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FINAL REPORT
2018 Disparity Study
City of Virginia Beach
Final Report
January 2019
2018 City of Virginia Beach Disparity Study
Prepared for City of Virginia Beach Prepared by BBC Research & Consulting 1999 Broadway, Suite 2200 Denver, Colorado 80202‐9750 303.321.2547 fax 303.399.0448 www.bbcresearch.com [email protected]
Table of Contents
BBC RESEARCH & CONSULTING—FINAL REPORT i
ES. Executive Summary
A. Analyses in the Disparity Study ........................................................................................... ES–2
B. Availability Analysis Results ................................................................................................. ES–3
C. Utilization Analysis Results .................................................................................................. ES–5
D. Disparity Analysis Results .................................................................................................... ES–7
E. Program Implementation .................................................................................................. ES–11
1. Introduction
A. Background ........................................................................................................................... 1–2
B. Study Scope ........................................................................................................................... 1–3
C. Study Team Members ........................................................................................................... 1–5
2. Legal Analysis
A. Program Overview .............................................................................................................. 2–2
B. Legal Standards ................................................................................................................... 2–2
3. Marketplace Conditions
A. Human Capital ....................................................................................................................... 3–2
B. Financial Capital .................................................................................................................... 3–6
C. Business Ownership ............................................................................................................ 3–10
D. Business Success ................................................................................................................. 3–11
E. Summary .............................................................................................................................. 3–13
4. Collection and Analysis of Contract Data
A. Overview of Contracting and Procurement Policies ............................................................. 4–1
B. Collection and Analysis of Contract Data and Procurement Data......................................... 4–3
C. Collection of Vendor Data ..................................................................................................... 4–5
D. Relevant Geographic Market Area ........................................................................................ 4–6
E. Relevant Types of Work ......................................................................................................... 4–6
G. Agency Review Process ......................................................................................................... 4–7
5. Availability Analysis
A. Purpose of the Availability Analysis ...................................................................................... 5–1
B. Potentially Available Businesses ........................................................................................... 5–1
C. Businesses in the Availability Database ................................................................................. 5–3
D. Availability Calculations ........................................................................................................ 5–4
E. Availability Results ................................................................................................................. 5–6
Table of Contents
BBC RESEARCH & CONSULTING—FINAL REPORT ii
6. Utilization Analysis
Minority‐ and Woman‐owned Businesses ................................................................................ 6–1
Service Disabled Veteran‐owned Businesses ............................................................................ 6–4
7. Disparity Analysis
A. Overview ............................................................................................................................... 7–1
B. Disparity Analysis Results ...................................................................................................... 7–5
C. Statistical Significance ......................................................................................................... 7–10
8. Program Measures
A. Program Overview................................................................................................................. 8–1
B. Race‐ and Gender‐Neutral Measures .................................................................................... 8–2
C. Other Organizations’ Program Measures .............................................................................. 8–4
9. Program Implementation
Overall Goals ............................................................................................................................. 9–1
Other Considerations ................................................................................................................ 9–3
Appendices
A. Definitions of Terms
B. Legal Framework and Analysis
C. Quantitative Analysis
D. Qualitative Information about Marketplace Conditions
E. Availability Analysis Approach
F. Disparity Tables
CHAPTER ES.
Executive Summary
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 1
CHAPTER ES. Executive Summary
TheCityofVirginiaBeach(TheCity)retainedBBCResearch&Consulting(BBC)toconductadisparitystudytohelprefinetheorganization’simplementationoftheSmall,Woman,andMinority‐ownedBusiness(SWaM)Program.Theprimaryobjectiveoftheprogramistoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinCitycontracting.1Tomeetthatobjective,theCityusesvariousrace‐andgender‐neutralmeasures.Inthecontextofcontractingandprocurement,race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofsmallbusinessesinagovernmentorganization’scontracting,regardlessoftherace/ethnicityorgenderofthebusinesses’owners.Incontrasttorace‐andgender‐neutralmeasures,race‐andgender‐consciousmeasuresaremeasuresthatarespecificallydesignedtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting.TheCitydoesnotcurrentlyuseanyrace‐orgender‐consciousmeasuresaspartoftheSWaMProgram.
Aspartofthedisparitystudy,BBCassessedwhethertherewereanydisparitiesbetween:
ThepercentageofcontractdollarsthattheCityspentwithofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesbetweenJuly1,2012andJune30,2017(i.e.,thestudyperiod)(i.e.,utilization,orparticipation);and
Thepercentageofcontractdollarsthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesmightbeexpectedtoreceivebasedontheiravailabilitytoperformspecifictypesandsizesoftheCity’sprimecontractsandsubcontracts(i.e.,availability).
Thedisparitystudyalsoexaminedotherquantitativeandqualitativeinformationrelatedto:
ThelegalframeworkrelatedtotheCity’simplementationoftheSWaMProgram;
Localmarketplaceconditionsforthatminority‐,woman‐,andveteran‐ownedbusinesses;and
ContractingpracticesandbusinessassistanceprogramsthattheCitycurrentlyhasinplace.
TheCitycoulduseinformationfromthestudytohelprefineitsimplementationoftheSWaMProgram,includingsettingoverallaspirationalgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracting;determiningwhichprogrammeasurestousetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracting;and,ifappropriate,determiningwhichracial/ethnicandgendergroupswouldbeeligibleto
1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 2
participateinanyrace‐orgender‐consciousprogrammeasuresthattheCitymightdecidetouseinthefuture.
BBCsummarizeskeyinformationfromthe2018CityofVirginiaBeachDisparityStudyinfiveparts:
A. Analysesinthedisparitystudy;
B. Availabilityanalysisresults;
C. Utilizationanalysisresults;
D. Disparityanalysisresults;and
E. Programimplementation.
A. Analyses in the Disparity Study
Alongwithmeasuringdisparitiesbetweentheparticipationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontracts,BBCalsoexaminedotherinformationrelatedtotheCity’simplementationoftheSWaMProgram:
Thestudyteamconductedananalysisoffederalregulations,caselaw,andotherinformationtoguidethemethodologyforthedisparitystudy.Theanalysisincludedareviewoflegalrequirementsrelatedtominority‐andwoman‐ownedbusinessprograms,includingtheSWaMProgram(seeChapter2andAppendixB).
BBCconductedquantitativeanalysesofoutcomesforminorities,women,veterans,andthebusinessesthattheyownthroughouttherelevantgeographicmarketarea.2Inaddition,thestudyteamcollectedqualitativeinformationaboutpotentialbarriersthatminorities,women,veterans,andthebusinessesthattheyownfaceinthelocalmarketplacethroughin‐depthinterviews,telephonesurveys,publicmeetings,andwrittentestimony(seeChapter3,AppendixC,andAppendixD).
BBCanalyzedthepercentageofrelevantCitycontractingdollarsthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesareavailabletoperform.Thatanalysiswasbasedontelephonesurveysthatthestudyteamcompletedwithmorethan1,000businessesthatworkinindustriesrelatedtothespecifictypesofconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsthattheCityawards(seeChapter5andAppendixE).
BBCanalyzedthedollarsthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesreceivedonmorethan26,000construction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter6).
BBCexaminedwhethertherewereanydisparitiesbetweentheparticipationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesseson
2BBCidentifiedtherelevantgeographicmarketareaasChesapeakeCity,NorfolkCity,PortsmouthCity,andVirginiaBeachCity.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 3
construction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter7).
BBCreviewedthemeasuresthattheCityusestoencouragetheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinitscontractingaswellasmeasuresthatotherorganizationsintheregionuse(seeChapter8).
BBCprovidedguidancerelatedtoadditionalprogramoptionsandpotentialchangestocurrentcontractingpracticesfortheCity’sconsideration(seeChapter9).
B. Availability Analysis Results
BBCconductedacustomcensustoanalyzetheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforCityprimecontractsandsubcontracts.BBC’sapproachreliedoninformationfromsurveysthatthestudyteamconductedwithpotentiallyavailablebusinesseslocatedintherelevantgeographicmarketareathatperformworkwithinrelevantsubindustries.ThatapproachallowedBBCtodeveloparepresentative,unbiased,andstatistically‐validdatabaseofpotentiallyavailablebusinessestoestimatetheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesaccurately.
Minority‐and woman‐owned businesses.BBCexaminedtheavailabilityofminority‐andwoman‐ownedbusinessesforvariouscontractssetstoassessthedegreetowhichtheyareready,willing,andabletoperformdifferenttypesofCitywork.
Overall.FigureES‐1presentsoveralldollar‐weightedavailabilityestimatesbyrelevantbusinessgroupforallCitycontractsandprocurements.Overall,theavailabilityofminority‐andwoman‐ownedbusinessesforCitycontractsandprocurementsis25.2percent,indicatingthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceive25.2percentofthedollarsthattheCityawardsinconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservices.Non‐Hispanicwhitewoman‐ownedbusinesses(13.3%)andBlackAmerican‐ownedbusinesses(8.1%)exhibitedthehighestavailabilitypercentagesamongallgroups.
Figure ES‐1. Overall availability estimates by racial/ethnic and gender group
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail and results by group, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Contract role. Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineavailabilityestimatesseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐2,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherislowerforCityprimecontracts(24.5%)thanforsubcontracts(31.6%).Amongotherfactors,thatresultcould
Business group
Asian American‐owned 0.8 %
Black American‐owned 8.1 %
Hispanic American‐owned 2.7 %
Native American‐owned 0.4 %
Total Minority‐owned 12.0 %
Non‐Hispanic white woman‐owned 13.3 %
Total Minority‐ and Woman‐owned 25.2 %
Availability %
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 4
beduetothefactthatsubcontractstendtobemuchsmallerinsizethanprimecontractsandarethusmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.
Figure ES‐2. Availability estimates by contract role
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Industry.BBCexaminedavailabilityanalysisresultsseparatelyforconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontracts.AsshowninFigureES‐3,theavailabilityofminority‐andwoman‐ownedbusinessesishighestfortheCity’sarchitectureandengineeringcontracts(32.6%)andlowestforconstructioncontracts(19.8%).
Figure ES‐3. Availability estimates by industry
Note: Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail and results by group, see Figure F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source: BBC Research & Consulting availability analysis.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.ItisusefultoexamineavailabilityanalysisresultsseparatelyforcontractsthattheCityawardedwiththeuseofSWaMcontractgoals(goalscontracts)andcontractsthatitawardedwithouttheuseofgoals(nogoalscontracts).FigureES‐4presentsavailabilityestimatesseparatelyforgoalsandnogoalscontracts.AsshowninFigureES‐4,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherislowerforgoalscontracts(21.1%)thanfornogoalscontracts(28.0%).
Business group
Asian American‐owned 0.8 % 1.0 %
Black American‐owned 8.0 % 8.4 %
Hispanic American‐owned 2.7 % 2.8 %
Native American‐owned 0.4 % 0.2 %
Non‐Hispanic white woman‐owned 12.5 % 19.2 %
Total Minority‐ and Woman‐owned 24.5 % 31.6 %
Contract role
Prime
contracts Subcontracts
Business group
Asian American‐owned 1.6 % 0.0 % 0.1 % 0.1 %
Black American‐owned 5.7 % 9.2 % 10.4 % 10.1 %
Hispanic American‐owned 2.8 % 3.1 % 4.8 % 1.1 %
Native American‐owned 0.0 % 1.7 % 0.7 % 0.1 %
Non‐Hispanic white woman‐owned 9.6 % 18.6 % 10.3 % 18.8 %
Total Minority‐ and Woman‐owned 19.8 % 32.6 % 26.3 % 30.3 %
Construction
Other professional
services
Goods and
services
Industry
Architecture and
engineering
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 5
Figure ES‐4 Availability estimates by contract goals status
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Service disabled veteran‐owned businesses.BBCexaminedtheoverallavailabilityofservice‐disabledveteran‐ownedbusinessesforCitywork(i.e.,businessesownedbyveteranswhohaveadisabilityasaresultoftheirservice).Theavailabilityanalysisindicatedthattheavailabilityofservice‐disabledveteran‐ownedbusinessesfortheCity’scontractsandprocurementsis11.9percent.
C. Utilization Analysis Results
BBCmeasuredtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontractingintermsofutilization—thepercentageofprimecontractandsubcontractdollarsthatthosebusinessesreceivedonCityprimecontractsandsubcontractsduringthestudyperiod.BBCmeasuredtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontractsregardlessofwhethertheywerecertifiedSWaMbusinesses.
Minority‐ and woman‐owned businesses.BBCexaminedtheparticipationofminority‐andwoman‐ownedbusinessesforvarioussetsofcontractsthattheCityawardedduringthestudyperiod.Thestudyteamassessedtheparticipationofallofthosebusinessesconsideredtogetherandseparatelyforeachrelevantracial/ethnicandgendergroup.
Overall.FigureES‐5presentsthepercentageofcontractingdollarsthatminority‐andwoman‐ownedbusinessesreceivedonconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsandprocurementsthattheCityawardedduringthestudyperiod(includingbothprimecontractsandsubcontracts).Overall,minority‐andwoman‐ownedbusinessesconsideredtogetherreceived18.9percentoftherelevantcontractingdollarsthattheCityawardedduringthestudyperiod.Non‐Hispanicwhitewoman‐ownedbusinesses(8.2%)andAsianAmerican‐ownedbusinesses(5.6%)exhibitedhigherlevelsofparticipationthanallothergroups.
Business group
Asian American‐owned 1.1 % 0.5 %
Black American‐owned 5.5 9.7
Hispanic American‐owned 3.3 2.4
Native American‐owned 0.4 0.4
Non‐Hispanic white woman‐owned 10.7 % 14.9 %
Total Minority‐ and Woman‐owned 21.1 % 28.0 %
Goals status
Goals No goals
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 6
Figure ES‐5. Overall utilization results
Note:
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Contract role.Manyminority‐andwoman‐ownedbusinessesaresmallbusinesses,andthus,oftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineutilizationresultsseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐6,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashigherintheCity’ssubcontracts(21.9%)thanprimecontracts(18.5%).ThevastmajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithprimecontracts.
Figure ES‐6. Utilization results by contract role
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Figure ES‐7. Utilization results by relevant industry
Note: Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source: BBC Research & Consulting utilization analysis.
Industry. BBCexaminedutilizationanalysisresultsseparatelyfortheCity’sconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontracts.AsshowninFigureES‐7,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashighestintheCity’sotherprofessionalservicescontracts(50.6%)andlowestin
Business group
Minority‐ and Woman‐owned
Asian American‐owned 5.6 %
Black American‐owned 4.5 %
Hispanic American‐owned 0.5 %
Native American‐owned 0.0 %
Non‐Hispanic white woman‐owned 8.2 %
Total Minority‐ and Woman‐owned 18.9 %
Utilization
Business group
Asian American‐owned 6.3 % 0.4 %
Black American‐owned 4.9 % 1.3 %
Hispanic American‐owned 0.4 % 2.1 %
Native American‐owned 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 6.9 % 18.1 %
Total Minority‐ and Woman‐owned 18.5 % 21.9 %
Contract role
Prime
contracts Subcontracts
Business Group
Asian American‐owned 0.2 % 0.4 % 32.1 % 0.4 %
Black American‐owned 1.3 % 0.9 % 15.3 % 5.2 %
Hispanic American‐owned 1.0 % 0.1 % 0.4 % 0.1 %
Native American‐owned 0.0 % 0.0 % 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 9.3 % 8.7 % 2.9 % 9.3 %
Total Minority‐ and Woman‐owned 11.8 % 10.1 % 50.6 % 15.0 %
Industry
Construction
Other Professional
Services
Goods and
Services
Architecture
and Engineering
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 7
architectureandengineeringcontracts(10.1%).ThepluralityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithconstructioncontractsforwhichtheparticipationofminority‐andwoman‐ownedbusinesseswas11.8percent.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.Itisusefultoexamineparticipationseparatelyforgoalscontractsandnogoalscontractsanassessmentofhoweffectivetheuseofthosegoalswasinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinparticular.AsshowninFigureES‐8,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwasactuallymuchhigherinnogoalscontracts(23.7%)thangoalscontracts(11.5%).
Figure ES‐8. Utilization results by contract goal status
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Service‐disabled veteran‐owned businesses.BBCalsoexaminedtheparticipationofservice‐disabledveteran‐ownedbusinessesinthecontractsandprocurementsthattheCityawardedduringthestudyperiod.Theutilizationanalysisindicatedthattheparticipationofservice‐disabledveteran‐ownedbusinessesinCitycontractsandprocurementswas0.7percent.
D. Disparity Analysis Results
Althoughinformationabouttheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontractsisusefulonitsown,itisevenmoreusefulwhenitiscomparedwiththelevelofparticipationthatmightbeexpectedbasedontheiravailabilityforCitywork.Aspartofthedisparityanalysis,BBCcomparedtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCityprimecontractsandsubcontractswiththepercentageofcontractdollarsthatthosebusinessesmightbeexpectedtoreceivebasedontheiravailabilityforthatwork.BBCcalculateddisparityindicesforeachrelevantbusinessgroupandforvariouscontractsetsbydividingpercentutilizationbypercentavailabilityandmultiplyingby100.Adisparityindexof100indicatesanexactmatchbetweenparticipationandavailabilityforaparticulargroupforaparticularcontractset(referredtoasparity).Adisparityindexoflessthan100indicatesadisparitybetweenparticipationandavailability.Adisparityindexoflessthan80indicatesasubstantialdisparitybetweenparticipationandavailability.
Minority‐and woman‐owned businesses.BBCexaminedtheavailabilityofminority‐andwoman‐ownedbusinessesforvariouscontractssetstoassessthedegreetowhichtheymayhavebeenunderutilizedonvarioustypesofCitywork.
Business group
Asian American‐owned 0.1 % 9.3 %
Black American‐owned 0.9 % 6.9 %
Hispanic American‐owned 1.1 % 0.2 %
Native American‐owned 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 9.4 % 7.3 %
Total Minority‐ and Woman‐owned 11.5 % 23.7 %
Goal status
Goals No goals
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 8
Overall.FigureES‐9presentsdisparityindicesforallrelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thelinedownthecenterofthegraphshowsadisparityindexlevelof100,whichindicatesparitybetweenparticipationandavailability.Alineisalsodrawnatadisparityindexlevelof80,becausesomecourtsuse80asthethresholdforwhatindicatesasubstantialdisparity.AsshowninFigureES‐9,overall,theparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityawardedduringthestudyperiodwassubstantiallylowerthanwhatonemightexpectbasedontheavailabilityofthosebusinessesforthatwork.Thedisparityindexof75indicatesthatminority‐andwoman‐ownedbusinessesreceivedapproximately$0.75foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityfortherelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Disparityanalysisresultsbyindividualracial/ethnicandgendergroupindicatedthat:
Fourgroupsexhibiteddisparityindicessubstantiallybelowparity:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof62),BlackAmerican‐ownedbusinesses(disparityindexof56),HispanicAmerican‐ownedbusinesses(disparityindexof20),andNativeAmerican‐ownedbusinesses(disparityindexof5).
AsianAmerican‐ownedbusinesses(disparityindexof200+)didnotexhibitadisparity.
Figure ES‐9. Disparity indices by group
Note:
For more detail, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
Contract role. Subcontractstendtobemuchsmallerinsizethanprimecontracts.Asaresult,subcontractsareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.Thus,itmightbereasonabletoexpectbetteroutcomesforminority‐andwoman‐ownedbusinessesonsubcontractsthanonprimecontracts.AsshowninFigureES‐10,minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityforbothprimecontracts(disparityindexof76)andsubcontracts(disparityindexof69).Resultsforindividualgroupsindicatedthat:
AllgroupsshowedsubstantialdisparitiesonprimecontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Allgroupsshowedsubstantialdisparitiesonsubcontractsexceptfornon‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof94).
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 9
Figure ES‐10. Disparity indices for prime contracts and subcontracts
Note:
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
Industry.BBCexamineddisparityanalysisresultsseparatelyfortheCity’sconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontracts.AsshowninFigureES‐11,minority‐andwoman‐ownedbusinessesconsideredtogethershowedsubstantialdisparitiesforeachrelevantindustryexceptotherprofessionalservices(disparityindexof193).Disparityanalysisresultsdifferedbyindustryandgroup:
Threeindividualgroupsshowedsubstantialdisparitiesonconstructioncontracts:AsianAmerican‐ownedbusinesses(disparityindexof13),BlackAmerican‐ownedbusinesses(disparityindexof23),andHispanicAmerican‐ownedbusinesses(disparityindexof35).
AllindividualgroupsshowedsubstantialdisparitiesonarchitectureandengineeringcontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Threeindividualgroupsshowedsubstantialdisparitiesonotherprofessionalservicescontracts:HispanicAmerican‐ownedbusinesses(disparityindexof8),NativeAmerican‐ownedbusinesses(disparityindexof0),andnon‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof29).
AllindividualgroupsshowedsubstantialdisparitiesongoodsandservicescontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 10
Figure ES‐11. Disparity analysis results by relevant industry
Note:
For more detail, see Figures F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.Itisusefultoexaminedisparityanalysisresultsseparatelyforgoalscontractsandnogoalscontractstoassesstheeffectivenessofthosegoalstoaddressanydisparitiesbetweenparticipationandavailability.AsshowninFigureES‐12,minority‐andwoman‐ownedbusinessesconsideredtogetheractuallyshowedasubstantialdisparityforgoalscontracts(disparityindexof55)butnotfornogoalscontracts(disparityindexof85).ResultsforindividualgroupsindicatedthatSWaMcontractgoalsmaybemoreeffectiveinaddressingdisparitiesforcertaingroupsthanothers:
Non‐Hispanicwhitewoman‐ownedbusinessesdidnotexhibitasubstantialdisparityongoalscontracts(disparityindexof88)butallotherindividualgroupsdidexhibitsubstantialdisparities.
AllindividualgroupsshowedsubstantialdisparitiesonnogoalscontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 11
Service‐disabled veteran‐owned businesses. BBCalsocomparedparticipationtoavailabilityforservice‐disabledveteran‐ownedbusinessesinCitywork.Service‐disabledveteran‐ownedbusinessesexhibitedadisparityindexof6,indicatingthattheiractualparticipationinCitycontractingwassubstantiallylessthantheiravailability.
Figure ES‐12. Disparity analysis results by contract goals status
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
E. Program Implementation
TheCityshouldreviewstudyresultsandotherrelevantinformationinconnectionwithmakingdecisionsconcerningitsimplementationoftheSWaM.Keyconsiderationsofpotentialrefinementarediscussedbelow.Inmakingthoseconsiderations,theCityshouldalsoassesswhetheradditionalresources,changesininternalpolicy,orchangesinstatelawmayberequired.
Overall annual aspirational goal.In2010,theCityadoptedanannualaspirationalgoalof10percentforminority‐ownedbusinessparticipationinCitycontracts.Resultsfromthedisparitystudy—particularlytheavailabilityanalysisandanalysesofmarketplaceconditions—canbehelpfultotheCityinadjustingitsoverallannualgoalfortheparticipationofminority‐ownedbusinessesandalsotopotentiallyincludewoman‐ownedbusinessesandservice‐disabledveteran‐ownedbusinesses.Theavailabilityanalysisindicatesthat,consideringallindustriestogether,minority‐ownedbusinessesmightbeexpectedtoreceive12.0percentofCitycontractingdollarsandwoman‐ownedbusinessesmightbeexpectedtoreceive13.3percentof
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 12
Citycontractingdollars.3Theavailabilityanalysisindicatedthatservice‐disabledveteran‐ownedbusinessesmightbeexpectedtoreceive11.9percentofCitycontractingdollars.TheCityshouldconsideradjustingitsoverallaspirationalgoalbasedonthatinformationandinformationaboutlocalmarketplaceconditionspresentedinChapter3,AppendixC,andAppendixD.
SWaM Office.TheCitydoesnothaveadedicatedofficetoimplementtheSWaMProgramandmonitortheparticipationofSWaM‐certifiedbusinessesinitscontracts.Instead,theCitycurrentlyreliesonstaffwhoworkinthePurchasingDivisiontodoso.TheCityshouldconsiderestablishingadedicatedofficeresponsibleforimplementingtheSWaMProgramandmonitoringprogressthattheCityismakingtowardsencouragingtheparticipationofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.Theofficeshouldhaveenoughdedicatedstafftocarryoutessentialprogramfunctions.AlthoughtheCity’sMinorityBusinessCoordinatorcurrentlyworkswithinthePurchasingDivision,theCitymightinsteadconsiderhousingaSWaMOfficewithintheOfficeofEconomicDevelopment.DoingsowouldallowSWaMstafftomoreeffectivelypartnerwiththeOfficeofEconomicDevelopment,whichalreadycarriesoutanumberofactivitiesrelevanttopotentialSWaMOfficeefforts.
Data collection.TheCitymaintainscomprehensivedataontheprimecontractsandprocurementsthatitawardsandmaintainsthosedatainawell‐organizedandintuitivemanner.However,theCitydoesnotmaintainanadequatelinkbetweenitscontractingandpaymentinformationandcouldeasilydosoinitscurrentsystems.DoingsowouldallowtheCitytoaccuratelyassesswhethertherearesubstantialdifferencesbetweencontractawardandpaymentamounts.Moreover,theCitydoesnotmaintaincomprehensivedataonsubcontractsthatareassociatedwiththeprimecontractsthatitawards.TheCityshouldconsidercollectingcomprehensivedataonallsubcontracts,regardlessoftheownershipstatusofeachbusiness.CollectingdataonallsubcontractswillhelpensurethattheCitymonitorstheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesaccurately.TheCityshouldconsidercollectingthosedataaspartofbidsandalsorequiringprimecontractorstosubmitdataonsubcontractsaspartoftheinvoicingprocessforallcontracts.TheCityshouldtrainrelevantdepartmentstafftocollectandentersubcontractdataaccuratelyandconsistently.
Growth monitoring.Alongwithworkingtoimproveitscontractingandvendordatasystems,theCitymightalsoconsidercollectingdataontheimpactthattheSWaMProgramhasonthegrowthofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesovertime.DoingsowouldrequiretheCitytocollectbaselineinformationonSWaM‐certifiedbusinesses—suchasrevenue,numberoflocations,numberofemployees,andemployeedemographics—andthencontinuetocollectthatinformationfromeachbusinessonanannualbasis.SuchmetricswouldallowtheCitytoassesswhethertheprogramishelpingbusinessesgrowandrefinethemeasuresthatitusesaspartoftheSWaMProgram.
3Theavailabilityofminority‐andwoman‐ownedbusinessesforallindustriesconsideredtogetherreflectsaweightof0.45forconstruction;0.13forarchitectureandengineering;0.17forotherprofessionalservices;and0.26forgoodsandservices,basedonthevolumeofdollarsthattheCityspentduringthestudyperiodineachindustry.
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Business certification. TheCitydoesnotcurrentlycertifyminority‐andwoman‐ownedbusinessesorotherdiversebusinessesitselfbutinsteadreliesontheVirginiaDepartmentofSmallBusinessandSupplierDiversity(SBSD)todoso.Somebusinessesparticipatinginin‐depthinterviewsandpublicmeetingscommentedonthedifficultiesandtimerequirementsassociatedwithSBSD’scertificationprocess.TheCitymightconsideroperatingitsowncertificationprocessaspartoftheSWaMProgramalongwithrecognizingSBSD‐certifiedbusinesses.DoingsowouldallowtheCitytocertifyminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesusingcriteriathataremostrelevanttoitslocalmarketplace(e.g.,race/ethnicityofowners,genderofowners,andrevenuerequirements).
Subcontract opportunities.Subcontractsoftenrepresentaccessibleopportunitiesforsmallanddiversebusinessestobecomeinvolvedincontracting.However,subcontractingaccountedforarelativelysmallpercentageofthetotalcontractingdollarsthattheCityawardedduringthestudyperiod.Toincreasethenumberofsubcontractopportunities,theCitycouldconsiderimplementingaprogramthatrequiresprimecontractorstosubcontractacertainamountofprojectworkaspartoftheirbidsandproposals,regardlessoftherace/ethnicityorgenderofsubcontractorowners.Forspecifictypesofcontractswheresubcontractingorpartnershipopportunitiesmightexist,theCitycouldsetaminimumpercentageofworktobesubcontracted.Primecontractorswouldthenhavetomeetorexceedthatthresholdinorderfortheirbidstobeconsideredresponsive.
Contract goals. TheCityshouldconsiderusingminority‐andwoman‐ownedbusinessgoalsonindividualcontractsthatitawards.DisparityanalysisresultsindicatedthatnearlyallrelevantgroupsshowedsubstantialdisparitiesonthecontractsthattheCityawardedduringthestudyperiod,indicatingthattheyarefacingbarriersaspartoftheCity’scontractingprocesses.BecausetheCityusesmanyrace‐andgender‐neutralmeasurestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontracting,andbecausethosemeasureshavenotsufficientlyaddresseddisparitiesforseveralindividualgroups,theCitymightconsiderusingcontractgoalsinthefuture.Becausetheuseofsuchgoalswouldbeconsideredarace‐andgender‐consciousmeasure,theCitywillneedtoensurethattheuseofthosegoalsmeetsthestructscrutinystandardofconstitutionalreview(fordetails,seeChapter2andAppendixB).
Unbundling large contracts. Ingeneral,minority‐andwoman‐ownedbusinessesexhibitedreducedavailabilityforrelativelylargecontractsthattheCityawardedduringthestudyperiod.Inaddition,aspartofin‐depthinterviewsandpublicmeetings,severalbusinessesownersreportedthatthesizeofgovernmentcontractsoftenservesasabarriertotheirsuccess(fordetails,seeAppendixD).Tofurtherencouragetheparticipationofsmallanddiversebusinesses,theCityshouldconsidermakingeffortstounbundlerelativelylargeprimecontractsandevensubcontractsintoseveralsmallercontracts.Forexample,theCityofCharlotte,NorthCarolinaencouragesprimecontractorstounbundlesubcontractingopportunitiesintosmallercontractpiecesthataremorefeasibleforsmallbusinessesandminority‐andwoman‐ownedbusinessestoworkonandacceptssuchattemptsasgoodfaitheffortsaspartofitscontractinggoalsprogram.
Prompt payment.Aspartofin‐depthinterviews,severalbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,reporteddifficultieswithreceivingpaymentinatimelymanneronCitycontracts,particularlywhentheyworkassubcontractors(fordetails,see
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AppendixD).Manybusinessesalsocommentedthathavingcapitalonhandiscrucialtobusinesssuccessandisoftenchallengingforsmallbusinesses.Citycontractsincludelanguagetoensurepromptpaymentofsubcontractors,buttheCityshouldconsiderreinforcingpromptpaymentpolicieswithitsprocurementstaffandprimecontractors.Inaddition,theCitytypicallypayscontractorsviahardcopychecksandcouldconsiderautomatingpayments.Doingsomighthelpensurethatbothprimecontractorsandsubcontractorsreceivepaymentinatimelymanner.
CHAPTER 1.
Introduction
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CHAPTER 1. Introduction
VirginiaBeachisthemostpopulouscityinVirginiaandoneofthe40mostpopulouscitiesintheUnitedStates.TheCityofVirginiaBeach(theCity)providesmyriadservicestothenearly500,000peoplewholiveandworkintheregion.Thoseservicesincludepoliceandfireprotection;healthandmentalhealthservices;roadconstructionandmaintenance;waterandsewageservices;andavarietyofsocialandeconomicservices.Aspartofprovidingthoseservices,theCitytypicallyspendshundredsofmillionsofcontractingdollarseachyeartoprocurevariousgoodsandservicesinconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservices.
Overthepast20years,theCityhasusedvariousstrategiesandeffortstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.Thoseeffortshaveincluded:
EstablishingtheSmall,Woman,andMinority‐ownedBusiness(SWaM)Program;
EstablishingtheSmallBusinessEnhancementProgram;
Establishinganaspirational10percentgoalfortheparticipationofminority‐ownedbusinessesinCitycontracting;
Creatingtheregion’sfirstMinorityBusinessCouncil;
UnbundlingCitycontractstobetterenableSWaMbusinessestocompeteforCitycontracts;
ProvidingdepartmentbuyersaccesstoacomprehensivedatabaseofSWaMbusinesses;
ImplementingaCityAdministrativeDirectiverequiringthesolicitationofSWaMbusinessesandservice‐disabledveteran‐ownedbusinessesforprocurementsworthlessthan$50,000;
EnteringintoaMemorandumofUnderstandingwiththeVirginiaDepartmentofSmallBusinessandSupplierDiversity‐SBSD;
Creatingthreebusinessdiversitypositions:theMinorityBusinessCoordinator,theSWaMBusinessDevelopmentManager,andtheTitleVICivilRightsComplianceCoordinator;and
Implementingabondwaiver/prequalificationprogram.
TheCityretainedBBCResearch&Consulting(BBC)toconductadisparitystudytohelpevaluatetheeffectivenessofitsmeasurestoencouragetheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinitscontractsandprocurements.Aspartofthestudy,BBCexaminedwhetherthereareanydisparitiesbetween:
ThepercentageofcontractdollarsthattheCityspentwithofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesduringthestudyperiod(i.e.,utilization);and
Thepercentageofcontractdollarsthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesmightbeexpectedtoreceivebasedontheiravailabilitytoperformspecifictypesandsizesoftheCity’sprimecontractsandsubcontracts(i.e.,availability).
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BBCalsoassessedotherquantitativeandqualitativeinformationrelatedto:
ThelegalframeworkrelatedtotheCity’simplementationoftheSWaMProgram;
Localmarketplaceconditionsforminority‐andwoman‐ownedbusinesses;and
ContractingpracticesandbusinessassistanceprogramsthattheCitycurrentlyhasinplace.
ThereareseveralreasonswhythedisparitystudywillbeusefultotheCity:
Thedisparitystudyprovidesanindependentreviewoftheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesintheCity’scontractingandprocurement,whichwillbevaluabletoCityleadershipandexternalstakeholders;
InformationfromthedisparitystudywillbeusefultotheCityasitmakesdecisionsabouttheSWaMProgram;
Thedisparitystudyprovidesinsightsintohowtoincreasecontractingopportunitiesforminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses;and
Organizationsthathavesuccessfullydefendedtheirimplementationsofcontractingprogramsincourthavetypicallyreliedoninformationfromdisparitystudies.
BBCintroducestheCityofVirginiaBeachDisparityStudyinthreeparts:
A. Background;
B. Studyscope;and
C. Studyteammembers.
A. Background
TheSWaMProgramisdesignedtoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinCitycontractingandprocurement,particularlyinthecontractingareasofconstruction;architectureandengineering;andotherprofessionalservices.Totrytomeettheobjectivesoftheprogram,theCityusesvariousrace‐andgender‐neutralprogrammeasurestoencouragetheparticipationofthosebusinessesinitsowncontracting.Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofsmallbusinessesinagovernmentorganization’scontracting,regardlessoftherace/ethnicityorgenderofbusinesses’owners.Thetypesofrace‐andgender‐neutralmeasuresthattheCitycurrentlyusesinclude:
Networkingandoutreachevents;
Trainingseminarsandworkshops;
Financingandbondingassistance;
Mentorship;and
Monitoringandreporting.
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Incontrasttorace‐andgender‐neutralmeasures,race‐andgender‐consciousmeasuresaremeasuresthatarespecificallydesignedtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting(e.g.,participationgoalsforminority‐andwoman‐ownedbusinessonindividualcontracts).TheCitydoesnotcurrentlyuseanyrace‐orgender‐consciousmeasuresaspartoftheSWaMProgram.
B. Study Scope
InformationfromthedisparitystudywillhelptheCitycontinuetoencouragetheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinitscontractingandprocurement.Inaddition,itwillhelptheCityimplementtheSWaMProgrameffectivelyandinalegally‐defensiblemanner.
Relevant business groups.Ingeneral,BBCfocuseditsanalysesonwhetherbarriersordiscriminationbasedonrace/ethnicity,gender,oramilitary‐relateddisabilityaffectedtheparticipationofbusinessesinCitycontractsorprocurements,regardlessofwhetherthosebusinesseswere,orcouldbe,SWaM‐certified.AnalyzingtheparticipationandavailabilityofbusinessesregardlessofSWaMcertificationallowedBBCtoassesswhethersuchbarriersaffectbusinesssuccessindependentofcertificationstatus.Tointerpretthecoreanalysespresentedinthedisparitystudy,itisusefultounderstandhowthestudyteamdefinesthevariousgroupsofbusinessesthatarethefocusoftheSWaMProgramandthedisparitystudy.
Minority‐ and woman‐owned businesses.BBCanalyzedbusinessoutcomesforminority‐andwoman‐ownedbusinesses,whichweredefinedasbusinessesownedbyAsianAmericans,BlackAmericans,HispanicAmericans,NativeAmericans,orwomenofanyrace/ethnicity.Toavoiddouble‐counting,BBCclassifiedminoritywoman‐ownedbusinesseswiththeircorrespondingminoritygroups.(Forexample,BlackAmericanwoman‐ownedbusinesseswereclassifiedalongwithbusinessesownedbyBlackAmericanmenasBlackAmerican‐ownedbusinesses.)Thus,woman‐ownedbusinessesinthisreportreferstonon‐Hispanicwhitewoman‐ownedbusinesses.
Service‐disabled veteran‐owned businesses.BBCanalyzedbusinessoutcomesforservice‐disabledveteran‐ownedbusinesses,whichweredefinedasbusinessesthatareownedbyveteransoftheUnitedStatesmilitarywhohaveamentalorphysicaldisabilitythatresulteddirectlyfromtheirmilitaryservice.
SWaM‐certified businesses.SWaM‐certifiedbusinessesaresmallbusinesses,minority‐ownedbusinesses,orwoman‐ownedbusinessesthatarespecificallycertifiedasSWaMbusinessesthroughtheCommonwealthofVirginia(theCommonwealth).BusinessesseekingSWaMcertificationarerequiredtosubmitanapplicationtotheCommonwealth.Theapplicationisavailableonlineandrequiresbusinessestosubmitvariousinformationincludingbusinessname;contactinformation;licenseinformation;financialinformation;workspecializations;andtherace/ethnicityandgenderoftheirowners.TheCommonwealthreviewseachapplicationforapproval.Notethatfirmsownedbynon‐Hispanicwhitemenwhoarenotservice‐disabledveteranscanalsobecomeSWaM‐certifiediftheymeeteligibilityrequirementsforbeingsmallbusinesses.However,BBC’sanalysesfocusedprimarilyonbusinessesthatareminority‐ownedorwoman‐owned.
Potential SWaM‐certified businesses.PotentialSWaM‐certifiedbusinessesareminority‐orwoman‐ownedbusinessesthatareSWaM‐certifiedorappearthattheycouldbecertifiedbased
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onownershipstatusandsizerequirementssetforthbytheCommonwealth.ThestudyteamdidnotcountbusinessesthathavebeendecertifiedfromtheSWaMProgramaspotentialSWaM‐certifiedbusinessesinthisstudy.
Majority‐owned businesses.Majority‐ownedbusinessesarebusinessesthatareownedbynon‐Hispanicwhitemenwhoarenotservice‐disabledveterans.
Analyses in the disparity study.Thedisparitystudyexaminedwhetherthereareanydisparitiesbetweentheparticipationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesonCitycontracts.Inaddition,thedisparitystudyalsoincludes:
AreviewoflegalissuesrelatedtotheCity’simplementationoftheSWaMProgram;
Ananalysisoflocalmarketplaceconditionsforminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses;
AnassessmentoftheCity’scontractingpracticesandbusinessassistanceprograms;and
OtherinformationfortheCitytoconsiderasitrefinesitsimplementationoftheSWaMProgram.
Thedisparitystudyfocusedonconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesthattheCityawardedbetweenJuly1,2012andJune30,2017(i.e.,thestudyperiod).Informationfromthedisparitystudyisorganizedasfollows:
Legal framework and analysis.Thestudyteamconductedadetailedanalysisofrelevantfederalregulations,caselaw,statelaw,andotherinformationtoguidethemethodologyforthedisparitystudy.Theanalysisincludedareviewoffederalandstaterequirementsconcerningtheimplementationofminority‐andwoman‐ownedbusinessprograms.ThelegalframeworkandanalysisissummarizedinChapter2andpresentedindetailinAppendixB.
Marketplace conditions.BBCconductedquantitativeanalysesofthesuccessofminoritiesandwomenaswellasminority‐,woman‐,andveteran‐ownedbusinessesinthelocalcontractingandprocurementindustries.BBCcomparedbusinessoutcomesforminoritiesandwomenaswellasminority‐andwoman‐ownedbusinessestooutcomesfornon‐Hispanicwhitemenandbusinessesownedbynon‐Hispanicwhitemen.Inaddition,thestudyteamcollectedqualitativeinformationaboutpotentialbarriersthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesfaceintheVirginiaBeachregionthroughin‐depthinterviewsandpublicmeetings.InformationaboutmarketplaceconditionsispresentedinChapter3,AppendixC,andAppendixD.
Data collection.BBCcollectedcomprehensivedataontheprimecontractsandsubcontractsthattheCityawardedduringthestudyperiodaswellasinformationonthebusinessesthatparticipatedinthosecontracts.ThescopeofBBC’sdatacollectioneffortsispresentedinChapter4.
Availability analysis.BBCassessedthedegreetowhichminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesareready,willing,andabletoperformonCityprimecontractsandsubcontracts.ThatanalysiswasbasedonCitydataandtelephonesurveysthatthestudyteamconductedwiththousandsofbusinessesthatarelocatedintheVirginiaBeachregionandthat
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workinindustriesrelatedtothetypesofcontractsandprocurementsthattheCityawards.ResultsfromtheavailabilityanalysisarepresentedinChapter5andAppendixE.
Utilization analysis.BBCanalyzedprimecontractandsubcontractdollarsthattheCityspentwithminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesoncontractsthatitawardedduringthestudyperiod.ResultsfromtheutilizationanalysisarepresentedinChapter6.
Disparity analysis.BBCexaminedwhethertherewereanydisparitiesbetweentheutilizationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesonprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteamalsoassessedwhetheranyobserveddisparitieswerestatisticallysignificant.ResultsfromthedisparityanalysisarepresentedinChapter7andAppendixF.
Program measures. BBCreviewedtherace‐andgender‐neutralmeasuresthattheCityusestoencouragetheparticipationofsmallbusinessesinitscontractingaswellasmeasuresthatotherorganizationsacrossthecountryuse.ThatinformationispresentedinChapter8.
Program implementation.BBCreviewedtheCity’scontractingpracticesandprogrammeasuresthatarepartofitsimplementationoftheSWaMProgram.BBCprovidedguidancerelatedtoadditionalprogramoptionsandchangestocurrentcontractingpracticesfortheCitytoconsider.Thestudyteam’sreviewandguidancerelatedtoprogramimplementationispresentedinChapter9.
C. Study Team Members
TheBBCdisparitystudyteamwasmadeupoffourfirmsthat,collectively,possessdecadesofexperiencerelatedtoconductingdisparitystudiesinconnectionwithsmallanddiversebusinessprograms.
BBC (prime consultant).BBCisaDenver‐baseddisparitystudyandeconomicresearchfirm.BBChadoverallresponsibilityforthedisparitystudyandperformedallofthequantitativeanalyses.
The Miles Agency.TheMilesAgencyisaBlackAmericanwoman‐ownedcommunityengagementfirmbasedinVirginiaBeach.TheMilesAgencyconductedin‐depthinterviewswithbusinesseslocatedintheVirginiaBeachregionaspartofthestudyteam’squalitativeanalysesofmarketplaceconditions.Inaddition,thefirmhelpedfacilitatevariouscommunityengagementefforts.
Holland & Knight. Holland&Knightisalawfirmwithofficesthroughoutthecountry.Holland&Knightconductedthelegalanalysisthatprovidedthebasisforthestudy.
Customer Research International (CRI).CRIisaSubcontinentAsianAmerican‐ownedsurveyfieldworkfirmbasedinSanMarcos,Texas.CRIconductedtelephonesurveyswiththousandsofbusinesseslocatedintheVirginiaBeachregiontogatherinformationfortheutilizationandavailabilityanalyses.
CHAPTER 2.
Legal Analysis
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CHAPTER 2. Legal Analysis
TheCityofVirginiaBeach(TheCity)usesvariouseffortstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservicedisabledveteran‐ownedbusinessesinitscontracting,includingitsoperationoftheSmall,Woman,andMinority‐ownedBusiness(SWaM)Program.Totrytomeettheobjectivesoftheprogram,theCityusesvariousrace‐andgender‐neutralprogrammeasures.Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofsmallbusinessesinanorganization’scontractingregardlessoftherace/ethnicityorgenderofbusinesses’owners.Incontrast,race‐andgender‐consciousmeasuresaredesignedtospecificallyencouragetheparticipationofminority‐andwoman‐ownedbusinessesintheorganization’scontracting(e.g.,participationgoalsforminority‐andwoman‐ownedbusinessonindividualcontracts).
AlthoughtheCitydoesnotcurrentlyuseanyrace‐orgender‐consciousmeasuresaspartoftheSWaMProgram,itisinstructivetoreviewlegalstandardssurroundingtheiruseincasetheCitydecidesthatusingsuchmeasuresisappropriateinthefuture.Anyuseofrace‐andgender‐consciousmeasuresmustmeetthestrictscrutinystandardofconstitutionalreview.1Thestrictscrutinystandardpresentsthehighestthresholdforevaluatingthelegalityofrace‐andgender‐consciousmeasuresshortofprohibitingthemaltogether.Underthestrictscrutinystandard,agovernmentorganizationmust:
Haveacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationoritspresenteffects;and
Establishthattheuseofanysuchmeasureisnarrowlytailoredtoachievethegoalofremedyingtheidentifieddiscrimination.
Agovernmentorganization’sprogrammustmeetboththecompellinggovernmentalinterestandthenarrowtailoringcomponentsofthestrictscrutinystandard.Aprogramthatfailstomeeteithercomponentisunconstitutional.
BBCResearch&Consulting(BBC)summarizestheelementsoftheSWaMProgramaswellasthelegalstandardstowhichtheCitymustadhereinimplementingtheprogram.BBCpresentsthatinformationintwoparts:
A. Programoverview;and
B. Legalstandards.
1CertainFederalCourtsofAppealsapplytheintermediatescrutinystandardtogender‐consciousprograms.AppendixBdescribestheintermediatescrutinystandardindetail.
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A. Program Overview
TheSWaMProgramisdesignedtoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinCitycontractingandprocurement,particularlyinthecontractingareasofconstructionandarchitectureandengineering.Totrytomeettheobjectivesoftheprogram,theCityusesvariousrace‐andgender‐neutralprogrammeasurestoencouragetheparticipationofthosebusinessesinitsowncontracting,including:
Networkingandoutreachevents;
Trainingseminarsandworkshops;
Financingandbondingassistance;
Mentorship;
Monitoringandreporting;
TheBondWaiver/PrequalificationProgram;and
TheSmallBusinessEnhancementProgram.
TheCityalsoencouragesprimecontractorstoutilizeSWaM‐certifiedsubcontractorsonselectconstructionandarchitectureandengineeringcontracts.Forconstructionandarchitectureandengineeringcontractsworth$100,000ormore,theCityasksthatprimecontractorsfulfill50percentofsubcontractingopportunitieswithSWaM‐certifiedbusinesses.TheCitydoesnotcurrentlyuseanyrace‐orgender‐consciousmeasuresaspartoftheSWaMProgram.
B. Legal Standards
Therearedifferentlegalstandardsfordeterminingtheconstitutionalityofcontractingprogramsdependingonwhethertheyrelyonlyonrace‐andgender‐neutralmeasuresoracombinationofrace‐andgender‐neutralandrace‐andgender‐consciousmeasures.BBCbrieflysummarizeslegalstandardsforbothtypesofprogramsbelow.
Programs that rely only on race‐ and gender‐neutral measures.Governmentorganizationsthatimplementcontractingprogramsthatrelyonlyonrace‐andgender‐neutralmeasuresmustshowarationalbasisfortheirprograms.Showingarationalbasisrequiresorganizationstodemonstratethattheircontractingprogramsarerationallyrelatedtoalegitimategovernmentinterest.Itisthelowestthresholdforevaluatingthelegalityofgovernmentcontractingprograms.Whencourtsreviewprogramsbasedonarationalbasis,onlythemostegregiousviolationsleadtoprogramsbeingdeemedunconstitutional.TheCityimplementstheSWaMPrograminarace‐andgender‐neutralmanner.
Programs that rely on race‐ and gender‐neutral and race‐ and gender‐conscious measures.TheUnitedStatesSupremeCourthasestablishedthatcontractingprogramsthatincludebothrace‐andgender‐neutralandrace‐andgender‐consciousmeasuresmustmeetthestrictscrutinystandardofconstitutionalreview.2Incontrasttoarationalbasis,thestrict
2CertainFederalCourtsofAppealsapplytheintermediatescrutinystandardtogender‐consciousprograms.AppendixBdescribestheintermediatescrutinystandardindetail.
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scrutinystandardpresentsthehighestthresholdforevaluatingthelegalityofgovernmentcontractingprogramsshortofprohibitingthemaltogether.ThetwokeyUnitedStatesSupremeCourtcasesthatestablishedthestrictscrutinystandardforsuchprogramsare:
The1989decisioninCityofRichmondv.J.A.CrosonCompany,whichestablishedthestrictscrutinystandardofreviewforrace‐consciousprogramsadoptedbystateandlocalgovernments;3and
The1995decisioninAdarandConstructors,Inc.v.Peña,whichestablishedthestrictscrutinystandardofreviewforfederalrace‐consciousprograms.4
Underthestrictscrutinystandard,agovernmentorganizationmustshowacompellinggovernmentalinteresttouserace‐andgender‐consciousmeasuresandensurethatitsuseofrace‐andgender‐consciousmeasuresisnarrowtailored.Aprogramthatfailstomeeteithercomponentisunconstitutional.
Compelling governmental interest. Anorganizationthatusesrace‐orgender‐consciousmeasuresaspartofaminority‐orwoman‐ownedbusinessprogramhastheinitialburdenofshowingevidenceofdiscrimination—includingstatisticalandanecdotalevidence—thatsupportstheuseofsuchmeasures.Organizationscannotrelyonnationalstatisticsofdiscriminationinanindustrytodrawconclusionsabouttheprevailingmarketconditionsintheirownregions.Rather,theymustassessdiscriminationwithintheirownrelevantmarketareas.5Itisnotnecessaryforagovernmentorganizationitselftohavediscriminatedagainstminority‐orwoman‐ownedbusinessesforittoact.InCityofRichmondv.J.A.CrosonCompany,theSupremeCourtfound,“if[theorganization]couldshowthatithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry…[i]tcouldtakeaffirmativestepstodismantlesuchasystem.”
Narrow tailoring.Inadditiontodemonstratingacompellinggovernmentalinterest,agovernmentagencymustalsodemonstratethatitsuseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Thereareanumberoffactorsthatacourtconsiderswhendeterminingwhethertheuseofsuchmeasuresisnarrowlytailoredincluding:
Thenecessityofsuchmeasuresandtheefficacyofalternative,race‐andgender‐neutralmeasures;
Thedegreetowhichtheuseofsuchmeasuresislimitedtothosegroupsthatactuallysufferdiscriminationinthelocalmarketplace;
Thedegreetowhichtheuseofsuchmeasuresisflexibleandlimitedindurationincludingtheavailabilityofwaiversandsunsetprovisions;
Therelationshipofanynumericalgoalstotherelevantbusinessmarketplace;and
3CityofRichmondv.J.A.CrosonCompany,488U.S.469(1989).
4AdarandConstructors,Inc.v.Peña,515U.S.200(1995).
5Seee.g.,ConcreteWorks,Inc.v.CityandCountyofDenver(“ConcreteWorksI”),36F.3d1513,1520(10thCir.1994).
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Theimpactofsuchmeasuresontherightsofthirdparties.6
Meeting the strict scrutiny standard.Manygovernmentorganizationshaveusedinformationfromdisparitystudiesaspartofdeterminingwhethertheircontractingpracticesareaffectedbyrace‐orgender‐baseddiscriminationandensuringthattheiruseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Specifically,organizationshaveassessedevidenceofanydisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesfortheircontractsandprocurements.InCityofRichmondv.J.A.CrosonCompany,theUnitedStatesSupremeCourtheldthat,“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”LowercourtdecisionssinceCityofRichmondv.J.A.CrosonCompanyhaveheldthatacompellinggovernmentalinterestmustbeestablishedforeachracial/ethnicandgendergrouptowhichrace‐andgender‐consciousmeasuresapply.
Manyprogramshavefailedtomeetthestrictscrutinystandard,becausetheyhavefailedtomeetthecompellinggovernmentalinterestrequirement,thenarrowtailoringrequirement,orboth.However,manyotherprogramshavemetthestrictscrutinystandardandcourtshavedeemedthemtobeconstitutional.AppendixBprovidesdetaileddiscussionsofthecaselawrelatedtothoseprograms.
6See,e.g.,AGC,SDCv.Caltrans,713F.3dat1198‐1199;Rothe,545F.3dat1036;WesternStatesPaving,407F3dat993‐995;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;Eng’gContractorsAss’n,122F.3dat927(internalquotationsandcitationsomitted).
CHAPTER 3.
Marketplace Conditions
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CHAPTER 3. Marketplace Conditions
Historically,therehavebeenmyriadlegal,economic,andsocialobstaclesthathaveimpededminoritiesandwomenfromacquiringthehumanandfinancialcapitalnecessarytostartandoperatesuccessfulbusinesses.Barrierssuchasslavery,racialoppression,segregation,race‐baseddisplacement,andlabormarketdiscriminationproducedsubstantialdisparitiesforminoritiesandwomen,theeffectsofwhicharestillapparenttoday.Thosebarrierslimitedopportunitiesforminoritiesintermsofbotheducationandworkplaceexperience.1,2,3,4
Similarly,manywomenwererestrictedtoeitherbeinghomemakersortakinggender‐specificjobswithlowpayandlittlechanceforadvancement.5
Inthe19thandearly20thcenturies,minoritiesinVirginiafacedbarriersthatweresimilartothosethatminoritiesfacednationwide.DiscriminatorytreatmentwascommonforminoritiesinVirginia.BlackAmericanswereforcedtoliveinracially‐segregatedneighborhoodsandsendtheirchildrentosegregatedschools.Intheearly20thcentury,BlackAmericanmeninVirginiawerebarredfromvoting.BlackAmericanswerealsoforcedtouseseparatefacilitiesatarearestaurants,publicbuildings,andculturalinstitutions.6Severalofthemostwell‐documentedexamplesofredlining—whereBlackAmericansweresystematicallydeniedaccesstobankingandmortgageservicesbecausetheyweredeemedtoliveinhigher‐risk,“undesirable”neighborhoods—occurredinplaceslikeRichmondandNorfolk,Virginia.7,8Disparatetreatmentalsoextendedintothelabormarket.BlackAmericanswereconcentratedinlowwageworkinagricultureandotherindustrieswithfewopportunitiesforadvancement.9,10
Inthemiddleofthe20thcentury,manylegalandworkplacereformsopenedupnewopportunitiesforminoritiesandwomennationwide.Forexample,Brownv.BoardofEducation,TheEqualPayAct,TheCivilRightsAct,andTheWomen’sEducationalEquityActoutlawedmanyformsofrace‐andgender‐baseddiscrimination.Workplacesadoptedformalizedpersonnelpoliciesandimplementedprogramstodiversifytheirstaffs.11Thosereformsincreaseddiversityinworkplacesandreducededucationalandemploymentdisparitiesforminoritiesandwomen12,13,14,15However,despitethoseimprovements,minoritiesandwomencontinuetofacebarriers—suchasincarceration,residentialsegregation,andfamilyresponsibilities—thathavemadeitmoredifficulttoacquirethehumanandfinancialcapitalnecessarytostartandoperatebusinessessuccessfully.16,17,18,19
FederalCourtsandtheUnitedStatesCongresshaveconsideredbarriersthatminorities;women;andminority‐andwoman‐ownedbusinessesfaceinalocalmarketplaceasevidencefortheexistenceofrace‐andgender‐baseddiscriminationinthatmarketplace.20,21,22TheUnitedStatesSupremeCourtandotherfederalcourtshaveheldthatanalysesofconditionsinalocalmarketplaceforminorities;women;andminority‐andwoman‐ownedbusinessesareinstructiveindeterminingwhetheragencies’implementationsofminority‐andwoman‐ownedbusinessprogramsareappropriateandjustified.Thoseanalyseshelpagenciesdeterminewhethertheyarepassivelyparticipatinginanyrace‐orgender‐baseddiscriminationthatmakesitmore
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difficultforminority‐andwoman‐ownedbusinessestosuccessfullycompetefortheircontracts.Passiveparticipationindiscriminationmeansthatagenciesunintentionallyperpetuaterace‐orgender‐baseddiscriminationsimplybyoperatingwithindiscriminatorymarketplaces.Manycourtshaveheldthatpassiveparticipationinanyrace‐orgender‐baseddiscriminationestablishesacompellinggovernmentalinterestforagenciestotakeremedialactiontoaddresssuchdiscrimination.23,24,25
Thestudyteamconductedquantitativeandqualitativeanalysestoassesswhetherminorities;women;andminority‐andwoman‐ownedbusinessesfaceanybarriersintheVirginiaBeachconstruction;architecturalandengineering,professionalservices;andgoodsandservicesindustries.1Thestudyteamalsoexaminedthepotentialeffectsthatanysuchbarriershaveontheformationandsuccessofminority‐andwoman‐ownedbusinessesandontheirparticipationin,andavailabilityfor,contractsthattheCityofVirginiaBeachawards.Thestudyteamexaminedlocalmarketplaceconditionsprimarilyinfourareas:
Humancapital,toassesswhetherminoritiesandwomenfaceanybarriersrelatedtoeducation,employment,andgainingmanagerialexperienceinrelevantindustries;
Financialcapital,toassesswhetherminoritiesandwomenfaceanybarriersrelatedtowages,homeownership,personalwealth,andaccesstofinancing;
Businessownershiptoassesswhetherminoritiesandwomenownbusinessesatratesthatarecomparabletothatofnon‐Hispanicwhitemen;and
Successofbusinessestoassesswhetherminority‐andwoman‐ownedbusinesseshaveoutcomesthataresimilartothoseofbusinessesownedbynon‐Hispanicwhitemen.
TheinformationinChapter3comesfromexistingresearchintheareaofrace‐andgender‐baseddiscriminationaswellasfromprimaryresearchthatthestudyteamconductedofcurrentmarketplaceconditions.AdditionalquantitativeandqualitativeanalysesofmarketplaceconditionsarepresentedinAppendixCandAppendixD,respectively.
A. Human Capital
Humancapitalisthecollectionofpersonalknowledge,behavior,experience,andcharacteristicsthatmakeupanindividual’sabilitytoperformandsucceedinparticularlabormarkets.Humancapitalfactorssuchaseducation,businessexperience,andmanagerialexperiencehavebeenshowntoberelatedtobusinesssuccess.26,27,28,29Anyrace‐orgender‐basedbarriersinthoseareasmaymakeitmoredifficultforminoritiesandwomentoworkinrelevantindustriesandpreventsomeofthemfromstartingandoperatingbusinessessuccessfully.
Education.Barriersassociatedwitheducationalattainmentmayprecludeentryoradvancementincertainindustries,becausemanyoccupationsrequireatleastahighschooldiploma,andsomeoccupations—suchasoccupationsinprofessionalservices—requireatleastafour‐yearcollegedegree.Inaddition,educationalattainmentisastrongpredictorofboth
1TheVirginiaBeachmarketplaceisdefinedinthisstudyasChesapeakeCity,NorfolkCity,PortsmouthCity,andVirginiaBeachCity.
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incomeandpersonalwealth,whicharebothshowntoberelatedtobusinessformationandsuccess.30,31Nationally,minoritieslagbehindnon‐Hispanicwhitesintermsofbotheducationalattainmentandthequalityofeducationthattheyreceive.32,33Minoritiesarefarmorelikelythannon‐Hispanicwhitestoattendschoolsthatdonotprovideaccesstocoreclassesinscienceandmath.34Inaddition,BlackAmericanstudentsaremorethanthreetimesmorelikelythannon‐Hispanicwhitestobeexpelledorsuspendedfromhighschool.35Forthoseandotherreasons,minoritiesarefarlesslikelythannon‐Hispanicwhitestoattendcollege;enrollathighly‐ormoderatelyselectivefour‐yearinstitutions;orearncollegedegrees.36
EducationaloutcomesforminoritiesinVirginiaBeacharesimilartothoseforminoritiesnationwide.Thestudyteam’sanalysesoftheVirginiaBeachlaborforceindicatethatcertainminoritygroupsarefarlesslikelythannon‐Hispanicwhitestoearnacollegedegree.Figure3‐1presentsthepercentageofVirginiaBeachworkersthathaveearnedfour‐yearcollegedegreesbyrace/ethnicityandgender.AsshowninFigure3‐1,BlackAmericansandHispanicAmericansaresubstantiallylesslikelythannon‐Hispanicwhiteworkerstohavefour‐yearcollegedegrees.Incontrast,AsianAmericansaremorelikelythannon‐Hispanicwhiteworkersandwomenaremorelikelythanmentohavefour‐yearcollegedegrees,
Figure 3‐1. Percentage of workers 25 and older with at least a four‐year college degree, Virginia Beach, 2012‐2016
Note:
** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 95% confidence level for Virginia Beach.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Employment and management experience.Animportantprecursortobusinessownershipandsuccessisacquiringdirectworkandmanagementexperienceinrelevantindustries.Anybarriersthatlimitminoritiesandwomenfromacquiringthatexperiencecouldpreventthemfromstartingandoperatingrelatedbusinessesinthefuture.
Employment.Onanationallevel,priorindustryexperiencehasbeenshowntobeanimportantindicatorforbusinessownershipandsuccess.However,minoritiesandwomenareoftenunabletoacquirerelevantworkexperience.Theyaresometimesdiscriminatedagainstinhiringdecisions,whichimpedestheirentryintothelabormarket.37,38,39Whenemployed,theyareoftenrelegatedtoperipheralpositionsinthelabormarketandtoindustriesthatexhibitalreadyhighconcentrationsofminoritiesorwomen.40,41,42,43,44Inaddition,minoritiesareincarceratedatahigherratethannon‐HispanicwhitesinVirginiaandnationwide,whichcontributestoanumberoflabordifficulties,includingdifficultiesfindingsjobsandrelativelyslowwagegrowth.45,46,47,48
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Thestudyteam’sanalysesofthelaborforceinVirginiaBeacharelargelyconsistentwiththosefindings.Figures3‐2and3‐3presenttherepresentationsofminorityandwomenworkersinvariousVirginiaBeachindustries.AsshowninFigure3‐2,theVirginiaBeachindustrieswiththehighestrepresentationsofminorityworkersarechildcare,hair,andnails;healthcare;andotherservices.TheVirginiaBeachindustrieswiththelowestrepresentationsofminorityworkersareconstruction;wholesaletrade;andextractionandagriculture.
Figure 3‐2.
Percent representation of minorities in various industries in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between minority workers in the specified industry and all industries is statistically significant at the 95% confidence level.
The representation of minorities among all Virginia Beach workers is 29% for Black Americans, 7% for Hispanic Americans, 6% for Asian Americans, 1% for Native Americans, 0% for Other race minorities and 43% for all minorities considered together.
"Other race minority" includes respondents who do not identify with the racial categories defined by the U.S. Census Bureau in its survey questionnaire.
Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, scientific research, and veterinary services industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select Other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and Other personal were combined into one category of childcare, hair, and nails.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Figures3‐3indicatesthattheVirginiaBeachindustrieswiththehighestrepresentationsofwomenworkersarechildcare,hair,andnails;healthcare;andeducation.TheVirginiaBeachindustrieswiththelowestrepresentationsofwomenworkersaremanufacturing;extractionandagriculture;andconstruction.
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Figure 3‐3.
Percent representation of women in various industries in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between women workers in the specified industry and all industries is statistically significant at the 95% confidence level.
The representation of women among all Virginia Beach workers is 46%.
Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, scientific research, and veterinary services industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select Other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and Other personal were combined into one category of childcare, hair, and nails.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Management experience.Managerialexperienceisanessentialpredictorofbusinesssuccess.However,race‐andgender‐baseddiscriminationremainsapersistentobstacletogreaterdiversityinmanagementpositions.49,50,51Nationally,minoritiesandwomenarefarlesslikelythannon‐Hispanicwhitementoworkinmanagementpositions.52,53SimilaroutcomesappeartoexistforminoritiesandwomeninVirginiaBeach.ThestudyteamexaminedtheconcentrationofminoritiesandwomeninmanagementpositionsintheVirginiaBeachconstruction;professionalservices;andgoodsandgeneralservicesindustries.AsshowninFigure3‐4,comparedtonon‐HispanicwhiteAmericans,asmallerpercentageofBlackAmericansworkasmanagersintheconstructionandgoodsandservicesindustriesandasmallerpercentageofHispanicAmericansworkasmanagersintheconstructionindustry.Comparedtomen,asmallerpercentageofwomenworkasmanagersinthearchitectureandengineeringindustry.Incontrast,alargerpercentageofwomenthanmenworkasmanagersintheconstructionindustry.
Intergenerational business experience.Havingafamilymemberwhoownsabusinessandisworkinginthatbusinessisanimportantpredictorofbusinessownershipandbusinesssuccess.Suchexperienceshelpentrepreneursgainaccesstoimportantopportunitynetworks;
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obtainknowledgeofbestpracticesandbusinessetiquette;andreceivehands‐onexperienceinhelpingtorunbusinesses.However,atleastnationally,minoritieshavesubstantiallyfewerfamilymemberswhoownbusinessesandbothminoritiesandwomenhavefeweropportunitiestobeinvolvedwiththosebusinesses.54,55Thatlackofexperiencemakesitdifficultforminoritiesandwomentosubsequentlystarttheirownbusinessesandoperatethemsuccessfully.
Figure 3‐4. Percentage of workers who worked as a manager in each study‐related industry, Virginia Beach, 2012‐2016
Note: *, ** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 90% and 95% confidence level, respectively.
† Denotes that significant differences in proportions were not reported due to small sample size.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
B. Financial Capital
Inadditiontohumancapital,financialcapitalhasbeenshowntobeanimportantindicatorofbusinessformationandsuccess.56,57,58Individualscanacquirefinancialcapitalthroughmanysourcesincludingemploymentwages,personalwealth,homeownership,andfinancing.Ifrace‐orgender‐baseddiscriminationexistsinfinancialcapitalmarkets,minoritiesandwomenmayhavedifficultyacquiringthecapitalnecessarytostart,operate,orexpandbusinesses.
Wages and income.Wageandincomegapsbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenarewell‐documentedthroughoutthecountry,evenwhenresearchershavestatisticallycontrolledforvariousfactorsunrelatedtoraceandgender.59,60,61Forexample,nationalincomedataindicatethat,onaverage,BlackAmericansandHispanicAmericanshavehouseholdincomesthatarelessthantwo‐thirdsthoseofnon‐Hispanicwhites.62,63Womenhavealsofacedconsistentwageandincomegapsrelativetomen.Nationally,themedianhourlywageofwomenisstillonly82percentthemedianhourlywageofmen.64Suchdisparitiesmakeitdifficultforminoritiesandwomentouseemploymentwagesasasourceofbusinesscapital.
BBCobservedwagegapsinVirginiaBeachconsistentwiththosethatresearchershaveobservednationally.Figure3‐5presentsmeanannualwagesforVirginiaBeachworkersbyrace/ethnicity
Virginia Beach
Race/ethnicity
Black American 2.8 % ** 8.3 % 2.4 % 5.8 % **
Asian American 6.6 3.3 7.9 12.7
Hispanic American 4.5 ** 2.9 0.0 7.0
Native American 10.7 † 0.0 † 39.3 † 7.4
Other Race Minority 0.0 † 0.0 † 0.0 † 0.0 †
Non‐Hispanic white 11.8 5.5 4.8 8.7
Gender
Women 14.6 % * 2.4 % ** 4.1 % 8.2 %
Men 8.5 7.0 3.7 7.8
All individuals 9.1 % 5.5 % 4.0 % 7.9 %
Construction
Architecture &
Engineering Professional Services
Goods &
Services
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andgender.AsshowninFigure3‐5,BlackAmericans,AsianAmericans,HispanicAmericans,NativeAmericans,andotherraceminoritiesinVirginiaBeachearnsubstantiallylessthannon‐Hispanicwhites.Inaddition,womenworkersearnsubstantiallylessthanmen.BBCalsoconductedregressionanalysestoassesswhetherwagedisparitiesexistevenafteraccountingforvariousrace‐andgender‐neutralfactorssuchasage,education,andfamilystatus.ThoseanalysesindicatedthatbeingBlackAmerican,AsianAmerican,HispanicAmerican,otherraceminority,orawomanwasassociatedwithsubstantiallylowerearningsthanbeingnon‐Hispanicwhiteoraman,evenafteraccountingforvariousrace‐andgender‐neutralfactors(fordetails,seeFigureC‐9inAppendixC).
Figure 3‐5. Mean annual wages, Virginia Beach, 2012‐2016
Note:
The sample universe is all non‐institutionalized, employed individuals aged 25‐64 that are not in school, the military, or self‐employed.
** Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level for Virginia Beach.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Personal wealth.Anotherpotentiallyimportantsourceofbusinesscapitalispersonalwealth.Aswithwagesandincome,therearesubstantialdisparitiesbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenintermsofpersonalwealth.65,66Forexample,in2010,BlackAmericansandHispanicAmericansacrossthecountryexhibitedaveragehouseholdnetworththatwas5percentand1percentthatofnon‐Hispanicwhites,respectively.InVirginia,approximatelyone‐out‐of‐fiveBlackAmericansandone‐out‐of‐tenHispanicAmericansarelivinginpoverty.IntheUnitedStates,approximatelyone‐out‐of‐fiveBlackAmericansandHispanicAmericansarelivinginpoverty,aboutdoublethecomparableratefornon‐Hispanicwhites.67Wealthinequalitiesalsoexistforwomenrelativetomen.Forexample,themedianwealthofnon‐marriedwomennationallyisapproximatelyone‐thirdthatofnon‐marriedmen.68
Homeownership.Homeownershipandhomeequityhavebeenshowntobekeysourcesofbusinesscapital.69,70However,minoritiesappeartofacesubstantialbarriersnationwideinowninghomes.Forexample,BlackAmericansandHispanicAmericansownhomesatlessthantwo‐thirdstherateofnon‐Hispanicwhites.71Discriminationisatleastpartlytoblameforthosedisparities.Researchindicatesthatminoritiescontinuetobegivenlessinformationonprospectivehomesandhavetheirpurchaseoffersrejectedbecauseoftheirrace.72,73Minoritieswhoownhomestendtoownhomesthatareworthsubstantiallylessthanthoseofnon‐Hispanicwhitesandalsotendtoaccruesubstantiallylessequity.74,75Differencesinhomevaluesandequitybetweenminoritiesandnon‐Hispanicwhitescanbeattributed—atleast,inpart—tothedepressedpropertyvaluesthattendtoexistinracially‐segregatedneighborhoods.76,77
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MinoritiesappeartofacehomeownershipbarriersinVirginiaBeachthataresimilartothoseobservednationally.BBCexaminedhomeownershipratesinVirginiaBeachforrelevantracial/ethnicgroups.AsshowninFigure3‐6,BlackAmericans,HispanicAmericans,andNativeAmericansinVirginiaBeachexhibithomeownershipratesthatarelowerthanthatofnon‐Hispanicwhites.
Figure 3‐6. Home Ownership Rates, Virginia Beach, 2012‐2016
Note:
The sample universe is all households.
** Denotes statistically significant differences from non‐Hispanic whites at the 95% confidence level for Virginia Beach.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Figure3‐7presentsmedianhomevaluesamonghomeownersofdifferentracial/ethnicgroupsinVirginiaBeach.Consistentwithnationaltrends,homeownersofcertainminoritygroups—BlackAmerican,HispanicAmerican,NativeAmerican,andotherminorities—ownhomesthat,onaverage,areworthlessthanthoseofnon‐Hispanicwhites.
Figure 3‐7. Median home values, Virginia Beach, 2012‐2016
Note:
The sample universe is all owner‐occupied housing units.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
Access to financing. Minoritiesandwomenfacemanybarriersintryingtoaccesscreditandfinancing,bothforhomepurchasesandforbusinesscapital.Researchershaveoftenattributedthosebarrierstovariousformsofrace‐andgender‐baseddiscriminationthatexistincreditmarkets.78,79,80,81,82,83Thestudyteamsummarizesresultsrelatedtodifficultiesthatminorities;women;andminority‐andwoman‐ownedbusinessesfaceinhomecreditandbusinesscreditmarkets.
Home credit.Minoritiesandwomencontinuetofacebarrierswhentryingtoaccesscredittopurchasehomes.Examplesofsuchbarriersincludediscriminatorytreatmentofminoritiesandwomenduringthepre‐applicationphaseanddisproportionatetargetingofminorityandwomenborrowersforsubprimehomeloans.84,85,86,87,88Race‐andgender‐basedbarriersinhomecreditmarkets,aswellastheforeclosurecrisis,haveledtodecreasesinhomeownershipamongminoritiesandwomenandhaveerodedtheirlevelsofpersonalwealth.89,90,91,92Toexaminehow
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minoritiesfareinthehomecreditmarketrelativetonon‐Hispanicwhites,thestudyteamanalyzedhomeloandenialratesforhigh‐incomehouseholdsbyrace/ethnicity.ThestudyteamanalyzedthosedataforVirginiaBeachandtheUnitedStatesasawhole.AsshowninFigure3‐8,in2016,BlackAmericans;AsianAmericans,HispanicAmericans;andNativeAmericansorOtherPacificIslandersinVirginiaBeachweredeniedhomeloansathigherratesthannon‐Hispanicwhites.Inaddition,thestudyteam’sanalysesindicatethatcertainminoritygroupsinVirginiaBeacharemorelikelythannon‐Hispanicwhitestoreceivesubprimemortgages(fordetails,seeFigureC‐14inAppendixC).
Figure 3‐8. Denial rates of conventional purchase loans for high‐income households, Virginia Beach and the United States, 2007 and 2016
Note:
High‐income borrowers are those households with 120% or more of the HUD area median family income (MFI).
Native Americans are combined with Pacific Islanders due to small sample size.
Source:
FFIEC HMDA data 2007 and 2016. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.
Business credit.Minority‐andwoman‐ownedbusinessesfacesubstantialdifficultiesaccessingbusinesscredit.Forexample,duringloanpre‐applicationmeetings,minority‐ownedbusinessesaregivenlessinformationaboutloanproducts,aresubjectedtomorecreditinformationrequests,andareofferedlesssupportthantheirnon‐Hispanicwhitecounterparts.93ResearchershaveshownthatBlackAmerican‐ownedbusinessesandHispanicAmerican‐ownedbusinessesaremorelikelytoforegosubmittingbusinessloanapplicationsandaremorelikelytobedeniedbusinesscreditwhentheydoseekloans,evenafteraccountingforvariousrace‐andgender‐neutralfactors.94,95,96Inaddition,womenarelesslikelytoapplyforcreditandreceiveloansoflessvaluewhentheydo.97,98Withoutequalaccesstobusinesscapital,minority‐andwoman‐ownedbusinessesmustoperatewithlesscapitalthanbusinessesownedbynon‐Hispanicwhitemenandrelymoreonpersonalfinances.99,100,101,102
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C. Business Ownership
Nationally,therehasbeensubstantialgrowthinthenumberofminority‐andwoman‐ownedbusinessesinrecentyears.Forexample,from2007to2012,thenumberofwoman‐ownedbusinessesincreasedby27percent,BlackAmerican‐ownedbusinessesincreasedby35percent,andHispanicAmerican‐ownedbusinessesincreasedby46percent.103Despitetheprogressthatminoritiesandwomenhavemadewithregardtobusinessownership,importantbarriersinstartingandoperatingbusinessesremain.BlackAmericans,HispanicAmericans,andwomenarestilllesslikelytostartbusinessesthannon‐Hispanicwhitemen.104,105,106,107Inaddition,althoughratesofbusinessownershiphaveincreasedamongminoritiesandwomen,theyhavebeenunabletopenetrateallindustriesevenly.Minoritiesandwomendisproportionatelyownbusinessesinindustriesthatrequirelesshumanandfinancialcapitaltobesuccessfulandthatalreadyincludelargeconcentrationsofindividualsfromdisadvantagedgroups.108,109,110
ThestudyteamexaminedratesofbusinessownershipintheVirginiaBeachconstruction;architectureandengineering;professionalservices;andgoodsandservicesindustriesbyrace/ethnicityandgender.AsshowninFigure3‐9,BlackAmericansexhibitlowerratesofbusinessownershipthannon‐Hispanicwhitesacrossallindustries.HispanicAmericansinthearchitectureandengineeringindustryexhibitedlowerratesofbusinessownershipthannon‐HispanicwhiteAmericans.Inaddition,womenworkingintheprofessionalservicesindustryintheVirginiaBeachmarketplacealsoexhibitedlowerratesofbusinessownershipthanmen.
Figure 3‐9. Self‐employment rates in study‐related industries, Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 95% confidence level.
† Denotes that significant differences in proportions were not reported due to small sample size.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
BBCalsoconductedregressionanalysestodeterminewhetherdifferencesinbusinessownershipratesbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenexistevenafterstatisticallycontrollingforvariousrace‐andgender‐neutralfactorssuchasincome,education,andfamilialstatus.Thestudyteamconductedthoseanalysesseparatelyfor
Virginia Beach
Race/ethnicity
Black American 14.3 % ** 2.8 % ** 6.4 % ** 4.9 % **
Asian American 17.0 13.2 13.5 10.3
Hispanic American 19.6 2.9 ** 10.8 5.3
Native American 43.4 † 0.0 † 0.0 † 1.5
Other Race Minority 0.0 † 0.0 † 0.0 † 24.7 †
Non‐Hispanic white 25.2 12.4 13.7 8.0
Gender
Women 17.8 % 12.7 % 8.5 % ** 6.4 %
Men 22.9 9.7 14.8 7.4
All individuals 22.3 % 10.7 % 10.4 % 7.0 %
Architecture &
Engineering Professional Services
Goods &
ServicesConstruction
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 3, PAGE 11
eachrelevantindustry.Figure3‐10presentstherace/ethnicityandgenderfactorsthatweresignificantlyandindependentlyrelatedtobusinessownershipforeachrelevantindustry.AsshowninFigure3‐10,evenafteraccountingforrace‐andgender‐neutralfactors,beingawomanandbeingBlackAmericanwereassociatedwithlowerratesofbusinessownershipintheVirginiaBeachconstructionindustry.Thus,disparitiesinbusinessownershipratesbetweenwomenandmenarenotcompletelyexplainedbydifferencesingender‐neutralfactorssuchasincome,education,andfamilialstatus.
Figure 3‐10. Predictors of business ownership in construction (probit regression), Virginia Beach, 2012‐2016
Note:
*,** Denote statistical significance at the 90% and 95% confidence levels, respectively.
Other race minority omitted from the regression due to small sample size.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa.
D. Business Success
Thereisagreatdealofresearchindicatingthat,nationally,minority‐andwoman‐ownedbusinessesfareworsethanbusinessesownedbynon‐Hispanicwhitemen.Forexample,BlackAmericans,NativeAmericans,HispanicAmericans,andwomenexhibithigherratesofmovingfrombusinessownershiptounemploymentthannon‐Hispanicwhitesandmen.Inaddition,minority‐andwoman‐ownedbusinesseshavebeenshowntobelesssuccessfulthanbusinessesownedbynon‐Hispanicwhitesandmenusinganumberofdifferentindicatorssuchasprofits,closurerates,andbusinesssize(butalsoseeRobbandWatson2012).111,112,113Thestudyteamexamineddataonbusinessclosure,businessreceipts,andbusinessownerearningstofurtherexplorethesuccessofminority‐andwoman‐ownedbusinessesinVirginia.
Business closure. ThestudyteamexaminedtheratesofclosureamongVirginiabusinessesbytherace/ethnicityandgenderoftheowners.Figure3‐11presentsthoseresults.AsshowninFigure3‐11,BlackAmerican‐,AsianAmerican‐,andHispanicAmerican‐ownedbusinessesinVirginiaappeartocloseathigherratesthannon‐Hispanicwhite‐ownedbusinesses.Inaddition,
Variable
Constant ‐1.3672 *
Age 0.0002
Age‐squared 0.0002
Married 0.0852
Disabled 0.0874
Number of children in household ‐0.0341
Number of people over 65 in household ‐0.1195
Owns home 0.1821
Home value ($000s) 0.0001
Monthly mortgage payment ($000s) 0.0314
Interest and dividend income ($000s) 0.0046
Income of spouse or partner ($0000s) ‐0.0002
Speaks English well 0.1183
Less than high school education ‐0.0360
Some college ‐0.0856
Four‐year degree ‐0.4149 **
Advanced degree ‐0.3952
Black American ‐0.3077 **
Asian American ‐0.1464
Hispanic American 0.1035
Native American 0.4897
Women ‐0.3270 **
Coefficient
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 3, PAGE 12
woman‐ownedbusinessesinVirginiaappeartocloseathigherratesthanbusinessesownedbymen.Increasedratesofbusinessclosureamongminority‐andwoman‐ownedbusinessesmayhaveimportanteffectsontheiravailabilityforgovernmentcontractsinVirginiaandintheCityofVirginiaBeach.
Figure 3‐11. Rates of business closure in Virginia, 2002‐2006
Note:
Data include only to non‐publicly held businesses.
Equal Gender Ownership refers to those businesses for which ownership is split evenly between women and men.
Statistical significance of these results cannot be determined, because sample sizes were not reported.
Source:
Lowrey, Ying. 2010. “Race/Ethnicity and Establishment Dynamics, 2002‐2006.” U.S. Small Business Administration Office of Advocacy. Washington D.C.
Lowrey, Ying. 2014. "Gender and Establishment Dynamics, 2002‐2006." U.S. Small Business Administration Office of Advocacy. Washington D.C.
Business receipts. BBCalsoexamineddataonbusinessreceiptstoassesswhetherminority‐andwoman‐ownedbusinessesinVirginiaBeachearnasmuchasbusinessesownedbywhitesorbusinessownedbymen,respectively.Figure3‐12showsmeanannualreceiptsforbusinessesintheVirginiaBeach‐Norfolk‐NewportNewsMetropolitanAreabytherace/ethnicityandgenderofowners.Thoseresultsindicatethat,in2012,allrelevantminoritygroupsinVirginiaBeachshowedlowermeanannualbusinessreceiptsthanbusinessesownedbywhites.Inaddition,woman‐ownedbusinessesinVirginiaBeachshowedlowermeanannualbusinessreceiptsthanbusinessesownedbymen.
Figure 3‐12. Mean annual business receipts (in thousands), Virginia Beach‐Norfolk‐Newport News, VA‐NC Metro Area, 2012
Note:
Includes employer and non‐employer firms. Does not include publicly‐traded companies or other firms not classifiable by race/ethnicity and gender.
Source:
2012 Survey of Business Owners, part of the U.S. Census Bureau’s 2012 Economic Census.
Business owner earnings.ThestudyteamanalyzedbusinessownerearningstoassesswhetherminoritiesandwomeninVirginiaBeachearnasmuchfromthebusinessesthattheyownasnon‐Hispanicwhitesandmendo.AsshowninFigure3‐13,BlackAmericansandHispanicAmericansearnedlessonaveragefromtheirbusinessesthannon‐Hispanicwhites
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 3, PAGE 13
earnedfromtheirbusinesses.Inaddition,womeninVirginiaBeachearnedlessfromtheirbusinessesthanmenearnedfromtheirbusinesses.BBCalsoconductedregressionanalysestodeterminewhetherearningsdisparitiesinVirginiaBeachexistevenafterstatisticallycontrollingforvariousrace‐andgender‐neutralfactorssuchasage,education,andfamilystatus.Theresultsofthoseanalysesindicatedthat,comparedtobeingaman,beingawomaninVirginiaBeachwasassociatedwithsubstantiallylowerbusinessownerearnings(fordetails,seeFigureC‐27inAppendixC).
Figure 3‐13. Mean annual business owner earnings, Virginia Beach, 2012‐2016
Note:
The sample universe is business owners age 16 and older who reported positive earnings. All amounts in 2016 dollars.
** Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level.
† Denotes that significant differences in proportions were not reported due to small sample size.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
E. Summary
BBC’sanalysesofmarketplaceconditionsindicatethatminorities,women,minority‐ownedbusinesses,andwoman‐ownedbusinessesfacesubstantialbarriersinVirginiaBeach.Existingresearch,aswellasprimaryresearchthatthestudyteamconducted,indicatethatrace‐andgender‐baseddisparitiesexistintermsofacquiringhumancapital,accruingfinancialcapital,owningbusinesses,andoperatingsuccessfulbusinesses.Inmanycases,thereisevidencethatthosedisparitiesexistevenafteraccountingforvariousrace‐andgender‐neutralfactorssuchasage,income,education,andfamilialstatus.Thereisalsoevidencethatmanydisparitiesaredue—atleast,inpart—torace‐andgender‐baseddiscrimination.
BarriersinthemarketplacelikelyhaveimportanteffectsontheabilityofminoritiesandwomentostartbusinessesinrelevantVirginiaBeachindustries—construction;architectureandengineering;professionalservices;andgoodsandservices—andoperatingthosebusinessessuccessfully.Anydifficultiesthatminoritiesandwomenfaceinstartingandoperatingbusinessesmayreducetheiravailabilityforgovernmentworkandmayalsoreducethedegreetowhichtheyareabletosuccessfullycompeteforgovernmentcontracts.Inaddition,theexistenceofbarriersintheVirginiaBeachmarketplaceindicatesthatgovernmentagenciesinthestatearepassivelyparticipatinginrace‐andgender‐baseddiscriminationthatmakesitmoredifficultforminority‐andwoman‐ownedbusinessestosuccessfullycompetefortheircontracts.TheCityofVirginiaBeachisnotuniquelyfacedwithpassiveparticipation.Othergovernmentagenciesthroughoutthemarketplacearelikelyaffectedbytheirpassiveparticipationinrace‐andgender‐baseddiscriminationaswell.Manycourtshaveheldthatpassiveparticipationinany
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 3, PAGE 14
race‐orgender‐baseddiscriminationestablishesacompellinggovernmentalinterestforagenciestotakeremedialactiontoaddresssuchdiscrimination.
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112Coleman,SusanandAliciaRobb.2009.“AComparisonofNewFirmFinancingbyGender:EvidencefromtheKauffmanFirmSurveyData.”SmallBusinessEconomics33(4):397–411.
113Robb,AliciaM.andJohnWatson.2012.“GenderDifferencesinFirmPerformance:EvidencefromNewVenturesintheUnitedStates.”JournalofBusinessVenturing27(5):544–58.
CHAPTER 4.
Collection and Analysis of Contract Data
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CHAPTER 4. Collection and Analysis of Contract Data
Chapter4providesanoverviewofthepoliciesthattheCityofVirginiaBeach(theCity)usestoawardcontractsandprocurements;thecontractsandprocurementsthatthestudyteamanalyzedaspartofthedisparitystudy;andtheprocessthatthestudyteamusedtocollectrelevantprimecontract,procurement,andsubcontractdataforthedisparitystudy.Chapter4isorganizedintosixparts:
A. Overviewofcontractingandprocurementpolicies;
B. Collectionandanalysisofcontractandprocurementdata;
C. Collectionofvendordata;
D. Relevantgeographicmarketarea;
E. Relevanttypesofwork;and
F. Agencyreviewprocess.
A. Overview of Contracting and Procurement Policies
TheCity’sPurchasingDivisionprovidesguidancetoalldepartmentstoensureconsistencyinprocurementproceduresandcompliancewiththeVirginiaPublicProcurementAct(VPPA)andtheVirginiaBeachPurchasingOrdinance.TheCityhasdevelopeddetailedguidelinesfortheprocurementofconstruction,design,goods,services,andtechnology.WithintheFinanceDepartment,thePurchasingDivisionisresponsibleforthepurchaseorleaseofallgoods,supplies,andservicesfortheCity.AcentralizedPurchasingAgent—whosedutiesandauthorityaregrantedbyCityCouncil—overseesallCitypurchasesandcontracts.ThePurchasingAgentisalsoresponsibleforestablishingandmaintainingprocurementpoliciesandproceduresandensuringcompliancewiththosepolicies.
Purchase limits.TheCityimplementsvariouspurchasingmethodsdependingontheestimatedcostofthepurchase;therequiredgoodorservices;theneedsoftheusingagency;andthelevelofcompetitioninthemarket.Ingeneral,theCity’spurchasingprocedurescanbecategorizedintooneofthreetypes:smallpurchases,competitivesealedbidding,andcompetitivenegotiations.MostCitypurchasesareprocuredusingoneofthosethreeprocesses.
Small purchases.TheCityfollowssmallpurchaseproceduresforallprocurementsworth$100,000orless.Purchasingrequirementsforsmallpurchasesdifferdependingonthesizeofthepurchase.
Purchasesworth$5,000orless.TheCity’sPurchasingAgenthasdelegatedallCityagenciestheauthoritytopurchasegoodsandservicesworth$5,000orless.AgenciesarerequiredtofollowtheCity’sPurchasingManualandareencouragedtosolicitminority‐andwoman‐ownedbusinessesforsuchprocurementopportunities
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Purchasesworthbetween$5,001and$30,000.TheCityisrequiredtosolicitaminimumoffourverbalorwrittenquotationsforpurchasesworthmorethan$5,000butlessthan$30,000.Atleasttwoofthequotationsmustbefromsmall,minority‐,orwoman‐ownedbusinesses,andatleastonequotationmustbefromaminority‐orwoman‐ownedbusiness,ifavailable.
Purchasesbetween$30,001and$100,000.TheCityisrequiredtosolicitaminimumoffivebusinessesforverbalorwrittenquotationsforpurchasesworthatleast$30,001butlessthan$100,000.Atleastthreeofthequotationsmustbefromsmall,minority‐,orwoman‐ownedbusinesses,andatleasttwoquotationsmustbefromminority‐orwoman‐ownedbusinesses,ifavailable.
Competitive sealed bidding.TheCityfollowscompetitivesealedbiddingprocedurestoprocuregoodsandservicesforwhichdetailedspecificationsarepossible,includingsomeconstructionservices,supportservices,andgoodsworth$100,000ormore.AsrequiredbyVPPA§2.2‐4303,thePurchasingDivisiondraftsandadvertisesallinvitationsforbids(IFB)forallcompetitivelybidprocurements.IFBsmustprovideadetaileddescriptionoftherequiredscopeofworkandmustbepostedintheCity’sPurchasingDivisionofficeatleast10calendardayspriortothebidclosingdate.IFBsmayalsobepublishedinanewspaperofgeneralcirculation.TheCityisrequiredtonotifyminority‐andwoman‐ownedbusinessesaboutIFBsandcollectatleastthreebidsfromsuchbusinesses.Bidsremainsealeduntilthebidopeningday,whentheyareopenedandreadaloudpublicly.
Onceopened,competitivebidsareevaluatedbyboththeusingCityagencyandpurchasingstaff.Theprocurementisthenawardedtothelowestresponsiveandresponsiblebidder.AllpurchasesawardedusingcompetitivesealedbiddingproceduremustbeapprovedbytheCity’sPurchasingAgent.
Competitive negotiations.TheCityfollowscompetitivenegotiationsprocedures—whichrequirearequestforproposals(RFP)process—toawardprofessionalservicescontractsworthmorethan$60,000andnonprofessionalservicescontractsworth$100,000ormore.RFPproceduresallowforbestvaluepurchases.Undercompetitivenegotiationsprocedures,thesolicitationmustbeadvertisedinanewspaperandthenamesofthesubmittingofferorsarereadaloudduringapublicproposalopening.Afterpublicopeningoftheofferors’names,anevaluationcommitteescoreseachproposalbeforeenteringintonegotiationswithashort‐listofofferors.Uponcompletionofnegotiations,theevaluationcommitteeselectsthesuccessfulofferorbeforeforwardingitalongtotheCity’sPurchasingAgentforapproval.
Professionalservicescontractsworthlessthan$60,000canbeawardedbytheusingCityagencyafterbeingpre‐approvedbythePurchasingDivision.Theusingagencyisrequiredtocontactaminimumoffivequalifiedfirmstorequestwrittenproposals.Atleastoneofthosefirmsmustbeaminority‐ownedbusinessorwoman‐ownedbusiness.
Information technology and software.AlltechnologypurchasesmustbereviewedandapprovedbyCommunicationsandInformationTechnology(ComIT)priortoanyprocurementaction,regardlessofthefundingsourceorusingCityagency.Hardwareandsoftwarepurchasesworthlessthan$5,000mustbesubmittedtoComITforapproval.Onceapproved,theusingagencycanprocessthepurchaseorderdirectlywiththevendor.Technologypurchaseworth
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 3
$5,000ormoremustbeprocessedthroughComITforreviewandapprovalandthensubmittedtoPurchasingforprocurement.
Special procurements. TheCitycanusespecialoremergencypurchasingmethodsforcertaingoodsandtechnologypurchasesinsituationsprovidedunderVPPA.1Suchmethodscanbeusediftheprocurementmeetsoneofthefollowingcriteria:
Government‐to‐governmentpurchases;
Emergencypurchases;
Publishingandadvertising;
Licensingfeesandmembershipdues;
Legalservicesandexperttestimony;
Testing,evaluation,andtrainingservices;
Utilities;
Clientspecifichumanservices;
Solesource;or
AnotherexceptionspecifiedunderVPPA.
AnyCitydepartmentusingspecialoremergencypurchasingmethodsmustprovidewrittenjustificationtothePurchasingDivisionexplainingwhyaspecialprocurementmethodisnecessary.
B. Collection and Analysis of Contract Data and Procurement Data
BBCResearch&Consulting(BBC)collectedcontractingandvendordatafromtheCity’scentralizedInSitedatasystemtoserveasthebasisofkeydisparitystudyanalyses,includingtheutilization,availability,anddisparityanalyses.ThestudyteamcollectedthemostcomprehensivedatathatwasavailableonprimecontractsandsubcontractsthattheCityawardedbetweenJuly1,2012andJune30,2017.BBCsoughtdatathatincludedinformationaboutprimecontractorsandsubcontractorsregardlessoftherace/ethnicityandgenderoftheirownersortheirstatusesascertifiedSmall,Women‐Owned,andMinority‐owned(SWaM)businesses.Thestudyteamcollecteddataonconstruction;architectureandengineering,otherprofessionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteam’sanalysesincludedcontractsandpaymentsworth$1,000ormore.2
Prime contract data collection.TheCityprovidedthestudyteamwithelectronicdataonconstruction;architectureandengineering,otherprofessionalservices;andgoodsandservices
1VPPA2.2‐4303
2Thestudyteamchose$1,000asitsanalysisthresholdbecausemanypaymentsunder$1,000representedrefundsorotherpaymentstoindividualsandrepresentedarelativelysmallamountofthepaymentdollarsduringthestudyperiod.Paymentsof$1,000ormoreaccountedformorethan99percentofallCitypaymentdollarsduringthestudyperiod.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 4
primecontractsthattheagencyawardedduringthestudyperiod.TheCitymaintainsthosedataintheInSitedatasystemaswellasthroughtheOfficeofMinorityBusinessCoordinator.Asavailable,BBCcollectedthefollowinginformationabouteachrelevantprimecontract:
Contractorpurchaseordernumber;
Descriptionofwork;
Awarddate;
Awardamount(includingchangeordersandamendments);
Amountpaid‐to‐date;
WhetherSWaMgoalswereused;
Fundingsource(federal,state,orlocalfunding);
Primecontractorname;and
Primecontractoridentificationnumber.
TheCityalsoprovidedthestudyteamwithinformationaboutallpaymentsthattheCitymadeduringthestudyperiod.TheCityadvisedthestudyteamonhowtointerprettheprovideddata,includinghowtoidentifyuniquebidopportunitiesandhowtoaggregaterelatedpaymentamounts.Whenpossible,thestudyteamaggregatedindividualpaymentsintocontractorpurchaseorderelements.Ininstanceswherepaymentinformationcouldnotbeaggregated,thestudyteamtreatedpaymentrecordsasindividualcontractelements.
Subcontract data collection.InordertogathercomprehensivesubcontractdataaboutrelevantCitycontracts,thestudyteamconductedsurveyswithprimecontractorstocollectinformationonthesubcontractsthatwereassociatedwiththecontractsonwhichtheyworkedduringthestudyperiod.BBCcollectedsubcontractinformationaboutconstruction;architectureandengineering;parkingservices;andjanitorialcontracts.BBCsentoutsurveystorequestsubcontractdataabout533primecontractsthattheCityawardedduringthestudyperiod.Afterthefirstroundofsurveys,BBCsentreminderletterstounresponsiveprimecontractors.BBCthenworkedwiththeCitytocontactremainingunresponsiveprimecontractorswiththehighestvaluedcontracts.BBCcollectedthefollowinginformationabouteachrelevantsubcontractaspartofthesurveyprocess:
Associatedprimecontractnumber;
AmountpaidonthesubcontractasofJune30,2017;
Descriptionofwork;
Subcontractorname;and
Subcontractorcontactinformation.
Those533contractsaccountedforapproximately$674millionworthofpaymentsduringthestudyperiod.Throughthesurveyeffort,BBCcollectedsubcontractdataassociatedwithmorethan$385million,or56percent,ofthosecontractpayments.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 5
Contracts included in study analyses. Thestudyteamcollectedinformationon24,701relevantprimecontractelementsand1,621associatedsubcontractsthattheCityawardedduringthestudyperiodintheareasofconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservices,accountingforapproximately$1.2billionofCityspend.Figure4‐1presentsdollarsbyrelevantcontractingareafortheprimecontractsandsubcontractsthatthestudyteamincludedinitsanalyses.
Figure 4‐1. Number of City contracts included in the study
Note:
Numbers rounded to nearest dollar and thus may not sum exactly to totals.
Source:
BBC Research & Consulting from City contract and payment data.
Prime contract and subcontract amounts.Foreachcontractelementincludedinthestudyteam’sanalyses,BBCexaminedthedollarsthattheCityawardedorpaidtoeachprimecontractorduringthestudyperiodandthedollarsthattheprimecontractorpaidtoanysubcontractors.
Ifacontractdidnotincludeanysubcontracts,thestudyteamattributedtheentireamountawardedorpaidduringthestudyperiodtotheprimecontractor.
Ifacontractincludedsubcontracts,thestudyteamcalculatedsubcontractamountsasthetotalamountpaidtoeachsubcontractorduringthestudyperiod.BBCthencalculatedtheprimecontractamountasthetotalamountpaidduringthestudyperiodlessthesumofdollarspaidtoallsubcontractors.
C. Collection of Vendor Data
TheCitymaintainsalistofallbusinessesthathavedonebusinessorexpressedinterestindoingbusinesswiththeCity.InordertobeawardedacontractorreceivepaymentbytheCity,vendorsmustregisterwiththeCity’scentralvendorregistrationsystem.VendorsinterestedinworkingwiththeCitymayalsoregistertoreceivenotificationsaboutcontractingopportunities.RegisteringwiththeCityisfreeofchargebutrequiresthatvendorssubmitabidder’sapplicationandprovidetheircontactinformationaswellasinformationabouttheircompanies’characteristics.Thestudyteamcollectedvendorinformationfromthoselistsaswellasthroughnationalbusinesslistings,certificationlists,telephonesurveys,andothersources.ThestudyteamcompiledthefollowinginformationonbusinessesthatparticipatedinrelevantCitycontractsduringthestudyperiod:
Businessname;
Physicaladdressesandphonenumbers;
Ownershipstatus(i.e.,whethereachbusinesswasminority‐owned,woman‐owned,veteran‐owned,orservicedisabled‐veteranowned);
Ethnicityofownership(ifminority‐owned);
Contract Type
Dollars
(in thousands)
Construction 3,445 $525,979
Architecture and engineering 1,377 153,581
Other professional services 5,725 196,174
Good and services 15,775 300,725
Total 26,322 $1,176,459
Number of
Contract Elements
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 6
SWaMcertificationstatus;
Primarylinesofwork;
Businesssize;and
Yearofestablishment.
BBCreliedonavarietyofsourcesforthatinformation,including:
Citycontractandvendordata;
Cityvendorregistrationlist;
VirginiaDepartmentofSmallBusinessSupplierDiversitycertificationdirectory;
SmallBusinessAdministrationcertificationandownershiplists,including8(a)HUBZoneandself‐certificationlists;
Dun&Bradstreet(D&B)businesslistingsandotherbusinessinformationsources;
Telephonesurveysthatthestudyteamconductedwithbusinessownersandmanagersaspartoftheutilizationandavailabilityanalyses;and
Businesswebsites.
BBCcollectedallvendorinformationin2017and2018.
D. Relevant Geographic Market Area
ThestudyteamusedtheCity’scontractingandvendordatatohelpdeterminetherelevantgeographicmarketarea—thegeographicalareainwhichtheagencyspendsthesubstantialmajorityofitscontractingdollars—forthestudy.Thestudyteam’sanalysisshowedthat76percentofrelevantcontractingdollarsduringthestudyperiodwenttobusinesseswithlocationsinthecitiesofVirginiaBeach,Chesapeake,Portsmouth,andNorfolk,indicatingthatthosecitiesshouldbeconsideredtherelevantgeographicmarketareaforthestudy.BBC’sanalyses—includingtheavailabilityanalysisandquantitativeanalysesofmarketplaceconditions—focusedonthosefourcities.
E. Relevant Types of Work
Foreachprimecontractandsubcontractelement,thestudyteamdeterminedthesubindustrythatbestcharacterizedthebusiness’sprimarylineofwork(e.g.,heavyconstruction).BBCidentifiedsubindustriesbasedonCitycontractdata;telephonesurveysthatBBCconductedwithprimecontractorsandsubcontractors;businesscertificationlists;D&Bbusinesslistings;andothersources.BBCdevelopedsubindustriesbasedinparton8‐digitD&Bindustryclassificationcodes.Figure4‐2presentsthedollarsthatthestudyteamexaminedinthevariousconstruction;architectureandengineering,otherprofessionalservices;andgoodsandservicessubindustriesthatBBCincludedinitsanalyses.
Thestudyteamcombinedrelatedsubindustriesthataccountedforrelativelysmallpercentagesoftotalcontractingdollarsintofour“other”subindustries—“otherconstructionservices,”“otherconstructionmaterials,”“othergoods,”and“otherservices.”Forexample,thecontractingdollars
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 7
thattheCityawardedtocontractorsfor“roofing,siding,andflooring”representedlessthan1percentoftotalCitydollarsthatBBCexaminedinthestudy.BBCcombined“roofing,siding,andflooring”withotherconstructionservicessubindustriesthatalsoaccountedforrelativelysmallpercentagesoftotaldollarsandthatwererelativelydissimilartoothersubindustriesintothe“otherconstructionservices”subindustry.
TherewerealsocontractsthatwerecategorizedinvarioussubindustriesthatBBCdidnotincludeaspartofitsanalyses,becausetheyarenottypicallyanalyzedaspartofdisparitystudies.BBCdidnotincludecontractsinitsanalysesthat:
TheCityawardedtouniversities,governmentagencies,utilityproviders,hospitals,orothernonprofitorganizations($152millionofassociatedcontractdollars);
Wereclassifiedinsubindustriesthatreflectednationalmarkets(i.e.,subindustriesthataredominatedbylargenationalorinternationalbusinesses)orwereclassifiedinsubindustriesforwhichtheCityawardedthemajorityofcontractingdollarstobusinesseslocatedoutsideoftherelevantgeographicmarketarea($80millionofassociatedcontractdollars);3
Wereclassifiedinsubindustrieswhichoftenincludepropertypurchases,leases,orotherpass‐throughdollars(e.g.,realestateorlegalservices;$125millionofassociatedcontractdollars);
WereclassifiedinsubindustriesnottypicallyincludedinadisparitystudyandaccountforsmallproportionsofCitycontractingdollars($12millionofassociatedcontractdollars).4
F. Agency Review Process
TheCityreviewedBBC’scontractingandpaymentdataseveraltimesduringthestudyprocess.TheBBCstudyteammetwithCitystafftoreviewthedatacollectionprocess,informationthatthestudyteamgathered,andsummaryresults.BBCincorporatedtheCity’sfeedbackinthefinalcontractandvendordatathatthestudyteamusedaspartofthedisparitystudy.
3Examplesofsuchindustriesincludebanking;insurance;firetrucks;andsoftware.
4Examplesofindustriesnottypicallyincludedinadisparitystudyincludesubscriptionsservices,healthservices,andlodging.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 8
Figure 4‐2. City contract dollars by subindustry
Note:
Numbers rounded to nearest dollar and thus may not sum exactly to totals.
Source:
BBC Research & Consulting from City contract and payment data.
Industry
Total
(in Thousands)
Construction
Heavy construction $133,255
Water, sewer, and utility lines 123,654
Building construction 85,631
Electrical work 40,995
Dam and marine construction 29,049
Excavation 19,123
Other construction services 17,933
Concrete, asphalt, and related products 17,262
Mechanical contracting services 16,601
Concrete work 13,811
Trucking, hauling and storage 9,741
Roofing, siding, and flooring contractors 5,701
Painting and weatherproofing 3,924
Structural metals 3,557
Structural steel construction 2,894
Masonry, drywall and stonework 2,450
Elevators, conveyors, and moving walkways 399
Total construction $525,979
Architecture and engineering
Engineering $113,262
Environmental and planning services 13,286
Architectural and design services 11,069
Surveying and mapmaking 9,589
Construction management 6,375
Total architecture and engineering $153,581
Other professional services
IT and data services $88,060
Human resources and job training services 62,165
Business and market research services 29,625
Health and medical services 9,940
Advertising, marketing and public relations 4,006
Finance and accounting 1,626
Educational services 624
Scientific and medical research 92
Testing services 36
Total other professional services $196,174
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 4, PAGE 9
Figure 4‐2 (continued). City contract dollars by subindustry
Note:
Numbers rounded to nearest dollar and thus may not sum exactly to totals.
Source:
BBC Research & Consulting from City contract and payment data.
Industry
Total
(in Thousands)
Goods and services
Automobiles $30,096
Other goods 29,196
Other services 28,404
Communications equipment 20,102
Engineering equipment and precision instruments 19,500
Event coordination and promotion 18,163
Industrial equipment and machinery 16,913
Plumbing and HVAC supplies 15,863
Vehicle parts and supplies 13,063
Heavy construction equipment 11,365
Landscape services 9,218
Dining and recreational services 9,213
Printing, copying, and mailing 8,482
Office equipment and supplies 7,342
Computers and peripherals 7,329
Cleaning and janitorial services 6,993
Waste and recycling services 5,912
Electrical equipment and supplies 5,297
Security guard services 4,285
Other construction materials 4,143
Lawn and garden equipment 3,879
Fencing, guardrails and signs 3,684
Parking services 3,332
Traffic signals and street lighting 3,287
Uniforms, apparels, and linen 2,699
Furniture 2,333
Food products, wholesale and retail 1,921
Petroleum and petroleum products 1,856
Doors, windows, and glasswork 1,620
Industrial chemicals 1,439
Equipment maintenance and repair 960
Cleaning and janitorial supplies 876
Security services 598
Lawn and garden supplies 417
Computer systems and services 408
Transit services 395
Vehicle repair 141
Total goods and services $300,725
GRAND TOTAL $1,176,459
CHAPTER 5.
Availability Analysis
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 2
CHAPTER 5. Availability Analysis
BBCResearch&Consulting(BBC)analyzedtheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses(i.e.,businessesownedbyveteranswhohaveadisabilityasaresultoftheirservice)thatareready,willing,andabletoperformonCityofVirginiaBeach(City)construction;architectureandengineering;otherprofessionalservices;andgoodsandservicesprimecontractsandsubcontracts.1Chapter5describestheavailabilityanalysisinfiveparts:
A. Purposeoftheavailabilityanalysis;
B. Potentiallyavailablebusinesses;
C. Availabilitydatabase;
D. Availabilitycalculations;and
E. Availabilityresults.
AppendixEprovidessupportinginformationrelatedtotheavailabilityanalysis.
A. Purpose of the Availability Analysis
BBCexaminedtheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforCityprimecontractsandsubcontractstorefineitsimplementationoftheSmall,Woman,andMinority‐ownedBusiness(SWaM)Programandtouseasinputsinthedisparityanalysis.Inthedisparityanalysis,BBCcomparedthepercentageofCitycontractdollarsthatwenttominority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesduringthestudyperiod(i.e.,participation,orutilization)tothepercentageofdollarsthatonemightexpectthosebusinessestoreceivebasedontheiravailabilityforspecifictypesandsizesofCityprimecontractsandsubcontracts.ThestudyperiodincludedcontractsthattheCityawardedbetweenJuly1,2012andJune30,2017.ComparisonsbetweenparticipationandavailabilityallowedBBCtodeterminewhethercertainbusinessgroupswereunderutilizedduringthestudyperiodrelativetotheiravailabilityforCitywork(fordetails,seeChapter7).
B. Potentially Available Businesses
BBC’savailabilityanalysisfocusedonspecificareasofwork,orsubindustries,relatedtotherelevanttypesofcontractsandprocurementsthattheCityawardedduringthestudyperiod.BBCbegantheavailabilityanalysisbyidentifyingthespecificsubindustriesinwhichtheCityspendsthemajorityofitscontractingdollars(fordetails,seeChapter4)aswellasthe
1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 3
geographicareasinwhichthemajorityofthebusinesseswithwhichtheCityspendsthosecontractingdollarsarelocated(i.e.,therelevantgeographicmarketarea).2
BBCthenconductedextensivesurveystodeveloparepresentative,unbiased,andstatistically‐validdatabaseofpotentiallyavailablebusinesseslocatedintherelevantgeographicmarketareathatperformworkwithinrelevantsubindustries.Thatmethodofexaminingavailabilityisreferredtoasacustomcensusandhasbeenacceptedinfederalcourtasthepreferredmethodologyforconductingavailabilityanalyses.Theobjectiveoftheavailabilitysurveywasnottocollectinformationfromeachandeveryrelevantbusinessthatisoperatinginthelocalmarketplace.Itwastocollectinformationfromanunbiasedsubsetofthebusinesspopulationthatappropriatelyrepresentstheentirebusinesspopulationoperatinginthelocalmarketplace.ThatapproachallowedBBCtoestimatetheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinanaccurate,statistically‐validmanner.
Overview of availability surveys. ThestudyteamconductedtelephonesurveyswithbusinessownersandmanagerstoidentifylocalbusinessesthatarepotentiallyavailableforCityprimecontractsandsubcontracts.3BBCbeganthesurveyprocessbycompilingacomprehensiveandunbiasedphonebookofallbusinesses—regardlessofownership—thatperformworkinrelevantindustriesandhavealocationwithintherelevantgeographicmarketarea.BBCdevelopedthatphonebookbasedoninformationfromavarietyofdatasourcesincludingDun&Bradstreet(D&B)MarketplaceandtheCity’svendorregistrationlist.BBCcollectedinformationaboutallbusinessestablishmentslistedunder8‐digitworkspecializationcodes(asdevelopedbyD&B)thatweremostrelatedtothecontractsthattheCityawardedduringthestudyperiod.BBCobtainedlistingson7,013localbusinessesthatdoworkrelatedtothoseworkspecializations.BBCdidnothaveworkingphonenumbersfor1,145ofthosebusinessesbutattemptedavailabilitysurveyswiththeremaining5,868businessestablishments.
Availability survey information.BBCworkedwithCustomerResearchInternationaltoconducttelephonesurveyswiththeownersormanagersoftheidentifiedbusinessestablishments.Surveyquestionscoveredmanytopicsabouteachbusinessincluding:
Statusasaprivatebusiness(asopposedtoapublicagencyornonprofitorganization);
Statusasasubsidiaryorbranchofanothercompany;
Primarylinesofwork;
InterestinperformingworkfortheCityandothergovernmentagencies;
Interestinperformingworkasaprimecontractororasasubcontractor;
Largestprimecontractorsubcontractbidonorperformedinthepreviousfiveyears;
Race/ethnicityandgenderofownership;and
Service‐disabledveteranstatusofownership.
2BBCidentifiedtherelevantgeographicmarketareaforthedisparitystudyasChesapeakeCity,NorfolkCity,PortsmouthCity,andVirginiaBeachCity.
3Thestudyteamofferedbusinessrepresentativestheoptionofcompletingsurveysviafaxore‐mailiftheypreferrednottocompletesurveysviatelephone.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 2
Potentially available businesses.BBCconsideredbusinessestobepotentiallyavailableforCityprimecontractsorsubcontractsiftheyreportedhavingalocationintherelevantgeographicmarketareaandreportedpossessingallofthefollowingcharacteristics:
Beingaprivatesectorbusiness(asopposedtoagovernmentornonprofitorganization);
HavingperformedworkrelevanttoCityconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractingorprocurement;
Havingbidonorperformedconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesprimecontractsorsubcontractsineitherthepublicorprivatesectorintherelevantgeographicmarketareainthepastfiveyears;and
BeinginterestedinworkfortheCityorothergovernmentagencies.4
BBCalsoconsideredthefollowinginformationaboutbusinessestodetermineiftheywerepotentiallyavailableforspecificprimecontractsandsubcontractsthattheCityawards:
Theroleinwhichtheywork(i.e.,asaprimecontractor,subcontractor,orboth);and
Thelargestcontracttheybidorperformedinthepastfiveyears.
C. Businesses in the Availability Database
Afterconductingavailabilitysurveyswithmorethanonethousandlocalbusinesses,BBCdevelopedadatabaseofinformationaboutbusinessesthatarepotentiallyavailableforCityconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsandprocurements.InformationfromthedatabaseallowedBBCtoassessbusinessesthatareready,willing,andabletoperformworkfortheCity.Figure5‐1presentsthepercentageofbusinessesintheavailabilitydatabasethatwereminority‐,woman,orservice‐disabledveteranowned.Thestudyteam’sanalysisincluded659businessesthatarepotentiallyavailableforspecificconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsandprocurementsthattheCityawards.AsshowninFigure5‐1,ofthosebusinesses,39percentwereminority‐orwoman‐owned,and7percentwereservice‐disabledveteran‐owned.TheinformationinFigure5‐1reflectsasimpleheadcountofbusinesseswithnoanalysisoftheiravailabilityforspecificCitycontracts.Thus,itrepresentsonlyafirststeptowardanalyzingtheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforCitywork.
4Thatinformationwasgatheredseparatelyforprimecontractandsubcontractwork.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 3
Figure 5‐1. Percentage of businesses in the availability database that were minority‐, woman‐, or service‐disabled veteran‐owned
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
Source:
BBC Research & Consulting availability analysis.
D. Availability Calculations
BBCanalyzedinformationfromtheavailabilitydatabasetodevelopdollar‐weightedestimatesoftheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforCitywork.ThoseestimatesrepresentthepercentageofCitycontractingandprocurementdollarsthatminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesseswouldbeexpectedtoreceivebasedontheiravailabilityforspecifictypesandsizesofCityprimecontractsandsubcontracts.
Steps to calculating availability.BBCusedabottomup,contract‐by‐contractmatchingapproachtocalculateavailability.OnlyaportionofthebusinessesintheavailabilitydatabasewasconsideredpotentiallyavailableforanygivenCityprimecontractorsubcontract.BBCfirstexaminedthecharacteristicsofeachspecificprimecontractorsubcontract(referredtogenerallyasacontractelement).includingtypeofworkandcontractsize.BBCthenidentifiedbusinessesintheavailabilitydatabasethatperformworkofthattype,inthatrole(i.e.,asaprimecontractororsubcontractor),andofthatsize.BBCidentifiedthecharacteristicsofeachprimecontractandsubcontractincludedinthedisparitystudyandthentookthefollowingstepstocalculateavailabilityforeachcontractelement:
1. Foreachcontractelement,thestudyteamidentifiedbusinessesintheavailabilitydatabasethatreportedthatthey:
Areinterestedinperformingconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesworkinthatparticularroleforthatspecifictypeofworkfortheCity;and
Havebidonorperformedworkofthatsizeinthepastfiveyears.
2. Thestudyteamthencountedthenumberofminority‐ownedbusinesses,woman‐ownedbusinesses,service‐disabledveteran‐ownedbusinesses,andbusinessesownedbynon‐Hispanicwhitemenwhowerenotservice‐disabledveterans(i.e.,majority‐ownedbusinesses)intheavailabilitydatabasethatmetthecriteriaspecifiedinStep1.
3. Thestudyteamtranslatedthenumericavailabilityofbusinessesforthecontractelementintopercentageavailability.
BBCrepeatedthosestepsforeachcontractelementthatthestudyteamexaminedinthedisparitystudy.BBCmultipliedpercentageavailabilityforeachcontractelementbythedollarsassociatedwithit,addedresultsacrossallcontractelements,anddividedbythetotaldollarsfor
Business group
Asian American‐owned 2.6 %
Black American‐owned 12.9 %
Hispanic American‐owned 2.6 %
Native American‐owned 1.0 %
Non‐Hispanic white woman‐owned 20.2 %
Total Minority‐ and Woman‐owned 39.0 %
Service‐disabled veteran‐owned 7.0 %
Availability %
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 4
allcontractelements.Theresultwasdollar‐weightedestimatesoftheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesoverallandseparatelyforeachrelevantgroup.Figure5‐2providesanexampleofhowBBCcalculatedavailabilityforaspecificsubcontractassociatedwithaconstructionprimecontractthattheCityawardedduringthestudyperiod.
BBC’savailabilitycalculationsarebasedonprimecontractsandsubcontractsthattheCityawardedbetweenJuly1,2012andJune30,2017.AkeyassumptionoftheavailabilityanalysisisthatthecontractsandprocurementsthattheCityawardedduringthestudyperiodarerepresentativeofthecontractsandprocurementsthattheCitywillawardinthefuture.IfthetypesandsizesofthosecontractsandprocurementsdiffersubstantiallyfromtheonestheCityawardedinthepast,thentheCityshouldadjustavailabilityestimatesaccordingly.
Improvements on a simple head count of businesses.BBCusedacustomcensusapproachtocalculatetheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforCityworkratherthanusingasimpleheadcountofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses(e.g.,simplycalculatingthepercentageofalllocalbusinessesthatareminority‐,woman‐,orservice‐disabledveteran‐owned).ThereareseveralimportantwaysinwhichBBC’scustomcensusapproachtomeasuringavailabilityismoreprecisethancompletingasimpleheadcount.
BBC’s approach accounts for type of work.Federalregulationssuggestcalculatingavailabilitybasedonbusinesses’abilitiestoperformspecifictypesofwork.BBCtookworktypeintoaccountbyexamining71differentsubindustriesaspartofestimatingavailabilityforCitycontracting.
BBC’s approach accounts for contractor role.Thestudyteamcollectedinformationonwhetherbusinessesworkasprimecontractors,subcontractors,orboth.BusinessesthatreportedworkingasprimecontractorswereconsideredpotentiallyavailableforCityprimecontracts.Businessesthatreportedworkingassubcontractorswereconsideredpotentiallyavailableforsubcontracts.Businessesthatreportedworkingasbothprimecontractorsandsubcontractorswereconsideredpotentiallyavailableforbothprimecontractsandsubcontracts.
Figure 5‐2. Example of an availability calculation for a City subcontract
On a contract that the City awarded in 2015, the prime
contractor awarded a subcontract worth $67,447 for
engineering services. To determine the overall
availability of minority-, woman-, and service-disabled veteran-owned businesses for that subcontract, the study team identified businesses in the availability
database that:
a. Were in business in 2015;
b. Indicated that they performed engineering
work;
c. Reported bidding on work of similar or
greater size in the past; and
d. Reported interest in working as a
subcontractor on City or other government
agency projects.
The study team found 42 businesses in the availability
database that met those criteria. Of those businesses,
13 were minority‐ or woman‐owned businesses and 3
were service‐disabled veteran‐owned business. Thus,
the availability of minority‐ and woman‐owned
businesses for the subcontract was 31 percent (i.e.,
13/42 X 100 = 31), and the availability of service‐
disabled veteran‐owned businesses was 7 percent
(3/42 X 100 = 7).
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 5
BBC’s approach accounts for the relative capacity of businesses.ToaccountforthecapacityofbusinessestoworkonCitycontracts,BBCconsideredthesize—intermsofdollarvalue—oftheprimecontractsandsubcontractsthatabusinessbidonorreceivedinthepreviousfiveyearswhendeterminingwhethertocountthatbusinessasavailableforparticularprimecontractsorsubcontracts.Foreachcontractelement,BBCconsideredwhetherbusinesseshadpreviouslybidonorreceivedatleastonecontractofanequivalentorgreaterdollarvalue.BBC’sapproachtoaccountingforcapacityisconsistentwithmanyrecent,keycourtdecisionsthathavefoundsuchmeasurestobeimportanttomeasuringavailability(e.g.,AssociatedGeneralContractorsofAmerica,SanDiegoChaptervs.CaliforniaDepartmentofTransportation,etal.,5WesternStatesPavingCompanyv.WashingtonStateDOT,6RotheDevelopmentCorp.v.U.S.DepartmentofDefense,7andEngineeringContractorsAssociationofS.Fla.Inc.vs.MetroDadeCounty8).
BBC’s approach accounts for interest in relevant work.ThestudyteamcollectedinformationonwhetherbusinessesareinterestedinworkingonCityconstruction;architectureandengineering;otherprofessionalservices;andgoodsandgeneralserviceswork(inadditiontoseveralotherfactorsrelatedtoCityprimecontractsandsubcontracts,suchascontracttypeandsize).BusinesseshadtoindicatethattheyareinterestedinperformingsuchworkfortheCityinordertobeconsideredpotentiallyavailableforCitycontractsandprocurements.
BBC’s approach generates dollar‐weighted results.BBCexaminedavailabilityonacontract‐by‐contractbasisandthendollar‐weightedtheresults.Thus,theresultsofrelativelylargecontractelementscontributedmoretooverallavailabilityestimatesthanthoseofrelativelysmallcontractelements.Thatapproachisconsistentwithrelevantcaselawandregulations.
E. Availability Results
BBCestimatedtheavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesfor26,322construction;architectureandengineering;otherprofessionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityawardedbetweenJuly1,2012andJune30,2017.
Minority‐and woman‐owned businesses.BBCexaminedtheavailabilityofminority‐andwoman‐ownedbusinessesforvariouscontractssetstoassessthedegreetowhichtheyareready,willing,andabletoperformdifferenttypesofCitywork.
Overall.Figure5‐3presentsdollar‐weightedavailabilityestimatesbyrelevantbusinessgroupforCitycontractsandprocurements.Overall,theavailabilityofminority‐andwoman‐ownedbusinessesforCitycontractsandprocurementsis25.2percent,indicatingthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceive25.2percentofthedollarsthattheCityawardsinconstruction;architectureandengineering;otherprofessionalservices;andgoods
5AGC,SanDiegoChapterv.CaliforniaDOT,2013WL1607239(9thCir.April16,2013).
6WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).7RotheDevelopmentCorp.v.U.S.DepartmentofDefense,545F.3d1023(Fed.Cir.2008).
8EngineeringContractorsAssociationofS.Fla.Inc.vs.MetroDadeCounty,943F.Supp.1546(S.D.Fla.1996).
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 6
andservices.Non‐Hispanicwhitewoman‐ownedbusinesses(13.3%)andBlackAmerican‐ownedbusinesses(8.1%)exhibitedthehighestavailabilitypercentagesamongallgroups.
Figure 5‐3. Overall availability estimates by racial/ethnic and gender group
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail and results by group, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Contract role. Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineavailabilityestimatesseparatelyforprimecontractsandsubcontracts.Figure5‐4presentsthoseresults.AsshowninFigure5‐4,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherislowerforCityprimecontracts(24.5%)thanforsubcontracts(31.6%).Amongotherfactors,thatresultcouldbeduetothefactthatsubcontractstendtobemuchsmallerinsizethanprimecontractsandareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.
Figure 5‐4. Availability estimates by contract role
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Industry.BBCexaminedavailabilityanalysisresultsseparatelyfortheCity’sconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontracts.AsshowninFigure5‐5,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherishighestfortheCity’sarchitectureandengineeringcontracts(32.6%)andlowestforconstructioncontracts(19.8%).
Business group
Asian American‐owned 0.8 %
Black American‐owned 8.1 %
Hispanic American‐owned 2.7 %
Native American‐owned 0.4 %
Total Minority‐owned 12.0 %
Non‐Hispanic white woman‐owned 13.3 %
Total Minority‐ and Woman‐owned 25.2 %
Availability %
Business group
Asian American‐owned 0.8 % 1.0 %
Black American‐owned 8.0 % 8.4 %
Hispanic American‐owned 2.7 % 2.8 %
Native American‐owned 0.4 % 0.2 %
Non‐Hispanic white woman‐owned 12.5 % 19.2 %
Total Minority‐ and Woman‐owned 24.5 % 31.6 %
Contract role
Prime
contracts Subcontracts
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 7
Figure 5‐5. Availability estimates by industry
Note: Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail and results by group, see Figure F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source: BBC Research & Consulting availability analysis.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.ItisusefultoexamineavailabilityanalysisresultsseparatelyforcontractsthattheCityawardedwiththeuseofSWaMcontractgoals(goalscontracts)andcontractsthattheCityawardedwithouttheuseofgoals(nogoalscontracts).Figure5‐6presentsavailabilityestimatesseparatelyforgoalsandnogoalscontracts.AsshowninFigure5‐6,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherislowerforgoalscontracts(21.1%)thanfornogoalscontracts(28.0%).
Figure 5‐6. Availability estimates by contract goals status
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Time period.BBCexaminedavailabilityanalysisresultsseparatelyforcontractsandprocurementsthattheCityawardedintheearlystudyperiod(i.e.,July1,2012–June30,2015)andthelatestudyperiod(i.e.,July1,2015–June30,2017)todeterminewhetherthetypesandsizesofcontractsthattheCityawardedacrossthestudyperiodchangedovertime,whichinturnwouldaffectavailability.AsshowninFigure5‐7,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherwassomewhatlowerintheearlystudyperiod(24.2%)thanthelatestudyperiod(26.9%).
Business group
Asian American‐owned 1.6 % 0.0 % 0.1 % 0.1 %
Black American‐owned 5.7 % 9.2 % 10.4 % 10.1 %
Hispanic American‐owned 2.8 % 3.1 % 4.8 % 1.1 %
Native American‐owned 0.0 % 1.7 % 0.7 % 0.1 %
Non‐Hispanic white woman‐owned 9.6 % 18.6 % 10.3 % 18.8 %
Total Minority‐ and Woman‐owned 19.8 % 32.6 % 26.3 % 30.3 %
Construction
Other professional
services
Goods and
services
Industry
Architecture and
engineering
Business group
Asian American‐owned 1.1 % 0.5 %
Black American‐owned 5.5 9.7
Hispanic American‐owned 3.3 2.4
Native American‐owned 0.4 0.4
Non‐Hispanic white woman‐owned 10.7 % 14.9 %
Total Minority‐ and Woman‐owned 21.1 % 28.0 %
Goals status
Goals No goals
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 5, PAGE 8
Figure 5‐7. Availability estimates by time period
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail and results by group, see Figure F‐3 and F‐4 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Service‐disabled veteran‐owned businesses.Similarly,BBCexaminedtheoverallavailabilityofservice‐disabledveteran‐ownedbusinessesforCitywork.Theavailabilityanalysisindicatedthattheavailabilityofservice‐disabledveteran‐ownedbusinessesfortheCity’scontractsandprocurementsis11.9percent.
Business group
Asian American‐owned 0.5 % 1.2 %
Black American‐owned 7.4 % 9.1 %
Hispanic American‐owned 2.1 % 3.9 %
Native American‐owned 0.4 % 0.3 %
Non‐Hispanic white woman‐owned 13.8 % 12.3 %
Total Minority‐ and Woman‐owned 24.2 % 26.9 %
LateEarly
Time period
CHAPTER 6.
Utilization Analysis
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 6, PAGE 1
CHAPTER 6. Utilization Analysis
Chapter6presentsinformationabouttheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses(i.e.,businessesownedbyveteranswhohaveadisabilityasaresultoftheirservice)inconstruction;architectureandengineering;otherprofessionalservices;andgoodsandgeneralservicescontractsandprocurementsthattheCityofVirginiaBeach(theCity)awardedbetweenJuly1,2012andJune30,2017.BBCResearch&Consulting(BBC)measuredtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontractingintermsofutilization—thepercentageofprimecontractandsubcontractdollarsthatthosebusinessesreceivedonCityprimecontractsandsubcontractsduringthestudyperiod.1Forexample,if5percentofCityprimecontractandsubcontractdollarswenttonon‐Hispanicwhitewoman‐ownedbusinessesonaparticularsetofcontracts,utilizationofnon‐Hispanicwhitewoman‐ownedbusinessesforthatsetofcontractswouldbe5percent.BBCconsideredutilizationresultsontheirownandasinputsinthedisparityanalysis(fordetails,seeChapter7).Thestudyteammeasuredtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCitycontractsregardlessofwhethertheywerecertifiedasSmall,Woman,andMinority‐owned(SWaM)businesses.
Minority‐ and Woman‐owned Businesses
BBCexaminedtheparticipationofminority‐andwoman‐ownedbusinessesforvarioussetsofcontractsthattheCityawardedduringthestudyperiod.Thestudyteamassessedtheparticipationofallofthosebusinessesconsideredtogetherandseparatelyforeachrelevantracial/ethnicandgendergroup.
Overall.Figure6‐1presentsthepercentageofcontractingdollarsthatminority‐andwoman‐ownedbusinessesreceivedonconstruction;architectureandengineering;otherprofessionalservices;andgoodsandgeneralservicescontractsandprocurementsthattheCityawardedduringthestudyperiod(includingbothprimecontractsandsubcontracts).AsshowninFigure6‐1,overall,minority‐andwoman‐ownedbusinessesconsideredtogetherreceived18.9percentoftherelevantcontractingdollarsthattheCityawardedduringthestudyperiod.Lessthanone‐halfofthosedollars—8.6percent—wenttoSWaM‐certifiedbusinesses.Non‐Hispanicwhitewoman‐ownedbusinesses(8.2%)andAsianAmerican‐ownedbusinesses(5.6%)exhibitedhigherlevelsofparticipationonCitycontractsthanallothergroups.
1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 6, PAGE 2
Figure 6‐1. Overall utilization results
Note:
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Contract role.Manyminority‐andwoman‐ownedbusinessesaresmallbusinesses,andthus,oftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineutilizationresultsseparatelyforprimecontractsandsubcontracts.Figure6‐2presentsthoseresults.AsshowninFigure6‐2,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashigherintheCity’ssubcontracts(21.9%)thanprimecontracts(18.5%).ThevastmajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithprimecontracts.
Figure 6‐2. Utilization results by contract role
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Industry. BBCexaminedutilizationanalysisresultsseparatelyfortheCity’sconstruction;architectureandengineering;otherprofessionalservices;andgoodsandgeneralservicescontracts.AsshowninFigure6‐3,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashighestintheCity’sotherprofessionalservicescontracts(50.6%)andlowestinarchitectureandengineeringcontracts(10.1%).ThepluralityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithconstructioncontractsforwhichtheparticipationofminority‐andwoman‐ownedbusinesseswas11.8percent.
Business group
Minority‐ and Woman‐owned
Asian American‐owned 5.6 %
Black American‐owned 4.5 %
Hispanic American‐owned 0.5 %
Native American‐owned 0.0 %
Non‐Hispanic white woman‐owned 8.2 %
Total Minority‐ and Woman‐owned 18.9 %
SWaM‐certified
Asian American‐owned 0.2 %
Black American‐owned 1.9 %
Hispanic American‐owned 0.3 %
Native American‐owned 0.0 %
Non‐Hispanic white woman‐owned 6.3 %
Total SWaM‐certified 8.6 %
Utilization
Business group
Asian American‐owned 6.3 % 0.4 %
Black American‐owned 4.9 % 1.3 %
Hispanic American‐owned 0.4 % 2.1 %
Native American‐owned 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 6.9 % 18.1 %
Total Minority‐ and Woman‐owned 18.5 % 21.9 %
Contract role
Prime
contracts Subcontracts
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 6, PAGE 3
Figure 6‐3. Utilization results by relevant industry
Note: Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source: BBC Research & Consulting utilization analysis.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.ItisusefultoexamineparticipationseparatelyforcontractsthattheCityawardedwiththeuseofSWaMcontractgoals(goalscontracts)andcontractsthattheCityawardedwithouttheuseofgoals(nogoalscontracts)asanassessmentofhoweffectivetheuseofthosegoalswereinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinparticular.Figure6‐4presentsutilizationresultsseparatelyforgoalsandnogoalscontracts.AsshowninFigure6‐4,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwasactuallymuchhigherinnogoalscontracts(23.7%)thangoalscontracts(11.5%).
Figure 6‐4. Utilization results by contract goal status
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Time period. BBCexaminedutilizationresultsseparatelyforcontractsandprocurementsthattheCityawardedintheearlystudyperiod(i.e.,July1,2012–June30,2015)andthelatestudyperiod(i.e.,July1,2015–June30,2017)todeterminewhethertheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractschangedovertime.AsshowninFigure6‐5,theparticipationofminority‐andwoman‐ownedbusinesseswassomewhathigherinthelatestudyperiod(20.0%)thantheearlystudyperiod(18.2%).
Business Group
Asian American‐owned 0.2 % 0.4 % 32.1 % 0.4 %
Black American‐owned 1.3 % 0.9 % 15.3 % 5.2 %
Hispanic American‐owned 1.0 % 0.1 % 0.4 % 0.1 %
Native American‐owned 0.0 % 0.0 % 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 9.3 % 8.7 % 2.9 % 9.3 %
Total Minority‐ and Woman‐owned 11.8 % 10.1 % 50.6 % 15.0 %
Construction
Other Professional
Services
Goods and
Services
Architecture
and Engineering
Business group
Asian American‐owned 0.1 % 9.3 %
Black American‐owned 0.9 % 6.9 %
Hispanic American‐owned 1.1 % 0.2 %
Native American‐owned 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 9.4 % 7.3 %
Total Minority‐ and Woman‐owned 11.5 % 23.7 %
Goal status
Goals No goals
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 6, PAGE 4
Figure 6‐5. Utilization results by time period
Numbers rounded to nearest tenth of 1 percent. Numbers may not add to totals.
For more detail, see Figures F‐3 and F‐4 in Appendix F.
Source:
BBC Research & Consulting utilization analysis.
Concentration of dollars. BBCanalyzedwhetherthedollarsthateachrelevantbusinessgroupreceivedonCitycontractsduringthestudyperiodwerespreadacrossarelativelylargenumberofbusinessesorwereconcentratedwitharelativelysmallnumberofbusinesses.Thestudyteamassessedthatquestionbycalculating:
Thenumberofdifferentbusinesseswithineachrelevantgroupthatreceivedcontractingdollarsduringthestudyperiod;and
Thenumberofdifferentbusinesseswithineachrelevantgroupthataccountedfor75percentofthegroup’stotalcontractingdollarsduringthestudyperiod.
Overall,437differentminority‐andwoman‐ownedbusinessesparticipatedinCitycontractsduringthestudyperiod.Thirty‐eightofthosebusinesses,or8.7percentofallutilizedminority‐andwoman‐ownedbusinesses,accountedfor75percentofthetotalcontractingdollarsthatminority‐andwoman‐ownedbusinessesreceivedduringthestudyperiod.Figure6‐6presentsanalogousresultsforeachrelevantracial/ethnicandgendergroup.Mostnotably,asingleAsianAmerican‐ownedbusinessaccountedforthevastmajority—86percent—ofthetotalcontractingdollarsthatAsianAmerican‐ownedbusinessesreceivedduringthestudyperiod).
Figure 6‐6. Concentration of dollars that went to minority‐ and woman‐owned businesses
Note:
The number of utilized businesses does not sum to 437, because 17 minority‐owned businesses were of an unknown minority group.
Source:
BBC Research & Consulting utilization analysis.
Service‐Disabled Veteran‐Owned Businesses
Similarly,BBCexaminedtheparticipationofservice‐disabledveteran‐ownedbusinessesinthecontractsandprocurementsthattheCityawardedduringthestudyperiod.Theutilizationanalysisindicatedthattheparticipationofservice‐disabledveteran‐ownedbusinessesinCitycontractsandprocurementswas0.7percent.
Business group
Asian American‐owned 5.5 % 5.9 %
Black American‐owned 3.9 % 5.6 %
Hispanic American‐owned 0.5 % 0.5 %
Native American‐owned 0.0 % 0.0 %
Non‐Hispanic white woman‐owned 8.2 % 8.0 %
Total Minority‐ and Woman‐owned 18.2 % 20.0 %
Time period
Early Late
Business group
Asian American‐owned 36 1 2.8%
Black American‐owned 89 2 2.2%
Hispanic American‐owned 21 2 9.5%
Native American‐owned 4 1 25.0%
Non‐Hispanic white woman‐owned 270 29 10.7%
Number Percent
Businesses accounting
for 75% of dollarsUtilized
businesses
CHAPTER 7.
Disparity Analysis
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 1
CHAPTER 7. Disparity Analysis
Thedisparityanalysiscomparedtheparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesincontractsthattheCityofVirginiaBeach(theCity)awardedbetweenJuly1,2012andJune30,2017(i.e.,thestudyperiod)towhatthosebusinessesmightbeexpectedtoreceivebasedontheiravailabilityforthatwork.Theanalysisfocusedonconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontractsandprocurements.Chapter7presentsthedisparityanalysisinthreeparts:
A. Overview;
B. Disparityanalysisresults;and
C. Statisticalsignificance.
A. Overview
Aspartofthedisparityanalysis,BBCResearch&Consulting(BBC)comparedtheactualparticipationofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinCityprimecontractsandsubcontractswiththepercentageofcontractdollarsthatthosebusinessesmightbeexpectedtoreceivebasedontheiravailabilityforthatwork.1BBCexpressedbothactualparticipationandavailabilityaspercentagesofthetotaldollarsassociatedwithaparticularsetofcontracts(e.g.,5%participationcomparedwith4%availability).BBCthencalculatedadisparityindextohelpcompareparticipationandavailabilityresultsacrossrelevantbusinessgroupsandcontractsetsusingthefollowingformula:
Adisparityindexof100indicatesparitybetweenactualparticipation,orutilization,andavailability.Thatis,participationofaparticularbusinessgroupwaslargelyinlinewithitsavailability.Adisparityindexoflessthan100indicatesadisparitybetweenparticipationandavailability.Thatis,aparticularbusinessgroupwasunderutilizedrelativetoitsavailability.Finally,adisparityindexoflessthan80indicatesasubstantialdisparitybetweenparticipationandavailability.Thatis,aparticularbusinessgroupwassubstantiallyunderutilizedrelativetoitsavailability.2
1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.2Manycourtshavedeemeddisparityindicesbelow80asbeingsubstantialandhaveacceptedsuchoutcomesasevidenceofadverseconditionsforaparticularbusinessgroup(e.g.,seeRotheDevelopmentCorpv.U.S.DeptofDefense,545F.3d1023,1041;Eng’gContractorsAss’nofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3dat914,923(11thCircuit1997);and
%participation
%availabilityx100
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 2
ThedisparityanalysisresultsthatBBCpresentsinChapter7summarizedetailedresultstablesthatarepresentedinAppendixF.EachtableinAppendixFpresentsdisparityanalysisresultsforadifferentsetofcontracts.Forexample,Figure7‐1,whichisidenticaltoFigureF‐2inAppendixF,presentsdisparityanalysisresultsforallCitycontractsthatBBCexaminedaspartofthestudy.AppendixFincludesanalogoustablesfordifferentsubsetsofcontractsincluding:
Construction;architectureandengineering;otherprofessionalservices;andgoodsandservicescontracts;
Primecontractsandsubcontracts;and
ContractsthattheCityawardedindifferentstudyperiodyears.
TheheadingofeachtableinAppendixFprovidesadescriptionofthesubsetofcontractsthatBBCanalyzedforthatparticulartable.
AreviewofFigure7‐1helpstointroducethecalculationsandformatofallofthedisparityanalysistablesinAppendixF.AsillustratedinFigure7‐1,thedisparityanalysistablespresentinformationabouteachrelevantbusinessgroupinseparaterows:
“Allbusinesses”inrow(1)pertainstoinformationaboutallbusinessesregardlessoftherace/ethnicityandgenderoftheirowners.
Row(2)presentsresultsforallminority‐andwoman‐ownedbusinessesconsideredtogether,regardlessofwhethertheywerecertifiedasSmall,Woman,andMinority‐owned(SWaM)businesses.
Row(3)presentsresultsforallnon‐Hispanicwhitewoman‐ownedbusinesses,regardlessofwhethertheywerecertifiedasSWaMbusinesses.
Row(4)presentsresultsforallminority‐ownedbusinesses,regardlessofwhethertheywerecertifiedasSWaMbusinesses.
Rows(5)through(9)presentresultsforbusinessesofeachindividualracial/ethnicgroup,regardlessofwhethertheywerecertifiedasSWaMbusinesses.
Rows(10)through(17)presentresultsforbusinessesofeachindividualracial/ethnicgroupthatwerecertifiedasSWaMbusiness.
Utilization results.Eachdisparityanalysistableincludesthesamecolumnsandrows:
Column(a)presentsthetotalnumberofprimecontractsandsubcontracts(i.e.,contractelements)thatBBCanalyzedaspartofthecontractset.Asshowninrow(1)ofcolumn(a)ofFigure7‐1,BBCanalyzed26,322contractelements.Thevaluepresentedincolumn(a)foreachindividualbusinessgrouprepresentsthenumberofcontractelementsinwhichbusinessesofthatparticulargroupparticipated(e.g.,asshowninrow(6)ofcolumn(a),BlackAmerican‐ownedbusinessesparticipatedin3,033primecontractsandsubcontracts).
ConcreteWorksofColo.,Inc.v.CityandCountyofDenver,36F.3d1513,1524(10thCir.1994).SeeAppendixBforadditionaldiscussionofthoseandothercases.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 3
Figure 7‐1. Example of a disparity analysis table from Appendix F (same as Figure F‐2 in Appendix F)
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “woman‐owned” refers to non‐Hispanic white woman‐owned.
* Unknown minority‐owned businesses were allocated to minority subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American‐owned businesses (column b, row 5) accounted for 25 percent of total minority‐owned business dollars (column b, row 4), then 25 percent of column b, row 9 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting disparity analysis.
(1) All businesses 26,322 $1,176,459 $1,176,459
(2) Minority and woman‐owned businesses 7,429 $221,800 $221,800 18.9 25.2 ‐6.4 74.7
(3) Non‐Hispanic white woman‐owned 3,838 $95,902 $95,902 8.2 13.3 ‐5.1 61.5
(4) Minority‐owned 3,591 $125,898 $125,898 10.7 12.0 ‐1.3 89.4
(5) Asian American‐owned 339 $65,543 $66,330 5.6 0.8 4.9 200+
(6) Black American‐owned 3,033 $52,414 $53,043 4.5 8.1 ‐3.6 55.9
(7) Hispanic American‐owned 105 $6,219 $6,293 0.5 2.7 ‐2.2 19.5
(8) Native American‐owned 42 $229 $231 0.0 0.4 ‐0.4 5.1
(9) Unknown minority‐owned 72 $1,495
(10) SWAM‐certified 3,061 $101,744 $101,744 8.6
(11) Non‐Hispanic white woman‐owned SWaM 2,181 $73,118 $73,589 6.3
(12) Minority‐owned SWAM 858 $27,974 $28,155 2.4
(13) Asian American‐owned SWAM 222 $2,246 $2,301 0.2
(14) Black American‐owned SWAM 514 $21,706 $22,240 1.9
(15) Hispanic American‐owned SWAM 78 $3,432 $3,516 0.3
(16) Native American‐owned SWAM 17 $95 $98 0.0
(17) Unknown minority‐owned SWAM 27 $496
(d) (g)
Disparityindex
(f)
Utilization ‐Availability
Availabilitypercentagepercentage
Utilization
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number of contractelements
dollarsTotal
(thousands)
(e)
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 4
Column(b)presentsthedollars(inthousands)thatwereassociatedwiththesetofcontractelements.Asshowninrow(1)ofcolumn(b)ofFigure7‐1,BBCexaminedapproximately$1.2billionfortheentiresetofcontractelements.Thedollartotalsincludebothprimecontractandsubcontractdollars.Thevaluepresentedincolumn(b)foreachindividualbusinessgrouprepresentsthedollarsthatthebusinessesofthatparticulargroupreceivedonthesetofcontractelements(e.g.,asshowninrow(6)ofcolumn(b),BlackAmerican‐ownedbusinessesreceivedapproximately$52.4million).
Column(c)presentsthedollars(inthousands)thatwereassociatedwiththesetofcontractelementsafteradjustingthosedollarsforbusinessesthatBBCidentifiedasminority‐ownedbutforwhichspecificrace/ethnicityinformationwasnotavailable.
Column(d)presentstheparticipationofeachbusinessgroupasapercentageoftotaldollarsassociatedwiththesetofcontractelements.BBCcalculatedeachpercentageincolumn(d)bydividingthedollarsgoingtoaparticulargroupincolumn(c)bythetotaldollarsassociatedwiththesetofcontractelementsshowninrow(1)ofcolumn(c),andthenexpressingtheresultasapercentage(e.g.,forBlackAmerican‐ownedbusinesses,thestudyteamdivided$53.0millionby$1.2billionandmultipliedby100foraresultof4.5%,asshowninrow(6)ofcolumn(d)).
ThebottomhalfofFigure7‐1presentsutilizationresultsforminority‐andwoman‐ownedbusinessesthatwereSWaM‐certified.
Availability results.Column(e)ofFigure7‐1presentstheavailabilityofeachrelevantbusinessgroupforallcontractelementsthatthestudyteamanalyzedaspartofthecontractset.Availabilityestimates,whicharerepresentedaspercentagesofthetotalcontractingdollarsassociatedwiththesetofcontracts,serveasbenchmarksagainstwhichtocomparetheparticipationofspecificgroupsforspecificsetsofcontracts(e.g.,asshowninrow(6)ofcolumn(e),theavailabilityofBlackAmerican‐ownedbusinessesforCityworkis8.1%).
Differences between participation and availability.Thenextstepinanalyzingwhethertherewasadisparitybetweentheparticipationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesistosubtracttheparticipationpercentagefromtheavailabilitypercentage.Column(f)ofFigure7‐1presentsthepercentagepointdifferencebetweenparticipationandavailabilityforeachrelevantracial/ethnicandgendergroup.Forexample,aspresentedinrow(6)ofcolumn(f)ofFigure7‐1,theparticipationofBlackAmerican‐ownedbusinessesinCitycontractswas3.6percentagepointslessthantheiravailability.
Disparity indices.Itissometimesdifficulttointerpretabsolutepercentagedifferencesbetweenparticipationandavailability.Therefore,BBCalsocalculatedadisparityindexforeachrelevantracial/ethnicandgendergroup.Column(g)ofFigure7‐1presentsthedisparityindexforeachgroup.Forexample,asreportedinrow(6)ofcolumn(g),thedisparityindexforBlackAmerican‐ownedbusinesseswasapproximately56,indicatingthatBlackAmerican‐ownedbusinessesactuallyreceivedapproximately$0.56foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityforprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 5
BBCappliedthefollowingruleswhendisparityindiceswereexceedinglylargeorcouldnotbecalculatedbecausethestudyteamdidnotidentifyanybusinessesofaparticulargroupasavailableforaparticularcontractset:
WhenBBC’scalculationsshowedadisparityindexexceeding200,BBCreportedanindexof“200+.”Adisparityindexof200+meansthatparticipationwasmorethantwiceasmuchasavailabilityforaparticulargroupforaparticularsetofcontracts.
Whentherewasnoparticipationandnoavailabilityforaparticulargroupforaparticularsetofcontracts,BBCreportedadisparityindexof“100,”indicatingparity.
B. Disparity Analysis Results
BBCmeasureddisparitiesbetweentheparticipationandavailabilityofminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesforvarioussetsofcontractsthattheCityawardedduringthestudyperiod.
Minority‐and woman‐owned businesses.BBCexaminedtheavailabilityofminority‐andwoman‐ownedbusinessesforvariouscontractssetstoassessthedegreetowhichtheymayhavebeenunderutilizedonvarioustypesofCitywork.
Overall.Figure7‐2presentsdisparityindicesforallrelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thelinedownthecenterofthegraphshowsadisparityindexlevelof100,whichindicatesparitybetweenparticipationandavailability.Disparityindicesoflessthan100indicatedisparitiesbetweenparticipationandavailability(i.e.,underutilization).Forreference,alineisalsodrawnatadisparityindexlevelof80,becausesomecourtsuse80asthethresholdforwhatindicatesasubstantialdisparity.AsshowninFigure7‐2,overall,theparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityawardedduringthestudyperiodwassubstantiallylowerthanwhatonemightexpectbasedontheavailabilityofthosebusinessesforthatwork.Thedisparityindexof75indicatesthatminority‐andwoman‐ownedbusinessesreceivedapproximately$0.75foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityfortherelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Disparityanalysisresultsbyindividualracial/ethnicandgendergroupindicatedthat:
Fourgroupsexhibiteddisparityindicessubstantiallybelowparity:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof62),BlackAmerican‐ownedbusinesses(disparityindexof56),HispanicAmerican‐ownedbusinesses(disparityindexof20),andNativeAmerican‐ownedbusinesses(disparityindexof5).
AsianAmerican‐ownedbusinesses(disparityindexof200+)didnotexhibitadisparity.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 6
Figure 7‐2. Disparity indices by group
Note:
For more detail, see Figure F‐2 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
Contract role. Subcontractstendtobemuchsmallerinsizethanprimecontracts.Asaresult,subcontractsareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.Thus,itmightbereasonabletoexpectbetteroutcomesforminority‐andwoman‐ownedbusinessesonsubcontractsthanonprimecontracts.Figure7‐3presentsdisparityindicesforallrelevantgroupsforprimecontractsandsubcontracts.AsshowninFigure7‐3,minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityforbothprimecontracts(disparityindexof76)andsubcontracts(disparityindexof69).
Figure 7‐3. Disparity indices for prime contracts and subcontracts
Note:
For more detail, see Figures F‐9 and F‐10 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 7
Resultsforindividualgroupsindicatedthat:
AllgroupsshowedsubstantialdisparitiesonprimecontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Allgroupsshowedsubstantialdisparitiesonsubcontractsexceptfornon‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof94).
Industry.BBCexamineddisparityanalysisresultsseparatelyfortheCity’sconstruction;architectureandengineering;otherprofessionalservices;andgoodsandgeneralservicescontracts.Figure7‐4presentsdisparityindicesforallrelevantgroupsbycontractingarea.AsshowninFigure7‐4,minority‐andwoman‐ownedbusinessesconsideredtogethershowedsubstantialdisparitiesforeachrelevantindustryexceptotherprofessionalservices(disparityindexof193).
Figure 7‐4. Disparity analysis results by relevant industry
Note:
For more detail, see Figures F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 8
Disparityanalysisresultsdifferedbyindustryandgroup:
Threeindividualgroupsshowedsubstantialdisparitiesonconstructioncontracts:AsianAmerican‐ownedbusinesses(disparityindexof13),BlackAmerican‐ownedbusinesses(disparityindexof23),andHispanicAmerican‐ownedbusinesses(disparityindexof35).
AllindividualgroupsshowedsubstantialdisparitiesonarchitectureandengineeringcontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Threeindividualgroupsshowedsubstantialdisparitiesonotherprofessionalservicescontracts:HispanicAmerican‐ownedbusinesses(disparityindexof8),NativeAmerican‐ownedbusinesses(disparityindexof0),andnon‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof29).
AllindividualgroupsshowedsubstantialdisparitiesongoodsandservicescontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Figure 7‐5. Disparity analysis results by contract goals status
Note:
Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
For more detail, see Figures F‐11 and F‐12 in Appendix F.
Source:
BBC Research & Consulting availability analysis.
Goal status.TheCityusedSWaMcontractgoalstoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinmanyofthecontractsthatitawardedduringthestudyperiod.SWaMgoalsonlyappliedtoselectconstructioncontractsduringthestudyperiod.ItisusefultoexaminedisparityanalysisresultsseparatelyforcontractsthattheCityawardedwiththeuseofSWaMcontractgoals(goalscontracts)andcontractsthattheCityawardedwithouttheuseofgoals(nogoalscontracts)toassesstheeffectivenessofthosegoalstoaddressanydisparitiesbetweenparticipationandavailability.Figure7‐5presentsdisparityindicesseparatelyforgoalsandnogoalscontracts.AsshowninFigure7‐5,minority‐andwoman‐ownedbusinessesconsideredtogetheractuallyshowedasubstantialdisparityforgoalscontracts(disparityindexof55)butnotfornogoalscontracts
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 9
(disparityindexof85).ResultsforindividualgroupsindicatedthatSWaMcontractgoalsmaybemoreeffectiveinaddressingdisparitiesforcertaingroupsthanothers:
Non‐Hispanicwhitewoman‐ownedbusinessesdidnotexhibitasubstantialdisparityongoalscontracts(disparityindexof88)butallotherindividualgroupsdidexhibitsubstantialdisparities.
AllindividualgroupsshowedsubstantialdisparitiesonnogoalscontractsexceptforAsianAmerican‐ownedbusinesses(disparityindexof200+).
Time period.BBCalsoexamineddisparityanalysisresultsseparatelyfortwoseparatetimeperiods:July1,2012throughJune30,2015(earlystudyperiod)andJuly1,2015throughJune30,2017(latestudyperiod).ThatinformationmighthelptheCitydeterminewhetherthereweredifferentoutcomesforminority‐andwoman‐ownedbusinessesasthecountrymovedfurtherandfurtherfromtheeconomicdownturnthatbeganin2008.Figure7‐6presentsdisparityindicesforallrelevantracial/ethnicandgendergroupsseparatelyfortheearlyandlatestudyperiods.AsshowninFigure7‐6,disparityanalysisresultswereverysimilarbetweentheearlyandlatestudyperiods.Minority‐andwoman‐ownedbusinessesshowedsubstantialdisparitiesforcontractsthattheCityawardedintheearlystudyperiod(disparityindexof75)andinthelatestudyperiod(disparityindexof74).ResultsforindividualgroupsindicatedthatthatallgroupsshowedsubstantialdisparitiesinbothtimeperiodswiththeexceptionofAsianAmerican‐ownedbusinesses,whichdidnotshowadisparityineithertimeperiod.
Figure 7‐6. Disparity indices for early and late study period
Note:
For more detail, see Figures F‐2 and F‐3 in Appendix F.
Source:
BBC Research & Consulting disparity analysis.
Service‐disabled veteran‐owned businesses. Similarly,BBCcomparedparticipationtoavailabilityforservice‐disabledveteran‐ownedbusinessesinCitywork.Thedisparityanalysisindicatedthatservice‐disabledveteran‐ownedbusinessesexhibitedadisparityindexof
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 10
Figure 7‐7. Monte Carlo Analysis
BBC used a Monte Carlo approach to randomly select businesses to win each individual contract element that the study team included in its analyses. For each contract element, BBC’s availability database provided information on individual businesses that are available for that contract element based on type of work, contractor role, and contract size. BBC assumed that each available business had an equal chance of winning the contract element, so the odds of a business from a certain group winning it were equal to the number of businesses from that group available for it divided by the total number of businesses available for it. The Monte Carlo simulation then randomly chose a business from the pool of available businesses to win the contract element.
The Monte Carlo simulation repeated the above process for all contract elements in a particular contract set. The output of a single Monte Carlo simulation for all contract elements in the set represented the simulated participation of minority‐ and woman‐owned businesses for that set of contract elements. The entire Monte Carlo simulation was then repeated 1 million times for each contract set. The combined output from all 1 million simulations represented a probability distribution of the overall participation of minority‐ and woman‐owned businesses if contracts were awarded randomly based only on the availability of relevant businesses working in the local marketplace.
The output of the Monte Carlo simulations represents the number of simulations out of 1 million that produced simulated participation that was equal or below the actual observed participation for each racial/ethnic and gender group and for each set of contracts. If that number was less than or equal to 25,000 (i.e., 2.5% of the total number of simulations), then BBC considered the corresponding disparity index to be statistically significant at the 95 percent confidence level. If that number was less than or equal to 50,000 (i.e., 5.0% of the total number of simulations), then BBC considered that disparity index to be statistically significant at the 90 percent confidence level.
6,indicatingthattheiractualparticipationinCitycontractingwassubstantiallylessthantheiravailability.
C. Statistical Significance
Statisticalsignificancetestsallowresearcherstotestthedegreetowhichtheycanrejectrandomchanceasanexplanationforanyobservedquantitativedifferences.Inotherwords,astatisticallysignificantdifferenceisonethatonecanconsidertobereliableorreal.BBCusedaprocessthatreliesonrepeated,randomsimulationstoexaminethestatisticalsignificanceofdisparityanalysisresults.ThatapproachisreferredtoasaMonteCarloanalysis.Figure7‐7describeshowthestudyteamusedMonteCarlototestthestatisticalsignificanceofdisparityanalysisresults.
Results.AsshowninFigure7‐8,resultsfromtheMonteCarloanalysisindicatedthatthedisparitiesonallcontractsforallminority‐andwoman‐ownedbusinesses,Non‐Hispanicwhitewoman‐ownedbusinesses,BlackAmerican‐ownedbusinesses,HispanicAmerican‐ownedbusinesses,andNativeAmerican‐ownedbusinesseswerestatisticallysignificantatthe95percentconfidencelevel.Thesubstantialdisparitiesfoundforthosegroupsduringthelatestudyperiodandonprimecontractswerealsostatisticallysignificantatthe95percentconfidencelevel.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 7, PAGE 11
Figure 7‐8. Monte Carlo simulation results for disparity analysis results
Business Group
All contracts
Minority‐owned and woman‐owned 75 0 <0.1 %
Non‐Hispanic white woman‐owned 62 0 <0.1 %
Minority‐owned 89 155,185 15.5 %
Asian American‐owned 200+ N/A N/A
Black American‐owned 56 0 <0.1 %
Hispanic American‐owned 19 0 <0.1 %
Native American‐owned 5 0 <0.1 %
Late study period (July 1, 2015 ‐ June 30, 2017)
Minority‐owned and woman‐owned 74 6,199 0.6 %
Non‐Hispanic white woman‐owned 65 191 N/A
Minority‐owned 82 199,758 20.0 %
Asian American‐owned 200+ N/A N/A
Black American‐owned 61 10,411 1.0 %
Hispanic American‐owned 13 2 <0.1 %
Native American‐owned 1 0 <0.1 %
Prime contracts
Minority‐owned and woman‐owned 76 0 <0.1 %
Non‐Hispanic white woman‐owned 55 0 <0.1 %
Minority‐owned 97 408,306 40.8 %
Asian American‐owned 200+ N/A N/A %
Black American‐owned 61 5 <0.1 %
Hispanic American‐owned 13 0 <0.1 %
Native American‐owned 5 0 <0.1 %
Probability of observed
disparity occurring due
to "chance"
Disparity
index
Number of simulation runs out
of one million that replicated
observed utilization
CHAPTER 8.
Program Measures
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 1
CHAPTER 8. Program Measures
AspartofimplementingtheSmall,Women‐Owned,andMinority‐ownedBusiness(SWaM)Program,theCityofVirginiaBeach(theCity)usesvariousrace‐andgender‐neutralmeasurestoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.1Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofallbusinesses—or,allsmallbusinesses—inanorganization’scontracting.Participationinsuchmeasuresisnotlimitedtominority‐andwoman‐ownedbusinesses.Incontrast,race‐andgender‐consciousmeasuresaremeasuresthataredesignedtospecificallyencouragetheparticipationofminority‐andwoman‐ownedbusinessesinanorganization’scontracting(e.g.,usingminority‐ownedbusinesssubcontractinggoalsonindividualcontracts).TheCitydoesnotcurrentlyimplementanyrace‐orgender‐consciousmeasures.
BBCResearch&Consulting(BBC)reviewedmeasuresthattheCitycurrentlyusestoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.Inaddition,BBCreviewedrace‐andgender‐neutralmeasuresthatotherorganizationsintheregionuse.ThatinformationisinstructivebecauseitallowsanassessmentofthemeasuresthattheCityiscurrentlyusingandanassessmentofadditionalmeasuresthattheorganizationcouldconsiderusinginthefuture.BBCreviewedtheCity’sprogrammeasuresinthreeparts:
A. Programoverview;
B. Race‐andgender‐neutralmeasures;and
C. Otherorganizations’programmeasures.
A. Program Overview
TheCityimplementstheSWaMProgramtoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.TheCitybeganimplementingtheSWaMProgram—whichwasmodelledaftertheCommonwealthofVirginia’sSWaMProgram—in2007.InordertobeSWaM‐certified,abusinessmustbe:
Asmallbusinesswith250orfeweremployees,oraverageannualgrossreceiptsof$10millionorlessoverthepreviousthreeyears;
1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewoman‐ownedbusinesses.Informationandresultsforminority‐andwoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 2
Aminority‐ownedbusinessthatisatleast51percentownedandcontrolledbyoneormoreminorityindividualswhoareUnitedStatescitizensorlegalresidentaliens;
Awoman‐ownedbusinessthatisatleast51percentownedandcontrolledbyoneormorewomenwhoareU.S.citizensorlegalresidentaliens;or
Aservice‐disabledveteran‐ownedbusinessthatisatleast51percentownedandcontrolledbyservice‐disabledveteranswhoarecertifiedassuchbytheVirginiaDepartmentofVeteranServices.2
TheCity’sFinanceDepartmentPurchasingDivisionisresponsibleformonitoringprogressrelatedtotheparticipationofSWaM‐certifiedbusinessesinCitycontracts;maintainingalistofSWaM‐certifiedbusinesses;anddevelopingplanstoincreasetheparticipationofSWaMbusinesses.Inaddition,in2008,theCityofVirginiaBeachCityCounciladoptedaresolutionestablishingacitywideaspirationalgoalof10percentminority‐ownedbusinessparticipationinCitycontracts.Theresolutionappliestoconstruction;architectureandengineering;andgoodsandservicescontractswithparticularemphasisonconstructionandarchitectureandengineeringforwhichthereissubstantiallocalmarketcompetition.
B. Race‐ and Gender‐Neutral Measures
TheCityusesmyriadrace‐andgender‐neutralmeasurestoencouragetheparticipationofsmallbusinesses—includingmanyminority‐,woman‐,andservice‐disabledveteran‐ownedbusinesses—initscontracting.TheCityusesthefollowingtypesofrace‐andgender‐neutralmeasures:
Businessdevelopmentprograms;
Advocacyandoutreachefforts;
Financialincentives;
TheSWaMMentorshipProgram;
Entrepreneur‐in‐ResidenceProgram;
TheBondWaiver/PrequalificationProgram;and
TheSmallBusinessEnhancementProgram.
Business development programs.TheCityoffersbusinessdevelopmentopportunitiestosmallbusinessesthroughaseriesofworkshopsandprograms.
Small Business Development Workshop Series.TheCityhostsaseriesoffreeeducationworkshopsontopicsrangingfrombusinessfinancingtocybersecurity.Theworkshopsaredesignedtoeducatesmallbusinessownersaboutkeyfactorsneededtodevelopandgrowtheirbusinesses.Workshopsareheldquarterlyandarefreetoattend.
2AlthoughtheCommonwealthofVirginiaisthesolecertifyingagencyfortheSWaMProgram,theCityofVirginiaBeachallowsbusinessestoself‐certifyasservice‐disabledveteran‐ownedbusinesses.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 3
Contractors Institute (CI).InpartnershipwiththeSoutheasternSmallBusinessDevelopmentCenter,theCityoffersaseriesofbusinesseducationsessionscalledCI.CIprovidessmallbusinesseswithtraininginthepreparationofsubmittingbidsandproposalstolocal,state,andfederalgovernmentagencies.Todate,98smallbusinessesthroughouttheHamptonRoadsregionhavecompletedthethree‐dayprogram,andsmallbusinesseshavebeenawarded23primecontractsafterattendingtheprogram.
Advocacy and outreach efforts.TheCityalsoparticipatesinvariousadvocacy,educational,andoutreachefforts.
Project information sessions. TheDepartmentsofPublicUtilitiesandPublicWorkshostprojectinformationsessionsthroughouttheyeartoprovideinformationaboutupcomingprojects.TheCitytriestoholdprojectsessionsthreetosixmonthspriortomajorsolicitationstoallowbusinessesampleopportunitytoprepareforthesolicitationasaprimecontractororsubcontractor.ProjectmanagersfromtheDepartmentsofPublicUtilitiesandPublicWorksalsoattendthesesessionstoprovidedetailsrelatedtorequestedscopesofservicesandtonetworkwithbusinessownersandrepresentatives.
Hampton University Small Business Center. TheCitypartnerswithHamptonUniversitytohelpitidentifySWaM‐certifiedbusinessesthatareavailableforCityandprivatesectorcontracts.HamptonUniversitythendistributesnoticestothosebusinessesregardingupcomingandfuturenetworkingevents,educationalworkshops,andsolicitations.TheUniversityalsoprovidesassistancewithbidandproposalsubmissions.
Procurement Opportunity Committee (POC).TheCityformedthePOCin2015toassistsmallbusinessesinsuccessfullypursuingcontractingopportunities.TheCity’sPurchasingAgent,SeniorProcurementSpecialist,DepartmentalRepresentatives,SWaMBusinessDevelopmentManager,andtheMinorityBusinessCoordinatorsserveasPOCmembers.POCofferscoaching,mentoring,outreach,andeducationtolocalsmallbusinesses.Todate,firmsparticipatinginPOChavebeenawardedmorethan$1millioninCitycontracts.
Small Business Mentorship Program. TheCitypartnerswithlocaluniversitiesandbusinessleaderstoimplementtheSmallBusinessMentorshipProgram.Theprogramprovidestailoredmentoringtosmallbusinessesandminority‐andwoman‐ownedbusinesses.Theprogramisfreeandoffersmentoringintheareasofhumanresources,informationtechnology,finance,andmarketing.
Financial incentives.TheCityoffersavarietyoffinancialincentivestoqualifyingneworexpandingbusinesstoassistwithvariousbusinesscosts.TheCity’sofferingsinclude:
TheEconomicDevelopmentInvestmentProgram(EDIP),whichprovidesgrantstoqualifyingbusinessesforinfrastructureimprovementsandotherbusinessprojects;
TheViBeCreativeDistrictMatchingGrantProgram,whichprovidesgrantstoqualifyingbusinesseswithinparticularCityboundariesforbuildingimprovements,equipmentpurchases,ormodernizationprojects;and
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 4
Industrialrevenuebondstoprovidefinancialassistancetoprivatesectorentitiesfortheacquisitionandconstructionofindustrialandcommercialfacilities.
TheCityalsooffersenergy‐efficientbuildingtaxreductions,datacentertaxreductions,andadditionaltaxandbusinesslicensingincentivestosupportbusinessformationandgrowththroughoutVirginiaBeach.
SWaM Mentorship Program.TheCity’sSWaMMentorshipProgramprovidestailoredbusinessmentoringtosmallbusinessesthroughoutVirginiaBeach.TheCitypartnerswithlocaluniversitiesandbusinessleaderstoprovideproject‐specificmentoring,handsonbusinessmentoring,andfocusgrouptrainingintheareasofhumanresources,informationtechnology,finance,andmarketing.Theprogramisfreeofchargeforqualifyingsmallbusinesses.
TheCityalsopartnerswithServiceCorpsofRetiredExecutives(SCORE)—anationalnonprofitassociationthatoffersfreeeducation,counseling,andrelatedresourcesforstartingandexpandingsmallbusinesses—tooffermentorservices.SCOREprovidesfreementoringandlow‐costtrainingandconductsavarietyofworkshopsonlineandinpersonthataddressmanyoftheessentialstrategiesnecessaryforestablishingandmanagingsuccessfulbusinesses.
Entrepreneur‐in‐Residence Program.TheCitypartnerswith1701—VirginiaBeach'sfirstcollaborativecoworkingspacelocatedintheViBeCreativeDistrict—toprovidecoworkingspaceandservicestoconnectlocalbusinessesandsupportbusinessdevelopment.Theprogramoffersnetworkingevents,socialmediaandmagazinepromotion,classesandworkshops,businessmentoring,andvariousotherbusinesssupportiveservices.Businessescanalsoapplytoearnthreemonthsoffreecoworkingofficespace.
Bond Waiver/Prequalification Program.TheVirginiaBeachCityCounciladoptedtheBondWaiver/PrequalificationProgramin2011toassistsmallbusinesses,minority‐,woman‐,andservice‐disabledveteran‐ownedbusinessesinsecuringcontractingopportunitieswithouttheadditionalburdenofbid,performance,andpaymentbondcosts.TheCityappliestheprogramtonon‐transportationconstructionprojectsvaluedbetween$100,000and$500,000.
Small Business Enhancement Program (SBEP).TheCitybeganimplementingSBEPin2012.TheprogramrequiresprimecontractorswhochoosetosubcontractanyportionofaCityconstructioncontracttosubcontractaminimumof50percentofthesubcontractedworktoSWaM‐certifiedbusinesses.
C. Other Organizations’ Program Measures
Inadditiontotherace‐andgender‐neutralmeasuresthattheCitycurrentlyuses,thereareanumberofrace‐andgender‐neutralprogrammeasuresthatotherorganizationsinVirginiausetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesintheircontracting.Figure8‐1providesexamplesofthosemeasures.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 5
Figure 8‐1. Examples of race‐ and gender‐neutral program measures that other organizations in Virginia use
Type Examples of Program Measures
The Virginia Department of Housing and Community Development (DHCD) offers the Virginia
Individual Development Accounts (VIDA) program to encourage saving and improve personal
financial management. DHCD provides matching funds for individuals who are saving for specific
purposes, such as homeownership, education, or business start‐ups. VIDA funds can be used for
various expenses that help individuals start or expand their businesses, including business
equipment, inventory, or post‐secondary education tuition payments. Participants receive $8 in
match funds for every $1 they save, up to $4,000. They also receive technical training and
support.
The Virginia Economic Development Partnership has established the Virginia Small Business
Financing Authority (VSBFA)—the Commonwealth of Virginia’s business and economic
development financing arm—to provide capital to businesses for economic growth and
expansion. The financing comes in many different forms, including loans, bonds, and grants. The
VSBFA also has weekly business development events which are offered free of charge. The
events cover topics such as working with the Commonwealth and Federal Disadvantaged
Business Enterprise (DBE) requirements. VSBFA also offers one‐on‐one business counseling.
The Franklin County Office of Economic Development offers a number of grant opportunities to
assist businesses with growth and expansion. The Franklin County Job Creation Grant is available
to all businesses—new or expanding, in any industry—that are investing in the local economy
and creating local jobs. The grant amount depends on the size of the business’s investment and
the number of jobs it creates within Franklin County. The Franklin County Training Grant is
available to local employers for supporting training related to business expansions. The grant
can also be used to train employees. Businesses can receive up to $150 per employee. Grants
are limited to $5,000 per request.
Hiscox and Hartford Insurance both offer various types of small business insurance, including
general and professional liability; errors and omissions; and workers’ compensation insurance.
Both companies offer free risk assessment to help small businesses select tailored insurance
products to cover their needs.
Mentor‐Protégé
Programs
THRIVE Mentor Network has partnered with the Small Business Development Centers, George
Mason University, Chamber Richmond Virginia , and the Small Business Administration to help
individuals and small businesses with every aspect of starting, running, and growing a business.
Registration is free, and events are held on a weekly basis. Business owners have the option to
choose their own mentor. THRIVE also provides learning guides, which cover a variety of topics
related to starting and operating a business.
Capital, Bonding,
and Insurance
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 8, PAGE 6
Figure 8‐1. (continued) Examples of race‐ and gender‐neutral program measures that other organizations in Virginia use
Type Examples of Program Measures
Mentor‐Protégé
Programs
The Hampton Roads Chamber of Commerce and the Small Business Development Centers of
Hampton Roads created the PROPEL Mentor‐Protégé Program to provide extensive support and
training to small businesses. The program begins with a seven‐week Business Bootcamp and
then provides follow‐up counseling and monthly mentoring. Mentoring is provided for two
years, and participants are matched with successful entrepreneurs recruited from the
Entrepreneur Organization, the Chamber Board of Directors, and other organizations
throughout the region. Participants also benefit from peer‐to‐peer mentoring during monthly
Protégé Round Up meetings. Tuition for this program is $400 per student and covers all training
materials and follow‐up support.
The Virginia Chamber of Commerce offers businesses the opportunity to market themselves
amongst top executives in Virginia. The Virginia Chamber hosts business recognition events and
conferences on a monthly basis. Events typically cost between $95 and $125 per attendee. The
Virginia Chamber has also developed a nonprofit association for CEOs of small‐ to mid‐size
businesses called the Virginia Council of CEOs. The association allows CEOs to learn and grow
from one another. It currently has 200 members.
The National Seminars Training is an organization that offers educational training and seminars
across the county. The organization offer a number of workshops and seminars throughout
Virginia to business professionals in all industries. The seminars cost anywhere from $99 for a
one‐day seminar to $900 for more intensive multi‐day workshops. Seminars cover a variety of
topics, from human resource and payroll law to using Excel and project management. Seminars
are offered throughout the state on a regular basis. Individuals can register for a seminar
through the National Seminars Training website.
The City of Norfolk offers a series of business training seminars through its Small Business
Initiative (SBI). Seminars are suitable for all stages of business growth, free of charge, and cover
a variety of topics, including business planning, online marketing, financing, networking, and
contracting with government agencies. Recent seminars have covered cash flow management,
bookkeeping, tax planning, social media marketing, and search engine optimization. SBI also
offers one‐on‐one business consultations, networking opportunities, and empowerment events.
The Association of Procurement Technical Assistance Centers (APTAC) is a national nonprofit
that offers Procurement Technical Assistance Programs (PTAP) across the country. Its mission is
to expand the number of businesses capable of participating in the public sector. The Virginia
PTAP provides counseling, training, special events, and bid match services to businesses.
Counseling is free for Virginia‐based businesses as long as they register with APTAC. The
program provides business counseling specifically related to federal set‐asides, certification
requirements, and pre‐ and post‐contract award compliance. Counseling meetings are
conducted in person and scheduled on a first‐come first‐served basis. Counseling sessions
typically last one hour. PTAP offers a number of other business trainings, both in person and via
webinar. Trainings are held quarterly and cover procurement‐related topics. Most trainings are
offered at no charge but some require a small fee. The City has partners with the organizations
local chapter to facilitate a number of trainings and workshops.
Technical
Assistance,
Education, and
Networking
CHAPTER 9.
Program Implementation
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CHAPTER 9. Program Implementation
ThedisparitystudyprovidessubstantialinformationthattheCityofVirginiaBeach(theCity)shouldconsidertorefineitsimplementationoftheSmall,Women‐Owned,andMinority‐ownedBusiness(SWaM)Programandbetterencouragetheparticipationofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinCitycontracting.Below,BBCpresentsseveralkeyconsiderationsthattheCityshouldmake.
Overall Goals
In2010,theCityadoptedanannualaspirationalgoalof10percentforminority‐ownedbusinessparticipationinCitycontracts.Eachyear,theCityusesmyriadrace‐andgender‐neutralmeasurestoencouragetheparticipationofminority‐ownedbusinessesaswellaswoman‐ownedbusinessesandservice‐disabledveteran‐ownedbusinessesinitscontracting.Resultsfromthedisparitystudy—particularlytheavailabilityanalysisandanalysesofmarketplaceconditions—canbehelpfultotheCityinrevisingitsoverallgoalforminority‐ownedbusinesses.ResultsfromthedisparitystudycanalsobehelpfultotheCityinestablishingoverallgoalsforwoman‐ownedandservice‐disabledveteran‐ownedbusinessesifitdeemsthemappropriate.TheCityshouldconsiderwhetheritisappropriatetoestablishseparategoalsforminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesorwhetheritwillcountparticipationofthosebusinessestowardsoneoverallgoal.
Base.TheavailabilityanalysisprovidedinformationthattheCitycanuseasabasisforitsoverallgoal,orgoals.Figure9‐1presentstheavailabilityofminority‐andwoman‐ownedbusinessesfortheconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.AsshowninFigure9‐1,consideringallindustriestogether,minority‐ownedbusinessesmightbeexpectedtoreceive12.0percentofCitycontractingdollars,andwoman‐ownedbusinessesmightbeexpectedtoreceive13.3percentoftheCitycontractingdollars.1Similarly,BBCexaminedtheoverallavailabilityofservice‐disabledveteran‐ownedbusinessesforCitywork.Theavailabilityanalysisindicatedthatservice‐disabledveteran‐ownedbusinessesmightbeexpectedtoreceive11.9percentofCitycontractingdollars.TheCitycouldalsoconsidersettingoverallgoalsseparatelyforitsconstruction;architectureandengineering,otherprofessionalservices;andgoodsandservicescontractsandprocurements.Forexample,asindicatedbyFigure9‐1,theCitycouldestablishanoverallminority‐andwoman‐ownedbusinessgoalof19.8percentforconstructioncontracts.
1Theavailabilityofminority‐andwoman‐ownedbusinessesforallindustriesconsideredtogetherreflectsaweightof0.45forconstruction;0.13forarchitectureandengineering;0.17forotherprofessionalservices;and0.26forgoodsandservices,basedonthevolumeofdollarsthattheCityspentduringthestudyperiodineachindustry.
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 9, PAGE 2
Figure 9‐1. Availability of minority‐ and woman‐owned businesses for City contracts
Note: Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.
Total availability represents a dollar‐weighted aggregation of the availability percentages associated with each relevant industry based on the actual dollars that the City spent in each industry during the study period.
For details, see Figures F‐2, F‐5, F‐6, F‐7, and F‐8 in Appendix F.
Source: BBC Research & Consulting availability analysis.
Goal adjustments. Insettingoverallannualgoals,organizationsoftenexaminevariousinformationtodeterminewhetheranadjustmenttoavailabilityisnecessarytoaccountforpastparticipationofdisadvantagedbusinessesintheircontracting;currentconditionsinthelocalmarketplacefordisadvantagedindividualsandbusinesses;andotherrelevantfactors.TheFederalDisadvantagedBusinessEnterprise(DBE)Program,whichorganizationsoftenuseasamodeltosetandadjusttheiroverallannualgoals,outlinesseveralfactorsthatorganizationsmightconsiderwhenassessingwhethertoadjusttheirgoals:
1. Volumeofworkminority‐andwoman‐ownedbusinesseshaveperformedinrecentyears;
2. Informationrelatedtoemployment,self‐employment,education,training,andunions;
3. Informationrelatedtofinancing,bonding,andinsurance;and
4. Otherrelevantdata.
1. Volume of work disadvantaged businesses enterprises have performed in recent years. TheUnitedStatesDepartmentofTransportation’s(USDOT’s)“TipsforGoal‐Setting”suggeststhatorganizationsshouldexaminedataonpastparticipationofDBEsintheircontractsinrecentyears.USDOTfurthersuggeststhatorganizationsshouldchoosethemedianlevelofannualDBEparticipationforthoseyearsasthemeasureofpastparticipation:
Yourgoalsettingprocesswillbemoreaccurateifyouusethemedian(insteadoftheaverageormean)ofyourpastparticipationtomakeyouradjustmentbecausetheprocessofdeterminingthemedianexcludesalloutlier(abnormallyhighorabnormallylow)pastparticipationpercentages.2
2SectionIII(A)(5)(c)inUSDOT’s“TipsforGoal‐SettingintheFederalDisadvantagedEnterprise(DBE)Program.”http://www.osdbu.dot.gov/DBEProgram/tips.cfm
Industry
Construction 10.2% 9.6% 19.8%
Architecture and engineering 14.0% 18.6% 32.6%
Other professional services 16.0% 10.3% 26.3%
Goods and services 11.4% 18.8% 30.3%
All industries 12.0% 13.3% 25.2%
Minority‐owned White woman‐owned
Business type
Total
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 9, PAGE 3
IftheCityweretouseanapproachsimilartotheonethatUSDOToutlinesin“TipsforGoalsSetting,”itmightconsidertakingtheaverageofitsoverallannualgoalwiththemedianpastparticipationtoadjustitsgoals.
2. Information related to employment, self‐employment, education, training, and unions.Chapter3summarizesinformationaboutconditionsinthelocalcontractingindustryforminorities,women,andminority‐andwoman‐ownedbusinesses.AdditionalinformationaboutquantitativeandqualitativeanalysesofconditionsinthelocalmarketplacearepresentedinAppendicesCandD.BBC’sanalysesindicatethattherearebarriersthatcertainminoritygroupsandwomenfacerelatedtohumancapital,financialcapital,andbusinessownershipinthelocalmarketplace.Suchbarriersmaydecreasetheavailabilityofminority‐ownedbusinesses,woman‐ownedbusinesses,andotherdisadvantagedbusinessestoobtainandperformthecontractsthattheCityawards.TheCityshouldconsiderthatinformationcarefullyindeterminingwhetheranyadjustmentstoitsoverallgoaliswarranted.
3. Information related to financing, bonding, and insurance. BBC’sanalysisofaccesstofinancing,bonding,andinsurancealsorevealedquantitativeandqualitativeevidencethatminorities;women;andminority‐andwoman‐ownedbusinessesintheVirginiaBeachareadonothavethesameaccesstothosebusinessinputsasnon‐Hispanicwhitemenandbusinessesownedbynon‐Hispanicwhitemen(fordetails,seeChapter3andAppendicesCandD).Anybarrierstoobtainingfinancing,bonding,andinsurancemightlimitopportunitiesforminorities,women,andotherdisadvantagedindividualstosuccessfullyformandoperatebusinessesinthelocalmarketplace.SuchbarrierswouldalsoplacethosebusinessesatadisadvantageincompetingforCityprimecontractsandsubcontracts.Thus,theCityshouldalsoconsiderinformationaboutfinancing,bonding,andinsuranceindeterminingwhethertomakeanyadjustmentstoitsoverallgoal.
4. Other factors.TheFederalDBEProgramsuggeststhatorganizationsalsoexamine“otherfactors”whendeterminingwhethertoadjusttheiroverallannualgoals.Forexample,thereisquantitativeevidencethatcertaingroupsofminority‐andwoman‐ownedbusinessesarelesssuccessfulthanbusinessesownedbynon‐Hispanicwhitemenandfacegreaterbarriersinthemarketplace,evenafteraccountingforrace‐andgender‐neutralfactors.Chapter3summarizesthatevidenceandAppendixCpresentscorrespondingquantitativeanalyses.Thereisalsoqualitativeevidenceofbarrierstothesuccessofminority‐andwoman‐ownedbusinesses,aspresentedinAppendixD.Someofthatinformationsuggeststhatdiscriminationonthebasisofrace/ethnicityandgenderadverselyaffectsminority‐andwoman‐ownedbusinessesinthelocalcontractingindustry.
Other Considerations
BBCidentifiedvariousconsiderationsthattheCityshouldmakebasedondisparitystudyresultsandthestudyteam’sreviewoftheCity’scontractingpracticesandprogrammeasures.Inmakingthoseconsiderations,theCityshouldassesswhetheradditionalresources,changesininternalpolicy,orchangesinlawmayberequired.
City SWaM office.TheCitydoesnothaveadedicatedofficetoimplementtheSWaMProgramandmonitortheparticipationofSWaM‐certifiedbusinessesinitscontracts.Instead,theCity
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 9, PAGE 4
currentlyreliesonstaffwhoworkinthePurchasingDivisiontodoso.TheCityshouldconsiderestablishingadedicatedofficeresponsibleforimplementingtheSWaMprogramandmonitoringprogressthattheCityismakingtowardsencouragingtheparticipationofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesinitscontracting.Theofficeshouldhaveenoughdedicatedstafftocarryoutessentialprogramfunctions,potentiallyincluding:
Certifyingbusinessesandassistingthemwithcertificationrequirements;
Developingprogrammeasuresandsupportingdocuments;
Implementingbusinessdevelopmentprograms;
CollectingdataandmonitoringSWaM‐certifiedbusinessparticipationinCitycontracts;
TrainingCitystaffonprogrampoliciesanddatareportingrequirements;and
WorkingwithCitydepartmentstohostnetworkingandoutreachevents.
AlthoughtheCity’sMinorityBusinessCoordinatorcurrentlyworkswithinthePurchasingDivision,theCitymightinsteadconsiderhousingaSWaMOfficewithintheOfficeofEconomicDevelopment.DoingsowouldallowSWaMstafftomoreeffectivelypartnerwiththeOfficeofEconomicDevelopment,whichalreadycarriesoutanumberofactivitiesrelevanttopotentialSWaMOfficeefforts(e.g.,providingbusinessassistanceservices).
Networking and outreach. TheCityhostsandparticipatesinmanynetworkingandoutreacheventsthatincludeinformationaboutbusinessassistance,doingbusinesswiththeCity,andupcomingbidopportunities.TheCitypartnerswithanumberoflocalorganizationstooffersmallbusinesstrainingandassistance.TheCityshouldconsidercontinuingthoseeffortsandconsiderbroadeningitseffortstoincludemorepartnershipswithlocaltradeorganizationsandotherpublicorganizationsthathaveinitiativesinplacetoencouragethegrowthofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinesses.TheCitymightalsoconsidercreatingaconsortiumoflocalorganizationsthatwouldjointlyhostquarterlyoutreachandnetworkingeventsaswellastrainingsessionsforbusinessesseekingpublicsectorcontracts.Inaddition,theCityshouldconsiderwaysthatitcanbetterleveragetechnologytonetworkmoreeffectivelywithbusinessesthroughouttheregion.TheCitycouldconsidermakinguseofonlineprocurementfairs,webinars,conferencecalls,andothertoolstoprovideoutreachandtechnicalassistance.
Data collection.TheCitymaintainscomprehensivedataontheprimecontractsandprocurementsthatitawards,andthosedataaregenerallywell‐organizedandcomprehensive.However,theCitydoesnotmaintainanadequatelinkbetweenitscontractingandpaymentinformationandcouldeasilydosoinitscurrentsystems.DoingsowouldallowtheCitytoaccuratelyassesswhethertherearesubstantialdifferencesbetweencontractawardandpaymentamounts.Moreover,theCitydoesnotmaintaincomprehensivedataonsubcontractsthatareassociatedwiththeprimecontractsthatitawards.TheCityshouldconsidercollectingcomprehensivedataonallsubcontracts,regardlessofwhethertheyareperformedbyminority‐ownedbusinesses,woman‐ownedbusinesses,service‐disabledveteran‐ownedbusiness,orbusinessesownedbynon‐Hispanicwhitemenwhoarenotservice‐disabledveterans.Collecting
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 9, PAGE 5
dataonallsubcontractswillhelpensurethattheCitymonitorstheparticipationofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesasaccuratelyaspossible.Collectingthefollowingdataonallsubcontractswouldbeappropriate:
Subcontractorname,address,phonenumber,andemailaddress;
Typeofassociatedwork;
Subcontractawardamount;and
Subcontractpaid‐to‐dateamounts.
TheCityshouldconsidercollectingthosedataaspartofbidsbutalsorequiringprimecontractorstosubmitdataonsubcontractsaspartoftheinvoicingprocessforallcontracts.TheCityshouldtrainrelevantdepartmentstafftocollectandentersubcontractdataaccuratelyandconsistently.
Growth monitoring.Alongwithworkingtoimproveitscontractingandvendordatasystems,theCitymightalsoconsidercollectingdataontheimpactthattheSWaMProgramhasonthegrowthofminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesovertime.DoingsowouldrequiretheCitytocollectbaselineinformationonSWaM‐certifiedbusinesses—suchasrevenue,numberoflocations,numberofemployees,andemployeedemographics—andthencontinuetocollectthatinformationfromeachbusinessonanannualbasis.SuchmetricswouldallowtheCitytoassesswhethertheprogramishelpingbusinessesgrowandrefinethemeasuresthatitusesaspartoftheSWaMProgram.
Business certification. TheCitydoesnotcurrentlycertifyminority‐andwoman‐ownedbusinessesorotherdiversebusinessesitselfbutinsteadreliesontheVirginiaDepartmentofSmallBusinessandSupplierDiversity(SBSD)todoso.Somebusinessesparticipatinginin‐depthinterviewsandpublicmeetingscommentedonthedifficultiesandtimerequirementsassociatedwithSBSD’scertificationprocess.TheCitymightconsideroperatingitsowncertificationprocessaspartoftheSWaMProgramalongwithrecognizingSBSD‐certifiedbusinesses.DoingsowouldallowtheCitytocertifyminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinessesusingcriteriathataremostrelevanttoitslocalmarketplace(e.g.,race/ethnicityofowners,genderofowners,andrevenuerequirements).Developingacertificationprocesswouldrequirenewpoliciesandsubstantialresources.TheCitymightconsiderworkingwithaconsultingfirmthatspecializesincertificationprocessesifitisinterestedindevelopingitsowncertificationprogram.Inaddition,theCityshouldconsiderbusinesssizelimitationsaspartofitscertificationprocess,particularlyrelatingtorevenueandpersonalnetworth.ManyorganizationsthatcertifybusinessesusesizelimitationssetforthbytheUnitedStatesSmallBusinessAdministration.
Subcontract opportunities.Subcontractsoftenrepresentaccessibleopportunitiesforsmallanddiversebusinessestobecomeinvolvedincontracting.However,subcontractingaccountedforarelativelysmallpercentageofthetotalcontractingdollarsthattheCityawardedduringthestudyperiod.Toincreasethenumberofsubcontractopportunities,theCitycouldconsiderimplementingaprogramthatrequiresprimecontractorstosubcontractacertainamountofprojectworkaspartoftheirbidsandproposals,regardlessoftherace/ethnicityorgenderof
BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 9, PAGE 6
subcontractorowners.Forspecifictypesofcontractswheresubcontractingorpartnershipopportunitiesmightexist,theCitycouldsetaminimumpercentageofworktobesubcontracted.Primecontractorswouldthenhavetomeetorexceedthisthresholdinorderfortheirbidstobeconsideredresponsive.
IftheCityweretoimplementsuchaprogram,itshouldincludeflexibilityprovisionssimilartogoodfaitheffortsprocessesthatwouldrequireprimecontractorstodocumenttheireffortstoidentifyandincludepotentialsubcontractorsintheirproposalsforCitycontracts.TheCityshoulddevelopclearguidelinestodeterminewhethercontractorsaremakinggoodfaitheffortstomeettheminimumsubcontractingrequirement.
Contract goals. TheCityshouldconsiderusingminority‐andwoman‐ownedbusinessgoalsonindividualcontractsthatitawards.DisparityanalysisresultsindicatedthatnearlyallrelevantgroupsshowedsubstantialdisparitiesonthecontractsthattheCityawardedduringthestudyperiod,indicatingthattheyarefacingbarriersaspartoftheCity’scontractingprocesses.BecausetheCityusesmanyrace‐andgender‐neutralmeasurestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontracting,andbecausethosemeasureshavenotsufficientlyaddresseddisparitiesforseveralindividualgroups,theCitymightconsiderusingcontractgoalsinthefuture.Becausetheuseofsuchgoalswouldbeconsideredarace‐andgender‐consciousmeasure,theCitywillneedtoensurethattheuseofthosegoalsmeetsthestructscrutinystandardofconstitutionalreview,includingshowingacompellinggovernmentalinterestfortheiruseandensuringthattheiruseisnarrowlytailored(fordetails,seeChapter2andAppendixB).Priortoimplementingcontractgoals,theCityshouldconsiderwhetherithasfullyimplementeditsexistingrace‐andgender‐neutralmeasuresandwhetheritcanimplementadditionalrace‐andgender‐neutralmeasurestofurtherencouragetheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracting.
Unbundling large contracts. Ingeneral,minority‐andwoman‐ownedbusinessesexhibitedreducedavailabilityforrelativelylargecontractsthattheCityawardedduringthestudyperiod.Inaddition,aspartofin‐depthinterviewsandpublicmeetings,severalbusinessesownersreportedthatthesizeofgovernmentcontractsoftenservesasabarriertotheirsuccess(fordetails,seeAppendixD).Tofurtherencouragetheparticipationofsmallanddiversebusinesses,theCityshouldconsidermakingeffortstounbundlerelativelylargeprimecontractsandevensubcontractsintoseveralsmallercontracts.Forexample,theCityofCharlotte,NorthCarolinaencouragesprimecontractorstounbundlesubcontractingopportunitiesintosmallercontractpiecesthataremorefeasibleforsmallbusinessesandminority‐andwoman‐ownedbusinessestoworkonandacceptssuchattemptsasgoodfaitheffortsaspartofitscontractinggoalsprogram.Doingsowouldresultinthatworkbeingmoreaccessibletosmallbusinesses,whichinturnmightincreaseopportunitiesforsmallbusinessesandresultingreaterminority‐,woman‐,andservice‐disabledveteran‐ownedbusinessparticipation.
Prompt payment.Aspartofin‐depthinterviews,severalbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,reporteddifficultieswithreceivingpaymentinatimelymanneronCitycontracts,particularlywhentheyworkassubcontractors(fordetails,seeAppendixD).Manybusinessesalsocommentedthathavingcapitalonhandiscrucialtobusinesssuccessandoftenachallengeforsmallbusinesses.Citycontractsincludelanguagetoensure
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promptpaymentofsubcontractors,buttheCityshouldconsiderreinforcingpromptpaymentpolicieswithitsprocurementstaffandprimecontractors.Inaddition,theCitytypicallypayscontractorsviahardcopychecksandcouldconsiderautomatingpayments.Doingsomighthelpensurethatbothprimecontractorsandsubcontractorsreceivepaymentinatimelymanner.Itmayalsohelpensurethatminority‐ownedbusinesses,woman‐ownedbusinesses,andservice‐disabledveteran‐ownedbusinesseshaveenoughoperatingcapitaltoremainsuccessful.
APPENDIX A.
Definitions of Terms
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APPENDIX A. Definitions of Terms
AppendixAdefinestermsthatareusefultounderstandingtheCityofVirginiaBeachDisparityStudyreport.Thefollowingdefinitionsareonlyrelevantinthecontextofthisreport.
Anecdotal Information
Anecdotalinformationincludespersonalqualitativeaccountsandperceptionsofspecificincidents—includinganyincidentsofdiscrimination—sharedbyindividualintervieweesorparticipants.
Availability Analysis
Anavailabilityanalysisassessesthepercentageofdollarsthatonemightexpectaspecificgroupofbusinessestoreceiveoncontractsorprocurementsthataparticularorganizationawards.TheavailabilityanalysisinthisreportisbasedonthematchbetweenvariouscharacteristicsofpotentiallyavailablebusinessesandofprimecontractsandsubcontractsthattheCityofVirginiaBeachawardedduringthestudyperiod.
Business
Abusinessisafor‐profitenterpriseincludingallofitsestablishmentsorlocationsandincludingsoleproprietorships,corporations,professionalcorporations,limitedliabilitycompanies,limitedpartnerships,limitedliabilitypartnerships,oranyotherpartnershipsregardlessofwhethertheywereformedunderthelawsoftheCommonwealthofVirginia.
Business Listing
Abusinesslistingisarecordinadatabaseofbusinessinformation.Arecordisconsideredalistinguntilthestudyteamdeterminesthatthelistingactuallyrepresentsabusinessestablishmentwithaworkingphonenumber.
Business Establishment
Abusinessestablishmentisaplaceofbusinesswithanaddressandaworkingphonenumber.Asinglebusiness,orfirm,canhavemanybusinessestablishments,orlocations.
City of Virginia Beach (City)
VirginiaBeachisthemostpopulouscityinVirginiaandoneofthe40mostpopulouscitiesintheUnitedStates.TheCityprovidesmyriadservicestothenearly500,000peoplewholiveandworkintheregion.Thoseservicesincludepoliceandfireprotection;healthandmentalhealthservices;roadconstructionandmaintenance;waterandsewageservices;andavarietyofsocialandeconomicservices.
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Commonwealth of Virginia (Commonwealth)
TheCommonwealthcomprisesvariousagencies,departments,andofficestooverseethefunctionsandmanagementofVirginia.ItalsooperatestheSmall,Woman,andMinority‐ownedBusinessProgram.
Compelling Governmental Interest
Aspartofthestrictscrutinystandardofconstitutionalreview,agovernmentorganizationmustdemonstrateacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationinordertoimplementrace‐orgender‐consciousmeasures.Anorganizationthatusesrace‐orgender‐consciousmeasuresaspartofacontractingprogramhastheinitialburdenofshowingevidenceofdiscrimination—includingstatisticalandanecdotalevidence—thatsupportstheuseofsuchmeasures.Theorganizationmustassesssuchdiscriminationwithinitsownrelevantgeographicmarketarea.
Consultant
Aconsultantisabusinessthatperformsprofessionalservicescontracts.
Contract
Acontractisalegallybindingrelationshipbetweenthesellerofgoodsorservicesandabuyer.Thestudyteamoftenusesthetermcontractsynonymouslywithprocurement.
Contract Element
Acontractelementiseitheraprimecontractorasubcontract.
Contractor
Acontractorisabusinessthatperformsconstructioncontracts.
Control
Controlmeansexercisingmanagementandexecutiveauthorityofabusiness.
Custom Census Availability Analysis
Acustomcensusavailabilityanalysisisoneinwhichresearchersattemptsurveyswithpotentiallyavailablebusinessesworkinginthelocalmarketplacetocollectinformationaboutkeybusinesscharacteristics.Researchersthentakesurveyinformationaboutpotentiallyavailablebusinessesandmatchthemtothecharacteristicsofprimecontractsandsubcontractsthatanorganizationactuallyawardedduringthestudyperiodtoassessthepercentageofdollarsthatonemightexpectaspecificgroupofbusinessestoreceiveoncontractsorprocurementsthattheorganizationawards.Acustomcensusavailabilityapproachisacceptedintheindustryasthepreferredmethodforconductingavailabilityanalyses,becauseittakesseveraldifferentfactorsintoaccount,includingbusinesses’primarylinesofworkandtheircapacitytoperformonanorganization’scontracts.
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Disparity
Adisparityisadifferenceorgapbetweenanactualoutcomeandsomebenchmark.Inthisreport,thetermdisparityreferstoadifferencebetweentheparticipationofaspecificgroupofbusinessesinCitycontractingandtheavailabilityofthatgroupforCitywork.
Disparity Analysis
AdisparityanalysisexamineswhetherthereareanydifferencesbetweentheparticipationofaspecificgroupofbusinessesinCitycontractingandtheavailabilityofthatgroupforCitywork.
Disparity Index
AdisparityindexiscomputedbydividingtheactualparticipationofaspecificgroupofbusinessesinCitycontractingbytheavailabilityofthatgroupforCityworkandmultiplyingtheresultby100.Smallerdisparityindicesindicatelargerdisparities.
Dun & Bradstreet (D&B)
D&Bistheleadingglobalprovideroflistsofbusinessestablishmentsandotherbusinessinformationforspecificindustrieswithinspecificgeographicalareas(fordetails,seewww.dnb.com).
Enterprise
Anenterpriseisaneconomicunitthatcouldbeafor‐profitbusinessorbusinessestablishment;nonprofitorganization;orpublicsectororganization.
Firm
Seebusiness.
Industry
Anindustryisabroadclassificationforbusinessesprovidingrelatedgoodsorservices(e.g.,constructionorotherprofessionalservices).
Local Marketplace
Seerelevantgeographicmarketarea.
Majority‐owned Business
Amajority‐ownedbusinessisafor‐profitbusinessthatisatleast51percentownedandcontrolledbynon‐Hispanicwhitemenwhoarenotservicedisabledveterans.
Minority
Aminorityisanindividualwhoidentifieswithoneofthefollowingracial/ethnicgroups:AsianAmericans,BlackAmericans,HispanicAmericans,orNativeAmericans.
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Minority‐owned Business
Aminority‐ownedbusinessisabusinesswithatleast51percentownershipandcontrolbyindividualswhoidentifythemselveswithoneofthefollowingracial/ethnicgroups:AsianAmericans,BlackAmericans,HispanicAmericans,orNativeAmericans.Abusinessdoesnothavetobecertifiedtobeconsideredaminority‐ownedbusinessinthisstudy.(Thestudyteamconsideredbusinessesownedbyminoritywomenasminority‐ownedbusinesses.)
Narrow Tailoring
Aspartofthestrictscrutinystandardofconstitutionalreview,agovernmentorganizationmustdemonstratethatitsuseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Thereareanumberoffactorsthatacourtconsiderswhendeterminingwhethertheuseofsuchmeasuresisnarrowlytailored,including:
a) Thenecessityofsuchmeasuresandtheefficacyofalternative,race‐andgender‐neutralmeasures;
b) Thedegreetowhichtheuseofsuchmeasuresislimitedtothosegroupsthatactuallysufferdiscriminationinthelocalmarketplace;
c) Thedegreetowhichtheuseofsuchmeasuresisflexibleandlimitedinduration,includingtheavailabilityofwaiversandsunsetprovisions;
d) Therelationshipofanynumericalgoalstotherelevantbusinessmarketplace;and
e) Theimpactofsuchmeasuresontherightsofthirdparties.
Non‐response Bias
Non‐responsebiasoccursinsurveyresearchwhenparticipants’responsestosurveyquestionstheoreticallydifferfromthepotentialresponsesofindividualswhodidnotparticipateinthesurvey.
Participation
Seeutilization.
Prime Consultant
Aprimeconsultantisaprofessionalservicesbusinessthatperformsprofessionalservicesprimecontractsdirectlyforendusers,suchastheCity.
Prime Contract
Aprimecontractisacontractbetweenaprimecontractor,orprimeconsultant,andanenduser,suchastheCity.
Prime Contractor
Aprimecontractorisaconstructionbusinessthatperformsprimecontractsdirectlyforendusers,suchastheCity.
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Project
Aprojectreferstoaconstruction;architectureandengineering;otherprofessionalservices;orgoodsandservicesendeavorthattheCitybidoutduringthestudyperiod.Aprojectcouldincludeoneormoreprimecontractsandcorrespondingsubcontracts.
Race‐ and Gender‐conscious Measures
Race‐andgender‐consciousmeasuresarecontractingmeasuresthatarespecificallydesignedtoincreasetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting.Businessesownedbymembersofcertainracial/ethnicgroupsmightbeeligibleforsuchmeasuresbutnototherbusinesses.Similarly,businessesownedbywomenmightbeeligiblebutnotbusinessesownedbymen.
Race‐ and Gender‐neutral Measures
Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoremovepotentialbarriersforallbusinessesattemptingtodoworkwithanorganizationormeasuresthataredesignedtoincreasetheparticipationofsmalloremergingbusinessesintheorganization’scontracts,regardlessoftherace/ethnicityorgenderoftheowners.Race‐andgender‐neutralmeasuresmayincludeassistanceinovercomingbondingandfinancingobstacles;simplifyingbiddingprocedures;providingtechnicalassistance;establishingprogramstoassiststart‐ups;andothermethodsopentoallbusinesses,regardlessoftherace/ethnicityorgenderoftheowners.
Rational Basis
Governmentorganizationsthatimplementcontractingprogramsthatrelyonlyonrace‐andgender‐neutralmeasurestoencouragetheparticipationofsmallbusinesses,regardlessoftherace/ethnicityorgenderofbusinessowners,mustshowarationalbasisfortheirprograms.Showingarationalbasisrequiresorganizationstodemonstratethattheircontractingprogramsarerationallyrelatedtoalegitimategovernmentinterest.Itisthelowestthresholdforevaluatingthelegalityofgovernmentcontractingprograms.Whencourtsreviewprogramsbasedonarationalbasis,onlythemostegregiousviolationsleadtoprogramsbeingdeemedunconstitutional.
Relevant Geographic Market Area
TherelevantgeographicmarketareaisthegeographicareainwhichthebusinessestowhichtheCityawardsmostofitscontractingdollarsarelocated.Therelevantgeographicmarketareaisalsoreferredtoasthelocalmarketplace.Caselawrelatedtocontractingprogramsanddisparitystudiesrequiresdisparitystudyanalysestofocusontherelevantgeographicmarketarea.TherelevantgeographicmarketareafortheCityisVirginiaBeach,Norfolk,Chesapeake,andPortsmouthCountiesinVirginia.
Service Disabled Veteran‐owned Business
Aservicedisabledveteran‐ownedbusinessisabusinesswithatleast51percentownershipandcontrolbyveteransoftheUnitedStatesmilitarywhohavephysicalormentaldisabilitiesdirectlyrelatedtotheirmilitaryservice.
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Small, Woman, and Minority‐owned Business (SWaM) Program
TheSWaMProgramisdesignedtoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinCitycontractingandprocurement,particularlyinthecontractingareasofconstruction;architectureandengineering;andotherprofessionalservices.TheCityusesvariousrace‐andgender‐neutralmeasurestomeettheobjectivesoftheprogrambutdoesnotcurrentlyuseanyrace‐orgender‐consciousmeasures.
Statistically Significant Difference
Astatisticallysignificantdifferencereferstoaquantitativedifferenceforwhichthereisa0.95or0.90probabilitythatchancecanbecorrectlyrejectedasanexplanationforthedifference(meaningthatthereisa0.05or0.10probability,respectively,thatchanceinthesamplingprocesscouldcorrectlyaccountforthedifference).
Strict Scrutiny
Strictscrutinyisthelegalstandardthatagovernmentorganization’suseofrace‐andgender‐consciousmeasuresmustmeetinorderforittobeconsideredconstitutional.Strictscrutinyrepresentsthehighestthresholdforevaluatingthelegalityofrace‐andgender‐consciousmeasuresshortofprohibitingthemaltogether.Underthestrictscrutinystandard,anorganizationmust:
a) Haveacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationoritspresenteffects;and
b) Establishthattheuseofanysuchmeasuresisnarrowlytailoredtoachievethegoalofremedyingtheidentifieddiscrimination.
Anorganization‘suseofrace‐andgender‐consciousmeasuresmustmeetboththecompellinggovernmentalinterestandthenarrowtailoringcomponentsofthestrictscrutinystandardforittobeconsideredconstitutional.
Study Period
Thestudyperiodisthetimeperiodonwhichthestudyteamfocusedfortheutilization,availability,anddisparityanalyses.TheCityhadtohaveawardedacontractduringthestudyperiodforthecontracttobeincludedinthestudyteam’sanalyses.ThestudyperiodfortheCityofVirginiaBeachDisparityStudywasJuly1,2012throughJune30,2017.
Subconsultant
Asubconsultantisaprofessionalservicesbusinessthatperformsservicesforprimeconsultantsaspartoflargerprofessionalservicescontracts.
Subcontract
Asubcontractisacontractbetweenaprimecontractororprimeconsultantandanotherbusinesssellinggoodsorservicestotheprimecontractororprimeconsultantaspartofalargercontract.
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Subcontractor
Asubcontractorisabusinessthatperformsservicesforprimecontractorsaspartoflargercontracts.
Subindustry
Asubindustryisaspecificclassificationforbusinessesprovidingrelatedgoodsorserviceswithinaparticularindustry(e.g.,water,sewer,andutilitylinesisasubindustryofconstruction).
Utilization
Utilizationreferstothepercentageoftotalcontractingdollarsthatwereassociatedwithaparticularsetofcontractsthatwenttoaspecificgroupofbusinesses.
Vendor
AvendorisabusinessthatsellsgoodseithertoaprimecontractororprimeconsultantortoanendusersuchastheCity.
Woman‐owned Business
Awoman‐ownedbusinessisabusinesswithatleast51percentownershipandcontrolbynon‐Hispanicwhitewomen.Abusinessdoesnothavetobecertifiedtobeconsideredawoman‐ownedbusiness.(Thestudyteamconsideredbusinessesownedbyminoritywomenasminority‐ownedbusinesses.)
APPENDIX B.
Legal Framework and Analysis
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Table of Contents
APPENDIXB.LEGALFRAMEWORKANDANALYSIS............................................................................................................................1
EXECUTIVESUMMARY.....................................................................................................................................................................................1
A.Introduction..............................................................................................................................................................................................1
B.U.S.SupremeCourtCases....................................................................................................................................................................2
1.CityofRichmondv.J.A.CrosonCo.,488U.S.469(1989)..................................................................................................2
2.AdarandConstructors,Inc.v.Pena(“AdarandI”),515U.S.200(1995).....................................................................4
C.TheLegalFrameworkAppliedtoStateandLocalGovernmentMBE/WBE/DBEPrograms..................................5
1.Strictscrutinyanalysis.....................................................................................................................................................................5
2.Intermediatescrutinyanalysis..................................................................................................................................................17
3.Rationalbasisanalysis..................................................................................................................................................................19
4.Pendingcases(atthetimeofthisreport).............................................................................................................................23
SUMMARIESOFRECENTDECISIONS......................................................................................................................................................26
D.RecentDecisionsInvolvingStateorLocalGovernmentMBE/WBE/DBEProgramsintheFourthCircuitCourtofAppeals........................................................................................................................................................................................26
1.H.B.RoweCo.,Inc.v.W.LyndoTippett,NCDOT,etal.,615F.3d233(4thCir.2010).......................................26
2.H.B.RoweCorp.,Inc.v.W.LyndoTippett,NorthCarolinaDOT,etal.,589F.Supp.2d587(E.D.N.C.2008),affirmedinpart,reversedinpart,andremanded,615F.3d233(4thCir.2010).........................................36
3.AssociatedUtilityContractorsofMaryland,Inc.v.MayorandCityCouncilofBaltimore,218F.Supp.2d749(D.Md.2002)..............................................................................................................................................................40
4.AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimoreandMarylandMinorityContractorsAssociation,Inc.,83F.Supp.2d613(D.Md.2000)...............................................41
E.RecentDecisionsInvolvingStateorLocalGovernmentMBE/WBE/DBEProgramsinOtherJurisdictions................................................................................................................................................................................................48
RecentDecisionsinFederalCircuitCourtsofAppeal...........................................................................................................48
1.Jana‐RockConstruction,Inc.v.NewYorkStateDept.ofEconomicDevelopment,438F.3d195(2dCir.2006).................................................................................................................................................................................................48
2.RapidTestProds.,Inc.v.DurhamSch.Servs.,Inc.,460F.3d859(7thCir.2006).................................................49
3.Virdiv.DeKalbCountySchoolDistrict,135Fed.Appx.262,2005WL138942(11thCir.2005)(unpublishedopinion).......................................................................................................................................................................50
4.ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003),cert.denied,540U.S.1027,124S.Ct.556(2003)(Scalia,JusticewithwhomtheChiefJusticeRehnquist,joined,dissentingfromthedenialofcertiorari).....................................................................................................................52
5.InreCityofMemphis,293F.3d345(6thCir.2002)........................................................................................................63
6.BuildersAss’nofGreaterChicagov.CountyofCook,Chicago,256F.3d642(7thCir.2001).........................64
7.AssociatedGen.Contractorsv.Drabik,214F.3d730(6thCir.2000),affirmingCaseNo.C2‐98‐943,998WL812241(S.D.Ohio1998).................................................................................................................................................65
8.W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999)...........................................69
9.MontereyMechanicalv.Wilson,125F.3d702(9thCir.1997).....................................................................................71
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10.Eng’gContractorsAss’nofS.Floridav.Metro.DadeCounty,122F.3d895(11thCir.1997)......................72
11.ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,36F.3d1513(10thCir.1994).................83
12.AssociatedGen.ContractorsofCalifornia,Inc.v.CoalitionforEcon.Equity(“AGCC”),950F.2d1401(9thCir.1991)...........................................................................................................................................................................93
13.CoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991)....................................................................96
RecentDistrictCourtDecisions......................................................................................................................................................99
14.KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016)..................................99
15.Thomasv.CityofSaintPaul,526F.Supp.2d959(D.Minn2007),affirmed,321Fed.Appx.541,2009WL777932(8thCir.March26,2009)(unpublishedopinion),cert.denied,130S.Ct.408(2009)....106
16.ThompsonBuildingWreckingCo.v.Augusta,Georgia,No.1:07CV019,2007WL926153(S.D.Ga.Mar.14,2007)(Slip.Op.)................................................................................................................................................................108
17.HershellGillConsultingEngineers,Inc.v.Miami‐DadeCounty,333F.Supp.2d1305(S.D.Fla.2004)......................................................................................................................................................................................................109
18.FloridaA.G.C.Council,Inc.v.StateofFlorida,303F.Supp.2d1307(N.D.Fla.2004)...................................114
19.TheBuildersAss’nofGreaterChicagov.TheCityofChicago,298F.Supp.2d725(N.D.Ill.2003)........115
20.KornhassConstruction,Inc.v.StateofOklahoma,DepartmentofCentralServices,140F.Supp.2d1232(W.D.OK.2001)......................................................................................................................................................................116
21.Websterv.FultonCounty,51F.Supp.2d1354(N.D.Ga.1999),affirmedpercuriam218F.3d1267(11thCir.2000).................................................................................................................................................................................121
22.AssociatedGen.Contractorsv.Drabik,50F.Supp.2d741(S.D.Ohio1999)....................................................124
23.Phillips&Jordan,Inc.v.Watts,13F.Supp.2d1308(N.D.Fla.1998)..................................................................126
F.RecentDecisionsInvolvingtheFederalDBEProgramanditsImplementationbyStateandLocalGovernments............................................................................................................................................................................................127
RecentDecisionsinFederalCircuitCourtsofAppeal........................................................................................................127
1.MountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.,2017WL2179120(9thCir.May16,2017),Memorandumopinion,(NotforPublication)UnitedStatesCourtofAppeals
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fortheNinthCircuit,May16,2017,DocketNos.14‐26097and15‐35003,dismissinginpart,reversinginpartandremandingtheU.S.DistrictCourtdecisionat2014WL6686734(D.Mont.Nov.26,2014).....127
2.MidwestFenceCorporationv.U.S.DepartmentofTransportation,IllinoisDepartmentofTransportation,IllinoisStateTollHighwayAuthority,840F.3d932,2016WL6543514(7thCir.2016),cert.denied,2017WL497345(2017)......................................................................................................................133
3.DunnetBayConstructionCompanyv.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.2015),cert.denied,DunnetBayConstructionCo.v.Blankenhorn,RandallS.,etal.,2016WL193809(Oct.3,2016)..................................................................................................................................................142
4.AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187(9thCir.2013)........................................................................................................146
5.Braunsteinv.ArizonaDOT,683F.3d1177(9thCir.2012)........................................................................................153
6.NorthernContracting,Inc.v.Illinois,473F.3d715(7thCir.2007).........................................................................155
7.WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006)................................................................................................................................................................................157
8.SherbrookeTurf,Inc.v.MinnesotaDOT,andGrossSeedCompanyv.NebraskaDepartmentofRoads,345F.3d964(8thCir.2003),cert.denied,541U.S.1041(2004)..................................................................161
9.AdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000)cert.grantedthendismissedasimprovidentlygrantedsubnom.AdarandConstructors,Inc.v.Mineta,532U.S.941,534U.S.103(2001)....................................................................................................................................................................................................164
RecentDistrictCourtDecisions...................................................................................................................................................172
10.MidwestFenceCorporationv.UnitedStatesDOTandFederalHighwayAdministration,theIllinoisDOT,theIllinoisStateTollHighwayAuthority,etal.,84F.Supp.3d705,2015WL1396376(N.D.Ill,2015),affirmed,840F.3d932(7thCir.2016).....................................................................................................172
11.GeyerSignal,Inc.v.Minnesota,DOT,2014WL1309092(D.Minn.March31,2014)..................................182
12.DunnetBayConstructionCompanyv.GaryHannig,initsofficialcapacityasSecretaryofTransportationfortheIllinoisDOTandtheIllinoisDOT,2014WL552213(C.D.Ill.2014),affirmed,DunnetBayConstructionCo.v.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.2015)..............................................................................................................................................................................................190
13.M.K.WeedenConstructionv.StateofMontana,MontanaDepartmentofTransportation,etal.,2013WL4774517(D.Mont.)(September4,2013)..........................................................................................................194
14.AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,U.S.D.C.,E.D.Cal.CivilActionNo.S‐09‐1622,SlipOpinion(E.D.Cal.April20,2011),appealdismissedbasedonstanding,onothergroundsNinthCircuitheldCaltrans’DBEProgramconstitutional,AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187(9thCir.2013)...................................................196
15.GeodCorporationv.NewJerseyTransitCorporation,etal.,746F.Supp.2d642,2010WL4193051(D.N.J.October19,2010).........................................................................................................................................199
16.GeodCorporationv.NewJerseyTransitCorporation,etseq.678F.Supp.2d276,2009WL2595607(D.N.J.August20,2009)..............................................................................................................................................204
17.SouthFloridaChapteroftheAssociatedGeneralContractorsv.BrowardCounty,Florida,544F.Supp.2d1336(S.D.Fla.2008)......................................................................................................................................................207
18.WesternStatesPavingCo.v.WashingtonDOT,USDOT&FHWA,2006WL1734163(W.D.Wash.June23,2006)(unpublishedopinion).....................................................................................................................................209
19.NorthernContracting,Inc.v.Illinois,2005WL2230195(N.D.Ill.,2005),affirmed,473F.3d715(7thCir.2007)......................................................................................................................................................................................210
20.NorthernContracting,Inc.v.StateofIllinois,IllinoisDOT,andUSDOT,2004WL422704(N.D.Ill.March3,2004)...................................................................................................................................................................................215
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21.SherbrookeTurf,Inc.v.MinnesotaDOT,2001WL1502841,No.00‐CV‐1026(D.Minn.2001)(unpublishedopinion),affirmed345F.3d964(8thCir.2003)......................................................................................217
22.GrossSeedCo.v.NebraskaDepartmentofRoads,CivilActionFileNo.4:00CV3073(D.Neb.May6,2002),affirmed345F.3d964(8thCir.2003)........................................................................................................................218
23.KlaverConstruction,Inc.v.KansasDOT,211F.Supp.2d1296(D.Kan.2002)...............................................218
G.RecentDecisionsandAuthoritiesInvolvingFederalProcurementThatMayImpactDBEandMBE/WBEPrograms............................................................................................................................................................................219
1.RotheDevelopment,Inc.v.U.S.Dept.ofDefense,U.S.SmallBusinessAdministration,etal.,836F3d57,2016WL4719049(D.C.Cir.2016),cert.denied,2017WL1375832(2017),affirmingonothergrounds,RotheDevelopment,Inc.v.U.S.Dept.ofDefense,U.S.SmallBusinessAdministration,etal.,107F.Supp.3d183(D.D.C.2015)..............................................................................................................................................219
2.RotheDevelopmentCorp.v.U.S.Dept.ofDefense,etal.,545F.3d1023(Fed.Cir.2008)............................222
3.RotheDevelopment,Inc.v.U.S.Dept.ofDefenseandSmallBusinessAdministration,107F.Supp.3d183,2015WL3536271(D.D.C.2015),affirmedonothergrounds,836F.3d57,2016WL4719049(D.C.Cir.2016)...................................................................................................................................................................................230
4.DynaLanticCorp.v.UnitedStatesDept.ofDefense,etal.,885F.Supp.2d237,2012WL3356813(D.D.C.,2012),appealsvoluntarilydismissed,UnitedStatesCourtofAppeals,DistrictofColumbia,DocketNumbers12‐5329and12‐5330(2014)..................................................................................................................235
5.DynaLanticCorp.v.UnitedStatesDept.ofDefense,etal.,503F.Supp.2d262(D.D.C.2007).....................242
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APPENDIX B. Legal Framework and Analysis
EXECUTIVE SUMMARY
A. Introduction
Inthisappendix,Holland&KnightLLPanalyzesrecentcasesinvolvinglocalandstategovernmentminorityandwomen‐ownedanddisadvantaged‐ownedbusinessenterprise(“MBE/WBE/DBE”)programs.Theappendixalsoreviewsrecentcases,whichareinstructivetothestudyandMBE/WBE/DBEprograms,regardingtheFederalDisadvantagedBusinessEnterprise(“FederalDBE”)Program1andtheimplementationoftheFederalDBEProgrambylocalandstategovernments.TheFederalDBEProgramrecentlywascontinuedandreauthorizedbytheFixingAmerica’sSurfaceTransportationAct(FASTAct)2.TheappendixprovidesasummaryofthelegalframeworkforthedisparitystudyasapplicabletotheCityofVirginiaBeach.
AppendixBbeginswithareviewofthelandmarkUnitedStatesSupremeCourtdecisioninCityofRichmondv.J.A.Croson.3Crosonsetsforththestrictscrutinyconstitutionalanalysisapplicableinthelegalframeworkforconductingadisparitystudy.ThissectionalsonotestheUnitedStatesSupremeCourtdecisioninAdarandConstructors,Inc.v.Pena,4(“AdarandI”),whichappliedthestrictscrutinyanalysissetforthinCrosontofederalprogramsthatprovidefederalassistancetoarecipientoffederalfunds.TheSupremeCourt’sdecisionsinAdarandIandCroson,andsubsequentcasesandauthoritiesprovidethebasisforthelegalanalysisinconnectionwiththestudy.
Thelegalframeworkanalyzesandreviewssignificantrecentcourtdecisionsthathavefollowed,interpreted,andappliedCrosonandAdarandItothepresentandthatareapplicabletothisdisparitystudyandthestrictscrutinyanalysis.ThisanalysisreviewstheFourthCircuitCourtofAppealsdecisioninH.B.RoweCo.,Incv.W.LyndoTippett,NCDOTetal.5anddistrictcourtdecisionsintheFourthCircuitregardingMBE/WBE/DBEprograms.TheanalysisalsoreviewsrecentcourtdecisionsthatinvolvedchallengestoMBE/WBE/DBEprogramsinotherjuridictionsinSectionEbelow,whichareinformativetothestudy.
Inaddition,theanalysisreviewsotherrecentfederalcasesthathaveconsideredthevalidityoftheFederalDBEProgramanditsimplementationbyastateorlocalgovernmentagencyora
1 49CFRPart26(ParticipationbyDisadvantagedBusinessEnterprisesinDepartmentofTransportationFinancial
AssistancePrograms(“FederalDBEProgram”).SeetheTransportationEquityActforthe21stCentury(TEA‐21)asamendedandreauthorized(“MAP‐21,”“SAFETEA”and“SAFETEA‐LU”),andtheUnitedStatesDepartmentofTransportation(“USDOT”or“DOT”)regulationspromulgatedtoimplementTEA‐21theFederalregulationsknownasMovingAheadforProgressinthe21stCenturyAct(“MAP‐21”),PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.;precededbyPubL.109‐59,TitleI,§1101(b),August10,2005,119Stat.1156;precededbyPubL.105‐178,TitleI,§1101(b),June9,1998,112Stat.107.
2 Pub.L.114‐94,H.R.22,§1101(b),December4,2015,129Stat.1312.3 CityofRichmondv.J.A.Croson,488U.S.469(1989).4 AdarandConstructors,Inc.v.Pena,515U.S.200(1995).5 615F.3d233(4thCir.2010).
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recipientoffederalfunds,including:DunnetBayConstructionCo.v.IllinoisDOT,6AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation(“Caltrans”),etal.,7WesternStatesPavingCo.v.WashingtonStateDOT,8MountainWestHoldingCo.v.Montana,MontanaDOT,etal.,9M.K.WeedenConstructionv.Montana,MontanaDOT,etal.,10NorthernContracting,Inc.v.IllinoisDOT,11SherbrookeTurf,Inc.v.MinnDOTandGrossSeedv.NebraskaDepartmentofRoads,12AdarandConstruction,Inc.v.Slater13(“AdarandVII”),MidwestFenceCorp.v.U.S.DOT,FHWA,IllinoisDOT,IllinoisStateTollHighwayAuthority,etal.,14GeyerSignal,Inc.v.MinnesotaDOT,15GeodCorporationv.NewJerseyTransitCorporation,16andSouthFloridaChapteroftheA.G.C.v.BrowardCounty,Florida.17
TheanalysesoftheseandotherrecentcasessummarizedbelowareinstructivetothedisparitystudybecausetheyarethemostrecentandsignificantdecisionsbycourtssettingforththelegalframeworkappliedtoMBE/WBE/DBEProgramsanddisparitystudies,andconstruingthevalidityofgovernmentprogramsinvolvingMBE/WBE/DBEs.
B. U.S. Supreme Court Cases
1. City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)
InCroson,theU.S.SupremeCourtstruckdowntheCityofRichmond’s“set‐aside”programasunconstitutionalbecauseitdidnotsatisfythestrictscrutinyanalysisappliedto“race‐based”governmentalprograms.18J.A.CrosonCo.(“Croson”)challengedtheCityofRichmond’sminoritycontractingpreferenceplan,whichrequiredprimecontractorstosubcontractatleast30percentofthedollaramountofcontractstooneormoreMinorityBusinessEnterprises(“MBE”).Inenactingtheplan,theCitycitedpastdiscriminationandanintenttoincreaseminoritybusinessparticipationinconstructionprojectsasmotivatingfactors.
TheSupremeCourtheldtheCityofRichmond’s“set‐aside”actionplanviolatedtheEqualProtectionClauseoftheFourteenthAmendment.TheCourtappliedthe“strictscrutiny”
6 DunnetBayConstructionCo.v.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.,2015),cert.denied,
137S.Ct.31,2016WL193809,(October3,2016),DocketNo.15‐906;DunnetBayConstructionCo.v.IllinoisDOT,etal.2014WL552213(C.D.Ill.2014),affirmedbyDunnetBay,2015WL4934560(7thCir.,2015).
7 AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187,(9thCir.2013);U.S.D.,C.,E.D.Cal,CivilActionNo.S‐09‐1622,SlipOpinionTranscript(E.D.Cal.April20,2011),appealdismissedbasedonstanding,onothergroundsNinthCircuitheldCaltrans’DBEProgramconstitutional,AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,F.3d1187,(9thCir.2013).
8 WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).9 MountainWestHoldingCo.,Inc.v.Montana,2017WL2179120(9thCir.May16,2017),Memorandum,(Notfor
Publication)U.S.CourtofAppealsfortheNinthCircuit,May16,2017,DocketNos.14‐26097and15‐35003,dismissinginpart,reversinginpartandremandingtheU.S.DistrictCourtdecisionat2014WL6686734(D.Mont.2014).
10 M.K.WeedenConstructionv.StateofMontana,MontanaDOT,2013WL4774517(D.Mont.2013).11 NorthernContracting,Inc.v.IllinoisDOT,473F.3d715(7thCir.2007).
12 SherbrookeTurf,Inc.v.Minn.DOTandGrossSeedv.NebraskaDepartmentofRoads,345F.3d964(8thCir.2003),cert.
denied,541U.S.1041(2004).
13 AdarandConstruction,Inc.v.Slater,228F.3d1147(10thCir.2000)(“AdarandVII”).
14 MidwestFenceCorp.v.U.S.DOT,FHWA,IllinoisDOT,IllinoisStateTollHighwayAuthority,etal.,840F.3d932,2016WL6543514(7thCir.2016).MidwestFencefiledaPetitionforaWritofCertiorariwiththeU.S.SupremeCourt,see2017WL511931(Feb.2,2017),whichwasdenied,2017WL497345(June26,2017)..
15 GeyerSignal,Inc.v.MinnesotaDOT,2014W.L.1309092(D.Minn.2014).16 GeodCorporationv.NewJerseyTransitCorporation,766F.Supp.2d642(D.N.J.2010).17 SouthFloridaChapteroftheA.G.C.v.BrowardCounty,Florida,544F.Supp.2d1336(S.D.Fla.2008).18 488U.S.469(1989).
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standard,generallyapplicabletoanyrace‐basedclassification,whichrequiresagovernmentalentitytohavea“compellinggovernmentalinterest”inremedyingpastidentifieddiscriminationandthatanyprogramadoptedbyalocalorstategovernmentmustbe“narrowlytailored”toachievethegoalofremedyingtheidentifieddiscrimination.
TheCourtdeterminedthattheplanneitherserveda“compellinggovernmentalinterest”noroffereda“narrowlytailored”remedytopastdiscrimination.TheCourtfoundno“compellinggovernmentalinterest”becausetheCityhadnotprovided“astrongbasisinevidenceforitsconclusionthat[race‐based]remedialactionwasnecessary.”19TheCourtheldtheCitypresentednodirectevidenceofanyracediscriminationonitspartinawardingconstructioncontractsoranyevidencethattheCity’sprimecontractorshaddiscriminatedagainstminority‐ownedsubcontractors.20TheCourtalsofoundtherewereonlygeneralizedallegationsofsocietalandindustrydiscriminationcoupledwithpositivelegislativemotives.TheCourtconcludedthatthiswasinsufficientevidencetodemonstrateacompellinginterestinawardingpubliccontractsonthebasisofrace.
Similarly,theCourtheldtheCityfailedtodemonstratethattheplanwas“narrowlytailored”forseveralreasons,includingbecausetheredidnotappeartohavebeenanyconsiderationofrace‐neutralmeanstoincreaseminoritybusinessparticipationincitycontracting,andbecauseoftheoverinclusivenessofcertainminoritiesinthe“preference”program(forexample,Aleuts)withoutanyevidencetheysuffereddiscriminationinRichmond.21
TheCourtstatedthatrelianceonthedisparitybetweenthenumberofprimecontractsawardedtominorityfirmsandtheminoritypopulationoftheCityofRichmondwasmisplaced.Thereisnodoubt,theCourtheld,that“[w]heregrossstatisticaldisparitiescanbeshown,theyaloneinapropercasemayconstituteprimafacieproofofapatternorpracticeofdiscrimination”underTitleVII.,22.Butitisequallyclearthat“[w]henspecialqualificationsarerequiredtofillparticularjobs,comparisonstothegeneralpopulation(ratherthantothesmallergroupofindividualswhopossessthenecessaryqualifications)mayhavelittleprobativevalue.”23
TheCourtconcludedthatwherespecialqualificationsarenecessary,therelevantstatisticalpoolforpurposesofdemonstratingdiscriminatoryexclusionmustbethenumberofminoritiesqualifiedtoundertaketheparticulartask.TheCourtnotedthat“thecitydoesnotevenknowhowmanyMBE’sintherelevantmarketarequalifiedtoundertakeprimeorsubcontractingworkinpublicconstructionprojects.”24“Nordoesthecityknowwhatpercentageoftotalcityconstructiondollarsminorityfirmsnowreceiveassubcontractorsonprimecontractsletbythecity.”25
TheSupremeCourtstatedthatitdidnotintenditsdecisiontoprecludeastateorlocalgovernmentfrom“takingactiontorectifytheeffectsofidentifieddiscriminationwithinitsjurisdiction.”26TheCourtheldthat“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularservice
19 488U.S.at500,510.20 488U.S.at480,505.21 488U.S.at507‐510.22 488U.S.at501,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307–308,97S.Ct.2736,2741.23 488U.S.at501quotingHazelwood,433U.S.at308,n.13,97S.Ct.,at2742,n.13.24 488U.S.at502.25 Id.26 488U.S.at509.
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andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”27
TheCourtsaid:“IftheCityofRichmondhadevidencebeforeitthatnonminoritycontractorsweresystematicallyexcludingminoritybusinessesfromsubcontractingopportunitiesitcouldtakeactiontoendthediscriminatoryexclusion.”28“Undersuchcircumstances,thecitycouldacttodismantletheclosedbusinesssystembytakingappropriatemeasuresagainstthosewhodiscriminateonthebasisofraceorotherillegitimatecriteria.”“Intheextremecase,someformofnarrowlytailoredracialpreferencemightbenecessarytobreakdownpatternsofdeliberateexclusion.”29
TheCourtfurtherfound“iftheCitycouldshowthatithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry,wethinkitclearthattheCitycouldtakeaffirmativestepstodismantlesuchasystem.Itisbeyonddisputethatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxcontributionsofallcitizens,donotservetofinancetheevilofprivateprejudice.”30
2. Adarand Constructors, Inc. v. Pena (“Adarand I”), 515 U.S. 200 (1995)
InAdarandI,theU.S.SupremeCourtextendedtheholdinginCrosonandruledthatallfederalgovernmentprogramsthatuseracialorethniccriteriaasfactorsinprocurementdecisionsmustpassatestofstrictscrutinyinordertosurviveconstitutionalmuster.
ThecasesfollowingandinterpretingAdarandIandCrosonarethemostrecentandsignificantdecisionsbyfederalcourtssettingforththelegalframeworkfordisparitystudiesaswellasthepredicatetosatisfytheconstitutionalstrictscrutinystandardofreview,whichappliestotheimplementationoflocalandstategovernmentMBE/WBE/DBEprogramsandtheFederalDBEProgrambylocalandstategovernmentrecipientsoffederalfunds.
27 Id.28 488U.S.at509.29 Id.30 488U.S.at492.
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C. The Legal Framework Applied to State and Local Government MBE/WBE/DBE Programs
ThefollowingprovidesananalysisforthelegalframeworkfocusingonrecentkeycasesregardingstateandlocalMBE/WBE/DBEprograms,andtheirimplicationsforadisparitystudy.Therecentdecisionsinvolvingtheseprograms,theFederalDBEProgram,anditsimplementationbystateandlocalprograms,areinstructivebecausetheyconcernthestrictscrutinyanalysis,thelegalframeworkinthisarea,challengestothevalidityofMBE/WBE/DBEprograms,andananalysisofdisparitystudies.
1. Strict scrutiny analysis
Arace‐andethnicity‐basedprogramimplementedbyastateorlocalgovernmentissubjecttothestrictscrutinyconstitutionalanalysis.31Thestrictscrutinyanalysisiscomprisedoftwoprongs:
Theprogrammustserveanestablishedcompellinggovernmentalinterest;and
Theprogrammustbenarrowlytailoredtoachievethatcompellinggovernmentinterest.32
a.TheCompellingGovernmentalInterestRequirement.
Thefirstprongofthestrictscrutinyanalysisrequiresagovernmentalentitytohavea“compellinggovernmentalinterest”inremedyingpastidentifieddiscriminationinordertoimplementarace‐andethnicity‐basedprogram.33Stateandlocalgovernmentscannotrelyonnationalstatisticsofdiscriminationinanindustrytodrawconclusionsabouttheprevailingmarketconditionsintheirownregions.34Rather,stateandlocalgovernmentsmustmeasurediscriminationintheirstateorlocalmarket.However,thatisnotnecessarilyconfinedbythejurisdiction’sboundaries.35
ItisinstructivetoreviewthetypeofevidenceutilizedbyCongressandconsideredbythecourtstosupporttheFederalDBEProgram,anditsimplementationbylocalandstategovernmentsandagencies,whichissimilartoevidenceconsideredbycasesrulingonthevalidityofMBE/WBE/DBEprograms.ThefederalcourtsfoundCongress“spentdecadescompilingevidenceofracediscriminationingovernmenthighwaycontracting,ofbarrierstotheformation
31 Croson,448U.S.at492‐493;AdarandConstructors,Inc.v.Pena(AdarandI),515U.S.200,227(1995);see,e.g.,Fisherv.
UniversityofTexas,133S.Ct.2411(2013);MidwestFencev.IllinoisDOT,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3d1187,1195‐1200(9thCir.2013);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);NorthernContracting,473F.3dat721;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat969;AdarandVII,228F.3dat1176;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d990(3d.Cir.1993).
32 AdarandI,515U.S.200,227(1995);MidwestFencev.IllinoisDOT,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3d1187,1195‐1200(9thCir.2013);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);NorthernContracting,473F.3dat721;WesternStatesPaving,407F.3dat991(9thCir.2005);SherbrookeTurf,345F.3dat969;AdarandVII,228F.3dat1176;AssociatedGen.ContractorsofOhio,Inc.v.Drabik(“DrabikII”),214F.3d730(6thCir.2000);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);Eng’gContractorsAss’nofSouthFlorida,Inc.v.Metro.DadeCounty,122F.3d895(11thCir.1997);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d990(3d.Cir.1993).
33 Id.34 Id.;see,e.g.,ConcreteWorks,Inc.v.CityandCountyofDenver(“ConcreteWorksI”),36F.3d1513,1520(10thCir.1994).35 See,e.g.,ConcreteWorksI,36F.3dat1520.
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ofminority‐ownedconstructionbusinesses,andofbarrierstoentry.”36Theevidencefoundtosatisfythecompellingintereststandardincludednumerouscongressionalinvestigationsandhearings,andoutsidestudiesofstatisticalandanecdotalevidence(e.g.,disparitystudies).37TheevidentiarybasisonwhichCongressreliedtosupportitsfindingofdiscriminationincludes:
Barrierstominoritybusinessformation. Congressfoundthatdiscriminationbyprimecontractors,unions,andlendershaswoefullyimpededtheformationofqualifiedminoritybusinessenterprisesinthesubcontractingmarketnationwide,notingtheexistenceof“goodol’boy”networks,fromwhichminorityfirmshavetraditionallybeenexcluded,andtherace‐baseddenialofaccesstocapital,whichaffectstheformationofminoritysubcontractingenterprise.38
Barrierstocompetitionforexistingminorityenterprises.Congressfoundevidenceshowingsystematicexclusionanddiscriminationbyprimecontractors,privatesectorcustomers,businessnetworks,suppliers,andbondingcompaniesprecludingminorityenterprisesfromopportunitiestobid.Whenminorityfirmsarepermittedtobidonsubcontracts,primecontractorsoftenresistworkingwiththem.Congressfoundevidenceofthesameprimecontractorusingaminoritybusinessenterpriseonagovernmentcontractnotusingthatminoritybusinessenterpriseonaprivatecontract,despitebeingsatisfiedwiththatsubcontractor’swork.Congressfoundthatinformal,raciallyexclusionarybusinessnetworksdominatethesubcontractingconstructionindustry.39
Localdisparitystudies. Congressfoundthatlocalstudiesthroughoutthecountrytendtoshowadisparitybetweenutilizationandavailabilityofminority‐ownedfirms,raisinganinferenceofdiscrimination.40
Resultsofremovingaffirmativeactionprograms. Congressfoundevidencethatwhenrace‐consciouspubliccontractingprogramsarestruckdownordiscontinued,minoritybusinessparticipationintherelevantmarketdropssharplyorevendisappears,whichcourtshavefoundstronglysupportsthegovernment’sclaimthattherearesignificantbarrierstominoritycompetition,raisingthespecterofdiscrimination.41
FASTActandMAP‐21.InDecember2015andinJuly2012,CongresspassedtheFASTActandMAP‐21,respectively(seeabove),whichmade“Findings”that“discriminationandrelatedbarrierscontinuetoposesignificantobstaclesforminority‐andwomen‐ownedbusinessesseekingtodobusinessinfederally‐assistedsurfacetransportationmarkets,”andthatthecontinuingbarriers“meritthecontinuation”oftheFederalDBEProgram.42CongressalsofoundinboththeFASTActandMAP‐21thatitreceivedandreviewed
36 SherbrookeTurf,345F.3dat970,(citingAdarandVII,228F.3dat1167–76);WesternStatesPaving,407F.3dat992‐93.37 See,e.g.,AdarandVII,228F.3dat1167–76;seealsoWesternStatesPaving,407F.3dat992(Congress“explicitlyrelied
upon”theDepartmentofJusticestudythat“documentedthediscriminatoryhurdlesthatminoritiesmustovercometosecurefederallyfundedcontracts”);GeyerSignal,Inc.,2014WL1309092.
38 AdarandVII,228F.3d.at1168‐70;WesternStatesPaving,407F.3dat992;seeGeyerSignal,Inc.,2014WL1309092;DynaLantic,885F.Supp.2d237.
39 AdarandVII.at1170‐72;seeDynaLantic,885F.Supp.2d237.40 Id.at1172‐74;seeDynaLantic,885F.Supp.2d237;GeyerSignal,Inc.,2014WL1309092.41 AdarandVII,228F.3dat1174‐75;seeH.B.Rowe,615F.3d233,247‐258(4thCir.2010);SherbrookeTurf,345F.3dat973‐
4.42 PubL.114‐94,H.R.22,§1101(b),December4,2015,129Stat1312;PubL.112‐141,H.R.4348,§1101(b),July6,2012,
126Stat405.
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testimonyanddocumentationofraceandgenderdiscriminationwhich“provideastrongbasisthatthereisacompellingneedforthecontinuationofthe”FederalDBEProgram.43
Burdenofproof.Underthestrictscrutinyanalysis,andtotheextentastateorlocalgovernmentalentityhasimplementedarace‐andgender‐consciousprogram,thegovernmentalentityhastheinitialburdenofshowingastrongbasisinevidence(includingstatisticalandanecdotalevidence)tosupportitsremedialaction.44Ifthegovernmentmakesitsinitialshowing,theburdenshiftstothechallengertorebutthatshowing.45Thechallengerbearstheultimateburdenofshowingthatthegovernmentalentity’sevidence“didnotsupportaninferenceofpriordiscrimination.”46
Inapplyingthestrictscrutinyanalysis,thecourtsholdthattheburdenisonthegovernmenttoshowbothacompellinginterestandnarrowtailoring.47Itiswellestablishedthat“remedyingtheeffectsofpastorpresentracialdiscrimination”isacompellinginterest.48Inaddition,thegovernmentmustalsodemonstrate“astrongbasisinevidenceforitsconclusionthatremedialaction[is]necessary.”49
SincethedecisionbytheSupremeCourtinCroson,“numerouscourtshaverecognizedthatdisparitystudiesprovideprobativeevidenceofdiscrimination.”50“Aninferenceofdiscriminationmaybemadewithempiricalevidencethatdemonstrates‘asignificantstatisticaldisparitybetweenanumberofqualifiedminoritycontractors…andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.’”51Anecdotal 43 Id.at§1101(b)(1).44 SeeAGC,SDCv.Caltrans,713F.3rdat1195;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242,247‐258(4thCir.2010);
RotheDevelopmentCorp.v.DepartmentofDefense,545F.3d1023,1036(Fed.Cir.2008);N.Contracting,Inc.Illinois,473F.3dat715,721(7thCir.2007)(FederalDBEProgram);WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983,990‐991(9thCir.2005)(FederalDBEProgram);SherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964,969(8thCir.2003)(FederalDBEProgram);AdarandConstructorsInc.v.Slater(“AdarandVII”),228F.3d1147,1166(10thCir.2000)(FederalDBEProgram);Eng’gContractorsAss’n,122F.3dat916;MontereyMechanicalCo.v.Wilson,125F.3d702,713(9thCir.1997);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);GeyerSignal,Inc.,2014WL1309092;DynaLantic,885F.Supp.2d237,2012WL3356813;HershellGillConsultingEngineers,Inc.v.MiamiDadeCounty,333F.Supp.2d1305,1316(S.D.Fla.2004).
45 AdarandVII,228F.3dat1166;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);Eng’gContractorsAss’n,122F.3dat916;GeyerSignal,Inc.,2014WL1309092.
46 See,e.g.,AdarandVII,228F.3dat1166;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);Eng’gContractorsAss’n,122F.3dat916;seealsoSherbrookeTurf,345F.3dat971;N.Contracting,473F.3dat721;GeyerSignal,Inc.,2014WL1309092.
47 Id.;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);WesternStatesPaving,407F.3dat990;SeealsoMajeskev.CityofChicago,218F.3d816,820(7thCir.2000);GeyerSignal,Inc.,2014WL1309092.
48 Shawv.V.Hunt,517U.S.899,909(1996);CityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1989);see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).
49 Croson,488U.S.at500;see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242;SherbrookeTurf,345F.3dat971‐972;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);GeyerSignal,Inc.,2014WL1309092.
50 MidwestFence,2015W.L.1396376at*7(N.D.Ill.2015),affirmed,840F.3d932,2016WL6543514(7thCir.2016);see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3rdat1195‐1200;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);ConcreteWorksofColo.Inc.v.CityandCountyofDenver,36F.3d1513,1522(10thCir.1994),GeyerSignal,2014WL1309092(D.Minn,2014);seealso,ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).
51 Seee.g.,H.B.Rowev.NCDOT,615F.3d233,241‐242(4thCir.2010);MidwestFence,2015W.L.1396376at*7,quotingConcreteWorks;36F.3d1513,1522(quotingCroson,488U.S.at509),affirmed,840F.3d932,2016WL6543514(7thCir.
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evidencemaybeusedincombinationwithstatisticalevidencetoestablishacompellinggovernmentalinterest.52
Inadditiontoproviding“hardproof”tosupportitscompellinginterest,thegovernmentmustalsoshowthatthechallengedprogramisnarrowlytailored.53Oncethegovernmentalentityhasshownacceptableproofofacompellinginterestandremedyingpastdiscriminationandillustratedthatitsplanisnarrowlytailoredtoachievethisgoal,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplanisunconstitutional.54Therefore,notwithstandingtheburdenofinitialproductionrestswiththegovernment,theultimateburdenremainswiththepartychallengingtheapplicationofaDBEorMBE/WBEProgramtodemonstratetheunconstitutionalityofanaffirmative‐actiontypeprogram.55
Tosuccessfullyrebutthegovernment’sevidence,thecourtshold,includingtheFourthCircuitCourtofAppealsinH.B.Rowe,thatachallengermustintroduce“credible,particularizedevidence”ofitsownthatrebutsthegovernment’sshowingofastrongbasisinevidenceforthenecessityofremedialaction.56ThisrebuttalcanbeaccomplishedbyprovidinganeutralexplanationforthedisparitybetweenMBE/WBE/DBEutilizationandavailability,showingthatthegovernment’sdataisflawed,demonstratingthattheobserveddisparitiesarestatisticallyinsignificant,orpresentingcontrastingstatisticaldata.57Conjectureandunsupportedcriticismsofthegovernment’smethodologyareinsufficient.58Thecourts,includingH.B.Rowe,haveheldthatmerespeculationthegovernment’sevidenceisinsufficientormethodologicallyflaweddoesnotsufficetorebutagovernment’sshowing.59
2016);seealso,SherbrookeTurf,345F.3d233,241‐242(8thCir.2003);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).
52 Croson,488U.S.at509;see,e.g.,AGC,SDCv.Caltrans,713R.3dat1196;H.B.Rowev.NCDOT,615F.3d233,241‐242(4thCir.2010);MidwestFence,84F.Supp.3d705,2015WL1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).
53 AdarandConstructors,Inc.v.Pena,(“AdarandIII”),515U.S.200at235(1995);see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);Majeskev.CityofChicago,218F.3dat820;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).
54 Majeske,218F.3dat820;see,e.g.Wygantv.JacksonBd.OfEduc.,476U.S.267,277‐78;MidwestFence,840F.3d932,952‐954(7thCir.2016);MidwestFence,2015WL1396376*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);GeyerSignal,Inc.,2014WL1309092;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598;603;(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1002‐1007(3d.Cir.1993).
55 Id.;AdarandVII,228F.3dat1166.56 See,e.g.,H.B.Rowev.NCDOT,615F.3d233,at241‐242(4thCir.2010);ConcreteWorks,321F.3d950,959(quotingAdarand
Constructors,Inc.vs.Slater,228F.3d1147,1175(10thCir.2000));ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);MidwestFence,84F.Supp.3d705,2015W.L.1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092.
57 See,e.g.,H.B.Rowev.NCDOT,615F.3d233,at241‐242(4thCir.2010);ConcreteWorks,321F.3d950,959(quotingAdarandConstructors,Inc.vs.Slater,228F.3d1147,1175(10thCir.2000));ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598;603;(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1002‐1007(3d.Cir.1993);MidwestFence,84F.Supp.3d705,2015W.L.1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092;see,generally,EngineeringContractors,122F.3dat916;CoralConstruction,Co.v.KingCounty,941F.2d910,921(9thCir.1991).
58 Id.;H.B.Rowe,615F.3dat242;seealso,MidwestFence,840F.3d932,952‐954(7thCir.2016);SherbrookeTurf,345F.3dat971‐974;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016);GeyerSignal,2014WL1309092.
59 H.B.Rowe,615F.3dat242;seeMidwestFence,840F.3d932,952‐954(7thCir.2016);ConcreteWorks,321F.3dat991;seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092;KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
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TheFourthCircuitinH.B.Roweandothercourtshavenotedthat“thereisno‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”60TheFourthCircuitandothercourtsholdthatastateneednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary.61Instead,theSupremeCourtstatedthatagovernmentmaymeetitsburdenbyrelyingon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.62IthasbeenfurtherheldbythecourtinH.B.Roweandothercourtsthatthestatisticalevidencebe“corroboratedbysignificantanecdotalevidenceofracialdiscrimination”orbolsteredbyanecdotalevidencesupportinganinferenceofdiscrimination.63
TheFourthCircuitinH.B.Rowestatedthestrictscrutinystandardwasapplicabletojustifyarace‐consciousmeasure,andthatitisasubstantialburdenbutnotautomatically“fatalinfact.”64.Thecourtpointedoutthat“[t]heunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”65.Insoacting,agovernmentalentitymustdemonstrateithadacompellinginterestin“remedyingtheeffectsofpastorpresentracialdiscrimination.”66.
Thus,theFourthCircuitfoundthattojustifyarace‐consciousmeasure,agovernmentmustidentifythatdiscrimination,publicorprivate,withsomespecificity,andmusthaveastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.67ThecourtinH.B.Roweafterfindingthatthereisno‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark,statedthesufficiencyoftheState’sevidenceofdiscrimination“mustbeevaluatedonacase‐by‐casebasis.”68
ThecourtinH.B.Roweheldthattosatisfystrictscrutiny,thestate’sstatutoryschememustalsobe“narrowlytailored”toservethestate’scompellinginterestinnotfinancingprivatediscriminationwithpublicfunds.69
60 H.B.Rowe,615F.3dat241,quotingRotheDev.Corp.v.Dep’tofDef.,545F.3d1023,1049(Fed.Cir.2008)(quotingW.H.
ScottConstr.Co.v.CityofJackson,199F.3d206,218n.11(5thCir.1999));W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);see,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).
61 H.B.RoweCo.,615F.3dat241;see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);ConcreteWorks,321F.3dat958;,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).
62 Croson,488U.S.509,see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);H.B.Rowe,615F.3dat241;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).
63 H.B.Rowe,615F.3dat241,quotingMarylandTroopersAssociation,Inc.v.Evans,993F.2d1072,1077(4thCir.1993);see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);AGC,SanDiegov.Caltrans,713F.3dat1196;seealso,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
64 615F.3d233at241.65 Id.,615F.3dat241,quotingAlexanderv.Estepp,95F.3d312,315(4thCir.1996).66 Id.,quotingShawv.Hunt,517U.S.899,909(1996).67 615F.3d233at241quoting,Croson,488U.S.at504andWygantv.JacksonBoardofEducation,476U.S.267,277
(1986)(pluralityopinion),see,e.g.,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993).
68 Id.,615F.3dat241.(internalquotationmarksomitted).69 615F.3d233at242,citingAlexander,95F.3dat315(citingAdarand,515U.S.at227).
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Statisticalevidence.Statisticalevidenceofdiscriminationisaprimarymethodusedtodeterminewhetherornotastrongbasisinevidenceexiststodevelop,adoptandsupportaremedialprogram(i.e.,toproveacompellinggovernmentalinterest),orinthecaseofarecipientcomplyingwiththeFederalDBEProgram,toprovenarrowtailoringofprogramimplementationatthestaterecipientlevel.70“Wheregrossstatisticaldisparitiescanbeshown,theyaloneinapropercasemayconstituteprimafacieproofofapatternorpracticeofdiscrimination.”71
Oneformofstatisticalevidenceisthecomparisonofagovernment’sutilizationofMBE/WBEscomparedtotherelativeavailabilityofqualified,willingandableMBE/WBEs.72Thefederalcourtshaveheldthatasignificantstatisticaldisparitybetweentheutilizationandavailabilityofminority‐andwomen‐ownedfirmsmayraiseaninferenceofdiscriminatoryexclusion.73However,asmallstatisticaldisparity,standingalone,maybeinsufficienttoestablishdiscrimination.74
Otherconsiderationsregardingstatisticalevidenceinclude:
Availabilityanalysis.Adisparityindexrequiresanavailabilityanalysis.MBE/WBEandDBEavailabilitymeasurestherelativenumberofMBE/WBEsandDBEsamongallfirmsready,willingandabletoperformacertaintypeofworkwithinaparticulargeographicmarketarea.75Thereisauthoritythatmeasuresofavailabilitymaybeapproachedwithdifferentlevelsofspecificityandthepracticalityofvariousapproachesmustbe
70 See,e.g.,Croson,488U.S.at509;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat
1195‐1196;N.Contracting,473F.3dat718‐19,723‐24;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat973‐974;AdarandVII,228F.3dat1166;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016);GeyerSignal,2014WL1309092.
71 Croson,488U.S.at501,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307‐08(1977);seeMidwestFence,840F.3d932,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1196‐1197;N.Contracting,473F.3dat718‐19,723‐24;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat973‐974;AdarandVII,228F.3dat1166;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999).
72 Croson,448U.S.at509;seeMidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowev.NCDOT,615F.3d233,241‐244(4thCir.2010);Rothe,545F.3dat1041‐1042;ConcreteWorksofColo.,Inc.v.CityandCountyofDenver(“ConcreteWorksII”),321F.3d950,959(10thCir.2003);DrabikII,214F.3d730,734‐736;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
73 See,e.g.,Croson,488U.S.at509;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowev.NCDOT,615F.3d233,241‐244(4thCir.2010);Rothe,545F.3dat1041;ConcreteWorksII,321F.3dat970;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3d.Cir.1993);seealsoWesternStatesPaving,407F.3dat1001;KossmanContracting,2016WL1104363(S.D.Tex.2016).
74 WesternStatesPaving,407F.3dat1001.75 See,e.g.,Croson,448U.S.at509;49CFR§26.35;AGC,SDCv.Caltrans,713F.3dat1191‐1197;Rothe,545F.3dat1041‐
1042;N.Contracting,473F.3dat718,722‐23;WesternStatesPaving,407F.3dat995;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,602‐603(3d.Cir.1996);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
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considered,76“Ananalysisisnotdevoidofprobativevaluesimplybecauseitmaytheoreticallybepossibletoadoptamorerefinedapproach.”77
Utilizationanalysis.Courtshaveacceptedmeasuringutilizationbasedontheproportionofanagency’scontractdollarsgoingtoMBE/WBEsandDBEs.78
Disparityindex.Animportantcomponentofstatisticalevidenceisthe“disparityindex.”79Adisparityindexisdefinedastheratioofthepercentutilizationtothepercentavailabilitytimes100.Adisparityindexbelow80hasbeenacceptedasevidenceofadverseimpact.Thishasbeenreferredtoas“TheRuleofThumb”or“The80percentRule.”80
Twostandarddeviationtest.Thestandarddeviationfiguredescribestheprobabilitythatthemeasureddisparityistheresultofmerechance.Somecourtshaveheldthatastatisticaldisparitycorrespondingtoastandarddeviationoflessthantwoisnotconsideredstatisticallysignificant.81
Intermsofstatisticalevidence,theFourthCircuithasheldthatastate“neednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidence”,butratheritmayrelyon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.82.
TheFourthCircuitinH.B.RoweconsideredthestatisticalevidencefromadisparitystudyinconsideringtheequalprotectionchallengetotheNorthCarolinaminority‐andwoman‐ownedparticipationprogramandlookedtodisparityindices,ortocomputationsofdisparity
76 ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia(“CAEPII”),91F.3d586,603(3dCir.1996);see,e.g.,
AGC,SDCv.Caltrans,713F.3dat1197,quotingCroson,488U.S.at706(“degreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
77 ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia(“CAEPII”),91F.3d586,603(3dCir.1996);see,e.g.,AGC,SDCv.Caltrans,713F.3dat1197,quotingCroson,488U.S.at706(“degreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
78 SeeMidwestFence,840F.3d932,949‐953(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);Eng’gContractorsAss’n,122F.3dat912;N.Contracting,473F.3dat717‐720;SherbrookeTurf,345F.3dat973.
79 MidwestFence,840F.3d932,949‐953(7thCir.2016);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);Eng’gContractorsAss’n,122F.3dat914;W.H.ScottConstr.Co.v.CityofJackson,199F.3d206,218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,602‐603(3d.Cir.1996);ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia,6F.3d990at1005(3rdCir.1993).
80 See,e.g.,Ricciv.DeStefano,557U.S.557,129S.Ct.2658,2678(2009);MidwestFence,840F.3d932,950(7thCir.2016);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);AGC,SDCv.Caltrans,713F.3dat1191;Rothe,545F.3dat1041;Eng’gContractorsAss’n,122F.3dat914,923;ConcreteWorksI,36F.3dat1524.
81 See,e.g.,H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);Eng’gContractorsAss’n,122F.3dat914,917,923.TheEleventhCircuitfoundthatadisparitygreaterthantwoorthreestandarddeviationshasbeenheldtobestatisticallysignificantandmaycreateapresumptionofdiscriminatoryconduct.;Peightalv.MetropolitanEng’gContractorsAss’n,26F.3d1545,1556(11thCir.1994).TheSeventhCircuitCourtofAppealsinKadasv.MCISystemhouseCorp.,255F.3d359(7thCir.2001),raisedquestionsastotheuseofthestandarddeviationtestaloneasacontrollingfactorindeterminingtheadmissibilityofstatisticalevidencetoshowdiscrimination.Rather,theCourtconcludeditisforthejudgetosay,onthebasisofthestatisticalevidence,whetheraparticularsignificancelevel,inthecontextofaparticularstudyinaparticularcase,istoolowtomakethestudyworththeconsiderationofjudgeorjury.255F.3dat363.
82 615F.3d233at241,citingCroson,488U.S.at509(pluralityopinion),andcitingConcreteWorks,321F.3dat958.
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percentages,indeterminingwhetherCroson’sevidentiaryburdenwassatisfied.83TheFourthCircuitfoundthatdisparitystudiescanbeprobativeevidenceofdiscrimination.84
Anecdotalevidence.Anecdotalevidenceincludespersonalaccountsofincidents,includingofdiscrimination,toldfromthewitness’perspective.Anecdotalevidenceofdiscrimination,standingalone,generallyisinsufficienttoshowasystematicpatternofdiscrimination.85Butpersonalaccountsofactualdiscriminationmaycomplementempiricalevidenceandplayanimportantroleinbolsteringstatisticalevidence.86Ithasbeenheldthatanecdotalevidenceofalocalorstategovernment’sinstitutionalpracticesthatexacerbatediscriminatorymarketconditionsareoftenparticularlyprobative.87
Examplesofanecdotalevidencemayinclude:
TestimonyofMBE/WBEorDBEownersregardingwhethertheyfacedifficultiesorbarriers;
DescriptionsofinstancesinwhichMBE/WBEorDBEownersbelievetheyweretreatedunfairlyorwerediscriminatedagainstbasedontheirrace,ethnicity,orgenderorbelievetheyweretreatedfairlywithoutregardtorace,ethnicity,orgender;
Statementsregardingwhetherfirmssolicit,orfailtosolicit,bidsorpricequotesfromMBE/WBEsorDBEsonnon‐goalprojects;and
Statementsregardingwhetherthereareinstancesofdiscriminationinbiddingonspecificcontractsandinthefinancingandinsurancemarkets.88
Courtshaveacceptedandrecognizethatanecdotalevidenceisthewitness’narrativeofincidentstoldfromhisorherperspective,includingthewitness’thoughts,feelings,andperceptions,andthusanecdotalevidenceneednotbeverified.89
TheFourthCircuitinH.B.Rowestatedthatinadditiontostatisticalevidenceit“furtherrequire[s]thatsuchevidencebe‘corroboratedbysignificantanecdotalevidenceofracialdiscrimination.’”90Thecourtrejectedtheplaintiffs’contentionthattheanecdotaldatawas
83 H.B.Rowe,615F.3d233,241‐242;see,e.g.,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat602‐605(3dCir.
1996).84 H.B.Rowe,615F.3dat241‐249;see,e.g.,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat602‐605(3dCir.
1996).85 See,e.g.,AGC,SDCv.Caltrans,713F.3dat1192,1196‐1198;Eng’gContractorsAss’n,122F.3dat924‐25;ContractorsAss’n
ofE.Pa.v.CityofPhiladelphia,6F.3d990,1002‐1003(3d.Cir.1993);CoralConstr.Co.v.KingCounty,941F.2d910,919(9thCir.1991);O’DonnelConstr.Co.v.DistrictofColumbia,963F.2d420,427(D.C.Cir.1992).
86 See,e.g.,MidwestFence,840F.3d932,953(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1192,1196‐1198;H.B.Rowe,615F.3d233,248‐249;Eng’gContractorsAss’n,122F.3dat925‐26;ConcreteWorks,36F.3dat1520;ContractorsAss’n,6F.3dat1003;CoralConstr.Co.v.KingCounty,941F.2d910,919(9thCir.1991);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).
87 ConcreteWorksI,36F.3dat1520.88 See,e.g.,AGC,SDCv.Caltrans,713F.3dat1197;H.B.Rowe,615F.3d233,241‐242;249‐251;NorthernContracting,2005
WL2230195,at13‐15(N.D.Ill.2005),affirmed,473F.3d715(7thCir.2007);e.g.,ConcreteWorks,321F.3dat989;AdarandVII,228F.3dat1166‐76.Foradditionalexamplesofanecdotalevidence,seeEng’gContractorsAss’n,122F.3dat924;ConcreteWorks,36F.3dat1520;ConeCorp.v.HillsboroughCounty,908F.2d908,915(11thCir.1990);DynaLantic,885F.Supp.2d237;FloridaA.G.C.Council,Inc.v.StateofFlorida,303F.Supp.2d1307,1325(N.D.Fla.2004).
89 See,e.g.,AGC,SDCv.Caltrans,713F.3dat1197;H.B.Rowe,615F.3d233,241‐242,248‐249;ConcreteWorksII,321F.3dat989;Eng’gContractorsAss’n,122F.3dat924‐26;ConeCorp.,908F.2dat915;NorthernContracting,Inc.v.Illinois,2005WL2230195at*21,N.32(N.D.Ill.Sept.8,2005),aff’d473F.3d715(7thCir.2007).
90 615F.3dat241,quotingMarylandTroopersAssociation,Inc.v.Evans,993F.2d1072,1077(4thCir.1993).
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flawedbecausethestudydidnotverifytheanecdotaldataandthattheconsultantoversampledminoritysubcontractorsincollectingthedata.91
TheFourthCircuitstatedthattheplaintiffsofferednorationaleastowhyafactfindercouldnotrelyontheState’s“unverified”anecdotaldata,andpointedoutthatafactfindercouldverywellconcludethatanecdotalevidenceneednot‐andindeedcannot‐beverifiedbecauseit“isnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.”92ThecourtinH.B.Roweheldthatanecdotalevidencesupplementsstatisticalevidenceofdiscrimination.93
ThecourtinH.B.RowefoundthatNorthCarolina’sanecdotalevidenceofdiscriminationsufficientlysupplementedtheState’sstatisticalshowing.94Thesurveyevidenceexposedaninformal,raciallyexclusivenetworkthatsystemicallydisadvantagedminoritysubcontractors.95ThecourtheldthattheStatecouldconcludethatsuchnetworksexertachronicandperniciousinfluenceonthemarketplacethatcallsforremedialaction.96
ThecourtinH.B.Roweconcludedtheanecdotalevidenceindicatedthatracialdiscriminationisacriticalfactorunderlyingthegrossstatisticaldisparitiespresentedinthedisparitystudy97.Thus,thecourtheldthattheStatepresentedsubstantialstatisticalevidenceofgrossdisparity,corroboratedby“disturbing”anecdotalevidence.98
b.TheNarrowTailoringRequirement.
Thesecondprongofthestrictscrutinyanalysisrequiresthatarace‐orethnicity‐basedprogramorlegislationimplementedtoremedypastidentifieddiscriminationintherelevantmarketbe“narrowlytailored”toreachthatobjective.
Thenarrowtailoringrequirementhasseveralcomponentsandthecourts,includingtheFourthCircuitCourtofAppeals,analyzeseveralcriteriaorfactorsindeterminingwhetheraprogramorlegislationsatisfiesthisrequirementincluding:
Thenecessityforthereliefandtheefficacyofalternativerace‐,ethnicity‐,andgender‐neutralremedies;
Theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions;
Therelationshipofnumericalgoalstotherelevantlabormarket;and
Theimpactofarace‐,ethnicity‐,orgender‐consciousremedyontherightsofthirdparties.99
91 Id.at249.92 615F.3d233at249,quotingConcreteWorks,321F.3dat989.93 Id.at249.94 Id.95 Id.at251.96 Id.97 Id.at251.98 Id.99 See,e.g.,MidwestFence,840F.3d932,942,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.
Rowe,615F.3d233,252‐255;Rothe,545F.3dat1036;WesternStatesPaving,407F3dat993‐995;SherbrookeTurf,345
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TosatisfythenarrowlytailoredprongofthestrictscrutinyanalysisinthecontextoftheFederalDBEProgram,whichisinstructivetothestudy,thefederalcourtsthathaveevaluatedstateandlocalDBEProgramsandtheirimplementationoftheFederalDBEProgram,heldthefollowingfactorsarepertinent:
Evidenceofdiscriminationoritseffectsinthestatetransportationcontractingindustry;
Flexibilityanddurationofarace‐orethnicity‐consciousremedy;
RelationshipofanynumericalDBEgoalstotherelevantmarket;
Effectivenessofalternativerace‐andethnicity‐neutralremedies;
Impactofarace‐orethnicity‐consciousremedyonthirdparties;and
Applicationofanyrace‐orethnicity‐consciousprogramtoonlythoseminoritygroupswhohaveactuallysuffereddiscrimination.100
TheEleventhCircuitdescribedthe“theessenceofthe‘narrowlytailored’inquiry[as]thenotionthatexplicitlyracialpreferences…mustonlybea‘lastresort’option.”101Courtshavefoundthat“[w]hilenarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,itdoesrequireserious,goodfaithconsiderationofwhethersuchalternativescouldservethegovernmentalinterestatstake.”102
Similarly,theSixthCircuitCourtofAppealsinAssociatedGen.Contractorsv.Drabik(“DrabikII”),stated:“Adarandteachesthatacourtcalledupontoaddressthequestionofnarrowtailoringmustask,“forexample,whethertherewas‘anyconsiderationoftheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipation’ingovernmentcontracting…orwhethertheprogramwasappropriatelylimitedsuchthatit‘willnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.’”103
TheSupremeCourtinParentsInvolvedinCommunitySchoolsv.SeattleSchoolDistrict104alsofoundthatrace‐andethnicity‐basedmeasuresshouldbeemployedasalastresort.Themajorityopinionstated:“Narrowtailoringrequires‘serious,goodfaithconsiderationofworkablerace‐neutralalternatives,’andyetinSeattleseveralalternativeassignmentplans—manyofwhichwouldnothaveusedexpressracialclassifications—wererejectedwithlittleorno
F.3dat971;AdarandVII,228F.3dat1181;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);Eng’gContractorsAss’n,122F.3dat927(internalquotationsandcitationsomitted);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,605‐610(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,1008‐1009(3d.Cir.1993);seealso,GeyerSignal,Inc.,2014WL1309092.
100 See,e.g.,MidwestFence,840F.3d932,942,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,243‐245,252‐255;WesternStatesPaving,407F.3dat998;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;KornhassConstruction,Inc.v.StateofOklahoma,DepartmentofCentralServices,140F.Supp.2dat1247‐1248;seealsoGeyerSignal,Inc.,2014WL1309092.
101 Eng’gContractorsAss’n,122F.3dat926(internalcitationsomitted);seealsoVirdiv.DeKalbCountySchoolDistrict,135Fed.Appx.262,264,2005WL138942(11thCir.2005)(unpublishedopinion);Websterv.FultonCounty,51F.Supp.2d1354,1380(N.D.Ga.1999),aff’dpercuriam218F.3d1267(11thCir.2000).
102 SeeGrutterv.Bollinger,539U.S.306,339(2003);Richmondv.J.A.CrosonCo.,488U.S.469,509‐10(1989);H.B.Rowe,615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;seealsoAdarandI,515U.S.at237‐38.
103 AssociatedGen.ContractorsofOhio,Inc.v.Drabik(“DrabikII”),214F.3d730,738(6thCir.2000).104 551U.S.701,734‐37,127S.Ct.2738,2760‐61(2007).
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consideration.”105TheCourtfoundthattheDistrictfailedtoshowitseriouslyconsideredrace‐neutralmeasures.
The“narrowlytailored”analysisisinstructiveintermsofdevelopinganypotentiallegislationorprogramsthatinvolveMBE/WBE/DBEsorinconnectionwithdeterminingappropriateremedialmeasurestoachievelegislativeobjectives.
Race‐,ethnicity‐,andgender‐neutralmeasures.Totheextenta“strongbasisinevidence”existsconcerningdiscriminationinalocalorstategovernment’srelevantcontractingandprocurementmarket,thecourtsanalyzeseveralcriteriaorfactorstodeterminewhetherastate’simplementationofarace‐orethnicity‐consciousprogramisnecessaryandthusnarrowlytailoredtoachieveremedyingidentifieddiscrimination.Oneofthekeyfactorsdiscussedaboveisconsiderationofrace‐,ethnicity‐andgender‐neutralmeasures.
Thecourtsrequirethatalocalorstategovernmentseriouslyconsiderrace‐,ethnicity‐andgender‐neutraleffortstoremedyidentifieddiscrimination.106Andthecourtshaveheldunconstitutionalthoserace‐andethnicity‐consciousprogramsimplementedwithoutconsiderationofrace‐andethnicity‐neutralalternativestoincreaseminoritybusinessparticipationinstateandlocalcontracting.107
TheCourtinCrosonfollowedbydecisionsfromfederalcourtsofappealfoundthatlocalandstategovernmentshaveattheirdisposala“wholearrayofrace‐neutraldevicestoincreasetheaccessibilityofcitycontractingopportunitiestosmallentrepreneursofallraces.”108
Examplesofrace‐,ethnicity‐,andgender‐neutralalternativesinclude,butarenotlimitedto,thefollowing:
Providingassistanceinovercomingbondingandfinancingobstacles;
Relaxationofbondingrequirements;
Providingtechnical,managerialandfinancialassistance;
Establishingprogramstoassiststart‐upfirms;
Simplificationofbiddingprocedures;
Trainingandfinancialaidforalldisadvantagedentrepreneurs;
Non‐discriminationprovisionsincontractsandinstatelaw;
105 551U.S.701,734‐37,127S.Ct.at2760‐61;seealsoFisherv.UniversityofTexas,133S.Ct.2411(2013);Grutterv.Bollinger,
539U.S.305(2003).106 See,e.g.,MidwestFence,840F.3d932,937‐938,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1199;H.B.Rowe,
615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;AdarandVII,228F.3dat1179;Eng’gContractorsAss’n,122F.3dat927;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(CAEPII),91F.3dat608‐609(3d.Cir.1996);ContractorsAss’n(CAEPI),6F.3dat1008‐1009(3d.Cir.1993);CoralConstr.,941F.2dat923.
107 See,Croson,488U.S.at507;DrabikI,214F.3dat738(citationsandinternalquotationsomitted);seealso,Eng’gContractorsAss’n,122F.3dat927;Virdi,135Fed.Appx.At268;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(CAEPII),91F.3dat608‐609(3d.Cir.1996);ContractorsAss’n(CAEP(I),6F.3dat1008‐1009(3d.Cir.1993).
108 Croson,488U.S.at509‐510.
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Mentor‐protégéprogramsandmentoring;
Effortstoaddresspromptpaymentstosmallerbusinesses;
Smallcontractsolicitationstomakecontractsmoreaccessibletosmallerbusinesses;
Expansionofadvertisementofbusinessopportunities;
Outreachprogramsandefforts;
“Howtodobusiness”seminars;
Sponsoringnetworkingsessionsthroughoutthestateacquaintsmallfirmswithlargefirms;
CreationanddistributionofMBE/WBEandDBEdirectories;and
Streamliningandimprovingtheaccessibilityofcontractstoincreasesmallbusinessparticipation.109
Thecourtshaveheldthatwhilethenarrowtailoringanalysisdoesnotrequireagovernmentalentitytoexhausteverypossiblerace‐,ethnicity‐,andgender‐neutralalternative,itdoes“requireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.110
Additionalfactorsconsideredundernarrowtailoring.
Inadditiontotherequiredconsiderationofthenecessityforthereliefandtheefficacyofalternativeremedies(race‐andethnicity‐neutralefforts),thecourtsrequireevaluationofadditionalfactorsaslistedabove.111Forexample,tobeconsiderednarrowlytailored,courtshaveheldthataMBE/WBE‐orDBE‐typeprogramshouldinclude:(1)built‐inflexibility;112(2)goodfaitheffortsprovisions;113(3)waiverprovisions;114(4)arationalbasisforgoals;115(5)graduationprovisions;116(6)remediesonlyforgroupsforwhichtherewerefindingsof
109 See,e.g.,Croson,488U.S.at509‐510;H.B.Rowe,615F.3d233,252‐255;N.Contracting,473F.3dat724;AdarandVII,228
F.3d1179;49CFR§26.51(b);seealso,Eng’gContractorsAss’n,122F.3dat927‐29;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat608‐609(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).
110 ParentsInvolvedinCommunitySchoolsv.SeattleSchoolDistrict,551U.S.701,732‐47,127S.Ct2738,2760‐61(2007);AGC,SDCv.Caltrans,713F.3dat1199,citingGrutterv.Bollinger,539U.S.306,339(2003);H.B.Rowe,615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;Eng’gContractorsAss’n,122F.3dat927.
111 SeeMidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,252‐255;SherbrookeTurf,345F.3dat971‐972;Eng’gContractorsAss’n,122F.3dat927;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat608‐609(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).
112 MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;SherbrookeTurf,345F.3dat971‐972;CAEPI,6F.3dat1009;AssociatedGen.ContractorsofCa.,Inc.v.CoalitionforEconomicEquality(“AGCofCa.”),950F.2d1401,1417(9thCir.1991);CoralConstr.Co.v.KingCounty,941F.2d910,923(9thCir.1991);ConeCorp.v.HillsboroughCounty,908F.2d908,917(11thCir.1990).
113 MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;SherbrookeTurf,345F.3dat971‐972;CAEPI,6F.3dat1019;ConeCorp.,908F.2dat917.
114 MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;AGCofCa.,950F.2dat1417;ConeCorp.,908F.2dat917;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat606‐608(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).
115 Id;SherbrookeTurf,345F.3dat971‐973;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat606‐608(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).
116 Id.
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discrimination;117(7)sunsetprovisions;118and(8)limitationinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.119
2. Intermediate scrutiny analysis
CertainFederalCourtsofAppeal,includingtheFourthCircuitCourtofAppeals,applyintermediatescrutinytogender‐consciousprograms.120TheFourthCircuithasapplied“intermediatescrutiny”toclassificationsbasedongender.121Restrictionssubjecttointermediatescrutinyarepermissiblesolongastheyaresubstantiallyrelatedtoserveanimportantgovernmentalinterest.122
Thecourtshaveinterpretedthisintermediatescrutinystandardtorequirethatgender‐basedclassificationsbe:
1. Supportedbyboth“sufficientprobative”evidenceor“exceedinglypersuasivejustification”insupportofthestatedrationalefortheprogram;and
2. Substantiallyrelatedtotheachievementofthatunderlyingobjective.123
Underthetraditionalintermediatescrutinystandard,thecourtreviewsagender‐consciousprogrambyanalyzingwhetherthestateactorhasestablishedasufficientfactualpredicatefortheclaimthatfemale‐ownedbusinesseshavesuffereddiscrimination,andwhetherthegender‐consciousremedyisanappropriateresponsetosuchdiscrimination.Thisstandardrequiresthestateactortopresent“sufficientprobative”evidenceinsupportofitsstatedrationalefortheprogram.124
117 See,e.g.,AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,253‐255;WesternStatesPaving,407F.3d
at998;AGCofCa.,950F.2dat1417;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat593‐594,605‐609(3d.Cir.1996);ContractorsAss’n(CAEPI),6F.3dat1009,1012(3d.Cir.1993);KossmanContractingCo.,Inc.,v.CityofHouston,2016WL1104363(W.D.Tex.2016);SherbrookeTurf,2001WL150284(unpublishedopinion),aff’d345F.3d964.
118 See,e.g.,H.B.Rowe,615F.3d233,254;SherbrookeTurf,345F.3dat971‐972;Peightal,26F.3dat1559;.seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(W.D.Tex.2016).
119 CoralConstr.,941F.2dat925.120 H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayor
andCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);Seegenerally,AGC,SDCv.Caltrans,713F.3dat1195;WesternStatesPaving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);seealsoU.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”);GeyerSignal,2014WL1309092.
121 H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);see,e.g.,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);Cunninghamv.Beavers,858F.2d269,273(5thCir.1988),cert.denied,489U.S.1067(1989)(citingCraigv.Boren,429U.S.190(1976),andLalliv.Lalli,439U.S.259(1978)).
122 H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);see,e.g.,Serv.Emp.Int’lUnion,Local5v.CityofHous.,595F.3d588,596(5thCir.2010);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993).
123 See,AGC,SDCv.Caltrans,713F.3dat1195;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);WesternStatesPaving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);seealsoU.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”).
124 Id.TheSeventhCircuitCourtofAppeals,however,inBuildersAss’nofGreaterChicagov.CountyofCook,Chicago,didnotholdthereisadifferentlevelofscrutinyforgenderdiscriminationorgenderbasedprograms.256F.3d642,644‐45(7thCir.2001).TheCourtinBuildersAss’nrejectedthedistinctionappliedbytheEleventhCircuitinEngineeringContractors.
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Intermediatescrutiny,asinterpretedbyfederalcircuitcourtsofappeal,requiresadirect,substantialrelationshipbetweentheobjectiveofthegenderpreferenceandthemeanschosentoaccomplishtheobjective.125Themeasureofevidencerequiredtosatisfyintermediatescrutinyislessthanthatnecessarytosatisfystrictscrutiny.Unlikestrictscrutiny,ithasbeenheldthattheintermediatescrutinystandarddoesnotrequireashowingofgovernmentinvolvement,activeorpassive,inthediscriminationitseekstoremedy.126
TheFourthCircuitciteswithapprovaltheguidancefromtheEleventhCircuitthathasheld“[w]henagender‐consciousaffirmativeactionprogramrestsonsufficientevidentiaryfoundation,thegovernmentisnotrequiredtoimplementtheprogramonlyasalastresort….Additionally,underintermediatescrutiny,agender‐consciousprogramneednotcloselytieitsnumericalgoalstotheproportionofqualifiedwomeninthemarket.”127
TheFourthCircuitinH.B.Rowe,foundthatthedisparityanalysisdemonstratedwomen‐ownedbusinesseswonfarmorethantheirexpectedshareofsubcontractingdollarsduringthestudyperiod.128Therefore,thecourtconcludedthatprimecontractorssubstantiallyoverutilizedwomensubcontractorsonpublicroadconstructionprojects.129Thecourtheldthepublic‐sectorevidencedidnotevincethe“exceedinglypersuasivejustification”theSupremeCourtrequires.130
TheSupremeCourthasstatedthatanaffirmativeactionprogramsurvivesintermediatescrutinyiftheproponentcanshowitwas“aproductofanalysisratherthanastereotypedreactionbasedonhabit.”131TheThirdCircuitfoundthisstandardrequiredtheCityofPhiladelphiatopresentprobativeevidenceinsupportofitsstatedrationaleforthegenderpreference,discriminationagainstwomen‐ownedcontractors.132TheCourtinContractorsAss’nofE.Pa.(CAEPI)heldtheCityhadnotproducedenoughevidenceofdiscrimination,notingthatinitsbrief,theCityreliedonstatisticsintheCityCouncilFinanceCommitteeReportandoneaffidavitfromawomanengagedinthecateringbusiness,buttheCourtfoundthisevidenceonlyreflectedtheparticipationofwomeninCitycontractinggenerally,ratherthanintheconstructionindustry,whichwastheonlycognizableissueinthatcase.133
TheThirdCircuitinCAEPIheldtheevidenceofferedbytheCityofPhiladelphiaregardingwomen‐ownedconstructionbusinesseswasinsufficienttocreateanissueoffact.ThestudyinCAEPIcontainednodisparityindexforwomen‐ownedconstructionbusinessesinCitycontracting,suchasthatpresentedforminority‐ownedbusinesses.134Giventheabsenceofprobativestatisticalevidence,theCity,accordingtotheCourt,mustrelysolelyonanecdotalevidencetoestablishgenderdiscriminationnecessarytosupporttheOrdinance.135Butthe 125 See,e.g.,AGC,SDCv.Caltrans,713F.3dat1195;H.B.Rowe,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);WesternStates
Paving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);Assoc.UtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp2d613,619‐620(2000);see,also,U.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”)
126 CoralConstr.Co.,941F.2dat931‐932;SeeEng’gContractorsAss’n,122F.3dat910.127 615F.3d233,242;122F.3dat929(internalcitationsomitted).128 615F.3d233at254.129 Id.130 Id.at255.131 ContractorsAss’nofE.Pa.(CAEPI),6F.3dat1010(3d.Cir.1993).132 ContractorsAss’nofE.Pa.(CAEPI),6F.3dat1010(3d.Cir.1993).133 ContractorsAss’nofE.Pa.(CAEPI),6F.3dat1011(3d.Cir.1993).134 ContractorsAss’nofE.Pa.(CAEPI),6F.3dat1011(3d.Cir.1993).135 Id.
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recordcontainedonlyonethree‐pageaffidavitalleginggenderdiscriminationintheconstructionindustry.136Theonlyothertestimonyonthissubject,theCourtfoundinCAEPI,consistedofasingle,conclusorysentenceofonewitnesswhoappearedataCityCouncilhearing.137ThisevidencetheCourtheldwasnotenoughtocreateatriableissueoffactregardinggenderdiscriminationundertheintermediatescrutinystandard.
3. Rational basis analysis
Whereachallengetotheconstitutionalityofastatuteoraregulationdoesnotinvolveafundamentalrightorasuspectclass,theappropriatelevelofscrutinytoapplyistherationalbasisstandard.138WhenapplyingrationalbasisreviewundertheEqualProtectionClauseoftheFourteenthAmendmentoftheUnitedStatesConstitution,acourtisrequiredtoinquire“whetherthechallengedclassificationhasalegitimatepurposeandwhetheritwasreasonable[forthelegislature]tobelievethatuseofthechallengedclassificationwouldpromotethatpurpose.”139
ThecourtsinVirginiaandtheFourthCircuitCourtofAppealsinapplyingtherationalbasistestgenerallyfindthatachallengedlawisupheld“aslongastherecouldbesomerationalbasisforenacting[it],”thatis,that“thelawinquestionisrationallyrelatedtoalegitimategovernmentpurpose.”140Thisstandardthecourtsconcludeisconsideredquitedeferential141and“thefitbetweentheenactmentandthepublicpurposesbehinditneednotbemathematicallyprecise.”142Solongasagovernmentlegislaturehadareasonablebasisforadoptingtheclassification—whichcaninclude“rationalspeculationunsupportedbyevidenceorempiricaldata”—thelawwillpassconstitutionalmuster.143
“[T]heburdenisontheoneattackingthelegislativearrangementtonegativeeveryconceivablebasiswhichmightsupportit,whetherornotthebasishasafoundationintherecord.”144Moreover,“courtsarecompelledunderrational‐basisreviewtoacceptalegislature’sgeneralizationsevenwhenthereisanimperfectfitbetweenmeansandends.Aclassificationdoesnotfailrational‐basisreviewbecauseitisnotmadewithmathematicalnicetyorbecauseinpracticeitresultsinsomeinequality”.145
136 Id.137 Id.138 Grayv.CommonwealthofVirginia,247Va.290,306‐309,645S.E.2d448,458‐460(Va.2007);see,e.g.,Hellerv.Doe,509
U.S.312,320(1993);Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012);Cunninghamv.Beavers858F.2d269,273(5thCir.1988);seealsoLundeenv.CanadianPac.R.Co.,532F.3d682,689(8thCir.2008)(statingthatfederalcourtsreviewlegislationregulatingeconomicandbusinessaffairsundera‘highlydeferentialrationalbasis’standardofreview.”);H.B.Rowe,Inc.v.NCDOT,615F.3d233at254.
139 See,Grayv.CommonwealthofVirginia,247Va.290,306‐309,645S.E.2d448,458‐460(Va.2007);see,e.g.,Hellerv.Doe,509U.S.312,320(1993);Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012);Cunninghamv.Beavers858F.2d269,273(5thCir.1988).
140 Grayv.CommonwealthofVirginia,274Va.290,645S.E.2d448,459(Va.2007),citingKadrmasv.DickinsonPublicSchools,487U.S.450,457‐58(1998);seealsoCityofCleburnev.CleburneLivingCtr.,Inc.,473U.S.432,440,(1985)(citationsomitted);Hellerv.Doe,509U.S.312,318‐321(1993)(Underrationalbasisstandard,alegislativeclassificationisaccordedastrongpresumptionofvalidity).
141 Wilkinsv.Gaddy,734F.3d344,347(4thCir.2013).142 Id.143 Id.(citingFCCv.BeachCommc'ns,Inc.,508U.S.307,315(1993));see,Grayv.CommonwealthofVirginia,274Va.290,307,
645S.E.2d448,459(Va.2007);Finnv.VirginiaRetirementSVS,259Va.144,155,524S.E.2d125,131(2000).144 UnitedStatesv.Timms,664F.3d436,448‐49(4thCir.2012),cert.denied,133S.Ct.189(2012)(citingHellerv.Doe,509
U.S.312,320‐21(1993))(quotationmarksandcitationomitted);Grayv.CommonwealthofVirginia,274Va.at308‐9,645S.E.2dat460.
145 Hellerv.Doe,509U.S.312,321(1993).
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Underarationalbasisreviewstandard,alegislativeclassificationwillbeupheld“ifthereisarationalrelationshipbetweenthedisparityoftreatmentandsomelegitimategovernmentalpurpose.”146Becausealllegislationclassifiesitsobjects,differentialtreatmentisjustifiedby“anyreasonablyconceivablestateoffacts.”147
Arecentfederalcourtdecision,whichisinstructivetothestudy,involvedachallengetoandtheapplicationofasmallbusinessgoalinapre‐bidprocessforafederalprocurement.FirstlineTransportationSecurity,Inc.v.UnitedStates,isinstructiveandanalogoustosomeoftheissuesinasmallbusinessprogram.Thecaseisinformativeastotheuse,estimationanddeterminationofgoals(smallbusinessgoals,includingveteranpreferencegoals)inaprocurementundertheFederalAcquisitionRegulations(“FAR”)148.
Firstlineinvolvedasolicitationthatestablishedasmallbusinesssubcontractinggoalrequirement.InFirstline,theTransportationSecurityAdministration(“TSA”)issuedasolicitationforsecurityscreeningservicesattheKansasCityAirport.Thesolicitationstatedthatthe:“GovernmentanticipatesanoverallSmallBusinessgoalof40percent,”andthat“[w]ithinthatgoal,thegovernmentanticipatesfurthersmallbusinessgoalsof:Small,Disadvantagedbusiness[:]14.5%;WomanOwned[:]5percent:HUBZone[:]3percent;ServiceDisabled,VeteranOwned[:]3percent.”149
ThecourtappliedtherationalbasistestinconstruingthechallengetotheestablishmentbytheTSAofa40percentsmallbusinessparticipationgoalasunlawfulandirrational.150Thecourtstatedit“cannotsaythattheagency’sapproachisclearlyunlawful,orthattheapproachlacksarationalbasis.”151
Thecourtfoundthat“anagencymayrationallyestablishaspirationalsmallbusinesssubcontractinggoalsforprospectiveofferors….”Consequently,thecourtheldonerationalmethodbywhichtheGovernmentmayattempttomaximizesmallbusinessparticipation(includingveteranpreferencegoals)istoestablisharoughsubcontractinggoalforagivencontract,andthenallowpotentialcontractorstocompeteindesigninginnovatewaystostructureandmaximizesmallbusinesssubcontractingwithintheirproposals.152Thecourt,inanexerciseofjudicialrestraint,foundthe“40percentgoalisarationalexpressionoftheGovernment’spolicyofaffordingsmallbusinessconcerns…themaximumpracticableopportunitytoparticipateassubcontractors….”153
Veteranspreferences.InHooperv.BernalilloCountyAssessor,theSupremeCourtinaninstructivecaseaddressedtheconstitutionalityofaveteranspreferencestatute.154InHooper,NewMexicostatuteexemptedfromtheState’spropertytaxthetaxablevalueofpropertyofveteranswhoservedonactivedutyduringtheVietnamWar,butlimitedtheexemptiontoveteranswhowereNewMexicoresidentsbefore1976155.TheCourtconsideredwhetherthe
146 Hellerv.Doe,509U.S.312,320(1993);see,e.g.,Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012).147 Id.;see,Grayv.CommonwealthofVirginia,274Va.at308,645S.E.2dat459.148 2012WL5939228(Fed.Cl.2012).149 Id.150 Id.151 Id.152 Id.153 Id.154Hooperv.BernalilloCountyAssessor,472U.S.612(1985).155Hooperv.BernalilloCountyAssessor,472U.S.612(1985)
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NewMexicostatutethatgrantsataxexemptionlimitedtothoseVietnamveteranswhoresidedintheStatebefore1976,violatedtheEqualProtectionClauseoftheFourteenthAmendment.156TheCourtheldNewMexicostatute’sresidencerequirementviolatestheguaranteesoftheEqualProtectionClauseapplyingarationalbasisstandardanalysis.157
TheCourtinHooper,notedthatwhenastatedistributesbenefitsunequally,thedistinctionsitmakesaresubjecttoscrutinyundertheEqualProtectionClauseoftheFourteenthAmendment.Generally,alawwillsurvivethatscrutinyifthedistinctionrationallyfurthersalegitimatestatepurpose.158.ThedistinctionNewMexicomadebetweenveteranswhoestablishedresidencebefore1976,andthoseveteranswhoarrivedintheStatethereafter,theCourtfoundbearsnorationalrelationshiptooneoftheState’sobjectives‐encouragingVietnamveteranstomovetoNewMexico.Id.at619.Thelegislaturesetthiseligibilitydatelongafterthetriggeringeventoccurred.159
TheCourtfoundthatonecomponentofthesecondpurposerationaleofthestatute‐rewardingveteranswhoresidedintheStatebefore1976,fortheirmilitaryservicetosupportthestatute’sdistinctionbetweenresidentveteranswaslegitimate;theCourtobservedthat“[o]urcountryhasalongstandingpolicyofcompensatingveteransfortheirpastcontributionsbyprovidingthemwithnumerousadvantages.”160Thevariouspreferencesforveteransaregroundedina“[d]esiretocompensateinsomemeasureforthedisruptionofawayoflife...andtoexpressgratitude....”161.Consistentwiththispolicy,theStatemayawardcertainbenefitstoallitsbonafideveterans,becauseitthenismakingneitheraninvidiousnorirrationaldistinctionamongitsresidents.162Residentveterans,asagroup,maywelldeservepreferentialtreatment,andsuchdifferentialtreatmentvis‐à‐visnon‐veteransdoesnotoffendtheEqualProtectionClause.163
EvenassumingthattheStatemaylegitimatelygrantbenefitsonthebasisofacoincidencebetweenmilitaryserviceandpastresidence,theCourtsaidtheNewMexicostatute’sdistinctionbetweenresidentveteranswasnotrationallyrelatedtotheState’sassertedlegislativegoal.164Thestatutewasnotwrittentorequireanyconnectionbetweentheveteran’spriorresidenceandmilitaryservice.Id.TheveteranwhoresidedinNewMexicoasaninfantlongagowouldimmediatelyqualifyfortheexemptionuponsettlingintheStateatanytimeinthefutureregardlessofwhereheresidedbefore,during,oraftermilitaryservice.165
TheCourtfoundtheNewMexicostatutecreatestwotiersofresidentVietnamveterans,identifyingresidentveteranswhosettledintheStateafter1976,asinasense“second‐classcitizens.”166Thisdiscriminationonthebasisofresidencewasnotsupportedbyanyidentifiablestateinterest;thestatuteisnotwrittentobenefitonlythoseresidentswhosuffereddislocationwithintheState’sbordersbyreasonofmilitaryservice.167TheCourtstatedithasmadeclear
156Id.at614.157Id.at624.158Id.at618.159Id.160Id.at620(internalcitationsomitted).161Id.,quoting,Russellv.Hodges,470F.2d212,218(CA21972).162Id.163Id.164Id.at622.165Id.166Id.at623.167Id.
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thattheConstitutionwillnottolerateastatebenefitprogramthat“createsfixed,permanentdistinctions...between...classesofconcededlybonafideresidents,basedonhowlongtheyhavebeenintheState.”Id.TheCourtheldthatneithertheEqualProtectionClause,northeCourt’sprecedents,permittheStatetopreferestablishedresidentveteransovernewcomersintheretroactiveapportionmentofaneconomicbenefit.168
TheCourtheldthattheNewMexicoveterans’taxexemptionstatuteviolatedtheguaranteesoftheEqualProtectionClauseoftheFourteenthAmendmentrulingthestatutedidnotsatisfytherationalbasisstandardanalysis.
Inanotherinstructivecaseregardingacivilrightsactionwhereaplaintiffchallengedtheconstitutionalityofgivingapreferencetoveteransincivilserviceexaminations,adistrictcourtheldthatprovisionsofPennsylvaniaVeterans'PreferenceActgrantingatenpointbonustoscoreofanyveteranreceivingapassinggradeonstatecivilserviceexaminationwerenotviolativeofequalprotection.169Thecourtalsoheldthebonuspreferencedidnotdiscriminateagainstwomenbyreasonof“acute”disproportionbetweenmenandwomeninarmedforces,andevenifprovisionsdiddiscriminateagainstwomen,thecourtsaidtheymaybejustifiedasarecognitionthatexperience,discipline,andloyaltythatveteransgaininmilitaryserviceisconducivetobetterperformanceofpublicduties.170Thecourtdeniedtherequestfordeclaratoryandinjunctiverelief.171
ThecourtinFeinermanv.Jonesinconsideringtheanalysistoapplytoaveteranpreferencestatedthatanessentialelementofanyanalysisinvolvingtheequalprotectionclauserequiresadeterminationoftheappropriatestandardtobeusedbywhichtogaugetheconstitutionalityofagivenstatute.TheCourtstatedthetraditionalequalprotectionstandardlookstothereasonablenessoftheclassificationinlightofitspossibleintendedpurposes.172TheclassificationmustbearsomerationalrelationshiptoalegitimateendandwillbesetasideasviolativeoftheEqualProtectionclauseonlyifbasedonreasonstotallyunrelatedtothatgoal.173Underthistest,theCourtsaid,thepartychallengingtheconstitutionalityofastatutehastheburdenofprovingthatthestatutedenieshimequalprotection,anditwillnotbesetasideifitisreasonablyrelatedtosomepermissiblelegislativeoradministrativepurpose.174
Sincetheabstractrighttobefairlyconsideredforpublicemployment,accordingtothecourt,didnotinvolvea“fundamentalright”or“fundamentalinterest”,the“rationalbasis”testmustbeappliedtotestthevalidityoftheVeterans'PreferenceAct.175Theplaintiffhastheburdenofovercomingthepresumptionofconstitutionalityandofprovingthatveterans'preferenceisarbitraryandnotreasonablyrelatedtosomepermissiblelegislativeoradministrativepurpose.176
TheVeterans'PreferenceAct,whichawardsaten‐pointbonustoallveteranswhohavescoredapassinggradeoncivilservicetests,thecourtfoundwastypicalofthemanyStateandFederal
168Id.169Feinermanv.Jones,356F.Supp.252(1973)(M.D.Penn.1973).170Id.171Id.172Id.,citing,Shapirov.Thompson,394U.S.618(1969).173Id.citing,McDonaldv.BoardofElectionCommissioners,394U.S.802(1969).174Id.citing,McGowanv.Maryland,366U.S.420(1961).175Id.at258.176Id.at259.
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statutoryprovisionsgivingveterans'preferenceinpublicemployment.Plaintiffcontendedthatsuchabonusforveteranswasunconstitutionalinthatitdeniedequalprotectionofthelawbycreatingtwoclasses,veteransandnon‐veterans,extendingtotheformerbenefitswhichitdeniedtoothers.177
ThecourtfoundthattherearethreeunderlyingjustificationsinmostofthesecasesupholdingthevariousVeterans'PreferenceActs:(1)Asarecognitionthattheexperience,discipline,andloyaltywhichveteransgaininmilitaryserviceisconducivetothebetterperformanceofpublicduties;(2)Asarewardforthoseveteranswho,eitherinvoluntarilyorthroughenlistment,haveservedtheircountryintimeofwar;and(3)Asanaidintherehabilitationandrelocationoftheveteranwhosenormallifestylehasbeendisruptedbymilitaryservice.178
InadoptingtheVeterans'PreferenceAct,thecourtfoundthestatelegislatureexpresslyrecognizedthefirsttworeasonssetoutaboveasjustifyinggivingpreferencetoveterans.Section2oftheActprovidesthatcreditwillbegiventoaveteranonappointment“forthedisciplineandexperiencerepresentedbyhismilitarytrainingandfortheloyaltyandpublicspiritdemonstratedbyhisserviceforthepreservationofhiscountry.”179Similarly,inacasechallengingthevalidityofgrantingabonustoveteransunderapriorveterans'preferenceprovision,thecourtstateditspurposeinthismanner:“Asabasisforappointmentitisnotunreasonabletoselectwarveteransfromcandidatesforofficeandtogivethemacertaincreditinrecognitionofthediscipline,experienceandservicerepresentedbytheirmilitaryactivity.Nooneshoulddenythattheseadvantagesareconducivetothebetterperformanceofpublicduties,wherediscipline,loyalty,andpublicspiritarelikewiseessential.”180
Thecourtsustainedthevalidityofgrantingafifteen‐pointbonustoveteranstakingappointmentexaminations,solongastheapplicantsinitiallyreceivedapassinggrade.Atthesametime,however,thecourtstruckdownaprovisionofthestatutegranting15%credittoallveteranstakingtheexaminations,regardlessofwhethertheyachievedapassinggrade.181
4. Pending cases (at the time of this report)
Therearenosignificantpendingcasesonappealatthetimeofthisreport,whichmaypotentiallydirectlyimpactandbeinstructivetothestudy.Themostrecentcase,citedbelow,wasjustsettledandvoluntarilydismissedonMarch14,2018byorderofthedistrictcourtandstipulatedtobytheparties,afterremandfromtheNinthCircuitCourtofAppeals.
MountainWestHoldingCo.,Inc.v.Montana,2017WL2179120(9thCir.May16,2017),MemorandumOpinion(NotForPublication),U.S.CourtofAppealsfortheNinthCircuit,May16,2017,DocketNos.14‐26097and15‐35003,dismissinginpart,reversinginpartandremandingtheU.S.DistrictCourtdecisionat2014WL6686734(D.Mont.2014).PetitionforPanelRehearingandRehearingEnBancfiledwiththeU.S.CourtofAppealsfortheNinthCircuitbyMontanaDOT,May30,2017,deniedonJune27,2017.ThecaseonremandwasvoluntarilydismissedbystipulationofthepartiesafterthepartiesenteredintoaSettlementAgreement
177Id.at259.178Id.at259citing,Koelfgenv.Jackson,355F.Supp.243(D.Minn.1972).179Id.180Id.at259quoting,Commonwealthexrel.Grahamv.Schmid,333Pa.568,at573,3A.2d701,at704(1938).181Id.
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(February23,2018).ThecasewasordereddismissedbythedistrictcourtonMarch14,2018afterthepartiesperformedtheSettlementAgreement.(SeeSectionFbelow.)
RotheDevelopment,Inc.v.U.S.D.O.D.andS.B.A.,2016WL4719049(D.C.Cir.2016).Also,itisinstructivetothestudytopointouttherecentdecisioninRotheDevelopment,Inc.v.U.S.DepartmentofDefenseandSmallBusinessAdministration,2016WL4719049(D.C.Cir.Sept.9,2016),affirmingonothergrounds,RotheDevelopment,Inc.v.UnitedStatesDepartmentofDefense,U.S.SmallBusinessAdministration,etal,107F.Supp.3d183,2015WL3536271(D.D.C.,2015),certiorarideniedin2017.
RothefiledthisactionagainsttheU.S.DepartmentofDefenseandtheU.S.SmallBusinessAdministrationchallengingtheconstitutionalityoftheSection8(a)Programonitsface.TheRothecaseisnearlyidenticaltothechallengebroughtinDynaLanticCorp.v.U.S.DepartmentofDefense,885F.Supp.2d237(D.D.C.2012).DynaLantic’scourtrejectedtheplaintiff’sfacialattackandheldtheSection8(a)Programfaciallyconstitutional.
PlaintiffRothereliesonsubstantiallythesamerecordevidenceandnearlyidenticallegalargumentsasinDynaLantic,andurgedthecourttostrikedowntherace‐consciousprovisionsofSection8(a)ontheirface.ThedistrictcourtinRotheagreedwiththecourt’sfindings,holdingsandreasoninginDynaLantic,andthusconcludedthatSection8(a)isconstitutionalonitsface.
Thedistrictcourtconcludedthatplaintiff’sfacialconstitutionalchallengetotheSection8(a)Programfailed,thatthegovernmentdemonstratedacompellinginterestfortheracialclassification,theneedforremedialactionissupportedbystrongandunrebuttedevidence,andtheSection8(a)programisnarrowlytailored.
RotheappealedthedecisiontotheUnitedStatesCourtofAppealsfortheDistrictofColumbiaCircuit.Themajorityofthethreejudgepanelaffirmedthedistrictcourt’sdecision,butonothergrounds.182
TheCourtofAppealsinRothefoundthatthechallengewasonlytotheSection8(a)statute,nottheimplementingregulations,andthusheldtheSection8(a)statutewasrace‐neutral.183Therefore,thecourtheldtherationalbasistestappliedandnotstrictscrutiny.184Thecourtaffirmedthegrantofsummaryjudgmenttothegovernmentdefendantsapplyingtherationalbasisstandard,andupheldthevalidityofSection8(a)basedonthelimitedchallengebyRothetothestatuteandnottheregulations.
TheCourtofAppealsheldthatSection8(a)oftheSmallBusinessActdoesnotwarrantstrictscrutinybecauseitdoesnotonitsfaceclassifyindividualsbyrace.185Section8(a),theCourtsaid,unliketheimplementingregulations,usesfaciallyrace‐neutraltermsofeligibilitytoidentifyindividualvictimsofdiscrimination,prejudice,orbias,withoutpresumingthatmembersofcertainracial,ethnic,orculturalgroupsqualifyassuch.186(SeeSectionGbelow.)
1822016WL4719049(September9,2016).1832016WL4719049,at*1‐2.184Id.1852016WL4719049at**1‐2.186Id.
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RothefiledaPetitionforRehearingandRehearingEnBanctothefullCourtofAppeals.ThecourtdeniedthePetition.RothethenfiledaPetitionforaWritofCertioraritotheU.S.SupremeCourt,whichwasdeniedonOctober16,2017.2017WL1375832.
Ongoingreview.TheaboverepresentsasummaryofthelegalframeworkpertinenttothestudyandimplementationofDBE/MBE/WBE,orrace‐,ethnicity‐,orgender‐neutralprograms,theFederalDBEProgram,andtheimplementationoftheFederalDBEProgrambystateDOTsandlocalgovernmentrecipientsoffederalfunds.Becausethisisadynamicareaofthelaw,theframeworkissubjecttoongoingreviewasthelawcontinuestoevolve.Thefollowingprovidesmoredetailedsummariesofkeyrecentdecisions.
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SUMMARIES OF RECENT DECISIONS
D. Recent Decisions Involving State or Local Government MBE/WBE/DBE Programs in the Fourth Circuit Court of Appeals
1. H. B. Rowe Co., Inc. v. W. Lyndo Tippett, NCDOT, et al., 615 F.3d 233 (4th Cir. 2010)
TheStateofNorthCarolinaenactedstatutorylegislationthatrequiredprimecontractorstoengageingoodfaitheffortstosatisfyparticipationgoalsforminorityandwomensubcontractorsonstate‐fundedprojects.(SeefactsasdetailedinthedecisionoftheUnitedStatesDistrictCourtfortheEasternDistrictofNorthCarolinadiscussedbelow.).Theplaintiff,aprimecontractor,broughtthisactionafterbeingdeniedacontractbecauseofitsfailuretodemonstrategoodfaitheffortstomeettheparticipationgoalssetonaparticularcontractthatitwasseekinganawardtoperformworkwiththeNorthCarolinaDepartmentofTransportation(“NCDOT”).PlaintiffassertedthattheparticipationgoalsviolatedtheEqualProtectionClauseandsoughtinjunctivereliefandmoneydamages.
Afterabenchtrial,thedistrictcourtheldthechallengedstatutoryschemeconstitutionalbothonitsfaceandasapplied,andtheplaintiffprimecontractorappealed.615F.3d233at236.TheCourtofAppealsheldthattheStatedidnotmeetitsburdenofproofinallrespectstoupholdthevalidityofthestatelegislation.But,theCourtagreedwiththedistrictcourtthattheStateproducedastrongbasisinevidencejustifyingthestatutoryschemeonitsface,andasappliedtoAfricanAmericanandNativeAmericansubcontractors,andthattheStatedemonstratedthatthelegislativeschemeisnarrowlytailoredtoserveitscompellinginterestinremedyingdiscriminationagainsttheseracialgroups.TheCourtthusaffirmedthedecisionofthedistrictcourtinpart,reverseditinpartandremandedforfurtherproceedingsconsistentwiththeopinion.Id.
TheCourtfoundthattheNorthCarolinastatutoryscheme“largelymirroredthefederalDisadvantagedBusinessEnterprise(“DBE”)program,withwhicheverystatemustcomplyinawardinghighwayconstructioncontractsthatutilizefederalfunds.”615F.3d233at236.TheCourtalsonotedthatfederalcourtsofappeal“haveuniformlyupheldtheFederalDBEProgramagainstequal‐protectionchallenges.”Id.,atfootnote1,citing,AdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000).
In2004,theStateretainedaconsultanttoprepareandissueathirdstudyofsubcontractorsemployedinNorthCarolina’shighwayconstructionindustry.Thestudy,accordingtotheCourt,marshaledevidencetoconcludethatdisparitiesintheutilizationofminoritysubcontractorspersisted.615F.3d233at238.TheCourtpointedoutthatinresponsetothestudy,theNorthCarolinaGeneralAssemblysubstantiallyamendedstatelegislationsection136‐28.4andthenewlawwentintoeffectin2006.Thenewstatutemodifiedthepreviousstatutoryscheme,accordingtotheCourtinfiveimportantrespects.Id.
First,theamendedstatuteexpresslyconditionsimplementationofanyparticipationgoalsonthefindingsofthe2004study.Second,theamendedstatuteeliminatesthe5and10percentannualgoalsthatweresetinthepredecessorstatute.615F.3d233at238‐239.Instead,asamended,thestatuterequirestheNCDOTto“establishannualaspirationalgoals,notmandatorygoals,…fortheoverallparticipationincontractsbydisadvantagedminority‐ownedandwomen‐
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ownedbusinesses…[that]shallnotbeappliedrigidlyonspecificcontractsorprojects.”Id.at239,quoting,N.C.Gen.Stat.§136‐28.4(b)(2010).ThestatutefurthermandatesthattheNCDOTset“contract‐specificgoalsorproject‐specificgoals…foreachdisadvantagedminority‐ownedandwomen‐ownedbusinesscategorythathasdemonstratedsignificantdisparityincontractutilization”basedonavailability,asdeterminedbythestudy.Id.
Third,theamendedstatutenarrowedthedefinitionof“minority”toencompassonlythosegroupsthathavesuffereddiscrimination.Id.at239.Theamendedstatutereplacedalistofdefinedminoritiestoanycertaingroupsbydefining“minority”as“onlythoseracialorethnicityclassificationsidentifiedby[thestudy]…thathavebeensubjectedtodiscriminationintherelevantmarketplaceandthathavebeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.”Id.at239quotingsection136‐28.4(c)(2)(2010).
Fourth,theamendedstatuterequiredtheNCDOTtoreevaluatetheProgramovertimeandrespondtochangingconditions.615F.3d233at239.Accordingly,theNCDOTmustconductastudysimilartothe2004studyatleasteveryfiveyears.Id.§136‐28.4(b).Finally,theamendedstatutecontainedasunsetprovisionwhichwassettoexpireonAugust31,2009,buttheGeneralAssemblysubsequentlyextendedthesunsetprovisiontoAugust31,2010.Id.Section136‐28.4(e)(2010).
TheCourtalsonotedthatthestatuterequiredonlygoodfaitheffortsbytheprimecontractorstoutilizesubcontractors,andthatthegoodfaithrequirement,theCourtfound,provedpermissiveinpractice:primecontractorssatisfiedtherequirementin98.5percentofcases,failingtodosoinonly13of878attempts.615F.3d233at239.
Strictscrutiny.TheCourtstatedthestrictscrutinystandardwasapplicabletojustifyarace‐consciousmeasure,andthatitisasubstantialburdenbutnotautomatically“fatalinfact.”615F.3d233at241.TheCourtpointedoutthat“[t]heunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”Id.at241quotingAlexanderv.Estepp,95F.3d312,315(4thCir.1996).Insoacting,agovernmentalentitymustdemonstrateithadacompellinginterestin“remedyingtheeffectsofpastorpresentracialdiscrimination.”Id.,quotingShawv.Hunt,517U.S.899,909(1996).
Thus,theCourtfoundthattojustifyarace‐consciousmeasure,astatemustidentifythatdiscrimination,publicorprivate,withsomespecificity,andmusthaveastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.615F.3d233at241quoting,Croson,488U.S.at504andWygantv.JacksonBoardofEducation,476U.S.267,277(1986)(pluralityopinion).
TheCourtsignificantlynotedthat:“Thereisno‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”615F.3d233at241,quotingRotheDev.Corp.v.DepartmentofDefense,545F.3d1023,1049(Fed.Cir.2008).TheCourtstatedthatthesufficiencyoftheState’sevidenceofdiscrimination“mustbeevaluatedonacase‐by‐casebasis.”Id.at241.(internalquotationmarksomitted).
TheCourtheldthatastate“neednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary.615F.3d233at241,citingConcreteWorks,321F.3dat958.“Instead,astatemaymeetitsburdenbyrelyingon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.Id.at241,citingCroson,488U.S.at509
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(pluralityopinion).TheCourtstatedthatwe“furtherrequirethatsuchevidencebe‘corroboratedbysignificantanecdotalevidenceofracialdiscrimination.’”Id.at241,quotingMarylandTroopersAssociation,Inc.v.Evans,993F.2d1072,1077(4thCir.1993).
TheCourtpointedoutthatthosechallengingrace‐basedremedialmeasuresmust“introducecredible,particularizedevidencetorebut”thestate’sshowingofastrongbasisinevidenceforthenecessityforremedialaction.Id.at241‐242,citingConcreteWorks,321F.3dat959.Challengersmayofferaneutralexplanationforthestate’sevidence,presentcontrastingstatisticaldata,ordemonstratethattheevidenceisflawed,insignificant,ornotactionable.Id.at242(citationsomitted).However,theCourtstated“thatmerespeculationthatthestate’sevidenceisinsufficientormethodologicallyflaweddoesnotsufficetorebutastate’sshowing.Id.at242,citingConcreteWorks,321F.3dat991.
TheCourtheldthattosatisfystrictscrutiny,thestate’sstatutoryschememustalsobe“narrowlytailored”toservethestate’scompellinginterestinnotfinancingprivatediscriminationwithpublicfunds.615F.3d233at242,citingAlexander,95F.3dat315(citingAdarand,515U.S.at227).
Intermediatescrutiny.TheCourtheldthatcourtsapply“intermediatescrutiny”tostatutesthatclassifyonthebasisofgender.Id.at242.TheCourtfoundthatadefenderofastatutethatclassifiesonthebasisofgendermeetsthisintermediatescrutinyburden“byshowingatleastthattheclassificationservesimportantgovernmentalobjectivesandthatthediscriminatorymeansemployedaresubstantiallyrelatedtotheachievementofthoseobjectives.”Id.,quotingMississippiUniversityforWomenv.Hogan,458U.S.718,724(1982).TheCourtnotedthatintermediatescrutinyrequireslessofashowingthandoes“themostexacting”strictscrutinystandardofreview.Id.at242.TheCourtfoundthatits“sistercircuits”provideguidanceinformulatingagoverningevidentiarystandardforintermediatescrutiny.Thesecourtsagreethatsuchameasure“canrestsafelyonsomethinglessthanthe‘strongbasisinevidence’requiredtobeartheweightofarace‐orethnicity‐consciousprogram.”Id.at242,quotingEngineeringContractors,122F.3dat909(othercitationsomitted).
Indefiningwhatconstitutes“somethingless”thana‘strongbasisinevidence,’thecourts,…alsoagreethatthepartydefendingthestatutemust‘present[]sufficientprobativeevidenceinsupportofitsstatedrationaleforenactingagenderpreference,i.e.,…theevidence[mustbe]sufficienttoshowthatthepreferencerestsonevidence‐informedanalysisratherthanonstereotypicalgeneralizations.”615F.3d233at242quotingEngineeringContractors,122F.3dat910andConcreteWorks,321F.3dat959.Thegender‐basedmeasuresmustbebasedon“reasonedanalysisratherthanonthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.at242quotingHogan,458U.S.at726.
Plaintiff’sburden.TheCourtfoundthatwhenaplaintiffallegesthatastatuteviolatestheEqualProtectionClauseasappliedandonitsface,theplaintiffbearsaheavyburden.Initsfacialchallenge,theCourtheldthataplaintiff“hasaveryheavyburdentocarry,andmustshowthat[astatutoryscheme]cannotoperateconstitutionallyunderanycircumstance.”Id.at243,quotingWestVirginiav.U.S.DepartmentofHealth&HumanServices,289F.3d281,292(4thCir.2002).
Statisticalevidence.TheCourtexaminedtheState’sstatisticalevidenceofdiscriminationinpublic‐sectorsubcontracting,includingitsdisparityevidenceandregressionanalysis.TheCourtnotedthatthestatisticalanalysisanalyzedthedifferenceordisparitybetweentheamountofsubcontractingdollarsminority‐andwomen‐ownedbusinessesactuallywoninamarketand
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theamountofsubcontractingdollarstheywouldbeexpectedtowingiventheirpresenceinthatmarket.615F.3d233at243.TheCourtfoundthatthestudygroundeditsanalysisinthe“disparityindex,”whichmeasurestheparticipationofagivenracial,ethnic,orgendergroupengagedinsubcontracting.Id.Incalculatingadisparityindex,thestudydividedthepercentageoftotalsubcontractingdollarsthataparticulargroupwonbythepercentthatgrouprepresentsintheavailablelaborpool,andmultipliedtheresultby100.Id.Theclosertheresultingindexisto100,thegreaterthatgroup’sparticipation.Id.
TheCourtheldthatafterCroson,anumberofoursistercircuitshaverecognizedtheutilityofthedisparityindexindeterminingstatisticaldisparitiesintheutilizationofminority‐andwomen‐ownedbusinesses.Id.at243‐244(Citationstomultiplefederalcircuitcourtdecisionsomitted.)TheCourtalsofoundthatgenerally“courtsconsideradisparityindexlowerthan80asanindicationofdiscrimination.”Id.at244.Accordingly,thestudyconsideredonlyadisparityindexlowerthan80aswarrantingfurtherinvestigation.Id.
TheCourtpointedoutthataftercalculatingthedisparityindexforeachrelevantracialorgendergroup,theconsultanttestedforthestatisticalsignificanceoftheresultsbyconductingstandarddeviationanalysisthroughtheuseoft‐tests.TheCourtnotedthatstandarddeviationanalysis“describestheprobabilitythatthemeasureddisparityistheresultofmerechance.”615F.3d233at244,quotingEng’gContractors,122F.3dat914.Theconsultantconsideredthefindingoftwostandarddeviationstodemonstrate“with95percentcertaintythatdisparity,asrepresentedbyeitheroverutilizationorunderutilization,isactuallypresent.”Id.,citingEng’gContractors,122F.3dat914.
ThestudyanalyzedtheparticipationofminorityandwomensubcontractorsinconstructioncontractsawardedandmanagedfromthecentralNCDOTofficeinRaleigh,NorthCarolina.615F.3d233at244.Todetermineutilizationofminorityandwomensubcontractors,theconsultantdevelopedamasterlistofcontractsmainlyfromState‐maintainedelectronicdatabasesandhardcopyfiles;thenselectedfromthatlistastatisticallyvalidsampleofcontracts,andcalculatedthepercentageofsubcontractingdollarsawardedtominority‐andwomen‐ownedbusinessesduringthe5‐yearperiodendinginJune2003.(Thestudywaspublishedin2004).Id.at244.
TheCourtfoundthattheuseofdataforcentrally‐awardedcontractswassufficientforitsanalysis.ItwasnotedthatdatafromconstructioncontractsawardedandmanagedfromtheNCDOTdivisionsacrossthestateandfrompreconstructioncontracts,whichinvolveworkfromengineeringfirmsandarchitecturalfirmsonthedesignofhighways,wasincompleteandnotaccurate.615F.3d233at244,n.6.Thesedatawerenotrelieduponinformingtheopinionsrelatingtothestudy.Id.at244,n.6.
Toestimateavailability,whichtheCourtdefinedasthepercentageofaparticulargroupintherelevantmarketarea,theconsultantcreatedavendorlistcomprising:(1)subcontractorsapprovedbythedepartmenttoperformsubcontractworkonstate‐fundedprojects,(2)subcontractorsthatperformedsuchworkduringthestudyperiod,and(3)contractorsqualifiedtoperformprimeconstructionworkonstate‐fundedcontracts.615F.3d233at244.TheCourtnotedthatprimeconstructionworkonstate‐fundedcontractswasincludedbasedonthetestimonybytheconsultantthatprimecontractorsarequalifiedtoperformsubcontractingworkandoftendoperformsuchwork.Id.at245.TheCourtalsonotedthattheconsultantsubmitteditsmasterlisttotheNCDOTforverification.Id.at245.
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Basedontheutilizationandavailabilityfigures,thestudypreparedthedisparityanalysiscomparingtheutilizationbasedonthepercentageofsubcontractingdollarsoverthefiveyearperiod,determiningtheavailabilityinnumbersoffirmsandtheirpercentageofthelaborpool,adisparityindexwhichisthepercentageofutilizationindollarsdividedbythepercentageofavailabilitymultipliedby100,andaTValue.615F.3d233at245.
TheCourtconcludedthatthefiguresdemonstratedprimecontractorsunderutilizedalloftheminoritysubcontractorclassificationsonstate‐fundedconstructioncontractsduringthestudyperiod.615F.3d233245.Thedisparityindexforeachgroupwaslessthan80and,thus,theCourtfoundwarrantedfurtherinvestigation.Id.Thet‐testresults,however,demonstratedmarkedunderutilizationonlyofAfricanAmericanandNativeAmericansubcontractors.Id.ForAfricanAmericansthet‐valuefelloutsideoftwostandarddeviationsfromthemeanand,therefore,wasstatisticallysignificantata95percentconfidencelevel.Id.TheCourtfoundtherewasatleasta95percentprobabilitythatprimecontractors’underutilizationofAfricanAmericansubcontractorswasnottheresultofmerechance.Id.
ForNativeAmericansubcontractors,thet‐valueof1.41wassignificantataconfidencelevelofapproximately85percent.615F.3d233at245.Thet‐valuesforHispanicAmericanandAsianAmericansubcontractors,demonstratedsignificanceataconfidencelevelofapproximately60percent.Thedisparityindexforwomensubcontractorsfoundthattheywereoverutilizedduringthestudyperiod.Theoverutilizationwasstatisticallysignificantata95percentconfidencelevel.Id.
Tocorroboratethedisparitystudy,theconsultantconductedaregressionanalysisstudyingtheinfluenceofcertaincompanyandbusinesscharacteristics–withaparticularfocusonownerraceandgender–onafirm’sgrossrevenues.615F.3d233at246.TheconsultantobtainedthedatafromatelephonesurveyoffirmsthatconductedorattemptedtoconductbusinesswiththeNCDOT.Thesurveypoolconsistedofarandomsampleofsuchfirms.Id.
Theconsultantusedthefirms’grossrevenuesasthedependentvariableintheregressionanalysistotesttheeffectofothervariables,includingcompanyageandnumberoffull‐timeemployees,andtheowners’yearsofexperience,levelofeducation,race,ethnicity,andgender.615F.3d233at246.Theanalysisrevealedthatminorityandwomenownershipuniversallyhadanegativeeffectonrevenue,andAfricanAmericanownershipofafirmhadthelargestnegativeeffectonthatfirm’sgrossrevenueofalltheindependentvariablesincludedintheregressionmodel.Id.ThesefindingsledtotheconclusionthatforAfricanAmericansthedisparityinfirmrevenuewasnotduetocapacity‐relatedormanagerialcharacteristicsalone.Id.
TheCourtrejectedtheargumentsbytheplaintiffsattackingtheavailabilityestimates.TheCourtrejectedtheplaintiff’sexpert,Dr.GeorgeLaNoue,whotestifiedthatbidderdata–reflectingthenumberofsubcontractorsthatactuallybidonDepartmentsubcontracts–estimatesavailabilitybetterthan“vendordata.”615F.3d233at246.Dr.LaNoueconceded,however,thattheStatedoesnotcompilebidderdataandthatbidderdataactuallyreflectsskewedavailabilityinthecontextofagoalsprogramthaturgesprimecontractorstosolicitbidsfromminorityandwomensubcontractors.Id.TheCourtfoundthattheplaintiff’sexpertdidnotdemonstratethatthevendordatausedinthestudywasunreliable,orthatthebidderdatawouldhaveyieldedlesssupportfortheconclusionsreached.Insum,theCourtheldthattheplaintiffschallengetotheavailabilityestimatefailedbecauseitcouldnotdemonstratethatthe2004study’savailabilityestimatewasinadequate.Id.at246.TheCourtcitedConcreteWorks,321F.3dat991forthepropositionthatachallengercannotmeetitsburdenofproofthroughconjectureandunsupportedcriticismsofthestate’sevidence,”andthattheplaintiffRowepresentednoviable
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alternativefordeterminingavailability.Id.at246‐247,citingConcreteWorks,321F.3d991andSherbrookeTurf,Inc.v.Minn.DepartmentofTransportation,345F.3d964,973(8thCir.2003).
TheCourtalsorejectedtheplaintiff’sargumentthatminoritysubcontractorsparticipatedonstate‐fundedprojectsatalevelconsistentwiththeiravailabilityintherelevantlaborpool,basedonthestate’sresponsethatevidenceastothenumberofminoritysubcontractorsworkingwithstate‐fundedprojectsdoesnoteffectivelyrebuttheevidenceofdiscriminationintermsofsubcontractingdollars.615F.3d233at247.TheStatepointedtoevidenceindicatingthatprimecontractorsusedminoritybusinessesforlow‐valueworkinordertocomplywiththegoals,andthatAfricanAmericanownershiphadasignificantnegativeimpactonfirmrevenueunrelatedtofirmcapacityorexperience.Id.TheCourtconcludedplaintiffdidnotofferanycontraryevidence.Id.
TheCourtfoundthattheStatebolstereditspositionbypresentingevidencethatminoritysubcontractorshavethecapacitytoperformhigher‐valuework.615F.3d233at247.Thestudyconcluded,basedonasampleofsubcontractsandreportsofannualfirmrevenue,thatexclusionofminoritysubcontractorsfromcontractsunder$500,000wasnotafunctionofcapacity.Id.at247.Further,theStateshowedthatover90percentoftheNCDOT’ssubcontractswerevaluedat$500,000orless,andthatcapacityconstraintsdonotoperatewiththesameforceonsubcontractsastheymayonprimecontractsbecausesubcontractstendtoberelativelysmall.Id.at247.TheCourtpointedoutthattheCourtinRotheII,545F.3dat1042‐45,faulteddisparityanalysesoftotalconstructiondollars,includingprimecontracts,forfailingtoaccountfortherelativecapacityoffirmsinthatcase.Id.at247.
TheCourtpointedoutthatinadditiontothestatisticalevidence,theStatealsopresentedevidencedemonstratingthatfrom1991to1993,duringtheProgram’ssuspension,primecontractorsawardedsubstantiallyfewersubcontractingdollarstominorityandwomensubcontractorsonstate‐fundedprojects.TheCourtrejectedtheplaintiff’sargumentthatevidenceofadeclineinutilizationdoesnotraiseaninferenceofdiscrimination.615F.3d233at247‐248.TheCourtheldthattheverysignificantdeclineinutilizationofminorityandwomen‐subcontractors–nearly38percent–“surelyprovidesabasisforafactfindertoinferthatdiscriminationplayedsomeroleinprimecontractors’reducedutilizationofthesegroupsduringthesuspension.”Id.at248,citingAdarandv.Slater,228F.3dat1174(findingthatevidenceofdecliningminorityutilizationafteraprogramhasbeendiscontinued“stronglysupportsthegovernment’sclaimthattherearesignificantbarrierstominoritycompetitioninthepublicsubcontractingmarket,raisingthespecterofracialdiscrimination.”)TheCourtfoundsuchaninferenceisparticularlycompellingforminority‐ownedbusinessesbecause,evenduringthestudyperiod,primecontractorscontinuetounderutilizethemonstate‐fundedroadprojects.Id.at248.
Anecdotalevidence.TheStateadditionallyreliedonthreesourcesofanecdotalevidencecontainedinthestudy:atelephonesurvey,personalinterviews,andfocusgroups.TheCourtfoundtheanecdotalevidenceshowedaninformal“goodoldboy”networkofwhitecontractorsthatdiscriminatedagainstminoritysubcontractors.615F.3d233at248.TheCourtnotedthatthree‐quartersofAfricanAmericanrespondentstothetelephonesurveyagreedthataninformalnetworkofprimeandsubcontractorsexistedintheState,asdidthemajorityofotherminorities,thatmorethanhalfofAfricanAmericanrespondentsbelievedthenetworkexcludedtheircompaniesfrombiddingorawardingacontractasdidmanyoftheotherminorities.Id.at248.TheCourtfoundthatnearlyhalfofnonminoritymalerespondentscorroboratedtheexistenceofaninformalnetwork,however,only17percentofthembelievedthatthenetworkexcludedtheircompaniesfrombiddingorwinningcontracts.Id.
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AnecdotalevidencealsoshowedalargemajorityofAfricanAmericanrespondentsreportedthatdoublestandardsinqualificationsandperformancemadeitmoredifficultforthemtowinbidsandcontracts,thatprimecontractorsviewminorityfirmsasbeinglesscompetentthannonminorityfirms,andthatnonminorityfirmschangetheirbidswhennotrequiredtohireminorityfirms.615F.3d233at248.Inaddition,theanecdotalevidenceshowedAfricanAmericanandNativeAmericanrespondentsbelievedthatprimecontractorssometimesdroppedminoritysubcontractorsafterwinningcontracts.Id.at248.TheCourtfoundthatinterviewandfocus‐groupresponsesechoedandunderscoredthesereports.Id.
Theanecdotalevidenceindicatedthatprimecontractorsalreadyknowwhotheywilluseonthecontractbeforetheysolicitbids:thatthe“goodoldboynetwork”affectsbusinessbecauseprimecontractorsjustpickupthephoneandcalltheirbuddies,whichexcludesothersfromthatmarketcompletely;thatprimecontractorsprefertouseotherlessqualifiedminority‐ownedfirmstoavoidsubcontractingwithAfricanAmerican‐ownedfirms;andthatprimecontractorsusetheirpreferredsubcontractorregardlessofthebidprice.615F.3d233at248‐249.Severalminoritysubcontractorsreportedthatprimecontractorsdonottreatminorityfirmsfairly,pointingtoinstancesinwhichprimecontractorssolicitedquotesthedaybeforebidsweredue,didnotrespondtobidsfromminoritysubcontractors,refusedtonegotiatepriceswiththem,orgaveminoritysubcontractorsinsufficientinformationregardingtheproject.Id.at249.
TheCourtrejectedtheplaintiffs’contentionthattheanecdotaldatawasflawedbecausethestudydidnotverifytheanecdotaldataandthattheconsultantoversampledminoritysubcontractorsincollectingthedata.TheCourtstatedthattheplaintiffsofferednorationaleastowhyafactfindercouldnotrelyontheState’s“unverified”anecdotaldata,andpointedoutthatafactfindercouldverywellconcludethatanecdotalevidenceneednot‐andindeedcannot‐beverifiedbecauseit“isnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.”615F.3d233at249,quotingConcreteWorks,321F.3dat989.
TheCourtheldthatanecdotalevidencesimplysupplementsstatisticalevidenceofdiscrimination.Id.at249.TheCourtrejectedplaintiffs’argumentthatthestudyoversampledrepresentativesfromminoritygroups,andfoundthatsurveyingmorenon‐minoritymenwouldnothaveadvancedtheinquiry.Id.at249.Itwasnotedthatthesamplesoftheminoritygroupswererandomlyselected.Id.TheCourtfoundthestatehadcompellinganecdotalevidencethatminoritysubcontractorsfacerace‐basedobstaclestosuccessfulbidding.Id.at249.
Strongbasisinevidencethattheminorityparticipationgoalswerenecessarytoremedydiscrimination.TheCourtheldthattheStatepresenteda“strongbasisinevidence”foritsconclusionthatminorityparticipationgoalswerenecessarytoremedydiscriminationagainstAfricanAmericanandNativeAmericansubcontractors.”615F.3d233at250.Therefore,theCourtheldthattheStatesatisfiedthestrictscrutinytest.TheCourtfoundthattheState’sdatademonstratedthatprimecontractorsgrosslyunderutilizedAfricanAmericanandNativeAmericansubcontractorsinpublicsectorsubcontractingduringthestudy.Id.at250.TheCourtnotedthatthesefindingshaveparticularresonancebecausesince1983,NorthCarolinahasencouragedminorityparticipationinstate‐fundedhighwayprojects,andyetAfricanAmericanandNativeAmericansubcontractorscontinuetobeunderutilizedonsuchprojects.Id.at250.
Inaddition,theCourtfoundthedisparityindexinthestudydemonstratedstatisticallysignificantunderutilizationofAfricanAmericansubcontractorsata95percentconfidencelevel,andofNativeAmericansubcontractorsataconfidencelevelofapproximately85percent.615F.3d233at250.TheCourtconcludedtheStatebolsteredthedisparityevidencewithregression
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analysisdemonstratingthatAfricanAmericanownershipcorrelatedwithasignificant,negativeimpactonfirmrevenue,anddemonstratedtherewasadramaticdeclineintheutilizationofminoritysubcontractorsduringthesuspensionoftheprograminthe1990s.Id.
Thus,theCourtheldtheState’sevidenceshowingagrossstatisticaldisparitybetweentheavailabilityofqualifiedAmericanandNativeAmericansubcontractorsandtheamountofsubcontractingdollarstheywinonpublicsectorcontractsestablishedthenecessarystatisticalfoundationforupholdingtheminorityparticipationgoalswithrespecttothesegroups.615F.3d233at250.TheCourtthenfoundthattheState’sanecdotalevidenceofdiscriminationagainstthesetwogroupssufficientlysupplementedtheState’sstatisticalshowing.Id.Thesurveyinthestudyexposedaninformal,raciallyexclusivenetworkthatsystemicallydisadvantagedminoritysubcontractors.Id.at251.TheCourtheldthattheStatecouldconcludewithgoodreasonthatsuchnetworksexertachronicandperniciousinfluenceonthemarketplacethatcallsforremedialaction.Id.TheCourtfoundtheanecdotalevidenceindicatedthatracialdiscriminationisacriticalfactorunderlyingthegrossstatisticaldisparitiespresentedinthestudy.Id.at251.Thus,theCourtheldthattheStatepresentedsubstantialstatisticalevidenceofgrossdisparity,corroboratedby“disturbing”anecdotalevidence.
TheCourtheldincircumstanceslikethese,theSupremeCourthasmadeitabundantlyclearastatecanremedyapubliccontractingsystemthatwithholdsopportunitiesfromminoritygroupsbecauseoftheirrace.615F.3d233at251‐252.
Narrowlytailored.TheCourtthenaddressedwhethertheNorthCarolinastatutoryschemewasnarrowlytailoredtoachievetheState’scompellinginterestinremedyingdiscriminationagainstAfricanAmericanandNativeAmericansubcontractorsinpublic‐sectorsubcontracting.Thefollowingfactorswereconsideredindeterminingwhetherthestatutoryschemewasnarrowlytailored.
Neutralmeasures.TheCourtheldthatnarrowlytailoringrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives,”butastateneednot“exhaust[]…everyconceivablerace‐neutralalternative.”615F.3d233at252quotingGrutterv.Bollinger,539U.S.306,339(2003).TheCourtfoundthatthestudydetailsnumerousalternativerace‐neutralmeasuresaimedatenhancingthedevelopmentandcompetitivenessofsmallorotherwisedisadvantagedbusinessesinNorthCarolina.Id.at252.TheCourtpointedoutvariousrace‐neutralalternativesandmeasures,includingaSmallBusinessEnterpriseProgram;waivinginstitutionalbarriersofbondingandlicensingrequirementsoncertainsmallbusinesscontractsof$500,000orless;andtheDepartmentcontractsforsupportservicestoassistdisadvantagedbusinessenterpriseswithbookkeepingandaccounting,taxes,marketing,bidding,negotiation,andotheraspectsofentrepreneurialdevelopment.Id.at252.
TheCourtfoundthatplaintiffidentifiednoviablerace‐neutralalternativesthatNorthCarolinahadfailedtoconsiderandadopt.TheCourtalsofoundthattheStatehadundertakenmostoftherace‐neutralalternativesidentifiedbyUSDOTinitsregulationsgoverningtheFederalDBEProgram.615F.3d233at252,citing49CFR§26.51(b).TheCourtconcludedthattheStategaveseriousgoodfaithconsiderationtorace‐neutralalternativespriortoadoptingthestatutoryscheme.Id.
TheCourtconcludedthatdespitetheserace‐neutralefforts,thestudydemonstrateddisparitiescontinuetoexistintheutilizationofAfricanAmericanandNativeAmericansubcontractorsinstate‐fundedhighwayconstructionsubcontracting,andthatthese“persistentdisparitiesindicatethenecessityofarace‐consciousremedy.”615F.3d233at252.
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Duration.TheCourtagreedwiththedistrictcourtthattheprogramwasnarrowlytailoredinthatitsetaspecificexpirationdateandrequiredanewdisparitystudyeveryfiveyears.615F.3d233at253.TheCourtfoundthattheprogram’sinherenttimelimitandprovisionsrequiringregularreevaluationensureitiscarefullydesignedtoendureonlyuntilthediscriminatoryimpacthasbeeneliminated.Id.at253,citingAdarandConstructorsv.Slater,228F.3dat1179(quotingUnitedStatesv.Paradise,480U.S.149,178(1987)).
Program’sgoalsrelatedtopercentageofminoritysubcontractors.TheCourtconcludedthattheStatehaddemonstratedthattheProgram’sparticipationgoalsarerelatedtothepercentageofminoritysubcontractorsintherelevantmarketsintheState.615F.3d233at253.TheCourtfoundthattheNCDOThadtakenconcretestepstoensurethatthesegoalsaccuratelyreflecttheavailabilityofminority‐ownedbusinessesonaproject‐by‐projectbasis.Id.
Flexibility.TheCourtheldthattheProgramwasflexibleandthussatisfiedthisindicatorofnarrowtailoring.615F.3d233at253.TheProgramcontemplatedawaiverofproject‐specificgoalswhenprimecontractorsmakegoodfaitheffortstomeetthosegoals,andthatthegoodfaitheffortsessentiallyrequireonlythattheprimecontractorsolicitandconsiderbidsfromminorities.Id.TheStatedoesnotrequireorexpecttheprimecontractortoacceptanybidfromanunqualifiedbidder,oranybidthatisnotthelowestbid.Id.TheCourtfoundtherewasalenientstandardandflexibilityofthe“goodfaith”requirement,andnotedtheevidenceshowedonly13of878goodfaithsubmissionsfailedtodemonstrategoodfaithefforts.Id.
Burdenonnon‐MWBE/DBEs.TheCourtrejectedthetwoargumentspresentedbyplaintiffthattheProgramcreatedoneroussolicitationandfollow‐uprequirements,findingthattherewasnoneedforadditionalemployeesdedicatedtothetaskofrunningthesolicitationprogramtoobtainMBE/WBEs,andthattherewasnoevidencetosupporttheclaimthatplaintiffwasrequiredtosubcontractmillionsofdollarsofworkthatitcouldperformitselfforlessmoney.615F.3d233at254.TheStateofferedevidencefromthestudythatprimecontractorsneednotsubmitsubcontractworkthattheycanself‐perform.Id.
Overinclusive.TheCourtfoundbyitsowntermsthestatutoryschemeisnotoverinclusivebecauseitlimitedrelieftoonlythoseracialorethnicityclassificationsthathavebeensubjectedtodiscriminationintherelevantmarketplaceandthathadbeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.615F.3d233at254.TheCourtconcludedthatintailoringtheremedythisway,thelegislaturedidnotrandomlyincluderacialgroupsthatmayneverhavesufferedfromdiscriminationintheconstructionindustry,butrather,contemplatedparticipationgoalsonlyforthosegroupsshowntohavesuffereddiscrimination.Id.
Insum,theCourtheldthatthestatutoryschemeisnarrowlytailoredtoachievetheState’scompellinginterestinremedyingdiscriminationinpublic‐sectorsubcontractingagainstAfricanAmericanandNativeAmericansubcontractors.Id.at254.
Women‐ownedbusinessesoverutilized.Thestudy’spublic‐sectordisparityanalysisdemonstratedthatwomen‐ownedbusinesseswonfarmorethantheirexpectedshareofsubcontractingdollarsduringthestudyperiod.615F.3d233at254.Inotherwords,theCourtconcludedthatprimecontractorssubstantiallyoverutilizedwomensubcontractorsonpublicroadconstructionprojects.Id.TheCourtfoundthepublic‐sectorevidencedidnotevincethe“exceedinglypersuasivejustification”theSupremeCourtrequires.Id.at255.
TheCourtnotedthattheStatereliedheavilyonprivate‐sectordatafromthestudyattemptingtodemonstratethatprimecontractorssignificantlyunderutilizedwomensubcontractorsinthe
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generalconstructionindustrystatewideandintheAsheville,NorthCarolinaarea.615F.3d233at255.However,becausethestudydidnotprovideat‐testanalysisontheprivate‐sectordisparityfigurestocalculatestatisticalsignificance,theCourtcouldnotdeterminewhetherthisprivateunderutilizationwas“theresultofmerechance.”Id.at255.TheCourtfoundtroublingthe“evidentiarygap”thattherewasnoevidenceindicatingtheextenttowhichwomen‐ownedbusinessescompetingonpublic‐sectorroadprojectsviedforprivate‐sectorsubcontractsinthegeneralconstructionindustry.Id.at255.TheCourtalsofoundthattheStatedidnotpresentanyanecdotalevidenceindicatingthatwomensubcontractorssuccessfullybiddingonStatecontractsfacedprivate‐sectordiscrimination.Id.Inaddition,theCourtfoundmissinganyevidenceprimecontractorsthatdiscriminateagainstwomensubcontractorsintheprivatesectorneverthelesswinpublic‐sectorcontracts.Id.
TheCourtpointedoutthatitdidnotsuggestthattheproponentofagender‐consciousprogram“mustalwaystieprivatediscriminationtopublicaction.”615F.3d233at255,n.11.But,theCourtheldwhere,ashere,thereexistedsubstantialprobativeevidenceofoverutilizationintherelevantpublicsector,astatemustpresentsomethingmorethangeneralizedprivate‐sectordataunsupportedbycompellinganecdotalevidencetojustifyagender‐consciousprogram.Id.at255,n.11.
Moreover,theCourtfoundthestatefailedtoestablishtheamountofoverlapbetweengeneralconstructionandroadconstructionsubcontracting.615F.3d233at256.TheCourtsaidthatthedearthofevidenceastothecorrelationbetweenpublicroadconstructionsubcontractingandprivategeneralconstructionsubcontractingseverelylimitstheprivatedata’sprobativevalueinthiscase.Id.
Thus,theCourtheldthattheStatecouldnotovercomethestrongevidenceofoverutilizationinthepublicsectorintermsofgenderparticipationgoals,andthattheprofferedprivate‐sectordatafailedtoestablishdiscriminationintheparticularfieldinquestion.615F.3d233at256.Further,theanecdotalevidence,theCourtconcluded,indicatedthatmostwomensubcontractorsdonotexperiencediscrimination.Id.Thus,theCourtheldthattheStatefailedtopresentsufficientevidencetosupporttheProgram’scurrentinclusionofwomensubcontractorsinsettingparticipationgoals.Id.
Holding.TheCourtheldthatthestatelegislaturehadcraftedlegislationthatwithstoodtheconstitutionalscrutiny.615F.3d233at257.TheCourtconcludedthatinlightofthestatutoryscheme’sflexibilityandresponsivenesstotherealitiesofthemarketplace,andgiventheState’sstrongevidenceofdiscriminationagainAfricanAmericanandNativeAmericansubcontractorsinpublic‐sectorsubcontracting,theState’sapplicationofthestatutetothesegroupsisconstitutional.Id.at257.However,theCourtalsoheldthatbecausetheStatefailedtojustifyitsapplicationofthestatutoryschemetowomen,AsianAmerican,andHispanicAmericansubcontractors,theCourtfoundthoseapplicationswerenotconstitutional.
Therefore,theCourtaffirmedthejudgmentofthedistrictcourtwithregardtothefacialvalidityofthestatute,andwithregardtoitsapplicationtoAfricanAmericanandNativeAmericansubcontractors.615F.3d233at258.TheCourtreversedthedistrictcourt’sjudgmentinsofarasitupheldtheconstitutionalityofthestatelegislatureasappliedtowomen,AsianAmericanandHispanicAmericansubcontractors.Id.TheCourtthusremandedthecasetothedistrictcourttofashionanappropriateremedyconsistentwiththeopinion.Id.
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Concurringopinions.ItshouldbepointedoutthatthereweretwoconcurringopinionsbythethreeJudgepanel:onejudgeconcurredinthejudgment,andtheotherjudgeconcurredfullyinthemajorityopinionandthejudgment.
2. H. B. Rowe Corp., Inc. v. W. Lyndo Tippett, North Carolina DOT, et al., 589 F. Supp.2d 587 (E.D.N.C. 2008), affirmed in part, reversed in part, and remanded, 615 F.3d 233 (4th Cir. 2010)
InH.B.RoweCompanyv.Tippett,NorthCarolinaDepartmentofTransportation,etal.(“Rowe”),theUnitedStatesDistrictCourtfortheEasternDistrictofNorthCarolina,WesternDivision,heardachallengetotheStateofNorthCarolinaMBEandWBEProgram,whichisaStateofNorthCarolina“affirmativeaction”programadministeredbytheNCDOT.TheNCDOTMWBEProgramchallengedinRoweinvolvesprojectsfundedsolelybytheStateofNorthCarolinaandnotfundedbytheUSDOT.589F.Supp.2d587.
Background. Inthiscaseplaintiff,afamily‐ownedroadconstructionbusiness,bidonaNCDOTinitiatedstate‐fundedproject.NCDOTrejectedplaintiff’sbidinfavorofthenextlowbidthathadproposedhigherminorityparticipationontheprojectaspartofitsbid.AccordingtoNCDOT,plaintiff’sbidwasrejectedbecauseofplaintiff’sfailuretodemonstrate“goodfaithefforts”toobtainpre‐designatedlevelsofminorityparticipationontheproject.
Asaprimecontractor,plaintiffRowewasobligatedundertheMWBEProgramtoeitherobtainparticipationofspecifiedlevelsofMBEandWBEparticipationassubcontractors,ortodemonstrategoodfaitheffortstodoso.Forthisparticularproject,NCDOThadsetMBEandWBEsubcontractorparticipationgoalsof10percentand5percent,respectively.Plaintiff’sbidincluded6.6percentWBEparticipation,butnoMBEparticipation.Thebidwasrejectedafterareviewofplaintiff’sgoodfaitheffortstoobtainMBEparticipation.Thenextlowestbiddersubmittedabidincluding3.3percentMBEparticipationand9.3percentWBEparticipation,andalthoughnotobtainingaspecifiedlevelofMBEparticipation,itwasdeterminedtohavemadegoodfaitheffortstodoso.(OrderoftheDistrictCourt,datedMarch29,2007).
NCDOT’sMWBEProgram“largelymirrors”theFederalDBEProgram,whichNCDOTisrequiredtocomplywithinawardingconstructioncontractsthatutilizeFederalfunds.(589F.Supp.2d587;OrderoftheDistrictCourt,datedSeptember28,2007).LiketheFederalDBEProgram,underNCDOT’sMWBEProgram,thegoalsforminorityandfemaleparticipationareaspirationalratherthanmandatory.Id.AnindividualtargetforMBEparticipationwassetforeachproject.Id.
Historically,NCDOThadengagedinseveraldisparitystudies.Themostrecentstudywasdonein2004.Id.The2004study,whichfollowedthestudyin1998,concludedthatdisparitiesinutilizationofMBEspersistandthatabasisremainsforcontinuationoftheMWBEProgram.Thenewstatuteasrevisedwasapprovedin2006,whichmodifiedthepreviousMBEstatutebyeliminatingthe10percentand5percentgoalsandestablishingafixedexpirationdateof2009.
Plaintifffileditscomplaintinthiscasein2003againsttheNCDOTandindividualsassociatedwiththeNCDOT,includingtheSecretaryofNCDOT,W.LyndoTippett.Initscomplaint,plaintiffallegedthattheMWBEstatuteforNCDOTwasunconstitutionalonitsfaceandasapplied.589F.Supp.2d587.
March29,2007OrderoftheDistrictCourt. Themattercamebeforethedistrictcourtinitiallyonseveralmotions,includingthedefendants’MotiontoDismissorforPartialSummary
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Judgment,defendants’MotiontoDismisstheClaimforMootnessandplaintiff’sMotionforSummaryJudgment.ThecourtinitsOctober2007Ordergrantedinpartanddeniedinpartdefendants’MotiontoDismissorforpartialsummaryjudgment;denieddefendants’MotiontoDismisstheClaimforMootness;anddismissedwithoutprejudiceplaintiff’sMotionforSummaryJudgment.
ThecourtheldtheEleventhAmendmenttotheUnitedStatesConstitutionbarsplaintifffromobtaininganyreliefagainstdefendantNCDOT,andfromobtainingaretrospectivedamagesawardagainstanyoftheindividualdefendantsintheirofficialcapacities.Thecourtruledthatplaintiff’sclaimsforreliefagainsttheNCDOTwerebarredbytheEleventhAmendment,andtheNCDOTwasdismissedfromthecaseasadefendant.Plaintiff’sclaimsforinterest,actualdamages,compensatorydamagesandpunitivedamagesagainsttheindividualdefendantssuedintheirofficialcapacitiesalsowasheldbarredbytheEleventhAmendmentandweredismissed.But,thecourtheldthatplaintiffwasentitledtosueforaninjunctiontopreventstateofficersfromviolatingafederallaw,andundertheExParteYoungexception,plaintiff’sclaimfordeclaratoryandinjunctivereliefwaspermittedtogoforwardasagainsttheindividualdefendantswhowereactinginanofficialcapacitywiththeNCDOT.Thecourtalsoheldthattheindividualdefendantswereentitledtoqualifiedimmunity,andthereforedismissedplaintiff’sclaimformoneydamagesagainsttheindividualdefendantsintheirindividualcapacities.OrderoftheDistrictCourt,datedMarch29,2007.
DefendantsarguedthattherecentamendmenttotheMWBEstatuterenderedplaintiff’sclaimfordeclaratoryinjunctivereliefmoot.ThenewMWBEstatuteadoptedin2006,accordingtothecourt,doesawaywithmanyoftheallegedshortcomingsarguedbytheplaintiffinthislawsuit.Thecourtfoundtheamendedstatutehasasunsetdatein2009;specificaspirationalparticipationgoalsbywomenandminoritiesareeliminated;defines“minority”asincludingonlythoseracialgroupswhichdisparitystudiesidentifyassubjecttounderutilizationinstateroadconstructioncontracts;explicitlyreferencesthefindingsofthe2004DisparityStudyandrequiressimilarstudiestobeconductedatleastonceeveryfiveyears;anddirectsNCDOTtoenactregulationstargetingdiscriminationidentifiedinthe2004andfuturestudies.
Thecourtheld,however,thatthe2004DisparityStudyandamendedMWBEstatutedonotremedytheprimaryproblemwhichtheplaintiffcomplainedof:theuseofremedialrace‐andgender‐basedpreferencesallegedlywithoutvalidevidenceofpastracialandgenderdiscrimination.Inthatsense,thecourtheldtheamendedMWBEstatutecontinuedtopresentalivecaseorcontroversy,andaccordinglydeniedthedefendants’MotiontoDismissClaimforMootnessastoplaintiff’ssuitforprospectiveinjunctiverelief.OrderoftheDistrictCourt,datedMarch29,2007.
ThecourtalsoheldthatsincetherehadbeennoanalysisoftheMWBEstatuteapartfromthebriefsregardingmootness,plaintiff’spendingMotionforSummaryJudgmentwasdismissedwithoutprejudice.OrderoftheDistrictCourt,datedMarch29,2007.
September28,2007OrderoftheDistrictCourt. OnSeptember28,2007,thedistrictcourtissuedaneworderinwhichitdeniedboththeplaintiff’sandthedefendants’MotionsforSummaryJudgment.Plaintiffclaimedthatthe2004DisparityStudyisthesolebasisoftheMWBEstatute,thatthestudyisflawed,andthereforeitdoesnotsatisfythefirstprongofstrictscrutinyreview.Plaintiffalsoarguedthatthe2004studytendstoprovenon‐discriminationinthecaseofwomen;andfinallytheMWBEProgramfailsthesecondprongofstrictscrutinyreviewinthatitisnotnarrowlytailored.
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Thecourtfoundsummaryjudgmentwasinappropriateforeitherpartyandthattherearegenuineissuesofmaterialfactfortrial.Thefirstandforemostissueofmaterialfact,accordingtothecourt,wastheadequacyofthe2004DisparityStudyasusedtojustifytheMWBEProgram.Therefore,becausethecourtfoundtherewasagenuineissueofmaterialfactregardingthe2004Study,summaryjudgmentwasdeniedonthisissue.
ThecourtalsoheldtherewasconfusionastothebasisoftheMWBEProgram,andwhetheritwasbasedsolelyonthe2004Studyoralsoonthe1993and1998DisparityStudies.Therefore,thecourtheldagenuineissueofmaterialfactexistedonthisissueanddeniedsummaryjudgment.OrderoftheDistrictCourt,datedSeptember28,2007.
December9,2008OrderoftheDistrictCourt(589F.Supp.2d587). ThedistrictcourtonDecember9,2008,afterabenchtrial,issuedanOrderthatfoundasafactandconcludedasamatteroflawthatplaintifffailedtosatisfyitsburdenofproofthattheNorthCarolinaMinorityandWomen’sBusinessEnterpriseprogram,enactedbythestatelegislaturetoaffecttheawardingofcontractsandsubcontractsinstatehighwayconstruction,violatedtheUnitedStatesConstitution.
Plaintiff,initscomplaintfiledagainsttheNCDOTallegedthatN.C.Gen.St.§136‐28.4isunconstitutionalonitsfaceandasapplied,andthattheNCDOTwhileadministeringtheMWBEprogramviolatedplaintiff’srightsunderthefederallawandtheUnitedStatesConstitution.PlaintiffrequestedadeclaratoryjudgmentthattheMWBEprogramisinvalidandsoughtactualandpunitivedamages.
Asaprimecontractor,plaintiffwasobligatedundertheMWBEprogramtoeitherobtainparticipationofspecifiedlevelsofMBEandWBEsubcontractors,ortodemonstratethatgoodfaitheffortsweremadetodoso.Followingareviewofplaintiff’sgoodfaitheffortstoobtainminorityparticipationontheparticularcontractthatwasthesubjectofplaintiff’sbid,thebidwasrejected.Plaintiff’sbidwasrejectedinfavorofthenextlowestbid,whichhadproposedhigherminorityparticipationontheprojectaspartofitsbid.AccordingtoNCDOT,plaintiff’sbidwasrejectedbecauseofplaintiff’sfailuretodemonstrategoodfaitheffortstoobtainpre‐designatedlevelsofminorityparticipationontheproject.589F.Supp.2d587.
NorthCarolina’sMWBEprogram. TheMWBEprogramwasimplementedfollowingamendmentstoN.C.Gen.Stat.§136‐28.4.Pursuanttothedirectivesofthestatute,theNCDOTpromulgatedregulationsgoverningadministrationoftheMWBEprogram.SeeN.C.Admin.Codetit.19A,§2D.1101,etseq.TheregulationshadbeenamendedseveraltimesandprovidethatNCDOTshallensurethatMBEsandWBEshavethemaximumopportunitytoparticipateintheperformanceofcontractsfinancedwithnon‐federalfunds.N.C.Admin.CodeTit.19A§2D.1101.
NorthCarolina’sMWBEprogram,whichaffectedonlyhighwaybidsandcontractsfundedsolelywithstatemoney,accordingtothedistrictcourt,largelymirroredtheFederalDBEProgramwhichNCDOTisrequiredtocomplywithinawardingconstructioncontractsthatutilizefederalfunds.589F.Supp.2d587.LiketheFederalDBEProgram,underNorthCarolina’sMWBEprogram,thetargetsforminorityandfemaleparticipationwereaspirationalratherthanmandatory,andindividualtargetsfordisadvantagedbusinessparticipationweresetforeachindividualproject.N.C.Admin.Codetit.19A§2D.1108.IndeterminingwhatlevelofMBEandWBEparticipationwasappropriateforeachproject,NCDOTwouldtakeintoaccount“theapproximatedollarvalueofthecontract,thegeographicallocationoftheproposedwork,anumberoftheeligiblefundsinthegeographicalarea,andtheanticipatedvalueoftheitemsof
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worktobeincludedinthecontract.”Id.NCDOTwouldalsoconsider“theannualgoalsmandatedbyCongressandtheNorthCarolinaGeneralAssembly.”Id.
AfirmcouldbecertifiedasaMBEorWBEbyshowingNCDOTthatitis“ownercontrolledbyoneormoresociallyandeconomicallydisadvantagedindividuals.”NCAdmin.Codetit.1980,§2D.1102.
ThedistrictcourtstatedtheMWBEprogramdidnotdirectlydiscriminateinfavorofminorityandwomencontractors,butrather“encouragedprimecontractorstofavorMBEsandWBEsinsubcontractingbeforesubmittingbidstoNCDOT.”589F.Supp.2d587.Indeterminingwhetherthelowestbidderis“responsible,”NCDOTwouldconsiderwhetherthebidderobtainedthelevelofcertifiedMBEandWBEparticipationpreviouslyspecifiedintheNCDOTprojectproposal.Ifnot,NCDOTwouldconsiderwhetherthebiddermadegoodfaitheffortstosolicitMBEandWBEparticipation.N.C.Admin.Codetit.19A§2D.1108.
ThereweremultiplestudiesproducedandpresentedtotheNorthCarolinaGeneralAssemblyintheyears1993,1998and2004.The1998and2004studiesconcludedthatdisparitiesintheutilizationofminorityandwomencontractorspersist,andthatthereremainsabasisforcontinuationoftheMWBEprogram.TheMWBEprogramasamendedafterthe2004studyincludesprovisionsthateliminatedthe10percentand5percentgoalsandinsteadreplacedthemwithcontract‐specificparticipationgoalscreatedbyNCDOT;establishedasunsetprovisionthathasthestatuteexpiringonAugust31,2009;andprovidesrelianceonadisparitystudyproducedin2004.
TheMWBEprogram,asitstoodatthetimeofthisdecision,providesthatNCDOT“dictatestoprimecontractorstheexpressgoalofMBEandWBEsubcontractorstobeusedonagivenproject.However,insteadofthestatehiringtheMBEandWBEsubcontractorsitself,theNCDOTmakestheprimecontractorsolelyresponsibleforvettingandhiringthesesubcontractors.Ifaprimecontractorfailstohirethegoalamount,itmustsubmiteffortsof‘goodfaith’attemptstodoso.”589F.Supp.2d587.
Compellinginterest. ThedistrictcourtheldthatNCDOTestablishedacompellinggovernmentalinteresttohavetheMWBEprogram.ThecourtnotedthattheUnitedStatesSupremeCourtinCrosonmadeclearthatastatelegislaturehasacompellinginterestineradicatingandremedyingprivatediscriminationintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts.589F.Supp.2d587,citingCroson,488U.S.at492.ThedistrictcourtfoundthattheNorthCarolinaLegislatureestablisheditrelieduponastrongbasisofevidenceinconcludingthatpriorracediscriminationinNorthCarolina’sroadconstructionindustryexistedsoastorequireremedialaction.
Thecourtheldthatthe2004DisparityStudydemonstratedtheexistenceofpreviousdiscriminationinthespecificindustryandlocalityatissue.Thecourtstatedthatdisparityratiosprovidedforinthe2004DisparityStudyhighlightedtheunderutilizationofMBEsbyprimecontractorsbiddingonstatefundedhighwayprojects.Inaddition,thecourtfoundthatevidencerelieduponbythelegislaturedemonstratedadramaticdeclineintheutilizationofMBEsduringtheprogram’ssuspensionin1991.ThecourtalsofoundthatanecdotalsupportrelieduponbythelegislatureconfirmedandreinforcedthegeneraldatademonstratingtheunderutilizationofMBEs.ThecourtheldthattheNCDOTestablishedthat,“baseduponaclearandstronginferenceraisedbythisStudy,theyconcludedminoritycontractorssufferfromthelingeringeffectsofracialdiscrimination.”589F.Supp.2d587.
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WithregardtoWBEs,thecourtappliedadifferentstandardofreview.ThecourtheldthelegislativeschemeasitrelatestoMWBEsmustserveanimportantgovernmentalinterestandmustbesubstantiallyrelatedtotheachievementofthoseobjectives.ThecourtfoundthatNCDOTestablishedanimportantgovernmentalinterest.The2004DisparityStudyprovidedthattheaveragecontractsawardedWBEsaresignificantlysmallerthanthoseawardednon‐WBEs.ThecourtheldthatNCDOTestablishedbaseduponaclearandstronginferenceraisedbytheStudy,womencontractorssufferfrompastgenderdiscriminationintheroadconstructionindustry.
Narrowlytailored. ThedistrictcourtnotedthattheFourthCircuitofAppealslistsanumberoffactorstoconsiderinanalyzingastatutefornarrowtailoring:(1)thenecessityofthepolicyandtheefficacyofalternativeraceneutralpolicies;(2)theplanneddurationofthepolicy;(3)therelationshipbetweenthenumericalgoalandthepercentageofminoritygroupmembersintherelevantpopulation;(4)theflexibilityofthepolicy,includingtheprovisionofwaiversifthegoalcannotbemet;and(5)theburdenofthepolicyoninnocentthirdparties.589F.Supp.2d587,quotingBelkv.Charlotte‐MecklenburgBoardofEducation,269F.3d305,344(4thCir.2001).
ThedistrictcourtheldthatthelegislativeschemeinN.C.Gen.Stat.§136‐28.4isnarrowlytailoredtoremedyprivatediscriminationofminoritiesandwomenintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts.Thedistrictcourt’sanalysisfocusedonnarrowlytailoringfactors(2)and(4)above,namelythedurationofthepolicyandtheflexibilityofthepolicy.Withrespecttotheformer,thecourtheldthelegislativeschemeprovidestheprogrambereviewedatleasteveryfiveyearstorevisittheissueofutilizationofMWBEsintheroadconstructionindustry.N.C.Gen.Stat.§136‐28.4(b).Further,thelegislativeschemeincludesasunsetprovisionsothattheprogramwillexpireonAugust31,2009,unlessrenewedbyanactofthelegislature.Id.at§136‐28.4(e).Thecourtheldtheseprovisionsensuredthelegislativeschemelastnolongerthannecessary.
ThecourtalsofoundthatthelegislativeschemeenactedbytheNorthCarolinalegislatureprovidesflexibilityinsofarastheparticipationgoalsforagivencontractordeterminedonaprojectbyprojectbasis.§136‐28.4(b)(1).Additionally,thecourtfoundthelegislativeschemeinquestionisnotoverbroadbecausethestatuteappliesonlyto“thoseracialorethnicityclassificationsidentifiedbyastudyconductedinaccordancewiththissectionthathadbeensubjectedtodiscriminationinarelevantmarketplaceandthathadbeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.”§136‐28.4(c)(2).Thecourtfoundthatplaintifffailedtoprovideanyevidencethatindicatesminoritiesfromnon‐relevantracialgroupshadbeenawardedcontractsasaresultofthestatute.
Thecourtheldthatthelegislativeschemeisnarrowlytailoredtoremedyprivatediscriminationofminoritiesandwomenintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts,andthereforefoundthat§136‐28.4isconstitutional.
ThedecisionofthedistrictcourtwasappealedtotheUnitedStatesCourtofAppealsfortheFourthCircuit,whichaffirmedinpartandreversedinpartthedecisionofthedistrictcourt.See615F3d233(4thCir.2010),discussedabove.
3. Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 218 F. Supp.2d 749 (D. Md. 2002)
ThiscaseisinstructivebecausethecourtfoundtheExecutiveOrderoftheMayoroftheCityofBaltimorewasprecatoryinnature(creatingnolegalobligationorduty)andcontainedno
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enforcementmechanismorpenaltiesfornoncomplianceandimposednosubstantialrestrictions;theExecutiveOrderannouncedgoalsthatwerefoundtobeaspirationalonly.
TheAssociatedUtilityContractorsofMaryland,Inc.(“AUC”)suedtheCityofBaltimorechallengingitsordinanceprovidingforminorityandwomen‐ownedbusinessenterprise(“MWBE”)participationincitycontracts.Previously,anearlierCityofBaltimoreMWBEprogramwasdeclaredunconstitutional.AssociatedUtilityContractorsofMaryland,Inc.v.MayorandCityCouncilofBaltimore,83F.Supp.2d613(D.Md.2000).TheCityadoptedanewordinancethatprovidedfortheestablishmentofMWBEparticipationgoalsonacontract‐by‐contractbasis,andmadeseveralotherchangesfromthepreviousMWBEprogramdeclaredunconstitutionalintheearliercase.
Inaddition,theMayoroftheCityofBaltimoreissuedanExecutiveOrderthatannouncedagoalofawarding35percentofallCitycontractingdollarstoMBE/WBEs.Thecourtfoundthisgoalof35percentparticipationwasaspirationalonlyandtheExecutiveOrdercontainednoenforcementmechanismorpenaltiesfornoncompliance.TheExecutiveOrderalsospecifiedmany“noncoercive”outreachmeasurestobetakenbytheCityagenciesrelatingtoincreasingparticipationofMBE/WBEs.Thesemeasureswerefoundtobemerelyaspirationalandnoenforcementmechanismwasprovided.
ThecourtaddressedinthiscaseonlyamotiontodismissfiledbytheCityofBaltimorearguingthattheAssociatedUtilityContractorshadnostanding.ThecourtdeniedthemotiontodismissholdingthattheassociationhadstandingtochallengethenewMBE/WBEordinance,althoughthecourtnotedthatithadsignificantissueswiththeAUChavingrepresentationalstandingbecauseofthenatureoftheMBE/WBEplanandthefacttheAUCdidnothaveanyofitsindividualmembersnamedinthesuit.ThecourtalsoheldthattheAUCwasentitledtobringanasappliedchallengetotheExecutiveOrderoftheMayor,butrejectedithavingstandingtobringafacialchallengebasedonafindingthatitimposesnorequirement,createsnosanctions,anddoesnotinflictaninjuryuponanymemberoftheAUCinanyconcreteway.Therefore,theExecutiveOrderdidnotcreatea“caseorcontroversy”inconnectionwithafacialattack.ThecourtfoundthewordingoftheExecutiveOrdertobeprecatoryandimposingnosubstantiverestrictions.
AfterthisdecisiontheCityofBaltimoreandtheAUCenteredintoasettlementagreementandadismissalwithprejudiceofthecase.AnorderwasissuedbythecourtonOctober22,2003dismissingthecasewithprejudice.
4. Associated Utility Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore and Maryland Minority Contractors Association, Inc., 83 F. Supp.2d 613 (D. Md. 2000)
PlaintiffAssociatedUtilityContractorsofMaryland,Inc.(“AUC”)filedthisactiontochallengethecontinuedimplementationoftheaffirmativeactionprogramcreatedbyBaltimoreCityOrdinance(“theOrdinance”).83F.Supp.2d613(D.Md.2000)
TheOrdinancewasenactedin1990andauthorizedtheCitytoestablishannuallynumericalset‐asidegoalsapplicabletoawiderangeofpubliccontracts,includingconstructionsubcontracts.Id.
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AUCfiledamotionforsummaryjudgment,whichtheCityandinterveningdefendantMarylandMinorityContractorsAssociation,Inc.(“MMCA”)opposed.Id.at614.In1999,thecourtissuedanordergrantinginpartanddenyinginpartthemotionforsummaryjudgment(“theDecemberinjunction”).Id.Specifically,astoconstructioncontractsenteredintobytheCity,thecourtenjoinedenforcementoftheOrdinance(and,consequently,continuedimplementationoftheaffirmativeactionprogramitauthorized)inrespecttotheCity’s1999numericalset‐asidegoalsforMinority‐andWomen–OwnedBusinessEnterprises(“MWBEs”),whichhadbeenestablishedat20%and3%,respectively.Id.Thecourtdeniedthemotionforsummaryjudgmentastotheplaintiff’sfacialattackontheconstitutionalityoftheOrdinance,concludingthatthereexisted“adisputeofmaterialfactastowhethertheenactmentoftheOrdinancewasadequatelysupportedbyafactualrecordofunlawfuldiscriminationproperlyremediablethroughrace‐andgender‐basedaffirmativeaction.”Id.
TheCityappealedtheentryoftheDecemberinjunctiontotheUnitedStatesCourtofAppealsfortheFourthCircuit.Inaddition,theCityfiledamotionforstayoftheinjunction.Id.Insupportofthemotionforstay,theCitycontendedthatAUClackedorganizationalstandingtochallengetheOrdinance.Thecourtheldtheplaintiffsatisfiedtherequirementsfororganizationalstandingastotheset‐asidegoalsestablishedbytheCityfor1999.Id.
TheCityalsocontendedthatthecourterredinfailingtoforebearfromtheadjudicationofthiscaseandofthemotionforsummaryjudgmentuntilafterithadcompletedanallegeddisparitystudywhich,itcontended,wouldestablishajustificationfortheset‐asidegoalsestablishedfor1999.Id.Thecourtsaidthisargument,whichthecourtrejected,restedonthenotionthatagovernmentalentitymightpermissiblyadoptanaffirmativeactionplanincludingset‐asidegoalsandwaituntilsuchaplanischallengedincourtbeforeundertakingthenecessarystudiesuponwhichtheconstitutionalityoftheplandepends.Id.
Therefore,becausetheCityofferednocontemporaneousjustificationforthe1999set‐asidegoalsitadoptedontheauthorityoftheOrdinance,thecourtissuedaninjunctioninits1999decisionanddeclinedtostayitseffectiveness.Id.SincetheinjunctionawardedcompleterelieftotheAUC,andanyefforttoadjudicatetheissueofwhethertheCitywouldadoptrevisedset‐asidegoalsontheauthorityoftheOrdinancewaswhollyspeculativeundertaking,thecourtdismissedthecasewithoutprejudice.Id.
FactsandProceduralHistory.In1986,theCityCouncilenactedinOrdinance790thefirstcity‐wideaffirmativeactionset‐asidegoals,whichrequired,interalia,thatforallCitycontracts,20%ofthevalueofsubcontractsbeawardedtoMinority–OwnedBusinessEnterprises(“MBEs”)and3%toWomen–OwnedBusinessEnterprises(“WBEs”).Id.at615.AspermittedunderthencontrollingSupremeCourtprecedent,thecourtsaidOrdinance790wasjustifiedbyafindingthatgeneralsocietaldiscriminationhaddisadvantagedMWBEs.Apparently,nodisparitystatisticswereofferedtojustifyOrdinance790.Id.
AftertheSupremeCourtannounceditsdecisioninCityofRichmondv.J.A.Croson,488U.S.469(1989),theCityconvenedaTaskForcetostudytheconstitutionalityofOrdinance790.Id.TheTaskForceheldhearingsandissuedaPublicCommentDraftReportonNovember1,1989.Id.Itheldadditionalhearings,reviewedpubliccommentsandissueditsfinalreportonApril11,1990,recommendingseveralamendmentstoOrdinance790.Id.TheCityCouncilconductedhearings,andinJune1990,enactedOrdinance610,thelawunderattackinthiscase.Id.
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InenactingOrdinance610,theCityCouncilfoundthatitwasjustifiedasanappropriateremedyof“[p]astdiscriminationintheCity’scontractingprocessbyprimecontractorsagainstminorityandwomen’sbusinessenterprises....”Id.TheCityCouncilalsofoundthat“[m]inorityandwomen’sbusinessenterprises...havehaddifficultiesinobtainingfinancing,bonding,creditandinsurance;”that“[t]heCityofBaltimorehascreatedanumberofdifferentassistanceprogramstohelpsmallbusinesseswiththeseproblems...[butthatt]heseassistanceprogramshavenotbeeneffectiveineitherremedyingtheeffectsofpastdiscrimination...orinpreventingongoingdiscrimination.”Id.
TheoperativesectionofOrdinance610relevanttothiscasemandatedaprocedurebywhichset‐asidegoalsweretobeestablishedeachyearforminorityandwomenownedbusinessparticipationinCitycontracts.Id.TheOrdinanceitselfdidnotestablishanygoals,butdirectedtheMayortoconsultwiththeChiefofEqualOpportunityComplianceand“contractauthorities”andtoannuallyspecifygoalsforeachseparatecategoryofcontracting“suchaspublicworks,professionalservices,concessionandpurchasingcontracts,aswellasanyothercategoriesthattheMayordeemsappropriate.”Id.
In1990,uponitsenactmentoftheOrdinance,theCityestablishedacross‐the‐boardset‐asidegoalsof20%MBEand3%WBEforallCitycontractswithnovariationbymarket.Id.ThecourtfoundtheCitysimplyreadoptedthe20%MBEand3%WBEsubcontractorparticipationgoalsfromthepriorlaw,Ordinance790,whichtheOrdinancehadspecificallyrepealed.Id.at616.Thesesameset‐asidegoals,thecourtsaid,wereadoptedwithoutchangeandwithoutfactualsupportineachsucceedingyearsince1990.Id.
Noannualstudyeverwasundertakentosupporttheimplementationoftheaffirmativeactionprogramgenerallyortosupporttheestablishmentofanyannualgoals,thecourtconcluded,andtheCitydidnotcollectthedatawhichcouldhavepermittedsuchfindings.Id.Nodisparitystudyexistedorwasundertakenuntilthecommencementofthislawsuit.Id.Thus,thecourtheldtheCityhadnoreliablerecordoftheavailabilityofMWBEsforeachcategoryofcontracting,andthusnowayofdeterminingwhetherits20%and3%goalswererationallyrelatedtoextantdiscrimination(orthecontinuingeffectsthereof)inthelettingofpublicconstructioncontracts.Id.
AUChasassociationalstanding.AUCestablishedthatithadassociationalstandingtochallengetheset‐asidegoalsadoptedbytheCityin1999.Id.Specifically,AUCsufficientlyestablishedthatitsmemberswere“readyandable”tobidforCitypublicworkscontracts.Id.Nomore,thecourtnoted,wasrequired.Id.
ThecourtfoundthatAUC’smembersweredisadvantagedbythegoalsinthebiddingprocess,andthisalonewasacognizableinjury.Id.Forthepurposesofanequalprotectionchallengetoaffirmativeactionset‐asidegoals,thecourtstatedtheSupremeCourthasheldthatthe“‘injuryinfact’istheinabilitytocompeteonanequalfootinginthebiddingprocess...”Id.at617,quotingNortheasternFloridaChapter,508U.S.at666,andcitingAdarandConstructors,Inc.v.Pena,515U.S.200,211(1995).
TheSupremeCourtinNortheasternFloridaChapterheldthatindividualstandingisestablishedtochallengeaset‐asideprogramwhenapartydemonstrates“thatitisableandreadytobidoncontractsandthatadiscriminatorypolicypreventsitfromdoingsoonanequalbasis.”Id.at616quoting,Northeastern,508U.S.at666.TheSupremeCourtfurtherheldthatonceapartyshowsitis“readyandable”tobidinthiscontext,thepartywillhavesufficientlyshownthattheset‐asidegoalsare“the‘cause’ofitsinjuryandthatajudicialdecreedirectingthecitytodiscontinue
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itsprogramwould‘redress’theinjury,”thussatisfyingtheremainingrequirementsforindividualstanding.Id.quotingNortheastern,at666&n.5.
ThecourtfoundtherewasampleevidencethatAUCmemberswere“readyandable”tobidonCitypublicworkscontractsbasedonseveraldocumentsintherecord,andthatmembersofAUCwouldhaveindividualstandingintheirownrighttochallengetheconstitutionalityoftheCity’sset‐asidegoalsapplicabletoconstructioncontracting,satisfyingtheassociationalstandingtest.Id.at617‐18.ThecourtheldAUChadassociationalstandingtochallengetheconstitutionalityofthepublicworkscontractsset‐asideprovisionsestablishedin1999.Id.at618.
Strictscrutinyanalysis.AUCcomplainedthatsincetheirinitialpromulgationin1990,theCity’sset‐asidegoalsrequiredAUCmembersto“selectorrejectcertainsubcontractorsbasedupontherace,ethnicity,orgenderofsuchsubcontractors”inordertobidsuccessfullyonCitypublicworkscontractsforworkexceeding$25,000(“Citypublicworkscontracts”).Id.at618.AUCclaimed,therefore,thattheCity’sset‐asidegoalsviolatedtheFourteenthAmendment’sguaranteeofequalprotectionbecausetheyrequiredprimecontractorstoengageindiscriminationwhichthegovernmentitselfcannotperpetrate.Id.
Thecourtstatedthatgovernmentclassificationsbaseduponraceandethnicityarereviewedunderstrictscrutiny,citingtheSupremeCourtinAdarand,515U.S.at227;andthatthosebasedupongenderarereviewedunderthelessstringentintermediatescrutiny.Id.at618,citingUnitedStatesv.Virginia,518U.S.515,531(1996).Id.“[A]llracialclassifications,imposedbywhateverfederal,state,orlocalgovernmentalactor,mustbeanalyzedbyareviewingcourtunderstrictscrutiny.”Id.at619,quotingAdarand,515U.S.at227.Thegovernmentclassificationmustbenarrowlytailoredtoachieveacompellinggovernmentinterest.Id.citingCroson,488U.S.at493–95.ThecourtthennotedthattheFourthCircuithasexplained:
Therationaleforthisstringentstandardofreviewisplain.Ofallthecriteriabywhichmenandwomencanbejudged,themostperniciousisthatofrace.Theinjusticeofjudginghumanbeingsbythecoloroftheirskinissoapparentthatracialclassificationscannotberationalizedbythecasualinvocationofbenignremedialaims....Whiletheinequitiesandindignitiesvisitedbypastdiscriminationareundeniable,theuseofraceasareparationaldevicerisksperpetuatingtheveryrace‐consciousnesssucharemedypurportstoovercome.
Id.at619,quotingMarylandTroopersAss’n,Inc.v.Evans,993F.2d1072,1076(4thCir.1993)(citationomitted).
ThecourtalsopointedoutthatinCroson,apluralityoftheSupremeCourtconcludedthatstateandlocalgovernmentshaveacompellinginterestinremedyingidentifiedpastandpresentracediscriminationwithintheirborders.Id.at619,citingCroson,488U.S.at492.ThepluralityoftheSupremeCourt,accordingtothecourt,explainedthattheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitself,andtopreventthepublicentityfromactingasa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”byallowingtaxdollars“tofinancetheevilofprivateprejudice.”Id.at619,quotingCroson,488U.S.at492.Thus,thecourtfoundCrosonmakesclearthattheCityhasacompellinginterestineradicatingandremedyingprivatediscriminationintheprivatesubcontractinginherentinthelettingofCityconstructioncontracts.Id.
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TheFourthCircuit,thecourtstated,hasinterpretedCrosontoimposea“twostepanalysisforevaluatingarace‐consciousremedy.”Id.at619citingMarylandTroopersAss’n,993F.2dat1076.“First,the[government]musthavea‘strongbasisinevidenceforitsconclusionthatremedialaction[is]necessary....’‘Absentsearchingjudicialinquiryintothejustificationforsuchrace‐basedmeasures,thereissimplynowayofdeterminingwhatclassificationsare...infactmotivatedbyillegitimatenotionsofracialinferiorityorsimpleracialpolitics.’”Id.at619,quotingMarylandTroopersAss’n,993F.2dat1076(citingCroson).
ThesecondstepintheCrosonanalysis,accordingtothecourt,istodeterminewhetherthegovernmenthasadoptedprogramsthat“‘narrowlytailor’anypreferencesbasedonracetomeettheirremedialgoal.”Id.at619.ThecourtfoundthattheFourthCircuitsummarizedSupremeCourtjurisprudenceon“narrowtailoring”asfollows:
Thepreferencesmayremainineffectonlysolongasnecessarytoremedythediscriminationatwhichtheyareaimed;theymaynottakeonalifeoftheirown.Thenumericalgoalsmustbewaivableifqualifiedminorityapplicationsarescarce,andsuchgoalsmustbearareasonablerelationtominoritypercentagesintherelevantqualifiedlaborpool,notinthepopulationasawhole.Finally,thepreferencesmaynotsupplantrace‐neutralalternativesforremedyingthesamediscrimination.
Id.at620,quotingMarylandTroopersAss’n,993F.2dat1076–77(citationsomitted).
Intermediatescrutinyanalysis.Thecourtstatedtheintermediatescrutinyanalysisforgender‐baseddiscriminationasfollows:“Partieswhoseektodefendgender‐basedgovernmentactionmustdemonstratean‘exceedinglypersuasivejustification’forthataction.”Id.at620,quotingVirginia,518U.S.at531,116.Thisburdenisa“demanding[one]anditrestsentirelyontheState.”Id.at620quotingVirginia,518U.S.at533.
Althoughgenderisnot“aproscribedclassification,”inthewayraceorethnicityis,thecourtsnevertheless“carefullyinspect[]officialactionthatclosesadoorordeniesopportunity”onthebasisofgender.Id.at620,quotingVirginia,518U.S.at532‐533.Atbottom,thecourtconcluded,agovernmentwishingtodiscriminateonthebasisofgendermustdemonstratethatitsdoingsoserves“importantgovernmentalobjectivesandthatthediscriminatorymeansemployedaresubstantiallyrelatedtotheachievementofthoseobjectives.”Id.at620,quotingVirginia,518U.S.at533(citationsandquotationsomitted).
Aswiththestandardsforrace‐basedmeasures,thecourtfoundnoformulaexistsbywhichtodeterminewhatevidencewilljustifyeverydifferenttypeofgender‐consciousmeasure.Id.at620.However,astheThirdCircuithasexplained,“[l]ogically,acitymustbeabletorelyonlessevidenceinenactingagenderpreferencethanaracialpreferencebecauseapplyingCroson’sevidentiarystandardtoagenderpreferencewouldevisceratethedifferencebetweenstrictandintermediatescrutiny.”Id.at620,quotingContractorsAss’n,6F.3dat1010.
ThecourtpointedoutthattheSupremeCourthasstatedanaffirmativeactionprogramsurvivesintermediatescrutinyiftheproponentcanshowitwas“aproductofanalysisratherthanastereotypedreactionbasedonhabit.”Id.at620,quotingMetroBroadcasting,Inc.v.F.C.C.,497U.S.547,582–83(1990)(internalquotationsomitted).TheThirdCircuit,thecourtsaid,determinedthat“thisstandardrequirestheCitytopresentprobativeevidenceinsupportofitsstatedrationaleforthe[10%genderset‐aside]preference,discriminationagainstwomen‐ownedcontractors.”Id.at620,quotingContractorsAss’n,6F.3dat1010.
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Preenactmentversuspostenactmentevidence.InevaluatingthefirststepoftheCrosontest,whethertheCityhada“strongbasisinevidenceforitsconclusionthat[race‐conscious]remedialactionwasnecessary,”thecourtheldthatitmustlimititsinquirytoevidencewhichtheCityactuallyconsideredbeforeenactingthenumericalgoals.Id.at620.ThecourtfoundtheSupremeCourthasestablishedthestandardthatpreenactmentevidencemustprovidethe“strongbasisinevidence”thatrace‐basedremedialactionisnecessary.Id.at620‐621.
ThecourtnotedtheSupremeCourtinWygant,thepluralityopinion,joinedbyfourjusticesincludingJusticeO’Connor,heldthatastateentity“mustensurethat,beforeitembarksonanaffirmative‐actionprogram,ithasconvincingevidencethatremedialactioniswarranted.Thatis,itmusthavesufficientevidencetojustifytheconclusionthattherehasbeenpriordiscrimination.”Id.at621,quotingWygant,476U.S.at277.
Thecourtstatedthatbecauseofthiscontrollingprecedent,itwascompelledtoanalyzetheevidencebeforetheCitywhenitadoptedthe1999set‐asidegoalsspecifyingthe20%MBEparticipationinCityconstructionsubcontracts,andforanalogousreasons,the3%WBEpreferencemustalsobejustifiedbypreenactmentevidence.Id.at621.
ThecourtsaidtheFourthCircuithasnotruledontheissuewhetheraffirmativeactionmeasuresmustbejustifiedbyastrongbasisinpreenactmentevidence.ThecourtfoundthatintheFourthCircuitdecisionsinvalidatingstateaffirmativeactionpoliciesinPodbereskyv.Kirwan,38F.3d147(4thCir.1994),andMarylandTroopersAss’n,Inc.v.Evans,993F.2d1072(4thCir.1993),thecourtapparentlyreliedwithoutcommentuponpostenactmentevidencewhenevaluatingthepoliciesforCroson“strongbasisinevidence.”Id.at621,n.6,citingPodberesky,38F.3dat154(referringtopostenactmentsurveysofAfrican–AmericanstudentsatCollegeParkcampus);MarylandTroopers,993F.2dat1078(evaluatingstatisticsaboutthepercentageofblacktroopersin1991whendecidingwhethertherewasastatisticaldisparitygreatenoughtojustifytheaffirmativeactionmeasuresina1990consentdecree).Thecourtconcluded,however,thisissuewasapparentlynotraisedinthesecases,andbothweredecidedbeforethe1996SupremeCourtdecisioninShawv.Hunt,517U.S.899,whichclarifiedthattheWygantpluralitydecisionwascontrollingauthorityonthisissue.Id.at621,n.6.
Thecourtnotedthatthreecourtshadheld,priortoShaw,thatpostenactmentevidencemaybereliedupontosatisfytheCroson“strongbasisinevidence”requirement.ConcreteWorksofColorado,Inc.v.Denver,36F.3d1513(10thCir.1994),cert.denied,514U.S.1004,115S.Ct.1315,131L.Ed.2d196(1995);Harrison&BurrowesBridgeConstructors,Inc.v.Cuomo,981F.2d50,60(2dCir.1992);CoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991).Id.Inaddition,theEleventhCircuitheldin1997that“postenactmentevidenceisadmissibletodeterminewhetheranaffirmativeactionprogram”satisfiesCroson.EngineeringContractorsAss’nofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3d895,911–12(11thCir.1997),cert.denied,523U.S.1004(1998).BecausethecourtbelievedthatShawandWygantprovidedcontrollingauthorityontheroleofpostenactmentevidenceinthe“strongbasisinevidence”inquiry,itdidnotfindthesecasespersuasive.Id.at621.
Citydidnotsatisfystrictorintermediatescrutiny:nodisparitystudywascompletedorpreenactmentevidenceestablished.Inthiscase.thecourtfoundthattheCityconsiderednoevidencein1999beforepromulgatingtheconstructionsubcontractingset‐asidegoalsof20%forMBEsand3%forWBEs.Id.at621.BasedontheabsenceofanyrecordofwhatevidencetheCityconsideredpriortopromulgatingtheset‐asidegoalsfor1999,thecourtheldtherewasnodisputeofmaterialfactforeclosingsummaryjudgmentinfavorofplaintiff.Id.Thecourtthusfoundthatthe20%preferenceisnotsupportedbya“strongbasisinevidence”showinganeed
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forarace‐consciousremedialplanin1999;noristhe3%preferenceshowntobe“substantiallyrelatedtoachievement”oftheimportantobjectiveofremedyinggenderdiscriminationin1999,intheconstructionindustryinBaltimore.Id.
ThecourtrejectedtheCity’sassertionsthroughoutthecasethatthecourtshouldupholdtheset‐asidegoalsbaseduponstatistics,whichtheCitywasintheprocessofgatheringinadisparitystudyithadcommissioned.Id.at622.ThecourtsaidtheCitydidnotprovideanylegalsupportforthepropositionthatagovernmentalentitymightpermissiblyadoptanaffirmativeactionplanincludingset‐asidegoalsandwaituntilsuchaplanischallengedincourtbeforeundertakingthenecessarystudiesuponwhichtheconstitutionalityoftheplandepends.Id.Theinprocessstudywasnotcompleteasofthedateofthisdecisionbythecourt.Id.ThecourtthusstatedthestudycouldnothaveproduceddatauponwhichtheCityactuallyreliedinestablishingtheset‐asidegoalsfor1999.Id.
Thecourtnotedthatifthedatathestudyproducedwerereliableandcomplete,theCitycouldhavethestatisticalbasisuponwhichtomakethefindingsOrdinance610required,andwhichcouldsatisfytheconstitutionallyrequiredstandardsforthepromulgationandimplementationofnarrowlytailoredset‐asiderace‐andgenderconsciousgoals.Id.at622.Nonetheless,astherecordstoodwhenthecourtenteredtheDecember1999injunctionandasitstoodasofthedateofthedecision,therewerenodatainevidenceshowingadisparity,letaloneagrossdisparity,betweenMWBEavailabilityandutilizationinthesubcontractingconstructionmarketinBaltimoreCity.Id.TheCitypossessednosuchevidencewhenitestablishedthe1999set‐asidegoalschallengedinthecase.Id.
Apercentageset‐asidemeasure,liketheMWBEgoalsatissue,thecourtheldcouldonlybejustifiedbyreferencetotheoverallavailabilityofminority‐andwomen‐ownedbusinessesintherelevantmarkets.Id.Intheabsenceofsuchfigures,the20%MBEand3%WBEsetasidefigureswerearbitraryandunenforceableinlightofcontrollingSupremeCourtandFourthCircuitauthority.Id.
Holding.ThecourtheldthatforthesereasonsitenteredtheinjunctionagainsttheCityonDecember1999anditremainedfullyineffect.Id.at622.Accordingly,theCity’smotionforstayoftheinjunctionorderwasdeniedandtheactionwasdismissedwithoutprejudice.Id.at622.
ThecourtheldunconstitutionaltheCityofBaltimore’s“affirmativeaction”program,whichhadconstructionsubcontracting“set‐aside”goalsof20percentforMBEsand3percentforWBEs.ThecourtheldtherewasnodataorstatisticalevidencesubmittedbytheCitypriortoenactmentoftheOrdinance.TherewasnoevidenceshowingadisparitybetweenMBE/WBEavailabilityandutilizationinthesubcontractingconstructionmarketinBaltimore.ThecourtenjoinedtheCityOrdinance.
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E. Recent Decisions Involving State or Local Government MBE/WBE/DBE Programs in Other Jurisdictions
Recent Decisions in Federal Circuit Courts of Appeal
1. Jana‐Rock Construction, Inc. v. New York State Dept. of Economic Development, 438 F.3d 195 (2d Cir. 2006)
ThisrecentcaseisinstructiveinconnectionwiththedeterminationofthegroupsthatmaybeincludedinaMBE/WBE‐typeprogram,andthestandardofanalysisutilizedtoevaluatealocalgovernment’snon‐inclusionofcertaingroups.Inthiscase,theSecondCircuitCourtofAppealsheldracialclassificationsthatarechallengedas“under‐inclusive”(i.e.,thosethatexcludepersonsfromaparticularracialclassification)aresubjecttoa“rationalbasis”review,notstrictscrutiny.
PlaintiffLuiere,a70percentshareholderofJana‐RockConstruction,Inc.(“JanaRock”)andthe“sonofaSpanishmotherwhoseparentswereborninSpain,”challengedtheconstitutionalityoftheStateofNewYork’sdefinitionof“Hispanic”underitslocalminority‐ownedbusinessprogram.438F.3d195,199‐200(2dCir.2006).UndertheUSDOTregulations,49CFR§26.5,“HispanicAmericans”aredefinedas“personsofMexican,PuertoRican,Cuban,Dominican,CentralorSouthAmerican,orotherSpanishorPortuguesecultureororigin,regardlessofrace.”Id.at201.Uponproperapplication,Jana‐RockwascertifiedbytheNewYorkDepartmentofTransportationasaDisadvantagedBusinessEnterprise(“DBE”)underthefederalregulations.Id.
However,unlikethefederalregulations,theStateofNewYork’slocalminority‐ownedbusinessprogramincludedinitsdefinitionofminorities“HispanicpersonsofMexican,PuertoRican,Dominican,Cuban,CentralorSouthAmericanofeitherIndianorHispanicorigin,regardlessofrace.”Thedefinitiondidnotincludeallpersonsfrom,ordescendantsofpersonsfrom,SpainorPortugal.Id.Accordingly,Jana‐RockwasdeniedMBEcertificationunderthelocalprogram;Jana‐RockfiledsuitallegingaviolationoftheEqualProtectionClause.Id.at202‐03.Theplaintiffconcededthattheoverallminority‐ownedbusinessprogramsatisfiedtherequisitestrictscrutiny,butarguedthatthedefinitionof“Hispanic”wasfatallyunder‐inclusive.Id.at205.
TheSecondCircuitfoundthatthenarrow‐tailoringprongofthestrictscrutinyanalysis“allowsNewYorktoidentifywhichgroupsitispreparedtoproveareinneedofaffirmativeactionwithoutdemonstratingthatnoothergroupsmeritconsiderationfortheprogram.”Id.at206.Thecourtfoundthatevaluatingunder‐inclusivenessasanelementofthestrictscrutinyanalysiswasatoddswiththeUnitedStatesSupremeCourtdecisioninCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989)whichrequiredthataffirmativeactionprogramsbenobroaderthannecessary.Id.at207‐08.Thecourtsimilarlyrejectedtheargumentthatthestateshouldmirrorthefederaldefinitionof“Hispanic,”findingthatCongresshasmoreleewaythanthestatestomakebroaderclassificationsbecauseCongressismakingsuchclassificationsonthenationallevel.Id.at209.
Thecourtopined—withoutdeciding—thatitmaybeimpermissibleforNewYorktosimplyadoptthe“federalUSDOTdefinitionofHispanicwithoutatleastmakinganindependentassessmentofdiscriminationagainstHispanicsofSpanishOrigininNewYork.”Id.Additionally,findingthattheplaintifffailedtopointtoanydiscriminatorypurposebyNewYorkinfailingto
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includepersonsofSpanishorPortuguesedescent,thecourtdeterminedthattherationalbasisanalysiswasappropriate.Id.at213.
Thecourtheldthattheplaintifffailedtherationalbasistestforthreereasons:(1)becauseitwasnotirrationalnordiditdisplayanimustoexcludepersonsofSpanishandPortuguesedescentfromthedefinitionofHispanic;(2)becausethefacttheplaintiffcoulddemonstrateevidenceofdiscriminationthathepersonallyhadsuffereddidnotrenderNewYork’sdecisiontoexcludepersonsofSpanishandPortuguesedescentirrational;and(3)becausethefactNewYorkmayhavereliedonCensusdataincludingasmallpercentageofHispanicsofSpanishdescentdidnotmeanthatitwasirrationaltoconcludethatHispanicsofLatinAmericanoriginwereingreaterneedofremediallegislation.Id.at213‐14.Thus,theSecondCircuitaffirmedtheconclusionthatNewYorkhadarationalbasisforitsdefinitiontonotincludepersonsofSpanishandPortuguesedescent,andthusaffirmedthedistrictcourtdecisionupholdingtheconstitutionalityofthechallengeddefinition.
2. Rapid Test Prods., Inc. v. Durham Sch. Servs., Inc., 460 F.3d 859 (7th Cir. 2006)
InRapidTestProducts,Inc.v.DurhamSchoolServicesInc.,theSeventhCircuitCourtofAppealsheldthat42U.S.C.§1981(thefederalanti‐discriminationlaw)didnotprovidean“entitlement”indisadvantagedbusinessestoreceivecontractssubjecttosetasideprograms;rather,§1981providedaremedyforindividualswhoweresubjecttodiscrimination.
DurhamSchoolServices,Inc.(“Durham”),aprimecontractor,submittedabidforandwonacontractwithanIllinoisschooldistrict.Thecontractwassubjecttoaset‐asideprogramreservingsomeofthesubcontractsfordisadvantagedbusinessenterprises(arace‐andgender‐consciousprogram).Priortobidding,DurhamnegotiatedwithRapidTestProducts,Inc.(“RapidTest”),madeonepaymenttoRapidTestasanadvance,andincludedRapidTestinitsfinalbid.RapidTestbelievedithadreceivedthesubcontract.However,aftertheschooldistrictawardedthecontracttoDurham,DurhamgavethesubcontracttooneofRapidTest’scompetitor’s,abusinessownedbyanAsianmale.Theschooldistrictagreedtothesubstitution.RapidTestbroughtsuitagainstDurhamunder42U.S.C.§1981allegingthatDurhamdiscriminatedagainstitbecauseRapid’sownerwasablackwoman.
ThedistrictcourtgrantedsummaryjudgmentinfavorofDurhamholdingtheparties’dealinghadbeentooindefinitetocreateacontract.Onappeal,theSeventhCircuitCourtofAppealsstatedthat“§1981establishesaruleagainstdiscriminationincontractinganddoesnotcreateanyentitlementtobethebeneficiaryofacontractreservedforfirmsownedbyspecifiedracial,sexual,ethnic,orreligiousgroups.Argumentsthataparticularset‐asideprogramisalawfulremedyforpriordiscriminationmayormaynotprevailifapotentialsubcontractorclaimstohavebeenexcluded,butitistovictimsofdiscriminationratherthanfrustratedbeneficiariesthat§1981assignstherighttolitigate.”
ThecourtheldthatifraceorsexdiscriminationisthereasonwhyDurhamdidnotawardthesubcontracttoRapidTest,then§1981providesrelief.Havingfailedtoaddressthisissue,theSeventhCircuitCourtofAppealsremandedthecasetothedistrictcourttodeterminewhetherRapidTesthadevidencetobackupitsclaimthatraceandsexdiscrimination,ratherthananondiscriminatoryreasonsuchasinabilitytoperformtheservicesDurhamwanted,accountedforDurham’sdecisiontohireRapidTest’scompetitor.
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3. Virdi v. DeKalb County School District, 135 Fed. Appx. 262, 2005 WL 138942 (11th Cir. 2005) (unpublished opinion)
Althoughitisanunpublishedopinion,Virdiv.DeKalbCountySchoolDistrictisarecentEleventhCircuitdecisionreviewingachallengetoalocalgovernmentMBE/WBE‐typeprogram,whichisinstructivetothedisparitystudy.InVirdi,theEleventhCircuitstruckdownaMBE/WBEgoalprogramthatthecourtheldcontainedracialclassifications.ThecourtbaseditsrulingprimarilyonthefailureoftheDeKalbCountySchoolDistrict(the“District”)toseriouslyconsiderandimplementarace‐neutralprogramandtotheinfinitedurationoftheprogram.
PlaintiffVirdi,anAsianAmericanarchitectofIndiandescent,filedsuitagainsttheDistrict,membersoftheDeKalbCountyBoardofEducation(bothindividuallyandintheirofficialcapacities)(the“Board”)andtheSuperintendent(bothindividuallyandinhisofficialcapacity)(collectively“defendants”)pursuantto42U.S.C.§§1981and1983andtheFourteenthAmendmentallegingthattheydiscriminatedagainsthimonthebasisofracewhenawardingarchitecturalcontracts.135Fed.Appx.262,264(11thCir.2005).Virdialsoallegedtheschooldistrict’sMinorityVendorInvolvementProgramwasfaciallyunconstitutional.Id.
Thedistrictcourtinitiallygrantedthedefendants’MotionsforSummaryJudgmentonallofVirdi’sclaimsandtheEleventhCircuitCourtofAppealsreversedinpart,vacatedinpart,andremanded.Id.Onremand,thedistrictcourtgrantedthedefendants’MotionforPartialSummaryJudgmentonthefacialchallenge,andthengrantedthedefendants’motionforajudgmentasamatteroflawontheremainingclaimsatthecloseofVirdi’scase.Id.
In1989,theBoardappointedtheTillmanCommittee(the“Committee”)tostudyparticipationoffemale‐andminority‐ownedbusinesseswiththeDistrict.Id.TheCommitteemetwithvariousDistrictdepartmentsandanumberofminoritycontractorswhoclaimedtheyhadunsuccessfullyattemptedtosolicitbusinesswiththeDistrict.Id.Basedupona“generalfeeling”thatminoritieswereunder‐represented,theCommitteeissuedtheTillmanReport(the“Report”)stating“theCommittee’simpressionthat‘[m]inoritiesha[d]notparticipatedinschoolboardpurchasesandcontractinginaratioreflectingtheminoritymake‐upofthecommunity.”Id.TheReportcontainednospecificevidenceofpastdiscriminationnoranyfactualfindingsofdiscrimination.Id.
TheReportrecommendedthattheDistrict:(1)Advertisebidsandpurchasingopportunitiesinnewspaperstargetingminorities,(2)conductperiodicseminarstoeducateminoritiesondoingbusinesswiththeDistrict,(3)notifyorganizationsrepresentingminorityfirmsregardingbiddingandpurchasingopportunities,and(4)publisha“howto”booklettobemadeavailabletoanybusinessinterestedindoingbusinesswiththeDistrict.
Id.TheReportalsorecommendedthattheDistrictadoptannual,aspirationalparticipationgoalsforwomen‐andminority‐ownedbusinesses.Id.TheReportcontainedstatementsindicatingtheselectionprocessshouldremainneutralandrecommendedthattheBoardadoptanon‐discriminationstatement.Id.
In1991,theBoardadoptedtheReportandimplementedseveraloftherecommendations,includingadvertisingintheAJC,conductingseminars,andpublishingthe“howto”booklet.Id.TheBoardalsoimplementedtheMinorityVendorInvolvementProgram(the“MVP”)whichadoptedtheparticipationgoalssetforthintheReport.Id.at265.
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TheBoarddelegatedtheresponsibilityofselectingarchitectstotheSuperintendent.Id.VirdisentalettertotheDistrictinOctober1991expressinginterestinobtainingarchitecturalcontracts.Id.VirdisentthelettertotheDistrictManagerandsentfollow‐upliterature;here‐contactedtheDistrictManagerin1992and1993.Id.InAugust1994,VirdisentaletterandaqualificationspackagetoaprojectmanageremployedbyHeeryInternational.Id.Inafollow‐upconversation,theprojectmanagerallegedlytoldVirdithathisfirmwasnotselectednotbaseduponhisqualifications,butbecausethe“Districtwasonlylookingfor‘black‐ownedfirms.’”Id.VirdisentalettertotheprojectmanagerrequestingconfirmationofhisstatementinwritingandtheprojectmanagerforwardedthelettertotheDistrict.Id.
AfteraseriesofmeetingswithDistrictofficials,in1997,VirdimetwiththenewlyhiredExecutiveDirector.Id.at266.UponrequestoftheExecutiveDirector,Virdire‐submittedhisqualificationsbutwasinformedthathewouldbeconsideredonlyforfutureprojects(PhaseIIISPLOSTprojects).Id.VirdithenfiledsuitbeforeanyPhaseIIISPLOSTprojectswereawarded.Id.
TheEleventhCircuitconsideredwhethertheMVPwasfaciallyunconstitutionalandwhetherthedefendantsintentionallydiscriminatedagainstVirdionthebasisofhisrace.Thecourtheldthatstrictscrutinyappliestoallracialclassificationsandisnotlimitedtomerelyset‐asidesormandatoryquotas;therefore,theMVPwassubjecttostrictscrutinybecauseitcontainedracialclassifications.Id.at267.Thecourtfirstquestionedwhethertheidentifiedgovernmentinterestwascompelling.Id.at268.However,thecourtdeclinedtoreachthatissuebecauseitfoundtherace‐basedparticipationgoalswerenotnarrowlytailoredtoachievingtheidentifiedgovernmentinterest.Id.
ThecourtheldtheMVPwasnotnarrowlytailoredfortworeasons.Id.First,becausenoevidenceexistedthattheDistrictconsideredrace‐neutralalternativesto“avoidunwittingdiscrimination.”Thecourtfoundthat“[w]hilenarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,itdoesrequireserious,goodfaithconsiderationofwhethersuchalternativescouldservethegovernmentalinterestatstake.”Id.,citingGrutterv.Bollinger,539U.S.306,339(2003),andRichmondv.J.A.CrosonCo.,488U.S.469,509‐10(1989).ThecourtfoundthatDistrictcouldhaveengagedinanynumberofequallyeffectiverace‐neutralalternatives,includingusingitsoutreachprocedureandtrackingtheparticipationandsuccessofminority‐ownedbusinessascomparedtonon‐minority‐ownedbusinesses.Id.at268,n.8.Accordingly,thecourtheldtheMVPwasnotnarrowlytailored.Id.at268.
Second,thecourtheldthattheunlimiteddurationoftheMVP’sracialgoalsnegatedafindingofnarrowtailoring.Id.“[R]aceconscious…policiesmustbelimitedintime.”Id.,citingGrutter,539U.S.at342,andWalkerv.CityofMesquite,TX,169F.3d973,982(5thCir.1999).Thecourtheldthatbecausethegovernmentinterestcouldhavebeenachievedutilizingrace‐neutralmeasures,andbecausetheracialgoalswerenottemporallylimited,theMVPcouldnotwithstandstrictscrutinyandwasunconstitutionalonitsface.Id.at268.
WithrespecttoVirdi’sclaimsofintentionaldiscrimination,thecourtheldthatalthoughtheMVPwasfaciallyunconstitutional,noevidenceexistedthattheMVPoritsunconstitutionalitycausedVirditoloseacontractthathewouldhaveotherwisereceived.Id.Thus,becauseVirdifailedtoestablishacausalconnectionbetweentheunconstitutionalaspectoftheMVPandhisowninjuries,thecourtaffirmedthedistrictcourt’sgrantofjudgmentonthatissue.Id.at269.Similarly,thecourtfoundthatVirdipresentedinsufficientevidencetosustainhisclaimsagainsttheSuperintendentforintentionaldiscrimination.Id.
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Thecourtreversedthedistrictcourt’sorderpertainingtothefacialconstitutionalityoftheMVP’sracialgoals,andaffirmedthedistrictcourt’sordergrantingdefendants’motionontheissueofintentionaldiscriminationagainstVirdi.Id.at270.
4. Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950 (10th Cir. 2003), cert. denied, 540 U.S. 1027, 124 S. Ct. 556 (2003) (Scalia, Justice with whom the Chief Justice Rehnquist, joined, dissenting from the denial of certiorari)
ThiscaseisinstructivetothedisparitystudybecauseitisadecisionthatupholdsthevalidityofalocalgovernmentMBE/WBEprogram.ItissignificanttonotethattheTenthCircuitdidnotapplythenarrowlytailoredtestandthusdidnotruleonanapplicationofthenarrowlytailoredtest,insteadfindingthattheplaintiffhadwaivedthatchallengeinoneoftheearlierdecisionsinthecase.ThiscasealsoisoneoftheonlycasestohavefoundprivatesectormarketplacediscriminationasabasistoupholdanMBE/WBE‐typeprogram.
InConcreteWorkstheUnitedStatesCourtofAppealsfortheTenthCircuitheldthattheCityandCountyofDenverhadacompellinginterestinlimitingracediscriminationintheconstructionindustry,thattheCityhadanimportantgovernmentalinterestinremedyinggenderdiscriminationintheconstructionindustry,andfoundthattheCityandCountyofDenverhadestablishedacompellinggovernmentalinteresttohavearace‐andgender‐basedprogram.InConcreteWorks,theCourtofAppealsdidnotaddresstheissueofwhethertheMWBEOrdinancewasnarrowlytailoredbecauseitheldthedistrictcourtwasbarredunderthelawofthecasedoctrinefromconsideringthatissuesinceitwasnotraisedonappealbytheplaintiffconstructioncompaniesaftertheyhadlostthatissueonsummaryjudgmentinanearlierdecision.Therefore,theCourtofAppealsdidnotreachadecisionastonarrowlytailoringorconsiderthatissueinthecase.
Casehistory.Plaintiff,ConcreteWorksofColorado,Inc.(“CWC”)challengedtheconstitutionalityofan“affirmativeaction”ordinanceenactedbytheCityandCountyofDenver(hereinafterthe“City”or“Denver”).321F.3d950,954(10thCir.2003).TheordinanceestablishedparticipationgoalsforracialminoritiesandwomenoncertainCityconstructionandprofessionaldesignprojects.Id.
TheCityenactedanOrdinanceNo.513(“1990Ordinance”)containingannualgoalsforMBE/WBEutilizationonallcompetitivelybidprojects.Id.at956.Aprimecontractorcouldalsosatisfythe1990Ordinancerequirementsbyusing“goodfaithefforts.”Id.In1996,theCityreplacedthe1990OrdinancewithOrdinanceNo.304(the“1996Ordinance”).Thedistrictcourtstatedthatthe1996Ordinancedifferedfromthe1990OrdinancebyexpandingthedefinitionofcoveredcontractstoincludesomeprivatelyfinancedcontractsonCity‐ownedland;addedupdatedinformationandfindingstothestatementoffactualsupportforcontinuingtheprogram;refinedtherequirementsforMBE/WBEcertificationandgraduation;mandatedtheuseofMBEsandWBEsonchangeorders;andexpandedsanctionsforimproperbehaviorbyMBEs,WBEsormajority‐ownedcontractorsinfailingtoperformtheaffirmativeactioncommitmentsmadeonCityprojects.Id.at956‐57.
The1996Ordinancewasamendedin1998byOrdinanceNo.948(the“1998Ordinance”).The1998OrdinancereducedannualpercentagegoalsandprohibitedanMBEoraWBE,actingasabidder,fromcountingself‐performedworktowardprojectgoals.Id.at957.
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CWCfiledsuitchallengingtheconstitutionalityofthe1990Ordinance.Id.Thedistrictcourtconductedabenchtrialontheconstitutionalityofthethreeordinances.Id.ThedistrictcourtruledinfavorofCWCandconcludedthattheordinancesviolatedtheFourteenthAmendment.Id.TheCitythenappealedtotheTenthCircuitCourtofAppeals.Id.TheCourtofAppealsreversedandremanded.Id.at954.
TheCourtofAppealsappliedstrictscrutinytorace‐basedmeasuresandintermediatescrutinytothegender‐basedmeasures.Id.at957‐58,959.TheCourtofAppealsalsocitedRichmondv.J.A.CrosonCo.,forthepropositionthatagovernmentalentity“canuseitsspendingpowerstoremedyprivatediscrimination,ifitidentifiesthatdiscriminationwiththeparticularityrequiredbytheFourteenthAmendment.”488U.S.469,492(1989)(pluralityopinion).Because“anefforttoalleviatetheeffectsofsocietaldiscriminationisnotacompellinginterest,”theCourtofAppealsheldthatDenvercoulddemonstratethatitsinterestiscompellingonlyifit(1)identifiedthepastorpresentdiscrimination“withsomespecificity,”and(2)demonstratedthata“strongbasisinevidence”supportsitsconclusionthatremedialactionisnecessary.Id.at958,quotingShawv.Hunt,517U.S.899,909‐10(1996).
ThecourtheldthatDenvercouldmeetitsburdenwithoutconclusivelyprovingtheexistenceofpastorpresentracialdiscrimination.Id.Rather,Denvercouldrelyon“empiricalevidencethatdemonstrates‘asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractors…andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.’”Id.,quotingCroson,488U.S.at509(pluralityopinion).Furthermore,theCourtofAppealsheldthatDenvercouldrelyonstatisticalevidencegatheredfromthesix‐countyDenverMetropolitanStatisticalArea(MSA)andcouldsupplementthestatisticalevidencewithanecdotalevidenceofpublicandprivatediscrimination.Id.
TheCourtofAppealsheldthatDenvercouldestablishitscompellinginterestbypresentingevidenceofitsowndirectparticipationinracialdiscriminationoritspassiveparticipationinprivatediscrimination.Id.TheCourtofAppealsheldthatonceDenvermetitsburden,CWChadtointroduce“credible,particularizedevidencetorebut[Denver’s]initialshowingoftheexistenceofacompellinginterest,whichcouldconsistofaneutralexplanationforthestatisticaldisparities.”Id.(internalcitationsandquotationsomitted).TheCourtofAppealsheldthatCWCcouldalsorebutDenver’sstatisticalevidence“by(1)showingthatthestatisticsareflawed;(2)demonstratingthatthedisparitiesshownbythestatisticsarenotsignificantoractionable;or(3)presentingcontrastingstatisticaldata.”Id.(internalcitationsandquotationsomitted).TheCourtofAppealsheldthattheburdenofproofatalltimesremainedwithCWCtodemonstratetheunconstitutionalityoftheordinances.Id.at960.
TheCourtofAppealsheldthattomeetitsburdenofdemonstratinganimportantgovernmentalinterestpertheintermediatescrutinyanalysis,Denvermustshowthatthegender‐basedmeasuresintheordinanceswerebasedon“reasonedanalysisratherthanthroughthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.,quotingMiss.Univ.forWomenv.Hogan,458U.S.718,726(1982).
Thestudies.Denverpresentedhistorical,statisticalandanecdotalevidenceinsupportofitsMBE/WBEprograms.DenvercommissionedanumberofstudiestoassessitsMBE/WBEprograms.Id.at962.TheconsultingfirmhiredbyDenverutilizeddisparityindicesinpart.Id.at962.The1990StudyalsoexaminedMBEandWBEutilizationintheoverallDenverMSAconstructionmarket,bothpublicandprivate.Id.at963.
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TheconsultingfirmalsointerviewedrepresentativesofMBEs,WBEs,majority‐ownedconstructionfirms,andgovernmentofficials.Id.Basedonthisinformation,the1990Studyconcludedthat,despiteDenver’seffortstoincreaseMBEandWBEparticipationinDenverPublicWorksprojects,someDenveremployeesandprivatecontractorsengagedinconductdesignedtocircumventthegoalsprogram.Id.Afterreviewingthestatisticalandanecdotalevidencecontainedinthe1990Study,theCityCouncilenactedthe1990Ordinance.Id.
AftertheTenthCircuitdecidedConcreteWorksII,Denvercommissionedanotherstudy(the“1995Study”).Id.at963.Using1987CensusBureaudata,the1995StudyagainexaminedutilizationofMBEsandWBEsintheconstructionandprofessionaldesignindustrieswithintheDenverMSA.Id.The1995StudyconcludedthatMBEsandWBEsweremorelikelytobeone‐personorfamily‐runbusinesses.TheStudyconcludedthatHispanic‐ownedfirmswerelesslikelytohavepaidemployeesthanwhite‐ownedfirmsbutthatAsian/NativeAmerican‐ownedfirmsweremorelikelytohavepaidemployeesthanwhite‐orotherminority‐ownedfirms.Todeterminewhetherthesefactorsexplainedoverallmarketdisparities,the1995StudyusedtheCensusdatatocalculatedisparityindicesforallfirmsintheDenverMSAconstructionindustryandseparatelycalculateddisparityindicesforfirmswithpaidemployeesandfirmswithnopaidemployees.Id.at964.
TheCensusBureauinformationwasalsousedtoexamineaveragerevenuesperemployeeforDenverMSAconstructionfirmswithpaidemployees.Hispanic‐,Asian‐,NativeAmerican‐,andwomen‐ownedfirmswithpaidemployeesallreportedlowerrevenuesperemployeethanmajority‐ownedfirms.The1995Studyalsoused1990Censusdatatocalculateratesofself‐employmentwithintheDenverMSAconstructionindustry.TheStudyconcludedthatthedisparitiesintheratesofself‐employmentforblacks,Hispanics,andwomenpersistedevenaftercontrollingforeducationandlengthofworkexperience.The1995StudycontrolledforthesevariablesandreportedthatblacksandHispanicsworkingintheDenverMSAconstructionindustrywerelessthanhalfaslikelytoowntheirownbusinessesaswerewhitesofcomparableeducationandexperience.Id.
Inlate1994andearly1995,atelephonesurveyofconstructionfirmsdoingbusinessintheDenverMSAwasconducted.Id.at965.Basedoninformationobtainedfromthesurvey,theconsultantcalculatedpercentageutilizationandpercentageavailabilityofMBEsandWBEs.Percentageutilizationwascalculatedfromrevenueinformationprovidedbytherespondingfirms.PercentageavailabilitywascalculatedbasedonthenumberofMBEsandWBEsthatrespondedtothesurveyquestionregardingrevenues.Usingtheseutilizationandavailabilitypercentages,the1995Studyshoweddisparityindicesof64forMBEsand70forWBEsintheconstructionindustry.Intheprofessionaldesignindustry,disparityindiceswere67forMBEsand69forWBEs.The1995Studyconcludedthatthedisparityindicesobtainedfromthetelephonesurveydataweremoreaccuratethanthoseobtainedfromthe1987Censusdatabecausethedataobtainedfromthetelephonesurveyweremorerecent,hadanarrowerfocus,andincludeddataonCcorporations.Additionally,itwaspossibletocalculatedisparityindicesforprofessionaldesignfirmsfromthesurveydata.Id.
In1997,theCityconductedanotherstudytoestimatetheavailabilityofMBEsandWBEsandtoexamine,interalia,whetherraceandgenderdiscriminationlimitedtheparticipationofMBEsandWBEsinconstructionprojectsofthetypetypicallyundertakenbytheCity(the“1997Study”).Id.at966.The1997StudyusedgeographicandspecializationinformationtocalculateMBE/WBEavailability.Availabilitywasdefinedas“theratioofMBE/WBEfirmstothetotalnumberoffirmsinthefour‐digitSICcodesandgeographicmarketarearelevanttotheCity’scontracts.”Id.
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The1997StudycomparedMBE/WBEavailabilityandutilizationintheColoradoconstructionindustry.Id.ThestatewidemarketwasusedbecausenecessaryinformationwasunavailablefortheDenverMSA.Id.at967.Additionally,datacollectedin1987bytheCensusBureauwasusedbecausemorecurrentdatawasunavailable.TheStudycalculateddisparityindicesforthestatewideconstructionmarketinColoradoasfollows:41forAfricanAmericanfirms,40forHispanicfirms,14forAsianandotherminorities,and74forwomen‐ownedfirms.Id.
The1997StudyalsocontainedananalysisofwhetherAfricanAmericans,Hispanics,orAsianAmericansworkingintheconstructionindustryarelesslikelytobeself‐employedthansimilarlysituatedwhites.Id.UsingdatafromthePublicUseMicrodataSamples(“PUMS”)ofthe1990CensusofPopulationandHousing,theStudyusedasampleofindividualsworkingintheconstructionindustry.TheStudyconcludedthatinbothColoradoandtheDenverMSA,AfricanAmericans,Hispanics,andNativeAmericansworkingintheconstructionindustryhadlowerself‐employmentratesthanwhites.AsianAmericanshadhigherself‐employmentratesthanwhites.
UsingtheavailabilityfigurescalculatedearlierintheStudy,theStudythencomparedtheactualavailabilityofMBE/WBEsintheDenverMSAwiththepotentialavailabilityofMBE/WBEsiftheyformedbusinessesatthesamerateaswhiteswiththesamecharacteristics.Id.Finally,theStudyexaminedwhetherself‐employedminoritiesandwomenintheconstructionindustryhavelowerearningsthanwhitemaleswithsimilarcharacteristics.Id.at968.Usinglinearregressionanalysis,theStudycomparedbusinessownerswithsimilaryearsofeducation,ofsimilarage,doingbusinessinthesamegeographicarea,andhavingothersimilardemographiccharacteristics.Evenaftercontrollingforseveralfactors,theresultsshowedthatself‐employedAfricanAmericans,Hispanics,NativeAmericans,andwomenhadlowerearningsthanwhitemales.Id.
The1997StudyalsoconductedamailsurveyofbothMBE/WBEsandnon‐MBE/WBEstoobtaininformationontheirexperiencesintheconstructionindustry.OftheMBE/WBEswhoresponded,35percentindicatedthattheyhadexperiencedatleastoneincidentofdisparatetreatmentwithinthelastfiveyearswhileengagedinbusinessactivities.Thesurveyalsoposedthefollowingquestion:“Howoftendoprimecontractorswhouseyourfirmasasubcontractoronpublicsectorprojectswith[MBE/WBE]goalsorrequirements…alsouseyourfirmonpublicsectororprivatesectorprojectswithout[MBE/WBE]goalsorrequirements?”Fifty‐eightpercentofminoritiesand41percentofwhitewomenwhorespondedtothisquestionindicatedtheywere“seldomornever”usedonnon‐goalsprojects.Id.
MBE/WBEswerealsoaskedwhetherthefollowingaspectsofprocurementmadeitmoredifficultorimpossibletoobtainconstructioncontracts:(1)bondingrequirements,(2)insurancerequirements,(3)largeprojectsize,(4)costofcompletingproposals,(5)obtainingworkingcapital,(6)lengthofnotificationforbiddeadlines,(7)prequalificationrequirements,and(8)previousdealingswithanagency.Thisquestionwasalsoaskedofnon‐MBE/WBEsinaseparatesurvey.Withoneexception,MBE/WBEsconsideredeachaspectofprocurementmoreproblematicthannon‐MBE/WBEs.Todeterminewhetherafirm’ssizeorexperienceexplainedthedifferentresponses,aregressionanalysiswasconductedthatcontrolledforageofthefirm,numberofemployees,andlevelofrevenues.Theresultsagainshowedthatwiththesame,singleexception,MBE/WBEshadmoredifficultiesthannon‐MBE/WBEswiththesamecharacteristics.Id.at968‐69.
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Afterthe1997Studywascompleted,theCityenactedthe1998Ordinance.The1998Ordinancereducedtheannualgoalsto10percentforbothMBEsandWBEsandeliminatedaprovisionwhichpreviouslyallowedMBE/WBEstocounttheirownworktowardprojectgoals.Id.at969.
Theanecdotalevidenceincludedthetestimonyoftheseniorvice‐presidentofalarge,majority‐ownedconstructionfirmwhostatedthatwhenheworkedinDenver,hereceivedcrediblecomplaintsfromminorityandwomen‐ownedconstructionfirmsthattheyweresubjecttodifferentworkrulesthanmajority‐ownedfirms.Id.HealsotestifiedthathefrequentlyobservedgraffiticontainingracialorgenderepithetswrittenonjobsitesintheDenvermetropolitanarea.Further,hestatedthathebelieved,basedonhispersonalexperiences,thatmanymajority‐ownedfirmsrefusedtohireminority‐orwomen‐ownedsubcontractorsbecausetheybelievedthosefirmswerenotcompetent.Id.
SeveralMBE/WBEwitnessestestifiedthattheyexperienceddifficultyprequalifyingforprivatesectorprojectsandprojectswiththeCityandothergovernmentalentitiesinColorado.Oneindividualtestifiedthathercompanywasrequiredtoprequalifyforaprivatesectorprojectwhilenosimilarrequirementwasimposedonmajority‐ownedfirms.Severalotherstestifiedthattheyattemptedtoprequalifyforprojectsbuttheirapplicationsweredeniedeventhoughtheymettheprequalificationrequirements.Id.
OtherMBE/WBEstestifiedthattheirbidswererejectedevenwhentheywerethelowestbidder;thattheybelievedtheywerepaidmoreslowlythanmajority‐ownedfirmsonbothCityprojectsandprivatesectorprojects;thattheywerechargedmoreforsuppliesandmaterials;thattheywererequiredtodoadditionalworknotpartofthesubcontractingarrangement;andthattheyfounditdifficulttojoinunionsandtradeassociations.Id.TherewastestimonydetailingthedifficultiesMBE/WBEsexperiencedinobtaininglinesofcredit.OneWBEtestifiedthatshewasgivenafalseexplanationofwhyherloanwasdeclined;anothertestifiedthatthelendinginstitutionrequiredtheco‐signatureofherhusbandeventhoughherhusband,whoalsoownedaconstructionfirm,wasnotrequiredtoobtainherco‐signature;athirdtestifiedthatthebankrequiredherfathertobeinvolvedinthelendingnegotiations.Id.
Thecourtalsopointedoutanecdotaltestimonyinvolvingrecitationsofracially‐andgender‐motivatedharassmentexperiencedbyMBE/WBEsatworksites.Therewastestimonythatminorityandfemaleemployeesworkingonconstructionprojectswerephysicallyassaultedandfondled,spatuponwithchewingtobacco,andpeltedwithtwo‐inchboltsthrownbymalesfromaheightof80feet.Id.at969‐70.
Thelegalframeworkappliedbythecourt.TheCourtheldthatthedistrictcourtincorrectlybelievedDenverwasrequiredtoprovetheexistenceofdiscrimination.InsteadofconsideringwhetherDenverhaddemonstratedstrongevidencefromwhichaninferenceofpastorpresentdiscriminationcouldbedrawn,thedistrictcourtanalyzedwhetherDenver’sevidenceshowedthatthereispervasivediscrimination.Id.at970.Thecourt,quotingConcreteWorksII,statedthat“theFourteenthAmendmentdoesnotrequireacourttomakeanultimatefindingofdiscriminationbeforeamunicipalitymaytakeaffirmativestepstoeradicatediscrimination.”Id.at970,quotingConcreteWorksII,36F.3d1513,1522(10thCir.1994).Denver’sinitialburdenwastodemonstratethatstrongevidenceofdiscriminationsupporteditsconclusionthatremedialmeasureswerenecessary.Strongevidenceisthat“approachingaprimafaciecaseofaconstitutionalorstatutoryviolation,”notirrefutableordefinitiveproofofdiscrimination.Id.at97,quotingCroson,488U.S.at500.TheburdenofproofatalltimesremainedwiththecontractorplaintifftoprovebyapreponderanceoftheevidencethatDenver’s“evidencedidnot
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supportaninferenceofpriordiscriminationandthusaremedialpurpose.”Id.,quotingAdarandVII,228F.3dat1176.
Denver,theCourtheld,didintroduceevidenceofdiscriminationagainsteachgroupincludedintheordinances.Id.at971.Thus,Denver’sevidencedidnotsufferfromtheproblemdiscussedbythecourtinCroson.TheCourtheldthedistrictcourterroneouslyconcludedthatDenvermustdemonstratethattheprivatefirmsdirectlyengagedinanydiscriminationinwhichDenverpassivelyparticipatesdosointentionally,withthepurposeofdisadvantagingminoritiesandwomen.TheCrosonmajorityconcludedthata“citywouldhaveacompellinginterestinpreventingitstaxdollarsfromassisting[localtrade]organizationsinmaintainingaraciallysegregatedconstructionmarket.”Id.at971,quotingCroson,488U.S.503.Thus,theCourtheldDenver’sburdenwastointroduceevidencewhichraisedtheinferenceofdiscriminatoryexclusioninthelocalconstructionindustryandlinkeditsspendingtothatdiscrimination.Id.
TheCourtnotedtheSupremeCourthasstatedthattheinferenceofdiscriminatoryexclusioncanarisefromstatisticaldisparities.Id.,citingCroson,488U.S.at503.Accordingly,itconcludedthatDenvercouldmeetitsburdenthroughtheintroductionofstatisticalandanecdotalevidence.TotheextentthedistrictcourtrequiredDenvertointroduceadditionalevidencetoshowdiscriminatorymotiveorintentonthepartofprivateconstructionfirms,thedistrictcourterred.Denver,accordingtotheCourt,wasundernoburdentoidentifyanyspecificpracticeorpolicythatresultedindiscrimination.NeitherwasDenverrequiredtodemonstratethatthepurposeofanysuchpracticeorpolicywastodisadvantagewomenorminorities.Id.at972.
ThecourtfoundDenver’sstatisticalandanecdotalevidencerelevantbecauseitidentifiesdiscriminationinthelocalconstructionindustry,notsimplydiscriminationinsociety.ThecourtheldthegenesisoftheidentifieddiscriminationisirrelevantandthedistrictcourterredwhenitdiscountedDenver’sevidenceonthatbasis.Id.
ThecourtheldthedistrictcourterroneouslyrejectedtheevidenceDenverpresentedonmarketplacediscrimination.Id.at973.Thecourtrejectedthedistrictcourt’serroneouslegalconclusionthatamunicipalitymayonlyremedyitsowndiscrimination.ThecourtstatedthisconclusioniscontrarytotheholdingsinConcreteWorksIIandthepluralityopinioninCroson.Id.Thecourthelditpreviouslyrecognizedinthiscasethat“amunicipalityhasacompellinginterestintakingaffirmativestepstoremedybothpublicandprivatediscriminationspecificallyidentifiedinitsarea.”Id.,quotingConcreteWorksII,36F.3dat1529(emphasisadded).InConcreteWorksII,thecourtstatedthat“wedonotreadCrosonasrequiringthemunicipalitytoidentifyanexactlinkagebetweenitsawardofpubliccontractsandprivatediscrimination.”Id.,quotingConcreteWorksII,36F.3dat1529.
ThecourtstatedthatDenvercouldmeetitsburdenofdemonstratingitscompellinginterestwithevidenceofprivatediscriminationinthelocalconstructionindustrycoupledwithevidencethatithasbecomeapassiveparticipantinthatdiscrimination.Id.at973.Thus,Denverwasnotrequiredtodemonstratethatitis“guiltyofprohibiteddiscrimination”tomeetitsinitialburden.Id.
Additionally,thecourthadpreviouslyconcludedthatDenver’sstatisticalstudies,whichcomparedutilizationofMBE/WBEstoavailability,supportedtheinferencethat“localprimecontractors”areengagedinracialandgenderdiscrimination.Id.at974,quotingConcreteWorksII,36F.3dat1529.Thus,thecourtheldDenver’sdisparitystudiesshouldnothavebeendiscountedbecausetheyfailedtospecificallyidentifythoseindividualsorfirmsresponsibleforthediscrimination.Id.
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TheCourt’srejectionofCWC’sargumentsandthedistrictcourtfindings.
Useofmarketplacedata.Thecourtheldthedistrictcourt,interalia,erroneouslyconcludedthatthedisparitystudiesuponwhichDenverreliedweresignificantlyflawedbecausetheymeasureddiscriminationintheoverallDenverMSAconstructionindustry,notdiscriminationbytheCityitself.Id.at974.Thecourtfoundthatthedistrictcourt’sconclusionwasdirectlycontrarytotheholdinginAdarandVIIthatevidenceofbothpublicandprivatediscriminationintheconstructionindustryisrelevant.Id.,citingAdarandVII,228F.3dat1166‐67).
ThecourtheldtheconclusionreachedbythemajorityinCrosonthatmarketplacedataarerelevantinequalprotectionchallengestoaffirmativeactionprogramswasconsistentwiththeapproachlatertakenbythecourtinShawv.Hunt.Id.at975.InShaw,amajorityofthecourtreliedonthemajorityopinioninCrosonforthebroadpropositionthatagovernmentalentity’s“interestinremedyingtheeffectsofpastorpresentracialdiscriminationmayinthepropercasejustifyagovernment’suseofracialdistinctions.”Id.,quotingShaw,517U.S.at909.TheShawcourtdidnotadoptanyrequirementthatonlydiscriminationbythegovernmentalentity,eitherdirectlyorbyutilizingfirmsengagedindiscriminationonprojectsfundedbytheentity,wasremediable.Thecourt,however,didsetouttwoconditionsthatmustbemetforthegovernmentalentitytoshowacompellinginterest.“First,thediscriminationmustbeidentifieddiscrimination.”Id.at976,quotingShaw,517U.S.at910.TheCitycansatisfythisconditionbyidentifyingthediscrimination,“‘publicorprivate,withsomespecificity.’“Id.at976,citingShaw,517U.S.at910,quotingCroson,488U.S.at504(emphasisadded).Thegovernmentalentitymustalsohavea“strongbasisinevidencetoconcludethatremedialactionwasnecessary.”Id.Thus,thecourtconcludedShawspecificallystatedthatevidenceofeitherpublicorprivatediscriminationcouldbeusedtosatisfythemunicipality’sburdenofproducingstrongevidence.Id.at976.
InAdarandVII,thecourtnoteditconcludedthatevidenceofmarketplacediscriminationcanbeusedtosupportacompellinginterestinremedyingpastorpresentdiscriminationthroughtheuseofaffirmativeactionlegislation.Id.,citingAdarandVII,228F.3dat1166‐67(“[W]emayconsiderpublicandprivatediscriminationnotonlyinthespecificareaofgovernmentprocurementcontractsbutalsointheconstructionindustrygenerally;thusanyfindingsCongresshasmadeastotheentireconstructionindustryarerelevant.”(emphasisadded)).Further,thecourtpointedoutinthiscaseitearlierrejectedtheargumentCWCreassertedherethatmarketplacedataareirrelevantandremandedthecasetothedistrictcourttodeterminewhetherDenvercouldlinkitspublicspendingto“theDenverMSAevidenceofindustry‐widediscrimination.”Id.,quotingConcreteWorksII,36F.3dat1529.Thecourtstatedthatevidenceexplaining“theDenvergovernment’sroleincontributingtotheunderutilizationofMBEsandWBEsintheprivateconstructionmarketintheDenverMSA”wasrelevanttoDenver’sburdenofproducingstrongevidence.Id.,quotingConcreteWorksII,36F.3dat1530(emphasisadded).
Consistentwiththecourt’smandateinConcreteWorksII,theCityattemptedtoshowattrialthatit“indirectlycontributedtoprivatediscriminationbyawardingpubliccontractstofirmsthatinturndiscriminatedagainstMBEand/orWBEsubcontractorsinotherprivateportionsoftheirbusiness.”Id.TheCitycandemonstratethatitisa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”bycompilingevidenceofmarketplacediscriminationandthenlinkingitsspendingpracticestotheprivatediscrimination.Id.,quotingCroson,488U.S.at492.
ThecourtrejectedCWC’sargumentthatthelendingdiscriminationstudiesandbusinessformationstudiespresentedbyDenverwereirrelevant.InAdarandVII,thecourtconcludedthat
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evidenceofdiscriminatorybarrierstotheformationofbusinessesbyminoritiesandwomenandfaircompetitionbetweenMBE/WBEsandmajority‐ownedconstructionfirmsshowsa“stronglink”betweenagovernment’s“disbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.”Id.at977,quotingAdarandVII,228F.3dat1167‐68.ThecourtfoundthatevidencethatprivatediscriminationresultedinbarrierstobusinessformationisrelevantbecauseitdemonstratesthatMBE/WBEsareprecludedattheoutsetfromcompetingforpublicconstructioncontracts.ThecourtalsofoundthatevidenceofbarrierstofaircompetitionisrelevantbecauseitagaindemonstratesthatexistingMBE/WBEsareprecludedfromcompetingforpubliccontracts.Thus,likethestudiesmeasuringdisparitiesintheutilizationofMBE/WBEsintheDenverMSAconstructionindustry,studiesshowingthatdiscriminatorybarrierstobusinessformationexistintheDenverconstructionindustryarerelevanttotheCity’sshowingthatitindirectlyparticipatesinindustrydiscrimination.Id.at977.
TheCitypresentedevidenceoflendingdiscriminationtosupportitspositionthatMBE/WBEsintheDenverMSAconstructionindustryfacediscriminatorybarrierstobusinessformation.Denverintroducedadisparitystudypreparedin1996andsponsoredbytheDenverCommunityReinvestmentAlliance,ColoradoCapitalInitiatives,andtheCity.TheStudyultimatelyconcludedthat“despitethefactthatloanapplicantsofthreedifferentracial/ethnicbackgroundsinthissamplewerenotappreciablydifferentasbusinesspeople,theywereultimatelytreateddifferentlybythelendersonthecrucialissueofloanapprovalordenial.”Id.at977‐78.InAdarandVII,thecourtconcludedthatthisstudy,amongotherevidence,“stronglysupport[ed]aninitialshowingofdiscriminationinlending.”Id.at978,quoting,AdarandVII,228F.3dat1170,n.13(“Lendingdiscriminationaloneofcoursedoesnotjustifyactionintheconstructionmarket.However,thepersistenceofsuchdiscrimination…supportstheassertionthattheformation,aswellasutilization,ofminority‐ownedconstructionenterpriseshasbeenimpeded.”).TheCityalsointroducedanecdotalevidenceoflendingdiscriminationintheDenverconstructionindustry.
CWCdidnotpresentanyevidencethatunderminedthereliabilityofthelendingdiscriminationevidencebutsimplyrepeatedtheargument,foreclosedbycircuitprecedent,thatitisirrelevant.Thecourtrejectedthedistrictcourtcriticismoftheevidencebecauseitfailedtodeterminewhetherthediscriminationresultedfromdiscriminatoryattitudesorfromtheneutralapplicationofbankingregulations.Thecourtconcludedthatdiscriminatorymotivecanbeinferredfromtheresultsshownindisparitystudies.Thecourtheldthedistrictcourt’scriticismdidnotunderminethestudy’sreliabilityasanindicatorthattheCityispassivelyparticipatinginmarketplacediscrimination.ThecourtnotedthatinAdarandVIIittook“judicialnoticeoftheobviouscausalconnectionbetweenaccesstocapitalandabilitytoimplementpublicworksconstructionprojects.”Id.at978,quotingAdarandVII,228F.3dat1170.
DenveralsointroducedevidenceofdiscriminatorybarrierstocompetitionfacedbyMBE/WBEsintheformofbusinessformationstudies.The1990Studyandthe1995StudybothshowedthatallminoritygroupsintheDenverMSAformedtheirownconstructionfirmsatrateslowerthanthetotalpopulationbutthatwomenformedconstructionfirmsathigherrates.The1997Studyexaminedself‐employmentratesandcontrolledforgender,maritalstatus,education,availabilityofcapital,andpersonal/familyvariables.Asdiscussed,supra,theStudyconcludedthatAfricanAmericans,Hispanics,andNativeAmericansworkingintheconstructionindustryhavelowerratesofself‐employmentthansimilarlysituatedwhites.AsianAmericanshadhigherrates.The1997Studyalsoconcludedthatminorityandfemalebusinessownersintheconstructionindustry,withtheexceptionofAsianAmericanowners,havelowerearningsthan
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whitemaleowners.Thisconclusionwasreachedaftercontrollingforeducation,age,maritalstatus,anddisabilities.Id.at978.
Thecourtheldthatthedistrictcourt’sconclusionthatthebusinessformationstudiescouldnotbeusedtojustifytheordinancesconflictswithitsholdinginAdarandVII.“[T]heexistenceofevidenceindicatingthatthenumberof[MBEs]wouldbesignificantly(butunquantifiably)higherbutforsuchbarriersisneverthelessrelevanttotheassessmentofwhetheradisparityissufficientlysignificanttogiverisetoaninferenceofdiscriminatoryexclusion.”Id.at979,quotingAdarandVII,228F.3dat1174.
Insum,thecourtheldthedistrictcourterredwhenitrefusedtoconsiderorgivesufficientweighttothelendingdiscriminationstudy,thebusinessformationstudies,andthestudiesmeasuringmarketplacediscrimination.ThatevidencewaslegallyrelevanttotheCity’sburdenofdemonstratingastrongbasisinevidencetosupportitsconclusionthatremediallegislationwasnecessary.Id.at979‐80.
Variables. CWCchallengedDenver’sdisparitystudiesasunreliablebecausethedisparitiesshowninthestudiesmaybeattributabletofirmsizeandexperienceratherthandiscrimination.Denvercountered,however,thatafirm’ssizehaslittleeffectonitsqualificationsoritsabilitytoprovideconstructionservicesandthatMBE/WBEs,likeallconstructionfirms,canperformmostserviceseitherbyhiringadditionalemployeesorbyemployingsubcontractors.CWCrespondedthatelasticityitselfisrelativetosizeandexperience;MBE/WBEsarelesscapableofexpandingbecausetheyaresmallerandlessexperienced.Id.at980.
ThecourtconcludedthatevenifitassumedthatMBE/WBEsarelessabletoexpandbecauseoftheirsmallersizeandmorelimitedexperience,CWCdidnotrespondtoDenver’sargumentandtheevidenceitpresentedshowingthatexperienceandsizearenotrace‐andgender‐neutralvariablesandthatMBE/WBEconstructionfirmsaregenerallysmallerandlessexperiencedbecauseofindustrydiscrimination.Id.at981.Thelendingdiscriminationandbusinessformationstudies,accordingtothecourt,bothstronglysupportedDenver’sargumentthatMBE/WBEsaresmallerandlessexperiencedbecauseofmarketplaceandindustrydiscrimination.Inaddition,Denver’sexperttestifiedthatdiscriminationbybanksorbondingcompanieswouldreduceafirm’srevenueandthenumberofemployeesitcouldhire.Id.
DenveralsoargueditsStudiescontrolledforsizeandthe1995Studycontrolledforexperience.Itassertedthatthe1990StudymeasuredrevenuesperemployeeforconstructionforMBE/WBEsandconcludedthattheresultingdisparities,“suggest[]thatevenamongfirmsofthesameemploymentsize,industryutilizationofMBEsandWBEswaslowerthanthatofnon‐minoritymale‐ownedfirms.”Id.at982.Similarly,the1995Studycontrolledforsize,calculating,interalia,disparityindicesforfirmswithnopaidemployeeswhichpresumablyarethesamesize.
Basedontheuncontrovertedevidencepresentedattrial,thecourtconcludedthatthedistrictcourtdidnotgivesufficientweighttoDenver’sdisparitystudiesbecauseofitserroneousconclusionthatthestudiesfailedtoadequatelycontrolforsizeandexperience.ThecourtheldthatDenverispermittedtomakeassumptionsaboutcapacityandqualificationofMBE/WBEstoperformconstructionservicesifitcansupportthoseassumptions.ThecourtfoundtheassumptionsmadeinthiscasewereconsistentwiththeevidencepresentedattrialandsupportedtheCity’spositionthatafirm’ssizedoesnotaffectitsqualifications,willingness,orabilitytoperformconstructionservicesandthatthesmallersizeandlesserexperienceofMBE/WBEsare,themselves,theresultofindustrydiscrimination.Further,thecourtpointedout
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CWCdidnotconductitsowndisparitystudyusingmarketplacedataandthusdidnotdemonstratethatthedisparitiesshowninDenver’sstudieswoulddecreaseordisappearifthestudiescontrolledforsizeandexperiencetoCWC’ssatisfaction.Consequently,thecourtheldCWC’srebuttalevidencewasinsufficienttomeetitsburdenofdiscreditingDenver’sdisparitystudiesontheissueofsizeandexperience.Id.at982.
Specialization. ThedistrictcourtalsofaultedDenver’sdisparitystudiesbecausetheydidnotcontrolforfirmspecialization.Thecourtnotedthedistrictcourt’scriticismwouldbeappropriateonlyiftherewasevidencethatMBE/WBEsaremorelikelytospecializeincertainconstructionfields.Id.at982.
ThecourtfoundtherewasnoidentifiedevidenceshowingthatcertainconstructionspecializationsrequireskillslesslikelytobepossessedbyMBE/WBEs.ThecourtfoundrelevantthetestimonyoftheCity’sexpert,thatthedatahereviewedshowedthatMBEswererepresented“widelyacrossthedifferent[construction]specializations.”Id.at982‐83.TherewasnocontrarytestimonythataggregationbiascausedthedisparitiesshowninDenver’sstudies.Id.at983.
ThecourtheldthatCWCfailedtodemonstratethatthedisparitiesshowninDenver’sstudiesareeliminatedwhenthereiscontrolforfirmspecialization.Incontrast,oneoftheDenverstudies,whichcontrolledforSIC‐codesubspecialtyandstillshoweddisparities,providedsupportforDenver’sargumentthatfirmspecializationdoesnotexplainthedisparities.Id.at983.
Thecourtpointedoutthatdisparitystudiesmaymakeassumptionsaboutavailabilityaslongasthesameassumptionscanbemadeforallfirms.Id.at983.
UtilizationofMBE/WBEsonCityprojects. CWCarguedthatDenvercouldnotdemonstrateacompellinginterestbecauseitoverutilizedMBE/WBEsonCityconstructionprojects.Thisargument,accordingtothecourt,wasanextensionofCWC’sargumentthatDenvercouldjustifytheordinancesonlybypresentingevidenceofdiscriminationbytheCityitselforbycontractorswhileworkingonCityprojects.BecausethecourtconcludedthatDenvercouldsatisfyitsburdenbyshowingthatitisanindirectparticipantinindustrydiscrimination,CWC’sargumentrelatingtotheutilizationofMBE/WBEsonCityprojectsgoesonlytotheweightofDenver’sevidence.Id.at984.
Consistentwiththecourt’smandateinConcreteWorksII,attrialDenversoughttodemonstratethattheutilizationdatafromprojectssubjecttothegoalsprogramweretaintedbytheprogramand“reflect[ed]theintendedremedialeffectonMBEandWBEutilization.”Id.at984,quotingConcreteWorksII,36F.3dat1526.Denverarguedthatthenon‐goalsdatawerethebetterindicatorofpastdiscriminationinpubliccontractingthanthedataonallCityconstructionprojects.Id.at984‐85.ThecourtconcludedthatDenverpresentedampleevidencetosupporttheconclusionthattheevidenceshowingMBE/WBEutilizationonCityprojectsnotsubjecttotheordinancesorthegoalsprogramsisthebetterindicatorofdiscriminationinCitycontracting.Id.at985.
ThecourtrejectedCWC’sargumentthatthemarketplacedatawereirrelevantbutagreedthatthenon‐goalsdatawerealsorelevanttoDenver’sburden.ThecourtnotedthatDenverdidnotrelyheavilyonthenon‐goalsdataattrialbutfocusedprimarilyonthemarketplacestudiestosupportitsburden.Id.at985.
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Insum,thecourtheldDenverdemonstratedthattheutilizationofMBE/WBEsonCityprojectshadbeenaffectedbytheaffirmativeactionprogramsthathadbeeninplaceinoneformoranothersince1977.Thus,thenon‐goalsdatawerethebetterindicatorofdiscriminationinpubliccontracting.Thecourtconcludedthat,onbalance,thenon‐goalsdataprovidedsomesupportforDenver’spositionthatracialandgenderdiscriminationexistedinpubliccontractingbeforetheenactmentoftheordinances.Id.at987‐88.
Anecdotalevidence. Theanecdotalevidence,accordingtothecourt,includedseveralincidentsinvolvingprofoundlydisturbingbehavioronthepartoflenders,majority‐ownedfirms,andindividualemployees.Id.at989.Thecourtfoundthattheanecdotaltestimonyrevealedbehaviorthatwasnotmerelysophomoricorinsensitive,butwhichresultedinrealeconomicorphysicalharm.WhileCWCalsoarguedthatallneworsmallcontractorshavedifficultyobtainingcreditandthattreatmentthewitnessescharacterizedasdiscriminatoryisexperiencedbyallcontractors,Denver’switnessesspecificallytestifiedthattheybelievedtheincidentstheyexperiencedweremotivatedbyraceorgenderdiscrimination.Thecourtfoundtheysupportedthosebeliefswithtestimonythatmajority‐ownedfirmswerenotsubjecttothesamerequirementsimposedonthem.Id.
ThecourtheldtherewasnomerittoCWC’sargumentthatthewitnesses’accountsmustbeverifiedtoprovidesupportforDenver’sburden.Thecourtstatedthatanecdotalevidenceisnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.Id.
AfterconsideringDenver’sanecdotalevidence,thedistrictcourtfoundthattheevidence“showsthatrace,ethnicityandgenderaffecttheconstructionindustryandthosewhoworkinit”andthattheegregiousmistreatmentofminorityandwomenemployees“haddirectfinancialconsequences”onconstructionfirms.Id.at989,quotingConcreteWorksIII,86F.Supp.2dat1074,1073.Basedonthedistrictcourt’sfindingsregardingDenver’sanecdotalevidenceanditsreviewoftherecord,thecourtconcludedthattheanecdotalevidenceprovidedpersuasive,unrebuttedsupportforDenver’sinitialburden.Id.at989‐90,citingInt’lBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977)(concludingthatanecdotalevidencepresentedinapatternorpracticediscriminationcasewaspersuasivebecauseit“broughtthecold[statistics]convincinglytolife”).
Summary. ThecourtheldtherecordcontainedextensiveevidencesupportingDenver’spositionthatithadastrongbasisinevidenceforconcludingthatthe1990Ordinanceandthe1998OrdinancewerenecessarytoremediatediscriminationagainstbothMBEsandWBEs.Id.at990.TheinformationavailabletoDenveranduponwhichtheordinanceswerepredicated,accordingtothecourt,indicatedthatdiscriminationwaspersistentinthelocalconstructionindustryandthatDenverwas,atleast,anindirectparticipantinthatdiscrimination.
TorebutDenver’sevidence,thecourtstatedCWCwasrequiredto“establishthatDenver’sevidencedidnotconstitutestrongevidenceofsuchdiscrimination.”Id.at991,quotingConcreteWorksII,36F.3dat1523.CWCcouldnotmeetitsburdenofproofthroughconjectureandunsupportedcriticismsofDenver’sevidence.Rather,itmustpresent“credible,particularizedevidence.”Id.,quotingAdarandVII,228F.3dat1175.ThecourtheldthatCWCdidnotmeetitsburden.CWChypothesizedthatthedisparitiesshowninthestudiesonwhichDenverreliescouldbeexplainedbyanynumberoffactorsotherthanracialdiscrimination.However,thecourtfounditdidnotconductitsownmarketplacedisparitystudycontrollingforthedisputedvariablesandpresentednootherevidencefromwhichthecourtcouldconcludethatsuchvariablesexplainthedisparities.Id.at991‐92.
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Narrowtailoring.HavingconcludedthatDenverdemonstratedacompellinginterestintherace‐basedmeasuresandanimportantgovernmentalinterestinthegender‐basedmeasures,thecourthelditmustexaminewhethertheordinanceswerenarrowlytailoredtoservethecompellinginterestandaresubstantiallyrelatedtotheachievementoftheimportantgovernmentalinterest.Id.at992.
ThecourtstatedithadpreviouslyconcludedinitsearlierdecisionsthatDenver’sprogramwasnarrowlytailored.CWCappealedthegrantofsummaryjudgmentandthatappealculminatedinthedecisioninConcreteWorksII.Thecourtreversedthegrantofsummaryjudgmentonthecompelling‐interestissueandconcludedthatCWChadwaivedanychallengetothenarrowtailoringconclusionreachedbythedistrictcourt.BecausethecourtfoundConcreteWorksdidnotchallengethedistrictcourt’sconclusionwithrespecttothesecondprongofCroson’sstrictscrutinystandard—i.e.,thattheOrdinanceisnarrowlytailoredtoremedypastandpresentdiscrimination—thecourthelditneednotaddressthisissue.Id.at992,citingConcreteWorksII,36F.3dat1531,n.24.
Thecourtconcludedthatthedistrictcourtlackedauthoritytoaddressthenarrowtailoringissueonremandbecausenoneoftheexceptionstothelawofthecasedoctrineareapplicable.Thedistrictcourt’searlierdeterminationthatDenver’saffirmative‐actionmeasureswerenarrowlytailoredislawofthecaseandbindingontheparties.
5. In re City of Memphis, 293 F.3d 345 (6th Cir. 2002)
Thiscaseisinstructivetothedisparitystudybasedonitsholdingthatalocalorstategovernmentmaybeprohibitedfromutilizingpost‐enactmentevidenceinsupportofaMBE/WBE‐typeprogram.293F.3dat350‐351.TheUnitedStatesCourtofAppealsfortheSixthCircuitheldthatpre‐enactmentevidencewasrequiredtojustifytheCityofMemphis’MBE/WBEProgram.Id.TheSixthCircuitheldthatagovernmentmusthavehadsufficientevidentiaryjustificationforaraciallyconsciousstatuteinadvanceofitspassage.
ThedistrictcourthadruledthattheCitycouldnotintroduceapost‐enactmentstudyasevidenceofacompellinginteresttojustifyitsMBE/WBEProgram.Id.at350‐351.TheSixthCircuitdeniedtheCity’sapplicationforaninterlocutoryappealonthedistrictcourt’sorderandrefusedtogranttheCity’srequesttoappealthisissue.Id.at350‐351.
TheCityarguedthatasubstantialgroundfordifferenceofopinionexistedinthefederalcourtsofappeal.293F.3dat350.Thecourtstatedsomecircuitspermitpost‐enactmentevidencetosupplmentpre‐enactmentevidence.Id.Thisissue,accordingtotheCourt,appearstohavebeenresolvedintheSixthCircuit.Id.TheCourtnotedtheSixthCircuitdecisioninAGCv.Drabik,214F.3d730(6thCir.2000),whichheldthatunderCrosonaStatemusthavesufficientevidentiaryjustificationforaracially‐consciousstatuteinadvanceofitsenactment,andthatgovernmentalentitiesmustidentifythatdiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief.Memphis,293F.3dat350‐351,citingDrabik,214F.3dat738.
TheCourtinMemphissaidthatalthoughDrabikdidnotdirectlyaddresstheadmissibilityofpost‐enactmentevidence,itheldagovernmentalentitymusthavepre‐enactmentevidencesufficienttojustifyaracially‐consciousstatute.293R.3dat351.ThecourtconcludedDrabikindicatestheSixthCircuitwouldnotfavorusingpost‐enactmentevidencetomakethatshowing.Id.at351.UnderDrabik,theCourtinMemphisheldtheCitymustpresentpre‐enactmentevidencetoshowacompellingstateinterest.Id.at351.
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6. Builders Ass’n of Greater Chicago v. County of Cook, Chicago, 256 F.3d 642 (7th Cir. 2001)
ThiscaseisinstructivetothedisparitystudybecauseofitsanalysisoftheCookCountyMBE/WBEprogramandtheevidenceusedtosupportthatprogram.Thedecisionemphasizestheneedforanyrace‐consciousprogramtobebaseduponcredibleevidenceofdiscriminationbythelocalgovernmentagainstMBE/WBEsandtobenarrowlytailoredtoremedyonlythatidentifieddiscrimination.
InBuildersAss’nofGreaterChicagov.CountyofCook,Chicago,256F.3d642(7thCir.2001)theUnitedStatesCourtofAppealsfortheSeventhCircuitheldtheCookCounty,ChicagoMBE/WBEProgramwasunconstitutional.Thecourtconcludedtherewasinsufficientevidenceofacompellinginterest.ThecourtheldtherewasnocredibleevidencethatCookCountyintheawardofconstructioncontactsdiscriminatedagainstanyofthegroups“favored”bytheProgram.ThecourtalsofoundthattheProgramwasnot“narrowlytailored”toremedythewrongsoughttoberedressed,inpartbecauseitwasover‐inclusiveinthedefinitionofminorities.ThecourtnotedthelistofminoritiesincludedgroupsthathavenotbeensubjecttodiscriminationbyCookCounty.
Thecourtconsideredasanunresolvedissuewhetheradifferent,andspecificallyamorepermissive,standardthanstrictscrutinyisapplicabletopreferentialtreatmentonthebasisofsex,ratherthanraceorethnicity.256F.3dat644.ThecourtnotedthattheUnitedStatesSupremeCourtinUnitedStatesv.Virginia(“VMI”),518U.S.515,532andn.6(1996),heldracialdiscriminationtoastricterstandardthansexdiscrimination,althoughthecourtinCookCountystatedthedifferencebetweentheapplicablestandardshasbecome“vanishinglysmall.”Id.ThecourtpointedoutthattheSupremeCourtsaidintheVMIcase,that“partieswhoseektodefendgender‐basedgovernmentactionmustdemonstratean‘exceedinglypersuasive’justificationforthataction…”and,realistically,thelawcanasknomoreofrace‐basedremedieseither.”256F.3dat644,quotinginpartVMI,518U.S.at533.ThecourtindicatedthattheEleventhCircuitCourtofAppealsintheEngineeringContractAssociationofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3d895,910(11thCir.1997)decisioncreatedthe“paradoxthatapublicagencycanprovidestrongerremediesforsexdiscriminationthanforracediscrimination;itisdifficulttoseewhatsensethatmakes.”256F.3dat644.But,sinceCookCountydidnotargueforadifferentstandardfortheminorityandwomen’s“setasideprograms,”thewomen’sprogramthecourtdeterminedmustclearthesame“hurdles”astheminorityprogram.”256F.3dat644‐645.
Thecourtfoundthatsincetheordinancerequiresprimecontractorsonpublicprojectstoreserveasubstantialportionofthesubcontractsforminoritycontractors,whichisinapplicabletoprivateprojects,itis“tobeexpectedthattherewouldbemoresolicitingofthesecontractorsonpublicthanonprivateprojects.”Id.Therefore,thecourtdidnotfindpersuasivethattherewasdiscriminationbasedonthisdifferencealone.256F.3dat645.ThecourtpointedouttheCounty“concededthat[it]hadnospecificevidenceofpre‐enactmentdiscriminationtosupporttheordinance.”256F.3dat645quotingthedistrictcourtdecision,123F.Supp.2dat1093.Thecourtheldthata“publicagencymusthaveastrongevidentiarybasisforthinkingadiscriminatoryremedyappropriatebeforeitadoptstheremedy.”256F.3dat645(emphasisinoriginal).
Thecourtstatedthatminorityenterprisesintheconstructionindustry“tendtobesubcontractors,moreover,becauseasthedistrictcourtfoundnotclearlyerroneously,123F.Supp.2dat1115,theytendtobenewandthereforesmallandrelativelyuntested—factors
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notshowntobeattributabletodiscriminationbytheCounty.”256F.3dat645.ThecourtheldthattherewasnobasisforattributingtotheCountyanydiscriminationthatprimecontractorsmayhaveengagedin.Id.Thecourtnotedthat“[i]fprimecontractorsonCountyprojectswerediscriminatingagainstminoritiesandthiswasknowntotheCounty,whosefundingofthecontractsthusknowinglyperpetuatedthediscrimination,theCountymightbedeemedsufficientlycomplicit…tobeentitledtotakeremedialaction.”Id.But,thecourtfound“ofthatthereisnoevidenceeither.”Id.
ThecourtstatedthatiftheCountyhadbeencomplicitindiscriminationbyprimecontractors,itfound“puzzling”totrytoremedythatdiscriminationbyrequiringdiscriminationinfavorofminoritystockholders,asdistinctfromemployees.256F.3dat646.ThecourtheldthateveniftherecordmadeacaseforremedialactionofthegeneralsortfoundintheMWBEordinancebytheCounty,itwould“flunktheconstitutionaltest”bynotbeingcarefullydesignedtoachievetheostensibleremedialaimandnomore.256F.3dat646.ThecourtheldthatastateandlocalgovernmentthathasdiscriminatedjustagainstblacksmaynotbywayofremedydiscriminateinfavorofblacksandAsianAmericansandwomen.Id.Nor,thecourtstated,mayitdiscriminatemorethanisnecessarytocuretheeffectsoftheearlierdiscrimination.Id.“Normayitcontinuetheremedyinforceindefinitely,withnoefforttodeterminewhether,theremedialpurposeattained,continuedenforcementoftheremedywouldbeagratuitousdiscriminationagainstnonminoritypersons.”Id.Thecourt,therefore,heldthattheordinancewasnot“narrowlytailored”tothewrongthatitseekstocorrect.Id.
ThecourtthusfoundthattheCountybothfailedtoestablishthepremiseforaracialremedy,andalsothattheremedygoesfurtherthanisnecessarytoeliminatetheevilagainstwhichitisdirected.256F.3dat647.Thecourtheldthatthelistof“favoredminorities”includedgroupsthathaveneverbeensubjecttosignificantdiscriminationbyCookCounty.Id.Thecourtfounditunreasonableto“presume”discriminationagainstcertaingroupsmerelyonthebasisofhavinganancestorwhohadbeenborninaparticularcountry.Id.Therefore,thecourtheldtheordinancewasoverinclusive.
ThecourtfoundthattheCountydidnotmakeanyefforttoshowthat,wereitnotforahistoryofdiscrimination,minoritieswouldhave30percent,andwomen10percent,ofCountyconstructioncontracts.256F.3dat647.ThecourtalsorejectedthepropositionadvancedbytheCountyinthiscase—”thatacomparisonofthefractionofminoritysubcontractorsonpublicandprivateprojectsestablisheddiscriminationagainstminoritiesbyprimecontractorsonthelattertypeofproject.”256F.3dat647‐648.
7. Associated Gen. Contractors v. Drabik, 214 F.3d 730 (6th Cir. 2000), affirming Case No. C2‐98‐943, 998 WL 812241 (S.D. Ohio 1998)
ThiscaseisinstructivetothedisparitystudybasedontheanalysisappliedinfindingtheevidenceinsufficienttojustifyanMBE/WBEprogram,andtheapplicationofthenarrowlytailoredtest.TheSixthCircuitCourtofAppealsenjoinedtheenforcementofthestateMBEprogram,andinsodoingreversedstatecourtprecedentfindingtheprogramconstitutional.Thiscaseaffirmedadistrictcourtdecisionenjoiningtheawardofa“set‐aside”contractbasedontheStateofOhio’sMBEprogramwiththeawardofconstructioncontracts.
Thecourtheld,amongotherthings,thatthemereexistenceofsocietaldiscriminationwasinsufficienttosupportaracialclassification.Thecourtfoundthattheeconomicdatawereinsufficientandtoooutdated.ThecourtconcludedtheStatecouldnotestablishacompellinggovernmentalinterestandthatthestatutewasnotnarrowlytailored.Thecourtsaidthestatute
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failedthenarrowtailoringtest,includingbecausetherewasnoevidencethattheStatehadconsideredrace‐neutralremedies.
ThiscaseinvolvesasuitbytheAssociatedGeneralContractorsofOhioandAssociatedGeneralContractorsofNorthwestOhio,representingOhiobuildingcontractorstostoptheawardofaconstructioncontractfortheToledoCorrectionalFacilitytoaminority‐ownedbusiness(“MBE”),inabiddingprocessfromwhichnon‐minority‐ownedfirmswerestatutorilyexcludedfromparticipatingunderOhio’sstateMinorityBusinessEnterpriseAct.214F.3dat733.
AGCofOhioandAGCofNorthwestOhio(Plaintiffs‐Appellees)claimedtheOhioMinorityBusinessEnterpriseAct(“MBEA”)wasunconstitutionalinviolationoftheEqualProtectionClauseoftheFourteenthAmendment.Thedistrictcourtagreed,andpermanentlyenjoinedthestatefromawardinganyconstructioncontractsundertheMBEA.Drabik,DirectoroftheOhioDepartmentofAdministrativeServicesandothersappealedthedistrictcourt’sOrder.Id.at733.TheSixthCircuitCourtofAppealsaffirmedtheOrderofthedistrictcourt,holdingunconstitutionaltheMBEAandenjoiningthestatefromawardinganyconstructioncontractsunderthatstatute.Id.
OhiopassedtheMBEAin1980.Id.at733.Thislegislation“setaside”5%,byvalue,ofallstateconstructionprojectsforbiddingbycertifiedMBEsexclusively.Id.PursuanttotheMBEA,thestatedecidedtosetaside,forMBEsonly,biddingforconstructionoftheToledoCorrectionalFacility’sAdministrationBuilding.Non‐MBEswereexcludedonracialgroundsfrombiddingonthataspectoftheprojectandrestrictedintheirparticipationassubcontractors.Id.
TheCourtnoteditruledin1983thattheMBEAwasconstitutional,seeOhioContractorsAss’nv.Keip,713F.2d167(6thCir.1983).Id.Subsequently,theUnitedStatesSupremeCourtintwolandmarkdecisionsappliedthecriteriaofstrictscrutinyunderwhichsuch“raciallypreferentialset‐asides”weretobeevaluated.Id.(seeCityofRichmondv.J.A.CrosonCo.(1989)andAdarandConstructors,Inc.v.Pena(1995),citationomitted.)TheCourtnotedthatthedecisioninKeipwasamorerelaxedtreatmentaccordedtoequalprotectionchallengestostatecontractingdisputespriortoCroson.Id.at733‐734.
Strictscrutiny.TheCourtfounditisclearagovernmenthasacompellinginterestinassuringthatpublicdollarsdonotservetofinancetheevilofprivateprejudice.Id.at734‐735,citingCroson,488U.S.at492.But,theCourtstated“statisticaldisparityintheproportionofcontractsawardedtoaparticulargroup,standingalonedoesnotdemonstratesuchanevil.”Id.at735.
TheCourtsaidthereisnoquestionthatremedyingtheeffectsofpastdiscriminationconstitutesacompellinggovernmentalinterest.Id.at735.TheCourtstatedtomakethisshowing,astatecannotrelyonmerespeculation,orlegislativepronouncements,ofpastdiscrimination,butrather,theSupremeCourthasheldthestatebearstheburdenofdemonstratingastrongbasisinevidenceforitsconclusionthatremedialactionwasnecessarybyprovingeitherthatthestateitselfdiscriminatedinthepastorwasapassiveparticipantinprivateindustry’sdiscriminatorypractices.Id.at735,quotingCroson,488U.S.at486‐92.
Thus,theCourtconcludedthatthelinchpinoftheCrosonanalysisisitsmandatingofstrictscrutiny,therequirementthataprogrambenarrowlytailoredtoachieveacompellinggovernmentinterest,butaboveallitsholdingthatgovernmentsmustidentifydiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief;explicitfindingsofaconstitutionalorstatutoryviolationmustbemade.Id.at735,quotingCroson,488U.S.at497.
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Statisticalevidence:compellinginterest.TheCourtpointedoutthatproponentsof“raciallydiscriminatorysystems”suchastheMBEAhavesoughttogeneratethenecessaryevidencebyavarietyofmeans,however,sucheffortshavegenerallyfocusedon“mereunderrepresentation”byshowingalesserpercentageofcontractsawardedtoaparticulargroupthanthatgroup’spercentageinthegeneralpopulation.Id.at735.“Rawstatisticaldisparity”ofthissortispartoftheevidenceofferedbyOhiointhiscase,accordingtotheCourt.Id.at736.TheCourtstatedhowever,“suchevidenceofmerestatisticaldisparitieshasbeenfirmlyrejectedasinsufficientbytheSupremeCourt,particularlyinacontextsuchascontracting,wherespecialqualificationsaresorelevant.”Id.
TheCourtsaidthatalthoughOhio’smost“compelling”statisticalevidenceinthiscasecomparedthepercentageofcontractsawardedtominoritiestothepercentageofminority‐ownedbusinessesinOhio,whichtheCourtnotedprovidedstrongerstatisticsthanthestatisticsinCroson,itwasstillinsufficient.Id.at736.TheCourtfoundtheproblemwithOhio’sstatisticalcomparisonwasthatthepercentageofminority‐ownedbusinessesinOhio“didnottakeintoaccounthowmanyofthosebusinesseswereconstructioncompaniesofanysort,letalonehowmanywerequalified,willing,andabletoperformstateconstructioncontracts.”Id.
TheCourtheldthestatisticalevidencethattheOhiolegislaturehadbeforeitwhentheMBEAwasenactedconsistedofdatathatwasdeficient.Id.at736.TheCourtsaidthatmuchofthedatawasseverelylimitedinscope(ODOTcontracts)orwasirrelevanttothiscase(ODOTpurchasingcontracts).Id.TheCourtagainnotedthedatadidnotdistinguishminorityconstructioncontractorsfromminoritybusinessesgenerally,andtherefore“madenoattempttoidentifyminorityconstructioncontractingfirmsthatareready,willing,andabletoperformstateconstructioncontractsofanyparticularsize.”Id.TheCourtalsopointedouttheprogramwasnotnarrowlytailored,becausethestateconcededtheAGCshowedthattheStatehadnotperformedarecentstudy.Id.
TheCourtalsoconcludedthatevenstatisticalcomparisonsthatmightbeapparentlymorepertinent,suchaswiththepercentageofallfirmsqualified,insomeminimalsense,toperformtheworkinquestion,wouldalsofailtosatisfytheCourt’scriteria.Id.at736.“IfMBEscomprise10%ofthetotalnumberofcontractingfirmsinthestate,butonlyget3%ofthedollarvalueofcertaincontracts,thatdoesnotaloneshowdiscrimination,orevendisparity.Itdoesnotaccountfortherelativesizeofthefirms,eitherintermsoftheirabilitytodoparticularworkorintermsofthenumberoftaskstheyhavetheresourcestocomplete.”Id.at736.
TheCourtstatedtheonlycasesfoundtopresentthenecessary“compellinginterest”sufficienttojustifyanarrowlytailoredrace‐basedremedy,arethosethatexpose“pervasive,systematic,andobstinatediscriminatoryconduct.…”Id.at737,quotingAdarand,515U.S.at237.TheCourtsaidthatOhiohadmadenosuchshowinginthiscase.
Narrowtailoring.AsecondandseparatehurdlefortheMBEA,theCourtheld,isitsfailureofnarrowtailoring.TheCourtnotedtheSupremeCourtinAdarandtaughtthatacourtcalledupontoaddressthequestionofnarrowtailoringmustask,“forexample,whethertherewas‘anyconsiderationoftheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipation’ingovernmentcontracting….”Id.at737,quotingCroson,488U.S.at507.TheCourtstatedanarrowly‐tailoredset‐asideprogrammustbeappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminateandmustbelinkedtoidentifieddiscrimination.Id.at737.TheCourtsaidthattheprogrammustalsonotsufferfrom“overinclusiveness.”Id.at737,quotingCroson,515U.S.at506.
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TheCourtfoundtheMBEAsufferedfromdefectsbothofoverandunder‐inclusiveness.Id.at737.BylumpingtogetherthegroupsofBlacks,NativeAmericans,HispanicsandOrientals,theMBEAmaywellprovidepreferencewhere·therehasbeennodiscrimination,andmaynotproviderelieftogroupswherediscriminationmighthavebeenproven.Id.at737.Thus,theCourtsaid,theMBEAwassatisfiedifcontractorsofThaiorigin,whomightneverhavebeenseeninOhiountilrecently,receive10%ofstatecontracts,whileAfrican‐Americansreceivenone.Id.
Inaddition,theCourtfoundthatOhio’sownunderutilizationstatisticssufferfromafatalconceptualflaw:theydonotreporttheactualuseofminorityfirms;theyonlyreporttheuseofminorityfirmswhohavegonetothetroubleofbeingcertifiedandlistedamongthestate’s1,180MBEs.Id.at737.TheCourtsaidtherewasnoexaminationofwhethercontractsarebeingawardedtominorityfirmswhohaveneversoughtsuchpreferencetotakeadvantageofthespecialminorityprogram,forwhateverreason,andwhohavebeenawardedcontractsinopenbidding.Id.
TheCourtpointedoutthedistrictcourttooknoteoftheoutdatedcharacterofanyevidencethatmighthavebeenmarshaledinsupportoftheMBEA,andaddedthatevenifsuchdatahadbeensufficienttojustifythestatutetwentyyearsago,itwouldnotsufficetocontinuetojustifyitforever.Id.at737‐738.TheMBEA,theCourtnoted,hasremainedineffectfortwentyyearsandhasnosetexpiration.Id.at738.TheCourtreiteratedarace‐basedpreferenceprogrammustbeappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.Id.at737.
Finally,theCourtmentionedthatoneofthefactorsCrosonidentifiedasindicativeofnarrowtailoringiswhethernon‐race‐basedmeanswereconsideredasalternativestothegoal.Id.at738.TheCourtconcludedthehistoricalrecordcontainednoevidencethattheOhiolegislaturegaveanyconsiderationtothe·useofrace‐neutralmeanstoincreaseminorityparticipationinstatecontractingbeforeresortingtorace‐basedquotas.Id.at738.
Thedistrictcourthadfoundthatthesupplementationofthestate’sexistingdatawhichmightbeofferedgivenacontinuanceofthecasewouldnotsufficientlyenhancetherelevanceoftheevidencetojustifydelayinthedistrictcourt’shearing.Id.at738.TheCourtstatedthatunderCroson,thestatemusthavehadsufficientevidentiaryjustificationforaracially‐consciousstatuteinadvanceofitspassage.Id.TheCourtsaidthatCrosonrequiredgovernmentalentitiesmustidentifythatdiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief.Id.at738.
TheCourtalsoreferencedthedistrictcourtfindingthatthestatehadbeenlaxinmaintainingthetypeofstatisticsthatwouldbenecessarytoundergirditsaffirmativeactionprogram,andthatthepropermaintenanceofcurrentstatisticsisrelevanttotherequisitenarrowtailoringofsuchaprogram.Id.at738‐739.But,theCourtnotedthestatedoesnotknowhowmanyminority‐ownedbusinessesarenotcertifiedasMBEs,andhowmanyofthemhavebeensuccessfulinobtainingstatecontracts.Id.at739.
ThecourtwasmindfulofthefactitwasstrikingdownanentireclassofprogramsbydeclaringtheStateofOhioMBEstatuteinquestionunconstitutional,andnotedthatitsdecisionwas“notreconcilable”withtheOhioSupremeCourt’sdecisioninRitchieProduce,707N.E.2d871(Ohio1999)(upholdingtheOhioStateMBEProgram).
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8. W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206 (5th Cir. 1999)
Anon‐minoritygeneralcontractorbroughtthisactionagainsttheCityofJacksonandCityofficialsassertingthataCitypolicyanditsminoritybusinessenterpriseprogramforparticipationandconstructioncontractsviolatedtheEqualProtectionClauseoftheU.S.Constitution.
City of Jackson MBE Program.In1985theCityofJacksonadoptedaMBEProgram,whichinitiallyhadagoalof5%ofallcitycontracts.199F.3dat208.Id.The5%goalwasnotbasedonanyobjectivedata.Id.at209.Instead,itwasa“guess”thatwasadoptedbytheCity.Id.Thegoalwaslaterincreasedto15%becauseitwasfoundthat10%ofbusinessesinMississippiwereminority‐owned.Id.
AftertheMBEProgram’sadoption,theCity’sDepartmentofPublicWorksincludedaSpecialNoticetobiddersaspartofitsspecificationsforallCityconstructionprojects.Id.TheSpecialNoticeencouragedprimeconstructioncontractorstoincludeintheirbid15%participationbysubcontractorscertifiedasDisadvantagedBusinessEnterprises(DBEs)and5%participationbythosecertifiedasWBEs.Id.
TheSpecialNoticedefinedaDBEasasmallbusinessconcernthatisownedandcontrolledbysociallyandeconomicallydisadvantagedindividuals,whichhadthesamemeaningasunderSection8(d)oftheSmallBusinessActandsubcontractingregulationspromulgatedpursuanttothatAct.Id.ThecourtfoundthatSection8(d)oftheSBAstatesthatprimecontractorsaretopresumethatsociallyandeconomicallydisadvantagedindividualsincludecertainracialandethnicgroupsoranyotherindividualfoundtobedisadvantagedbytheSBA.Id.
In1991,theMississippilegislaturepassedabillthatwouldallowcitiestosetaside20%ofprocurementforminoritybusiness.Id.at209‐210.TheCityofJacksonCityCouncilvotedtoimplementtheset‐aside,contingentontheCity’sadoptionofadisparitystudy.Id.at210.TheCityconductedadisparitystudyin1994andconcludedthatthetotalunderutilizationofAfrican‐AmericanandAsian‐American‐ownedfirmswasstatisticallysignificant.Id.ThestudyrecommendedthattheCityimplementarangeofMBEgoalsfrom10‐15%.Id.TheCity,however,wasnotsatisfiedwiththestudy,accordingtothecourt,andchosenottoadoptitsconclusions.Id.Instead,theCityretainedits15%MBEgoalanddidnotadoptthedisparitystudy.Id.
W.H. Scott did not meet DBE goal.In1997theCityadvertisedfortheconstructionofaprojectandtheW.H.ScottConstructionCompany,Inc.(Scott)wasthelowestbidder.Id.Scottobtained11.5%WBEparticipation,butitreportedthatthebidsfromDBEsubcontractorshadnotbeenlowbidsand,therefore,itsDBE‐participationpercentagewouldbeonly1%.Id.
AlthoughScottdidnotachievetheDBEgoalandsubsequentlywouldnotconsidersuggestionsforincreasingitsminorityparticipation,theDepartmentofPublicWorksandtheMayor,aswellastheCity’sFinancialLegalDepartments,approvedScott’sbidanditwasplacedontheagendatobeapprovedbytheCityCouncil.Id.TheCityCouncilvotedagainsttheScottbidwithoutcomment.ScottallegedthatitwastoldtheCityrejecteditsbidbecauseitdidnotachievetheDBEgoal,buttheCityallegedthatitwasrejectedbecauseitexceededthebudgetfortheproject.Id.
TheCitysubsequentlycombinedtheprojectwithanotherrenovationprojectandawardedthatcombinedprojecttoadifferentconstructioncompany.Id.at210‐211.Scottmaintainedtherejectionofhisbidwasraciallymotivatedandfiledthissuit.Id.at211.
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District court decision.ThedistrictcourtgrantedScott’smotionforsummaryjudgmentagreeingwithScottthattherelevantPolicyincludednotjusttheSpecialNotice,butthatitalsoincludedtheMBEProgramandPolicydocumentregardingMBEparticipation.Id.at211.ThedistrictcourtfoundthattheMBEPolicywasunconstitutionalbecauseitlackedrequisitefindingstojustifythe15%minority‐participationgoalandsurvivestrictscrutinybasedonthe1989decisionintheCityofRichmond,v.J.A.CrosonCo.Id.Thedistrictcourtstruckdownminority‐participationgoalsfortheCity’sconstructioncontractsonly.Id.at211.ThedistrictcourtfoundthatScott’sbidwasrejectedbecauseScottlackedsufficientminorityparticipation,notbecauseitexceededtheCity’sbudget.Id.Inaddition,thedistrictcourtawardedScottlostprofits.Id.
Standing.TheFifthCircuitdeterminedthatinequalprotectioncaseschallengingaffirmativeactionpolicies,“injuryinfact”forpurposesofestablishingstandingisdefinedastheinabilitytocompeteonanequalfootinginthebiddingprocess.Id.at213.ThecourtstatedthatScottneednotprovethatitlostcontractsbecauseofthePolicy,butonlyprovethattheSpecialNoticeforcesittocompeteonanunequalbasis.Id.Thequestion,therefore,thecourtsaidiswhethertheSpecialNoticeimposesanobligationthatisbornunequallybyDBEcontractorsandnon‐DBEcontractors.Id.at213.
Thecourtfoundthatifanon‐DBEcontractorisunabletoprocure15%DBEparticipation,itmuststillsatisfytheCitythatadequategoodfaitheffortshavebeenmadetomeetthecontractgoalorriskterminationofitscontracts,andthatsucheffortsincludeengaginginadvertising,directsolicitationandfollow‐up,assistanceinattainingbondingorinsurancerequiredbythecontractor.Id.at214.ThecourtconcludedthatalthoughthelanguagedoesnotexpresslyauthorizeaDBEcontractortosatisfyDBE‐participationgoalsbykeepingtherequisitepercentageofworkforitself,itwouldbenonsensicaltointerpretitasprecludingaDBEcontractorfromdoingso.Id.at215.
IfaDBEcontractorperformed15%ofthecontractdollaramount,accordingtothecourt,itcouldsatisfytheparticipationgoalandavoidbothalossofprofitstosubcontractorsandthetimeandexpenseofcomplyingwiththegoodfaithrequirements.Id.at215.Thecourtsaidthatnon‐DBEcontractorsdonothavethisoption,andthus,Scottandothernon‐DBEcontractorsareatacompetitivedisadvantagewithDBEcontractors.Id.
Thecourt,therefore,foundScotthadsatisfiedstandingtobringthelawsuit.
Constitutional strict scrutiny analysis and guidance in determining types of evidence to justify a remedial MBE program.ThecourtfirstrejectedtheCity’scontentionthattheSpecialNoticeshouldnotbesubjecttostrictscrutinybecauseitestablishesgoalsratherthanmandatequotasforDBEparticipation.Id.at215‐217.Thecourtstatedthedistinctionbetweengoalsorquotasisimmaterialbecausethesetechniquesinduceanemployertohirewithaneyetowardmeetinganumericaltarget,andassuch,theywillresultinindividualsbeinggrantedapreferencebecauseoftheirrace.Id.at215.ThecourtalsorejectedtheCity’sargumentthattheDBEclassificationcreatedapreferencebasedon“disadvantage,”notrace.Id.at215‐216.ThecourtfoundthattheSpecialNoticereliedonSection8(d)andSection8(a)oftheSmallBusinessAct,whichprovideexplicitlyforarace‐basedpresumptionofsocialdisadvantage,andthusrequiresstrictscrutiny.Id.at216‐217.
ThecourtdiscussedtheCityofRichmondv.CrosoncaseasprovidingguidanceindeterminingwhattypesofevidencewouldjustifytheenactmentofanMBE‐typeprogram.Id.at217‐218.ThecourtnotedtheSupremeCourtstressedthatagovernmentalentitymustestablishafactualpredicate,tyingitsset‐asidepercentagetoidentifiedinjuriesintheparticularlocalindustry.Id.
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at217.ThecourtpointedoutgiventheSupremeCourtinCroson’semphasisonstatisticalevidence,othercourtsconsideringequalprotectionchallengestominority‐participationprogramshavelookedtodisparityindices,ortocomputationsofdisparitypercentages,indeterminingwhetherCroson’sevidentiaryburdenissatisfied.Id.at218.Thecourtfoundthatdisparitystudiesareprobativeevidencefordiscriminationbecausetheyensurethatthe“relevantstatisticalpool,”ofqualifiedminoritycontractorsisbeingconsidered.Id.at218.
ThecourtinafootnotestatedthatitdidnotattempttocraftaprecisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson“strongbasisinevidence”benchmark.Id.at218,n.11.Thesufficiencyofamunicipality’sfindingsofdiscriminationinalocalindustrymustbeevaluatedonacase‐by‐casebasis.Id.
TheCityarguedthatitwaserrorforthedistrictcourttoignoreitsstatisticalevidencesupportingtheuseofracialpresumptionsinitsDBE‐participationgoals,andhighlightedthedisparitystudyitcommissionedinresponsetoCroson.Id.at218.Thecourtstated,however,thatwhateverprobitythestudy’sfindingsmighthavehadontheanalysisisirrelevanttothecase,becausetheCityrefusedtoadoptthestudywhenitwasissuedin1995.Id.Inaddition,thecourtsaidthestudywasrestrictedtothelettingofprimecontractsbytheCityundertheCity’sProgram,anddidnotincludeananalysisoftheavailabilityandutilizationofqualifiedminoritysubcontractors,therelevantstatisticalpool,intheCity’sconstructionprojects.Id.at218.
ThecourtnotedthathadtheCityadoptedparticularizedfindingsofdiscriminationwithinitsvariousagencies,andsetparticipationgoalsforeachaccordingly,theoutcomeofthedecisionmighthavebeendifferent.Id.at219.AbsentsuchevidenceintheCity’sconstructionindustry,however,thecourtconcludedtheCitylackedthefactualpredicatesrequiredundertheEqualProtectionClausetosupporttheCity’s15%DBE‐participationgoal.Id.Thus,thecourtheldtheCityfailedtoestablishacompellinginterestjustifyingtheMBEprogramortheSpecialNotice,andbecausetheCityfailedastrictscrutinyanalysisonthisground,thecourtdeclinedtoaddresswhethertheprogramwasnarrowlytailored.
Lost profits and damages.ScottsoughtdamagesfromtheCityunder42U.S.C.§1983,includinglostprofits.Id.at219.Thecourt,affirmingthedistrictcourt,concludedthatinlightoftheentirerecordtheCityCouncilrejectedScott’slowbidbecauseScottfailedtomeettheSpecialNotice’sDBE‐participationgoal,notbecauseScott’sbidexceededtheCity’sbudget.Id.at220.Thecourt,therefore,affirmedtheawardoflostprofitstoScott.
9. Monterey Mechanical v. Wilson, 125 F.3d 702 (9th Cir. 1997)
ThiscaseisinstructiveinthattheNinthCircuitanalyzedandheldinvalidtheenforcementofaMBE/WBE‐typeprogram.Althoughtheprogramatissueutilizedtheterm“goals”asopposedto“quotas,”theNinthCircuitrejectedsuchadistinction,holding“[t]herelevantquestionisnotwhetherastatuterequirestheuseofsuchmeasures,butwhetheritauthorizesorencouragesthem.”Thecasealsoisinstructivebecauseitfoundtheuseof“goals”andtheapplicationof“goodfaithefforts”inconnectionwithachievinggoalstotriggerstrictscrutiny.
MontereyMechanicalCo.(the“plaintiff”)submittedthelowbidforaconstructionprojectfortheCaliforniaPolytechnicStateUniversity(the“University”).125F.3d702,704(9thCir.1994).TheUniversityrejectedtheplaintiff’sbidbecausetheplaintifffailedtocomplywithastatestatuterequiringprimecontractorsonsuchconstructionprojectstosubcontract23percentoftheworktoMBE/WBEsor,alternatively,demonstrategoodfaithoutreachefforts.Id.Theplaintiffconductedgoodfaithoutreacheffortsbutfailedtoprovidetherequisitedocumentation;the
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awardeeprimecontractordidnotsubcontractanyportionoftheworktoMBE/WBEsbutdidincludedocumentationofgoodfaithoutreachefforts.Id.
Importantly,theUniversitydidnotconductadisparitystudy,andinsteadarguedthatbecause“the‘goalrequirements’ofthescheme‘[did]notinvolveracialorgenderquotas,set‐asidesorpreferences,’”theUniversitydidnotneedadisparitystudy.Id.at705.TheplaintiffprotestedthecontractawardandsuedtheUniversity’strustees,andanumberofotherindividuals(collectivelythe“defendants”)allegingthestatelawwasviolativeoftheEqualProtectionClause.Id.Thedistrictcourtdeniedtheplaintiff’smotionforaninterlocutoryinjunctionandtheplaintiffappealedtotheNinthCircuitCourtofAppeals.Id.
Thedefendantsfirstarguedthatthestatutewasconstitutionalbecauseittreatedallgeneralcontractorsalike,byrequiringalltocomplywiththeMBE/WBEparticipationgoals.Id.at708.Thecourtheld,however,thataminorityorwomenbusinessenterprisecouldsatisfytheparticipationgoalsbyallocatingtherequisitepercentageofworktoitself.Id.at709.Thecourtheldthatcontrarytothedistrictcourt’sfinding,suchadifferencewasnotdeminimis.Id.
Thedefendant’salsoarguedthatthestatutewasnotsubjecttostrictscrutinybecausethestatutedidnotimposerigidquotas,butratheronlyrequiredgoodfaithoutreachefforts.Id.at710.Thecourtrejectedtheargumentfindingthatalthoughthestatutepermittedawardstobidderswhodidnotmeetthepercentagegoals,“theyarerigidinrequiringpreciselydescribedandmonitoredeffortstoattainthosegoals.”Id.Thecourtciteditsownearlierprecedenttoholdthat“theprovisionsarenotimmunizedfromscrutinybecausetheypurporttoestablishgoalsratherthanquotas…[T]herelevantquestionisnotwhetherastatuterequirestheuseofsuchmeasures,butwhetheritauthorizesorencouragesthem.”Id.at710‐11(internalcitationsandquotationsomitted).ThecourtfoundthatthestatuteencouragedsetasidesandcitedConcreteWorksofColoradov.Denver,36F.3d1512(10thCir.1994),asanalogoussupportfortheproposition.Id.at711.
Thecourtfoundthatthestatutetreatedcontractorsdifferentlybasedupontheirrace,ethnicityandgender,andalthough“wordedintermsofgoalsandgoodfaith,thestatuteimposesmandatoryrequirementswithconcreteness.”Id.Thecourtalsonotedthatthestatutemayimposeadditionalcomplianceexpensesuponnon‐MBE/WBEfirmswhoarerequiredtomakegoodfaithoutreachefforts(e.g.,advertising)toMBE/WBEfirms.Id.at712.
Thecourtthenconductedstrictscrutiny(race),andanintermediatescrutiny(gender)analyses.Id.at712‐13.ThecourtfoundtheUniversitypresented“noevidence”tojustifytherace‐andgender‐basedclassificationsandthusdidnotconsideradditionalissuesofproof.Id.at713.Thecourtfoundthatthestatutewasnotnarrowlytailoredbecausethedefinitionof“minority”wasoverbroad(e.g.,inclusionofAleuts).Id.at714,citingWygantv.JacksonBoardofEducation,476U.S.267,284,n.13(1986)andCityofRichmondv.J.A.Croson,Co.,488U.S.469,505‐06(1989).Thecourtfound“[a]broadprogramthatsweepsinallminoritieswitharemedythatisinnowayrelatedtopastharmscannotsurviveconstitutionalscrutiny.”Id.at714,citingHopwoodv.StateofTexas,78F.3d932,951(5thCir.1996).ThecourtheldthatthestatuteviolatedtheEqualProtectionClause.
10. Eng’g Contractors Ass’n of S. Florida v. Metro. Dade County, 122 F.3d 895 (11th Cir. 1997)
EngineeringContractorsAssociationofSouthFloridav.MetropolitanEngineeringContractorsAssociationisaparamountcaseintheEleventhCircuitandisinstructivetothedisparitystudy.
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ThisdecisionhasbeencitedandappliedbythecourtsinvariouscircuitsthathaveaddressedMBE/WBE‐typeprogramsorlegislationinvolvinglocalgovernmentcontractingandprocurement.
InEngineeringContractorsAssociation,sixtradeorganizations(the“plaintiffs”)filedsuitinthedistrictcourtfortheSouthernDistrictofFlorida,challengingthreeaffirmativeactionprogramsadministeredbyEngineeringContractorsAssociation,Florida,(the“County”)asviolativeoftheEqualProtectionClause.122F.3d895,900(11thCir.1997).ThethreeaffirmativeactionprogramschallengedweretheBlackBusinessEnterpriseprogram(“BBE”),theHispanicBusinessEnterpriseprogram(“HBE”),andtheWomanBusinessEnterpriseprogram,(“WBE”),(collectively“MWBE”programs).Id.TheplaintiffschallengedtheapplicationoftheprogramtoCountyconstructioncontracts.Id.
Forcertainclassesofconstructioncontractsvaluedover$25,000,theCountysetparticipationgoalsof15percentforBBEs,19percentforHBEs,and11percentforWBEs.Id.at901.TheCountyestablishedfive“contractmeasures”toreachtheparticipationgoals:(1)setasides,(2)subcontractorgoals,(3)projectgoals,(4)bidpreferences,and(5)selectionfactors.Onceacontractwasidentifiedascoveredbyaparticipationgoal,areviewcommitteewoulddeterminewhetheracontractmeasureshouldbeutilized.Id.TheCountyCommissionwouldmakethefinaldeterminationanditsdecisionwasappealabletotheCountyManager.Id.TheCountyreviewedtheefficacyoftheMWBEprogramsannually,andreevaluatedthecontinuingviabilityoftheMWBEprogramseveryfiveyears.Id.
Inabenchtrial,thedistrictcourtappliedstrictscrutinytotheBBEandHBEprogramsandheldthattheCountylackedtherequisite“strongbasisinevidence”tosupporttherace‐andethnicity‐consciousmeasures.Id.at902.ThedistrictcourtappliedintermediatescrutinytotheWBEprogramandfoundthatthe“Countyhadpresentedinsufficientprobativeevidencetosupportitsstatedrationaleforimplementingagenderpreference.”Id.Therefore,theCountyhadfailedtodemonstratea“compellinginterest”necessarytosupporttheBBEandHBEprograms,andfailedtodemonstratean“importantinterest”necessarytosupporttheWBEprogram.Id.ThedistrictcourtassumedtheexistenceofasufficientevidentiarybasistosupporttheexistenceoftheMWBEprogramsbutheldtheBBEandHBEprogramswerenotnarrowlytailoredtotheintereststheypurportedtoserve;thedistrictcourtheldtheWBEprogramwasnotsubstantiallyrelatedtoanimportantgovernmentinterest.Id.ThedistrictcourtenteredafinaljudgmentenjoiningtheCountyfromcontinuingtooperatetheMWBEprogramsandtheCountyappealed.TheEleventhCircuitCourtofAppealsaffirmed.Id.at900,903.
Onappeal,theEleventhCircuitconsideredfourmajorissues:
1. Whethertheplaintiffshadstanding.[TheEleventhCircuitansweredthisintheaffirmativeandthatportionoftheopinionisomittedfromthissummary];
2. WhetherthedistrictcourterredinfindingtheCountylackeda“strongbasisinevidence”tojustifytheexistenceoftheBBEandHBEprograms;
3. WhetherthedistrictcourterredinfindingtheCountylackeda“sufficientprobativebasisinevidence”tojustifytheexistenceoftheWBEprogram;and
4. WhethertheMWBEprogramswerenarrowlytailoredtotheintereststheywerepurportedtoserve.
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Id.at903.
TheEleventhCircuitheldthattheBBEandHBEprogramsweresubjecttothestrictscrutinystandardenunciatedbytheU.S.SupremeCourtinCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989).Id.at906.Underthisstandard,“anaffirmativeactionprogrammustbebasedupona‘compellinggovernmentinterest’andmustbe‘narrowlytailored’toachievethatinterest.”Id.TheEleventhCircuitfurthernoted:
“Inpractice,theinterestthatisallegedinsupportofracialpreferencesisalmostalwaysthesame—remedyingpastorpresentdiscrimination.Thatinterestiswidelyacceptedascompelling.Asaresult,thetruetestofanaffirmativeactionprogramisusuallynotthenatureofthegovernment’sinterest,butrathertheadequacyoftheevidenceofdiscriminationofferedtoshowthatinterest.”
Id.(internalcitationsomitted).
Therefore,strictscrutinyrequiresafindingofa“‘strongbasisinevidence’tosupporttheconclusionthatremedialactionisnecessary.”Id.,citingCroson,488U.S.at500).Therequisite“‘strongbasisinevidence’cannotreston‘anamorphousclaimofsocietaldiscrimination,onsimplelegislativeassurancesofgoodintention,oroncongressionalfindingsofdiscriminationinthenationaleconomy.’”Id.at907,citingEnsleyBranch,NAACPv.Seibels,31F.3d1548,1565(11thCir.1994)(citingandapplyingCroson)).However,theEleventhCircuitfoundthatagovernmentalentitycan“justifyaffirmativeactionbydemonstrating‘grossstatisticaldisparities’betweentheproportionofminoritieshired…andtheproportionofminoritieswillingandabletodothework…Anecdotalevidencemayalsobeusedtodocumentdiscrimination,especiallyifbuttressedbyrelevantstatisticalevidence.”Id.(internalcitationsomitted).
Notwithstandingthe“exceedinglypersuasivejustification”languageutilizedbytheSupremeCourtinUnitedStatesv.Virginia,116S.Ct.2264(1996)(evaluatinggender‐basedgovernmentaction),theEleventhCircuitheldthattheWBEprogramwassubjecttotraditionalintermediatescrutiny.Id.at908.Underthisstandard,thegovernmentmustprovide“sufficientprobativeevidence”ofdiscrimination,whichisalesserstandardthanthe“strongbasisinevidence”understrictscrutiny.Id.at910.
TheCountyprovidedtwotypesofevidenceinsupportoftheMWBEprograms:(1)statisticalevidence,and(2)non‐statistical“anecdotal”evidence.Id.at911.Asaninitialmatter,theEleventhCircuitfoundthatinsupportoftheBBEprogram,theCountypermissiblyreliedonsubstantially“post‐enactment”evidence(i.e.,evidencebasedondatarelatedtoyearsfollowingtheinitialenactmentoftheBBEprogram).Id.However,“suchevidencecarrieswithitthehazardthattheprogramatissuemayitselfbemaskingdiscriminationthatmightotherwisebeoccurringintherelevantmarket.”Id.at912.Adistrictcourtshouldnot“speculateaboutwhatthedatamighthaveshownhadtheBBEprogramneverbeenenacted.”Id.
Thestatisticalevidence.TheCountypresentedfivebasiccategoriesofstatisticalevidence:(1)Countycontractingstatistics;(2)Countysubcontractingstatistics;(3)marketplacedatastatistics;(4)TheWainwrightStudy;and(5)TheBrimmerStudy.Id.Insummary,theEleventhCircuitheldthattheCounty’sstatisticalevidence(describedmorefullybelow)wassubjecttomorethanoneinterpretation.Id.at924.Thedistrictcourtfoundthattheevidencewas“insufficienttoformtherequisitestrongbasisinevidenceforimplementingaracialorethnicpreference,andthatitwasinsufficientlyprobativetosupporttheCounty’sstatedrationalefor
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imposingagenderpreference.”Id.Thedistrictcourt’sviewoftheevidencewasapermissibleone.Id.
Countycontractingstatistics.TheCountypresentedastudycomparingthreefactorsforCountynon‐procurementconstructioncontractsovertwotimeperiods(1981‐1991and1993):(1)thepercentageofbiddersthatwereMWBEfirms;(2)thepercentageofawardeesthatwereMWBEfirms;and(3)theproportionofCountycontractdollarsthathadbeenawardedtoMWBEfirms.Id.at912.
TheEleventhCircuitfoundthatnotably,fortheBBEandHBEstatistics,generallytherewereno“consistentlynegativedisparitiesbetweenthebidderandawardeepercentages.Infact,by1993,theBBEandHBEbiddersarebeingawardedmorethantheirproportionate‘share’…whenthebidderpercentagesareusedasthebaseline.”Id.at913.FortheWBEstatistics,thebidder/awardeestatisticswere“decidedlymixed”asacrosstherangeofCountyconstructioncontracts.Id.
TheCountythenrefinedthosestatisticsbyaddinginthetotalpercentageofannualCountyconstructiondollarsawardedtoMBE/WBEs,bycalculating“disparityindices”foreachprogramandclassificationofconstructioncontract.TheEleventhCircuitexplained:
“[A]disparityindexcomparestheamountofcontractawardsagroupactuallygottotheamountwewouldhaveexpectedittogetbasedonthatgroup’sbiddingactivityandawardeesuccessrate.Morespecifically,adisparityindexmeasurestheparticipationofagroupinCountycontractingdollarsbydividingthatgroup’scontractdollarpercentagebytherelatedbidderorawardeepercentage,andmultiplyingthatnumberby100percent.”
Id.at914.“Theutilityofdisparityindicesorsimilarmeasures…hasbeenrecognizedbyanumberoffederalcircuitcourts.”Id.
TheEleventhCircuitfoundthat“[i]ngeneral…disparityindicesof80percentorgreater,whichareclosetofullparticipation,arenotconsideredindicationsofdiscrimination.”Id.TheEleventhCircuitnotedthat“theEEOC’sdisparateimpactguidelinesusethe80percenttestastheboundarylinefordeterminingaprimafaciecaseofdiscrimination.”Id.,citing29CFR§1607.4D.Inaddition,nocircuitthathas“explicitlyendorsedtheuseofdisparityindices[has]indicatedthatanindexof80percentorgreatermightbeprobativeofdiscrimination.”Id.,citingConcreteWorksv.City&CountyofDenver,36F.3d1513,1524(10thCir.1994)(creditingdisparityindicesrangingfrom0%to3.8%);ContractorsAss’nv.CityofPhiladelphia,6F.3d990(3dCir.1993)(creditingdisparityindexof4%).
Aftercalculationofthedisparityindices,theCountyappliedastandarddeviationanalysistotestthestatisticalsignificanceoftheresults.Id.at914.“Thestandarddeviationfiguredescribestheprobabilitythatthemeasureddisparityistheresultofmerechance.”Id.TheEleventhCircuithadpreviouslyrecognized“[s]ocialscientistsconsiderafindingoftwostandarddeviationssignificant,meaningthereisaboutonechancein20thattheexplanationforthedeviationcouldberandomandthedeviationmustbeaccountedforbysomefactorotherthanchance.”Id.
ThestatisticspresentedbytheCountyindicated“statisticallysignificantunderutilizationofBBEsinCountyconstructioncontracting.”Id.at916.Theresultswere“lessdramatic”forHBEsandmixedasbetweenfavorableandunfavorableforWBEs.Id.
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TheEleventhCircuitthenexplainedtheburdenofproof:
“[O]ncetheproponentofaffirmativeactionintroducesitsstatisticalproofasevidenceofitsremedialpurpose,therebysupplyingthe[district]courtwiththemeansfordeterminingthat[it]hadafirmbasisforconcludingthatremedialactionwasappropriate,itisincumbentuponthe[plaintiff]toprovetheircase;theycontinuetobeartheultimateburdenofpersuadingthe[district]courtthatthe[defendant’s]evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose,orthattheplaninstitutedonthebasisofthisevidencewasnotsufficiently‘narrowlytailored.”
Id.(internalcitationsomitted).
TheEleventhCircuitnotedthataplaintiffhasatleastthreemethodstorebuttheinferenceofdiscriminationwitha“neutralexplanation”by:“(1)showingthatthestatisticsareflawed;(2)demonstratingthatthedisparitiesshownbythestatisticsarenotsignificantoractionable;or(3)presentingcontrastingstatisticaldata.”Id.(internalquotationsandcitationsomitted).TheEleventhCircuitheldthattheplaintiffsproduced“sufficientevidencetoestablishaneutralexplanationforthedisparities.”Id.
Theplaintiffsallegedthatthedisparitieswere“betterexplainedbyfirmsizethanbydiscrimination…[because]minorityandfemale‐ownedfirmstendtobesmaller,andthatitstandstoreasonsmallerfirmswillwinsmallercontracts.”Id.at916‐17.TheplaintiffsproducedCensusdataindicating,onaverage,minority‐andfemale‐ownedconstructionfirmsinEngineeringContractorsAssociationweresmallerthannon‐MBE/WBEfirms.Id.at917.TheEleventhCircuitfoundthattheplaintiff’sexplanationofthedisparitieswasa“plausibleone,inlightoftheuncontrovertedevidencethatMBE/WBEconstructionfirmstendtobesubstantiallysmallerthannon‐MBE/WBEfirms.”Id.
Additionally,theEleventhCircuitnotedthattheCounty’sownexpertadmittedthat“firmsizeplaysasignificantroleindeterminingwhichfirmswincontracts.”Id.Theexpertstated:
Thesizeofthefirmhasgottobeamajordeterminantbecauseofcoursesomefirmsaregoingtobelarger,aregoingtobebetterprepared,aregoingtobeinagreaternaturalcapacitytobeabletoworkonsomeofthecontractswhileotherssimplybyvirtueoftheirsmallsizesimplywouldnotbeabletodoit.Id.
TheEleventhCircuitthensummarized:
Becausetheyarebigger,biggerfirmshaveabiggerchancetowinbiggercontracts.Itfollowsthat,allotherfactorsbeingequalandinaperfectlynondiscriminatorymarket,onewouldexpectthebigger(onaverage)non‐MWBEfirmstogetadisproportionatelyhigherpercentageoftotalconstructiondollarsawardedthanthesmallerMWBEfirms.Id.
Inanticipationofsuchanargument,theCountyconductedaregressionanalysistocontrolforfirmsize.Id.Aregressionanalysisis“astatisticalprocedurefordeterminingtherelationshipbetweenadependentandindependentvariable,e.g.,thedollarvalueofacontractawardandfirmsize.”Id.(internalcitationsomitted).Thepurposeoftheregressionanalysisis“todeterminewhethertherelationshipbetweenthetwovariablesisstatisticallymeaningful.”Id.
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TheCounty’sregressionanalysissoughttoidentifydisparitiesthatcouldnotbeexplainedbyfirmsize,andtheoreticallyinsteadbasedonanotherfactor,suchasdiscrimination.Id.TheCountyconductedtworegressionanalysesusingtwodifferentproxiesforfirmsize:(1)totalawardedvalueofallcontractsbidon;and(2)largestsinglecontractawarded.Id.TheregressionanalysesaccountedformostofthenegativedisparitiesregardingMBE/WBEparticipationinCountyconstructioncontracts(i.e.,mostoftheunfavorabledisparitiesbecamestatisticallyinsignificant,correspondingtostandarddeviationvalueslessthantwo).Id.
Basedonanevaluationoftheregressionanalysis,thedistrictcourtheldthatthedemonstrateddisparitieswereattributabletofirmsizeasopposedtodiscrimination.Id.at918.Thedistrictcourtconcludedthatthefewunexplaineddisparitiesthatremainedafterregressingforfirmsizewereinsufficienttoprovidetherequisite“strongbasisinevidence”ofdiscriminationofBBEsandHBEs.Id.TheEleventhCircuitheldthatthisdecisionwasnotclearlyerroneous.Id.
WithrespecttotheBBEstatistics,theregressionanalysisexplainedallbutonenegativedisparity,foronetypeofconstructioncontractbetween1989‐1991.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisdidnotconstitutea“strongbasisinevidence”ofdiscrimination.Id.
WithrespecttotheHBEstatistics,oneoftheregressionmethodsfailedtoexplaintheunfavorabledisparityforonetypeofcontractbetween1989‐1991,andbothregressionmethodsfailedtoexplaintheunfavorabledisparityforanothertypeofcontractduringthatsametimeperiod.Id.However,by1993,bothregressionmethodsaccountedforalloftheunfavorabledisparities,andoneofthedisparitiesforonetypeofcontractwasactuallyfavorableforHBEs.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisdidnotconstitutea“strongbasisinevidence”ofdiscrimination.Id.
Finally,withrespecttotheWBEstatistics,theregressionanalysisexplainedallbutonenegativedisparity,foronetypeofconstructioncontractinthe1993period.Id.Theregressionanalysisexplainedalloftheothernegativedisparities,andinthe1993period,adisparityforonetypeofcontractwasactuallyfavorabletoWBEs.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisevidencewasnot“sufficientlyprobativeofdiscrimination.”Id.
TheCountyarguedthatthedistrictcourterroneouslyreliedonthedisaggregateddata(i.e.,brokendownbycontracttype)asopposedtotheconsolidatedstatistics.Id.at919.ThedistrictcourtdeclinedtoassigndispositiveweighttotheaggregateddatafortheBBEstatisticsfor1989‐1991because(1)theaggregateddatafor1993didnotshownegativedisparitieswhenregressedforfirmsize,(2)theBBEdisaggregateddataleftonlyoneunexplainednegativedisparityforonetypeofcontractfor1989‐1991whenregressedforfirmsize,and(3)“theCounty’sownexperttestifiedastotheutilityofexaminingthedisaggregateddata‘insofarastheyreflectdifferentkindsofwork,differentbiddingpractices,perhapsavarietyofotherfactorsthatcouldmakethemheterogeneouswithoneanother.”Id.
Additionally,thedistrictcourtnoted,andtheEleventhCircuitfoundthat“theaggregationofdisparitystatisticsfornonheterogenousdatapopulationscangiverisetoastatisticalphenomenonknownas‘Simpson’sParadox,’whichleadstoillusorydisparitiesinimproperlyaggregateddatathatdisappearwhenthedataaredisaggregated.”Id.at919,n.4(internalcitationsomitted).“Underthosecircumstances,”theEleventhCircuitheldthatthedistrictcourtdidnoterrinassigninglessweighttotheaggregateddata,infindingtheaggregateddataforBBEsfor1989‐1991didnotprovidea“strongbasisinevidence”ofdiscrimination,orinfinding
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thatthedisaggregateddataformedaninsufficientbasisofsupportforanyoftheMBE/WBEprogramsgiventheapplicableconstitutionalrequirements.Id.at919.
Countysubcontractingstatistics. TheCountyperformedasubcontractingstudytomeasureMBE/WBEparticipationintheCounty’ssubcontractingbusinesses.ForeachMBE/WBEcategory(BBE,HBE,andWBE),“thestudycomparedtheproportionofthedesignatedgroupthatfiledasubcontractor’sreleaseoflienonaCountyconstructionprojectbetween1991and1994withtheproportionofsalesandreceiptdollarsthatthesamegroupreceivedduringthesametimeperiod.”Id.
Thedistrictcourtfoundthestatisticalevidenceinsufficienttosupporttheuseofrace‐andethnicity‐consciousmeasures,notingproblemswithsomeofthedatameasures.Id.at920.
Mostnotably,thedenominatorusedinthecalculationoftheMWBEsalesandreceiptspercentagesisbaseduponthetotalsalesandreceiptsfromallsourcesforthefirmfilingasubcontractor’sreleaseoflienwiththeCounty.Thatmeans,forinstance,thatifanationwidenon‐MWBEcompanyperforming99percentofitsbusinessoutsideofDadeCountyfiledasinglesubcontractor’sreleaseoflienwiththeCountyduringtherelevanttimeframe,allofitssalesandreceiptsforthattimeframewouldbecountedinthedenominatoragainstwhichMWBEsalesandreceiptsarecompared.Asthedistrictcourtpointedout,thatisnotareasonablewaytomeasureDadeCountysubcontractingparticipation.
Id.TheCounty’sargumentthatastrongmajority(72%)ofthesubcontractorswerelocatedinDadeCountydidnotrenderthedistrictcourt’sdecisiontofailtocreditthestudyerroneous.Id.
Marketplacedatastatistics. TheCountyconductedanotherstatisticalstudy“toseewhatthedifferencesareinthemarketplaceandwhattherelationshipsareinthemarketplace.”Id.Thestudywasbasedonasampleof568contractors,fromapoolof10,462firms,thathadfileda“certificateofcompetency”withDadeCountyasofJanuary1995.Id.Theselectedfirmsparticipatedinatelephonesurveyinquiringabouttherace,ethnicity,andgenderofthefirm’sowner,andaskedforinformationonthefirm’stotalsalesandreceiptsfromallsources.Id.TheCounty’sexpertthenstudiedthedatatodetermine“whethermeaningfulrelationshipsexistedbetween(1)therace,ethnicity,andgenderofthesurveyedfirmowners,and(2)thereportedsalesandreceiptsofthatfirm.Id.Theexpert’shypothesiswasthatunfavorabledisparitiesmaybeattributabletomarketplacediscrimination.Theexpertperformedaregressionanalysisusingthenumberofemployeesasaproxyforsize.Id.
TheEleventhCircuitfirstnotedthatthestatisticalpoolusedbytheCountywassubstantiallylargerthantheactualnumberoffirms,willing,able,andqualifiedtodotheworkasthestatisticalpoolrepresentedallthosefirmsmerelylicensedasaconstructioncontractor.Id.Althoughthisfactordidnotrenderthestudymeaningless,thedistrictcourtwasentitledtoconsiderthatinevaluatingtheweightofthestudy.Id.at921.TheEleventhCircuitquotedtheSupremeCourtforthefollowingproposition:“[w]henspecialqualificationsarerequiredtofillparticularjobs,comparisonstothegeneralpopulation(ratherthantothesmallergroupofindividualswhopossessthenecessaryqualifications)mayhavelittleprobativevalue.”Id.,quotingCroson,488U.S.at501,quotingHazelwoodSch.Dist.v.UnitedStates,433U.S.299,308n.13(1977).
TheEleventhCircuitfoundthatafterregressingforfirmsize,neithertheBBEnorWBEdatashowedstatisticallysignificantunfavorabledisparities.Id.Althoughthemarketplacedatadid
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revealunfavorabledisparitiesevenafteraregressionanalysis,thedistrictcourtwasnotrequiredtoassignthosedisparitiescontrollingweight,especiallyinlightofthedissimilarresultsoftheCountyContractingStatistics,discussedsupra.Id.
TheWainwrightStudy. TheCountyalsointroducedastatisticalanalysispreparedbyJonWainwright,analyzing“thepersonalandfinancialcharacteristicsofself‐employedpersonsworkingfull‐timeintheDadeCountyconstructionindustry,basedondatafromthe1990PublicUseMicrodataSampledatabase”(derivedfromthedecennialcensus).Id.Thestudy“(1)comparedconstructionbusinessownershipratesofMBE/WBEstothoseofnon‐MBE/WBEs,and(2)analyzeddisparitiesinpersonalincomebetweenMBE/WBEandnon‐MBE/WBEbusinessowners.”Id.“Thestudyconcludedthatblacks,Hispanics,andwomenarelesslikelytoownconstructionbusinessesthansimilarlysituatedwhitemales,andMBE/WBEsthatdoentertheconstructionbusinessearnlessmoneythansimilarlysituatedwhitemales.”Id.
Withrespecttothefirstconclusion,Wainwrightcontrolledfor“humancapital”variables(education,yearsoflabormarketexperience,maritalstatus,andEnglishproficiency)and“financialcapital”variables(interestanddividendincome,andhomeownership).Id.Theanalysisindicatedthatblacks,Hispanicsandwomenentertheconstructionbusinessatlowerratesthanwouldbeexpected,oncenumerosity,andidentifiedhumanandfinancialcapitalarecontrolledfor.Id.Thedisparitiesforblacksandwomen(butnotHispanics)weresubstantialandstatisticallysignificant.Id.at922.Theunderlyingtheoryofthisbusinessownershipcomponentofthestudyisthatanysignificantdisparitiesremainingaftercontrolofvariablesareduetotheongoingeffectsofpastandpresentdiscrimination.Id.
TheEleventhCircuitheld,inlightofCroson,thedistrictcourtneednothaveacceptedthistheory.Id.TheEleventhCircuitquotedCroson,inwhichtheSupremeCourtrespondedtoasimilarargumentadvancedbytheplaintiffsinthatcase:“Therearenumerousexplanationsforthisdearthofminorityparticipation,includingpastsocietaldiscriminationineducationandeconomicopportunitiesaswellasbothblackandwhitecareerandentrepreneurialchoices.Blacksmaybedisproportionatelyattractedtoindustriesotherthanconstruction.”Id.,quotingCroson,488U.S.at503.FollowingtheSupremeCourtinCroson,theEleventhCircuitheld“thedisproportionateattractionofaminoritygrouptonon‐constructionindustriesdoesnotmeanthatdiscriminationintheconstructionindustryisthereason.”Id.,quotingCroson,488U.S.at503.Additionally,thedistrictcourthadevidencethatbetween1982and1987,therewasasubstantialgrowthrateofMBE/WBEfirmsasopposedtonon‐MBE/WBEfirms,whichwouldfurthernegatethepropositionthattheconstructionindustrywasdiscriminatingagainstminority‐andwomen‐ownedfirms.Id.at922.
WithrespecttothepersonalincomecomponentoftheWainwrightstudy,afterregressionanalyseswereconducted,onlytheBBEstatisticsindicatedastatisticallysignificantdisparityratio.Id.at923.However,theEleventhCircuitheldthedistrictcourtwasnotrequiredtoassignthedisparitycontrollingweightbecausethestudydidnotregressforfirmsize,andinlightoftheconflictingstatisticalevidenceintheCountyContractingStatisticsandMarketplaceDataStatistics,discussedsupra,whichdidregressforfirmsize.Id.
TheBrimmerStudy. ThefinalstudypresentedbytheCountywasconductedunderthesupervisionofDr.AndrewF.Brimmerandconcernedonlyblack‐ownedfirms.Id.Thekeycomponentofthestudywasananalysisofthebusinessreceiptsofblack‐ownedconstructionfirmsfortheyearsof1977,1982and1987,basedontheCensusBureau’sSurveyofMinority‐andWomen‐OwnedBusinesses,producedeveryfiveyears.Id.Thestudysoughttodetermine
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theexistenceofdisparitiesbetweensalesandreceiptsofblack‐ownedfirmsinDadeCountycomparedtothesalesandreceiptsofallconstructionfirmsinDadeCounty.Id.
Thestudyindicatedsubstantialdisparitiesin1977and1987butnot1982.Id.TheCountyallegedthattheabsenceofdisparityin1982wasduetosubstantialrace‐consciousmeasuresforamajorconstructioncontract(Metrorailproject),andnotduetoalackofdiscriminationintheindustry.Id.However,thestudymadenoattempttofilterfortheMetrorailprojectand“complete[ly]fail[ed]”toaccountforfirmsize.Id.Accordingly,theEleventhCircuitfoundthedistrictcourtpermissiblydiscountedtheresultsoftheBrimmerstudy.Id.at924.
Anecdotalevidence. Inaddition,theCountypresentedasubstantialamountofanecdotalevidenceofperceiveddiscriminationagainstBBEs,asmallamountofsimilaranecdotalevidencepertainingtoWBEs,andnoanecdotalevidencepertainingtoHBEs.Id.TheCountypresentedthreebasicformsofanecdotalevidence:“(1)thetestimonyoftwoCountyemployeesresponsibleforadministeringtheMBE/WBEprograms;(2)thetestimony,primarilybyaffidavit,oftwenty‐threeMBE/WBEcontractorsandsubcontractors;and(3)asurveyofblack‐ownedconstructionfirms.”Id.
TheCountyemployeestestifiedthatthedecentralizedstructureoftheCountyconstructioncontractingsystemaffordsgreatdiscretiontoCountyemployees,whichinturncreatestheopportunityfordiscriminationtoinfectthesystem.Id.Theyalsotestifiedtospecificincidentsofdiscrimination,forexample,thatMBE/WBEscomplainedofreceivinglengthierpunchliststhantheirnon‐MBE/WBEcounterparts.Id.TheyalsotestifiedthatMBE/WBEsencounterdifficultiesinobtainingbondingandfinancing.Id.
TheMBE/WBEcontractorsandsubcontractorstestifiedtonumerousincidentsofperceiveddiscriminationintheDadeCountyconstructionmarket,including:
Situationsinwhichaprojectforemanwouldrefusetodealdirectlywithablackorfemalefirmowner,insteadpreferringtodealwithawhiteemployee;instancesinwhichanMWBEownerknewitselftobethelowbidderonasubcontractingproject,butwasnotawardedthejob;instancesinwhichalowbidbyanMWBEwas“shopped”tosolicitevenlowerbidsfromnon‐MWBEfirms;instancesinwhichanMWBEownerreceivedaninvitationtobidonasubcontractwithinadayofthebidduedate,togetherwitha“letterofunavailability”fortheMWBEownertosigninordertoobtainawaiverfromtheCounty;andinstancesinwhichanMWBEsubcontractorwashiredbyaprimecontractor,butsubsequentlywasreplacedwithanon‐MWBEsubcontractorwithindaysofstartingworkontheproject.
Id.at924‐25.
Finally,theCountysubmittedastudypreparedbyDr.JoeE.Feagin,comprisedofinterviewsof78certifiedblack‐ownedconstructionfirms.Id.at925.Theintervieweesreportedsimilarinstancesofperceiveddiscrimination,including:“difficultyinsecuringbondingandfinancing;slowpaymentbygeneralcontractors;unfairperformanceevaluationsthatweretaintedbyracialstereotypes;difficultyinobtaininginformationfromtheCountyoncontractingprocesses;andhigherpricesonequipmentandsuppliesthanwerebeingchargedtonon‐MBE/WBEfirms.”Id.
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TheEleventhCircuitfoundthatnumerousblack‐andsomefemale‐ownedconstructionfirmsinDadeCountyperceivedthattheywerethevictimsofdiscriminationandtwoCountyemployeesalsobelievedthatdiscriminationcouldtainttheCounty’sconstructioncontractingprocess.Id.However,suchanecdotalevidenceishelpful“onlywhenit[is]combinedwithandreinforcedbysufficientlyprobativestatisticalevidence.”Id.InherpluralityopinioninCroson,JusticeO’Connorfoundthat“evidenceofapatternofindividualdiscriminatoryactscan,ifsupportedbyappropriatestatisticalproof,lendsupporttoalocalgovernment’sdeterminationthatbroaderremedialreliefisjustified.”Id.,quotingCroson,488U.S.at509(emphasisaddedbytheEleventhCircuit).Accordingly,theEleventhCircuitheldthat“anecdotalevidencecanplayanimportantroleinbolsteringstatisticalevidence,butthatonlyintherarecasewillanecdotalevidencesufficestandingalone.”Id.at925.TheEleventhCircuitalsocitedtoopinionsfromtheThird,NinthandTenthCircuitsassupportingthesameproposition.Id.at926.TheEleventhCircuitaffirmedthedecisionofthedistrictcourtenjoiningthecontinuedoperationoftheMBE/WBEprogramsbecausetheydidnotrestona“constitutionallysufficientevidentiaryfoundation.”Id.
AlthoughtheEleventhCircuitdeterminedthattheMBE/WBEprogramdidnotsurviveconstitutionalmusterduetotheabsenceofasufficientevidentiaryfoundation,theEleventhCircuitproceededwiththesecondprongofthestrictscrutinyanalysisofdeterminingwhethertheMBE/WBEprogramswerenarrowlytailored(BBEandHBEprograms)orsubstantiallyrelated(WBEprogram)tothelegitimategovernmentinteresttheypurportedtoserve,i.e.,“remedyingtheeffectsofpresentandpastdiscriminationagainstblacks,Hispanics,andwomenintheDadeCountyconstructionmarket.”Id.
Narrowtailoring. “Theessenceofthe‘narrowlytailored’inquiryisthenotionthatexplicitlyracialpreferences…mustonlybea‘lastresort’option.”Id.,quotingHayesv.NorthSideLawEnforcementOfficersAss’n,10F.3d207,217(4thCir.1993)andcitingCroson,488U.S.at519(Kennedy,J.,concurringinpartandconcurringinthejudgment)(“[T]hestrictscrutinystandard…forbidstheuseofevennarrowlydrawnracialclassificationsexceptasalastresort.”).
TheEleventhCircuithasidentifiedfourfactorstoevaluatewhetherarace‐orethnicity‐consciousaffirmativeactionprogramisnarrowlytailored:(1)“thenecessityforthereliefandtheefficacyofalternativeremedies;(2)theflexibilityanddurationoftherelief;(3)therelationshipofnumericalgoalstotherelevantlabormarket;and(4)theimpactofthereliefontherightsofinnocentthirdparties.”Id.at927,citingEnsleyBranch,31F.3dat1569.Thefourfactorsprovide“ausefulanalyticalstructure.”Id.at927.TheEleventhCircuitfocusedonlyonthefirstfactorinthepresentcase“becausethatiswheretheCounty’sMBE/WBEprogramsaremostproblematic.”Id.
TheEleventhCircuit
flatlyreject[ed]theCounty’sassertionthat‘givenastrongbasisinevidenceofarace‐basedproblem,arace‐basedremedyisnecessary.’Thatissimplynotthelaw.Ifarace‐neutralremedyissufficienttocurearace‐basedproblem,thenarace‐consciousremedycanneverbenarrowlytailoredtothatproblem.”Id.,citingCroson,488U.S.at507(holdingthataffirmativeactionprogramwasnotnarrowlytailoredwhere“theredoesnotappeartohavebeenanyconsiderationoftheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipationincitycontracting”)…SupremeCourtdecisionsteachthatarace‐consciousremedyisnotmerelyoneofmanyequallyacceptablemedicationsthegovernmentmayusetotreatarace‐basedproblem.Instead,itisthestrongestof
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medicines,withmanypotentialsideeffects,andmustbereservedforthoseseverecasesthatarehighlyresistanttoconventionaltreatment.
Id.at927.
TheEleventhCircuitheldthattheCounty“clearlyfailedtogiveseriousandgoodfaithconsiderationtotheuseofrace‐andethnicity‐neutralmeasures.”Id.Rather,thedeterminationofthenecessitytoestablishtheMWBEprogramswasbaseduponaconclusorylegislativestatementastoitsnecessity,whichinturnwasbaseduponan“equallyconclusoryanalysis”intheBrimmerstudy,andareportthattheSBAonlywasabletodirect5percentofSBAfinancingtoblack‐ownedbusinessesbetween1968‐1980.Id.
TheCountyadmitted,andtheEleventhCircuitconcluded,thattheCountyfailedtogiveanyconsiderationtoanyalternativetotheHBEaffirmativeactionprogram.Id.at928.Moreover,theEleventhCircuitfoundthatthetestimonyoftheCounty’sownwitnessesindicatedtheviabilityofrace‐andethnicity‐neutralmeasurestoremedymanyoftheproblemsfacingblack‐andHispanic‐ownedconstructionfirms.Id.TheCountyemployeesidentifiedproblems,virtuallyallofwhichwererelatedtotheCounty’sownprocessesandprocedures,including:“thedecentralizedCountycontractingsystem,whichaffordsahighlevelofdiscretiontoCountyemployees;thecomplexityofCountycontractspecifications;difficultyinobtainingbonding;difficultyinobtainingfinancing;unnecessarybidrestrictions;inefficientpaymentprocedures;andinsufficientorinefficientexchangeofinformation.”Id.TheEleventhCircuitfoundthattheproblemsfacingMBE/WBEcontractorswere“institutionalbarriers”toentryfacingeverynewentrantintotheconstructionmarket,andwereperhapsaffectingtheMBE/WBEcontractorsdisproportionatelyduetothe“institutionalyouth”ofblack‐andHispanic‐ownedconstructionfirms.Id.“Itfollowsthatthosefirmsshouldbehelpedthemostbydismantlingthosebarriers,somethingtheCountycoulddoatleastinsubstantialpart.”Id.
TheEleventhCircuitnotedthattherace‐andethnicity‐neutraloptionsavailabletotheCountymirroredthoseavailableandcitedbyJusticeO’ConnorinCroson:
[T]hecityhasatitsdisposalawholearrayofrace‐neutralmeasurestoincreasetheaccessibilityofcitycontractingopportunitiestosmallentrepreneursofallraces.Simplificationofbiddingprocedures,relaxationofbondingrequirements,andtrainingandfinancialaidfordisadvantagedentrepreneursofallraceswouldopenthepubliccontractingmarkettoallthosewhohavesufferedtheeffectsofpastsocietaldiscriminationandneglect…Thecitymayalsoacttoprohibitdiscriminationintheprovisionofcreditorbondingbylocalsuppliersandbanks.
Id.,quotingCroson,488U.S.at509‐10.TheEleventhCircuitfoundthatexceptforsome“half‐heartedprograms”consistingof“limitedtechnicalandfinancialaidthatmightbenefitBBEsandHBEs,”theCountyhadnot“seriouslyconsidered”ortriedmostoftherace‐andethnicity‐neutralalternativesavailable.Id.at928.“Mostnotably…theCountyhasnottakenanyactionwhatsoevertoferretoutandrespondtoinstancesofdiscriminationifandwhentheyhaveoccurredintheCounty’sowncontractingprocess.”Id.
TheEleventhCircuitfoundthattheCountyhadtakennostepsto“inform,educate,discipline,orpenalize”discriminatorymisconductbyitsownemployees.Id.at929.NorhadtheCountypassedanylocalordinancesexpresslyprohibitingdiscriminationbylocalcontractors,subcontractors,suppliers,bankers,orinsurers.Id.“Insteadofturningtorace‐andethnicity‐
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consciousremediesasalastresort,theCountyhasturnedtothemasafirstresort.”Accordingly,theEleventhCircuitheldthateveniftheBBEandHBEprogramsweresupportedbytherequisiteevidentiaryfoundation,theyviolatedtheEqualProtectionClausebecausetheywerenotnarrowlytailored.Id.
Substantialrelationship. TheEleventhCircuitheldthatduetotherelaxed“substantialrelationship”standardforgender‐consciousprograms,iftheWBEprogramresteduponasufficientevidentiaryfoundation,itcouldpassthesubstantialrelationshiprequirement.Id.However,becauseitdidnotrestuponasufficientevidentiaryfoundation,theWBEprogramcouldnotpassconstitutionalmuster.Id.
Foralloftheforegoingreasons,theEleventhCircuitaffirmedthedecisionofthedistrictcourtdeclaringtheMBE/WBEprogramsunconstitutionalandenjoiningtheircontinuedoperation.
11. Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d 1513 (10th Cir. 1994)
ThecourtconsideredwhethertheCityandCountyofDenver’srace‐andgender‐consciouspubliccontractawardprogramcompliedwiththeFourteenthAmendment’sguaranteeofequalprotectionofthelaws.Plaintiff‐AppellantConcreteWorksofColorado,Inc.(“ConcreteWorks”)appealedthedistrictcourt’ssummaryjudgmentorderupholdingtheconstitutionalityofDenver’spubliccontractprogram.ThecourtconcludedthatgenuineissuesofmaterialfactexistwithregardtotheevidentiarysupportthatDenverpresentstodemonstratethatitsprogramsatisfiestherequirementsofCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989).Accordingly,thecourtreversedandremanded.36F.3d1513(10thCir.1994).
Background.In,1990,theDenverCityCouncilenactedOrdinance(“Ordinance”)toenablecertifiedracialminoritybusinessenterprises(“MBEs”)1andwomen‐ownedbusinessenterprises(“WBEs”)toparticipateinpublicworksprojects“toanextentapproximatingthelevelof[their]availabilityandcapacity.”Id.at1515.ThisOrdinancewasthemostrecentinaseriesofprovisionsthattheDenverCityCouncilhasadoptedsince1983toremedyperceivedraceandgenderdiscriminationinthedistributionofpublicandprivateconstructioncontracts.Id.at1516.
In1992,ConcreteWorks,anonminorityandmale‐ownedconstructionfirm,filedthisEqualProtectionClausechallengetotheOrdinance.Id.ConcreteWorksallegedthattheOrdinancecausedittolosethreeconstructioncontractsforfailuretocomplywitheitherthestatedMBEandWBEparticipationgoalsorthegood‐faithrequirements.RatherthanpursuingadministrativeorstatecourtreviewoftheOCC’sfindings,ConcreteWorksinitiatedthisaction,seekingapermanentinjunctionagainstenforcementoftheOrdinanceanddamagesforlostcontracts.Id.
In1993,andafterextensivediscovery,thedistrictcourtgrantedDenver’ssummaryjudgmentmotion.ConcreteWorks,Inc.v.CityandCountyofDenver,823F.Supp.821(D.Colo.1993).ThecourtconcludedthatConcreteWorkshadstandingtobringthisclaim.Id.Withrespecttothemerits,thecourtheldthatDenver’sprogramsatisfiedthestrictscrutinystandardembracedbyamajorityoftheSupremeCourtinCrosonbecauseitwasnarrowlytailoredtoachieveacompellinggovernmentinterest.Id.
Standing.Attheoutset,theTenthCircuitonappealconsideredDenver’scontentionthatConcreteWorksfailstosatisfyitsburdenofestablishingstandingtochallengetheOrdinance’s
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constitutionality.Id.at1518.ThecourtconcludedthatConcreteWorksdemonstrated“injuryinfact”becauseitsubmittedbidsonthreeprojectsandtheOrdinancepreventeditfromcompetingonanequalbasiswithminorityandwomen‐ownedprimecontractors.Id.
Specifically,theunequalnatureofthebiddingprocessliedintheOrdinance’srequirementthatanonminorityprimecontractormustmeetMBEandWBEparticipationgoalsbyenteringintojointventureswithMBEsandWBEsorhiringthemassubcontractors(orsatisfyingtheten‐stepgoodfaithrequirement).Id.Incontrast,minorityandwomen‐ownedprimecontractorscouldusetheirownworktosatisfyMBEandWBEparticipationgoals.Id.Thus,theextrarequirements,thecourtfoundimposedcostsandburdensonnonminorityfirmsthatprecludedthemfromcompetingwithMBEsandWBEsonanequalbasis.Id.at1519.
Inadditiontodemonstrating“injuryinfact,”ConcreteWorks,thecourtheld,alsosatisfiedthetworemainingelementstoestablishstanding:(1)acausalrelationshipbetweentheinjuryandthechallengedconduct;and(2)alikelihoodthattheinjurywillberedressedbyafavorableruling.Thus,thecourtconcludedthatConcreteWorkshadstandingtochallengetheconstitutionalityofDenver’srace‐andgender‐consciouscontractprogram.Id.
EqualProtectionClauseStandards.Thecourtdeterminedtheappropriatestandardofequalprotectionreviewbyexaminingthenatureoftheclassificationsembodiedinthestatute.ThecourtappliedstrictscrutinytotheOrdinance’srace‐basedpreferencescheme,andthusinquiredwhetherthestatutewasnarrowlytailoredtoachieveacompellinggovernmentinterest.Id.Gender‐basedclassifications,incontrast,thecourtconcludedareevaluatedundertheintermediatescrutinyrubric,whichprovidesthatthelawmustbesubstantiallyrelatedtoanimportantgovernmentobjective.Id.
PermissibleEvidenceandBurdensofProof.InCroson,apluralityoftheCourtconcludedthatstateandlocalgovernmentshaveacompellinginterestinremedyingidentifiedpastandpresentdiscriminationwithintheirborders.Id.citing,Croson,488U.S.at492,509,ThepluralityexplainedthattheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthepublicentityfromactingasa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”byallowingtaxdollars“tofinancetheevilofprivateprejudice.”Id.citing,Crosonat492.
A.GeographicScopeoftheData.ConcreteWorkscontendedthatCrosonprecludedthecourtfromconsideringempiricalevidenceofdiscriminationinthesix‐countyDenverMetropolitanStatisticalArea(MSA).Instead,itarguedCrosonwouldallowDenveronlytousedatadescribingdiscriminationwithintheCityandCountyofDenver.Id.at1520.
ThecourtstatedthatamajorityinCrosonobservedthatbecausediscriminationvariesacrossmarketareas,stateandlocalgovernmentscannotrelyonnationalstatisticsofdiscriminationintheconstructionindustrytodrawconclusionsaboutprevailingmarketconditionsintheirownregions.Id.at1520,citingCrosonat504.Therelevantareainwhichtomeasurediscrimination,then,isthelocalconstructionmarket,butthatisnotnecessarilyconfinedbyjurisdictionalboundaries.Id.
ThecourtsaidthatCrosonsupporteditsconsiderationofdatafromtheDenverMSAbecausethisdatawassufficientlygeographicallytargetedtotherelevantmarketarea.Id.Therecordrevealedthatover80percentofDenverDepartmentofPublicWorks(“DPW”)constructionanddesigncontractswereawardedtofirmslocatedwithintheDenverMSA.Id.at1520.Toconfine
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thepermissibledatatoagovernmentalbody’sstrictgeographicalboundaries,thecourtfound,wouldignoretheeconomicrealitythatcontractsareoftenawardedtofirmssituatedinadjacentareas.Id.
Thecourtsaidthatitisimportantthatthepertinentdatacloselyrelatetothejurisdictionalareaofthemunicipalitywhoseprogramisscrutinized,buthereDenver’scontractingactivity,insofarasconstructionworkwasconcerned,wascloselyrelatedtotheDenverMSA.Id.at1520.Therefore,thecourtheldthatdatafromtheDenverMSAwasadequatelyparticularizedforstrictscrutinypurposes.Id.
B.AnecdotalEvidence.ConcreteWorksarguedthatthedistrictcourtcommittedreversibleerrorbyconsideringsuchnon‐empiricalevidenceofdiscriminationastestimonyfromminorityandwomen‐ownedfirmsdeliveredduringpublichearings,affidavitsfromMBEsandWBEs,summariesoftelephoneinterviewsthatDenverofficialsconductedwithMBEsandWBEs,andreportsgeneratedduringOfficeofAffirmativeActioncomplianceinvestigations.Id.
Thecourtstatedthatselectiveanecdotalevidenceaboutminoritycontractors’experiences,withoutmore,wouldnotprovideastrongbasisinevidencetodemonstratepublicorprivatediscriminationinDenver’sconstructionindustrysufficienttopassconstitutionalmusterunderCroson.Id.at1520.
Personalaccountsofactualdiscriminationortheeffectsofdiscriminatorypracticesmay,accordingtothecourt,however,vividlycomplementempiricalevidence.Id.Thecourtconcludedthatanecdotalevidenceofamunicipality’sinstitutionalpracticesthatexacerbatediscriminatorymarketconditionsareoftenparticularlyprobative.Id.Therefore,thegovernmentmayincludeanecdotalevidenceinitsevidentiarymosaicofpastorpresentdiscrimination.Id.
ThecourtpointedoutthatinthecontextofemploymentdiscriminationsuitsarisingunderTitleVIIoftheCivilRightsActof1964,theSupremeCourthasstatedthatanecdotalevidencemaybring“coldnumbersconvincinglytolife.”Id.at1520,quoting,InternationalBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977).Infact,thecourtfound,themajorityinCrosonimpliedlyendorsedtheinclusionofpersonalaccountsofdiscrimination.Id.at1521.Thecourtthusdeemedanecdotalevidenceofpublicandprivateraceandgenderdiscriminationappropriatesupplementaryevidenceinthestrictscrutinycalculus.Id.
C.Post–EnactmentEvidence.ConcreteWorksarguedthatthecourtshouldconsideronlyevidenceofdiscriminationthatexistedpriortoDenver’senactmentoftheOrdinance.Id.InCroson,thecourtnotedthattheSupremeCourtunderscoredthatamunicipality“mustidentify[the]discrimination...withsomespecificitybefore[it]mayuserace‐consciousrelief.”Id.at1521,quoting,Croson,488U.S.at504(emphasisadded).Absentanypre‐enactmentevidenceofdiscrimination,thecourtsaidamunicipalitywouldbeunabletosatisfyCroson.Id.
However,thecourtdidnotreadCroson’sevidentiaryrequirementasforeclosingtheconsiderationofpost‐enactmentevidence.Id.at1521.Post‐enactmentevidence,ifcarefullyscrutinizedforitsaccuracy,thecourtfoundwouldoftenprovequiteusefulinevaluatingtheremedialeffectsorshortcomingsoftherace‐consciousprogram.Id.This,thecourtnotedwasespeciallytrueinthiscase,whereDenverfirstimplementedalimitedaffirmativeactionprogramin1983andhassincemodifiedandexpandeditsscope.Id.
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Thecourtheldthestrongweightofauthorityendorsestheadmissibilityofpost‐enactmentevidencetodeterminewhetheranaffirmativeactioncontractprogramcomplieswithCroson.Id.at1521.Thecourtagreedthatpost‐enactmentevidencemayproveusefulforacourt’sdeterminationofwhetheranordinance’sdeviationfromthenormofequaltreatmentisnecessary.Id.Thus,evidenceofdiscriminationexistingsubsequenttoenactmentofthe1990Ordinance,thecourtconcludedwasproperlybeforeit.Id.
D.BurdensofProductionandProof.ThecourtstatedthattheSupremeCourtinCrosonstruckdowntheCityofRichmond’sminorityset‐asideprogrambecausetheCityfailedtoprovideanadequateevidentiaryshowingofpastorpresentdiscrimination.Id.at1521,citing,Croson,488U.S.at498–506.ThecourtpointedoutthatbecausetheFourteenthAmendmentonlytoleratesrace‐consciousprogramsthatnarrowlyseektoremedyidentifieddiscrimination,theSupremeCourtinCrosonexplainedthatstateandlocalgovernments“mustidentifythatdiscrimination...withsomespecificitybeforetheymayuserace‐consciousrelief.”Id.,citingCroson,at504.ThecourtsaidthattheSupremeCourt’sbenchmarkforjudgingtheadequacyofthegovernment’sfactualpredicateforaffirmativeactionlegislationwaswhetherthereexistsa“strongbasisinevidencefor[thegovernment’s]conclusionthatremedialactionwasnecessary.”Id.,quoting,Croson,at500.
AlthoughCrosonplacestheburdenofproductiononthemunicipalitytodemonstratea“strongbasisinevidence”thatitsrace‐andgender‐consciouscontractprogramaimstoremedyspecificallyidentifiedpastorpresentdiscrimination,thecourtheldtheFourteenthAmendmentdoesnotrequireacourttomakeanultimatejudicialfindingofdiscriminationbeforeamunicipalitymaytakeaffirmativestepstoeradicatediscrimination.Id.at1521,citing,Wygant,476U.S.at292(O’Connor,J.,concurringinpartandconcurringinthejudgment).Anaffirmativeactionresponsetodiscriminationissustainableagainstanequalprotectionchallengesolongasitispredicateduponstrongevidenceofdiscrimination.Id.at1522,citing,Croson,488U.S.at504.
Aninferenceofdiscrimination,thecourtfound,maybemadewithempiricalevidencethatdemonstrates“asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractors...andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.”Id.at1522,quoting,Crosonat509(plurality).ThecourtconcludedthatitdidnotreadCrosontorequireanattempttocraftaprecisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson“strongbasisinevidence”benchmark.Id.That,thecourtstated,mustbeevaluatedonacase‐by‐casebasis.Id.
Thecourtsaidthattheadequacyofamunicipality’sshowingofdiscriminationmustbeevaluatedinthecontextofthebreadthoftheremedialprogramadvancedbythemunicipality.Id.at1522,citing,Crosonat498.Ultimately,whetherastrongbasisinevidenceofpastorpresentdiscriminationexists,therebyestablishingacompellinginterestforthemunicipalitytoenactarace‐consciousordinance,thecourtfoundisaquestionoflaw.Id.Underlyingthatlegalconclusion,however,thecourtnotedarefactualdeterminationsabouttheaccuracyandvalidityofamunicipality’sevidentiarysupportforitsprogram.Id.
Notwithstandingtheburdenofinitialproductionthatrestswiththemunicipality,“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.at1522,quoting,Wygant,476U.S.at277–78(plurality).Thus,thecourtstatedthatonceDenverpresentedadequatestatisticalevidenceofpreciselydefineddiscriminationintheDenverareaconstructionmarket,itbecameincumbentuponConcreteWorkseithertoestablishthatDenver’sevidencedidnotconstitute
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strongevidenceofsuchdiscriminationorthattheremedialstatutewasnotnarrowlydrawn.Id.at1523.AbsentsuchashowingbyConcreteWorks,thecourtsaid,summaryjudgmentupholdingDenver’sOrdinancewouldbeappropriate.Id.
E.EvidentiaryPredicateUnderlyingDenver’sOrdinance.TheevidenceofdiscriminationthatDenverpresentstodemonstrateacompellinggovernmentinterestinenactingtheOrdinanceconsistedofthreecategories:(1)evidenceofdiscriminationincitycontractingfromthemid–1970sto1990;(2)dataaboutMBEandWBEutilizationintheoverallDenverMSAconstructionmarketbetween1977and1992;and(3)anecdotalevidencethatincludedpersonalaccountsbyMBEsandWBEswhohaveexperiencedbothpublicandprivatediscriminationandtestimonyfromcityofficialswhodescribeinstitutionalgovernmentalpracticesthatperpetuatepublicdiscrimination.Id.at1523.
1.DiscriminationintheAwardofPublicContracts.ThecourtconsideredtheevidencethatDenverpresentedtodemonstrateunderutilizationofMBEsandWBEsintheawardofcitycontractsfromthemid1970sto1990.ThecourtfoundthatDenverofferedpersuasivepiecesofevidencethat,consideredintheabstract,couldgiverisetoaninferenceofrace‐andgender‐basedpublicdiscriminationonisolatedpublicworksprojects.Id.at1523.However,thecourtalsofoundtherecordshowedthatMBEandWBEutilizationonpubliccontractsasawholeduringthisperiodwasstrongincomparisontothetotalnumberofMBEsandWBEswithinthelocalconstructionindustry.Id.at1524.Denverofferedarebuttaltothismoregeneralevidence,butthecourtstateditwasclearthattheweighttobegivenbothtothegeneralevidenceandtothespecificevidencerelatingtoindividualcontractspresentedgenuinedisputesofmaterialfacts.
Thecourtthenengagedinananalysisofthefactualrecordandanidentificationofthegenuinematerialissuesoffactarisingfromtheparties’competingevidence.
(a) Federal Agency Reports of Discrimination in Denver.DenversubmittedfederalagencyreportsofdiscriminationinDenverpubliccontractawards.Id.at1524.Therecordcontainedasummaryofa1978studybytheUnitedStatesGeneralAccountingOffice(“GAO”),whichshowedthatbetween1975and1977minoritybusinessesweresignificantlyunderrepresentedintheperformanceofDenverpubliccontractsthatwerefinancedinwholeorinpartbyfederalgrants.Id.
ConcreteWorksarguedthatamaterialfactissuearoseaboutthevalidityofthisevidencebecause“the1978GAOReportwasnothingmorethanalistingoftheproblemsfacedbyallsmallfirms,firststartingoutinbusiness.”Id.at1524.Thecourtpointedout,however,ConcreteWorksignoredtheGAOReport’sempiricaldata,whichquantifiedtheactualdisparitybetweentheutilizationofminoritycontractorsandtheirrepresentationinthelocalconstructionindustry.Id.Inaddition,thecourtnotedthattheGAOReportreflectedthefindingsofanobjectivethirdparty.Id.Becausethisdataremaineduncontested,notwithstandingConcreteWorks’conclusoryallegationstothecontrary,thecourtfoundthe1978GAOReportprovidedevidencetosupportDenver’sshowingofdiscrimination.Id.
AddedtotheGAOfindingswasa1979letterfromtheUnitedStatesDepartmentofTransportation(“USDOT”)totheMayoroftheCityofDenver,describingtheUSDOTOfficeofCivilRights’studyofDenver’sdiscriminatorycontractingpracticesatStapletonInternationalAirport.Id.at1524.USDOTthreatenedtowithholdadditionalfederalfundingforStapletonbecauseDenverhad“deniedminoritycontractorsthebenefitsof,excludedthemfrom,or
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otherwisediscriminatedagainstthemconcerningcontractingopportunitiesatStapleton,”inviolationofTitleVIoftheCivilRightsActof1964andotherfederallaws.Id.
ThecourtdiscussedthefollowingdataasreflectedofthelowlevelofMBEandWBEutilizationonStapletoncontractspriortoDenver’sadoptionofanMBEandWBEgoalsprogramatStapletonin1981:fortheyears1977to1980,respectively,MBEutilizationwas0percent,3.8percent,.7percent,and2.1percent;dataonWBEutilizationwasunknownfortheyears1977to1979,anditwas.05percentfor1980.Id.at1524.
ThecourtstatedthatlikeitsunconvincingattempttodiscredittheGAOReport,ConcreteWorkspresentednoevidencetochallengethevalidityofUSDOT’sallegations.Id.ConcreteWorks,thecourtsaid,failedtointroduceevidencerefutingthesubstanceofUSDOT’sinformation,attackingitsmethodology,orchallengingthelowutilizationfiguresforMBEsatStapletonbefore1981.Id.at1525.Thus,accordingtothecourt,ConcreteWorksfailedtocreateagenuineissueoffactabouttheconclusionsintheUSDOT’sreport.Id.Insum,thecourtfoundthefederalagencyreportsofdiscriminationinDenver’scontractawardssupportedDenver’scontentionthatraceandgenderdiscriminationexistedpriortotheenactmentofthechallengedOrdinance.Id.
(b) Denver’s Reports of Discrimination.Denverpointedtoevidenceofpublicdiscriminationpriorto1983,theyearthatthefirstDenverordinancewasenacted.Id.at1525.A1979DPW“MajorBondProjectsFinalReport,”whichreviewedMBEandWBEutilizationonprojectsfundedbythe1972and1974bondreferendaandthe1975and1976revenuebonds,thecourtsaid,showedstrongevidenceofunderutilizationofMBEsandWBEs.Id.BasedonthisReport’sdescriptionoftheapproximately$85millionincontractawards,therewas0percentMBEandWBEutilizationforprofessionaldesignandconstructionmanagementprojects,andlessthan1percentutilizationforconstruction.Id.TheReportconcludedthatifMBEsandWBEshadbeenutilizedinthesameproportionasfoundintheconstructionindustry,5percentofthecontractdollarswouldhavebeenawardedtoMBEsandWBEs.Id.
Tounderminethisdata,ConcreteWorksallegedthattheDPWReportcontained“noinformationaboutthenumberofminorityorwomenownedfirmsthatwereused”onthesebondprojects.Id.at1525.However,thecourtconcludedtheReport’sdescriptionofMBEandWBEutilizationintermsofcontractdollarsprovidedamoreaccuratedepictionoftotalutilizationthanwouldthemerenumberofMBEandWBEfirmsparticipatingintheseprojects.Id.Thus,thecourtsaidthislineofattackbyConcreteWorkswasunavailing.Id.
ConcreteWorksalsoadvancedexperttestimonythatDenver’sdatademonstratedstrongMBEandWBEutilizationonthetotalDPWcontractsawardedbetween1978and1982.Id.Denverrespondedbypointingoutthatbecausefederalandcityaffirmativeactionprogramswereinplacefromthemid–1970stothepresent,thisoverallDPWdatareflectedtheintendedremedialeffectonMBEandWBEutilizationoftheseprograms.Id.at1526.BasedonitscontentionthattheoverallDPWdatawastherefore“tainted”anddistortedbythesepre‐existingaffirmativeactiongoalsprograms,Denveraskedthecourttofocusinsteadonthedatageneratedfromspecificpubliccontractprogramsthatwere,foronereasonoranother,insulatedfromfederalandlocalaffirmativeactiongoalsprograms,i.e.“non‐goalspublicprojects.”Id.
Giventhatthesamelocalconstructionindustryperformedbothgoalsandnon‐goalspubliccontracts,Denverarguedthatdatageneratedonnon‐goalspublicprojectsofferedacontrolgroupwithwhichthecourtcouldcompareMBEandWBEutilizationonpubliccontractsgovernedbyagoalsprogramandthoseinsulatedfromsuchgoalrequirements.Id.Denver
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arguedthattheutilizationofMBEsandWBEsonnon‐goalsprojectswasthebettertestofwhethertherehadbeendiscriminationhistoricallyinDenvercontractingpractices.Id.at1526.
DGSdata.Thefirstsetofdatafromnon‐goalspublicprojectsthatDenveridentifiedwereMBEandWBEdisparityindicesonDenverDepartmentofGeneralServices(“DGS”)contracts,whichrepresentedone‐thirdofallcityconstructionfundingandwhich,priortotheenactmentofthe1990Ordinance,werenotsubjecttothegoalsprograminstitutedintheearlierordinancesforDPWcontracts.Id.at1526.TheDGSdata,thecourtfound,revealedextremelylowMBEandWBEutilization.Id.ForMBEs,theDGSdatashoweda.14disparityindexin1989anda.19disparityindexin1990—evidencethecourtstatedwasofsignificantunderutilization.Id.ForWBEs,thedisparityindexwas.47in1989and1.36in1990—thelatter,thecourtsaidshowedgreaterthanfullparticipationandtheformerdemonstratingunderutilization.Id.
ThecourtnotedthatitdidnothavethebenefitofrelevantauthoritywithwhichtocompareDenver’sdisparityindicesforWBEs.Nevertheless,thecourtconcludedDenver’sdataindicatedsignificantWBEunderutilizationsuchthattheOrdinance’sgenderclassificationarosefrom“reasonedanalysisratherthanthroughthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.at1526,n.19,quoting,MississippiUniv.ofWomen,458U.S.at726.
DPWdata.ThesecondsetofdatapresentedbyDenver,thecourtsaid,reflecteddistinctMBEandWBEunderutilizationonnon‐goalspublicprojectsconsistingofseparateDPWprojectsonwhichnogoalsprogramwasimposed.Id.at1527.ConcreteWorks,accordingtothecourt,attemptedtotrivializethesignificanceofthisdatabycontendingthattheprojects,indollarterms,reflectedasmallfractionofthetotalDenverMSAconstructionmarket.Id.But,thecourtnotedthatConcreteWorksmissedthepointbecausethedatawasnotintendedtoreflectconditionsintheoverallmarket.Id.Insteadthedatadealtsolelywiththeutilizationlevelsforcity‐fundedprojectsonwhichnoMBEandWBEgoalswereimposed.Id.Thecourtfoundthatitwasparticularlytellingthatthedisparityindexsignificantlydeterioratedonprojectsforwhichthecitydidnotestablishminorityandgenderparticipationgoals.Id.InsofarasConcreteWorksdidnotattackthedataonanyothergrounds,thecourtconsidereditwaspersuasiveevidenceofunderlyingdiscriminationintheDenverconstructionmarket.Id.
Empiricaldata.ThethirdevidentiaryitemsupportingDenver’scontentionthatpublicdiscriminationexistedpriortoenactmentofthechallengedOrdinancewasempiricaldatafrom1989,generatedafterDenvermodifieditsrace‐andgender‐consciousprogram.Id.at1527.InthewakeofCroson,DenveramendeditsprogrambyeliminatingtheminimumannualgoalsprogramforMBEandWBEparticipationandbyrequiringMBEsandWBEstodemonstratethattheyhadsufferedfrompastdiscrimination.Id.
Thismodification,thecourtsaid,resultedinanoticeabledeclineintheshareofDPWconstructiondollarsawardedtoMBEs.Id.From1985to1988(priortothe1989modificationofDenver’sprogram),DPWconstructiondollarsawardedtoMBEsrangedfrom17tonearly20percentoftotaldollars.Id.However,thecourtnotedthefiguredroppedto10.4percentin1989,aftertheprogrammodificationstookeffect.Id.at1527.LiketheDGSandnon‐goalsDPWprojects,this1989data,thecourtconcluded,furthersupportedtheinferencethatMBEandWBEutilizationsignificantlydeclinedafterdeletionofagoalsprogramorrelaxationoftheminimumMBEandWBEutilizationgoalrequirements.Id.
Nonetheless,thecourtstateditmustconsiderDenver’sempiricalsupportforitscontentionthatpublicdiscriminationexistedpriortotheenactmentoftheOrdinanceinthecontextoftheoverallDPWdata,whichshowedconsistentlystrongMBEandWBEutilizationfrom1978tothe
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present.Id.at1528.ThecourtnotedthatalthoughDenver’sargumentmayprovepersuasiveattrialthatthenon‐goalsprojectswerethemostreliableindiciaofdiscrimination,therecordonsummaryjudgmentcontainedtwosetsofdata,onethatgaverisetoaninferenceofdiscriminationandtheotherthatunderminedsuchaninference.Id.Thisdiscrepancy,thecourtfound,highlightedwhysummaryjudgmentwasinappropriateonthisrecord.Id.
Availabilitydata.ThecourtconcludedthatuncertaintyaboutthecapacityofMBEsandWBEsinthelocalmarkettocompetefor,andperform,thepublicprojectsforwhichtherewasunderutilizationofMBEsandWBEsfurtherhighlightedwhytherecordwasnotripeforsummaryjudgment.Id.at1528.AlthoughDenver’sdatausedasitsbaselinethepercentageoffirmsinthelocalconstructionmarketthatwereMBEsandWBEs,ConcreteWorksarguedthatamoreaccurateindicatorwouldconsiderthecapacityoflocalMBEsandWBEstoundertakethework.Id.ThecourtsaidthatuncertaintyaboutthecapacityofMBEsandWBEsinthelocalmarkettocompetefor,andperform,thepublicprojectsforwhichtherewasunderutilizationofMBEsandWBEsfurtherhighlightedwhytherecordwasnotripeforsummaryjudgment.Id.
ThecourtagreedwiththeothercircuitswhichhadatthattimeinterpretedCrosonimpliedlytopermitamunicipalitytorely,asdidDenver,ongeneraldatareflectingthenumberofMBEsandWBEsinthemarketplacetodefeatthechallenger’ssummaryjudgmentmotionorrequestforapreliminaryinjunction.Id.at1527citing,ContractorsAss’n,6F.3dat1005(comparingMBEparticipationincitycontractswiththe“percentageof[MBE]availabilityorcompositioninthe‘population’ofPhiladelphiaareaconstructionfirms”);AssociatedGen.Contractors,950F.2dat1414(relyingonavailabilitydatatoconcludethatcitypresented“detailedfindingsofpriordiscrimination”);ConeCorp.,908F.2dat916(statisticaldisparitybetween“thetotalpercentageofminoritiesinvolvedinconstructionandtheworkgoingtominorities”showsthat“theracialclassificationintheCountyplan[was]necessary”).
But,thecourtfoundConcreteWorkshadidentifiedalegitimatefactualdisputeabouttheaccuracyofDenver’sdataandquestionedwhetherDenver’srelianceonthepercentageofMBEsandWBEsavailableinthemarketplaceoverstated“theabilityofMBEsorWBEstoconductbusinessrelativetotheindustryasawholebecauseM/WBEstendtobesmallerandlessexperiencedthannonminority‐ownedfirms.”Id.at1528.Inotherwords,thecourtsaid,adisparityindexcalculatedonthebasisoftheabsolutenumberofMBEsinthelocalmarketmayshowgreaterunderutilizationthandoesdatathattakesintoconsiderationthesizeofMBEsandWBEs.Id.
ThecourtstatedthatitwasnotimplyingthatavailabilitywasnotanappropriatebarometertocalculateMBEandWBEutilization,nordiditcastaspersionsondatathatsimplyusedrawnumbersofMBEsandWBEscomparedtonumbersoftotalfirmsinthemarket.Id.Thecourtconcluded,however,oncecredibleinformationaboutthesizeorcapacityofthefirmswasintroducedintherecord,itbecameafactorthatthecourtshouldconsider.Id.
Denverpresentedseveralresponses.Id.at1528.Itarguedthataconstructionfirm’sprecise“capacity”atagivenmomentintimebeliedquantificationduetotheindustry’shighlyelasticnature.Id.DPWcontractsrepresentedlessthan4percentoftotalMBErevenuesandlessthan2percentofWBErevenuesin1989,therebythecourtsaid,stronglyimpliedthatMBEandWBEparticipationinDPWcontractsdidnotrenderthesefirmsincapableofconcurrentlyundertakingadditionalwork.Id.at1529.DenverpresentedevidencethatmostMBEsandWBEshadneverparticipatedincitycontracts,“althoughalmostallfirmscontactedindicatedthattheywereinterestedinCitywork.”Id.OfthoseMBEsandWBEswhohavereceivedworkfromDPW,
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availabledatashowedthatlessthan10percentoftheirtotalrevenueswerefromDPWcontracts.Id.
Thecourtheldallofthebackandforthargumentshighlightedthatthereweregenuineandmaterialfactualdisputesintherecord,andthatsuchdisputesabouttheaccuracyofDenver’sdatashouldnotberesolvedatsummaryjudgment.Id.at1529.
(c) Evidence of Private Discrimination in the Denver MSA.Inrecognitionthatamunicipalityhasacompellinginterestintakingaffirmativestepstoremedybothpublicandprivatediscriminationspecificallyidentifiedinitsarea,thecourtalsoconsidereddataaboutconditionsintheoverallDenverMSAconstructionindustrybetween1977and1992.Id.at1529.ThecourtstatedthatgivenDPWandDGSconstructioncontractsrepresentedapproximately2percentofallconstructionintheDenverMSA,DenverMSAindustrydatasharpenedthepictureoflocalmarketconditionsforMBEsandWBEs.Id.
AccordingtoDenver’sexpertaffidavits,theMBEdisparityindexintheDenverMSAwas.44in1977,.26in1982,and.43in1990.Id.ThecorrespondingWBEdisparityindiceswere.46in1977,.30in1982,and.42in1989.Id.Thispre‐enactmentevidenceoftheoverallDenverMSAconstructionmarket—i.e.combinedpublicandprivatesectorutilizationofMBEsandWBEs—thecourtfoundgaverisetoaninferencethatlocalprimecontractorsdiscriminatedonthebasisofraceandgender.Id.
Thecourtpointedoutthatratherthanofferinganyevidenceinrebuttal,ConcreteWorksmerelystatedthatthisempiricalevidencedidnotprovethattheDenvergovernmentitselfdiscriminatedagainstMBEsandWBEs.Id.at1529.ConcreteWorksaskedthecourttodefinetheappropriatemarketaslimitedtocontractswiththeCityandCountyofDenver.Id.But,thecourtsaidthatsucharequestignoredthelessonofCrosonthatamunicipalitymaydesignprogramstopreventtaxdollarsfrom“financ[ing]theevilofprivateprejudice.”Id.,quoting,Croson,488U.S.at492.
ThecourtfoundthatwhattheDenverMSAdatadidnotindicate,however,waswhethertherewasanylinkagebetweenDenver’sawardofpubliccontractsandtheDenverMSAevidenceofindustry‐widediscrimination.Id.at1529.ThecourtsaiditcouldnottellwhetherDenverindirectlycontributedtoprivatediscriminationbyawardingpubliccontractstofirmsthatinturndiscriminatedagainstMBEand/orWBEsubcontractorsinotherprivateportionsoftheirbusinessorwhethertheprivatediscriminationwaspracticedbyfirmswhodidnotreceiveanypubliccontracts.Id.
NeitherCrosonnoritsprogeny,thecourtpointedout,clearlystatedwhetherprivatediscriminationthatwasinnowayfundedwithpublictaxdollarscould,byitself,providetherequisitestrongbasisinevidencenecessarytojustifyamunicipality’saffirmativeactionprogram.Id.ThecourtsaidapluralityinCrosonsuggestedthatremedialmeasurescouldbejustifieduponamunicipality’sshowingthat“ithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry.”Id.at1529,quoting,Croson,488U.S.at492.
ThecourtconcludedthatCrosondidnotrequirethemunicipalitytoidentifyanexactlinkagebetweenitsawardofpubliccontractsandprivatediscrimination,butsuchevidencewouldatleastenhancethemunicipality’sfactualpredicateforarace‐andgender‐consciousprogram.Id.at1529.TherecordbeforethecourtdidnotexplaintheDenvergovernment’srolein
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contributingtotheunderutilizationofMBEsandWBEsintheprivateconstructionmarketintheDenverMSA,andthecourtstatedthatthismaybeafruitfulissuetoexploreattrial.Id.at1530.
(d). Anecdotal Evidence.Therecord,accordingtothecourt,containednumerouspersonalaccountsbyMBEsandWBEs,aswellasprimecontractorsandcityofficials,describingdiscriminatorypracticesintheDenverconstructionindustry.Id.at1530.Suchanecdotalevidencewascollectedduringpublichearingsin1983and1988,interviews,thesubmissionofaffidavits,andcasestudiesperformedbyaconsultingfirmthatDenveremployedtoinvestigatepublicandprivatemarketconditionsin1990,priortotheenactmentofthe1990Ordinance.Id.
Thccourtindicatedagainthatanecdotalevidenceaboutminority‐andwomen‐ownedcontractors’experiencescouldbolsterempiricaldatathatgaverisetoaninferenceofdiscrimination.Id.at1530.Whileafactfinder,thecourtstated,shouldaccordlessweighttopersonalaccountsofdiscriminationthatreflectisolatedincidents,anecdotalevidenceofamunicipality’sinstitutionalpracticescarrymoreweightduetothesystemicimpactthatsuchinstitutionalpracticeshaveonmarketconditions.Id.
ThecourtnotedthatinadditiontotheindividualaccountsofdiscriminationthatMBEsandWBEshadencounteredintheDenverMSA,Cityaffirmativeactionofficialsexplainedthatchangeordersofferedaconvenientmeansofskirtingprojectgoalsbypermittingwhatwouldotherwisebeanewconstructionproject(andthussubjecttotheMBEandWBEparticipationrequirements)tobecharacterizedasanextensionofanexistingprojectandthuswithinDGS’sbailiwick.Id.at1530.Anassistantcityattorney,thecourtsaid,alsorevealedthatprojectshavebeenlabelled“remodeling,”asopposedto“reconstruction,”becausetheformerfallwithinDGS,andthuswerenotsubjecttoMBEandWBEgoalspriortotheenactmentofthe1990Ordinance.Id.at1530.ThecourtconcludedovertheobjectofConcreteWorksthatthisanecdotalevidencecouldbeconsideredinconjunctionwithDenver’sstatisticalanalysis.Id.
2.Summary.ThecourtsummarizeditsrulingbyindicatingDenverhadcompiledsubstantialevidencetosupportitscontentionthattheOrdinancewasenactedtoremedypastrace‐andgender‐baseddiscrimination.Id.at1530.ThecourtfoundincontrasttothepredicatefactsonwhichRichmondunsuccessfullyreliedinCroson,thatDenver’sevidenceofdiscriminationbothintheawardofpubliccontractsandwithintheoverallDenverMSAwasparticularizedandgeographicallytargeted.Id.ThecourtemphasizedthatDenverneednotnegateallevidenceofnon‐discrimination,norwasitDenver’sburdentoprovejudiciallythatdiscriminationdidexist.Id.Rather,thecourtheld,Denverneedonlycomeforwardwitha“strongbasisinevidence”thatitsOrdinancewasanarrowly‐tailoredresponsetospecificallyidentifieddiscrimination.Id.Then,thecourtsaiditbecameConcreteWorks’burdentoshowthattherewasnosuchstrongbasisinevidencetosupportDenver’saffirmativeactionlegislation.Id.
ThecourtalsostatedthatConcreteWorkshadspecificallyidentifiedpotentialflawsinDenver’sdataandhadputforthevidencethatDenver’sdatafailedtosupportaninferenceofeitherpublicorprivatediscrimination.Id.at1530.WithrespecttoDenver’sevidenceofpublicdiscrimination,forexample,thecourtfoundoverallDPWdatademonstratedstrongMBEandWBEutilization,yetdataforisolatedDPWprojectsandDGScontractawardssuggestedtothecontrary.Id.Thepartiesofferedconflictingrationalesforthisdisparatedata,andthecourtconcludedtherecorddidnotprovideaclearexplanation.Id.Inaddition,thecourtsaidthatConcreteWorkspresentedalegitimatecontentionthatDenver’sdisparityindicesfailedtoconsidertherelativelysmallsizeofMBEsandWBEs,whichthecourtnotedfurtherimpededitsabilitytodrawconclusionsfromtheexistingrecord.Id.at1531.
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Significantly,thecourtpointedoutthatbecauseConcreteWorksdidnotchallengethedistrictcourt’sconclusionwithrespecttothesecondprongofCroson’sstrictscrutinystandard—i.e.thattheOrdinancewasnarrowlytailoredtoremedypastandpresentdiscrimination—thecourtneednotanddidnotaddressthisissue.Id.at1531.
Onremand,thecourtstatedthepartiesshouldbepermittedtodevelopafactualrecordtosupporttheircompetinginterpretationsoftheempiricaldata.Id.at1531.Accordingly,thecourtreversedthedistrictcourtrulinggrantingsummaryjudgmentandremandedthecaseforfurtherproceedings.SeeConcreteWorksofColoradov.CityandCountyofDenver,321F.3d950(10thCir.2003).
12. Associated Gen. Contractors of California, Inc. v. Coalition for Econ. Equity (“AGCC”), 950 F.2d 1401 (9th Cir. 1991)
InAssociatedGen.ContractorsofCalifornia,Inc.v.CoalitionforEcon.Equity(“AGCC”),theNinthCircuitCourtofAppealsdeniedplaintiffsrequestforpreliminaryinjunctiontoenjoinenforcementofthecity’sbidpreferenceprogram.950F.2d1401(9thCir.1991).Althoughanoldercase,AGCCisinstructiveastotheanalysisconductedbytheNinthCircuit.Thecourtdiscussedtheutilizationofstatisticalevidenceandanecdotalevidenceinthecontextofthestrictscrutinyanalysis.Id.at1413‐18.
TheCityofSanFranciscoadoptedanordinancein1989providingbidpreferencestoprimecontractorswhoweremembersofgroupsfounddisadvantagedbypreviousbiddingpractices,andspecificallyprovideda5percentbidpreferenceforLBEs,WBEsandMBEs.950F.2dat1405.LocalMBEsandWBEswereeligiblefora10percenttotalbidpreference,representingthecumulativetotalofthefivepercentpreferencegivenLocalBusinessEnterprises(“LBEs”)andthe5percentpreferencegivenMBEsandWBEs.Id.Theordinancedefined“MBE”asaneconomicallydisadvantagedbusinessthatwasownedandcontrolledbyoneormoreminoritypersons,whichweredefinedtoincludeAsian,blacksandLatinos.“WBE”wasdefinedasaneconomicallydisadvantagedbusinessthatwasownedandcontrolledbyoneormorewomen.Economicallydisadvantagedwasdefinedasabusinesswithaveragegrossannualreceiptsthatdidnotexceed$14million.Id.
TheMotionforPreliminaryInjunctionchallengedtheconstitutionalityoftheMBEprovisionsofthe1989OrdinanceinsofarasitpertainedtoPublicWorksconstructioncontracts.Id.at1405.ThedistrictcourtdeniedtheMotionforPreliminaryInjunctionontheAGCC’sconstitutionalclaimonthegroundthatAGCCfailedtodemonstratealikelihoodofsuccessonthemerits.Id.at1412.
TheNinthCircuitCourtofAppealsappliedthestrictscrutinyanalysisfollowingthedecisionoftheU.S.SupremeCourtinCityofRichmondv.Croson.ThecourtstatedthataccordingtotheU.S.SupremeCourtinCroson,amunicipalityhasacompellinginterestinginredressing,notonlydiscriminationcommittedbythemunicipalityitself,butalsodiscriminationcommittedbyprivatepartieswithinthemunicipalities’legislativejurisdiction,solongasthemunicipalityinsomewayperpetuatedthediscriminationtoberemediedbytheprogram.Id.at1412‐13,citingCrosonat488U.S.at491‐92,537‐38.Tosatisfythisrequirement,“thegovernmentalactorneednotbeanactiveperpetratorofsuchdiscrimination;passiveparticipationwillsatisfythissub‐partofstrictscrutinyreview.”Id.at1413,quotingCoralConstructionCompanyv.KingCounty,941F.2d910at916(9thCir.1991).Inaddition,the[m]ereinfusionoftaxdollarsintoadiscriminatoryindustrymaybesufficientgovernmentalinvolvementtosatisfythisprong.”Id.at1413quotingCoralConstruction,941F.2dat916.
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ThecourtpointedoutthattheCityhadmadedetailedfindingsofpriordiscriminationinconstructionandbuildingwithinitsborders,hadtestimonytakenatmorethantenpublichearingsandreceivednumerouswrittensubmissionsfromthepublicaspartofitsanecdotalevidence.Id.at1414.TheCityDepartmentscontinuedtodiscriminateagainstMBEsandWBEsandcontinuedtooperateunderthe“oldboynetwork”inawardingcontracts,therebydisadvantagingMBEsandWBEs.Id.And,theCityfoundthatlargestatisticaldisparitiesexistedbetweenthepercentageofcontractsawardedtoMBEsandthepercentageofavailableMBEs.950F.2dat1414.ThecourtstatedtheCityalsofound“discriminationintheprivatesectoragainstMBEsandWBEsthatismanifestedinandexacerbatedbytheCity’sprocurementpractices.”Id.at1414.
TheNinthCircuitfoundthestudycommissionedbytheCityindicatedtheexistenceoflargedisparitiesbetweentheawardofcitycontractstoavailablenon‐minoritybusinessesandtoMBEs.Id.at1414.UsingtheCityandCountyofSanFranciscoasthe“relevantmarket,”thestudycomparedthenumberofavailableMBEprimeconstructioncontractorsinSanFranciscowiththeamountofcontractdollarsawardedbytheCitytoSanFrancisco‐basedMBEsforaparticularyear.Id.at1414.ThestudyfoundthatavailableMBEsreceivedfarfewercitycontractsinproportiontotheirnumbersthantheiravailablenon‐minoritycounterparts.Id.Specifically,thestudyfoundthatwithrespecttoprimeconstructioncontracting,disparitiesbetweenthenumberofavailablelocalAsian‐,black‐andHispanic‐ownedfirmsandthenumberofcontractsawardedtosuchfirmswerestatisticallysignificantandsupportedaninferenceofdiscrimination.Id.Forexample,inprimecontractingforconstruction,althoughMBEavailabilitywasdeterminedtobeat49.5percent,MBEdollarparticipationwasonly11.1percent.Id.TheNinthCircuitstatedthaninitsdecisioninCoralConstruction,itemphasizedthatsuchstatisticaldisparitiesare“aninvaluabletoolanddemonstratingthediscriminationnecessarytoestablishacompellinginterest.Id.at1414,citingtoCoralConstruction,941F.2dat918andCroson,488U.S.at509.
Thecourtnotedthattherecorddocumentsavastnumberofindividualaccountsofdiscrimination,whichbring“thecoldnumbersconvincinglytolife.Id.at1414,quotingCoralConstruction,941F.2dat919.TheseaccountsincludenumerousreportsofMBEsbeingdeniedcontractsdespitebeingthelowbidder,MBEsbeingtoldtheywerenotqualifiedalthoughtheywerelaterfoundqualifiedwhenevaluatedbyoutsideparties,MBEsbeingrefusedworkevenaftertheywereawardedcontractsaslowbidder,andMBEsbeingharassedbycitypersonneltodiscouragethemfrombiddingoncitycontracts.Idat1415.TheCitypointedtonumerousindividualaccountsofdiscrimination,thatan“oldboynetwork”stillexists,andthatracialdiscriminationisstillprevalentwithintheSanFranciscoconstructionindustry.Id.Thecourtfoundthatsucha“combinationofconvincinganecdotalandstatisticalevidenceispotent.”Id.at1415quotingCoralConstruction,941F.2dat919.
Thecourtalsostatedthatthe1989OrdinanceappliesonlytoresidentMBEs.TheCity,therefore,accordingtothecourt,appropriatelyconfineditsstudytothecitylimitsinordertofocusonthosewhomthepreferenceschemetargeted.Id.at1415.ThecourtnotedthatthestatisticsrelieduponbytheCitytodemonstratediscriminationinitscontractingprocessesconsideredonlyMBEslocatedwithintheCityofSanFrancisco.Id.
ThecourtpointedouttheCity’sfindingswerebasedupondozensofspecificinstancesofdiscriminationthatarelaidoutwithparticularityintherecord,aswellasthesignificantstatisticaldisparitiesintheawardofcontracts.ThecourtnotedthattheCitymustsimplydemonstratetheexistenceofpastdiscriminationwithspecificity,butthereisnorequirement
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thatthelegislativefindingsspecificallydetaileachandeveryincidencethatthelegislativebodyhasrelieduponinsupportofthisdecisionthataffirmativeactionisnecessary.Id.at1416.
Initsanalysisofthe“narrowlytailored”requirement,thecourtfocusedonthreecharacteristicsidentifiedbythedecisioninCrosonasindicativeofnarrowtailoring.First,anMBEprogramshouldbeinstitutedeitherafter,orinconjunctionwith,race‐neutralmeansofincreasingminoritybusinessparticipationinpubliccontracting.Id.at1416.Second,theplanshouldavoidtheuseof“rigidnumericalquotas.”Id.AccordingtotheSupremeCourt,systemsthatpermitwaiverinappropriatecasesandthereforerequiresomeindividualizedconsiderationoftheapplicantsposealesserdangerofoffendingtheConstitution.Id.Mechanismsthatintroduceflexibilityintothesystemalsopreventtheimpositionofadisproportionateburdenonafewindividuals.Id.Third,“anMBEprogrammustbelimitedinitseffectivescopetotheboundariesoftheenactingjurisdiction.Id.at1416quotingCoralConstruction,941F.2dat922.
ThecourtfoundthattherecordshowedtheCityconsidered,butrejectedasnotviable,specificrace‐neutralalternativesincludingafundtoassistnewlyestablishedMBEsinmeetingbondingrequirements.Thecourtstatedthat“whilestrictscrutinyrequiresserious,goodfaithconsiderationofrace‐neutralalternatives,strictscrutinydoesnotrequireexhaustionofeverypossiblesuchalternative…howeverirrational,costly,unreasonable,andunlikelytosucceedsuchalternativemaybe.”Id.at1417quotingCoralConstruction,941F.2dat923.ThecourtfoundtheCitytenyearsbeforehadattemptedtoeradicatediscriminationincitycontractingthroughpassageofarace‐neutralordinancethatprohibitedcitycontractorsfromdiscriminatingagainsttheiremployeesonthebasisofraceandrequiredcontractorstotakestepstointegratetheirworkforce;andthattheCitymadeandcontinuestomakeeffortstoenforcetheanti‐discriminationordinance.Id.at1417.Thecourtstatedinclusionofsuchrace‐neutralmeasuresisonefactorsuggestingthatanMBEplanisnarrowlytailored.Id.at1417.
ThecourtalsofoundthattheOrdinancepossessedtherequisiteflexibility.Ratherthanarigidquotasystem,theCityadoptedamoremodestsystemaccordingtothecourt,thatofbidpreferences.Id.at1417.Thecourtpointedoutthattherewerenogoals,quotas,orset‐asidesandmoreover,theplanremediesonlyspecificallyidentifieddiscrimination:theCityprovidespreferencesonlytothoseminoritygroupsfoundtohavepreviouslyreceivedalowerpercentageofspecifictypesofcontractsthantheiravailabilitytoperformsuchworkwouldsuggest.Id.at1417.
ThecourtrejectedtheargumentofAGCCthattopassconstitutionalmusteranyremedymustprovideredressonlytospecificindividualswhohavebeenidentifiedasvictimsofdiscrimination.Id.at1417,n.12.TheNinthCircuitagreedwiththedistrictcourtthataniron‐cladrequirementlimitinganyremedytoindividualspersonallyproventohavesufferedpriordiscriminationwouldrenderanyrace‐consciousremedy“superfluous,”andwouldthwarttheSupremeCourt’sdirectiveinCrosonthatrace‐consciousremediesmaybepermittedinsomecircumstances.Id.at1417,n.12.Thecourtalsofoundthattheburdensofthebidpreferencesonthosenotentitledtothemappear“relativelylightandwelldistributed.”Id.at1417.ThecourtstatedthattheOrdinancewas“limitedinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.Id.at1418,quotingCoralConstruction,941F.2dat925.ThecourtfoundthatSanFranciscohadcarefullylimitedtheordinancetobenefitonlythoseMBEslocatedwithintheCity’sborders.Id.1418.
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13. Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991)
InCoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991),theNinthCircuitexaminedtheconstitutionalityofKingCounty,Washington’sminorityandwomenbusinessset‐asideprograminlightofthestandardsetforthinCityofRichmondv.J.A.CrosonCo.ThecourtheldthatalthoughtheCountypresentedampleanecdotalevidenceofdisparatetreatmentofMBEcontractorsandsubcontractors,thetotalabsenceofpre‐programenactmentstatisticalevidencewasproblematictothecompellinggovernmentinterestcomponentofthestrictscrutinyanalysis.Thecourtremandedtothedistrictcourtforadeterminationofwhetherthepost‐programenactmentstudiesconstitutedasufficientcompellinggovernmentinterest.Perthenarrowtailoringprongofthestrictscrutinytest,thecourtfoundthatalthoughtheprogramincludedrace‐neutralalternativemeasuresandwasflexible(i.e.,includedawaiverprovision),theoverbreadthoftheprogramtoincludeMBEsoutsideofKingCountywasfataltothenarrowtailoringanalysis.
Thecourtalsoremandedontheissueofwhethertheplaintiffswereentitledtodamagesunder42U.S.C.§§1981and1983,andinparticulartodeterminewhetherevidenceofcausationexisted.WithrespecttotheWBEprogram,thecourtheldtheplaintiffhadstandingtochallengetheprogram,andapplyingtheintermediatescrutinyanalysis,heldtheWBEprogramsurvivedthefacialchallenge.
InfindingtheabsenceofanystatisticaldatainsupportoftheCounty’sMBEProgram,thecourtmadeitclearthatstatisticalanalyseshaveservedandwillcontinuetoserveanimportantroleincasesinwhichtheexistenceofdiscriminationisadisputedissue.941F.2dat918.Thecourtnotedthatithasrepeatedlyapprovedtheuseofstatisticalprooftoestablishaprimafaciecaseofdiscrimination.Id.ThecourtpointedoutthattheU.S.SupremeCourtinCrosonheldthatwhere“grossstatisticaldisparitiescanbeshown,theyalonemayinapropercaseconstituteprimafacieproofofapatternorpracticeofdiscrimination.”Id.at918,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307‐08,andCroson,488U.S.at501.
Thecourtpointsoutthatstatisticalevidencemaynotfullyaccountforthecomplexfactorsandmotivationsguidingemploymentdecisions,manyofwhichmaybeentirelyrace‐neutral.Id.at919.Thecourtnotedthattherecordcontainedaplethoraofanecdotalevidence,butthatanecdotalevidence,standingalone,suffersthesameflawsasstatisticalevidence.Id.at919.Whileanecdotalevidencemaysufficetoproveindividualclaimsofdiscrimination,rarely,accordingtothecourt,ifever,cansuchevidenceshowasystemicpatternofdiscriminationnecessaryfortheadoptionofanaffirmativeactionplan.Id.
Nonetheless,thecourtheldthatthecombinationofconvincinganecdotalandstatisticalevidenceispotent.Id.at919.Thecourtpointedoutthatindividualswhotestifiedabouttheirpersonalexperiencesbroughtthecoldnumbersofstatistics“convincinglytolife.”Id.at919,quotingInternationalBrotherhoodofTeamstersv.UnitedStates,431U.S.324,339(1977).ThecourtalsopointedoutthattheEleventhCircuitCourtofAppeals,inpassinguponaminoritysetasideprogramsimilartotheoneinKingCounty,concludedthatthetestimonyregardingcomplaintsofdiscriminationcombinedwiththegrossstatisticaldisparitiesuncoveredbytheCountystudiesprovidedmorethanenoughevidenceonthequestionofpriordiscriminationandneedforracialclassificationtojustifythedenialofaMotionforSummaryJudgment.Id.at919,citingConeCorp.v.HillsboroughCounty,908F.2d908,916(11thCir.1990).
ThecourtfoundthattheMBEProgramoftheCountycouldnotstandwithoutaproperstatisticalfoundation.Id.at919.Thecourtaddressedwhetherpost‐enactmentstudiesdonebytheCounty
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ofastatisticalfoundationcouldbeconsideredbythecourtinconnectionwithdeterminingthevalidityoftheCountyMBEProgram.Thecourtheldthatamunicipalitymusthavesomeconcreteevidenceofdiscriminationinaparticularindustrybeforeitmayadoptaremedialprogram.Id.at920.However,thecourtsaidthisrequirementofsomeevidencedoesnotmeanthataprogramwillbeautomaticallystruckdowniftheevidencebeforethemunicipalityatthetimeofenactmentdoesnotcompletelyfulfillbothprongsofthestrictscrutinytest.Id.Rather,thecourtheld,thefactualpredicatefortheprogramshouldbeevaluatedbaseduponallevidencepresentedtothedistrictcourt,whethersuchevidencewasadducedbeforeorafterenactmentoftheMBEProgram.Id.Therefore,thecourtadoptedarulethatamunicipalityshouldhavebeforeitsomeevidenceofdiscriminationbeforeadoptingarace‐consciousprogram,whileallowingpost‐adoptionevidencetobeconsideredinpassingontheconstitutionalityoftheprogram.Id.
Thecourt,therefore,remandedthecasetothedistrictcourtfordeterminationofwhethertheconsultantstudiesthatwereperformedaftertheenactmentoftheMBEProgramcouldprovideanadequatefactualjustificationtoestablisha“propellinggovernmentinterest”forKingCounty’sadoptingtheMBEProgram.Id.at922.
ThecourtalsofoundthatCrosondoesnotrequireashowingofactivediscriminationbytheenactingagency,andthatpassiveparticipation,suchastheinfusionoftaxdollarsintoadiscriminatoryindustry,suffices.Id.at922,citingCroson,488U.S.at492.ThecourtpointedoutthattheSupremeCourtinCrosonconcludedthatiftheCityhadevidencebeforeit,thatnon‐minoritycontractorsweresystematicallyexcludingminoritybusinessesfromsubcontractingopportunities,itcouldtakeactiontoendthediscriminatoryexclusion.Id.at922.Thecourtpointsoutthatiftherecordultimatelysupportedafindingofsystemicdiscrimination,theCountyadequatelylimiteditsprogramtothosebusinessesthatreceivetaxdollars,andtheprogramimposedobligationsupononlythosebusinesseswhichvoluntarilysoughtKingCountytaxdollarsbycontractingwiththeCounty.Id.
Thecourtaddressedseveralfactorsintermsofthenarrowlytailoredanalysis,andfoundthatfirst,anMBEprogramshouldbeinstitutedeitherafter,orinconjunctionwith,race‐neutralmeansofincreasingminoritybusinessparticipationandpubliccontracting.Id.at922,citingCroson,488U.S.at507.Thesecondcharacteristicofthenarrowly‐tailoredprogram,accordingtothecourt,istheuseofminorityutilizationgoalsonacase‐by‐casebasis,ratherthanuponasystemofrigidnumericalquotas.Id.Finally,thecourtstatedthatanMBEprogrammustbelimitedinitseffectivescopetotheboundariesoftheenactingjurisdiction.Id.
Amongthevariousnarrowlytailoredrequirements,thecourtheldconsiderationofrace‐neutralalternativesisamongthemostimportant.Id.at922.Nevertheless,thecourtstatedthatwhilestrictscrutinyrequiresserious,goodfaithconsiderationofrace‐neutralalternatives,strictscrutinydoesnotrequireexhaustionofeverypossiblesuchalternative.Id.at923.Thecourtnotedthatitdoesnotintendagovernmententityexhausteveryalternative,howeverirrational,costly,unreasonable,andunlikelytosucceedsuchalternativemightbe.Id.Thus,thecourtrequiredonlythatastateexhaustsrace‐neutralmeasuresthatthestateisauthorizedtoenact,andthathaveareasonablepossibilityofbeingeffective.Id.ThecourtnotedinthiscasetheCountyconsideredalternatives,butdeterminedthattheywerenotavailableasamatteroflaw.Id.TheCountycannotberequiredtoengageinconductthatmaybeillegal,norcanitbecompelledtoexpendprecioustaxdollarsonprojectswherepotentialforsuccessismarginalatbest.Id.
ThecourtnotedthatKingCountyhadadoptedsomerace‐neutralmeasuresinconjunctionwiththeMBEProgram,forexample,hostingoneortwotrainingsessionsforsmallbusinesses,
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coveringsuchtopicsasdoingbusinesswiththegovernment,smallbusinessmanagement,andaccountingtechniques.Id.at923.Inaddition,theCountyprovidedinformationonassessingSmallBusinessAssistancePrograms.Id.ThecourtfoundthatKingCountyfulfilleditsburdenofconsideringrace‐neutralalternativeprograms.Id.
Asecondindicatorofaprogram’snarrowlytailoringisprogramflexibility.Id.at924.Thecourtfoundthatanimportantmeansofachievingsuchflexibilityisthroughuseofcase‐by‐caseutilizationgoals,ratherthanrigidnumericalquotasorgoals.Id.at924.ThecourtpointedoutthatKingCountyuseda“percentagepreference”method,whichisnotaquota,andwhilethepreferenceislockedatfivepercent,suchafixedpreferenceisnotundulyrigidinlightofthewaiverprovisions.ThecourtfoundthatavalidMBEProgramshouldincludeawaiversystemthataccountsforboththeavailabilityofqualifiedMBEsandwhetherthequalifiedMBEshavesufferedfromtheeffectsofpastdiscriminationbytheCountyorprimecontractors.Id.at924.ThecourtfoundthatKingCounty’sprogramprovidedwaiversinbothinstances,includingwhereneitherminoritynorawoman’sbusinessisavailabletoprovideneededgoodsorservicesandwhereavailableminorityand/orwomen’sbusinesseshavegivenpricequotesthatareunreasonablyhigh.Id.
ThecourtalsopointedoutotherattributesofthenarrowlytailoredandflexibleMBEprogram,includingabidderthatdoesnotmeetplannedgoals,maynonethelessbeawardedthecontractbydemonstratingagoodfaithefforttocomply.Id.TheactualpercentagesofrequiredMBEparticipationaredeterminedonacase‐by‐casebasis.Levelsofparticipationmaybereducediftheprescribedlevelsarenotfeasible,ifqualifiedMBEsareunavailable,orifMBEpricequotesarenotcompetitive.Id.
ThecourtconcludedthatanMBEprogrammustalsobelimitedinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.Id.at925.HerethecourtheldthatKingCounty’sMBEprogramfailsthisthirdportionof“narrowlytailored”requirement.Thecourtfoundthedefinitionof“minoritybusiness”includedintheProgramindicatedthataminority‐ownedbusinessmayqualifyforpreferentialtreatmentifthebusinesshasbeendiscriminatedagainstintheparticulargeographicalareasinwhichitoperates.Thecourtheldthisdefinitionasoverlybroad.Id.at925.ThecourtheldthattheCountyshouldaskthequestionwhetherabusinesshasbeendiscriminatedagainstinKingCounty.Id.Thisdetermination,accordingtothecourt,isnotaninsurmountableburdenfortheCounty,astheruledoesnotrequirefindingspecificinstancesofdiscriminatoryexclusionforeachMBE.Id.Rather,iftheCountysuccessfullyprovesmalignantdiscriminationwithintheKingCountybusinesscommunity,anMBEwouldbepresumptivelyeligibleforreliefifithadpreviouslysoughttodobusinessintheCounty.Id.
Inotherwords,ifsystemicdiscriminationintheCountyisshown,thenitisfairtopresumethatanMBEwasvictimizedbythediscrimination.Id.at925.ForthepresumptiontoattachtotheMBE,however,itmustbeestablishedthattheMBEis,orattemptedtobecome,anactiveparticipantintheCounty’sbusinesscommunity.Id.BecauseKingCounty’sprogrampermittedMBEparticipationevenbyMBEsthathavenopriorcontactwithKingCounty,theprogramwasoverbroadtothatextent.Id.Therefore,thecourtreversedthegrantofsummaryjudgmenttoKingCountyontheMBEprogramonthebasisthatitwasgeographicallyoverbroad.
Thecourtconsideredthegender‐specificaspectoftheMBEprogram.Thecourtdeterminedthedegreeofjudicialscrutinyaffordedgender‐consciousprogramswasintermediatescrutiny,ratherthanstrictscrutiny.Id.at930.Underintermediatescrutiny,gender‐basedclassificationmustserveanimportantgovernmentalobjective,andtheremustbeadirect,substantialrelationshipbetweentheobjectiveandthemeanschosentoaccomplishtheobjective.Id.at931.
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Inthiscase,thecourtconcluded,thatKingCounty’sWBEpreferencesurvivedafacialchallenge.Id.at932.ThecourtfoundthatKingCountyhadalegitimateandimportantinterestinremedyingthemanydisadvantagesthatconfrontwomenbusinessownersandthatthemeanschosenintheprogramweresubstantiallyrelatedtotheobjective.Id.ThecourtfoundtherecordadequatelyindicateddiscriminationagainstwomenintheKingCountyconstructionindustry,notingtheanecdotalevidenceincludinganaffidavitofthepresidentofaconsultingengineeringfirm.Id.at933.Therefore,thecourtupheldtheWBEportionoftheMBEprogramandaffirmedthedistrictcourt’sgrantofsummaryjudgmenttoKingCountyfortheWBEprogram.
Recent District Court Decisions
14. Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).
PlaintiffKossmanisacompanyengagedinthebusinessofprovidingerosioncontrolservicesandismajorityownedbyawhitemale.2016WL1104363at*1.KossmanbroughtthisactionasanequalprotectionchallengetotheCityofHouston’sMinorityandWomenOwnedBusinessEnterprise(“MWBE”)program.Id.TheMWBEprogramthatischallengedhasbeenineffectsince2013andsetsa34percentMWBEgoalforconstructionprojects.Id.Houstonsetthisgoalbasedonadisparitystudyissuedin2012.Id.Thestudyanalyzedthestatusofminority‐ownedandwomen‐ownedbusinessenterprisesinthegeographicandproductmarketsofHouston’sconstructioncontracts.Id.
KossmanallegesthattheMWBEprogramisunconstitutionalonthegroundthatitdeniesnon‐MWBEsequalprotectionofthelaw,andassertsthatithaslostbusinessasaresultoftheMWBEprogrambecauseprimecontractorsareunwillingtosubcontractworktoanon‐MWBEfirmlikeKossman.Id.at*1.Kossmanfiledamotionforsummaryjudgment;HoustonfiledamotiontoexcludethetestimonyofKossman’sexpert;andHoustonfiledamotionforsummaryjudgment.Id.
ThedistrictcourtreferredthesemotionstotheMagistrateJudge.TheMagistrateJudge,onFebruary17,2016,issueditsMemorandum&RecommendationtothedistrictcourtinwhichitfoundthatHouston’smotiontoexcludeKossman’sexpertshouldbegrantedbecausetheexpertarticulatednomethodandhadnotraininginstatisticsoreconomicsthatwouldallowhimtocommentonthevalidityofthedisparitystudy.Id.at*1TheMagistrateJudgealsofoundthattheMWBEprogramwasconstitutionalunderstrictscrutiny,exceptwithrespecttotheinclusionofNative‐American‐ownedbusinesses.Id.TheMagistrateJudgefoundtherewasinsufficientevidencetoestablishaneedforremedialactionforbusinessesownedbyNativeAmericans,butfoundtherewassufficientevidencetojustifyremedialactionandinclusionofotherracialandethnicminoritiesandwomen‐ownedbusinesses.Id.
AftertheMagistrateJudgeissueditsMemorandum&Recommendation,Kossmanfiledobjections,whichthedistrictcourtsubsequentlyinitsorderadoptingMemorandum&Recommendation,decidedonMarch22,2016,affirmedandadoptedtheMemorandum&RecommendationofthemagistratejudgeandoverruledtheobjectionsbyKossman.Id.at*2.
DistrictcourtorderadoptingMemorandum&RecommendationofMagistrateJudge.
Dun&BradstreetunderlyingdataproperlywithheldandKossman’sproposedexpertproperlyexcluded.ThedistrictcourtfirstrejectedKossman’sobjectionthattheCityofHoustonimproperlywithheldtheDun&Bradstreetdatathatwasutilizedinthedisparitystudy.
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Thisrulingwasinconnectionwiththedistrictcourt’saffirmingthedecisionoftheMagistrateJudgegrantingthemotionofHoustontoexcludethetestimonyofKossman’sproposedexpert.KossmanhadconcededthattheMagistrateJudgecorrectlydeterminedthatKossman’sproposedexpertarticulatednomethodandreliedonuntestedhypotheses.Id.at*2.Kossmanalsoacknowledgedthattheexpertwasunabletoproducedatatoconfrontthedisparitystudy.Id.
KossmanhadallegedthatHoustonwithheldtheunderlyingdatafromDun&Bradstreet.ThecourtfoundthatunderthecontractualagreementbetweenHoustonanditsconsultant,theconsultantforHoustonhadalicensingagreementwithDun&BradstreetthatprohibiteditfromprovidingtheDun&Bradstreetdatatoanythird‐party.Id.at*2.Inaddition,thecourtagreedwithHoustonthatKossmanwouldnotbeabletoofferadmissibleanalysisoftheDun&Bradstreetdata,evenifithadaccesstothedata.Id.AstheMagistrateJudgepointedout,thecourtfoundKossman’sexperthadnotraininginstatisticsoreconomics,andthuswouldnotbequalifiedtointerprettheDun&Bradstreetdataorchallengethedisparitystudy’smethods.Id.Therefore,thecourtaffirmedthegrantofHouston’smotiontoexcludeKossman’sexpert.
Dun&Bradstreetdataisreliableandacceptedbycourts;biddingdatarejectedasproblematic.ThecourtrejectedKossman’sargumentthatthedisparitystudywasbasedoninsufficient,unverifiedinformationfurnishedbyothers,andrejectedKossman’sargumentthatbiddingdataisasuperiormeasureofdeterminingavailability.Id.at*3.
Thedistrictcourtheldthatbecausethedisparitystudyconsultantdidnotcollectthedata,butinsteadutilizeddatathatDun&Bradstreethadcollected,theconsultantcouldnotguaranteetheinformationitreliedonincreatingthestudyandrecommendations.Id.at*3.Theconsultant’srolewastoanalyzethatdataandmakerecommendationsbasedonthatanalysis,andithadnoreasontodoubttheauthenticityoraccuracyoftheDun&Bradstreetdata,norhadKossmanpresentedanyevidencethatwouldcallthatdataintoquestion.Id.AsHoustonpointedout,Dun&Bradstreetdataisextremelyreliable,isfrequentlyusedindisparitystudies,andhasbeenconsistentlyacceptedbycourtsthroughoutthecountry.Id.
KossmanpresentednoevidenceindicatingthatbiddingdataisacomparablymoreaccurateindicatorofavailabilitythantheDun&Bradstreetdata,butratherKossmanreliedonpureargument.Id.at*3.ThecourtagreedwiththeMagistrateJudgethatbiddingdataisinherentlyproblematicbecauseitreflectsonlythosefirmsactuallysolicitedforbids.Id.Therefore,thecourtfoundthebiddingdatawouldfailtoidentifythosefirmsthatwerenotsolicitedforbidsduetodiscrimination.Id.
Theanecdotalevidenceisvalidandreliable.ThedistrictcourtrejectedKossman’sargumentthatthestudyimproperlyreliedonanecdotalevidence,inthattheevidencewasunreliableandunverified.Id.at*3.Thedistrictcourtheldthatanecdotalevidenceisavalidsupplementtothestatisticalstudy.Id.TheMWBEprogramissupportedbybothstatisticalandanecdotalevidence,andanecdotalevidenceprovidesavaluablenarrativeperspectivethatstatisticsalonecannotprovide.Id.
ThedistrictcourtalsofoundthatHoustonwasnotrequiredtoindependentlyverifytheanecdotes.Id.at*3.Kossman,thedistrictcourtconcluded,couldhavepresentedcontraryevidence,butitdidnot.Id.Thedistrictcourtcitedothercourtsforthepropositionthatthecombinationofanecdotalandstatisticalevidenceispotent,andthatanecdotalevidenceisnothingmorethanawitness’snarrativeofanincidenttoldfromthewitness’sperspectiveandincludingthewitness’sperceptions.Id.Also,thecourtheldthecitywasnotrequiredtopresent
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corroboratingevidence,andtheplaintiffwasfreetopresentitsownwitnesstoeitherrefutetheincidentdescribedbythecity’switnessesortorelatetheirownperceptionsondiscriminationintheconstructionindustry.Id.
Thedatarelieduponbythestudywasnotstale.ThecourtrejectedKossman’sargumentthatthestudyreliedondatathatistoooldandnolongerrelevant.Id.at*4.Thecourtfoundthatthedatawasnotstaleandthatthestudyusedthemostcurrentavailabledataatthetimeofthestudy,includingCensusBureaudata(2006‐2008)andFederalReservedata(1993,1998and2003),andthestudyperformedregressionanalysesonthedata.Id.
Moreover,KossmanpresentednoevidencetosuggestthatHouston’sconsultantcouldhaveaccessedmorerecentdataorthattheconsultantwouldhavereacheddifferentconclusionswithmorerecentdata.Id.
TheHoustonMWBEprogramisnarrowlytailored.ThedistrictcourtagreedwiththeMagistrateJudgethatthestudyprovidedsubstantialevidencethatHoustonengagedinrace‐neutralalternatives,whichwereinsufficienttoeliminatedisparities,andthatdespiterace‐neutralalternativesinplaceinHouston,adversedisparitiesforMWBEswereconsistentlyobserved.Id.at*4.Therefore,thecourtfoundtherewasstrongevidencethataremedialprogramwasnecessarytoaddressdiscriminationagainstMWBEs.Id.Moreover,Houstonwasnotrequiredtoexhausteverypossiblerace‐neutralalternativebeforeinstitutingtheMWBEprogram.Id.
ThedistrictcourtalsofoundthattheMWBEprogramdidnotplaceanundueburdenonKossmanorsimilarlysituatedcompanies.Id.at*4.UndertheMWBEprogram,aprimecontractormaysubstituteasmallbusinessenterpriselikeKossmanforanMWBEonaraceandgender‐neutralbasisforuptofourpercentofthevalueofacontract.Id.KossmandidnotpresentevidencethatheeverbidonmorethanfourpercentofaHoustoncontract.Id.Inaddition,thecourtstatedthefacttheMWBEprogramplacedsomeburdenonKossmanisinsufficienttosupporttheconclusionthattheprogramisnotnearlytailored.Id.ThecourtconcurredwiththeMagistrateJudge’sobservationthattheproportionalsharingofopportunitiesis,atthecore,thepointofaremedialprogram.Id.ThedistrictcourtagreedwiththeMagistrateJudge’sconclusionthattheMWBEprogramisnearlytailored.
Native‐American‐ownedbusinesses.ThestudyfoundthatNative‐American‐ownedbusinesseswereutilizedatahigherrateinHouston’sconstructioncontractsthanwouldbeanticipatedbasedontheirrateofavailabilityintherelevantmarketarea.Id.at*4.ThecourtnotedthisfindingwouldtendtonegatethepresenceofdiscriminationagainstNativeAmericansinHouston’sconstructionindustry.Id.
ThisHoustondisparitystudyconsultantstatedthatthehighutilizationrateforNativeAmericansstemslargelyfromtheworkoftwoNative‐American‐ownedfirms.Id.TheHoustonconsultantsuggestedthatwithoutthesetwofirms,theutilizationrateforNativeAmericanswoulddeclinesignificantly,yieldingastatisticallysignificantdisparityratio.Id.
TheMagistrateJudge,accordingtothedistrictcourt,correctlyheldandfoundthattherewasinsufficientevidencetosupportincludingNativeAmericansintheMWBEprogram.Id.ThecourtapprovedandadoptedtheMagistrateJudgeexplanationthattheopinionofthedisparitystudyconsultantthatasignificantstatisticaldisparitywouldexistiftwoofthecontractingNative‐American‐ownedbusinessesweredisregarded,isnotevidenceoftheneedforremedialaction.Id.at*5.Thedistrictcourtfoundnoequal‐protectionsignificancetothefactthemajorityof
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contractslettoNative‐American‐ownedbusinessesweretoonlytwofirms.Id.Therefore,theutilizationgoalforbusinessesownedbyNativeAmericansisnotsupportedbyastrongevidentiarybasis.Id.at*5.
ThedistrictcourtagreedwiththeMagistrateJudge’srecommendationthatthedistrictcourtgrantsummaryjudgmentinfavorofKossmanwithrespecttotheutilizationgoalforNative‐American‐ownedbusiness.Id.ThecourtfoundtherewaslimitedsignificancetotheHoustonconsultant’sopinionthatutilizationofNative‐American‐ownedbusinesseswoulddroptostatisticallysignificantlevelsiftwoNative‐American‐ownedbusinesseswereignored.Id.at*5.
ThecourtstatedthesituationpresentedbytheHoustondisparitystudyconsultantofa“hypotheticalnon‐existence”ofthesefirmsisnotevidenceandcannotsatisfystrictscrutiny.Id.at*5.Therefore,thedistrictcourtadoptedtheMagistrateJudge’srecommendationwithrespecttoexcludingtheutilizationgoalforNative‐American‐ownedbusinesses.Id.ThecourtnotedthatapreferenceforNative‐American‐ownedbusinessescouldbecomeconstitutionallyvalidinthefutureifthereweresufficientevidenceofdiscriminationagainstNative‐American‐ownedbusinessesinHouston’sconstructioncontracts.Id.at*5.
Conclusion.ThedistrictcourtheldthattheMemorandum&RecommendationoftheMagistrateJudgeisadoptedinfull;Houston’smotiontoexcludetheKossman’sproposedexpertwitnessisgranted;Kossman’smotionforsummaryjudgmentisgrantedwithrespecttoexcludingtheutilizationgoalforNative‐American‐ownedbusinessesanddeniedinallotherrespects;Houston’smotionforsummaryjudgmentisdeniedwithrespecttoincludingtheutilizationgoalforNative‐American‐ownedbusinessesandgrantedinallotherrespectsastotheMWBEprogramforotherminoritiesandwomen‐ownedfirms.Id.at*5.
MemorandumandRecommendationbyMagistrateJudge,datedFebruary17,2016,S.D.Texas,CivilActionNo.H‐14‐1203.
Kossman’sproposedexpertexcludedandnotadmissible.Kossmaninitsmotionforsummaryjudgmentsolelyreliedonthetestimonyofitsproposedexpert,andsubmittednootherevidenceinsupportofitsmotion.TheMagistrateJudge(hereinafter“MJ”)grantedHouston’smotiontoexcludetestimonyofKossman’sproposedexpert,whichthedistrictcourtadoptedandapproved,formultiplereasons.TheMJfoundthathisexperiencedoesnotincludedesigningorconductingstatisticalstudies,andhehasnoeducationortraininginstatisticsoreconomics.See,MJ,MemorandumandRecommendation(“M&R”)byMJ,datedFebruary17,2016,at31,S.D.Texas,CivilActionNo.H‐14‐1203.TheMJfoundhewasnotqualifiedtocollect,organizeorinterpretnumericaldata,hasnoexperienceextrapolatinggeneralconclusionsaboutasubsetofthepopulationbysamplingit,hasdemonstratednoknowledgeofsamplingmethodsorunderstandingofthemathematicalconceptsusedintheinterpretationofrawdata,andthus,isnotqualifiedtochallengethemethodsandcalculationsofthedisparitystudy.Id.
TheMJfoundthattheproposedexpertreportisonlyatheoreticalattackonthestudywithnobasisandobjectiveevidence,suchasdatarortestimonyofconstructionfirmsintherelativemarketareathatsupporthisassumptionsregardingavailableMWBEsorcomparativestudiesthatcontrolthefactorsaboutwhichhecomplained.Id.at31.TheMJstatedthattheproposedexpertisnotaneconomistandthusisnotqualifiedtochallengethedisparitystudyexplanationofitseconomicconsiderations.Id.at31.Theproposedexpertfailedtoprovideeconometricsupportfortheuseofbidderdata,whichhearguedwasthebettersourcefordeterminingavailability,citednopersonalexperiencefortheuseofbidderdata,andprovidednoproofthatwouldmoreaccuratelyreflectavailabilityofMWBEsabsentdiscriminatoryinfluence.Id.
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Moreover,heacknowledgedthatnobidderdatahadbeencollectedfortheyearscoveredbythestudy.Id.
Thecourtfoundthattheproposedexpertarticulatednomethodatalltodoadisparitystudy,butmerelyprovideduntestedhypotheses.Id.at33.Theproposedexpert’scriticismsofthestudy,accordingtotheMJ,werenotfoundedincitedprofessionalsocialscienceoreconometricstandards.Id.at33.TheMJconcludesthattheproposedexpertisnotqualifiedtooffertheopinionscontainedinhisreport,andthathisreportisnotrelevant,notreliable,and,therefore,notadmissible.Id.at34.
Relevantgeographicmarketarea.TheMJfoundthemarketareaofthedisparityanalysiswasgeographicallyconfinedtoareacodesinwhichthemajorityofthepubliccontractingconstructionfirmswerelocated.Id.at3‐4,51.Therelevantmarketarea,theMJsaid,wasweightedbyindustry,andthereforethestudylimitedtherelevantmarketareabygeographyandindustrybasedonHouston’spastyears’recordsfrompriorconstructioncontracts.Id.at3‐4,51.
AvailabilityofMWBEs.TheMJconcludeddisparitystudiesthatcomparedtheavailabilityofMWBEsintherelevantmarketwiththeirutilizationinlocalpubliccontractinghavebeenwidelyrecognizedasstrongevidencetofindacompellinginterestbyagovernmentalentityformakingsurethatitspublicdollarsdonotfinanceracialdiscrimination.Id.at52‐53.Here,thestudydefinedthemarketareabyreviewingpastcontractinformation,anddefinedtherelevantmarketaccordingtotwocriticalfactors,geographyandindustry.Id.at3‐4,53.Thoseparameters,weightedbydollarsattributabletoeachindustry,wereusedtoidentifyforcomparisonMWBEsthatwereavailableandMWBEsthathadbeenutilizedinHouston’sconstructioncontractingoverthelastfiveandone‐halfyears.Id.at4‐6,53.Thestudyadjustedforownerlabormarketexperienceandeducationalattainmentinadditiontogeographiclocationandindustryaffiliation.Id.at6,53.
Kossmanproducednoevidencethattheavailabilityestimatewasinadequate.Id.at53.Plaintiff’scriticismsoftheavailabilityanalysis,includingforcapacity,thecourtstatedwasnotsupportedbyanycontraryevidenceorexpertopinion.Id.at53‐54.TheMJrejectedPlaintiff’sproposedexpert’ssuggestionthatanalysisofbidderdataisabetterwaytoidentifyMWBEs.Id.at54.TheMJnotedthatKossman’sproposedexpertpresentednocomparativeevidencebasedonbidderdata,andtheMJfoundthatbidderdatamayproduceavailabilitystatisticsthatareskewedbyactiveandpassivediscriminationinthemarket.Id.
Inadditiontobeingunderinclusiveduetodiscrimination,theMJsaidbidderdatamaybeoverinclusiveduetoinaccurateself‐evaluationbyfirmsofferingbidsdespitetheinabilitytofulfillthecontract.Id.at54.Itispossiblethatunqualifiedfirmswouldbeincludedintheavailabilityfiguresimplybecausetheybidonaparticularproject.Id.TheMJconcludedthatthelawdoesnotrequireanindividualizedapproachthatmeasureswhetherMWBEsarequalifiedonacontract‐by‐contractbasis.Id.at55.
Disparityanalysis.ThestudyindicatedsignificantstatisticaladversedisparitiesastobusinessesownedbyAfricanAmericansandAsians,whichtheMJfoundprovidedaprimafaciecaseofastrongbasisinevidencethatjustifiedtheProgram’sutilizationgoalsforbusinessesownedbyAfricanAmericans,Asian‐PacificAmericans,andsubcontinentAsianAmericans.Id.at55.
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ThedisparityanalysisdidnotreflectsignificantstatisticaldisparitiesastobusinessesownedbyHispanicAmericans,NativeAmericansornon‐minoritywomen.Id.at55‐56.TheMJfound,however,theevidenceofsignificantstatisticaladversedisparityintheutilizationofHispanic‐ownedbusinessesintheunremediated,privatesectormetHouston’sprimafacieburdenofproducingastrongevidentiarybasisforthecontinuedinclusionofbusinessesownedbyHispanicAmericans.Id.at56.TheMJsaidthedifferencebetweentheprivatesectorandHouston’sconstructioncontractingwasespeciallynotablebecausetheutilizationofHispanic‐ownedbusinessesbyHoustonhasbenefittedfromHouston’sremedialprogramformanyyears.Id.Withoutaremedialprogram,theMJstatedtheevidencesuggests,andnoevidencecontradicts,afindingthatutilizationwouldfallbacktoprivatesectorlevels.Id.
WithregardtobusinessesownedbyNativeAmericans,thestudyindicatedtheywereutilizedtoahigherpercentagethantheiravailabilityintherelevantmarketarea.Id.at56.AlthoughtheconsultantforHoustonsuggestedthatasignificantstatisticaldisparitywouldexistiftwoofthecontractingNative‐American‐ownedbusinessesweredisregarded,theMJfoundthatopinionisnotevidenceoftheneedforremedialaction.Id.at56.TheMJconcludedtherewasno‐equalprotectionsignificancetothefactthemajorityofcontractslettoNative‐American‐ownedbusinessesweretoonlytwofirms,whichwasindicatedbyHouston’sconsultant.Id.
Theutilizationofwomen‐ownedbusinesses(WBEs)declinedbyfiftypercentwhentheynolongerbenefittedfromremedialgoals.Id.at57.BecauseWBEswereeliminatedduringtheperiodstudied,thesignificanceofstatisticaldisparity,accordingtotheMJ,isnotreflectedinthenumbersfortheperiodasawhole.Id.at57.TheMJsaidduringthetimeWBEswerenotpartoftheprogram,thestatisticaldisparitybetweenavailabilityandutilizationwassignificant.Id.TheprecipitousdeclineintheutilizationofWBEsafterWBEswereeliminatedandthesignificantstatisticaldisparitywhenWBEsdidnotbenefitfrompreferentialtreatment,theMJfound,providedastrongbasisinevidenceforthenecessityofremedialaction.Id.at57.Kossman,theMJpointedout,offerednoevidenceofagender‐neutralreasonforthedecline.Id.
TheMJrejectedPlaintiff’sargumentthatprimecontractorandsubcontractordatashouldnothavebeencombined.Id.at57.TheMJsaidthatprimecontractorandsubcontractordataisnotrequiredtobeevaluatedseparately,butthattheevidenceshouldcontainreliablesubcontractordatatoindicatediscriminationbyprimecontractors.Id.at58.Here,thestudyidentifiedtheMWBEsthatcontractedwithHoustonbyindustryandthoseavailableintherelevantmarketbyindustry.Id.at58.Thedata,accordingtotheMJ,wasspecificandcomplete,andseparatelyconsideringprimecontractorsandsubcontractorsisnotonlyunnecessarybutmaybemisleading.Id.Theanecdotalevidenceindicatedthatconstructionfirmshadserved,ondifferentcontracts,inbothroles.Id.
TheMJstatedthelawrequiresthatthetargeteddiscriminationbeidentifiedwithparticularity,notthateveryinstanceofexplicitorimplicitdiscriminationbeexposed.Id.at58.Thestudy,theMJfound,definedtherelevantmarketatasufficientlevelofparticularitytoproduceevidenceofpastdiscriminationinHouston’sawardingofconstructioncontractsandtoreachconstitutionallysoundresults.Id.
Anecdotalevidence.Kossmancriticizedtheanecdotalevidencewithwhichastudysupplementeditsstatisticalanalysisasnothavingbeenverifiedandinvestigated.Id.at58‐59.TheMJsaidthatKossmancouldhavepresenteditsownevidence,butdidnot.Id.at59.Kossmanpresentednocontrarybodyofanecdotalevidenceandpointedtonothingthatcalledintoquestionthespecificresultsofthemarketsurveysandfocusgroupsdoneinthestudy.Id.The
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courtrejectedanyrequirementthattheanecdotalevidencebeverifiedandinvestigated.Id.at59.
Regressionanalyses.Kossmanchallengedtheregressionanalysesdoneinthestudyofbusinessformation,earningsandcapitalmarkets.Id.at59.Kossmancriticizedtheregressionanalysesforfailingtopreciselypointtowheretheidentifieddiscriminationwasoccurring.Id.TheMJfoundthatthefocusonidentifyingwherediscriminationisoccurringmissesthepoint,asregressionanalysesisnotintendedtopointtospecificsourcesofdiscrimination,buttoeliminatefactorsotherthandiscriminationthatmightexplaindisparities.Id.at59‐60.Discrimination,theMJsaid,isnotrevealedthroughevidenceofexplicitdiscrimination,butisrevealedthroughunexplainabledisparity.Id.at60.
TheMJnotedthatdatausedintheregressionanalyseswerethemostcurrentavailabledataatthetime,andforthemostpartdatadatedfromwithinacoupleofyearsorlessofthestartofthestudyperiod.Id.at60.Again,theMJstated,Kossmanproducednoevidencethatthedataonwhichtheregressionanalyseswerebasedwereinvalid.Id.
NarrowTailoringfactors.TheMJfoundthattheHoustonMWBEprogramsatisfiedthenarrowtailoringprongofastrictscrutinyanalysis.TheMJsaidthatthe2013MWBEprogramcontainedavarietyofrace‐neutralremedies,includingmanyeducationalopportunities,butthattheevidenceoftheirefficacyorlackthereofisfoundinthedisparityanalyses.Id.at60‐61.TheMJconcludedthatwhiletherace‐neutralremediesmayhaveapositiveeffect,theyhavenoteliminatedthediscrimination.Id.at61.TheMJfoundHouston’srace‐neutralprogrammingsufficienttosatisfytherequirementsofnarrowtailoring.Id.
Astothefactorsofflexibilityanddurationofthe2013Program,theMJalsostatedtheseaspectssatisfynarrowtailoring.Id.at61.The2013Programemploysgoalsasopposedtoquotas,setsgoalsonacontract‐by‐contractbasis,allowssubstitutionofsmallbusinessenterprisesforMWBEsforuptofourpercentofthecontract,includesaprocessforallowinggood‐faithwaivers,andbuildsindueprocessforsuspensionsofcontractorswhofailtomakegood‐faitheffortstomeetcontractgoalsorMWSBEsthatfailtomakegood‐faitheffortstomeetallparticipationrequirements.Id.at61.Houstoncommittedtoreviewthe2013Programatleasteveryfiveyears,whichtheMJfoundtobeareasonablybriefdurationperiod.Id.
TheMJconcludedthatthethirty‐fourpercentannualgoalisproportionaltotheavailabilityofMWBEshistoricallysufferingdiscrimination.Id.at61.Finally,theMJfoundthattheeffectofthe2013Programonthirdpartiesisnotsogreatastoimposeanunconstitutionalburdenonnon‐minorities.Id.at62.Theburdenonnon‐minoritySBEs,suchasKossman,islessenedbythefour‐percentsubstitutionprovision.Id.at62.TheMJnotedanotherdistrictcourt’sopinionthatthemerepossibilitythatinnocentpartieswillsharetheburdenofaremedialprogramisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at62.
Holding.TheMJheldthatHoustonestablishedaprimafaciecaseofcompellinginterestandnarrowtailoringforallaspectsoftheMWBEprogram,exceptgoalsforNative‐American‐ownedbusinesses.Id.at62.TheMJalsoheldthatPlaintifffailedtoproduceanyevidence,muchlessthegreaterweightofevidence,thatwouldcallintoquestiontheconstitutionalityofthe2013MWBEprogram.Id.at62.
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15. Thomas v. City of Saint Paul, 526 F. Supp.2d 959 (D. Minn 2007), affirmed, 321 Fed. Appx. 541, 2009 WL 777932 (8th Cir. March 26, 2009) (unpublished opinion), cert. denied, 130 S.Ct. 408 (2009)
InThomasv.CityofSaintPaul,theplaintiffsareAfricanAmericanbusinessownerswhobroughtthislawsuitclaimingthattheCityofSaintPaul,Minnesotadiscriminatedagainsttheminawardingpublicly‐fundedcontracts.TheCitymovedforsummaryjudgment,whichtheUnitedStatesDistrictCourtgrantedandissuedanorderdismissingtheplaintiff’slawsuitinDecember2007.
ThebackgroundofthecaseinvolvestheadoptionbytheCityofSaintPaulofaVendorOutreachProgram(“VOP”)thatwasdesignedtoassistminorityandothersmallbusinessownersincompetingforCitycontracts.PlaintiffswereVOP‐certifiedminoritybusinessowners.PlaintiffscontendedthattheCityengagedinraciallydiscriminatoryillegalconductinawardingCitycontractsforpublicly‐fundedprojects.PlaintiffThomasclaimedthattheCitydeniedhimopportunitiestoworkonprojectsbecauseofhisracearguingthattheCityfailedtoinvitehimtobidoncertainprojects,theCityfailedtoawardhimcontractsandthefactindependentdevelopershadnotcontractedwithhiscompany.526F.Supp.2dat962.TheCitycontendedthatThomaswasprovidedopportunitiestobidfortheCity’swork.
PlaintiffBrianConoverownedatruckingfirm,andheclaimedthatnoneofhisbidsasasubcontractoron22differentprojectstovariousindependentdeveloperswereaccepted.526F.Supp.2dat962.Thecourtfoundthatafteryearsofdiscovery,plaintiffConoverofferednoadmissibleevidencetosupporthisclaim,hadnotidentifiedthesubcontractorswhosebidswereaccepted,anddidnotofferanycomparisonshowingtheacceptedbidandthebidhesubmitted.Id.PlaintiffConoveralsocomplainedthathereceivedbiddinginvitationsonlyafewdaysbeforeabidwasdue,whichdidnotallowhimadequatetimetoprepareacompetitivebid.Id.Thecourtfound,however,hefailedtoidentifyanyparticularprojectforwhichhehadonlyasingledayofbid,anddidnotidentifyanysimilarlysituatedpersonofanyracewhowasaffordedalongerperiodoftimeinwhichtosubmitabid.Id.at963.PlaintiffNewellclaimedhesubmittednumerousbidsontheCity’sprojectsallofwhichwererejected.Id.Thecourtfound,however,thatheprovidednospecificsaboutwhyhedidnotreceivethework.Id.
TheVOP. UndertheVOP,theCitysetsannualbenchmarksorlevelsofparticipationforthetargetedminoritiesgroups.Id.at963.TheVOPprohibitsquotasandimposesvarious“goodfaith”requirementsonprimecontractorswhobidforCityprojects.Id.at964.Inparticular,theVOPrequiresthatwhenaprimecontractorrejectsabidfromaVOP‐certifiedbusiness,thecontractormustgivetheCityitsbasisfortherejection,andevidencethattherejectionwasjustified.Id.TheVOPfurtherimposesobligationsontheCitywithrespecttovendorcontracts.Id.ThecourtfoundtheCitymustseekwherepossibleandlawfultoawardaportionofvendorcontractstoVOP‐certifiedbusinesses.Id.TheCitycontractmanagermustsolicitthesebidsbyphone,advertisementinalocalnewspaperorothermeans.Whereapplicable,thecontractmanagermayassistinterestedVOPparticipantsinobtainingbonds,linesofcreditorinsurancerequiredtoperformunderthecontract.Id.TheVOPordinanceprovidesthatwhenthecontractmanagerengagesinoneormorepossibleoutreachefforts,heorsheisincompliancewiththeordinance.Id.
AnalysisandOrderoftheCourt. ThedistrictcourtfoundthattheCityisentitledtosummaryjudgmentbecauseplaintiffslackstandingtobringtheseclaimsandthatnogenuineissueofmaterialfactremains.Id.at965.ThecourtheldthattheplaintiffshadnostandingtochallengetheVOPbecausetheyfailedtoshowtheyweredeprivedofanopportunitytocompete,orthat
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theirinabilitytoobtainanycontractresultedfromanactofdiscrimination.Id.Thecourtfoundtheyfailedtoshowanyinstanceinwhichtheirracewasadeterminantinthedenialofanycontract.Id.at966.Asaresult,thecourtheldplaintiffsfailedtodemonstratetheCityengagedindiscriminatoryconductorpolicywhichpreventedplaintiffsfromcompeting.Id.at965‐966.
Thecourtheldthatintheabsenceofanyshowingofintentionaldiscriminationbasedonrace,themerefacttheCitydidnotawardanycontractstoplaintiffsdoesnotfurnishthatcausalnexusnecessarytoestablishstanding.Id.at966.ThecourtheldthelawdoesnotrequiretheCitytovoluntarilyadopt“aggressiverace‐basedaffirmativeactionprograms”inordertoawardspecificgroupspublicly‐fundedcontracts.Id.at966.ThecourtfoundthatplaintiffshadfailedtoshowaviolationoftheVOPordinance,oranyillegalpolicyoractiononthepartoftheCity.Id.
Thecourtstatedthattheplaintiffsmustidentifyadiscriminatorypolicyineffect.Id.at966.Thecourtnoted,forexample,evenassumingtheCityfailedtogiveplaintiffsmorethanoneday’snoticetoenterabid,suchafailureisnot,perse,illegal.Id.Thecourtfoundtheplaintiffsofferednoevidencethatanyoneelseofanyotherracereceivedanearliernotice,orthathewasgiventhisallegedlytardynoticeasaresultofhisrace.Id.
ThecourtconcludedthatevenifplaintiffsmaynothavebeenhiredasasubcontractortoworkforprimecontractorsreceivingCitycontracts,thesewereindependentdevelopersandtheCityisnotrequiredtodefendtheallegedbadactsofothers.Id.Therefore,thecourtheldplaintiffshadnostandingtochallengetheVOP.Id.at966.
Plaintiff’sclaims. Thecourtfoundthatevenassumingplaintiffspossessedstanding,theyfailedtoestablishfactswhichdemonstratedaneedforatrial,primarilybecauseeachtheoryofrecoveryisviableonlyiftheCity“intentionally”treatedplaintiffsunfavorablybecauseoftheirrace.Id.at967.Thecourtheldtoestablishaprimafacieviolationoftheequalprotectionclause,theremustbestateaction.Id.Plaintiffsmustofferfactsandevidencethatconstituteproofof“raciallydiscriminatoryintentorpurpose.”Id.at967.Here,thecourtfoundthatplaintifffailedtoallegeanysingleinstanceshowingtheCity“intentionally”rejectedVOPbidsbasedontheirrace.Id.
Thecourtalsofoundthatplaintiffsofferednoevidenceofaspecifictimewhenanyoneofthemsubmittedthelowestbidforacontractorasubcontract,orshowedanycasewheretheirbidswererejectedonthebasisofrace.Id.Thecourtheldtheallegedfailuretoplaceminoritycontractorsinapreferredposition,withoutmore,isinsufficienttosupportafindingthattheCityfailedtotreatthemequallybasedupontheirrace.Id.
TheCityrejectedtheplaintiff’sclaimsofdiscriminationbecausetheplaintiffsdidnotestablishbyevidencethattheCity“intentionally”rejectedtheirbidduetoraceorthattheCity“intentionally”discriminatedagainsttheseplaintiffs.Id.at967‐968.ThecourtheldthattheplaintiffsdidnotestablishasingleinstanceshowingtheCitydeprivedthemoftheirrights,andtheplaintiffsdidnotproduceevidenceofa“discriminatorymotive.”Id.at968.ThecourtconcludedthatplaintiffshadfailedtoshowthattheCity’sactionswere“raciallymotivated.”Id.
TheEighthCircuitCourtofAppealsaffirmedtherulingofthedistrictcourt.Thomasv.CityofSaintPaul,2009WL777932(8thCir.2009)(unpublishedopinion).TheEighthCircuitaffirmedbasedonthedecisionofthedistrictcourtandfindingnoreversibleerror.
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16. Thompson Building Wrecking Co. v. Augusta, Georgia, No. 1:07CV019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007)(Slip. Op.)
ThiscaseconsideredthevalidityoftheCityofAugusta’slocalminorityDBEprogram.ThedistrictcourtenjoinedtheCityfromfavoringanycontractbidonthebasisofracialclassificationandbaseditsdecisionprincipallyupontheoutdatedandinsufficientdataprofferedbytheCityinsupportofitsprogram.2007WL926153at*9‐10.
TheCityofAugustaenactedalocalDBEprogrambasedupontheresultsofadisparitystudycompletedin1994.Thedisparitystudyexaminedthedisparityinsocioeconomicstatusamongraces,comparedblack‐ownedbusinessesinAugustawiththoseinotherregionsandthoseownedbyotherracialgroups,examined“Georgia’sracisthistory”incontractingandprocurement,andexaminedcertaindatarelatedtoAugusta’scontractingandprocurement.Id.at*1‐4.TheplaintiffcontractorsandsubcontractorschallengedtheconstitutionalityoftheDBEprogramandsoughttoextendatemporaryinjunctionenjoiningtheCity’simplementationofracialpreferencesinpublicbiddingandprocurement.
TheCitydefendedtheDBEprogramarguingthatitdidnotutilizeracialclassificationsbecauseitonlyrequiredvendorstomakea“goodfaitheffort”toensureDBEparticipation.Id.at*6.Thecourtrejectedthisargumentnotingthatbidderswererequiredtosubmita“ProposedDBEParticipation”formandthatbidscontainingDBEparticipationweretreatedmorefavorablythanthosebidswithoutDBEparticipation.Thecourtstated:“Becauseaperson’sbusinesscanqualifyforthefavorabletreatmentbasedonthatperson’srace,whileasimilarlysituatedpersonofanotherracewouldnotqualify,theprogramcontainsaracialclassification.”Id.
ThecourtnotedthattheDBEprogramharmedsubcontractorsintwoways:first,becauseprimecontractorswilldiscriminatebetweenDBEandnon‐DBEsubcontractorsandabidwithaDBEsubcontractorwouldbetreatedmorefavorably;andsecond,becausetheCitywouldfavorabidcontainingDBEparticipationoveranequalorevensuperiorbidcontainingnoDBEparticipation.Id.
ThecourtappliedthestrictscrutinystandardsetforthinCrosonandEngineeringContractorsAssociationtodeterminewhethertheCityhadacompellinginterestforitsprogramandwhethertheprogramwasnarrowlytailoredtothatend.ThecourtnotedthatpursuanttoCroson,theCitywouldhaveacompellinginterestinassuringthattaxdollarswouldnotperpetuateprivateprejudice.But,thecourtfound(citingtoCroson),thatastateorlocalgovernmentmustidentifythatdiscrimination,“publicorprivate,withsomespecificitybeforetheymayuserace‐consciousrelief.”ThecourtcitedtheEleventhCircuit’spositionthat“‘grossstatisticaldisparities’betweentheproportionofminoritieshiredbythepublicemployerandtheproportionofminoritieswillingandabletowork”mayjustifyanaffirmativeactionprogram.Id.at*7.Thecourtalsostatedthatanecdotalevidenceisrelevanttotheanalysis.
ThecourtdeterminedthatwhiletheCity’sdisparitystudyshowedsomestatisticaldisparitiesbuttressedbyanecdotalevidence,thestudysufferedfrommultipleissues.Id.at*7‐8.Specifically,thecourtfoundthatthoseportionsofthestudyexaminingdiscriminationoutsidetheareaofsubcontracting(e.g.,socioeconomicstatusofracialgroupsintheAugustaarea)wereirrelevantforpurposesofshowingacompellinginterest.Thecourtalsocitedthefailureofthestudytodifferentiatebetweendifferentminorityracesaswellastheimproperaggregationofrace‐andgender‐baseddiscriminationreferredtoasSimpson’sParadox.
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ThecourtassumedforpurposesofitsanalysisthattheCitycouldshowacompellinginterestbutconcludedthattheprogramwasnotnarrowlytailoredandthuscouldnotsatisfystrictscrutiny.Thecourtfoundthatitneedlooknofurtherbeyondthefactofthethirteen‐yeardurationoftheprogramabsentfurtherinvestigation,andtheabsenceofasunsetorexpirationprovision,toconcludethattheDBEprogramwasnotnarrowlytailored.Id.at*8.Notingthataffirmativeactionispermittedonlysparingly,thecourtfound:“[i]twouldbeimpossibleforAugustatoarguethat,13yearsafterlaststudyingtheissue,racialdiscriminationissorampantintheAugustacontractingindustrythattheCitymustaffirmativelyacttoavoidbeingcomplicit.”Id.Thecourtheldinconclusion,thattheplaintiffswere“substantiallylikelytosucceedinprovingthat,whentheCityrequestsbidswithminorityparticipationandinfactfavorsbidswithsuch,theplaintiffswillsufferracialdiscriminationinviolationoftheEqualProtectionClause.”Id.at*9.
InasubsequentOrderdatedSeptember5,2007,thecourtdeniedtheCity’smotiontocontinueplaintiff’sMotionforSummaryJudgment,deniedtheCity’sRule12(b)(6)motiontodismiss,andstayedtheactionfor30dayspendingmediationbetweentheparties.Importantly,inthisOrder,thecourtreiteratedthatthefemale‐andlocally‐ownedbusinesscomponentsoftheprogram(challengedinplaintiff’sMotionforSummaryJudgment)wouldbesubjecttointermediatescrutinyandrationalbasisscrutiny,respectively.ThecourtalsoreiterateditsrejectionoftheCity’schallengetotheplaintiffs’standing.ThecourtnotedthatunderAdarand,preventingacontractorfromcompetingonanequalfootingsatisfiestheparticularizedinjuryprongofstanding.AndshowingthatthecontractorwillsometimeinthefuturebidonaCitycontract“thatoffersfinancialincentivestoaprimecontractorforhiringdisadvantagedsubcontractors”satisfiesthesecondrequirementthattheparticularizedinjurybeactualorimminent.Accordingly,thecourtconcludedthattheplaintiffshavestandingtopursuethisaction.
17. Hershell Gill Consulting Engineers, Inc. v. Miami‐Dade County, 333 F. Supp.2d 1305 (S.D. Fla. 2004)
ThedecisioninHershellGillConsultingEngineers,Inc.v.Miami‐DadeCounty,issignificanttothedisparitystudybecauseitappliedandfollowedtheEngineeringContractorsAssociationdecisioninthecontextofcontractingandprocurementforgoodsandservices(includingarchitectandengineerservices).Manyoftheothercasesfocusedonconstruction,andthusHershellGillisinstructiveastotheanalysisrelatingtoarchitectandengineeringservices.ThedecisioninHershellGillalsoinvolvedadistrictcourtintheEleventhCircuitimposingcompensatoryandpunitivedamagesuponindividualCountyCommissionersduetothedistrictcourt’sfindingoftheirwillfulfailuretoabrogateanunconstitutionalMBE/WBEProgram.Inaddition,thecaseisnoteworthybecausethedistrictcourtrefusedtofollowthe2003TenthCircuitCourtofAppealsdecisioninConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321.3d950(10thCir.2003).Seediscussion,infra.
SixyearsafterthedecisioninEngineeringContractorsAssociation,twowhitemale‐ownedengineeringfirms(the“plaintiffs”)broughtsuitagainstEngineeringContractorsAssociation(the“County”),theformerCountyManager,andvariouscurrentCountyCommissioners(the“Commissioners”)intheirofficialandpersonalcapacities(collectivelythe“defendants”),seekingtoenjointhesame“participationgoals”inthesameMWBEprogramdeemedtoviolatetheFourteenthAmendmentintheearliercase.333F.Supp.1305,1310(S.D.Fla.2004).AftertheEleventhCircuit’sdecisioninEngineeringContractorsAssociationstrikingdowntheMWBEprogramsasappliedtoconstructioncontracts,theCountyenactedaCommunitySmallBusinessEnterprise(“CSBE”)programforconstructioncontracts,“butcontinuedtoapplyracial,ethnic,
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andgendercriteriatoitspurchasesofgoodsandservicesinotherareas,includingitsprocurementofA&Eservices.”Id.at1311.
TheplaintiffsbroughtsuitchallengingtheBlackBusinessEnterprise(BBE)program,theHispanicBusinessEnterprise(HBE)program,andtheWomenBusinessEnterprise(WBE)program(collectively“MBE/WBE”).Id.TheMBE/WBEprogramsappliedtoA&Econtractsinexcessof$25,000.Id.at1312.TheCountyestablishedfive“contractmeasures”toreachtheparticipationgoals:(1)setasides,(2)subcontractorgoals,(3)projectgoals,(4)bidpreferences,and(5)selectionfactors.Id.Onceacontractwasidentifiedascoveredbyaparticipationgoal,areviewcommitteewoulddeterminewhetheracontractmeasureshouldbeutilized.Id.TheCountywasrequiredtoreviewtheefficacyoftheMBE/WBEprogramsannually,andreevaluatedthecontinuingviabilityoftheMBE/WBEprogramseveryfiveyears.Id.at1313.However,thedistrictcourtfound“theparticipationgoalsforthethreeMBE/WBEprogramschallenged…remainedunchangedsince1994.”Id.
In1998,counselforplaintiffscontactedtheCountyCommissionersrequestingthediscontinuationofcontractmeasuresonA&Econtracts.Id.at1314.UponrequestoftheCommissioners,thecountymanagerthenmadetworeports(anoriginalandafollow‐up)measuringparityintermsofdollarsawardedanddollarspaidintheareasofA&Eforblacks,Hispanics,andwomen,andconcludedbothtimesthatthe“Countyhasreachedparityforblack,Hispanic,andWomen‐ownedfirmsintheareasof[A&E]services.”Thefinalreportfurtherstated“Basedonalltheanalysesthathavebeenperformed,theCountydoesnothaveabasisfortheestablishmentofparticipationgoalswhichwouldallowstafftoapplycontractmeasures.”Id.at1315.ThedistrictcourtalsofoundthattheCommissionerswereinformedthat“therewasevenlessevidencetosupport[theMBE/WBE]programsasappliedtoarchitectsandengineersthentherewasincontractconstruction.”Id.Nonetheless,theCommissionersvotedtocontinuetheMBE/WBEparticipationgoalsattheirpreviouslevels.Id.
InMayof2000(18monthsafterthelawsuitwasfiled),theCountycommissionedDr.ManuelJ.Carvajal,aneconometrician,tostudyarchitectsandengineersinthecounty.Hisfinalreporthadfourparts:
(1)dataidentificationandcollectionofmethodologyfordisplayingtheresearchresults;(2)presentationanddiscussionoftablespertainingtoarchitecture,civilengineering,structuralengineering,andawardsofcontractsinthoseareas;(3)analysisofthestructureandempiricalestimatesofvarioussetsofregressionequations,thecalculationofcorrespondingindices,andanassessmentoftheirimportance;and(4)aconclusionthatthereisdiscriminationagainstwomenandHispanics—butnotagainstblacks—inthefieldsofarchitectureandengineering.
Id.ThedistrictcourtissuedapreliminaryinjunctionenjoiningtheuseoftheMBE/WBEprogramsforA&Econtracts,pendingtheUnitedStatesSupremeCourtdecisionsinGratzv.Bollinger,539U.S.244(2003)andGrutterv.Bollinger,539U.S.306(2003).Id.at1316.
ThecourtconsideredwhethertheMBE/WBEprogramswereviolativeofTitleVIIoftheCivilRightsAct,andwhethertheCountyandtheCountyCommissionerswereliableforcompensatoryandpunitivedamages.
ThedistrictcourtfoundthattheSupremeCourtdecisionsinGratzandGrutterdidnotaltertheconstitutionalanalysisassetforthinAdarandandCroson.Id.at1317.Accordingly,therace‐andethnicity‐basedclassificationsweresubjecttostrictscrutiny,meaningtheCountymustpresent“astrongbasisofevidence”indicatingtheMBE/WBEprogramwasnecessaryandthatitwas
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narrowlytailoredtoitspurportedpurpose.Id.at1316.Thegender‐basedclassificationsweresubjecttointermediatescrutiny,requiringtheCountytoshowthe“gender‐basedclassificationservesanimportantgovernmentalobjective,andthatitissubstantiallyrelatedtotheachievementofthatobjective.”Id.at1317(internalcitationsomitted).Thecourtfoundthattheproponentofagender‐basedaffirmativeactionprogrammustpresent“sufficientprobativeevidence”ofdiscrimination.Id.(internalcitationsomitted).Thecourtfoundthatundertheintermediatescrutinyanalysis,theCountymust(1)demonstratepastdiscriminationagainstwomenbutnotnecessarilyatthehandsoftheCounty,and(2)thatthegender‐consciousaffirmativeactionprogramneednotbeusedonlyasa“lastresort.”Id.
TheCountypresentedbothstatisticalandanecdotalevidence.Id.at1318.ThestatisticalevidenceconsistedofDr.Carvajal’sreport,mostofwhichconsistedof“post‐enactment”evidence.Id.Dr.Carvajal’sanalysissoughttodiscovertheexistenceofracial,ethnicandgenderdisparitiesintheA&Eindustry,andthentodeterminewhetheranysuchdisparitiescouldbeattributedtodiscrimination.Id.Thestudyusedfourdatasets:threeweredesignedtoestablishthemarketplaceavailabilityoffirms(architecture,structuralengineering,andcivilengineering),andthefourthfocusedonawardsissuedbytheCounty.Id.Dr.Carvajalusedthephonebook,alistcompiledbyinfoUSA,andalistoffirmsregisteredfortechnicalcertificationwiththeCounty’sDepartmentofPublicWorkstocompilealistofthe“universe”offirmscompetinginthemarket.Id.Forthearchitecturalfirmsonly,healsousedalistoffirmsthathadbeenissuedanarchitectureprofessionallicense.Id.
Dr.Carvajalthenconductedaphonesurveyoftheidentifiedfirms.Basedonhisdata,Dr.CarvajalconcludedthatdisparitiesexistedbetweenthepercentageofA&Efirmsownedbyblacks,Hispanics,andwomen,andthepercentageofannualbusinesstheyreceived.Id.Dr.Carvajalconductedregressionanalyses“inordertodeterminetheeffectafirmowner’sgenderorracehadoncertaindependentvariables.”Id.Dr.Carvajalusedthefirm’sannualvolumeofbusinessasadependentvariableanddeterminedthedisparitiesweredueineachcasetothefirm’sgenderand/orethnicclassification.Id.at1320.Healsoperformedvariantstotheequationsincluding:(1)usingcertificationratherthansurveydatafortheexperience/capacityindicators,(2)withtheoutliersdeleted,(3)withpublicly‐ownedfirmsdeleted,(4)withthedummyvariablesreversed,and(5)usingonlycurrentlycertifiedfirms.”Id.Dr.Carvajal’sresultsremainedsubstantiallyunchanged.Id.
Basedonhisanalysisofthemarketplacedata,Dr.Carvajalconcludedthatthe“grossstatisticaldisparities”intheannualbusinessvolumeforHispanic‐andwomen‐ownedfirmscouldbeattributedtodiscrimination;he“didnotfindsufficientevidenceofdiscriminationagainstblacks.”Id.
ThecourtheldthatDr.Carvajal’sstudyconstitutedneithera“strongbasisinevidence”ofdiscriminationnecessarytojustifyrace‐andethnicity‐consciousmeasures,nordiditconstitute“sufficientprobativeevidence”necessarytojustifythegender‐consciousmeasures.Id.ThecourtmadeaninitialfindingthatnodisparityexistedtoindicateunderutilizationofMBE/WBEsintheawardofA&EcontractsbytheCounty,norwasthereunderutilizationofMBE/WBEsinthecontractstheywereawarded.Id.Thecourtfoundthatananalysisoftheawarddataindicated,“[i]fanything,thedataindicatesanoverutilizationofminority‐ownedfirmsbytheCountyinrelationtotheirnumbersinthemarketplace.”Id.
Withrespecttothemarketplacedata,theCountyconcededthattherewasinsufficientevidenceofdiscriminationagainstblackstosupporttheBBEprogram.Id.at1321.WithrespecttothemarketplacedataforHispanicsandwomen,thecourtfoundit“unreliableandinaccurate”for
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threereasons:(1)thedatafailedtoproperlymeasurethegeographicmarket,(2)thedatafailedtoproperlymeasuretheproductmarket,and(3)themarketplacesurveywasunreliable.Id.at1321‐25.
ThecourtruledthatitwouldnotfollowtheTenthCircuitdecisionofConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003),astheburdenofproofenunciatedbytheTenthCircuitconflictswiththatoftheEleventhCircuit,andthe“TenthCircuit’sdecisionisflawedforthereasonsarticulatedbyJusticeScaliainhisdissentfromthedenialofcertiorari.”Id.at1325(internalcitationsomitted).
ThedefendantintervenorspresentedanecdotalevidencepertainingonlytodiscriminationagainstwomenintheCounty’sA&Eindustry.Id.TheanecdotalevidenceconsistedofthetestimonyofthreeA&Eprofessionalwomen,“nearlyall”ofwhichwasrelatedtodiscriminationintheawardofCountycontracts.Id.at1326.However,thedistrictcourtfoundthattheanecdotalevidencecontradictedDr.Carvajal’sstudyindicatingthatnodisparityexistedwithrespecttotheawardofCountyA&Econtracts.Id.
ThecourtquotedtheEleventhCircuitinEngineeringContractorsAssociationfortheproposition“thatonlyintherarecasewillanecdotalevidencesufficestandingalone.”Id.(internalcitationsomitted).Thecourtheldthat“[t]hisisnotoneofthoserarecases.”Thedistrictcourtconcludedthatthestatisticalevidencewas“unreliableandfail[ed]toestablishtheexistenceofdiscrimination,”andtheanecdotalevidencewasinsufficientasitdidnotevenreachthelevelofanecdotalevidenceinEngineeringContractorsAssociationwheretheCountyemployeesthemselvestestified.Id.
ThecourtmadeaninitialfindingthatanumberofminoritygroupsprovidedpreferentialtreatmentwereinfactmajoritiesintheCountyintermsofpopulation,votingcapacity,andrepresentationontheCountyCommission.Id.at1326‐1329.Forpurposesonlyofconductingthestrictscrutinyanalysis,thecourtthenassumedthatDr.Carvajal’sreportdemonstrateddiscriminationagainstHispanics(notetheCountyhadconcededithadinsufficientevidenceofdiscriminationagainstblacks)andsoughttodeterminewhethertheHBEprogramwasnarrowlytailoredtoremedyingthatdiscrimination.Id.at1330.However,thecourtfoundthatbecausethestudyfailedto“identifywhoisengaginginthediscrimination,whatformthediscriminationmighttake,atwhatstageintheprocessitistakingplace,orhowthediscriminationisaccomplished…itisvirtuallyimpossibletonarrowlytailoranyremedy,andtheHBEprogramfailsonthisfactalone.”Id.
ThecourtfoundthatevenaftertheCountyManagersinformedtheCommissionersthattheCountyhadreachedparityintheA&Eindustry,theCommissionersdeclinedtoenactaCSBEordinance,arace‐neutralmeasureutilizedintheconstructionindustryafterEngineeringContractorsAssociation.Id.Instead,theCommissionersvotedtocontinuetheHBEprogram.Id.ThecourtheldthattheCounty’sfailuretoevenexploreaprogramsimilartotheCSBEordinanceindicatedthattheHBEprogramwasnotnarrowlytailored.Id.at1331.
ThecourtalsofoundthattheCountyenactedabroadanti‐discriminationordinanceimposingharshpenaltiesforaviolationthereof.Id.However,“notasinglewitnessattrialknewofanyinstanceofacomplaintbeingbroughtunderthisordinanceconcerningtheA&Eindustry,”leadingthecourttoconcludethattheordinancewaseithernotbeingenforced,ornodiscriminationexisted.Id.Undereitherscenario,theHBEprogramcouldnotbenarrowlytailored.Id.
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ThecourtfoundthewaiverprovisionsintheHBEprograminflexibleinpractice.Id.Additionally,thecourtfoundtheCountyhadfailedtocomplywiththeprovisionsintheHBEprogramrequiringadjustmentofparticipationgoalsbasedonannualstudies,becausetheCountyhadnotinfactconductedannualstudiesforseveralyears.Id.Thecourtfoundthiseven“moreproblematic”becausetheHBEprogramdidnothaveabuilt‐indurationallimit,andthusblatantlyviolatedSupremeCourtjurisprudencerequiringthatracialandethnicpreferences“mustbelimitedintime.”Id.at1332,citingGrutter,123S.Ct.at2346.Fortheforegoingreasons,thecourtconcludedtheHBEprogramwasnotnarrowlytailored.Id.at1332.
WithrespecttotheWBEprogram,thecourtfoundthat“thefailureoftheCountytoidentifywhoisdiscriminatingandwhereintheprocessthediscriminationistakingplaceindicates(thoughnotconclusively)thattheWBEprogramisnotsubstantiallyrelatedtoeliminatingthatdiscrimination.”Id.at1333.Thecourtfoundthattheexistenceoftheanti‐discriminationordinance,therefusaltoenactasmallbusinessenterpriseordinance,andtheinflexibilityinsettingtheparticipationgoalsrenderedtheWBEprogramunabletosatisfythesubstantialrelationshiptest.Id.
ThecourtheldthattheCountywasliableforanycompensatorydamages.Id.at1333‐34.ThecourtheldthattheCommissionershadabsoluteimmunityfortheirlegislativeactions;however,theywerenotentitledtoqualifiedimmunityfortheiractionsinvotingtoapplytherace‐,ethnicity‐,andgender‐consciousmeasuresoftheMBE/WBEprogramsiftheiractionsviolated“clearlyestablishedstatutoryorconstitutionalrightsofwhichareasonablepersonwouldhaveknown…Accordingly,thequestioniswhetherthestateofthelawatthetimetheCommissionersvotedtoapply[race‐,ethnicity‐,andgender‐consciousmeasures]gavethem‘fairwarning’thattheiractionswereunconstitutional.“Id.at1335‐36(internalcitationsomitted).
ThecourtheldthattheCommissionerswerenotentitledtoqualifiedimmunitybecausethey“hadbeforethematleastthreecasesthatgavethemfairwarningthattheirapplicationoftheMBE/WBEprograms…wereunconstitutional:Croson,Adarandand[EngineeringContractorsAssociation].”Id.at1137.ThecourtfoundthattheCommissionersvotedtoapplythecontractmeasuresaftertheSupremeCourtdecidedbothCrosonandAdarand.Id.Moreover,theEleventhCircuithadalreadystruckdowntheconstructionprovisionsofthesameMBE/WBEprograms.Id.Thus,thecaselawwas“clearlyestablished”andgavetheCommissionersfairwarningthattheMBE/WBEprogramswereunconstitutional.Id.
ThecourtalsofoundtheCommissionershadspecificinformationfromtheCountyManagerandotherinternalstudiesindicatingtheproblemswiththeMBE/WBEprogramsandindicatingthatparityhadbeenachieved.Id.at1338.Additionally,theCommissionersdidnotconducttheannualstudiesmandatedbytheMBE/WBEordinanceitself.Id.Foralltheforegoingreasons,thecourtheldtheCommissionersweresubjecttoindividualliabilityforanycompensatoryandpunitivedamages.
ThedistrictcourtenjoinedtheCounty,theCommissioners,andtheCountyManagerfromusing,orrequiringtheuseof,gender,racial,orethniccriteriaindeciding(1)whetheraresponsetoanRFPsubmittedforA&Eworkisresponsive,(2)whethersucharesponsewillbeconsidered,and(3)whetheracontractwillbeawardedtoaconsultantsubmittingsucharesponse.Thecourtawardedtheplaintiffs$100eachinnominaldamagesandreasonableattorneys’feesandcosts,forwhichitheldtheCountyandtheCommissionersjointlyandseverallyliable.
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18. Florida A.G.C. Council, Inc. v. State of Florida, 303 F. Supp.2d 1307 (N.D. Fla. 2004)
ThiscaseisinstructivetothedisparitystudyastothemannerinwhichdistrictcourtswithintheEleventhCircuitareinterpretingandapplyingEngineeringContractorsAssociation.Itisalsoinstructiveintermsofthetypeoflegislationtobeconsideredbythelocalandstategovernmentsastowhatthecourtsconsidertobea“race‐conscious”programand/orlegislation,aswellastothesignificanceoftheimplementationofthelegislationtotheanalysis.
Theplaintiffs,A.G.C.Council,Inc.andtheSouthFloridaChapteroftheAssociatedGeneralContractorsbroughtthiscasechallengingtheconstitutionalityofcertainprovisionsofaFloridastatute(Section287.09451,etseq.).TheplaintiffscontendedthatthestatuteviolatedtheEqualProtectionClauseoftheFourteenthAmendmentbyinstitutingrace‐andgender‐conscious“preferences”inordertoincreasethenumericrepresentationof“MBEs”incertainindustries.
Accordingtothecourt,theFloridaStatuteenactedrace‐consciousandgender‐consciousremedialprogramstoensureminorityparticipationinstatecontractsforthepurchaseofcommoditiesandinconstructioncontracts.TheStatecreatedtheOfficeofSupplierDiversity(“OSD”)toassistMBEstobecomesuppliersofcommodities,servicesandconstructiontothestategovernment.TheOSDhadcertainresponsibilities,includingadoptingrulesmeanttoassesswhetherstateagencieshavemadegoodfaitheffortstosolicitbusinessfromMBEs,andtomonitorwhethercontractorshavemadegoodfaitheffortstocomplywiththeobjectiveofgreateroverallMBEparticipation.
Thestatuteenumeratedmeasuresthatcontractorsshouldundertake,suchasminority‐centeredrecruitmentinadvertisingasameansofadvancingthestatute’spurpose.ThestatuteprovidedthateachStateagencyis“encouraged”tospend21percentofthemoniesactuallyexpendedforconstructioncontracts,25percentofthemoniesactuallyexpendedforarchitecturalandengineeringcontracts,24percentofthemoniesactuallyexpendedforcommoditiesand50.5percentofthemoniesactuallyexpendedforcontractualservicesduringthefiscalyearforthepurposeofenteringintocontractswithcertifiedMBEs.ThestatutealsoprovidedthatstateagenciesareallowedtoallocatecertainpercentagesforblackAmericans,HispanicAmericansandforAmericanwomen,andthegoalsarebrokendownbyconstructioncontracts,architecturalandengineeringcontracts,commoditiesandcontractualservices.
TheStatetookthepositionthatthespendinggoalswere“precatory.”Thecourtfoundthattheplaintiffshadstandingtomaintaintheactionandtopursueprospectiverelief.Thecourtheldthatthestatutewasunconstitutionalbasedonthefindingthatthespendinggoalswerenotnarrowlytailoredtoachieveagovernmentalinterest.Thecourtdidnotspecificallyaddresswhetherthearticulatedreasonsforthegoalscontainedinthestatutehadsufficientevidence,butinsteadfoundthatthearticulatedreasonwould,“iftrue,”constituteacompellinggovernmentalinterestnecessitatingrace‐consciousremedies.Ratherthanexploretheevidence,thecourtfocusedonthenarrowlytailoredrequirementandheldthatitwasnotsatisfiedbytheState.
ThecourtfoundthattherewasnoevidenceintherecordthattheStatecontemplatedrace‐neutralmeanstoaccomplishtheobjectivessetforthinSection287.09451etseq.,suchas“‘simplificationofbiddingprocedures,relaxationofbondingrequirements,trainingorfinancialaidfordisadvantagedentrepreneursofallraces[which]wouldopenthepubliccontractingmarkettoallthosewhohavesufferedtheeffectsofpastdiscrimination.’”FloridaA.G.C.Council,
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303F.Supp.2dat1315,quotingEng’gContractorsAss’n,122F.3dat928,quotingCroson,488U.S.at509‐10.
ThecourtnotedthatdefendantsdidnotseemtodisagreewiththereportissuedbytheStateofFloridaSenatethatconcludedtherewaslittleevidencetosupportthespendinggoalsoutlinedinthestatute.Rather,theStateofFloridaarguedthatthestatuteis“permissive.”Thecourt,however,heldthat“thereisnodistinctionbetweenastatutethatisprecatoryversusonethatiscompulsorywhenthechallengedstatute‘inducesanemployertohirewithaneyetowardmeeting…[a]numericaltarget.’FloridaA.G.C.Council,303F.Supp.2dat1316.
ThecourtfoundthattheStateappliespressuretoStateagenciestomeetthelegislativeobjectivesofthestatuteextendingbeyondsimpleoutreachefforts.TheStateagencies,accordingtothecourt,wererequiredtocoordinatetheirMBEprocurementactivitieswiththeOSD,whichincludesadoptingaMBEutilizationplan.IftheStateagencydeviatedfromtheutilizationplanintwoconsecutiveandthreeoutoffivetotalfiscalyears,thentheOSDcouldreviewanyandallsolicitationsandcontractawardsoftheagencyasdeemednecessaryuntilsuchtimeastheagencymetitsutilizationplan.Thecourtheldthatbasedonthesefactors,althoughallegedtobe“permissive,”thestatutetextuallywasnot.
Therefore,thecourtfoundthatthestatutewasnotnarrowlytailoredtoserveacompellinggovernmentalinterest,andconsequentlyviolatedtheEqualProtectionClauseoftheFourteenthAmendment.
19. The Builders Ass’n of Greater Chicago v. The City of Chicago, 298 F. Supp.2d 725 (N.D. Ill. 2003)
Thiscaseisinstructivebecauseofthecourt’sfocusandanalysisonwhethertheCityofChicago’sMBE/WBEprogramwasnarrowlytailored.Thebasisofthecourt’sholdingthattheprogramwasnotnarrowlytailoredisinstructiveforanyprogramconsideredbecauseofthereasonsprovidedastowhytheprogramdidnotpassmuster.
Theplaintiff,theBuildersAssociationofGreaterChicago,broughtthissuitchallengingtheconstitutionalityoftheCityofChicago’sconstructionMinority‐andWomen‐OwnedBusiness(“MWBE”)Program.ThecourtheldthattheCityofChicago’sMWBEprogramwasunconstitutionalbecauseitdidnotsatisfytherequirementthatitbenarrowlytailoredtoachieveacompellinggovernmentalinterest.Thecourtheldthatitwasnotnarrowlytailoredforseveralreasons,includingbecausetherewasno“meaningfulindividualizedreview”ofMBE/WBEs;ithadnoterminationdatenordidithaveanymeansfordeterminingatermination;the“graduation”revenueamountforfirmstograduateoutoftheprogramwasveryhigh,$27,500,000,andinfactveryfewfirmsgraduated;therewasnonetworththreshold;and,waiverswererarelyornevergrantedonconstructioncontracts.ThecourtfoundthattheCityprogramwasa“rigidnumericalquota,”notrelatedtothenumberofavailable,willingandablefirms.Formulisticpercentages,thecourtheld,couldnotsurvivethestrictscrutiny.
Thecourtheldthatthegoalsplandidnotaddressissuesraisedastodiscriminationregardingmarketaccessandcredit.Thecourtfoundthatagoalsprogramdoesnotdirectlyimpactprimecontractor’sselectionofsubcontractorsonnon‐goalsprivateprojects.Thecourtfoundthataset‐asideorgoalsprogramdoesnotdirectlyimpactdifficultiesinaccessingcredit,anddoesnotaddressdiscriminatoryloandenialsorhigherinterestrates.ThecourtfoundtheCityhasnotsoughttoattackdiscriminationbyprimesdirectly,“butitcould.”298F.2d725.“Tomonitorpossiblediscriminatoryconductitcouldmaintainitscertificationlistandrequirethose
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contractingwiththeCitytoconsiderunsolicitedbids,tomaintainbiddingrecords,andtojustifyrejectionofanycertifiedfirmsubmittingthelowestbid.ItcouldalsorequirefirmsseekingCityworktopostprivatejobsaboveacertainminimumonawebsiteorotherwiseprovidepublicnotice…”Id.
Thecourtconcludedthatotherrace‐neutralmeanswereavailabletoimpactcredit,highinterestrates,andotherpotentialmarketplacediscrimination.Thecourtpointedtorace‐neutralmeansincludinglinkeddeposits,withtheCitybankingatinstitutionsmakingloanstostartupandsmallerfirms.Otherrace‐neutralprogramsreferencedincludedquickpayandcontractdownsizing;restrictingself‐performancebyprimecontractors;adirectloanprogram;waiverofbondsoncontractsunder$100,000;abankparticipationloanprogram;a2percentlocalbusinesspreference;outreachprogramsandtechnicalassistanceandworkshops;andseminarspresentedtonewconstructionfirms.
Thecourtheldthatraceandethnicitydomatter,butthatracialandethnicclassificationsarehighlysuspect,canbeusedonlyasalastresort,andcannotbemadebysomemechanicalformulation.Therefore,thecourtconcludedtheCity’sMWBEProgramcouldnotstandinitspresentguise.Thecourtheldthatthepresentprogramwasnotnarrowlytailoredtoremedypastdiscriminationandthediscriminationdemonstratedtonowexist.
Thecourtenteredaninjunction,butdelayedtheeffectivedateforsixmonthsfromthedateofitsOrder,December29,2003.ThecourtheldthattheCityhada“compellinginterestinnothavingitsconstructionprojectsslipbacktonearmonopolydominationbywhitemalefirms.”Thecourtruledabriefcontinuationoftheprogramforsixmonthswasappropriate“astheCityrethinksthemanytoolsofredressithasavailable.”Subsequently,thecourtdeclaredunconstitutionaltheCity’sMWBEProgramwithrespecttoconstructioncontractsandpermanentlyenjoinedtheCityfromenforcingtheProgram.2004WL757697(N.D.Ill2004).
20. Kornhass Construction, Inc. v. State of Oklahoma, Department of Central Services, 140 F.Supp.2d 1232 (W.D. OK. 2001)
Plaintiffs,non‐minoritycontractors,broughtthisactionagainsttheStateofOklahomachallengingminoritybidpreferenceprovisionsintheOklahomaMinorityBusinessEnterpriseAssistanceAct(“MBEAct”).TheOklahomaMBEActestablishedabidpreferenceprogrambywhichcertifiedminoritybusinessenterprisesaregivenfavorabletreatmentoncompetitivebidssubmittedtothestate.140F.Supp.2dat1235–36.UndertheMBEAct,thebidsofnon‐minoritycontractorswereraisedby5percent,placingthematacompetitivedisadvantageaccordingtothedistrictcourt.Id.at1235–1236.
Thenamedplaintiffsbidonstatecontractsinwhichtheirbidswereincreasedby5percentastheywerenon‐minoritybusinessenterprises.Althoughtheplaintiffsactuallysubmittedthelowestdollarbids,oncethe5percentfactorwasapplied,minoritybiddersbecamethesuccessfulbiddersoncertaincontracts.140F.Supp.at1237.
IndeterminingtheconstitutionalityorvalidityoftheOklahomaMBEAct,thedistrictcourtwasguidedinitsanalysisbytheTenthCircuitCourtofAppealsdecisioninAdarandConstructors,Inc.v.Slater,288F.3d1147(10thCir.2000).ThedistrictcourtpointedoutthatinAdarandVII,theTenthCircuitfoundcompellingevidenceofbarrierstobothminoritybusinessformationandexistingminoritybusinesses.Id.at1238.Insum,thedistrictcourtnotedthattheTenthCircuitconcludedthattheGovernmenthadmetitsburdenofpresentingastrongbasisinevidence
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sufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.140F.Supp.2dat1239,citingAdarandVII,228F.3d1147,1174.
Compellingstateinterest. Thedistrictcourt,followingAdarandVII,appliedthestrictscrutinyanalysis,arisingoutoftheFourteenthAmendment’sEqualProtectionClause,inwhicharace‐basedaffirmativeactionprogramwithstandsstrictscrutinyonlyifitisnarrowlytailoredtoserveacompellinggovernmentalinterest.Id.at1239.ThedistrictcourtpointedoutthatitisclearfromSupremeCourtprecedent,theremaybeacompellinginterestsufficienttojustifyrace‐consciousaffirmativeactionmeasures.Id.TheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthegovernmentalentityfrombecominga“passiveparticipant”inasystemofracialexclusionpracticedbyprivatebusinesses.Id.at1240.Therefore,thedistrictcourtconcludedthatboththefederalandstategovernmentshaveacompellinginterestassuringthatpublicdollarsdonotservetofinancetheevilofprivateprejudice.Id.
Thedistrictcourtstatedthata“merestatisticaldisparityintheproportionofcontractsawardedtoaparticulargroup,standingalone,doesnotdemonstratetheevilofprivateorpublicracialprejudice.”Id.Rather,thecourtheldthatthe“benchmarkforjudgingtheadequacyofastate’sfactualpredicateforaffirmativeactionlegislationiswhetherthereexistsastrongbasisintheevidenceofthestate’sconclusionthatremedialactionwasnecessary.”Id.ThedistrictcourtfoundthattheSupremeCourtmadeitclearthatthestatebearstheburdenofdemonstratingastrongbasisinevidenceforitsconclusionthatremedialactionwasnecessarybyprovingeitherthatthestateitselfdiscriminatedinthepastorwas“apassiveparticipant”inprivateindustry’sdiscriminatorypractices.Id.at1240,citingtoAssociatedGeneralContractorsofOhio,Inc.v.Drabik,214F.3d730,735(6thCir.2000)andCityofRichmondv.J.A.CrosonCompany,488U.S.469at486‐492(1989).
Withthisbackground,theStateofOklahomastatedthatitscompellingstateinterest“istopromotetheeconomyoftheStateandtoensurethatminoritybusinessenterprisesaregivenanopportunitytocompeteforstatecontracts.”Id.at1240.Thus,thedistrictcourtfoundtheStateadmittedthattheMBEAct’sbidpreference“isnotbasedonpastdiscrimination,”rather,itisbasedonadesireto“encourag[e]economicdevelopmentofminoritybusinessenterpriseswhichinturnwillbenefittheStateofOklahomaasawhole.”Id.InlightofAdarandVII,andprevailingSupremeCourtcaselaw,thedistrictcourtfoundthatthisarticulatedinterestisnot“compelling”intheabsenceofevidenceofpastorpresentracialdiscrimination.Id.
ThedistrictcourtconsideredtestimonypresentedbyIntervenorswhoparticipatedinthecaseforthedefendantsandassertedthattheOklahomalegislatureconductedaninterimstudypriortoadoptionoftheMBEAct,duringwhichtestimonyandevidencewerepresentedtomembersoftheOklahomaLegislativeBlackCaucusandotherparticipatinglegislators.Thestudywasconductedmorethan14yearspriortothecaseandtheIntervenorsdidnotactuallyofferanyoftheevidencetothecourtinthiscase.TheIntervenorssubmittedanaffidavitfromthewitnesswhoservesastheTitleVICoordinatorfortheOklahomaDepartmentofTransportation.Thecourtfoundthattheaffidavitfromthewitnessaverredingeneraltermsthatminoritybusinesseswerediscriminatedagainstintheawardingofstatecontracts.ThedistrictcourtfoundthattheIntervenorshavenotproduced—orindeedevendescribed—theevidenceofdiscrimination.Id.at1241.Thedistrictcourtfoundthatitcannotbediscernedfromthedocumentswhichminoritybusinesseswerethevictimsofdiscrimination,orwhichracialorethnicgroupsweretargetedbysuchallegeddiscrimination.Id.
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ThecourtalsofoundthattheIntervenors’evidencedidnotindicatewhatdiscriminatoryactsorpracticesallegedlyoccurred,orwhentheyoccurred.Id.ThedistrictcourtstatedthattheIntervenorsdidnotidentify“asinglequalified,minority‐ownedbidderwhowasexcludedfromastatecontract.”Id.Thedistrictcourt,thus,heldthatbroadallegationsof“systematic”exclusionofminoritybusinesseswerenotsufficienttoconstituteacompellinggovernmentalinterestinremedyingpastorcurrentdiscrimination.Id.at1242.Thedistrictcourtstatedthatthiswasparticularlytrueinlightofthe“State’sadmissionherethattheState’sgovernmentalinterestwasnotinremedyingpastdiscriminationinthestatecompetitivebiddingprocess,butin‘encouragingeconomicdevelopmentofminoritybusinessenterpriseswhichinturnwillbenefittheStateofOklahomaasawhole.’”Id.at1242.
ThecourtfoundthattheStatedefendantsfailedtoproduceanyadmissibleevidenceofasingle,specificdiscriminatoryact,oranysubstantialevidenceshowingapatternofdeliberateexclusionfromstatecontractsofminority‐ownedbusinesses.Id.at1241‐1242,footnote11.
ThedistrictcourtalsonotedthattheSixthCircuitCourtofAppealsinDrabikrejectedOhio’sstatisticalevidenceofunderutilizationofminoritycontractorsbecausetheevidencedidnotreporttheactualuseofminorityfirms;rather,theyreportedonlytheuseofthoseminorityfirmsthathadgonetothetroubleofbeingcertifiedandlistedbythestate.Id.at1242,footnote12.Thedistrictcourtstatedthat,asinDrabik,theevidencepresentedinsupportoftheOklahomaMBEActfailedtoaccountforthepossibilitythatsomeminoritycontractorsmightnotregisterwiththestate,andthestatisticsdidnotaccountforanycontractsawardedtobusinesseswithminorityownershipoflessthan51percent,orforcontractsperformedinlargepartbyminority‐ownedsubcontractorswheretheprimecontractorwasnotacertifiedminority‐ownedbusiness.Id.
ThedistrictcourtfoundthattheMBEAct’sminoritybiddingpreferencewasnotpredicateduponafindingofdiscriminationinanyparticularindustryorregionofthestate,ordiscriminationagainstanyparticularracialorethnicgroup.Thecourtstatedthattherewasnoevidenceofferedofactualdiscrimination,pastorpresent,againstthespecificracialandethnicgroupstowhomthepreferencewasextended,otherthananattempttoshowahistoryofdiscriminationagainstAfricanAmericans.Id.at1242.
Narrowtailoring. ThedistrictcourtfoundthateveniftheState’sgoalscouldnotbeconsidered“compelling,”theStatedidnotshowthattheMBEActwasnarrowlytailoredtoservethosegoals.ThecourtpointedoutthattheTenthCircuitinAdarandVIIidentifiedsixfactorsthecourtmustconsiderindeterminingwhethertheMBEAct’sminoritypreferenceprovisionsweresufficientlynarrowlytailoredtosatisfyequalprotection:(1)theavailabilityofrace‐neutralalternativeremedies;(2)limitsonthedurationofthechallengedpreferenceprovisions;(3)flexibilityofthepreferenceprovisions;(4)numericalproportionality;(5)theburdenonthirdparties;and(6)over‐orunder‐inclusiveness.Id.at1242‐1243.
First,intermsofrace‐neutralalternativeremedies,thecourtfoundthattheevidenceofferedshowed,atmost,thatnominaleffortsweremadetoassistminority‐ownedbusinessespriortotheadoptionoftheMBEAct’sracialpreferenceprogram.Id.at1243.ThecourtconsideredevidenceregardingtheMinorityAssistanceProgram,butfoundthattobeprimarilyinformationalservicesonly,andwasnotdesignedtoactuallyassistminoritiesorotherdisadvantagedcontractorstoobtaincontractswiththeStateofOklahoma.Id.at1243.Incontrasttothis“informational”program,thecourtnotedtheTenthCircuitinAdarandVIIfavorablyconsideredthefederalgovernment’suseofraciallyneutralalternativesaimedatdisadvantagedbusinesses,includingassistancewithobtainingprojectbonds,assistancewith
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securingcapitalfinancing,technicalassistance,andotherprogramsdesignedtoassiststart‐upbusinesses.Id.at1243citingAdarandVII,228F.3dat1178‐1179.
ThedistrictcourtfoundthatitdoesnotappearfromtheevidencethatOklahoma’sMinorityAssistanceProgramprovidedthetypeofrace‐neutralreliefrequiredbytheTenthCircuitinAdarandVII,intheSupremeCourtintheCrosondecision,nordoesitappearthattheProgramwasraciallyneutral.Id.at1243.ThecourtfoundthattheStateofOklahomadidnotshowanymeaningfulformofassistancetonewordisadvantagedbusinessespriortotheadoptionoftheMBEAct,andthus,thecourtfoundthatthestatedefendantshadnotshownthatOklahomaconsideredrace‐neutralalternativemeanstoachievethestate’sgoalpriortoadoptionoftheminoritybidpreferenceprovisions.Id.at1243.
Inafootnote,thedistrictcourtpointedoutthattheTenthCircuithasrecognizedraciallyneutralprogramsdesignedtoassistallneworfinanciallydisadvantagedbusinessesinobtaininggovernmentcontractstendtobenefitminority‐ownedbusinesses,andcanhelpalleviatetheeffectsofpastandpresent‐daydiscrimination.Id.at1243,footnote15citingAdarandVII.
Thecourtconsideredtheevidenceofferedofpost‐enactmenteffortsbytheStatetoincreaseminorityparticipationinStatecontracting.Thecourtfoundthatmostoftheseeffortsweredirectedtowardencouragingtheparticipationofcertifiedminoritybusinessenterprises,“andarethusnotraciallyneutral.ThisevidencefailstodemonstratethattheStateemployedrace‐neutralalternativemeasurespriortoorafteradoptingtheMinorityBusinessEnterpriseAssistanceAct.”Id.at1244.Someoftheeffortsthecourtfoundweredirectedtowardencouragingtheparticipationofcertifiedminoritybusinessenterprisesandthusnotraciallyneutral,includedmailingvendorregistrationformstominorityvendors,telephoningandmailingletterstominorityvendors,providingassistancetovendorsincompletingregistrationforms,assuringthevendorsreceivedbidinformation,preparingaminoritybusinessdirectoryanddistributingittoallstateagencies,periodicallymailingconstructionprojectinformationtominorityvendors,andprovidingcommodityinformationtominorityvendorsuponrequest.Id.at1244,footnote16.
Intermsofdurationallimitsandflexibility,thecourtfoundthatthe“goal”of10percentofthestate’scontractsbeingawardedtocertifiedminoritybusinessenterpriseshadneverbeenreached,orevenapproached,duringthethirteenyearssincetheMBEActwasimplemented.Id.at1244.Thecourtfoundthedefendantsofferednoevidencethatthebidpreferencewaslikelytoendatanytimeintheforeseeablefuture,orthatitisotherwiselimitedinitsduration.Id.UnlikethefederalprogramsatissueinAdarandVII,thecourtstatedtheOklahomaMBEActhasnoinherenttimelimit,andnoprovisionfordisadvantagedminority‐ownedbusinessesto“graduate”frompreferenceeligibility.Id.ThecourtfoundtheMBEActwasnotlimitedtothoseminority‐ownedbusinesseswhichareshowntobeeconomicallydisadvantaged.Id.
ThecourtstatedthattheMBEActmadenoattempttoaddressorremedyanyactual,demonstratedpastorpresentracialdiscrimination,andtheMBEAct’sdurationwasnottiedinanywaytotheeradicationofsuchdiscrimination.Id.Instead,thecourtfoundtheMBEActrestsonthe“questionableassumptionthat10percentofallstatecontractdollarsshouldbeawardedtocertifiedminority‐ownedandoperatedbusinesses,withoutanyshowingthatthisassumptionisreasonable.”Id.at1244.
BythetermsoftheMBEAct,theminoritypreferenceprovisionswouldcontinueinplaceforfiveyearsafterthegoalof10percentminorityparticipationwasreached,andthusthedistrictcourt
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concludedthattheMBEAct’sminoritypreferenceprovisionslackedreasonabledurationallimits.Id.at1245.
Withregardtothefactorof“numericalproportionality”betweentheMBEAct’saspirationalgoalandthenumberofexistingavailableminority‐ownedbusinesses,thecourtfoundtheMBEAct’s10percentgoalwasnotbasedupondemonstrableevidenceoftheavailabilityofminoritycontractorswhowereeitherqualifiedtobidorwhowereready,willingandabletobecomequalifiedtobidonstatecontracts.Id.at1246–1247.ThecourtpointedoutthattheMBEActmadenoattempttodistinguishbetweenthefourminorityracialgroups,sothatcontractsawardedtomembersofallofthepreferredraceswereaggregatedindeterminingwhetherthe10percentaspirationalgoalhadbeenreached.Id.at1246.Inaddition,thecourtfoundtheMBEActaggregatedallstatecontractsforgoodsandservices,sothatminorityparticipationwasdeterminedbythetotalnumberofdollarsspentonstatecontracts.Id.
ThecourtstatedthatinAdarandVII,theTenthCircuitrejectedthecontentionthattheaspirationalgoalswererequiredtocorrespondtoanactualfindingastothenumberofexistingminority‐ownedbusinesses.Id.at1246.ThecourtnotedthatthegovernmentsubmittedevidenceinAdarandVII,thattheeffectsofpastdiscriminationhadexcludedminoritiesfromenteringtheconstructionindustry,andthatthenumberofavailableminoritysubcontractorsreflectedthatdiscrimination.Id.Inlightofthisevidence,thedistrictcourtsaidtheTenthCircuitheldthattheexistingpercentageofminority‐ownedbusinessesis“notnecessarilyanabsolutecap”onthepercentagethataremedialprogrammightlegitimatelyseektoachieve.Id.at1246,citingAdarandVII,228F.3dat1181.
UnlikeAdarandVII,thecourtfoundthattheOklahomaStatedefendantsdidnotoffer“substantialevidence”thattheminoritiesgivenpreferentialtreatmentundertheMBEActwereprevented,throughpastdiscrimination,fromenteringanyparticularindustry,orthatthenumberofavailableminoritysubcontractorsinthatindustryreflectsthatdiscrimination.140F.Supp.2dat1246.ThecourtconcludedthattheOklahomaStatedefendantsdidnotofferanyevidenceofthenumberofminority‐ownedbusinessesdoingbusinessinanyofthemanyindustriescoveredbytheMBEAct.Id.at1246–1247.
Withregardtotheimpactonthirdpartiesfactor,thecourtpointedouttheTenthCircuitinAdarandVIIstatedthemerepossibilitythatinnocentpartieswillsharetheburdenofaremedialprogramisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at1247.ThedistrictcourtfoundtheMBEAct’sbidpreferenceprovisionspreventednon‐minoritybusinessesfromcompetingonanequalbasiswithcertifiedminoritybusinessenterprises,andthatinsomeinstancesplaintiffshadbeenrequiredtolowertheirintendedbidsbecausetheyknewminorityfirmswerebidding.Id.Thecourtpointedoutthatthe5percentpreferenceisapplicabletoallcontractsawardedunderthestate’sCentralPurchasingActwithnotimelimitation.Id.
Intermsofthe“under‐andover‐inclusiveness”factor,thecourtobservedthattheMBEActextendeditsbiddingpreferencetoseveralracialminoritygroupswithoutregardtowhethereachofthosegroupshadsufferedfromtheeffectsofpastorpresentracialdiscrimination.Id.at1247.ThedistrictcourtreiteratedtheOklahomaStatedefendantsdidnotofferanyevidenceatallthattheminorityracialgroupsidentifiedintheActhadactuallysufferedfromdiscrimination.Id.
Second,thedistrictcourtfoundtheMBEAct’sbiddingpreferenceextendstoallcontractsforgoodsandservicesawardedundertheState’sCentralPurchasingAct,withoutregardto
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whethermembersofthepreferredminoritygroupshadbeenthevictimsofpastorpresentdiscriminationwithinthatparticularindustryortrade.Id.
Third,thedistrictcourtnotedthepreferenceextendstoallbusinessescertifiedasminority‐ownedandcontrolled,withoutregardtowhetheraparticularbusinessiseconomicallyorsociallydisadvantaged,orhassufferedfromtheeffectsofpastorpresentdiscrimination.Id.Thecourtthusfoundthatthefactorofover‐inclusivenessweighsagainstafindingthattheMBEActwasnarrowlytailored.Id.
ThedistrictcourtinconclusionfoundthattheOklahomaMBEActviolatedtheConstitution’sFifthAmendmentguaranteeofequalprotectionandgrantedtheplaintiffs’MotionforSummaryJudgment.
21. Webster v. Fulton County, 51 F. Supp.2d 1354 (N.D. Ga. 1999), affirmed per curiam 218 F.3d 1267 (11th Cir. 2000)
Thiscaseisinstructiveasitisanotherinstanceinwhichacourthasconsidered,analyzed,andruleduponarace‐,ethnicity‐andgender‐consciousprogram,holdingthelocalgovernmentMBE/WBE‐typeprogramfailedtosatisfythestrictscrutinyconstitutionalstandard.ThecasealsoisinstructiveinitsapplicationoftheEngineeringContractorsAssociationcase,includingtoadisparityanalysis,theburdensofproofonthelocalgovernment,andthenarrowlytailoredprongofthestrictscrutinytest.
Inthiscase,plaintiffWebsterbroughtanactionchallengingtheconstitutionalityofFultonCounty’s(the“County”)minorityandfemalebusinessenterpriseprogram(“M/FBE”)program.51F.Supp.2d1354,1357(N.D.Ga.1999).[ThedistrictcourtfirstsetforththeprovisionsoftheM/FBEprogramandconductedastandinganalysisat51F.Supp.2dat1356‐62].
Thecourt,citingEngineeringContractorsAssociationofS.Florida,Inc.v.Metro.EngineeringContractorsAssociation,122F.3d895(11thCir.1997),heldthat“[e]xplicitracialpreferencesmaynotbeusedexceptasa‘lastresort.’”Id.at1362‐63.ThecourtthensetforththestrictscrutinystandardforevaluatingracialandethnicpreferencesandthefourfactorsenunciatedinEngineeringContractorsAssociation,andtheintermediatescrutinystandardforevaluatinggenderpreferences.Id.at1363.ThecourtfoundthatunderEngineeringContractorsAssociation,thegovernmentcouldutilizebothpost‐enactmentandpre‐enactmentevidencetomeetitsburdenofa“strongbasisinevidence”forstrictscrutiny,and“sufficientprobativeevidence”forintermediatescrutiny.Id.
Thecourtfoundthatthedefendantbearstheinitialburdenofsatisfyingtheaforementionedevidentiarystandard,andtheultimateburdenofproofremainswiththechallengingpartytodemonstratetheunconstitutionalityoftheM/FBEprogram.Id.at1364.Thecourtfoundthattheplaintiffhasatleastthreemethods“torebuttheinferenceofdiscriminationwithaneutralexplanation:(1)demonstratethatthestatisticsareflawed;(2)demonstratethatthedisparitiesshownbythestatisticsarenotsignificant;or(3)presentconflictingstatisticaldata.”Id.,citingEng’gContractorsAss’n,122F.3dat916.
[ThedistrictcourtthensetforththeEngineeringContractorsAssociationopinionindetail.]
ThecourtfirstnotedthattheEleventhCircuithasrecognizedthatdisparityindicesgreaterthan80percentaregenerallynotconsideredindicationsofdiscrimination.Id.at1368,citingEng’gContractorsAssoc.,122F.3dat914.ThecourtthenconsideredtheCounty’spre‐1994disparity
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study(the“Brimmer‐MarshallStudy”)andfoundthatitfailedtoestablishastrongbasisinevidencenecessarytosupporttheM/FBEprogram.Id.at1368.
First,thecourtfoundthatthestudyrestedontheinaccurateassumptionthatastatisticalshowingofunderutilizationofminoritiesinthemarketplaceasawholewassufficientevidenceofdiscrimination.Id.at1369.ThecourtcitedCityofRichmondv.J.A.CrosonCo.,488U.S.496(1989)forthepropositionthatdiscriminationmustbefocusedoncontractingbytheentitythatisconsideringthepreferenceprogram.Id.BecausetheBrimmer‐MarshallStudycontainednostatisticalevidenceofdiscriminationbytheCountyintheawardofcontracts,thecourtfoundtheCountymustshowthatitwasa“passiveparticipant”indiscriminationbytheprivatesector.Id.ThecourtfoundthattheCountycouldtakeremedialactionifithadevidencethatprimecontractorsweresystematicallyexcludingminority‐ownedbusinessesfromsubcontractingopportunities,orifithadevidencethatitsspendingpracticesare“exacerbatingapatternofpriordiscriminationthatcanbeidentifiedwithspecificity.”Id.However,thecourtfoundthattheBrimmer‐MarshallStudycontainednosuchdata.Id.
Second,theBrimmer‐Marshallstudycontainednoregressionanalysistoaccountforrelevantvariables,suchasfirmsize.Id.at1369‐70.Attrial,Dr.Marshallsubmittedafollow‐uptotheearlierdisparitystudy.However,thecourtfoundthestudyhadthesameflawinthatitdidnotcontainaregressionanalysis.Id.ThecourtthusconcludedthattheCountyfailedtopresenta“strongbasisinevidence”ofdiscriminationtojustifytheCounty’sracialandethnicpreferences.Id.
ThecourtnextconsideredtheCounty’spost‐1994disparitystudy.Id.at1371.Thestudyfirstsoughttodeterminetheavailabilityandutilizationofminority‐andfemale‐ownedfirms.Id.Thecourtexplained:
Twomethodsmaybeusedtocalculateavailability:(1)bidanalysis;or(2)bidderanalysis.Inabidanalysis,theanalystcountsthenumberofbidssubmittedbyminorityorfemalefirmsoveraperiodoftimeanddividesitbythetotalnumberofbidssubmittedinthesameperiod.Inabidderanalysis,theanalystcountsthenumberofminorityorfemalefirmssubmittingbidsanddividesitbythetotalnumberoffirmswhichsubmittedbidsduringthesameperiod.
Id.ThecourtfoundthattheinformationprovidedinthestudywasinsufficienttoestablishafirmbasisinevidencetosupporttheM/FBEprogram.Id.at1371‐72.Thecourtalsofounditsignificanttoconductaregressionanalysistoshowwhetherthedisparitieswereeitherduetodiscriminationorotherneutralgrounds.Id.at1375‐76.
TheplaintiffandtheCountysubmittedstatisticalstudiesofdatacollectedbetween1994and1997.Id.at1376.ThecourtfoundthatthedatawerepotentiallyskewedduetotheoperationoftheM/FBEprogram.Id.Additionally,thecourtfoundthattheCounty’sstandarddeviationanalysisyieldednon‐statisticallysignificantresults(notingtheEleventhCircuithasstatedthatscientistsconsiderafindingoftwostandarddeviationssignificant).Id.(internalcitationsomitted).
ThecourtconsideredtheCounty’sanecdotalevidence,andquotedEngineeringContractorsAssociationforthepropositionthat“[a]necdotalevidencecanplayanimportantroleinbolsteringstatisticalevidence,butthatonlyintherarecasewillanecdotalevidencesufficestandingalone.”Id.,quotingEng’gContractorsAss’n,122F.3dat907.TheBrimmer‐Marshall
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Studycontainedanecdotalevidence.Id.at1379.Additionally,theCountyheldhearingsbutafterreviewingthetaperecordingsofthehearings,thecourtconcludedthatonlytwoindividualstestifiedtodiscriminationbytheCounty;oneofthemcomplainedthattheCountyusedtheM/FBEprogramtoonlybenefitAfricanAmericans.Id.Thecourtfoundthemostcommoncomplaintsconcernedbarriersinbonding,financing,andinsuranceandslowpaymentbyprimecontractors.Id.ThecourtconcludedthattheanecdotalevidencewasinsufficientinandofitselftoestablishafirmbasisfortheM/FBEprogram.Id.
ThecourtalsoappliedanarrowtailoringanalysisoftheM/FBEprogram.“TheEleventhCircuithasmadeitclearthattheessenceofthisinquiryiswhetherracialpreferenceswereadoptedonlyasa‘lastresort.’”Id.at1380,citingEng’gContractorsAssoc.,122F.3dat926.ThecourtcitedtheEleventhCircuit’sfour‐parttestandconcludedthattheCounty’sM/FBEprogramfailedonseveralgrounds.First,thecourtfoundthatarace‐basedproblemdoesnotnecessarilyrequirearace‐basedsolution.“Ifarace‐neutralremedyissufficienttocurearace‐basedproblem,thenarace‐consciousremedycanneverbenarrowlytailoredtothatproblem.”Id.,quotingEng’gContractorsAss’n,122F.3dat927.ThecourtfoundthattherewasnoevidenceofdiscriminationbytheCounty.Id.at1380.
ThecourtfoundthateventhoughamajorityoftheCommissionersontheCountyBoardwereAfricanAmerican,theCountyhadcontinuedtheprogramfordecades.Id.ThecourtheldthattheCountyhadnotseriouslyconsideredrace‐neutralmeasures:
ThereisnoevidenceintherecordthatanyCommissionerhasofferedaresolutionduringthisperiodsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity.ThereisnoevidenceintherecordofanyproposalbythestaffofFultonCountyofsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity.TherehasbeennoevidenceofferedofanydebatewithintheCommissionaboutsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity….Id.
ThecourtfoundthattherandominclusionofethnicandracialgroupswhohadnotsuffereddiscriminationbytheCountyalsomitigatedagainstafindingofnarrowtailoring.Id.ThecourtfoundthattherewasnoevidencethattheCountyconsideredrace‐neutralalternativesasanalternativetorace‐consciousmeasuresnorthatrace‐neutralmeasureswereinitiatedandfailed.Id.at1381.ThecourtconcludedthatbecausetheM/FBEprogramwasnotadoptedasalastresort,itfailedthenarrowtailoringtest.Id.
Additionally,thecourtfoundthattherewasnosubstantialrelationshipbetweenthenumericalgoalsandtherelevantmarket.Id.ThecourtrejectedtheCounty’sargumentthatitsprogramwaspermissiblebecauseitset“goals”asopposedto“quotas,”becausetheprograminEngineeringContractorsAssociationalsoutilized“goals”andwasstruckdown.Id.
PertheM/FBEprogram’sgender‐basedpreferences,thecourtfoundthattheprogramwassufficientlyflexibletosatisfythesubstantialrelationshipprongoftheintermediatescrutinystandard.Id.at1383.However,thecourtheldthattheCountyfailedtopresent“sufficientprobativeevidence”ofdiscriminationnecessarytosustainthegender‐basedpreferencesportionoftheM/FBEprogram.Id.
ThecourtfoundtheCounty’sM/FBEprogramunconstitutionalandenteredapermanentinjunctioninfavoroftheplaintiff.Id.Onappeal,theEleventhCircuitaffirmedpercuriam,stating
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onlythatitaffirmedonthebasisofthedistrictcourt’sopinion.Websterv.FultonCounty,Georgia,218F.3d1267(11thCir.2000).
22. Associated Gen. Contractors v. Drabik, 50 F. Supp.2d 741 (S.D. Ohio 1999)
ThedistrictcourtinthiscasepointedoutthatithadstruckdownOhio’sMBEstatutethatprovidedrace‐basedpreferencesintheawardofstateconstructioncontractsin1998.50F.Supp.2dat744.Twoweeksearlier,thedistrictcourtfortheNorthernDistrictofOhio,likewise,foundthesameOhiolawunconstitutionalwhenitwasreliedupontosupportastatemandatedset‐asideprogramadoptedbytheCuyahogaCommunityCollege.SeeF.BuddieContracting,Ltd.v.CuyahogaCommunityCollegeDistrict,31F.Supp.2d571(N.D.Ohio1998).Id.at741.
Thestatedefendant’sappealedthiscourt’sdecisiontotheUnitedStatescourtofAppealsfortheSixthCircuit.Id.Thereafter,theSupremeCourtofOhioheldinthecaseofRitcheyProduce,Co.,Inc.v.TheStateofOhio,DepartmentofAdministrative,704N.E.2d874(1999),thattheOhiostatute,whichprovidedrace‐basedpreferencesinthestate’spurchaseofnonconstruction‐relatedgoodsandservices,wasconstitutional.Id.at744.
Whilethiscourt’sdecisionrelatedtoconstructioncontractsandtheOhioSupremeCourt’sdecisionrelatedtoothergoodsandservices,thedecisionscouldnotbereconciled,accordingtothedistrictcourt.Id.at744.Subsequently,thestatedefendantsmovedthiscourttostayitsorderofNovember2,1998inlightoftheOhioStateSupremeCourt’sdecisioninRitcheyProduce.ThedistrictcourttooktheopportunityinthiscasetoreconsideritsdecisionofNovember2,1998,andtothereasonsgivenbytheSupremeCourtofOhioforreachingtheoppositeresultinRitcheyProduce,anddecideinthiscasethatitsoriginaldecisionwascorrect,andthatastayofitsorderwouldonlyservetoperpetuatea“blatantlyunconstitutionalprogramofrace‐basedbenefits.Id.at745.
Inthisdecision,thedistrictcourtreaffirmeditsearlierholdingthattheStateofOhio’sMBEprogramofconstructioncontractawardsisunconstitutional.ThecourtcitedtoF.BuddieContractingv.CuyahogaCommunityCollege,31F.Supp.2d571(N.D.Ohio1998),holdingasimilarlocalOhioprogramunconstitutional.ThecourtrepudiatedtheOhioSupremeCourt’sholdinginRitcheyProduce,707N.E.2d871(Ohio1999),whichheldthattheStateofOhio’sMBEprogramasappliedtothestate’spurchaseofnon‐construction‐relatedgoodsandserviceswasconstitutional.ThecourtfoundtheevidencetobeinsufficienttojustifytheOhioMBEprogram.ThecourtheldthattheprogramwasnotnarrowlytailoredbecausetherewasnoevidencethattheStatehadconsideredarace‐neutralalternative.
StrictScrutiny.ThedistrictcourtheldthattheSupremeCourtofOhiodecisioninRitcheyProducewaswronglydecidedforthefollowingreasons:
(1)Ohio’sMBEprogramofrace‐basedpreferencesintheawardofstatecontractswasunconstitutionalbecauseitisunlimitedinduration.Id.at745.
(2)aprogramofrace‐basedbenefitscannotbesupportedbyevidenceofdiscriminationwhichisover20yearsold.Id.
(3)thestateSupremeCourtfoundthattherewasaseverenumericalimbalanceintheamountofbusinesstheStatedidwithminority‐ownedenterprises,basedonitsuncriticalacceptanceofessentially“worthlesscalculationscontainedinatwenty‐one
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year‐oldreport,whichmiscalculatedthepercentageofminority‐ownedbusinessesinOhioandmisrepresenteddataonthepercentageofstatepurchasecontractstheyhadreceived,allofwhichwaseasilydetectablebyexaminingthedatacitedbytheauthorsofthereport.”Id.at745.
(4)ThestateSupremeCourtfailedtorecognizethattheincorrectlycalculatedpercentageofminority‐ownedbusinessesinOhio(6.7percent)bearsnorelationshiptothe15percentset‐asidegoaloftheOhioAct.Id.
(5)thestateSupremeCourtappliedanincorrectruleoflawwhenitannouncedthatOhio’sprogrammustbeupheldunlessitisclearlyunconstitutionalbeyondareasonabledoubt,whereasaccordingtothedistrictcourtinthiscase,theSupremeCourtoftheUnitedStateshassaidthatallracialclassclassificationsarehighlysuspectandmustbesubjectedtostrictjudicialscrutiny.Id.
(6)theevidenceofpastdiscriminationthattheOhioGeneralAssemblyhadin1980didnotprovideafirmbasisinevidenceforarace‐basedremedy.Id.
Thus,thedistrictcourtdeterminedtheevidencecouldnotsupportacompellingstate‐interestforrace‐basedpreferencesforthestateofOhioMBEAct,inpartbasedonthefactevidenceofpastdiscriminationwasstaleandtwentyyearsold,andthestatisticalanalysiswasinsufficientbecausethestatedidnotknowhowmanyMBE’sintherelevantmarketarequalifiedtoundertakeprimeorsubcontractingworkinpublicconstructioncontracts.Id.at763‐771.ThestatisticalevidencewasfatallyflawedbecausetherelevantuniverseofminoritybuisnessesisnotallminoritybusinessesinthestateofOhio,butonlythosewillingandabletoenterintocontractswiththestateofOhio.Id.at761.Inthecaseofset‐asideprograminstateconstruction,therelevantuniverseisminority‐ownedconstructionfirmswillingandabletoenterintostateconstructioncontracts.Id.
NarrowTailoring.Thecourtaddressedthesecondprongofthestrictscrutinyanalysis,andfoundthattheOhioMBEprogramatissuewasnotnarrowlytailored.Thecourtconcludedthatthestatecouldnotsatisfythefourfactorstobeconsideredindeterminingwhetherrace‐consciousremediesareappropriate.Id.at763.First,thecourtstatedthattherewasnoconsiderationofrace‐neutralalternativestoincreaseminorityparticipationinstatecontractingbeforeresortingto“race‐basedquotas”.Id.at763‐764.Thecourtheldthatfailuretoconsiderrace‐neutralmeanswasfataltotheset‐asideprograminCroson,andthefailureoftheStateofOhiotoconsiderrace‐neutralmeansbeforeadoptingtheMBEActin1980likewise“doomsOhio’sprogramofrace‐basedquotas”.Id.at765.
Second,thecourtfoundtheOhioMBEActwasnotflexible.Thecourtstatedthatinsteadofallowingflexibilitytoameliorateharmfuleffectsoftheprogram,theimprecisionofthestatutorygoalshasbeenusedtojustifybureaucraticdecisionswhichincreaseitsimpactonnon‐minoritybusiness.”Id.at765.ThecourtsaidthewaiversystemforprimecontractsfocusessolelyontheavailabilityofMBEs.Id.at766.Thecourtnotedtheawardingagencymayremovethecontractfromthesetasideprogramandopenitupforbiddingbynon‐minoritycontractorsifnocertifiedMBEsubmitsabid,orifallbidssubmittedbyMBEsareconsideredunacceptablyhigh.Id.But,ineitherevent,thecourtpointedouttheagencyisthenrequiredtosetasideadditionalcontractstosatisfythenumericalquotarequiredbythestatute.Id.ThecourtconcludedthatthereisnoconsiderationgiventowhethertheparticularMBEseekingaracialpreferencehassufferedfromtheeffectsofpastdiscriminationbythestateorprimecontractors.Id.
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Third,thecourtfoundtheOhioMBEActwasnotappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitwasdesignedtoeliminate.Id.at766.Thecourtstatedthe1980MBEActisunlimitedinduration,andthereisnoevidencethestatehaseverreconsideredwhetheracompellingstateinterestexiststhatwouldjustifythecontinuationofarace‐basedremedyatanytimeduringthetwodecadestheActhasbeenineffect.Id.
Fourth,thecourtfoundthegoalsoftheOhioMBEActwerenotrelatedtotherelevantmarketandthattheActfailedthiselementofthe“narrowlytailored”requirementofstrictscrutiny.Id.at767‐768.Thecourtsaidthegoalof15percentfarexceedsthepercentageofavailableminorityfirms,andthusbearsnorelationshiptotherelevantmarket.Id.
Fifth,thecourtfoundtheconclusionoftheOhioSupremeCourtthattheburdensimposedonnon‐MBEsbyvirtueoftheset‐asiderequirementswererelativelylightwasincorrect.Id.at768.Thecourtconcludednon‐minoritycontractorsinvarioustradeswereeffectivelyexcludedfromtheopportunitytobidonanyworkfromlargestateagencies,departments,andinstitutionssolelybecauseoftheirrace.Id.at678.
Sixth,thecourtfoundtheOhioMBEActprovidedrace‐basedbenefitsbasedonarandominclusionofminoritygroups.Id.at770‐771.Thecourtstatedtherewasnoevidenceaboutthenumberofeachracialorethnicgrouportherespectivesharesofthetotalcapitalimprovementexpenditurestheyreceived.Id.at770.Noneofthestatisticalinformation,thecourtsaid,brokedownthepercentageofallfirmsthatwereownedbyspecificminoritygroupsorthedollaramountsofcontractsreceivedbyfirmsinspecificminoritygroups.Id.Thecourt,thus,concludedthattheOhioMBEActincludedminoritygroupsrandomlywithoutanyspecificevidencethatanygroupsufferedfromdiscriminationintheconstructionindustryinOhio.Id.at771.
Conclusion.Thecourtthusdeniedthemotionofthestatedefendantstostaythecourt’spriororderholdingunconstitutionaltheOhioMBEActpendingtheappealofthecourt’sorder.Id.at771.Thisopinionunderscoredthatgovernmentsmustshowseveralfactorstodemonstratenarrowtailoring:(1)thenecessityforthereliefandtheefficacyofalternativeremedies,(2)flexibilityanddurationoftherelief,(3)relationshipofnumericalgoalstotherelevantlabormarket,and(4)impactofthereliefontherightsofthirdparties.ThecourtheldtheOhioMBEprogramfailedtosatisfythistest.
23. Phillips & Jordan, Inc. v. Watts, 13 F. Supp.2d 1308 (N.D. Fla. 1998)
ThiscaseisinstructivebecauseitaddressedachallengetoastateandlocalgovernmentMBE/WBE‐typeprogramandconsideredtherequisiteevidentiarybasisnecessarytosupporttheprogram.InPhillips&Jordan,thedistrictcourtfortheNorthernDistrictofFloridaheldthattheFloridaDepartmentofTransportation’s(“FDOT”)programof“settingaside”certainhighwaymaintenancecontractsforAfricanAmerican‐andHispanic‐ownedbusinessesviolatedtheEqualProtectionClauseoftheFourteenthAmendmenttotheUnitedStatesConstitution.Thepartiesstipulatedthattheplaintiff,anon‐minoritybusiness,hadbeenexcludedinthepastandmaybeexcludedinthefuturefromcompetingforcertainhighwaymaintenancecontracts“setaside”forbusinessenterprisesownedbyHispanicandAfricanAmericanindividuals.ThecourtheldthattheevidenceofstatisticaldisparitieswasinsufficienttosupporttheFloridaDOTprogram.
ThedistrictcourtpointedoutthatFloridaDOTdidnotclaimthatithadevidenceofintentionaldiscriminationintheawardofitscontracts.ThecourtstatedthattheessenceofFDOT’sclaimwasthatthetwoyeardisparitystudyprovidedevidenceofadisparitybetweentheproportion
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ofminoritiesawardedFDOTroadmaintenancecontractsandaportionoftheminorities“supposedlywillingandabletodoroadmaintenancework,”andthatFDOTdidnotitselfengageinanyracialorethnicdiscrimination,soFDOTmusthavebeenapassiveparticipantin“somebody’s”discriminatorypractices.
SinceitwasagreedinthecasethatFDOTdidnotdiscriminateagainstminoritycontractorsbiddingonroadmaintenancecontracts,thecourtfoundthattherecordcontainedinsufficientproofofdiscrimination.ThecourtfoundtheevidenceinsufficienttoestablishactsofdiscriminationagainstAfricanAmerican‐andHispanic‐ownedbusinesses.
Thecourtraisedquestionsconcerningthechoiceanduseofthestatisticalpoolofavailablefirmsrelieduponbythedisparitystudy.ThecourtexpressedconcernaboutwhetheritwasappropriatetouseCensusdatatoanalyzeanddeterminewhichfirmswereavailable(qualifiedand/orwillingandable)tobidonFDOTroadmaintenancecontracts.
F. Recent Decisions Involving the Federal DBE Program and its Implementation by State and Local Governments
ThereareseveralrecentandpendingcasesinvolvingchallengestotheUnitedStatesFederalDBEProgramanditsimplementationbythestatesandtheirgovernmentalentitiesforfederally‐fundedprojects.Thesecasescouldhaveasignificantimpactonthenatureandprovisionsofcontractingandprocurementonfederally‐fundedprojects,includingandrelatingtotheutilizationofDBEs.Inaddition,thesecasesprovideaninstructiveanalysisoftherecentapplicationofthestrictscrutinytesttoMBE/WBE‐andDBE‐typeprograms.
Recent Decisions in Federal Circuit Courts of Appeal
1. Mountain West Holding Co., Inc. v. The State of Montana, Montana DOT, et al., 2017 WL 2179120 (9th Cir. May 16, 2017), Memorandum opinion, (Not for Publication) United States Court of Appeals for the Ninth Circuit, May 16, 2017, Docket Nos. 14‐26097 and 15‐35003, dismissing in part, reversing in part and remanding the U.S. District Court decision at 2014 WL 6686734 (D. Mont. Nov. 26, 2014)
Note: TheNinthCircuitCourtofAppealsMemorandumprovides:“ThisdispositionisnotappropriateforpublicationandisnotprecedentexceptasprovidedbyNinthCircuitRule36‐3.”
Introduction.MountainWestHoldingCompanyinstallssigns,guardrails,andconcretebarriersonhighwaysinMontana.ItcompetestowinsubcontractsfromprimecontractorswhohavecontractedwiththeState.Itisnotownedandcontrolledbywomenorminorities.Someofitscompetitorsaredisadvantagedbusinessenterprises(DBEs)ownedbywomenorminorities.InthiscaseitclaimsthatMontana’sDBEgoal‐settingprogramunconstitutionallyrequiredprimecontractorstogivepreferencetotheseminorityorfemale‐ownedcompetitors,whichMountainWestHoldingsCompanyarguesisaviolationoftheEqualProtectionClause,42U.S.C.§1983andTitleVIoftheCivilRightsActof1964,42U.S.C.§2000d,etseq.
Factualandproceduralbackground.InMountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.,2014WL6686734(D.Mont.Nov.26,2014);CaseNo.1:13‐CV‐00049‐DLC,UnitedStatesDistrictCourtfortheDistrictofMontana,BillingsDivision,plaintiffMountainWestHoldingCo.,Inc.(“MountainWest”),allegeditisacontractorthatprovidesconstruction‐specifictrafficplanningandstaffingforconstructionprojectsaswellasthe
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installationofsigns,guardrails,andconcretebarriers.MountainWestsuedtheMontanaDepartmentofTransportation(“MDT”)andtheStateofMontana,challengingtheirimplementationoftheFederalDBEProgram.MountainWestbroughtthisactionallegingviolationoftheEqualProtectionClauseoftheFourteenthAmendmentoftheUnitedStatesConstitution,TitleVIoftheCivilRightsAct,42USC§2000(d)(7),and42USC§1983.
FollowingtheNinthCircuit’s2005decisioninWesternStatesPavingv.WashingtonDOT,etal.,MDTcommissionedadisparitystudywhichwascompletedin2009.MDTutilizedtheresultsofthedisparitystudytoestablishitsoverallDBEgoal.MDTdeterminedthattomeetitsoverallgoal,itwouldneedtoimplementrace‐consciouscontractspecificgoals.Baseduponthedisparitystudy,MountainWestallegestheStateofMontanautilizedrace,nationalorigin,andgender‐consciousgoalsinhighwayconstructioncontracts.MountainWestclaimstheStatedidnothaveastrongbasisinevidencetoshowtherewaspastdiscriminationinthehighwayconstructionindustryinMontanaandthattheimplementationofrace,gender,andnationaloriginpreferenceswerenecessaryorappropriate.MountainWestalsoallegesthatMontanahasinstitutedpoliciesandpracticeswhichexceedtheUnitedStatesDepartmentofTransportationDBErequirements.
MountainWestassertsthatthe2009studyconcludedall“relevant”minoritygroupswereunderutilizedin“professionalservices”andAsianPacificAmericansandHispanicAmericanswereunderutilizedin“businesscategoriescombined,”butitalsoconcludedthatall“relevant”minoritygroupsweresignificantlyoverutilizedinconstruction.MountainWestthusallegesthatalthoughthedisparitystudydemonstratesthatDBEgroupsare“significantlyoverrepresented”inthehighwayconstructionfield,MDThasestablishedpreferencesforDBEconstructionsubcontractorfirmsovernon‐DBEconstructionsubcontractorfirmsintheawardofcontracts.
MountainWestalsoassertsthattheMontanaDBEProgramdoesnothaveavalidstatisticalbasisfortheestablishmentorinclusionofrace,nationalorigin,andgenderconsciousgoals,thatMDTinappropriatelyreliesuponthe2009studyasthebasisforitsDBEProgram,andthatthestudyisflawed.MountainWestclaimstheMontanaDBEProgramisnotnarrowlytailoredbecauseitdisregardslargedifferencesinDBEfirmutilizationinMDTcontractsasamongthreedifferentcategoriesofsubcontractors:businesscategoriescombined,construction,andprofessionalservices;theMDTDBEcertificationprocessdoesnotrequiretheapplicanttospecifyanyspecificracialorethnicprejudiceorculturalbiasthathadanegativeimpactuponhisorherbusinesssuccess;andthecertificationprocessdoesnotrequiretheapplicanttocertifythatheorshewasdiscriminatedagainstintheStateofMontanainhighwayconstruction.
MountainWestandtheStateofMontanaandtheMDTfiledcrossMotionsforSummaryJudgment.MountainWestassertsthattherewasnoevidencethatallrelevantminoritygroupshadsuffereddiscriminationinMontana’stransportationcontractingindustrybecause,whilethestudyhaddeterminedthereweresubstantialdisparitiesintheutilizationofallminoritygroupsinprofessionalservicescontracts,therewasnodisparityintheutilizationofminoritygroupsinconstructioncontracts.
AGC,SanDiegov.CaliforniaDOTandWesternStatesPavingCo.v.WashingtonDOT.TheNinthCircuitandthedistrictcourtinMountainWestappliedthedecisioninWesternStates,407F.3d983(9thCir.2005),andthedecisioninAGC,SanDiegov.CaliforniaDOT,713F.3d1187(9thCir.2013)asestablishingthelawtobefollowedinthiscase.ThedistrictcourtnotedthatinWesternStates,theNinthCircuitheldthatastate’simplementationoftheFederalDBEProgramcanbesubjecttoanas‐appliedconstitutionalchallenge,despitethefacialvalidityoftheFederalDBEProgram.2014WL6686734at*2(D.Mont.November26,2014).TheNinthCircuitandthe
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districtcourtstatedtheNinthCircuithasheldthatwhetherastate’simplementationoftheDBEProgram“isnarrowlytailoredtofurtherCongress’sremedialobjectivedependsuponthepresenceorabsenceofdiscriminationintheState’stransportationcontractingindustry.”MountainWest,2014WL6686734at*2,quotingWesternStates,at997‐998,andMountainWest,2017WL2179120at*2(9thCir.May16,2017)Memorandum,May16,2017,at5‐6,quotingAGC,SanDiegov.CaliforniaDOT,713F.3d1187,1196.TheNinthCircuitinMountainWestalsopointedoutithadheldthat“evenwhendiscriminationispresentwithinaState,aremedialprogramisonlynarrowlytailoredifitsapplicationislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”MountainWest,2017WL2179120at*2,Memorandum,May16,2017,at6,and2014WL6686734at*2,quotingWesternStates,407F.3dat997‐999.
MDTstudy.MDTobtainedafirmtoconductadisparitystudythatwascompletedin2009.ThedistrictcourtinMountainWeststatedthattheresultsofthestudyindicatedsignificantunderutilizationofDBEsinallminoritygroupsin“professionalservices”contracts,significantunderutilizationofAsianPacificAmericansandHispanicAmericansin“businesscategoriescombined,”slightunderutilizationofnonminoritywomenin“businesscategoriescombined,”andoverutilizationofallgroupsinsubcontractor“construction”contracts.MountainWest,2014WL6686734at*2.
Inadditiontothestatisticalevidence,the2009disparitystudygatheredanecdotalevidencethroughsurveysandothermeans.ThedistrictcourtstatedtheanecdotalevidencesuggestedvariousformsofdiscriminationexistedwithinMontana’stransportationcontractingindustry,includingevidenceofanexclusive“goodoleboynetwork”thatmadeitdifficultforDBEstobreakintothemarket.Id.at*3.Thedistrictcourtsaidthatdespitethesefindings,theconsultingfirmrecommendedthatMDTcontinuetomonitorDBEutilizationwhileemployingonlyrace‐neutralmeanstomeetitsoverallgoal.Id.TheconsultingfirmrecommendedthatMDTconsidertheuseofrace‐consciousmeasuresifDBEutilizationdecreasedordidnotimprove.
Montanafollowedtherecommendationsprovidedinthestudy,andcontinuedusingonlyrace‐neutralmeansinitsefforttoaccomplishitsoverallgoalforDBEutilization.Id.Basedonthestatisticalanalysisprovidedinthestudy,MontanaestablishedanoverallDBEutilizationgoalof5.83percent.Id.
Montana’sDBEutilizationafterceasingtheuseofcontractgoals.Thedistrictcourtfoundthatin2006,MontanaachievedaDBEutilizationrateof13.1percent,however,afterMontanaceasedusingcontractgoalstoachieveitsoverallgoal,therateofDBEutilizationdeclinedsharply.2014WL6686734at*3.Theutilizationratedropped,accordingtothedistrictcourt,to5percentin2007,3percentin2008,2.5percentin2009,0.8percentin2010,andin2011,itwas2.8percentId.Inresponsetothisdecline,forfiscalyears2011‐2014,thedistrictcourtsaidMDTemployedcontractgoalsoncertainUSDOTcontractsinordertoachieve3.27percentagepointsofMontana’soverallgoalof5.83percentDBEutilization.
MDTthenconductedandpreparedanewGoalMethodologyforDBEutilizationforfederalfiscalyears2014‐2016.Id.USDOTapprovedthenewandcurrentgoalmethodologyforMDT,whichdoesnotprovidefortheuseofcontractgoalstomeettheoverallgoal.Id.Thus,thenewoverallgoalistobemadeentirelythroughtheuseofrace‐neutralmeans.Id.
MountainWest’sclaimsforrelief.MountainWestsoughtdeclaratoryandinjunctiverelief,includingprospectiverelief,againsttheindividualdefendants,andsoughtmonetarydamagesagainsttheStateofMontanaandtheMDTforallegedviolationofTitleVI.2014WL6686734at*3.MountainWest’sclaimformonetarydamagesisbasedonitsclaimthatonthreeoccasionsit
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wasalow‐quotingsubcontractortoaprimecontractorsubmittingabidtotheMDTonaprojectthatutilizedcontractgoals,andthatdespitebeingalow‐quotingbidder,MountainWestwasnotawardedthecontract.Id.MountainWestbringsanas‐appliedchallengetoMontana’sDBEprogram.Id.
Thetwo‐prongtesttodemonstratethataDBEprogramisnarrowlytailored.TheCourt,citingAGC,SanDiegov.CaliforniaDOT,713F.3d1187,1196,statedthatunderthetwo‐prongtestestablishedinWesternStates,inordertodemonstratethatitsDBEprogramisnarrowlytailored,(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbelimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.MountainWest,2017WL2179120at*2,Memorandum,May16,2017,at6‐7.
DistrictCourtHoldingin2014andtheAppeal.ThedistrictcourtgrantedsummaryjudgmenttotheState,andMountainWestappealed.SeeMountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.2014WL6686734(D.Mont.Nov.26,2014),dismissedinpart,reversedinpart,andremanded,U.S.CourtofAppeals,NinthCircuit,DocketNos.14‐36097and15‐35003,Memorandum2017WL2179120at**1‐4(9thCir.May16,2017).Montanaalsoappealedthedistrictcourt’sthresholddeterminationthatMountainWesthadaprivaterightofactionunderTitleVI,anditappealedthedistrictcourt’sdenialoftheState’smotiontostrikeanexpertreportsubmittedinsupportofMountainWest’smotion.
NinthCircuitHolding.TheNinthCircuitCourtofAppealsinitsMemornadumopiniondismissedMountainWest’sappealasmoottotheextentMountainWestpursuesequitableremedies,affirmedthedistrictcourt’sdeterminationthatMountainWesthasaprivaterighttoenforceTitleVI,affirmedthedistrictcourt’sdecisiontoconsiderthedisputedexpertreportbyMountainWest’sexpertwitness,andreversedtheordergrantingsummaryjudgmenttotheState.2017WL2179120at**1‐4(9thCir.May16,2017),U.S.CourtofAppeals,NinthCircuit,DocketNos.14‐36097and15‐35003,Memorandum,at3,5,11.
Mootness.TheNinthCircuitfoundthatMontanadoesnotcurrentlyemploygender‐orrace‐consciousgoals,andthedataitrelieduponasjustificationforitspreviousgoalsarenowseveralyearsold.TheCourtthusheldthatMountainWest’sclaimsforinjunctiveanddeclaratoryreliefarethereforemoot.MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at4.
TheCourtalsoheld,however,thatMountainWest’sTitleVIclaimfordamagesisnotmoot.2017WL2179120at**1‐2.TheCourtstatedthataplaintiffmayseekdamagestoremedyviolationsofTitleVI,see42U.S.C.§2000d‐7(a)(1)‐(2);andMountainWesthassoughtdamages.Claimsfordamages,accordingtotheCourt,donotbecomemootevenifchangestoachallengedprogrammakeclaimsforprospectivereliefmoot.Id.
Theappeal,theNinthCircuitheld,isthereforedismissedwithrespecttoMountainWest’sclaimsforinjunctiveanddeclaratoryrelief;andonlytheclaimfordamagesunderTitleVIremainsinthecase.MountainWest,2017WL2179120at**1(9thCir.),Memorandum,May16,2017,at4.
PrivateRightofActionandDiscriminationunderTitleVI.TheCourtconcludedforthereasonsfoundinthedistrictcourt’sorderthatMountainWestmaystateaprivateclaimfordamagesagainstMontanaunderTitleVI.Id.at*2.ThedistrictcourthadgrantedsummaryjudgmenttoMontanaonMountainWest’sclaimsfordiscriminationunderTitleVI.
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Montanadoesnotdisputethatitsprogramtookraceintoaccount.TheNinthCircuitheldthatclassificationsbasedonracearepermissible“onlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterests.”MountainWest,2017WL2179120(9thCir.)at*2,Memorandum,May16,2017,at6‐7.W.StatesPaving,407F.3dat990(quotingAdarandConstructors,Inc.v.Peña,515U.S.200,227(1995)).AsinWesternStatesPaving,theCourtappliedthesametesttoclaimsofunconstitutionaldiscriminationanddiscriminationinviolationofTitleVI.MountainWest,2017WL2179120at*2,n.2,Memorandum,May16,2017,at6,n.2;see,407F.3dat987.
Montana,theCourtfoundbearstheburdentojustifyanyracialclassifications.Id.Inanas‐appliedchallengetoastate’sDBEcontractingprogram,“(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbe‘limitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.’”MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at6‐7,quoting,Assoc.Gen.ContractorsofAm.v.Cal.Dep’tofTransp.,713F.3d1187,1196(9thCir.2013)(quotingW.StatesPaving,407F.3dat997‐99).Discriminationmaybeinferredfrom“asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.”MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at6‐7,quoting,CityofRichmondv.J.A.CrosonCo.,488U.S.469,509(1989).
Here,thedistrictcourtheldthatMontanahadsatisfieditsburden.Inreachingthisconclusion,thedistrictcourtreliedonthreetypesofevidenceofferedbyMontana.First,itcitedastudy,whichreporteddisparitiesinprofessionalservicescontractawardsinMontana.Second,thedistrictcourtnotedthatparticipationbyDBEsdeclinedafterMontanaabandonedrace‐consciousgoalsintheyearsfollowingthedecisioninWesternStatesPaving,407F.3d983.Third,thedistrictcourtcitedanecdotesofa“goodol’boys”networkwithintheState’scontractingindustry.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at7.
TheNinthCircuitreversedthedistrictcourtandheldthatsummaryjudgmentwasimproperinlightofgenuinedisputesofmaterialfactastothestudy’sanalysis,andbecausethesecondtwocategoriesofevidencewereinsufficienttoproveahistoryofdiscrimination.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at7.
Disputesoffactastostudy.MountainWest’sexperttestifiedthatthestudyreliedonseveralquestionableassumptionsandanopaquemethodologytoconcludethatprofessionalservicescontractswereawardedonadiscriminatorybasis.Id.at*3.TheNinthCircuitpointedoutafewexamplesthatitfoundillustratedtheareasinwhichtherearedisputesoffactastowhetherthestudysufficientlysupportedMontana’sactions:
1. NinthCircuitstatedthatitscasesrequirestatestoascertainwhetherlower‐than‐expectedDBEparticipationisattributabletofactorsotherthanraceorgender.W.StatesPaving,407F.3dat1000‐01.MountainWestarguesthatthestudydidnotexplainwhetherorhowitaccountedforagivenfirm’ssize,age,geography,orothersimilarfactors.Thereport’sauthorswereunabletoexplaintheiranalysisindepositionsforthiscase.Indeed,theCourtnoted,evenMontanaappearstohavequestionedthevalidityofthestudy’sstatisticalresultsMountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at8.
2. ThestudyreliedonatelephonesurveyofasampleofMontanacontractors.MountainWestarguedthat(a)itisunclearhowthestudyselectedthatsample,(b)onlyasmall
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percentageofsurveyedcontractorsrespondedtoquestions,and(c)itisunclearwhetherresponsivecontractorswererepresentativeofnonresponsivecontractors.2017WL2179120at*3(9thCir.May16,2017),Memorandumat8‐9.
3. Thestudyreliedonverysmallsamplesizesbutdidnotestsforstatisticalsignificance,andthestudyconsultantadmittedthat“someofthepopulationsampleswereverysmallandtheresultmaynotbesignificantstatistically.”2017WL2179120at*3(9thCir.May16,2017),Memorandumat8‐9.
4. MountainWestarguedthatthestudygaveequalweighttoprofessionalservicescontractsandconstructioncontracts,butprofessionalservicescontractscomposedlessthantenpercentoftotalcontractvolumeintheState’stransportationcontractingindustry.2017WL2179120at*3(9thCir.May16,2017),Memorandumat9.
5. MountainWestarguedthatMontanaincorrectlycomparedtheproportionofavailablesubcontractorstotheproportionofprimecontractdollarsawarded.Thedistrictcourtdidnotaddressthiscriticismorexplainwhythestudy’scomparisonwasappropriate.2017WL2179120at*3(9thCir.May16,2017),Memorandumat9.
Thepost‐2005declineinparticipationbyDBEs.TheNinthCircuitwasunabletoaffirmthedistrictcourt’sorderinrelianceonthedecreaseinDBEparticipationafter2005.InWesternStatesPaving,itwasheldthatadeclineinDBEparticipationafterrace‐andgender‐basedpreferencesarehaltedisnotnecessarilyevidenceofdiscriminationagainstDBEs.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at9,quotingWesternStates,407F.3dat999(“If[minoritygroupshavenotsufferedfromdiscrimination],thentheDBEprogramprovidesminoritieswhohavenotencountereddiscriminatorybarrierswithanunconstitutionalcompetitiveadvantageattheexpenseofbothnon‐minoritiesandanyminoritygroupsthathaveactuallybeentargetedfordiscrimination.”);id.at1001(“ThedisparitybetweentheproportionofDBEperformanceoncontractsthatincludeaffirmativeactioncomponentsandonthosewithoutsuchprovisionsdoesnotprovideanyevidenceofdiscriminationagainstDBEs.”).Id.
TheNinthCircuitalsocitedtotheU.S.DOTstatementmadetotheCourtinWesternStates.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at10,quoting,U.S.Dep’tofTransp.,WesternStatesPavingCo.CaseQ&A(Dec.16,2014)(“IncalculatingavailabilityofDBEs,[astate’s]studyshouldnotrelyonnumbersthatmayhavebeeninflatedbyrace‐consciousprogramsthatmaynothavebeennarrowlytailored.”).
Anecdotalevidenceofdiscrimination.TheNinthCircuitsaidthatwithoutastatisticalbasis,theStatecannotrelyonanecdotalevidencealone.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at10,quoting,CoralConst.Co.v.KingCty.,941F.2d910,919(9thCir.1991)(“Whileanecdotalevidencemaysufficetoproveindividualclaimsofdiscrimination,rarely,ifever,cansuchevidenceshowasystemicpatternofdiscriminationnecessaryfortheadoptionofanaffirmativeactionplan.”);andquoting,Croson,488U.S.at509(“[E]videnceofapatternofindividualdiscriminatoryactscan,ifsupportedbyappropriatestatisticalproof,lendsupporttoalocalgovernment’sdeterminationthatbroaderremedialreliefisjustified.”).Id.
Insum,theNinthCircuitfoundthatbecauseitmustviewtherecordinthelightmostfavorabletoMountainWest’scase,itconcludedthattherecordprovidesaninadequatebasisforsummaryjudgmentinMontana’sfavor.2017WL2179120at*3.
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Conclusion.TheNinthCircuitthusreversedandremandedforthedistrictcourttoconductwhateverfurtherproceedingsitconsidersmostappropriate,includingtrialortheresumptionofpretriallitigation.Thus,thecasewasdismissedinpart,reversedinpart,andremandedtothedistrictcourt.MountainWest,2017WL2179120at*4(9thCir.),Memorandum,May16,2017,at11.
2. Midwest Fence Corporation v. U.S. Department of Transportation, Illinois Department of Transportation, Illinois State Toll Highway Authority, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016), cert. denied, 2017 WL 497345 (2017)
PlaintiffMidwestFenceCorporationisaguardrailsandfencingspecialtycontractorthatusuallybidsonprojectsasasubcontractor.2016WL6543514at*1.MidwestFenceisnotaDBE.Id.MidwestFenceallegesthatthedefendants’DBEprogramsviolateditsFourteenthAmendmentrighttoequalprotectionunderthelaw,andchallengestheUnitedStatesDOTFederalDBEProgramandtheimplementationoftheFederalDBEProgrambytheIllinoisDOT(IDOT).Id.MidwestFencealsochallengestheIllinoisStateTollHighwayAuthority(Tollway)anditsimplementationofitsDBEProgram.Id.
Thedistrictcourtgrantedallthedefendants’motionsforsummaryjudgment.Id.at*1.SeeMidwestFenceCorp.v.U.S.DepartmentofTransportation,etal.,84F.Supp.3d705(N.D.Ill.2015)(seediscussionofdistrictcourtdecisionbelow).TheSeventhCircuitCourtofAppealsaffirmedthegrantofsummaryjudgmentbythedistrictcourt.Id.ThecourtheldthatitjoinstheotherfederalcircuitcourtsofappealinholdingthattheFederalDBEProgramisfaciallyconstitutional,theprogramservesacompellinggovernmentinterestinremedyingahistoryofdiscriminationinhighwayconstructioncontracting,theprogramprovidesstateswithamplediscretiontotailortheirDBEprogramstotherealitiesoftheirownmarketsandrequirestheuseofrace–andgender‐neutralmeasuresbeforeturningtorace‐andgender‐consciousmeasures.Id.
ThecourtofappealsalsoheldtheIDOTandTollwayprogramssurvivestrictscrutinybecausethesestatedefendantsestablishasubstantialbasisinevidencetosupporttheneedtoremedytheeffectsofpastdiscriminationintheirmarkets,andtheprogramsarenarrowlytailoredtoservethatremedialpurpose.Id.at*1.
Proceduralhistory.MidwestFenceassertedthefollowingprimarytheoriesinitschallengetotheFederalDBEProgram,IDOT’simplementationofit,andtheTollway’sownprogram:
1. Thefederalregulationsprescribeamethodforsettingindividualcontractgoalsthatplacesanundueburdenonnon‐DBEsubcontractors,especiallycertainkindsofsubcontractors,includingguardrailandfencingcontractorslikeMidwestFence.
2. Thepresumptionofsocialandeconomicdisadvantageisnottailoredadequatelytoreflectdifferencesinthecircumstancesactuallyfacedbywomenandthevariousracialandethnicgroupswhoreceivethatpresumption.
3. Thefederalregulationsareunconstitutionallyvague,particularlywithrespecttogoodfaitheffortstojustifyafront‐endwaiver.
Id.at*3‐4.MidwestFencealsoassertedthatIDOT’simplementationoftheFederalDBEProgramisunconstitutionalforessentiallythesamereasons.And,MidwestFencechallengestheTollway’sprogramonitsfaceandasapplied.Id.at*4.
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ThedistrictcourtfoundthatMidwestFencehadstandingtobringmostofitsclaimsandonthemerits,andthecourtupheldthefacialconstitutionalityoftheFederalDBEProgram.84F.Supp.3dat722‐23729;id.at*4.
ThedistrictcourtalsoconcludedMidwestFencedidnotrebuttheevidenceofdiscriminationthatIDOTofferedtojustifyitsprogram,andMidwestFencehadpresentedno“affirmativeevidence”thatIDOT’simplementationundulyburdenednon‐DBEs,failedtomakeuseofrace‐neutralalternatives,orlackedflexibility.84F.Supp.3dat733,737;id.at*4.
ThedistrictcourtnotedthatMidwestFence’schallengetotheTollway’sprogramparalleledthechallengetoIDOT’sprogram,andconcludedthattheTollway,likeIDOT,hadestablishedastrongbasisinevidenceforitsprogram.84F.Supp.3dat737,739;id.at*4.Inaddition,thecourtconcludedthat,likeIDOT’sprogram,theTollway’sprogramimposedaminimalburdenonnon‐DBEs,employedanumberofrace‐neutralmeasures,andofferedsubstantialflexibility.84F.Supp.3dat739‐740;id.at*4.
StandingtochallengetheDBEProgramsgenerally.ThedefendantsarguedthatMidwestFencelackedstanding.ThecourtofappealsheldthatthedistrictcourtcorrectlyfoundthatMidwestFencehasstanding.Id.at*5.Thecourtofappealsstatedthatbyallegingandthenofferingevidenceoflostbids,decreasedrevenue,difficultieskeepingitsbusinessafloatasaresultoftheDBEprogram,anditsinabilitytocompeteforcontractsonanequalfootingwithDBEs,MidwestFenceshowedbothcausationandredressability.Id.at*5.
ThecourtofappealsdistinguisheditsrulingintheDunnetBayConstructionCo.v.Borggren,799F.3d676(7thCir.2015),holdingthattherewasnostandingfortheplaintiffDunnetBaybasedonanunusualandcomplexsetoffactsunderwhichitwouldhavebeenimpossiblefortheplaintiffDunnetBaytohavewonthecontractitsoughtandforwhichitsoughtdamages.IDOTdidnotawardthecontracttoanyoneunderthefirstbidandhadre‐letthecontract,thusDunnetBaysufferednoinjurybecauseoftheDBEprograminthefirstbid.Id.at*5.ThecourtofappealsheldthiscaseisdistinguishablefromDunnetBaybecauseMidwestFenceseeksprospectivereliefthatwouldenableittocompetewithDBEsonanequalbasismoregenerallythaninDunnetBay.Id.at*5.
StandingtochallengetheIDOTTargetMarketProgram.ThedistrictcourthadcarvedoutonenarrowexceptiontoitsfindingthatMidwestFencehadstandinggenerally,findingthatMidwestFencelackedstandingtochallengetheIDOT“targetmarketprogram.”Id.at*6.ThecourtofappealsfoundthatnoevidenceintherecordestablishedMidwestFencebidonorlostanycontractssubjecttotheIDOTtargetmarketprogram.Id.at*6.ThecourtstatedthatIDOThadnotsetasideanyguardrailandfencingcontractsunderthetargetmarketprogram.Id.Therefore,MidwestFencedidnotshowthatithadsufferedfromaninabilitytocompeteonanequalfootinginthebiddingprocesswithrespecttocontractswithinthetargetmarketprogram.Id.
Facialversusas‐appliedchallengetotheUSDOTProgram.Inthisappeal,MidwestFencedidnotchallengewhetherUSDOThadestablisheda“compellinginterest”toremedytheeffectsofpastorpresentdiscrimination.Thus,itdidnotchallengethenationalcompellinginterestinremedyingpastdiscriminationinitsclaimsagainsttheFederalDBEProgram.Id.at*6.Therefore,thecourtofappealsfocusedonwhetherthefederalprogramisnarrowlytailored.Id.
First,thecourtaddressedapreliminaryissue,namely,whetherMidwestFencecouldmaintainanas‐appliedchallengeagainstUSDOTandtheFederalDBEProgramorwhether,asthedistrict
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courtheld,theclaimagainstUSDOTislimitedtoafacialchallenge.Id.MidwestFencesoughtadeclarationthatthefederalregulationsareunconstitutionalasappliedinIllinois.Id.ThedistrictcourtrejectedtheattempttobringthatclaimagainstUSDOT,treatingitasapplyingonlytoIDOT.Id.at*6citingMidwestFence,84F.Supp.3dat718.Thecourtofappealsagreedwiththedistrictcourt.Id.
Thecourtofappealspointedoutthataprincipalfeatureofthefederalregulationsistheirflexibilityandadaptabilitytolocalconditions,andthatflexibilityisimportanttotheconstitutionalityoftheFederalDBEProgram,includingbecausearace‐andgender‐consciousprogrammustbenarrowlytailoredtoservethecompellinggovernmentalinterest.Id.at*6.Theflexibilityinregulations,accordingtothecourt,makesthestate,notUSDOT,primarilyresponsibleforimplementingtheirownprogramsinwaysthatcomplywiththeEqualProtectionClause.Id.at*6.Thecourtsaidthatastate,notUSDOT,isthecorrectpartytodefendachallengetoitsimplementationofitsprogram.Id.Thus,thecourtheldthedistrictcourtdidnoterrbytreatingtheclaimsagainstUSDOTasonlyafacialchallengetothefederalregulations.Id.
FederalDBEProgram:NarrowTailoring.TheSeventhCircuitnotedthattheEighth,Ninth,andTenthCircuitsallfoundtheFederalDBEProgramconstitutionalonitsface,andtheSeventhCircuitagreedwiththeseothercircuits.Id.at*7.Thecourtfoundthatnarrowtailoringrequires“aclosematchbetweentheevilagainstwhichtheremedyisdirectedandthetermsoftheremedy.”Id.Thecourtstateditlookstofourfactorsindeterminingnarrowtailoring:(a)“thenecessityforthereliefandtheefficacyofalternative[race‐neutral]remedies,”(b)“theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions,”(c)“therelationshipofthenumericalgoalstotherelevantlabor[orhere,contracting]market,”and(d)“theimpactofthereliefontherightsofthirdparties.”Id.at*7quotingUnitedStatesv.Paradise,480U.S.149,171(1987).TheSeventhCircuitalsopointedoutthattheTenthCircuitaddedtothisanalysisthequestionofover‐orunder‐inclusiveness.Id.at*7.
Inapplyingthesefactorstodeterminenarrowtailoring,thecourtsaidthatfirst,theFederalDBEProgramrequiresstatestomeetasmuchaspossibleoftheiroverallDBEparticipationgoalsthroughrace‐andgender‐neutralmeans.Id.at*7,citing49C.F.R.§26.51(a).Next,onitsface,thefederalprogramisbothflexibleandlimitedinduration.Id.Quotasareflatlyprohibited,andstatesmayapplyforwaivers,includingwaiversof“anyprovisionsregardingadministrativerequirements,overallgoals,contractgoalsorgoodfaithefforts,”§26.15(b).Id.at*7.Theregulationsalsorequirestatestoremainflexibleastheyadministertheprogramoverthecourseoftheyear,includingcontinuallyreassessingtheirDBEparticipationgoalsandwhethercontractgoalsarenecessary.Id.
ThecourtpointedoutthatastateneednotsetacontractgoaloneveryUSDOT‐assistedcontract,normusttheysetthosegoalsatthesamepercentageastheoverallparticipationgoal.Id.at*7.Together,thecourtfound,alloftheseprovisionsallowforsignificantandongoingflexibility.Id.at*8.StatesarenotlockedintotheirinitialDBEparticipationgoals.Id.Theiruseofcontractgoalsismeanttoremainfluid,reflectingastate’sprogresstowardsoverallDBEgoal.Id.
Asforduration,thecourtsaidthatCongresshasrepeatedlyreauthorizedtheprogramaftertakingnewlooksattheneedforit.Id.at*8.And,asnoted,statesmustmonitorprogresstowardmeetingDBEgoalsonaregularbasisandalterthegoalsifnecessary.Id.Theymuststopusingrace‐andgender‐consciousmeasuresifthosemeasuresarenolongerneeded.Id.
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Thecourtfoundthatthenumericalgoalsarealsotiedtotherelevantmarkets.Id.at*8.Inaddition,theregulationsprescribeaprocessforsettingaDBEparticipationgoalthatfocusesoninformationaboutthespecificmarket,andthatitisintendedtoreflectthelevelofDBEparticipationyouwouldexpectabsenttheeffectsofdiscrimination.Id.at*8,citing§26.45(b).ThecourtstatedthattheregulationsthusinstructstatestosettheirDBEparticipationgoalstoreflectactualDBEavailabilityintheirjurisdictions,asmodifiedbyotherrelevantfactorslikeDBEcapacity.Id.at*8.
MidwestFence“mismatch”argument:burdenonthirdparties.MidwestFence,thecourtsaid,focusesitscriticismontheburdenofthirdpartiesandarguestheprogramisover‐inclusive.Id.at*8.But,thecourtfound,theregulationsincludemechanismstominimizetheburdenstheprogramplacesonnon‐DBEthirdparties.Id.Aprimaryexample,thecourtpointsout,issuppliedin§26.33(a),whichrequiresstatestotakestepstoaddressoverconcentrationofDBEsincertaintypesofworkiftheoverconcentrationundulyburdensnon‐DBEstothepointthattheycannolongerparticipateinthemarket.Id.at*8.Thecourtconcludedthatstandardscanberelaxedifuncompromisingenforcementwouldyieldnegativeconsequences,forexample,statescanobtainwaiversifspecialcircumstancesmakethestate’scompliancewithpartofthefederalprogram“impractical,”andcontractorswhofailtomeetaDBEcontractgoalcanstillbeawardedthecontractiftheyhavedocumentedgoodfaitheffortstomeetthegoal.Id.at*8,citing§26.51(a)and§26.53(a)(2).
MidwestFencearguedthata“mismatch”inthewaycontractgoalsarecalculatedresultsinaburdenthatfallsdisproportionatelyonspecialtysubcontractors.Id.at*8.Underthefederalregulations,thecourtnoted,states’overallgoalsaresetasapercentageofalltheirUSDOT‐assistedcontracts.Id.However,statesmaysetcontractgoals“onlyonthose[USDOT]‐assistedcontractsthathavesubcontractingpossibilities.”Id.,quoting§26.51(e)(1)(emphasisadded).
MidwestFencearguedthatbecauseDBEsmustbesmall,theyaregenerallyunabletocompeteforprimecontracts,andthistheyargueisthe“mismatch.”Id.at*8.WherecontractgoalsarenecessarytomeetanoverallDBEparticipationgoal,thosecontractgoalsaremetalmostentirelywithsubcontractordollars,which,MidwestFenceasserts,placesaheavyburdenonnon‐DBEsubcontractorswhileleavingnon‐DBEprimecontractorsintheclear.Id.at*8.
ThecourtgoesthroughahypotheticalexampletoexplaintheissueMidwestFencehasraisedasamismatchthatimposesadisproportionateburdenonspecialtysubcontractorslikeMidwestFence.Id.at*8.Intheexampleprovidedbythecourt,theoverallparticipationgoalforastatecallsforDBEstoreceiveacertainpercentageoftotalfunds,butinpracticeinthehypotheticalitrequiresthestatetoawardDBEsforlessthanalloftheavailablesubcontractorfundsbecauseitdeterminesthattherearenosubcontractingpossibilitiesonhalfthecontracts,thusrenderingthemineligibleforcontractgoals.Id.Themismatchisthatthefederalprogramrequiresthestatetosetitsoverallgoalonallfundsitwillspendoncontracts,butatthesametimethecontractseligibleforcontractgoalsmustbeonesthathavesubcontractingpossibilities.Id.Therefore,accordingtoMidwestFence,inpracticetheparticipationgoalssetwouldrequirethestatetoawardDBEsfromtheavailablesubcontractorfundswhiletakingnobusinessawayfromtheprimecontractors.Id.
Thecourtstatedthatitfound“[t]hisprospectistroubling.”Id.at*9.ThecourtsaidthattheDBEprogramcanimposeadisproportionateburdenonsmall,specializednon‐DBEsubcontractors,especiallywhencomparedtolargerprimecontractorswithwhomDBEswouldcompetelessfrequently.Id.Thispotential,accordingtothecourt,foradisproportionateburden,however,
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doesnotrendertheprogramfaciallyunconstitutional.Id.ThecourtsaidthattheconstitutionalityoftheFederalDBEProgramdependsonhowitisimplemented.Id.
Thecourtpointedoutthatsomeofthesuggestedrace‐andgender‐neutralmeansthatstatescanuseunderthefederalprogramaredesignedtoincreaseDBEparticipationinprimecontractingandotherfieldswhereDBEparticipationhashistoricallybeenlow,suchasspecificallyencouragingstatestomakecontractsmoreaccessibletosmallbusinesses.Id.at*9,citing§26.39(b).ThecourtalsonotedthatthefederalprogramcontemplatesDBEs’abilitytocompeteequallyrequiringstatestoreportDBEparticipationasprimecontractorsandmakeseffortstodevelopthatpotential.Id.at*9.
ThecourtstatedthatstateswillcontinuetoresorttocontractgoalsthatopenthedoortothetypeofmismatchthatMidwestFencedescribes,buttheprogramonitsfacedoesnotcompelanunfairdistributionofburdens.Id.at*9.SmallspecialtycontractorsmayhavetobearatleastsomeoftheburdenscreatedbyremedyingpastdiscriminationundertheFederalDBEProgram,buttheSupremeCourthasindicatedthatinnocentthirdpartiesmayconstitutionallyberequiredtobearatleastsomeoftheburdenoftheremedy.Id.at*9.
Over‐Inclusiveargument.MidwestFencealsoarguedthatthefederalprogramisover‐inclusivebecauseitgrantspreferencestogroupswithoutanalyzingtheextenttowhicheachgroupisactuallydisadvantaged.Id.at*9.Inresponse,thecourtmentionedtwofederal‐specificarguments,notingthatMidwestFence’scriticismsarebestanalyzedaspartofitsas‐appliedchallengeagainstthestatedefendants.Id.First,MidwestFencecontendsnothingprovesthatthedisparitiesrelieduponbythestudyconsultantwerecausedbydiscrimination.Id.at*9.Thecourtfoundthattojustifyitsprogram,USDOTdoesnotneeddefinitiveproofofdiscrimination,butmusthaveastrongbasisinevidencethatremedialactionisnecessarytoremedypastdiscrimination.Id.
Second,MidwestFenceattackswhatitperceivesastheone‐size‐fits‐allnatureoftheprogram,suggestingthattheregulationsoughttoprovidedifferentremediesfordifferentgroups,butinsteadthefederalprogramoffersasingleapproachtoallthedisadvantagedgroups,regardlessofthedegreeofdisparities.Id.at*9.ThecourtpointedoutMidwestFencedidnotarguethatanyofthegroupswerenotinfactdisadvantagedatall,andthatthefederalregulationsultimatelyrequireindividualizeddeterminations.Id.at*10.Eachpresumptivelydisadvantagedfirmownermustcertifythatheorsheis,infact,sociallyandeconomicallydisadvantaged,andthatpresumptioncanberebutted.Id.Inthisway,thecourtsaid,thefederalprogramrequiresstatestoextendbenefitsonlytothosewhoareactuallydisadvantaged.Id.
ThereforethecourtagreedwiththedistrictcourtthattheFederalDBEProgramisnarrowlytailoredonitsface,soitsurvivesstrictscrutiny.
ClaimsagainstIDOTandtheTollway:voidforvagueness.MidwestFencearguedthatthefederalregulationsareunconstitutionallyvagueasappliedbyIDOTbecausetheregulationsfailtospecifywhatgoodfaitheffortsacontractormustmaketoqualifyforawaiver,andfocusesitsattackontheprovisionsoftheregulations,whichaddresspossiblecostdifferentialsintheuseofDBEs.Id.at*11.MidwestFencearguedthatAppendixAof49C.F.R.,Part26at¶IV(D)(2)istoovagueinitslanguageonwhenadifferenceinpriceissignificantenoughtojustifyfallingshortoftheDBEcontractgoal.Id.Thecourtfoundifthestandardseemsvague,thatislikelybecauseitwasmeanttobeflexible,andamorerigidstandardcouldeasilybetooarbitraryandhinderprimecontractors’abilitytoadjusttheirapproachestothecircumstancesofparticularprojects.Id.at*11.
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ThecourtsaidMidwestFence’srealargumentseemstobethatinpractice,primecontractorserrtoofaronthesideofcaution,grantingsignificantpricepreferencestoDBEsinsteadoftakingtheriskoflosingacontractforfailuretomeettheDBEgoal.Id.at*12.MidwestFencecontendsthiscreatesadefactosystemofquotasbecausecontractorsbelievetheymustmeettheDBEgoalorlosethecontract.Id.ButAppendixAtotheregulations,thecourtnoted,cautionsagainstthisveryapproach.Id.Thecourtfoundflexibilityandtheavailabilityofwaiversaffectwhetheraprogramisnarrowlytailored,andthattheregulationscautionagainstquotas,provideexamplesofgoodfaitheffortsprimecontractorscanmakeandstatescanconsider,andinstructabiddertousegoodbusinessjudgmenttodecidewhetherapricedifferenceisreasonableorexcessive.Id.Forpurposesofcontractawards,thecourtholdsthisisenoughtogivefairnoticeofconductthatisforbiddenorrequired.Id.at*12.
EqualProtectionchallenge:compellinginterestwithstrongbasisinevidence.InrulingonthemeritsofMidwestFence’sequalprotectionclaimsbasedontheactionsofIDOTandtheTollway,thefirstissuethecourtaddressesiswhetherthestatedefendantshadacompellinginterestinenactingtheirprograms.Id.at*12.Thecourtstatedthatit,alongwiththeothercircuitcourtsofappeal,haveheldastateagencyisentitledtorelyonthefederalgovernment’scompellinginterestinremedyingtheeffectsofpastdiscriminationtojustifyitsownDBEplanforhighwayconstructioncontracting.Id.But,sincenotallofIDOT’scontractsarefederallyfunded,andtheTollwaydidnotreceivefederalfundingatall,withrespecttothosecontracts,thecourtsaiditmustconsiderwhetherIDOTandtheTollwayestablishedastrongbasisinevidencetosupporttheirprograms.Id.
IDOTprogram.IDOTreliedonanavailabilityandadisparitystudytosupportitsprogram.ThedisparitystudyfoundthatDBEsweresignificantlyunderutilizedasprimecontractorscomparingfirmavailabilityofprimecontractorsintheconstructionfieldtotheamountofdollarstheyreceivedinprimecontracts.Thedisparitystudycollectedutilizationrecords,definedIDOT’smarketarea,identifiedbusinessesthatwerewillingandabletoprovideneededservices,weightedfirmavailabilitytoreflectIDOT’scontractingpatternwithweightsassignedtodifferentareasbasedonthepercentageofdollarsexpendedinthoseareas,determinedwhethertherewasastatisticallysignificantunder‐utilizationofDBEsbycalculatingthedollarseachgroupwouldbeexpectedtoreceivebasedonavailability,calculatedthedifferencebetweentheexpectedandactualamountofcontractdollarsreceived,andensuredthatresultswerenotattributabletochance.Id.at*13.
ThecourtsaidthatthedisparitystudydetermineddisparityratiosthatwerestatisticallysignificantandthestudyfoundthatDBEsweresignificantlyunderutilizedasprimecontractors,notingthatafigurebelow0.80isgenerallyconsidered“solidevidenceofsystematicunder‐utilizationcallingforaffirmativeactiontocorrectit.”Id.at*13.ThestudyfoundthatDBEsmadeup25.55%ofprimecontractorsintheconstructionfield,received9.13%ofprimecontractsvaluedbelow$500,000and8.25%oftheavailablecontractdollarsinthatrange,yieldingadisparityratioof0.32forprimecontractsunder$500,000.Id.
Intherealmofcontractionsubcontracting,thestudyshowedthatDBEsmayhave29.24%ofavailablesubcontractors,andintheconstructionindustrytheyreceive44.62%ofavailablesubcontracts,butthosesubcontractsamountedtoonly10.65%ofavailablesubcontractingdollars.Id.at*13.This,accordingtothestudy,yieldedastatisticallysignificantdisparityratioof0.36,whichthecourtfoundlowenoughtosignalsystemicunder‐utilization.Id.
IDOTreliedonadditionaldatatojustifyitsprogram,includingconductingazero‐goalexperimentin2002andin2003,whenitdidnotapplyDBEgoalstocontracts.Id.at*13.
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Withoutcontractgoals,theshareofthecontracts’valuethatDBEsreceiveddroppeddramatically,tojust1.5%ofthetotalvalueofthecontracts.Id.at*13.AndinthosecontractsadvertisedwithoutaDBEgoal,theDBEsubcontractorparticipationratewas0.84%.
Tollwayprogram.TollwayalsoreliedonadisparitystudylimitedtotheTollway’scontractingmarketarea.Thestudyuseda“customcensus”process,creatingadatabaseofrepresentativeprojects,identifyinggeographicandproductmarkets,countingbusinessesinthosemarkets,identifyingandverifyingwhichbusinessesareminority‐andwomen‐owned,andverifyingtheownershipstatusofalltheotherfirms.Id.at*13.ThestudyexaminedtheTollway’shistoricalcontractdata,reporteditsDBEutilizationasapercentageofcontractdollars,andcomparedDBEutilizationandDBEavailability,comingupwithdisparityindicesdividedbyraceandsex,aswellasbyindustrygroup.Id.
Thestudyfoundthatoutof115disparityindices,80showedstatisticallysignificantunder‐utilizationofDBEs.Id.at*14.Thestudydiscussedstatisticaldisparitiesinearningsandtheformationofbusinessesbyminoritiesandwomen,andconcludedthatastatisticallysignificantadverseimpactonearningswasobservedinboththeeconomyatlargeandintheconstructionandconstruction‐relatedprofessionalservicessector.”Id.at*14.Thestudyalsofoundwomenandminoritiesarenotaslikelytostarttheirownbusiness,andthatminoritybusinessformationrateswouldlikelybesubstantiallyandsignificantlyhigherifmarketsoperatedinarace‐andsex‐neutralmanner.Id.
Thestudyusedregressionanalysistoassessdifferencesinwages,business‐ownerearnings,andbusiness‐formationratesbetweenwhitemenandminoritiesandwomeninthewiderconstructioneconomy.Id.at*14.Thestudyfoundstatisticallysignificantdisparitiesremainedbetweenwhitemenandothergroups,controllingforvariousindependentvariablessuchasage,education,location,industryaffiliation,andtime.Id.Thedisparities,accordingtothestudy,wereconsistentwithamarketaffectedbydiscrimination.Id.
TheTollwayalsopresentedadditionalevidence,includingthattheTollwaysetaspirationalparticipationgoalsonasmallnumberofcontracts,andthoseattemptsfailed.Id.at*14.In2004,thecourtnotedtheTollwaydidnotawardasingleprimecontractorsubcontracttoaDBE,andtheDBEparticipationratein2005was0.01%acrossallconstructioncontracts.Id.Inaddition,theTollwayalsoconsidered,likeIDOT,anecdotalevidencethatprovidedtestimonyofseveralDBEownersregardingbarriersthattheythemselvesfaced.Id.
MidwestFence’scriticisms.MidwestFence’sexpertconsultantarguedthatthestudyconsultantfailedtoaccountforDBEs’readiness,willingness,andabilitytodobusinesswithIDOTandtheTollway,andthatthemethodofassessingreadinessandwillingnesswasflawed.Id.at*14.Inaddition,theconsultantforMidwestFencearguedthatoneofthestudiesfailedtoaccountforDBEs’relativecapacity,“meaningafirm’sabilitytotakeonmorethanonecontractatatime.”Thecourtnotedthatoneofthestudyconsultantsdidnotaccountforfirmcapacityandtheotherstudyconsultantfoundnoeffectivewaytoaccountforcapacity.Id.at*14,n.2.Thecourtsaidonestudydidperformaregressionanalysistomeasurerelativecapacityandlimiteditsdisparityanalysistocontractsunder$500,000,whichwas,accordingtothestudyconsultant,totakecapacityintoaccounttotheextentpossible.Id.
ThecourtpointedoutthatonemajorproblemwithMidwestFence’sreportisthattheconsultantdidnotperformanysubstantiveanalysisofhisown.Id.at*15.TheevidenceofferedbyMidwestFenceanditsconsultantwas,accordingtothecourt,“speculativeatbest.”Id.at*15.Thecourtsaidtheconsultant’srelativecapacityanalysiswassimilarlyspeculative,arguingthat
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theassumptionthatfirmshavethesameabilitytoprovideservicesupto$500,000maynotbetrueinpractice,andthatiftheestimatesofcapacityaretoolowtheresultingdisparityindexoverstatesthedegreeofdisparitythatexists.Id.at*15.
ThecourtstatedMidwestFence’sexpertsimilarlyarguedthattheexistenceoftheDBEprogram“may”causeanupwardbiasinavailability,thatanyobservationsofthepublicsectoringeneral“may”beaffectedbytheDBEprogram’sexistence,andthatdatabecomelessrelevantastimepasses.Id.at*15.ThecourtfoundthatgiventhesubstantialutilizationdisparityasshowninthereportsbyIDOTandtheTollwaydefendants,MidwestFence’sspeculativecritiquesdidnotraiseagenuineissueoffactastowhetherthedefendantshadasubstantialbasisinevidencetobelievethatactionwasneededtoremedydiscrimination.Id.at*15.
ThecourtrejectedMidwestFence’sargumentthatrequiringittoprovideanindependentstatisticalanalysisplacesanimpossibleburdenonitduetothetimeandexpensethatwouldberequired.Id.at*15.Thecourtnotedthattheburdenisinitiallyonthegovernmenttojustifyitsprograms,andthatsincethestatedefendantsofferedevidencetodoso,theburdenthenshiftedtoMidwestFencetoshowagenuineissueofmaterialfactastowhetherthestatedefendantshadasubstantialbasisinevidenceforadoptingtheirDBEprograms.Id.Speculativecriticismaboutpotentialproblems,thecourtfound,willnotcarrythatburden.Id.
Withregardtothecapacityquestion,thecourtnoteditwasMidwestFence’sstrongestcriticismandthatcourtshadrecognizeditasaseriousprobleminothercontexts.Id.at*15.Thecourtsaidthefailuretoaccountforrelativecapacitydidnotunderminethesubstantialbasisinevidenceinthisparticularcase.Id.at*15.MidwestFencedidnotexplainhowtoaccountforrelativecapacity.Id.Inaddition,ithasbeenrecognized,thecourtstated,thatdefectsincapacityanalysesarenotfatalinandofthemselves.Id.at*15.
Thecourtconcludedthatthestudiesshowstrikingutilizationdisparitiesinspecificindustriesintherelevantgeographicmarketareas,andtheyareconsistentwiththeanecdotalandlessformalevidencedefendantshadoffered.Id.at*15.ThecourtfoundMidwestFence’sexpert’s“speculation”thatfailuretoaccountforrelativecapacitymighthavebiasedDBEavailabilityupwarddoesnotunderminethestatisticalcoreofthestrongbasisinevidencerequired.Id.
Inaddition,thecourtrejectedMidwestFence’sargumentthatthedisparitystudiesdonotprovediscrimination,notingagainthatastateneednotconclusivelyprovetheexistenceofdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary,andthatwheregrossstatisticaldisparitiescanbeshown,theyalonemayconstituteprimafacieproofofapatternorpracticeofdiscrimination.Id.at*15.ThecourtalsorejectedMidwestFence’sattackontheanecdotalevidencestatingthattheanecdotalevidencebolstersthestatedefendants’statisticalanalyses.Id.at*15.
InconnectionwithMidwestFence’sargumentrelatingtotheTollwaydefendant,MidwestFencearguedthattheTollway’ssupportingdatawasfrombeforeitinstituteditsDBEprogram.Id.at*16.TheTollwayrespondedbyarguingthatitusedthebestdataavailableandthatinanyeventitsdatasetsshowdisparities.Id.at*16.ThecourtfoundthispointpersuasiveevenassumingsomeoftheTollway’sdatawerenotexact.Id.ThecourtsaidthatwhileeverysinglenumberintheTollway’s“arsenalofevidence”maynotbeexact,theoverallpicturestillshowsbeyondreasonabledisputeamarketplacewithsystemicunder‐utilizationofDBEsfarbelowthedisparityindexlowerthan80asanindicationofdiscrimination,andthatMidwestFence’s“abstractcriticisms”donotunderminethatcoreofevidence.Id.at*16.
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NarrowTailoring.ThecourtappliedthenarrowtailoringfactorstodeterminewhetherIDOT’sandtheTollway’simplementationoftheirDBEprogramsyieldedaclosematchbetweentheevilagainstwhichtheremedyisdirectedandthetermsoftheremedy.Id.at*16.Firstthecourtaddressedthenecessityforthereliefandtheefficacyofalternativerace‐neutralremediesfactor.Id.ThecourtreiteratedthatMidwestFencehasnotunderminedthedefendants’strongcombinationofstatisticalandotherevidencetoshowthattheirprogramsareneededtoremedydiscrimination.Id.
BothIDOTandtheTollway,accordingtothecourt,userace‐andgender‐neutralalternatives,andtheundisputedfactsshowthatthosealternativeshavenotbeensufficienttoremedydiscrimination.Id.ThecourtnotedthattherecordshowsIDOTusesnearlyallofthemethodsdescribedinthefederalregulationstomaximizeaportionofthegoalthatwillbeachievedthroughrace‐neutralmeans.Id.
Asforflexibility,bothIDOTandtheTollwaymakefront‐endwaiversavailablewhenacontractorhasmadegoodfaitheffortstocomplywithaDBEgoal.Id.at*17.ThecourtrejectedMidwestFence’sargumentsthattherewerealownumberofwaiversgranted,andthatcontractorsfearofhavingawaiverdeniedshowedthesystemwasadefactoquotasystem.Id.ThecourtfoundthatIDOTandtheTollwayhavenotgrantedlargenumbersofwaivers,buttherewasalsonoevidencethattheyhavedeniedlargenumbersofwaivers.Id.ThecourtpointedoutthattheevidencefromMidwestFencedoesnotshowthatdefendantsareresponsibleforfailingtograntfront‐endwaiversthatthecontractorsdonotrequest.Id.
Thecourtstatedintheabsenceofevidencethatdefendantsfailedtoadheretothegeneralgoodfaitheffortguidelinesandarbitrarilydenyordiscouragefront‐endwaiverrequests,MidwestFence’scontentionthatcontractorsfearlosingcontractsiftheyaskforawaiverdoesnotmakethesystemaquotasystem.Id.at*17.MidwestFence’sownevidence,thecourtstated,showsthatIDOTgrantedin2007,57of63front‐endwaiverrequests,andin2010,itgranted21of35front‐endwaiverrequests.Id.at*17.Inaddition,theTollwaygrantedatleastsomefront‐endwaiversinvolving1.02%ofcontractdollars.Id.Withoutevidencethatfarmorewaiverswererequested,thecourtwassatisfiedthateventhislowtotalbytheTollwaydoesnotraiseagenuinedisputeoffact.Id.
Thecourtalsorejectedas“underdeveloped”MidwestFence’sargumentthatthecourtshouldlookatthedollarvalueofwaiversgrantedratherthantherawnumberofwaiversgranted.Id.at*17.Thecourtfoundthatthisargumentdoesnotsupportadifferentoutcomeinthiscasebecausethedefendantsgrantmorefront‐endwaiverrequeststhantheydeny,regardlessofthedollaramountsthoserequestsencompass.MidwestFencepresentednoevidencethatIDOTandtheTollwayhaveanunwrittenpolicyofgrantingonlylow‐valuewaivers.Id.
ThecourtstatedthatMidwest’s“bestargument”againstnarrowedtailoringisits“mismatch”argument,whichwasdiscussedabove.Id.at*17.ThecourtsaidMidwest’sbroadcondemnationoftheIDOTandTollwayprogramsasfailingtocreatea“light”and“diffuse”burdenforthirdpartieswasnotpersuasive.Id.ThecourtnotedthattheDBEprograms,whichsetDBEgoalsononlysomecontractsandallowthosegoalstobewaivedifnecessary,mayendupforeclosingoneofseveralopportunitiesforanon‐DBEspecialtysubcontractorlikeMidwestFence.Id.But,therewasnoevidencethattheyimposetheentireburdenonthatsubcontractorbyshuttingitoutofthemarketentirely.Id.However,thecourtfoundthatMidwestFence’spointthatsubcontractorsappeartobearadisproportionateshareoftheburdenascomparedtoprimecontractors“istroubling.”Id.at*17.
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Althoughtheevidenceshoweddisparitiesinboththeprimecontractingandsubcontractingmarkets,underthefederalregulations,individualcontractgoalsaresetonlyforcontractsthathavesubcontractingpossibilities.Id.ThecourtpointedoutthatsomeDBEsareabletobidonprimecontracts,butthenecessarilysmallsizeofDBEsmakesthatdifficultinmostcases.Id.
But,accordingtothecourt,intheendtherecordshowsthattheproblemMidwestFenceraisesislargely“theoretical.”Id.at*18.NotallcontractshaveDBEgoals,sosubcontractorsareonanevenfootingforthosecontractswithoutsuchgoals.Id.IDOTandtheTollwaybothuseneutralmeasuresincludingsomedesignedtomakeprimecontractsmoreassessabletoDBEs.Id.ThecourtnotedthatDBEtruckingandmaterialsupplierscounttowardfulfillmentofacontract’sDBEgoal,eventhoughtheyarenotusedaslineitemsincalculatingthecontractgoalinthefirstplace,whichopensupcontractswithDBEgoalstonon‐DBEsubcontractors.Id.
ThecourtstatedthatifMidwestFence“hadpresentedevidenceratherthantheoryonthispoint,theresultmightbedifferent.”Id.at*18.“EvidencethatsubcontractorswerebeingfrozenoutofthemarketorbearingtheentireburdenoftheDBEprogramwouldlikelyrequireatrialtodetermineataminimumwhetherIDOTortheTollwaywereadheringtotheirresponsibilitytoavoidoverconcentrationinsubcontracting.”Id.at*18.ThecourtconcludedthatMidwestFence“hasshownhowtheIllinoisprogramcouldyieldthatresultbutnotthatitactuallydoesso.”Id.
InlightoftheIDOTandTollwayprograms’mechanismstopreventsubcontractorsfromhavingtobeartheentireburdenoftheDBEprograms,includingtheuseofDBEmaterialsandtruckingsuppliersinsatisfyinggoals,effortstodrawDBEsintoprimecontracting,andothermechanisms,accordingtothecourt,MidwestFencedidnotestablishagenuinedisputeoffactonthispoint.Id.at*18.Thecourtstatedthatthe“theoreticalpossibilityofa‘mismatch’couldbeaproblem,butwehavenoevidencethatitactuallyis.”Id.at*18.
Therefore,thecourtconcludedthatIDOTandtheTollwayDBEprogramsarenarrowlytailoredtoservethecompellingstateinterestinremedyingdiscriminationinpubliccontracting.Id.at*18.Theyincluderace‐andgender‐neutralalternatives,setgoalswithreferencetoactualmarketconditions,andallowforfront‐endwaivers.Id.“Sofarastherecordbeforeusshows,theydonotundulyburdenthirdpartiesinserviceofremedyingdiscrimination”,accordingtothecourt.Therefore,MidwestFencefailedtopresentagenuinedisputeoffact“onthispoint.”Id.
PetitionforaWritofCertiorari.MidwestFencefiledaPetitionforaWritofCertioraritotheUnitedStatesSupremeCourtin2017,andCertiorariwasdenied.2017WL497345(2017).
3. Dunnet Bay Construction Company v. Borggren, Illinois DOT, et al., 799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015), cert. denied, Dunnet Bay Construction Co. v. Blankenhorn, Randall S., et al., 2016 WL 193809 (Oct. 3, 2016).
DunnetBayConstructionCompanysuedtheIllinoisDepartmentofTransportation(IDOT)assertingthattheIllinoisDOT’sDBEProgramdiscriminatesonthebasisofrace.ThedistrictcourtgrantedsummaryjudgementtoIllinoisDOT,concludingthatDunnetBaylackedstandingtoraiseanequalprotectionchallengebasedonrace,andheldthattheIllinoisDOTDBEProgramsurvivedtheconstitutionalandotherchallenges.799F.3dat679.(See2014WL552213,C.D.Ill.Fed.12,2014)(SeesummaryofdistrictdecisioninSectionE.below).TheCourtofAppealsaffirmedthegrantofsummaryjudgmenttoIDOT.
DunnetBayengagesingeneralhighwayconstructionandisownedandcontrolledbytwowhitemales.799F.3dat679.Itsaverageannualgrossreceiptsbetween2007and2009wereover
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$52million.Id.IDOTadministersitsDBEProgramimplementingtheFederalDBEProgram.IDOTestablishedastatewideaspirationalgoalforDBEparticipationof22.77%.Id.at680.UnderIDOT’sDBEProgram,ifabidderfailstomeettheDBEcontractgoal,itmayrequestamodificationofthegoal,andprovidedocumentationofitsgoodfaitheffortstomeetthegoal.Id.at681.Theserequestsformodificationarealsoknownas“waivers.”Id.
TherecordshowedthatIDOThistoricallygrantedgoalmodificationrequestorwaivers:in2007,itgranted57of63pre‐awardgoalmodificationrequests;thesixotherbiddersultimatelymetthecontractgoalwithpost‐bidassistance.Id.at681.In2008,IDOTgranted50ofthe55pre‐awardgoalmodificationrequests;theotherfivebiddersultimatelymettheDBEgoal.Incalendaryear2009,IDOTgranted32of58goalmodificationrequests;theothercontractorsultimatelymetthegoals.Incalendaryear2010,IDOTreceived35goalmodificationrequests;itgranted21ofthemanddeniedtherest.Id.
DunnetBayallegedthatIDOThadtakenthepositionnowaiverswouldbegranted.Id.at697‐698.IDOTrespondedthatitwasnotitspolicytonotgrantwaivers,butinsteadIDOTwouldaggressivelypursueobtainingtheDBEparticipationintheircontractgoals,includingthatwaiversweregoingtobereviewedatahighleveltomakesuretheappropriatedocumentationwasprovidedinorderforawaivertobeissued.Id.
TheU.S.FHWAapprovedthemethodologyIDOTusedtoestablishastatewideoverallDBEgoalof22.77%.Id.at683,698.TheFHWAreviewedandapprovedtheindividualcontractgoalssetforworkonaprojectknownastheEisenhowerprojectthatDunnetBaybidonin2010.Id.DunnetBaysubmittedtoIDOTabidthatwasthelowestbidontheproject,butitwassubstantiallyoverthebudgetestimatefortheproject.Id.at683‐684.DunnetBaydidnotachievethegoalof22%,butthreeotherbidderseachmettheDBEgoal.Id.at684.DunnetBayrequestedawaiverbasedonitsgoodfaitheffortstoobtaintheDBEgoal.Id.at684.Ultimately,IDOTdeterminedthatDunnetBaydidnotproperlyexercisegoodfaitheffortsanditsbidwasrejected.Id.at684‐687,699.
Becauseallthebidswereoverbudget,IDOTdecidedtorebidtheEisenhowerproject.Id.at687.TherewerefourseparateEisenhowerprojectsadvertisedforbids,andIDOTgrantedoneofthefourgoalmodificationrequestsfromthatbidletting.DunnetBaybidononeoftherebidprojects,butitwasnotthelowestbid;itwasthethirdoutoffivebidders.Id.at687.DunnetBaydidmeetthe22.77%contractDBEgoal,ontherebidprospect,butwasnotawardedthecontractbecauseitwasnotthelowest.Id.
DunnetBaythenfileditslawsuitseekingdamagesaswellasadeclaratoryjudgementthattheIDOTDBEProgramisunconstitutionalandinjunctivereliefagainstitsenforcement.
ThedistrictcourtgrantedtheIDOTDefendants’motionforsummaryjudgementanddeniedDunnetBay’smotion.Id.at687.ThedistrictcourtconcludedthatDunnetBaylackedArticleIIIstandingtoraiseanequalprotectionchallengebecauseithasnotsufferedaparticularizedinjurythatwascalledbyIDOT,andthatDunnetBaywasnotdeprivedoftheabilitytocompeteonanequalbasis.Id.DunnetBayConstructionCompanyv.Hannig,2014WL552213,at*30(C.D.Ill.Feb.12,2014).
EvenifDunnetBayhadstandingtobringanequalprotectionclaim,thedistrictcourtheldthatIDOTwasentitledtosummaryjudgment.ThedistrictcourtconcludedthatDunnetBaywasheldtothesamestandardsaseveryotherbidder,andthuscouldnotestablishthatitwasthevictimofracialdiscrimination.Id.at687.Inaddition,thedistrictcourtdeterminedthatIDOThadnot
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exceededitsfederalauthorityunderthefederalrulesandthatDunnetBay’schallengetotheDBEProgramfailedundertheSeventhCircuitCourtofAppealsdecisioninNorthernContracting,Inc.v.Illinois,473F.3d715,721(7thCir.2007),whichinsulatesastateDBEProgramfromaconstitutionalattackabsentashowingthatthestateexceededitsfederalauthority.Id.at688.(SeediscussionofthedistrictcourtdecisioninDunnetBaybelowinSectionE).
DunnetBaylacksstandingtoraiseanequalprotectionclaim.ThecourtfirstaddressedtheissuewhetherDunnetBayhadstandingtochallengeIDOT’sDBEProgramonthegroundthatitdiscriminatedonthebasisofraceintheawardofhighwayconstructioncontracts.
ThecourtfoundthatDunnetBayhadnotestablishedthatitwasexcludedfromcompetitionorotherwisedisadvantagedbecauseofrace‐basedmeasures.Id.at690.NothinginIDOT’sDBEProgram,thecourtstated,excludedDunnetBayfromcompetitionforanycontract.Id.IDOT’sDBEProgramisnota“setasideprogram,”inwhichnon‐minorityownedbusinessescouldnotevenbidoncertaincontracts.Id.UnderIDOT’sDBEProgram,allcontractors,minorityandnon‐minoritycontractors,canbidonallcontracts.Id.at690‐691.
Thecourtsaidtheabsenceofcompleteexclusionfromcompetitionwithminority‐orwomen‐ownedbusinessesdistinguishedtheIDOTDBEProgramfromothercasesinwhichthecourtruledtherewasstandingtochallengeaprogram.Id.at691.DunnetBay,thecourtfound,hasnotallegedandhasnotproducedevidencetoshowthatitwastreatedlessfavorablythananyothercontractorbecauseoftheraceofitsowners.Id.Thislackofanexplicitpreferencefromminority‐ownedbusinessesdistinguishestheIDOTDBEProgramfromothercases.Id.UnderIDOT’sDBEProgram,allcontractorsaretreatedalikeandsubjecttothesamerules.Id.
Inaddition,thecourtdistinguishedothercasesinwhichthecontractorswerefoundtohavestandingbecauseinthosecasesstandingwasbasedinpartonthefacttheyhadlostanawardofacontractforfailingtomeettheDBEgoalorfailingtoshowgoodfaithefforts,despitebeingthelowbiddersonthecontract,andthesecondlowestbidderwasawardedthecontract.Id.at691.Incontrastwiththesecaseswheretheplaintiffshadstanding,thecourtsaidDunnetBaycouldnotestablishthatitwouldhavebeenawardedthecontractbutforitsfailuretomeettheDBEgoalordemonstrategoodfaithefforts.Id.at692.
TheevidenceestablishedthatDunnetBay’sbidwassubstantiallyovertheprogramestimatedbudget,andIDOTrebidthecontractbecausethelowbidwasovertheprojectestimate.Id.Inaddition,DunnetBayhadbeenleftofftheForBiddersListthatissubmittedtoDBEs,whichwasanotherreasonIDOTdecidedtorebidthecontract.Id.
ThecourtfoundthatevenassumingDunnetBaycouldestablishitwasexcludedfromcompetitionwithDBEsorthatitwasdisadvantagedascomparedtoDBEs,itcouldnotshowthatanydifferenceintreatmentwasbecauseofrace.Id.at692.Forthethreeyearspreceding2010,theyearitbidontheproject,DunnetBay’saveragegrossreceiptswereover$52million.Id.Therefore,thecourtfoundDunnetBay’ssizemakesitineligibletoqualifyasaDBE,regardlessoftheraceofitsowners.Id.DunnetBaydidnotshowthatanyadditionalcostsorburdensthatitwouldincurarebecauseofrace,buttheadditionalcostsandburdensareequallyattributabletoDunnetBay’ssize.Id.DunnetBayhadnotestablished,accordingtothecourt,thatthedenialofequaltreatmentresultedfromtheimpositionofaracialbarrier.Id.at693.
DunnetBayalsoallegedthatitwasforcedtoparticipateinadiscriminatoryschemeandwasrequiredtoconsiderraceinsubcontracting,andthusarguedthatitmayassertthird‐partyrights.Id.at693.Thecourtstatedthatithasnotadoptedthebroadviewofstandingregarding
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assertingthird‐partyrights.Id.ThecourtconcludedthatDunnetBay’sclaimedinjuryofbeingforcedtoparticipateinadiscriminatoryschemeamountstoachallengetothestate’sapplicationofafederallymandatedprogram,whichtheSeventhCircuitCourtofAppealshasdetermined“mustbelimitedtothequestionofwhetherthestateexceededitsauthority.”Id.at694,quoting,NorthernContracting,473F.3dat720‐21.ThecourtfoundDunnetBaywasnotdeniedequaltreatmentbecauseofracialdiscrimination,butinsteadanydifferenceintreatmentwasequallyattributabletoDunnetBay’ssize.Id.
ThecourtstatedthatDunnetBaydidnotestablishcausationalorredressability.Id.at695.ItfailedtodemonstratethattheDBEProgramcauseditanyinjuryduringthefirstbidprocess.Id.IDOTdidnotawardthecontracttoanyoneunderthefirstbidandre‐letthecontract.Id.Therefore,DunnetBaysufferednoinjurybecauseoftheDBEProgram.Id.ThecourtalsofoundthatDunnetBaycouldnotestablishredressabilitybecauseIDOT’sdecisiontore‐letthecontractredressedanyinjury.Id.
Inaddition,thecourtconcludedthatprudentiallimitationsprecludeDunnetBayfrombringingitsclaim.Id.at695.Thecourtsaidthatalitigantgenerallymustasserthisownlegalrightsandinterests,andcannotresthisclaimtoreliefonthelegalrightsorinterestsofthirdparties.Id.ThecourtrejectedDunnetBay’sattempttoasserttheequalprotectionrightsofanon‐minority‐ownedsmallbusiness.Id.at695‐696.
DunnetBaydidnotproducesufficientevidencethatIDOT’simplementationoftheFederalDBEProgramconstitutesracediscriminationasitdidnotestablishthatIDOTexceededitsfederalauthority.ThecourtsaidthatinthealternativetodenyingDunnetBaystanding,evenifDunnetBayhadstanding,IDOTwasstillentitledtosummaryjudgment.Id.at696.ThecourtstatedthattoestablishanequalprotectionclaimundertheFourteenthAmendment,DunnetBaymustshowthatIDOT“actedwithdiscriminatoryintent.”Id.
ThecourtestablishedthestandardbasedonitspreviousrulingintheNorthernContractingv.IDOTcasethatinimplementingitsDBEProgram,IDOTmayproperlyrelyon“thefederalgovernment’scompellinginterestinremedyingtheeffectsofpastdiscriminationinthenationalconstructionmarket.”Id.,at697,quotingNorthernContracting,473F.3dat720.Significantly,thecourtheldfollowingitsNorthernContractingdecisionasfollows:“[A]stateisinsulatedfrom[aconstitutionalchallengeastowhetheritsprogramisnarrowlytailoredtoachievethiscompellinginterest],absentashowingthatthestateexceededitsfederalauthority.”Id.quotingNorthernContracting,473F.3dat721.
DunnetBaycontendsthatIDOTexceededitsfederalauthoritybyeffectivelycreatingracialquotasbydesigningtheEisenhowerprojecttomeetapre‐determinedDBEgoalandeliminatingwaivers.Id.at697.DunnetBayassertsthatIDOTexceedsitsauthorityby:(1)settingthecontract’sDBEparticipationgoalat22%withouttherequiredanalysis;(2)implementinga“no‐waiver”policy;(3)preliminarilydenyingitsgoalmodificationrequestwithoutassessingitsgoodfaithefforts;(4)denyingitameaningfulreconsiderationhearing;(5)determiningthatitsgoodfaitheffortswereinadequate;and(6)providingnowrittenorotherexplanationofthebasisforitsgood‐faith‐effortsdetermination.Id.
InchallengingtheDBEcontractgoal,DunnetBayassertsthatthe22%goalwas“arbitrary”andthatIDOTmanipulatedtheprocesstojustifyapreordainedgoal.Id.at698.ThecourtstatedDunnetBaydidnotidentifyanyregulationorotherauthoritythatsuggestspoliticalmotivationsmatter,providedIDOTdidnotexceeditsfederalauthorityinsettingthecontractgoal.Id.DunnetBaydoesnotactuallychallengehowIDOTwentaboutsettingitsDBEgoalonthe
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contract.Id.DunnetBaydidnotpointtoanyevidencetoshowthatIDOTfailedtocomplywiththeapplicableregulationprovidingonlygeneralguidanceoncontractgoalsetting.Id.
TheFHWAapprovedIDOT’smethodologytoestablishitsstatewideDBEgoalandapprovedtheindividualcontractgoalsfortheEisenhowerproject.Id.at698.DunnetBaydidnotidentifyanypartoftheregulationthatIDOTallegedlyviolatedbyreevaluatingandthenincreasingitsDBEcontractgoal,byexpandingthegeographicareausedtodetermineDBEavailability,byaddingpavementpatchingandlandscapingworkintothecontractgoal,byincludingitemsthathadbeensetasideforsmallbusinessenterprises,orbyanyothermeansbywhichitincreasedtheDBEcontractgoal.Id.
Thecourtagreedwiththedistrictcourt’sconclusionthatbecausethefederalregulationsdonotspecifyaprocedureforarrivingatcontractgoals,itisnotapparenthowIDOTcouldhaveexceededitsfederalauthority.Id.at698.
ThecourtfoundDunnetBaydidnotpresentsufficientevidencetoraiseareasonableinferencethatIDOThadactuallyimplementedano‐waiverpolicy.Id.at698.ThecourtnotedIDOThadgrantedwaiversin2009andin2010thatamountedto60%ofthewaiverrequests.Id.ThecourtstatedthatIDOT’srecordofgrantingwaiversrefutesanysuggestionofano‐waiverpolicy.Id.at699.
ThecourtdidnotagreewithDunnetBay’schallengethatIDOTrejecteditsbidwithoutdeterminingwhetherithadmadegoodfaithefforts,pointingoutthatIDOTinfactdeterminedthatDunnetBayfailedtodocumentadequategoodfaithefforts,andthusithadcompliedwiththefederalregulations.Id.at699.ThecourtfoundIDOT’sdeterminationthatDunnetBayfailedtoshowgoodfaitheffortswassupportedintherecord.Id.ThecourtnotedthereasonsprovidedbyIDOT,includedDunnetBaydidnotutilizeIDOT’ssupportiveservices,andthattheotherbiddersallmettheDBEgoal,whereasDunnetBaydidnotcomeclosetothegoalinitsfirstbid.Id.at699‐700.
ThecourtsaidtheperformanceofotherbiddersinmeetingthecontractgoalislistedinthefederalregulationsasaconsiderationwhendecidingwhetherabidderhasmadegoodfaitheffortstoobtainDBEparticipationgoals,andwasaproperconsideration.Id.at700.ThecourtsaidDunnetBay’seffortstosecuretheDBEparticipationgoalmayhavebeenhinderedbytheomissionofDunnetBayfromtheForBidList,butfoundtherebiddingofthecontractremediedthatoversight.Id.
Conclusion.Thecourtaffirmedthedistrictcourt’sgrantofsummaryjudgementtotheIllinoisDOT,concludingthatDunnetBaylacksstanding,andthattheIllinoisDBEProgramimplementingtheFederalDBEProgramsurvivedtheconstitutionalandotherchallengesmadebyDunnetBay.
PetitionforaWritofCertiorariDenied.DunnetBayfiledaPetitionforaWritofCertioraritotheUnitedStatesSupremeCourtinJanuary2016.TheSupremeCourtdeniedthePetitiononOctober3,2016.
4. Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187 (9th Cir. 2013)
TheAssociatedGeneralContractorsofAmerica,Inc.,SanDiegoChapter,Inc.,(“AGC”)soughtdeclaratoryandinjunctivereliefagainsttheCaliforniaDepartmentofTransportation
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(“Caltrans”)anditsofficersonthegroundsthatCaltrans’DisadvantagedBusinessinitialEnterprise(“DBE”)programunconstitutionallyprovidedrace‐andsex‐basedpreferencestoAfricanAmerican,NativeAmerican‐,Asian‐PacificAmerican‐,andwomen‐ownedfirmsoncertaintransportationcontracts.ThefederaldistrictcourtupheldtheconstitutionalityofCaltrans’DBEprogramimplementingtheFederalDBEProgramandgrantedsummaryjudgmenttoCaltrans.ThedistrictcourtheldthatCaltrans’DBEprogramimplementingtheFederalDBEProgramsatisfiedstrictscrutinybecauseCaltranshadastrongbasisinevidenceofdiscriminationintheCaliforniatransportationcontractingindustry,andtheprogramwasnarrowlytailoredtothosegroupsthatactuallysuffereddiscrimination.ThedistrictcourtheldthatCaltrans’substantialstatisticalandanecdotalevidencefromadisparitystudyconductedbyBBCResearchandConsulting,providedastrongbasisinevidenceofdiscriminationagainstthefournamedgroups,andthattheprogramwasnarrowlytailoredtobenefitonlythosegroups.713F.3dat1190.
TheAGCappealedthedecisiontotheNinthCircuitCourtofAppeals.TheNinthCircuitinitiallyheldthatbecausetheAGCdidnotidentifyanyofthememberswhohavesufferedorwillsufferharmasaresultofCaltrans’program,theAGCdidnotestablishthatithadassociationalstandingtobringthelawsuit.Id.Mostsignificantly,theNinthCircuitheldthateveniftheAGCcouldestablishstanding,itsappealfailedbecausetheCourtfoundCaltrans’DBEprogramimplementingtheFederalDBEProgramisconstitutionalandsatisfiedtheapplicablelevelofstrictscrutinyrequiredbytheEqualProtectionClauseoftheUnitedStatesConstitution.Id.at1194‐1200.
CourtAppliesWesternStatesPavingCo.v.WashingtonStateDOTdecision.In2005theNinthCircuitCourtofAppealdecidedWesternStatesPavingCo.v.WashingtonStateDepartmentofTransportation,407F.3d.983(9thCir.2005),whichinvolvedafacialchallengetotheconstitutionalvalidityofthefederallawauthorizingtheUnitedStatesDepartmentofTransportationtodistributefundstoStatesfortransportation‐relatedprojects.Id.at1191.ThechallengeintheWesternStatesPavingcasealsoincludedanas‐appliedchallengetotheWashingtonDOTprogramimplementingthefederalmandate.Id.Applyingstrictscrutiny,theNinthCircuitupheldtheconstitutionalityofthefederalstatuteandthefederalregulations(theFederalDBEProgram),butstruckdownWashingtonDOT’sprogrambecauseitwasnotnarrowlytailored.Id.,citingWesternStatesPavingCo.,407F.3dat990‐995,999‐1002.
InWesternStatesPaving,theNinthCircuitannouncedatwo‐prongedtestfor“narrowtailoring”:
“(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbelimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”Id.1191,citingWesternStatesPavingCo.,407F.3dat997‐998.
Evidencegatheringandthe2007DisparityStudy.OnMay1,2006,Caltransceasedtouserace‐andgender‐consciousmeasuresinimplementingtheirDBEprogramonfederallyassistedcontractswhileitgatheredevidenceinanefforttocomplywiththeWesternStatesPavingdecision.Id.at1191.CaltranscommissionedadisparitystudybyBBCResearchandConsultingtodeterminewhethertherewasevidenceofdiscriminationinCalifornia’stransportationcontractingindustry.Id.TheCourtnotedthatdisparityanalysisinvolvesmakingacomparisonbetweentheavailabilityofminority‐andwomen‐ownedbusinessesandtheiractualutilization,producinganumbercalleda“disparityindex.”Id.Anindexof100representsstatisticalparitybetweenavailabilityandutilization,andanumberbelow100indicatesunderutilization.Id.An
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indexbelow80isconsideredasubstantialdisparitythatsupportsaninferenceofdiscrimination.Id.
TheCourtfoundtheresearchfirmandthedisparitystudygatheredextensivedatatocalculatedisadvantagedbusinessavailabilityintheCaliforniatransportationcontractingindustry.Id.at1191.TheCourtstated:“Basedonreviewofpublicrecords,interviews,assessmentsastowhetherafirmcouldbeconsideredavailable,forCaltranscontracts,aswellasnumerousotheradjustments,thefirmconcludedthatminority‐andwomen‐ownedbusinessesshouldbeexpectedtoreceive13.5percentofcontactdollarsfromCaltransadministeredfederallyassistedcontracts.”Id.at1191‐1192.
TheCourtsaidtheresearchfirm“examinedover10,000transportation‐relatedcontractsadministeredbyCaltransbetween2002and2006todetermineactualDBEutilization.Thefirmassesseddisparitiesacrossavarietyofcontracts,separatelyassessingcontractsbasedonfundingsource(stateorfederal),typeofcontract(primeorsubcontract),andtypeofproject(engineeringorconstruction).”Id.at1192.
TheCourtpointedoutakeydifferencebetweenfederallyfundedandstatefundedcontractsisthatrace‐consciousgoalswereinplaceforthefederallyfundedcontractsduringthe2002–2006period,butnotforthestatefundedcontracts.Id.at1192.Thus,theCourtstated:“statefundedcontractsfunctionedasacontrolgrouptohelpdeterminewhetherpreviousaffirmativeactionprogramsskewedthedata.”Id.
Moreover,theCourtfoundtheresearchfirmmeasureddisparitiesinalltwelveofCaltrans’administrativedistricts,andcomputedaggregatedisparitiesbasedonstatewidedata.Id.at1192.Thefirmevaluatedstatisticaldisparitiesbyraceandgender.TheCourtstatedthatwithinandacrossmanycategoriesofcontracts,theresearchfirmfoundsubstantialstatisticaldisparitiesforAfricanAmerican,Asian–Pacific,andNativeAmericanfirms.Id.However,theresearchfirmfoundthattherewerenotsubstantialdisparitiesfortheseminoritiesineverysubcategoryofcontract.Id.TheCourtnotedthatthedisparitystudyalsofoundsubstantialdisparitiesinutilizationofwomen‐ownedfirmsforsomecategoriesofcontracts.Id.Afterpublicationofthedisparitystudy,theCourtpointedouttheresearchfirmcalculateddisparityindicesforallwomen‐ownedfirms,includingfemaleminorities,showingsubstantialdisparitiesintheutilizationofallwomen‐ownedfirmssimilartothosemeasuredforwhitewomen.Id.
TheCourtfoundthatthedisparitystudyandCaltransalsodevelopedextensiveanecdotalevidence,by(1)conductingtwelvepublichearingstoreceivecommentsonthefirm’sfindings;(2)receivinglettersfrombusinessownersandtradeassociations;and(3)interviewingrepresentativesfromtwelvetradeassociationsand79owners/managersoftransportationfirms.Id.at1192.TheCourtstatedthatsomeoftheanecdotalevidenceindicateddiscriminationbasedonraceorgender.Id.
Caltrans’DBEProgram.CaltransconcludedthattheevidencefromthedisparitystudysupportedaninferenceofdiscriminationintheCaliforniatransportationcontractingindustry.Id.at1192‐1193.Caltransconcludedthatithadsufficientevidencetomakerace‐andgender‐consciousgoalsforAfricanAmerican‐,Asian–PacificAmerican‐,NativeAmerican‐,andwomen‐ownedfirms.Id.TheCourtstatedthatCaltransadoptedtherecommendationsofthedisparityreportandsetanoverallgoalof13.5percentfordisadvantagedbusinessparticipation.Caltransexpectedtomeetone‐halfofthe13.5percentgoalusingrace‐neutralmeasures.Id.
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CaltranssubmitteditsproposedDBEprogramtotheUSDOTforapproval,includingarequestforawaivertoimplementtheprogramonlyforthefouridentifiedgroups.Id.at1193.TheCaltrans’DBEprogramincluded66race‐neutralmeasuresthatCaltransalreadyoperatedorplannedtoimplement,andsubsequentproposalsincreasedthenumberofrace‐neutralmeasuresto150.Id.TheUSDOTgrantedthewaiver,butinitiallydidnotapproveCaltrans’DBEprogramuntilin2009,theDOTapprovedCaltrans’DBEprogramforfiscalyear2009.
DistrictCourtproceedings.AGCthenfiledacomplaintallegingthatCaltrans’implementationoftheFederalDBEProgramviolatedtheFourteenthAmendmentoftheU.S.Constitution,TitleVIoftheCivilRightsAct,andotherlaws.Ultimately,theAGConlyarguedanas‐appliedchallengetoCaltrans’DBEprogram.ThedistrictcourtonmotionsofsummaryjudgmentheldthatCaltrans’programwas“clearlyconstitutional,”asit“wassupportedbyastrongbasisinevidenceofdiscriminationintheCaliforniacontractingindustryandwasnarrowlytailoredtothosegroupswhichhadactuallysuffereddiscrimination.Id.at1193.
SubsequentCaltransstudyandprogram.WhiletheappealbytheAGCwaspending,CaltranscommissionedanewdisparitystudyfromBBCtoupdateitsDBEprogramasrequiredbythefederalregulations.Id.at1193.InAugust2012,BBCpublisheditsseconddisparityreport,andCaltransconcludedthattheupdatedstudyprovidedevidenceofcontinuingdiscriminationintheCaliforniatransportationcontractingindustryagainstthesamefourgroupsandHispanicAmericans.Id.CaltranssubmittedamodifiedDBEprogramthatisnearlyidenticaltotheprogramapprovedin2009,exceptthatitnowincludesHispanicAmericansandsetsanoverallgoalof12.5percent,ofwhich9.5percentwillbeachievedthroughrace‐andgender‐consciousmeasures.Id.TheUSDOTapprovedCaltrans’updatedprograminNovember2012.Id.
Jurisdictionissue.Initially,theNinthCircuitCourtofAppealsconsideredwhetherithadjurisdictionovertheAGC’sappealbasedonthedoctrinesofmootnessandstanding.TheCourtheldthattheappealisnotmootbecauseCaltrans’newDBEprogramissubstantiallysimilartothepriorprogramandisallegedtodisadvantageAGC’smembers“inthesamefundamentalway”asthepreviousprogram.Id.at1194.
TheCourt,however,heldthattheAGCdidnotestablishassociationalstanding.Id.at1194‐1195:TheCourtfoundthattheAGCdidnotidentifyanyaffectedmembersbynamenorhasitsubmitteddeclarationsbyanyofitsmembersattestingtoharmtheyhavesufferedorwillsufferunderCaltrans’program.Id.at1194‐1195.BecauseAGCfailedtoestablishstanding,theCourthelditmustdismisstheappealduetolackofjurisdiction.Id.at1195.
Caltrans’DBEProgramheldconstitutionalonthemerits.TheCourtthenheldthatevenifAGCcouldestablishstanding,itsappealwouldfail.Id.at1194‐1195.TheCourtheldthatCaltrans’DBEprogramisconstitutionalbecauseitsurvivestheapplicablelevelofscrutinyrequiredbytheEqualProtectionClauseandjurisprudence.Id.at1195‐1200.
TheCourtstatedthatrace‐consciousremedialprogramsmustsatisfystrictscrutinyandthatalthoughstrictscrutinyisstringent,itisnot“fatalinfact.”Id.at1194‐1195(quotingAdarandConstructors,Inc.v.Peña,515U.S.200,237(1995)(AdarandIII)).TheCourtquotedAdarandIII:“Theunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”Id.(quotingAdarandIII,515U.S.at237.)
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TheCourtpointedoutthatgender‐consciousprogramsmustsatisfyintermediatescrutinywhichrequiresthatgender‐consciousprogramsbesupportedbyan‘exceedinglypersuasivejustification’andbesubstantiallyrelatedtotheachievementofthatunderlyingobjective.Id.at1195(citingWesternStatesPaving,407F.3dat990n.6.).
TheCourtheldthatCaltrans’DBEprogramcontainsbothrace‐andgender‐consciousmeasures,andthatthe“entireprogrampassesstrictscrutiny.”Id.at1195.
A.ApplicationofstrictscrutinystandardarticulatedinWesternStatesPaving.TheCourtheldthattheframeworkforAGC’sas‐appliedchallengetoCaltrans’DBEprogramisgovernedbyWesternStatesPaving.TheNinthCircuitinWesternStatesPavingdevisedatwo‐prongedtestfornarrowtailoring:(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbe“limitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”Id.at1195‐1196(quotingWesternStatesPaving,407F.3dat997–99).
1.EvidenceofdiscriminationinCaliforniacontractingindustry.TheCourtheldthatinEqualProtectioncases,courtsconsiderstatisticalandanecdotalevidencetoidentifytheexistenceofdiscrimination.Id.at1196.TheU.S.SupremeCourthassuggestedthata“significantstatisticaldisparity”couldbesufficienttojustifyrace‐consciousremedialprograms.Id.at*7(citingCityofRichmondv.J.A.CrosonCo.,488U.S.469,509(1989)).TheCourtstatedthatalthoughgenerallynotsufficient,anecdotalevidencecomplementsstatisticalevidencebecauseofitsabilitytobring“thecoldnumbersconvincinglytolife.”Id.(quotingInt’lBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977)).
TheCourtpointedoutthatWashingtonDOT’sDBEprogramintheWesternStatesPavingcasewasheldinvalidbecauseWashingtonDOThadperformednostatisticalstudiesanditofferednoanecdotalevidence.Id.at1196.TheCourtalsostatedthattheWashingtonDOTusedanoversimplifiedmethodologyresultinginlittleweightbeinggivenbytheCourttothepurporteddisparitybecauseWashington’sdata“didnotaccountfortherelativecapacityofdisadvantagedbusinessestoperformwork,nordiditcontrolforthefactthatexistingaffirmativeactionprogramsskewedthepriorutilizationofminoritybusinessesinthestate.”Id.(quotingWesternStatesPaving,407F.3dat999‐1001).TheCourtsaidthatitstruckdownWashington’sprogramafterdeterminingthattherecordwasdevoidofanyevidencesuggestingthatminoritiescurrentlysuffer–orhaveeversuffered–discriminationintheWashingtontransportationcontractingindustry.”Id.
Significantly,theCourtheldinthiscaseasfollows:“Incontrast,Caltrans’affirmativeactionprogramissupportedbysubstantialstatisticalandanecdotalevidenceofdiscriminationintheCaliforniatransportationcontractingindustry.”Id.at1196.TheCourtnotedthatthedisparitystudydocumenteddisparitiesinmanycategoriesoftransportationfirmsandtheutilizationofcertainminority‐andwomen‐ownedfirms.Id.TheCourtfoundthedisparitystudy“accountedforthefactorsmentionedinWesternStatesPavingaswellasothers,adjustingavailabilitydatabasedoncapacitytoperformworkandcontrollingforpreviouslyadministeredaffirmativeactionprograms.”Id.(citingWesternStates,407F.3dat1000).
TheCourtalsoheld:“Moreover,thestatisticalevidencefromthedisparitystudyisbolsteredbyanecdotalevidencesupportinganinferenceofdiscrimination.Thesubstantialstatisticaldisparitiesalonewouldgiverisetoaninferenceofdiscrimination,seeCroson,488U.S.at509,andcertainlyCaltrans’statisticalevidencecombinedwithanecdotalevidencepassesconstitutionalmuster.”Id.at1196.
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TheCourtspecificallyrejectedtheargumentbyAGCthatstrictscrutinyrequiresCaltranstoprovideevidenceof“specificacts”of“deliberate”discriminationbyCaltransemployeesorprimecontractors.Id.at1196‐1197.TheCourtfoundthattheSupremeCourtinCrosonexplicitlystatesthat“[t]hedegreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”Id.at1197(quotingCroson,488U.S.at489).TheCourtconcludedthatarulerequiringastatetoshowspecificactsofdeliberatediscriminationbyidentifiedindividualswouldruncontrarytothestatementinCrosonthatstatisticaldisparitiesalonecouldbesufficienttosupportrace‐consciousremedialprograms.Id.(citingCroson,488U.S.at509).TheCourtrejectedAGC’sargumentthatCaltrans’programdoesnotsurvivestrictscrutinybecausethedisparitystudydoesnotidentifyindividualactsofdeliberatediscrimination.Id.
TheCourtrejectedasecondargumentbyAGCthatthisstudyshowedinconsistentresultsforutilizationofminoritybusinessesdependingonthetypeandnatureofthecontract,andthuscannotsupportaninferenceofdiscriminationintheentiretransportationcontractingindustry.Id.at1197.AGCarguedthateachofthesesubcategoriesofcontractsmustbeviewedinisolationwhenconsideringwhetheraninferenceofdiscriminationarises,whichtheCourtrejected.Id.TheCourtfoundthatAGC’sargumentoverlookstherationaleunderpinningtheconstitutionaljustificationforremedialrace‐consciousprograms:theyaredesignedtorootout“patternsofdiscrimination.”Id.quotingCroson,488U.S.at504.
TheCourtstatedthattheissueisnotwhetherCaltranscanshowunderutilizationofdisadvantagedbusinessesineverymeasuredcategoryofcontract.Butrather,theissueiswhetherCaltranscanmeettheevidentiarystandardrequiredbyWesternStatesPavingif,lookingattheevidenceinitsentirety,thedatashowsubstantialdisparitiesinutilizationofminorityfirmssuggestingthatpublicdollarsarebeingpouredinto“asystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry.”Id.at1197quotingCroson488U.S.at492.
TheCourtconcludedthatthedisparitystudyandanecdotalevidencedocumentapatternofdisparitiesforthefourgroups,andthatthestudyfoundsubstantialunderutilizationofthesegroupsinnumerouscategoriesofCaliforniatransportationcontracts,whichtheanecdotalevidenceconfirms.Id.at1197.TheCourtheldthisissufficienttoenableCaltranstoinferthatthesegroupsaresystematicallydiscriminatedagainstinpublicly‐fundedcontracts.Id.
Third,theCourtconsideredandrejectedAGC’sargumentthattheanecdotalevidencehaslittleornoprobativevalueinidentifyingdiscriminationbecauseitisnotverified.Id.at*9.TheCourtnotedthattheFourthandTenthCircuitshaverejectedtheneedtoverifyanecdotalevidence,andtheCourtstatedtheAGCmadenopersuasiveargumentthattheNinthCircuitshouldholdotherwise.Id.
TheCourtpointedoutthatAGCattemptedtodiscounttheanecdotalevidencebecausesomeaccountsascribeminorityunderutilizationtofactorsotherthanovertdiscrimination,suchasdifficultieswithobtainingbondingandbreakingintothe“goodolboy”networkofcontractors.Id.at1197‐1198.TheCourtheld,however,thatthefederalcourtsandregulationshaveidentifiedpreciselythesefactorsasbarriersthatdisadvantageminorityfirmsbecauseofthelingeringeffectsofdiscrimination.Id.at1198,citingWesternStatesPaving,407andAGCCII,950F.2dat1414.
TheCourtfoundthatAGCignoresthemanyincidentsofracialandgenderdiscriminationpresentedintheanecdotalevidence.Id.at1198.TheCourtsaidthatCaltransdoesnotclaim,andtheanecdotalevidencedoesnotneedtoprove,thateveryminority‐ownedbusinessis
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discriminatedagainst.Id.TheCourtconcluded:“ItisenoughthattheanecdotalevidencesupportsCaltrans’statisticaldatashowingapervasivepatternofdiscrimination.”Id.TheindividualaccountsofdiscriminationofferedbyCaltrans,accordingtotheCourt,metthisburden.Id.
Fourth,theCourtrejectedAGC’scontentionthatCaltrans’evidencedoesnotsupportaninferenceofdiscriminationagainstallwomenbecausegender‐baseddisparitiesinthestudyarelimitedtowhitewomen.Id.at1198.AGC,theCourtsaid,misunderstandsthestatisticaltechniquesusedinthedisparitystudy,andthatthestudycorrectlyisolatestheeffectofgenderbylimitingitsdatapooltowhitewomen,ensuringthatstatisticalresultsforgender‐baseddiscriminationarenotskewedbydiscriminationagainstminoritywomenonaccountoftheirrace.Id.
Inaddition,afterAGC’searlyincorrectobjectionstothemethodology,theresearchfirmconductedafollow‐upanalysisofallwomen‐ownedfirmsthatproducedadisparityindexof59.Id.at1198.TheCourtheldthatthisindexisevidenceofasubstantialdisparitythatraisesaninferenceofdiscriminationandissufficienttosupportCaltrans’decisiontoincludeallwomeninitsDBEprogram.Id.at1195.
2.Programtailoredtogroupswhoactuallysuffereddiscrimination.TheCourtpointedoutthatthesecondprongofthetestarticulatedinWesternStatesPavingrequiresthataDBEprogrambelimitedtothosegroupsthatactuallysuffereddiscriminationinthestate’scontractingindustry.Id.at1198.TheCourtfoundCaltrans’DBEprogramislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.Id.TheCourtheldthatthe2007disparitystudyshowedsystematicandsubstantialunderutilizationofAfricanAmerican‐,NativeAmerican‐,Asian‐PacificAmerican‐,andwomen‐ownedfirmsacrossarangeofcontractcategories.Id.at1198‐1199.Id.Thesedisparities,accordingtotheCourt,supportaninferenceofdiscriminationagainstthosegroups.Id.
CaltransconcludedthatthestatisticalevidencedidnotsupportaninferenceofapatternofdiscriminationagainstHispanicorSubcontinentAsianAmericans.Id.at1199.CaliforniaappliedforandreceivedawaiverfromtheUSDOTinordertolimitits2009programtoAfricanAmerican,NativeAmerican,Asian‐PacificAmerican,andwomen‐ownedfirms.Id.TheCourtheldthatCaltrans’program“adherespreciselytothenarrowtailoringrequirementsofWesternStates.”Id.
TheCourtrejectedtheAGCcontentionthattheDBEprogramisnotnarrowlytailoredbecauseitcreatesrace‐basedpreferencesforalltransportation‐relatedcontracts,ratherthandistinguishingbetweenconstructionandengineeringcontracts.Id.at1199.TheCourtstatedthatAGCcitednocasethatrequiresastatepreferenceprogramtoprovideseparategoalsfordisadvantagedbusinessparticipationonconstructionandengineeringcontracts.Id.TheCourtnotedthattothecontrary,thefederalguidelinesforimplementingthefederalprograminstructstatesnottoseparatedifferenttypesofcontracts.Id.TheCourtfoundthereare“soundpolicyreasonstonotrequiresuchparsing,includingthefactthatthereissubstantialoverlapinfirmscompetingforconstructionandengineeringcontracts,asprimeandsubcontractors.”Id.
B.Considerationofrace–neutralalternatives.TheCourtrejectedtheAGCassertionthatCaltrans’programisnotnarrowlytailoredbecauseitfailedtoevaluaterace‐neutralmeasuresbeforeimplementingthesystemofracialpreferences,andstatedthelawimposesnosuchrequirement.Id.at1199.TheCourtheldthatWesternStatesPavingdoesnotrequirestatesto
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independentlymeetthisaspectofnarrowtailoring,andinsteadfocusesonwhetherthefederalstatutesufficientlyconsideredrace‐neutralalternatives.Id.
Second,theCourtfoundthatevenifthisrequirementdoesapplytoCaltrans’program,narrowtailoringonlyrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”Id.at1199,citingGrutterv.Bollinger,539U.S.306,339(2003).TheCourtfoundthattheCaltransprogramhasconsideredanincreasingnumberofrace‐neutralalternatives,anditrejectedAGC’sclaimthatCaltrans’programdoesnotsufficientlyconsiderrace‐neutralalternatives.Id.at1199.
C.CertificationaffidavitsforDisadvantagedBusinessEnterprises.TheCourtrejectedtheAGCargumentthatCaltrans’programisnotnarrowlytailoredbecauseaffidavitsthatapplicantsmustsubmittoobtaincertificationasDBEsdonotrequireapplicantstoasserttheyhavesuffereddiscriminationinCalifornia.Id.at1199‐1200.TheCourtheldthecertificationprocessemployedbyCaltransfollowstheprocessdetailedinthefederalregulations,andthatthisisanimpermissiblecollateralattackonthefacialvalidityoftheCongressionalActauthorizingtheFederalDBEProgramandthefederalregulationspromulgatedbytheUSDOT(TheSafe,Accountable,Flexible,EfficientTransportationEquityAct:ALegacyforUsers,Pub.L.No.109‐59,§1101(b),119Sect.1144(2005)).Id.at1200.
D.Applicationofprogramtomixedstate‐andfederally‐fundedcontracts.TheCourtalsorejectedAGC’schallengethatCaltransappliesitsprogramtotransportationcontractsfundedbybothfederalandstatemoney.Id.at1200.TheCourtheldthatthisisanotherimpermissiblecollateralattackonthefederalprogram,whichexplicitlyrequiresgoalstobesetformix‐fundedcontracts.Id.
Conclusion.TheCourtconcludedthattheAGCdidnothavestanding,andthatfurther,Caltrans’DBEprogramsurvivesstrictscrutinyby:1)havingastrongbasisinevidenceofdiscriminationwithintheCaliforniatransportationcontractingindustry,and2)beingnarrowlytailoredtobenefitonlythosegroupsthathaveactuallysuffereddiscrimination.Id.at1200.TheCourtthendismissedtheappeal.Id.
5. Braunstein v. Arizona DOT, 683 F.3d 1177 (9th Cir. 2012)
BraunsteinisanengineeringcontractorthatprovidedsubsurfaceutilitylocationservicesforADOT.BraunsteinsuedtheArizonaDOTandothersseekingdamagesundertheCivilRightsAct,pursuantto§§1981and1983,andchallengingtheuseofArizona’sformeraffirmativeactionprogram,orrace‐andgender‐consciousDBEprogramimplementingtheFederalDBEProgram,allegingviolationoftheequalprotectionclause.
Factualbackground.ADOTsolicitedbidsforanewengineeringanddesigncontract.Sixfirmsbidontheprimecontract,butBraunsteindidnotbidbecausehecouldnotsatisfyarequirementthatprimecontractorscomplete50percentofthecontractworkthemselves.Instead,Braunsteincontactedthebiddingfirmstoaskaboutsubcontractingfortheutilitylocationwork.683F.3dat1181.AllsixfirmsrejectedBraunstein’sovertures,andBraunsteindidnotsubmitaquoteorsubcontractingbidtoanyofthem.Id.
Aspartofthebid,theprimecontractorswererequiredtocomplywithfederalregulationsthatprovidestatesreceivingfederalhighwayfundsmaintainaDBEprogram.683F.3dat1182.Underthiscontract,theprimecontractorwouldreceiveamaximumof5pointsforDBEparticipation.Id.at1182.Allsixfirmsthatbidontheprimecontractreceivedthemaximum5
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pointsforDBEparticipation.AllsixfirmscommittedtohiringDBEsubcontractorstoperformatleast6percentofthework.OnlyoneofthesixbiddingfirmsselectedaDBEasitsdesiredutilitylocationsubcontractor.ThreeofthebiddingfirmsselectedanothercompanyotherthanBraunsteintoperformtheutilitylocationwork.Id.DMJMwonthebidforthe2005contractusingAztectoperformtheutilitylocationwork.AztecwasnotaDBE.Id.at1182.
DistrictCourtrulings.BraunsteinbroughtthissuitinfederalcourtagainstADOTandemployeesoftheDOTallegingthatADOTviolatedhisrighttoequalprotectionbyusingraceandgenderpreferencesinitssolicitationandawardofthe2005contract.ThedistrictcourtdismissedasmootBraunstein’sclaimsforinjunctiveanddeclaratoryreliefbecauseADOThadsuspendeditsDBEprogramin2006followingtheNinthCircuitdecisioninWesternStatesPavingCo.v.WashingtonStateDOT,407F.3d9882(9thCir.2005).ThisleftonlyBraunstein’sdamagesclaimsagainsttheStateandADOTunder§2000d,andagainstthenamedindividualdefendantsintheirindividualcapacitiesunder§§1981and1983.Id.at1183.
ThedistrictcourtconcludedthatBraunsteinlackedArticleIIIstandingtopursuehisremainingclaimsbecausehehadfailedtoshowthatADOT’sDBEprogramhadaffectedhimpersonally.Thecourtnotedthat“Braunsteinwasaffordedtheopportunitytobidonsubcontractingwork,andtheDBEgoaldidnotserveasabarriertodoingso,norwasitanimpedimenttohissecuringasubcontract.”Id.at1183.ThedistrictcourtfoundthatBraunstein’sinabilitytosecureutilitylocationworkstemmedfromhispastunsatisfactoryperformance,nothisstatusasanon‐DBE.Id.
Lackofstanding.TheNinthCircuitCourtofAppealsheldthatBraunsteinlackedArticleIIIstandingandaffirmedtheentryofsummaryjudgmentinfavorofADOTandtheindividualemployeesofADOT.TheCourtfoundthatBraunsteinhadnotprovidedanyevidenceshowingthatADOT’sDBEprogramaffectedhimpersonallyorthatitimpededhisabilitytocompeteforutilitylocationworkonanequalbasis.Id.at1185.TheCourtnotedthatBraunsteindidnotsubmitaquoteorabidtoanyoftheprimecontractorsbiddingonthegovernmentcontract.Id.
TheCourtalsopointedoutthatBraunsteindidnotseekprospectivereliefagainstthegovernment“affirmativeaction”program,notingthedistrictcourtdismissedasmoothisclaimsfordeclaratoryandinjunctivereliefsinceADOThadsuspendeditsDBEprogrambeforehebroughtthesuit.Id.at1186.Thus,Braunstein’ssurvivingclaimswerefordamagesbasedonthecontractatissueratherthanprospectiverelieftoenjointheDBEProgram.Id.Accordingly,theCourtheldhemustshowmorethanthatheis“ableandready”toseeksubcontractingwork.Id.
TheCourtfoundBraunsteinpresentednoevidencetodemonstratethathewasinapositiontocompeteequallywiththeothersubcontractors,noevidencecomparinghimselfwiththeothersubcontractorsintermsofpriceorothercriteria,andnoevidenceexplainingwhythesixprospectiveprimecontractorsrejectedhimasasubcontractor.Id.at1186.TheCourtstatedthattherewasnothingintherecordindicatingtheADOTDBEprogramposedabarrierthatimpededBraunstein’sabilitytocompeteforworkasasubcontractor.Id.at1187.TheCourtheldthattheexistenceofaracialorgenderbarrierisnotenoughtoestablishstanding,withoutaplaintiff’sshowingthathehasbeensubjectedtosuchabarrier.Id.at1186.
TheCourtnotedBraunsteinhadexplicitlyacknowledgedpreviouslythatthewinningbidderonthecontractwouldnothirehimasasubcontractorforreasonsunrelatedtotheDBEprogram.Id.at1186.Atthesummaryjudgmentstage,theCourtstatedthatBraunsteinwasrequiredtosetforthspecificfactsdemonstratingtheDBEprogramimpededhisabilitytocompeteforthesubcontractingworkonanequalbasis.Id.at1187.
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SummaryjudgmentgrantedtoADOT.TheCourtconcludedthatBraunsteinwasunabletopointtoanyevidencetodemonstratehowtheADOTDBEprogramadverselyaffectedhimpersonallyorimpededhisabilitytocompeteforsubcontractingwork.Id.TheCourtthusheldthatBraunsteinlackedArticleIIIstandingandaffirmedtheentryofsummaryjudgmentinfavorofADOT.
6. Northern Contracting, Inc. v. Illinois, 473 F.3d 715 (7th Cir. 2007)
InNorthernContracting,Inc.v.Illinois,theSeventhCircuitaffirmedthedistrictcourtdecisionupholdingthevalidityandconstitutionalityoftheIllinoisDepartmentofTransportation’s(“IDOT”)DBEProgram.PlaintiffNorthernContractingInc.(“NCI”)wasawhitemale‐ownedconstructioncompanyspecializingintheconstructionofguardrailsandfencesforhighwayconstructionprojectsinIllinois.473F.3d715,717(7thCir.2007).Initially,NCIchallengedtheconstitutionalityofboththefederalregulationsandtheIllinoisstatuteimplementingtheseregulations.Id.at719.ThedistrictcourtgrantedtheUSDOT’sMotionforSummaryJudgment,concludingthatthefederalgovernmenthaddemonstratedacompellinginterestandthatTEA‐21wassufficientlynarrowlytailored.NCIdidnotchallengethisrulingandtherebyforfeitedtheopportunitytochallengethefederalregulations.Id.at720.NCIalsoforfeitedtheargumentthatIDOT’sDBEprogramdidnotserveacompellinggovernmentinterest.Id.ThesoleissueonappealtotheSeventhCircuitwaswhetherIDOT’sprogramwasnarrowlytailored.Id.
IDOTtypicallyadoptedanewDBEplaneachyear.Id.at718.InpreparingforFiscalYear2005,IDOTretainedaconsultingfirmtodetermineDBEavailability.Id.Theconsultantfirstidentifiedtherelevantgeographicmarket(Illinois)andtherelevantproductmarket(transportationinfrastructureconstruction).Id.Theconsultantthendeterminedavailabilityofminority‐andwomen‐ownedfirmsthroughanalysisofDun&Bradstreet’sMarketplacedata.Id.ThisinitiallistwascorrectedforerrorsinthedatabysurveyingtheD&Blist.Id.Inlightofthesesurveys,theconsultantarrivedataDBEavailabilityof22.77percent.Id.Theconsultantthenranaregressionanalysisonearningsandbusinessinformationandconcludedthatintheabsenceofdiscrimination,relativeDBEavailabilitywouldbe27.5percent.Id.IDOTconsideredthis,alongwithotherdata,includingDBEutilizationonIDOTs“zerogoal”experimentconductedin2002to2003,inwhichIDOTdidnotuseDBEgoalson5percentofitscontracts(1.5%utilization)anddataofDBEutilizationonprojectsfortheIllinoisStateTollHighwayAuthoritywhichdoesnotreceivefederalfundingandwhosegoalsarecompletelyvoluntary(1.6%utilization).Id.at719.Onthebasisofallofthisdata,IDOTadopteda22.77percentgoalfor2005.Id.
DespitethefacttheNCIforfeitedtheargumentthatIDOT’sDBEprogramdidnotserveacompellingstateinterest,theSeventhCircuitbrieflyaddressedthecompellinginterestprongofthestrictscrutinyanalysis,notingthatIDOThadsatisfieditsburden.Id.at720.Thecourtnotedthat,post‐Adarand,twoothercircuitshaveheldthatastatemayrelyonthefederalgovernment’scompellinginterestinimplementingalocalDBEplan.Id.at720‐21,citingWesternStatesPavingCo.,Inc.v.WashingtonStateDOT,407F.3d983,987(9thCir.2005),cert.denied,126S.Ct.1332(Feb.21,2006)andSherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964,970(8thCir.2003),cert.denied,541U.S.1041(2004).ThecourtstatedthatNCIhadnotarticulatedanyreasontobreakranksfromtheothercircuitsandexplainedthat“[i]nsofarasthestateismerelycomplyingwithfederallawitisactingastheagentofthefederalgovernment….Ifthestatedoesexactlywhatthestatuteexpectsittodo,andthestatuteisconcededforpurposesoflitigationtobeconstitutional,wedonotseehowthestatecanbethoughttohaveviolatedtheConstitution.”Id.at721,quotingMilwaukeeCountyPaversAssociationv.Fielder,922F.2d419,423(7thCir.1991).ThecourtdidnotaddresswhetherIDOThadanindependentinterestthatcouldhavesurvivedconstitutionalscrutiny.
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InaddressingthenarrowlytailoredprongwithrespecttoIDOT’sDBEprogram,thecourtheldthatIDOThadcomplied.Id.ThecourtconcludeditsholdinginMilwaukeethatastateisinsulatedfromaconstitutionalattackabsentashowingthatthestateexceededitsfederalauthorityremainedapplicable.Id.at721‐22.ThecourtnotedthattheSupremeCourtinAdarandConstructorsv.Pena,515U.S.200(1995)didnotseizetheopportunitytooverrulethatdecision,explainingthattheCourtdidnotinvalidateitsconclusionthatachallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.Id.at722.
ThecourtfurtherclarifiedtheMilwaukeeopinioninlightoftheinterpretationsoftheopinionsofferedinbytheNinthCircuitinWesternStatesandEighthCircuitinSherbrooke.Id.ThecourtstatedthattheNinthCircuitinWesternStatesmisreadtheMilwaukeedecisioninconcludingthatMilwaukeedidnotaddressthesituationofanas‐appliedchallengetoaDBEprogram.Id.at722,n.5.Relatedly,thecourtstatedthattheEighthCircuit’sopinioninSherbrooke(thattheMilwaukeedecisionwascompromisedbythefactthatitwasdecidedunderthepriorlaw“whenthe10percentfederalset‐asidewasmoremandatory”)wasunconvincingsinceallrecipientsoffederaltransportationfundsarestillrequiredtohavecompliantDBEprograms.Id.at722.FederallawmakesmoreclearnowthatthecompliancecouldbeachievedevenwithnoDBEutilizationifthatweretheresultofagoodfaithuseoftheprocess.Id.at722,n.5.ThecourtstatedthatIDOTinthiscasewasactingasaninstrumentoffederalpolicyandNCI’scollateralattackonthefederalregulationswasimpermissible.Id.at722.
Theremainderofthecourt’sopinionaddressedthequestionofwhetherIDOTexceededitsgrantofauthorityunderfederallaw,andheldthatallofNCI’sargumentsfailed.Id.First,NCIchallengedthemethodbywhichthelocalbasefigurewascalculated,thefirststepinthegoal‐settingprocess.Id.NCIarguedthatthenumberofregisteredandprequalifiedDBEsinIllinoisshouldhavesimplybeencounted.Id.Thecourtstatedthatwhilethefederalregulationslistseveralexamplesofmethodsfordeterminingthelocalbasefigure,Id.at723,theseexamplesarenotintendedasanexhaustivelist.Thecourtpointedoutthatthefifthiteminthelistisentitled“AlternativeMethods,”andstates:“Youmayuseothermethodstodetermineabasefigureforyouroverallgoal.AnymethodologyyouchoosemustbebasedondemonstrableevidenceoflocalmarketconditionsandbedesignatedtoultimatelyattainagoalthatisrationallyrelatedtotherelativeavailabilityofDBEsinyourmarket.”Id.(citing49CFR§26.45(c)(5)).Accordingtothecourt,theregulationsmakeclearthat“relativeavailability”means“theavailabilityofready,willingandableDBEsrelativetoallbusinessready,willing,andabletoparticipate”onDOTcontracts.Id.ThecourtstatedNCIpointedtonothinginthefederalregulationsthatindicatedthatarecipientmustsonarrowlydefinethescopeoftheready,willing,andavailablefirmstoasimplecountofthenumberofregisteredandprequalifiedDBEs.Id.ThecourtagreedwiththedistrictcourtthattheremedialnatureofthefederalschememilitatesinfavorofamethodofDBEavailabilitycalculationthatcastsabroadernet.Id.
Second,NCIarguedthattheIDOTfailedtoproperlyadjustitsgoalbasedonlocalmarketconditions.Id.Thecourtnotedthatthefederalregulationsdonotrequireanyadjustmentstothebasefigure,butsimplyproviderecipientswithauthoritytomakesuchadjustmentsifnecessary.Id.Accordingtothecourt,NCIfailedtoidentifyanyaspectoftheregulationsrequiringIDOTtoseparateprimecontractoravailabilityfromsubcontractoravailability,andpointedoutthattheregulationsrequirethelocalgoaltobefocusedonoverallDBEparticipation.Id.
Third,NCIcontendedthatIDOTviolatedthefederalregulationsbyfailingtomeetthemaximumfeasibleportionofitsoverallgoalthroughrace‐neutralmeansoffacilitatingDBEparticipation.Id.at723‐24.NCIarguedthatIDOTshouldhaveconsideredDBEswhohadwonsubcontractson
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goalprojectswheretheprimecontractordidnotconsiderDBEstatus,insteadofonlyconsideringDBEswhowoncontractsonno‐goalprojects.Id.at724.ThecourtheldthatwhiletheregulationsindicatethatwhereDBEswinsubcontractsongoalprojectsstrictlythroughlowbidthiscanbecountedasrace‐neutralparticipation,theregulationsdidnotrequireIDOTtosearchforthisdata,forthepurposeofcalculatingpastlevelsofrace‐neutralDBEparticipation.Id.Accordingtothecourt,therecordindicatedthatIDOTusednearlyallthemethodsdescribedintheregulationstomaximizetheportionofthegoalthatwillbeachievedthroughrace‐neutralmeans.Id.
ThecourtaffirmedthedecisionofthedistrictcourtupholdingthevalidityoftheIDOTDBEprogramandfoundthatitwasnarrowlytailoredtofurtheracompellinggovernmentalinterest.Id.
7. Western States Paving Co. v. Washington State DOT, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006)
ThiscaseoutoftheNinthCircuitstruckdownastate’simplementationoftheFederalDBEProgramforfailuretopassconstitutionalmuster.InWesternStatesPaving,theNinthCircuitheldthattheStateofWashington’simplementationoftheFederalDBEProgramwasunconstitutionalbecauseitdidnotsatisfythenarrowtailoringelementoftheconstitutionaltest.TheNinthCircuitheldthattheStatemustpresentitsownevidenceofpastdiscriminationwithinitsownboundariesinordertosurviveconstitutionalmusterandcouldnotmerelyrelyupondatasuppliedbyCongress.TheUnitedStatesSupremeCourtdeniedcertiorari.Theanalysisinthedecisionalsoisinstructiveinparticularastotheapplicationofthenarrowlytailoredprongofthestrictscrutinytest.
PlaintiffWesternStatesPavingCo.(“plaintiff”)wasawhitemale‐ownedasphaltandpavingcompany.407F.3d983,987(9thCir.2005).InJulyof2000,plaintiffsubmittedabidforaprojectfortheCityofVancouver;theprojectwasfinancedwithfederalfundsprovidedtotheWashingtonStateDOT(“WSDOT”)undertheTransportationEquityActforthe21stCentury(“TEA‐21”).Id.
CongressenactedTEA‐21in1991andaftermultiplerenewals,itwassettoexpireonMay31,2004.Id.at988.TEA‐21establishedminimumminority‐ownedbusinessparticipationrequirements(10%)forcertainfederally‐fundedprojects.Id.TheregulationsrequireeachstateacceptingfederaltransportationfundstoimplementaDBEprogramthatcomportswiththeTEA‐21.Id.TEA‐21indicatesthe10percentDBEutilizationrequirementis“aspirational,”andthestatutorygoal“doesnotauthorizeorrequirerecipientstosetoverallorcontractgoalsatthe10percentlevel,oranyotherparticularlevel,ortotakeanyspecialadministrativestepsiftheirgoalsareaboveorbelow10percent.”Id.
TEA‐21setsforthatwo‐stepprocessforastatetodetermineitsownDBEutilizationgoal:(1)thestatemustcalculatetherelativeavailabilityofDBEsinitslocaltransportationcontractingindustry(onewaytodothisistodividethenumberofready,willingandableDBEsinastatebythetotalnumberofready,willingandablefirms);and(2)thestateisrequiredto“adjustthisbasefigureupwardordownwardtoreflecttheprovencapacityofDBEstoperformwork(asmeasuredbythevolumeofworkallocatedtoDBEsinrecentyears)andevidenceofdiscriminationagainstDBEsobtainedfromstatisticaldisparitystudies.”Id.at989(citingregulation).Astateisalsopermittedtoconsiderdiscriminationinthebondingandfinancingindustriesandthepresenteffectsofpastdiscrimination.Id.(citingregulation).TEA‐21requiresageneralized,“undifferentiated”minoritygoalandastateisprohibitedfromapportioningtheir
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DBEutilizationgoalamongdifferentminoritygroups(e.g.,betweenHispanics,blacks,andwomen).Id.at990(citingregulation).
“Astatemustmeetthemaximumfeasibleportionofthisgoalthroughrace‐[andgender‐]neutralmeans,includinginformationalandinstructionalprogramstargetedtowardallsmallbusinesses.”Id.(citingregulation).Race‐andgender‐consciouscontractgoalsmustbeusedtoachieveanyportionofthecontractgoalsnotachievablethroughrace‐andgender‐neutralmeasures.Id.(citingregulation).However,TEA‐21doesnotrequirethatDBEparticipationgoalsbeusedoneverycontractoratthesameleveloneverycontractinwhichtheyareused;rather,theoveralleffectmustbeto“obtainthatportionoftherequisiteDBEparticipationthatcannotbeachievedthroughrace‐[andgender‐]neutralmeans.”Id.(citingregulation).
Aprimecontractormustuse“goodfaithefforts”tosatisfyacontract’sDBEutilizationgoal.Id.(citingregulation).However,astateisprohibitedfromenactingrigidquotasthatdonotcontemplatesuchgoodfaithefforts.Id.(citingregulation).
UndertheTEA‐21minorityutilizationrequirements,theCitysetagoalof14percentminorityparticipationonthefirstprojectplaintiffbidon;theprimecontractorthusrejectedplaintiff’sbidinfavorofahigherbiddingminority‐ownedsubcontractingfirm.Id.at987.InSeptemberof2000,plaintiffagainsubmittedabidonaprojectfinancedwithTEA‐21fundsandwasagainrejectedinfavorofahigherbiddingminority‐ownedsubcontractingfirm.Id.Theprimecontractorexpresslystatedthatherejectedplaintiff’sbidduetotheminorityutilizationrequirement.Id.
PlaintifffiledsuitagainsttheWSDOT,ClarkCounty,andtheCity,challengingtheminoritypreferencerequirementsofTEA‐21asunconstitutionalbothfaciallyandasapplied.Id.Thedistrictcourtrejectedbothofplaintiff’schallenges.ThedistrictcourtheldtheprogramwasfaciallyconstitutionalbecauseitfoundthatCongresshadidentifiedsignificantevidenceofdiscriminationinthetransportationcontractingindustryandtheTEA‐21wasnarrowlytailoredtoremedysuchdiscrimination.Id.at988.Thedistrictcourtrejectedtheas‐appliedchallengeconcludingthatWashington’simplementationoftheprogramcomportedwiththefederalrequirementsandthestatewasnotrequiredtodemonstratethatitsminoritypreferenceprogramindependentlysatisfiedstrictscrutiny.Id.PlaintiffappealedtotheNinthCircuitCourtofAppeals.Id.
TheNinthCircuitconsideredwhethertheTEA‐21,whichauthorizestheuseofrace‐andgender‐basedpreferencesinfederally‐fundedtransportationcontracts,violatedequalprotection,eitheronitsfaceorasappliedbytheStateofWashington.
Thecourtappliedastrictscrutinyanalysistoboththefacialandas‐appliedchallengestoTEA‐21.Id.at990‐91.Thecourtdidnotapplyaseparateintermediatescrutinyanalysistothegender‐basedclassificationsbecauseitdeterminedthatit“wouldnotyieldadifferentresult.”Id.at990,n.6.
Facialchallenge(FederalGovernment).Thecourtfirstnotedthatthefederalgovernmenthasacompellinginterestin“ensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectsofeitherpublicorprivatediscriminationwithinthetransportationcontractingindustry.”Id.at991,citingCityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1989)andAdarandConstructors,Inc.v.Slater(“AdarandVII”),228F.3d1147,1176(10thCir.2000).Thecourtfoundthat“[b]othstatisticalandanecdotalevidencearerelevantinidentifyingtheexistenceofdiscrimination.”Id.at991.ThecourtfoundthatalthoughCongressdidnothave
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evidenceofdiscriminationagainstminoritiesineverystate,suchevidencewasunnecessaryfortheenactmentofnationwidelegislation.Id.However,citingboththeEighthandTenthCircuits,thecourtfoundthatCongresshadampleevidenceofdiscriminationinthetransportationcontractingindustrytojustifyTEA‐21.Id.ThecourtalsofoundthatbecauseTEA‐21setforthflexiblerace‐consciousmeasurestobeusedonlywhenrace‐neutraleffortswereunsuccessful,theprogramwasnarrowlytailoredandthussatisfiedstrictscrutiny.Id.at992‐93.Thecourtaccordinglyrejectedplaintiff’sfacialchallenge.Id.
As‐applied challenge (State of Washington).PlaintiffallegedTEA‐21wasunconstitutionalas‐appliedbecausetherewasnoevidenceofdiscriminationinWashington’stransportationcontractingindustry.Id.at995.TheStateallegedthatitwasnotrequiredtoindependentlydemonstratethatitsapplicationofTEA‐21satisfiedstrictscrutiny.Id.TheUnitedStatesintervenedtodefendTEA‐21’sfacialconstitutionality,and“unambiguouslyconcededthatTEA‐21’sraceconsciousmeasurescanbeconstitutionallyappliedonlyinthosestateswheretheeffectsofdiscriminationarepresent.”Id.at996;seealsoBr.fortheUnitedStatesat28(April19,2004)(“DOT’sregulations…aredesignedtoassistStatesinensuringthatrace‐consciousremediesarelimitedtoonlythosejurisdictionswherediscriminationoritseffectsareaproblemandonlyasalastresortwhenrace‐neutralreliefisinsufficient.”(emphasisinoriginal)).
ThecourtfoundthattheEighthCircuitwastheonlyothercourttoconsideranas‐appliedchallengetoTEA‐21inSherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964(8thCir.2003),cert.denied124S.Ct.2158(2004).Id.at996.TheEighthCircuitdidnotrequireMinnesotaandNebraskatoidentifyacompellingpurposefortheirprogramsindependentofCongress’snationwideremedialobjective.Id.However,theEighthCircuitdidconsiderwhetherthestates’implementationofTEA‐21wasnarrowlytailoredtoachieveCongress’sremedialobjective.Id.TheEighthCircuitthuslookedtothestates’independentevidenceofdiscriminationbecause“tobenarrowlytailored,anationalprogrammustbelimitedtothosepartsofthecountrywhereitsrace‐basedmeasuresaredemonstrablyneeded.”Id.(internalcitationsomitted).TheEighthCircuitreliedonthestates’statisticalanalysesoftheavailabilityandcapacityofDBEsintheirlocalmarketsconductedbyoutsideconsultingfirmstoconcludethatthestatessatisfiedthenarrowtailoringrequirement.Id.at997.
ThecourtconcurredwiththeEighthCircuitandfoundthatWashingtondidnotneedtodemonstrateacompellinginterestforitsDBEprogram,independentfromthecompellingnationwideinterestidentifiedbyCongress.Id.However,thecourtdeterminedthatthedistrictcourterredinholdingthatmerecompliancewiththefederalprogramsatisfiedstrictscrutiny.Id.Rather,thecourtheldthatwhetherWashington’sDBEprogramwasnarrowlytailoredwasdependentonthepresenceorabsenceofdiscriminationinWashington’stransportationcontractingindustry.Id.at997‐98.“IfnosuchdiscriminationispresentinWashington,thentheState’sDBEprogramdoesnotservearemedialpurpose;itinsteadprovidesanunconstitutionalwindfalltominoritycontractorssolelyonthebasisoftheirraceorsex.”Id.at998.ThecourtheldthataSixthCircuitdecisiontothecontrary,TennesseeAsphaltCo.v.Farris,942F.2d969,970(6thCir.1991),misinterpretedearliercaselaw.Id.at997,n.9.
Thecourtfoundthatmoreover,evenwherediscriminationispresentinastate,aprogramisnarrowlytailoredonlyifitappliesonlytothoseminoritygroupswhohaveactuallysuffereddiscrimination.Id.at998,citingCroson,488U.S.at478.ThecourtalsofoundthatinMontereyMechanicalCo.v.Wilson,125F.3d702,713(9thCir.1997),ithad“previouslyexpressedsimilarconcernsaboutthehaphazardinclusionofminoritygroupsinaffirmativeactionprogramsostensiblydesignedtoremedytheeffectsofdiscrimination.”Id.InMontereyMechanical,the
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courtheldthat“theoverlyinclusivedesignationofbenefitedminoritygroupswasa‘redflagsignalingthatthestatuteisnot,astheEqualProtectionClauserequires,narrowlytailored.’”Id.,citingMontereyMechanical,125F.3dat714.Thecourtfoundthatothercourtsareinaccord.Id.at998‐99,citingBuildersAss’nofGreaterChi.v.CountyofCook,256F.3d642,647(7thCir.2001);AssociatedGen.ContractorsofOhio,Inc.v.Drabik,214F.3d730,737(6thCir.2000);O’DonnellConstr.Co.v.DistrictofColumbia,963F.2d420,427(D.C.Cir.1992).Accordingly,thecourtfoundthateachoftheprincipalminoritygroupsbenefitedbyWSDOT’sDBEprogrammusthavesuffereddiscriminationwithintheState.Id.at999.
ThecourtfoundthatWSDOT’sprogramcloselytrackedthesampleUSDOTDBEprogram.Id.WSDOTcalculateditsDBEparticipationgoalbyfirstcalculatingtheavailabilityofready,willingandableDBEsintheState(dividingthenumberoftransportationcontractingfirmsintheWashingtonStateOfficeofMinority,WomenandDisadvantagedBusinessEnterprisesDirectorybythetotalnumberoftransportationcontractingfirmslistedintheCensusBureau’sWashingtondatabase,whichequaled11.17%).Id.WSDOTthenupwardlyadjustedthe11.17percentbasefigureto14percent“toaccountfortheprovencapacityofDBEstoperformwork,asreflectedbythevolumeofworkperformedbyDBEs[duringacertaintimeperiod].”Id.AlthoughDBEsperformed18percentofworkonStateprojectsduringtheprescribedtimeperiod,Washingtonsetthefinaladjustedfigureat14percentbecauseTEA‐21reducedthenumberofeligibleDBEsinWashingtonbyimposingmorestringentcertificationrequirements.Id.at999,n.11.WSDOTdidnotmakeanadjustmenttoaccountfordiscriminatorybarriersinobtainingbondingandfinancing.Id.WSDOTsimilarlydidnotmakeanyadjustmenttoreflectpresentorpastdiscrimination“becauseitlackedanystatisticalstudiesevidencingsuchdiscrimination.”Id.
WSDOTthendeterminedthatitneededtoachieve5percentofits14percentgoalthroughrace‐consciousmeansbasedona9percentDBEparticipationrateonstate‐fundedcontractsthatdidnotincludeaffirmativeactioncomponents(i.e.,9%participationcouldbeachievedthroughrace‐neutralmeans).Id.at1000.TheUSDOTapprovedWSDOTgoal‐settingprogramandthetotalityofits2000DBEprogram.Id.
Washingtonconcededthatitdidnothavestatisticalstudiestoestablishtheexistenceofpastorpresentdiscrimination.Id.Itargued,however,thatithadevidenceofdiscriminationbecauseminority‐ownedfirmshadthecapacitytoperform14percentoftheState’stransportationcontractsin2000butreceivedonly9percentofthesubcontractingfundsoncontractsthatdidnotincludeanaffirmativeaction’scomponent.Id.ThecourtfoundthattheState’smethodologywasflawedbecausethe14percentfigurewasbasedontheearlier18percentfigure,discussedsupra,whichincludedcontractswithaffirmativeactioncomponents.Id.Thecourtconcludedthatthe14percentfiguredidnotaccuratelyreflecttheperformancecapacityofDBEsinarace‐neutralmarket.Id.ThecourtalsofoundtheStateconcededasmuchtothedistrictcourt.Id.
ThecourtheldthatadisparitybetweenDBEperformanceoncontractswithanaffirmativeactioncomponentandthosewithout“doesnotprovideanyevidenceofdiscriminationagainstDBEs.”Id.ThecourtfoundthattheonlyevidenceuponwhichWashingtoncouldrelywasthedisparitybetweentheproportionofDBEfirmsintheState(11.17%)andthepercentageofcontractsawardedtoDBEsonrace‐neutralgrounds(9%).Id.However,thecourtdeterminedthatsuchevidencewasentitledto“littleweight”becauseitdidnottakeintoaccountamultitudeofotherfactorssuchasfirmsize.Id.
Moreover,thecourtfoundthattheminimalstatisticalevidencewasinsufficientevidence,standingalone,ofdiscriminationinthetransportationcontractingindustry.Id.at1001.The
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courtfoundthatWSDOTdidnotpresentanyanecdotalevidence.Id.ThecourtrejectedtheState’sargumentthattheDBEapplicationsthemselvesconstitutedevidenceofpastdiscriminationbecausetheapplicationswerenotproperlyintherecord,andbecausetheapplicantswerenotrequiredtocertifythattheyhadbeenvictimsofdiscriminationinthecontractingindustry.Id.Accordingly,thecourtheldthatbecausetheStatefailedtoprofferevidenceofdiscriminationwithinitsowntransportationcontractingmarket,itsDBEprogramwasnotnarrowlytailoredtoCongress’scompellingremedialinterest.Id.at1002‐03.
Thecourtaffirmedthedistrictcourt’sgrantonsummaryjudgmenttotheUnitedStatesregardingthefacialconstitutionalityofTEA‐21,reversedthegrantofsummaryjudgmenttoWashingtonontheas‐appliedchallenge,andremandedtodeterminetheState’sliabilityfordamages.
ThedissentarguedthatwheretheStatecompliedwithTEA‐21inimplementingitsDBEprogram,itwasnotsusceptibletoanas‐appliedchallenge.
8. Sherbrooke Turf, Inc. v. Minnesota DOT, and Gross Seed Company v. Nebraska Department of Roads, 345 F.3d 964 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004)
ThiscaseisinstructiveinitsanalysisofstateDOTDBE‐typeprogramsandtheirevidentiarybasisandimplementation.ThiscasealsoisinstructiveinitsanalysisofthenarrowlytailoredrequirementforstateDBEprograms.InupholdingthechallengedFederalDBEProgramatissueinthiscasetheEighthCircuitemphasizedtherace‐,ethnicity‐andgender‐neutralelements,theultimateflexibilityoftheProgram,andthefacttheProgramwastiedcloselyonlytolabormarketswithidentifieddiscrimination.
InSherbrookeTurf,Inc.v.MinnesotaDOT,andGrossSeedCompanyv.NebraskaDepartmentofRoads,theU.S.CourtofAppealsfortheEighthCircuitupheldtheconstitutionalityoftheFederalDBEProgram(49CFRPart26).ThecourtheldtheFederalProgramwasnarrowlytailoredtoremedyacompellinggovernmentalinterest.Thecourtalsoheldthefederalregulationsgoverningthestates’implementationoftheFederalDBEProgramwerenarrowlytailored,andthestateDOT’simplementationoftheFederalDBEProgramwasnarrowlytailoredtoserveacompellinggovernmentinterest.
SherbrookeandGrossSeedbothcontendedthattheFederalDBEProgramonitsfaceandasappliedinMinnesotaandNebraskaviolatedtheEqualProtectioncomponentoftheFifthAmendment’sDueProcessClause.TheEighthCircuitengagedinareviewoftheFederalDBEProgramandtheimplementationoftheProgrambytheMinnesotaDOTandtheNebraskaDepartmentofRoads(“NebraskaDOR”)underastrictscrutinyanalysisandheldthattheFederalDBEProgramwasvalidandconstitutionalandthattheMinnesotaDOT’sandNebraskaDOR’simplementationoftheProgramalsowasconstitutionalandvalid.Applyingthestrictscrutinyanalysis,thecourtfirstconsideredwhethertheFederalDBEProgramestablishedacompellinggovernmentalinterest,andfoundthatitdid.ItconcludedthatCongresshadastrongbasisinevidencetosupportitsconclusionthatrace‐basedmeasureswerenecessaryforthereasonsstatedbytheTenthCircuitinAdarand,228F.3dat1167‐76.Althoughthecontractorspresentedevidencethatchallengedthedata,theyfailedtopresentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoparticipationinhighwaycontracts.Thus,thecourtheldtheyfailedtomeettheirultimateburdentoprovethattheDBEProgramisunconstitutionalonthisground.
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Finally,SherbrookeandGrossSeedarguedthattheMinnesotaDOTandNebraskaDORmustindependentlysatisfythecompellinggovernmentalinteresttestaspectofstrictscrutinyreview.Thegovernmentargued,andthedistrictcourtsbelowagreed,thatparticipatingstatesneednotindependentlymeetthestrictscrutinystandardbecauseundertheDBEProgramthestatemuststillcomplywiththeDOTregulations.TheEighthCircuitheldthatthisissuewasnotaddressedbytheTenthCircuitinAdarand.TheEighthCircuitconcludedthatneitherside’spositionisentirelysound.
ThecourtrejectedthecontentionofthecontractorsthattheirfacialchallengestotheDBEProgrammustbeupheldunlesstherecordbeforeCongressincludedstrongevidenceofracediscriminationinconstructioncontractinginMinnesotaandNebraska.Ontheotherhand,thecourtheldavalidrace‐basedprogrammustbenarrowlytailored,andtobenarrowlytailored,anationalprogrammustbelimitedtothosepartsofthecountrywhereitsrace‐basedmeasuresaredemonstrablyneededtotheextentthatthefederalgovernmentdelegatesthistailoringfunction,asastate’simplementationbecomesrelevanttoareviewingcourt’sstrictscrutiny.Thus,thecourtleftthequestionofstateimplementationtothenarrowtailoringanalysis.
Thecourtheldthatareviewingcourtapplyingstrictscrutinymustdetermineiftherace‐basedmeasureisnarrowlytailored.Thatis,whetherthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.ThecontractorshavetheultimateburdenofestablishingthattheDBEProgramisnotnarrowlytailored.Id.ThecompellinginterestanalysisfocusedontherecordbeforeCongress;thenarrow‐tailoringanalysislooksattherolesoftheimplementinghighwayconstructionagencies.
Fordeterminingwhetherarace‐consciousremedyisnarrowlytailored,thecourtlookedatfactorssuchastheefficacyofalternativeremedies,theflexibilityanddurationoftherace‐consciousremedy,therelationshipofthenumericalgoalstotherelevantlabormarket,andtheimpactoftheremedyonthirdparties.Id.UndertheDBEProgram,astatereceivingfederalhighwayfundsmust,onanannualbasis,submittoUSDOTanoverallgoalforDBEparticipationinitsfederally‐fundedhighwaycontracts.See,49CFR§26.45(f)(1).Theoverallgoal“mustbebasedondemonstrableevidence”astothenumberofDBEswhoareready,willing,andabletoparticipateascontractorsorsubcontractorsonfederally‐assistedcontracts.49CFR§26.45(b).Thenumbermaybeadjustedupwardtoreflectthestate’sdeterminationthatmoreDBEswouldbeparticipatingabsenttheeffectsofdiscrimination,includingrace‐relatedbarrierstoentry.See,49CFR§26.45(d).
Thestatemustmeetthe“maximumfeasibleportion”ofitsoverallgoalbyrace‐neutralmeansandmustsubmitforapprovalaprojectionoftheportionitexpectstomeetthroughrace‐neutralmeans.See,49CFR§26.45(a),(c).Ifrace‐neutralmeansareprojectedtofallshortofachievingtheoverallgoal,thestatemustgivepreferencetofirmsithascertifiedasDBEs.However,suchpreferencesmaynotincludequotas.49CFR§26.45(b).Duringthecourseoftheyear,ifastatedeterminesthatitwillexceedorfallshortofitsoverallgoal,itmustadjustitsuseofrace‐consciousandrace‐neutralmethods“[t]oensurethatyourDBEprogramcontinuestobenarrowlytailoredtoovercometheeffectsofdiscrimination.”49CFR§26.51(f).
Absentbadfaithadministrationoftheprogram,astate’sfailuretoachieveitsoverallgoalwillnotbepenalized.See,49CFR§26.47.Ifthestatemeetsitsoverallgoalfortwoconsecutiveyearsthroughrace‐neutralmeans,itisnotrequiredtosetanannualgoaluntilitdoesnotmeetitsprioroverallgoalforayear.See,49CFR§26.51(f)(3).Inaddition,DOTmaygrantanexemptionorwaiverfromanyandallrequirementsoftheProgram.See,49CFR§26.15(b).
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Likethedistrictcourtsbelow,theEighthCircuitconcludedthattheUSDOTregulations,ontheirface,satisfytheSupremeCourt’snarrowingtailoringrequirements.First,theregulationsplacestrongemphasisontheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipationingovernmentcontracting.345F.3dat972.Narrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butitdoesrequireseriousgoodfaithconsiderationofworkablerace‐neutralalternatives.345F.3dat971,citingGrutterv.Bollinger,539U.S.306.
Second,therevisedDBEprogramhassubstantialflexibility.Astatemayobtainwaiversorexemptionsfromanyrequirementsandisnotpenalizedforagoodfaithefforttomeetitsoverallgoal.Inaddition,theprogramlimitspreferencestosmallbusinessesfallingbeneathanearningsthreshold,andanyindividualwhosenetworthexceeds$750,000.00cannotqualifyaseconomicallydisadvantaged.See,49CFR§26.67(b).Likewise,theDBEprogramcontainsbuilt‐indurationallimits.345F.3dat972.AstatemayterminateitsDBEprogramifitmeetsorexceedsitsannualoverallgoalthroughrace‐neutralmeansfortwoconsecutiveyears.Id.;49CFR§26.51(f)(3).
Third,thecourtfound,theUSDOThastiedthegoalsforDBEparticipationtotherelevantlabormarkets.Theregulationsrequirestatestosetoverallgoalsbaseduponthelikelynumberofminoritycontractorsthatwouldhavereceivedfederalassistedhighwaycontractsbutfortheeffectsofpastdiscrimination.See,49CFR§26.45(c)‐(d)(Steps1and2).Thoughtheunderlyingestimatesmaybeinexact,theexerciserequiresstatestofocusonestablishingrealisticgoalsforDBEparticipationintherelevantcontactingmarkets.Id.at972.
Finally,CongressandDOThavetakensignificantsteps,thecourtheld,tominimizetherace‐basednatureoftheDBEProgram.Itsbenefitsaredirectedatallsmallbusinessesownedandcontrolledbythesociallyandeconomicallydisadvantaged.WhileTEA‐21createsapresumptionthatmembersofcertainracialminoritiesfallwithinthatclass,thepresumptionisrebuttable,wealthyminorityownersandwealthyminority‐ownedfirmsareexcluded,andcertificationisavailabletopersonswhoarenotpresumptivelydisadvantagedthatdemonstrateactualsocialandeconomicdisadvantage.Thus,raceismaderelevantintheProgram,butitisnotadeterminativefactor.345F.3dat973.Forthesereasons,thecourtagreedwiththedistrictcourtsthattherevisedDBEProgramisnarrowlytailoredonitsface.
SherbrookeandGrossSeedalsoarguedthattheDBEProgramasappliedinMinnesotaandNebraskaisnotnarrowlytailored.UndertheFederalProgram,statessettheirowngoals,basedonlocalmarketconditions;theirgoalsarenotimposedbythefederalgovernment;nordorecipientshavetotiethemtoanyuniformnationalpercentage.345F.3dat973,citing64Fed.Reg.at5102.
ThecourtanalyzedwhatMinnesotaandNebraskadidinconnectionwiththeirimplementationoftheFederalDBEProgram.MinnesotaDOTcommissionedadisparitystudyofthehighwaycontractingmarketinMinnesota.ThestudygroupdeterminedthatDBEsmadeup11.4percentoftheprimecontractorsandsubcontractorsinahighwayconstructionmarket.Ofthisnumber,0.6percentwereminority‐ownedand10.8percentwomen‐owned.Baseduponitsanalysisofbusinessformationstatistics,theconsultantestimatedthatthenumberofparticipatingminority‐ownedbusinesswouldbe34percenthigherinarace‐neutralmarket.Therefore,theconsultantadjusteditsDBEavailabilityfigurefrom11.4percentto11.6percent.Basedonthestudy,MinnesotaDOTadoptedanoverallgoalof11.6percentDBEparticipationforfederally‐assistedhighwayprojects.MinnesotaDOTpredictedthatitwouldneedtomeet9percentofthatoverallgoalthroughraceandgender‐consciousmeans,basedonthefactthatDBEparticipationinStatehighwaycontractsdroppedfrom10.25percentin1998to2.25percentin1999whenits
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previousDBEProgramwassuspendedbytheinjunctionbythedistrictcourtinanearlierdecisioninSherbrooke.MinnesotaDOTrequiredeachprimecontractbiddertomakeagoodfaithefforttosubcontractaprescribedportionoftheprojecttoDBEs,anddeterminedthatportionbasedonseveralindividualizedfactors,includingtheavailabilityofDBEsintheextentofsubcontractingopportunitiesontheproject.
Thecontractorpresentedevidenceattackingthereliabilityofthedatainthestudy,butitfailedtoestablishthatbetterdatawereavailableorthatMinnesotaDOTwasotherwiseunreasonableinundertakingthisthoroughanalysisandrelyingonitsresults.Id.TheprecipitousdropinDBEparticipationwhennorace‐consciousmethodswereemployed,thecourtconcluded,supportsMinnesotaDOT’sconclusionthatasubstantialportionofitsoverallgoalcouldnotbemetwithrace‐neutralmeasures.Id.Onthatrecord,thecourtagreedwiththedistrictcourtthattherevisedDBEProgramservesacompellinggovernmentinterestandisnarrowlytailoredonitsfaceandasappliedinMinnesota.
InNebraska,theNebraskaDORcommissionedadisparitystudyalsotoreviewavailabilityandcapabilityofDBEfirmsintheNebraskahighwayconstructionmarket.Theavailabilitystudyfoundthatbetween1995and1999,whenNebraskafollowedthemandatory10percentset‐asiderequirement,9.95percentofallavailableandcapablefirmswereDBEs,andDBEfirmsreceived12.7percentofthecontractdollarsonfederallyassistedprojects.AfterapportioningpartofthisDBEcontractingtorace‐neutralcontractingdecisions,NebraskaDORsetanoverallgoalof9.95percentDBEparticipationandpredictedthat4.82percentofthisoverallgoalwouldhavetobeachievedbyrace‐and‐genderconsciousmeans.TheNebraskaDORrequiredthatprimecontractorsmakeagoodfaithefforttoallocateasetportionofeachcontract’sfundstoDBEsubcontractors.TheEighthCircuitconcludedthatGrossSeed,likeSherbrooke,failedtoprovethattheDBEProgramisnotnarrowlytailoredasappliedinNebraska.Therefore,thecourtaffirmedthedistrictcourts’decisionsinGrossSeedandSherbrooke.(Seedistrictcourtopinionsdiscussedinfra.).
9. Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000) cert. granted then dismissed as improvidently granted sub nom. Adarand Constructors, Inc. v. Mineta, 532 U.S. 941, 534 U.S. 103 (2001)
ThisistheAdaranddecisionbytheUnitedStatesCourtofAppealsfortheTenthCircuit,whichwasonremandfromtheearlierSupremeCourtdecisionapplyingthestrictscrutinyanalysistoanyconstitutionalchallengetotheFederalDBEProgram.SeeAdarandConstructors,Inc.v.Pena,515U.S.200(1995).ThedecisionoftheTenthCircuitinthiscasewasconsideredbytheUnitedStatesSupremeCourt,afterthatcourtgrantedcertioraritoconsidercertainissuesraisedonappeal.TheSupremeCourtsubsequentlydismissedthewritofcertiorari“asimprovidentlygranted”withoutreachingthemeritsofthecase.ThecourtdidnotdecidetheconstitutionalityoftheFederalDBEProgramasitappliestostateDOTsorlocalgovernments.
TheSupremeCourtheldthattheTenthCircuithadnotconsideredtheissuebeforetheSupremeCourtoncertiorari,namelywhetherarace‐basedprogramapplicabletodirectfederalcontractingisconstitutional.ThisissueisdistinguishedfromtheissueoftheconstitutionalityoftheUSDOTDBEProgramasitpertainstoprocurementoffederalfundsforhighwayprojectsletbystates,andtheimplementationoftheFederalDBEProgrambystateDOTs.Therefore,theSupremeCourthelditwouldnotreachthemeritsofachallengetofederallawsrelatingtodirectfederalprocurement.
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TurningtotheTenthCircuitdecisioninAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000),theTenthCircuitupheldingeneralthefacialconstitutionalityoftheFederalDBEProgram.Thecourtfoundthatthefederalgovernmenthadacompellinginterestinnotperpetuatingtheeffectsofracialdiscriminationinitsowndistributionoffederalfundsandinremediatingtheeffectsofpastdiscriminationingovernmentcontracting,andthattheevidencesupportedtheexistenceofpastandpresentdiscriminationsufficienttojustifytheFederalDBEProgram.ThecourtalsoheldthattheFederalDBEProgramis“narrowlytailored,”andthereforeupheldtheconstitutionalityoftheFederalDBEProgram.
FollowingtheSupremeCourt’svacationoftheTenthCircuit’sdismissalonmootnessgrounds,thecourtaddressedthemeritsofthisappeal,namely,thefederalgovernment’schallengetothedistrictcourt’sgrantofsummaryjudgmenttoplaintiff‐appelleeAdarandConstructors,Inc.Insodoing,thecourtresolvedtheconstitutionalityoftheuseinfederalsubcontractingprocurementoftheSubcontractorCompensationClause(“SCC”),whichemploysrace‐consciouspresumptionsdesignedtofavorminorityenterprisesandother“disadvantagedbusinessenterprises”(“DBEs”).Thecourt’sevaluationoftheSCCprogramutilizesthe“strictscrutiny”standardofconstitutionalreviewenunciatedbytheSupremeCourtinanearlierdecisioninthiscase.Idat1155.
ThecourtaddressedtheconstitutionalityoftherelevantstatutoryprovisionsasappliedintheSCCprogram,aswellastheirfacialconstitutionality.Id.at1160.ItwasthejudgmentofthecourtthattheSCCprogramandtheDBEcertificationprogramsascurrentlystructured,thoughnotastheywerestructuredin1997whenthedistrictcourtlastrenderedjudgment,passedconstitutionalmuster:Thecourtheldtheywerenarrowlytailoredtoserveacompellinggovernmentalinterest.Id.
“CompellingInterest”inrace–consciousmeasuresdefined.Thecourtstatedthattheremaybeacompellinginterestthatsupportstheenactmentofrace‐consciousmeasures.JusticeO’Connorexplicitlystates:“Theunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”AdarandIII,515U.S.at237;seealsoShawv.Hunt,517U.S.899,909,(1996)(statingthat“remedyingtheeffectsofpastorpresentracialdiscriminationmayinthepropercasejustifyagovernment’suseofracialdistinctions”(citingCroson,488U.S.at498–506)).InterpretingCroson,thecourtrecognizedthat“theFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthepublicentityfromactingasa‘“passiveparticipant”inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry’byallowingtaxdollars‘tofinancetheevilofprivateprejudice.’“ConcreteWorksofColo.,Inc.v.City&CountyofDenver,36F.3d1513,1519(10thCir.1994)(quotingCroson,488U.S.at492,109S.Ct.706).Id.at1164.
ThegovernmentidentifiedthecompellinginterestatstakeintheuseofracialpresumptionsintheSCCprogramas“remedyingtheeffectsofracialdiscriminationandopeningupfederalcontractingopportunitiestomembersofpreviouslyexcludedminoritygroups.”Id.
Evidencerequiredtoshowcompellinginterest.Whilethegovernment’sarticulatedinterestwascompellingasatheoreticalmatter,thecourtdeterminedwhethertheactualevidenceprofferedbythegovernmentsupportedtheexistenceofpastandpresentdiscriminationinthepublicly‐fundedhighwayconstructionsubcontractingmarket.Id.at1166.
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The“benchmarkforjudgingtheadequacyofthegovernment’sfactualpredicateforaffirmativeactionlegislation[i]swhetherthereexistsa‘strongbasisinevidencefor[thegovernment’s]conclusionthatremedialactionwasnecessary.’“ConcreteWorks,36F.3dat1521(quotingCroson,488U.S.at500,(quoting(plurality)))(emphasisinConcreteWorks).Bothstatisticalandanecdotalevidenceareappropriateinthestrictscrutinycalculus,althoughanecdotalevidencebyitselfisnot.Id.at1166,citingConcreteWorks,36F.3dat1520–21.
Afterthegovernment’sinitialshowing,theburdenshiftedtoAdarandtorebutthatshowing:“Notwithstandingtheburdenofinitialproductionthatrests”withthegovernment,“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.(quotingWygant,476U.S.at277–78,(plurality)).“[T]henonminority[challengers]...continuetobeartheultimateburdenofpersuadingthecourtthat[thegovernmententity’s]evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.”Id.at1166,quoting,ConcreteWorks,at1522–23.
Inaddressingthequestionofwhatevidenceofdiscriminationsupportsacompellinginterestinprovidingaremedy,thecourtconsideredbothdirectandcircumstantialevidence,includingpost‐enactmentevidenceintroducedbydefendantsaswellastheevidenceinthelegislativehistoryitself.Id.at1166,citing,ConcreteWorks,36F.3dat1521,1529n.23(consideringpost‐enactmentevidence).Thecourtstateditmayconsiderpublicandprivatediscriminationnotonlyinthespecificareaofgovernmentprocurementcontractsbutalsointheconstructionindustrygenerally;thus,anyfindingsCongresshasmadeastotheentireconstructionindustryarerelevant.Idat1166‐67citing,ConcreteWorks,at1523,1529,andCroson,488U.S.at492(Op.ofO’Connor,J.).
Evidenceinthepresentcase.Therecanbenodoubt,thecourtfound,thatCongressrepeatedlyhasconsideredtheissueofdiscriminationingovernmentconstructionprocurementcontracts,findingthatracialdiscriminationanditscontinuingeffectshavedistortedthemarketforpubliccontracts—especiallyconstructioncontracts—necessitatingarace‐consciousremedy.Id.at1167,citing,Appendix—TheCompellingInterestforAffirmativeActioninFederalProcurement,61Fed.Reg.26,050,26,051–52&nn.12–21(1996)(“TheCompellingInterest“)(citingapproximatelythirtycongressionalhearingssince1980concerningminority‐ownedbusinesses).But,thecourtsaid,thequestionisnotmerelywhetherthegovernmenthasconsideredevidence,butratherthenatureandextentoftheevidenceithasconsidered.Id.
InConcreteWorks,thecourtnotedthat:
NeitherCrosonnoritsprogenyclearlystatewhetherprivatediscriminationthatis innowayfundedwithpublic taxdollarscan,by itself,providetherequisitestrongbasis inevidencenecessarytojustifyamunicipality’saffirmativeactionprogram.ApluralityinCrosonsimplysuggestedthatremedialmeasurescouldbejustifieduponamunicipality’sshowingthat“ithadessentiallybecomea‘passiveparticipant’ in a system of racial exclusion practiced by elements of the localconstructionindustry.”Croson,488U.S.at492,109S.Ct.706.AlthoughwedonotreadCrosonasrequiringthemunicipalitytoidentifyanexactlinkagebetweenitsaward of public contracts and private discrimination, such evidencewould atleast enhance the municipality’s factual predicate for a race‐ and gender‐consciousprogram.
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Id.at1167,quoting,ConcreteWorks,36F.3dat1529.UnlikeConcreteWorks,theevidencepresentedbythegovernmentinthepresentcasedemonstratedtheexistenceoftwokindsofdiscriminatorybarrierstominoritysubcontractingenterprises,bothofwhichshowastronglinkbetweenracialdisparitiesinthefederalgovernment’sdisbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.Id.at1168.Thefirstdiscriminatorybarriersaretotheformationofqualifiedminoritysubcontractingenterprisesduetoprivatediscrimination,precludingfromtheoutsetcompetitionforpublicconstructioncontractsbyminorityenterprises.Theseconddiscriminatorybarriersaretofaircompetitionbetweenminorityandnon‐minoritysubcontractingenterprises,againduetoprivatediscrimination,precludingexistingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.Thegovernmentalsopresentedfurtherevidenceintheformoflocaldisparitystudiesofminoritysubcontractingandstudiesoflocalsubcontractingmarketsaftertheremovalofaffirmativeactionprograms.Id.at1168.
a.Barrierstominoritybusinessformationinconstructionsubcontracting.Astothefirstkindofbarrier,thegovernment’sevidenceconsistedofnumerouscongressionalinvestigationsandhearingsaswellasoutsidestudiesofstatisticalandanecdotalevidence—citedanddiscussedinTheCompellingInterest,61Fed.Reg.26,054–58—anddemonstratedthatdiscriminationbyprimecontractors,unions,andlendershaswoefullyimpededtheformationofqualifiedminoritybusinessenterprisesinthesubcontractingmarketnationwide.Id.at1168.Theevidencedemonstratedthatprimecontractorsintheconstructionindustryoftenrefusetoemployminoritysubcontractorsdueto“oldboy”networks—basedonafamilialhistoryofparticipationinthesubcontractingmarket—fromwhichminorityfirmshavetraditionallybeenexcluded.Id.
Also,thecourtfound,subcontractors’unionsplacedbeforeminorityfirmsaplethoraofbarrierstomembership,therebyeffectivelyblockingthemfromparticipationinasubcontractingmarketinwhichunionmembershipisanimportantconditionforsuccess.Id.at1169.Thecourtstatedthatthegovernment’sevidencewasparticularlystrikingintheareaoftherace‐baseddenialofaccesstocapital,withoutwhichtheformationofminoritysubcontractingenterprisesisstymied.Id.at1169.
b.Barrierstocompetitionbyexistingminorityenterprises.Withregardtobarriersfacedbyexistingminorityenterprises,thegovernmentpresentedevidencetendingtoshowthatdiscriminationbyprimecontractors,privatesectorcustomers,businessnetworks,suppliers,andbondingcompaniesfostersadecidedlyunevenplayingfieldforminoritysubcontractingenterprisesseekingtocompeteintheareaoffederalconstructionsubcontracts.Id.at1170.ThecourtsaiditwasclearthatCongressdevotedconsiderableenergytoinvestigatingandconsideringthissystematicexclusionofexistingminorityenterprisesfromopportunitiestobidonconstructionprojectsresultingfromtheinsularityandsometimesoutrightracismofnon‐minorityfirmsintheconstructionindustry.Id.at1171.
Thegovernment’sevidence,thecourtfound,stronglysupportedthethesisthatinformal,raciallyexclusionarybusinessnetworksdominatethesubcontractingconstructionindustry,shuttingoutcompetitionfromminorityfirms.Id.Minoritysubcontractingenterprisesintheconstructionindustry,thecourtpointedout,foundthemselvesunabletocompetewithnon‐minorityfirmsonanequalplayingfieldduetoracialdiscriminationbybondingcompanies,withoutwhomthoseminorityenterprisescannotobtainsubcontractingopportunities.Thegovernmentpresentedevidencethatbondingisanessentialrequirementofparticipationinfederalsubcontractingprocurement.Id.Finally,thegovernmentpresentedevidenceofdiscriminationbysuppliers,theresultofwhichwasthatnonminoritysubcontractorsreceived
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specialpricesanddiscountsfromsuppliersnotavailabletominoritysubcontractors,drivingup“anticipatedcosts,andthereforethebid,forminority‐ownedbusinesses.”Id.at1172.
ContrarytoAdarand’scontentions,onthebasisoftheforegoingsurveyofevidenceregardingminoritybusinessformationandcompetitioninthesubcontractingindustry,thecourtfoundthegovernment’sevidenceastothekindsofobstaclesminoritysubcontractingbusinessesfaceconstitutedastrongbasisfortheconclusionthatthoseobstaclesarenot“thesameproblemsfacedbyanynewbusiness,regardlessoftheraceoftheowners.”Id.at1172.
c.Localdisparitystudies.ThecourtnotedthatfollowingtheSupremeCourt’sdecisioninCroson,numerousstateandlocalgovernmentsundertookstatisticalstudiestoassessthedisparity,ifany,betweenavailabilityandutilizationofminority‐ownedbusinessesingovernmentcontracting.Id.at1172.Thegovernment’sreviewofthosestudiesrevealedthatalthoughsuchdisparitywasleastglaringinthecategoryofconstructionsubcontracting,eveninthatarea“minorityfirmsstillreceiveonly87centsforeverydollartheywouldbeexpectedtoreceive”basedontheiravailability.TheCompellingInterest,61Fed.Reg.at26,062.Id.Inthatregard,theCrosonmajoritystatedthat“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythe[government]orthe[government’s]primecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”Id.quoting,488U.S.at509(Op.ofO’Connor,J.)(citationsomitted).
Thecourtsaidthatitwasmindfulthat“wherespecialqualificationsarenecessary,therelevantstatisticalpoolforpurposesofdemonstratingdiscriminatoryexclusionmustbethenumberofminoritiesqualifiedtoundertaketheparticulartask.”Id.at1172,quoting,Crosonat501–02.Butthecourtfoundthathere,itwasunawareofsuch“specialqualifications”asidefromthegeneralqualificationsnecessarytooperateaconstructionsubcontractingbusiness.Id.Ataminimum,thedisparityindicatedthattherehadbeenunder‐utilizationoftheexistingpoolofminoritysubcontractors;andthereisnoevidenceeitherintherecordonappealorinthelegislativehistorybeforethecourtthatthoseminoritysubcontractorswhohavebeenutilizedhaveperformedinadequatelyorotherwisedemonstratedalackofnecessaryqualifications.Id.at1173.
ThecourtfoundthedisparitybetweenminorityDBEavailabilityandmarketutilizationinthesubcontractingindustryraisedaninferencethatthevariousdiscriminatoryfactorsthegovernmentciteshavecreatedthatdisparity.Id.at1173.InConcreteWorks,thecourtstatedthat“[w]eagreewiththeothercircuitswhichhaveinterpretedCrosonimpliedlytopermitamunicipalitytorely...ongeneraldatareflectingthenumberofMBEsandWBEsinthemarketplacetodefeatthechallenger’ssummaryjudgmentmotion,”andthecourtheresaiditdidnotseeanydifferentstandardinthecaseofananalogoussuitagainstthefederalgovernment.Id.at1173,citing,ConcreteWorks,36F.3dat1528.Althoughthegovernment’saggregatefigureofa13%disparitybetweenminorityenterpriseavailabilityandutilizationwasnotoverwhelmingevidence,thecourtstateditwassignificant.Id.
Itwasmademoresignificantbytheevidenceshowingthatdiscriminatoryfactorsdiscouragebothenterpriseformationofminoritybusinessesandutilizationofexistingminorityenterprisesinpubliccontracting.Id.at1173.Thecourtsaidthatitwouldbe“sheerspeculation”toevenattempttoattachaparticularfiguretothehypotheticalnumberofminorityenterprisesthatwouldexistwithoutdiscriminatorybarrierstominorityDBEformation.Id.at1173,quoting,Croson,488U.S.at499.However,theexistenceofevidenceindicatingthatthenumberofminorityDBEswouldbesignificantly(butunquantifiably)higherbutforsuchbarriers,thecourt
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foundwasneverthelessrelevanttotheassessmentofwhetheradisparitywassufficientlysignificanttogiverisetoaninferenceofdiscriminatoryexclusion.Id.at1174.
d.Resultsofremovingaffirmativeactionprograms.Thecourttooknoticeofanadditionalsourceofevidenceofthelinkbetweencompellinginterestandremedy.Therewasampleevidencethatwhenrace‐consciouspubliccontractingprogramsarestruckdownordiscontinued,minoritybusinessparticipationintherelevantmarketdropssharplyorevendisappears.Id.at1174.Althoughthatevidencestandingalonethecourtfoundwasnotdispositive,itstronglysupportedthegovernment’sclaimthattherearesignificantbarrierstominoritycompetitioninthepublicsubcontractingmarket,raisingthespecterofracialdiscrimination.Id.“Wherethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”Id.at1174,quoting,Croson,488U.S.at509(Op.ofO’Connor,J.)(citationsomitted).
Insum,onthebasisoftheforegoingbodyofevidence,thecourtconcludedthatthegovernmenthadmetitsinitialburdenofpresentinga“strongbasisinevidence”sufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.Id.at1175,citing,Croson,488U.S.at500(quotingWygant,476U.S.at277).
Adarand’srebuttalfailedtomeettheirburden.Adarand,thecourtfoundutterlyfailedtomeettheir“ultimateburden”ofintroducingcredible,particularizedevidencetorebutthegovernment’sinitialshowingoftheexistenceofacompellinginterestinremedyingthenationwideeffectsofpastandpresentdiscriminationinthefederalconstructionprocurementsubcontractingmarket.Id.at1175.ThecourtrejectedAdarand’scharacterizationofvariouscongressionalreportsandfindingsasconclusoryanditshighlygeneralcriticismofthemethodologyofnumerous“disparitystudies”citedbythegovernmentanditsamicicuriaeassupplementalevidenceofdiscrimination.Id.Theevidencecitedbythegovernmentanditsamicicuriaeandexaminedbythecourtonlyreinforcedtheconclusionthat“racialdiscriminationanditseffectscontinuetoimpairtheabilityofminority‐ownedbusinessestocompeteinthenation’scontractingmarkets.”Id.
Thegovernment’sevidencepermittedafindingthatasamatteroflawCongresshadtherequisitestrongbasisinevidencetotakeactiontoremedyracialdiscriminationanditslingeringeffectsintheconstructionindustry.Id.at1175.Thisevidencedemonstratedthatboththerace‐basedbarrierstoentryandtheongoingrace‐basedimpedimentstosuccessfacedbyminoritysubcontractingenterprises—bothdiscussedabove—werecausedeitherbycontinuingdiscriminationorthelingeringeffectsofpastdiscriminationontherelevantmarket.Id.at1176.Congresswasnotlimitedtosimplyproscribingfederaldiscriminationagainstminoritycontractors,asithadalreadydone.ThecourtheldthattheConstitutiondoesnotobligateCongresstostandidlybyandcontinuetopourmoneyintoanindustrysoshapedbytheeffectsofdiscriminationthattheprofitstobederivedfromcongressionalappropriationsaccrueexclusivelytothebeneficiaries,howeverpersonallyinnocent,oftheeffectsofracialprejudice.Id.at1176.
ThecourtalsorejectedAdarand’scontentionthatCongressmustmakespecificfindingsregardingdiscriminationagainsteverysinglesub‐categoryofindividualswithinthebroadracialandethniccategoriesdesignatedbystatuteandaddressedbytherelevantlegislativefindings.Id.at1176.IfCongresshadvalidevidence,forexamplethatAsian–AmericanindividualsaresubjecttodiscriminationbecauseoftheirstatusasAsian–Americans,thecourtnoteditmakes
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nosensetorequiresub‐findingsthatsubcategoriesofthatclassexperienceparticularizeddiscriminationbecauseoftheirstatusas,forexample,AmericansfromBhutan.Id.“Race”thecourtsaidisoftenaclassificationofdubiousvalidity—scientifically,legally,andmorally.Thecourtdidnotimpartexcesslegitimacytoracialclassificationsbytakingnoticeoftheharshfactthatracialdiscriminationcommonlyoccursalongthelinesofthebroadcategoriesidentified:“BlackAmericans,HispanicAmericans,NativeAmericans,AsianPacificAmericans,andotherminorities.”Id.at1176,note18,citing,15U.S.C.§637(d)(3)(C).
Thecourtstatedthatitwasnotsuggestingthattheevidencecitedbythegovernmentwasunrebuttable.Id.at1176.Rather,thecourtindicateditwaspointingoutthatunderprecedentitisforAdarandtorebutthatevidence,andithasnotdonesototheextentrequiredtoraiseagenuineissueofmaterialfactastowhetherthegovernmenthasmetitsevidentiaryburden.Id.Thecourtreiteratedthat“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.at1522(quotingWygant,476U.S.at277–78,106S.Ct.1842(plurality)).“[T]henonminority[challengers]...continuetobeartheultimateburdenofpersuadingthecourtthat[thegovernmententity’s]evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.”Id.(quotingWygant,476U.S.at293,106S.Ct.1842(O’Connor,J.,concurring)).BecauseAdarandhadfailedutterlytomeetitsburden,thecourtheldthegovernment’sinitialshowingstands.Id.
Insum,guidedbyConcreteWorks,thecourtconcludedthattheevidencecitedbythegovernmentanditsamici,particularlythatcontainedinTheCompellingInterest,61Fed.Reg.26,050,morethansatisfiedthegovernment’sburdenofproductionregardingthecompellinginterestforarace‐consciousremedy.Id.at1176.Congresshadacompellinginterestineradicatingtheeconomicrootsofracialdiscriminationinhighwaytransportationprogramsfundedbyfederalmonies.Id.Thecourtthereforeaffirmedthedistrictcourt’sfindingofacompellinginterest.Id.
NarrowTailoring.ThecourtstateditwasguidedinitsinquirybytheSupremeCourtcasesthathaveappliedthenarrow‐tailoringanalysistogovernmentaffirmativeactionprograms.Id.at1177.Inapplyingstrictscrutinytoacourt‐orderedprogramremedyingthefailuretopromoteblackpoliceofficers,apluralityoftheCourtstatedthat
[i]ndeterminingwhetherrace‐consciousremediesareappropriate,we looktoseveralfactors,includingthenecessityforthereliefandtheefficacyofalternativeremedies; the flexibility anddurationof the relief, including theavailabilityofwaiverprovisions;therelationshipofthenumericalgoalstotherelevantlabormarket;andtheimpactofthereliefontherightsofthirdparties.
Id.at1177,quoting,Paradise,480U.S.at171(1986)(pluralityop.ofBrennan,J.)(citationsomitted).
Regardingflexibility,“theavailabilityofwaiver”isofparticularimportance.Id.Asfornumericalproportionality,Crosonadmonishedthecourtstobewareofthecompletelyunrealisticassumptionthatminoritieswillchooseaparticulartradeinlockstepproportiontotheirrepresentationinthelocalpopulation.”Id.,quoting,Croson,488U.S.at507(quotingSheetMetalWorkers’,478U.S.at494(O’Connor,J.,concurringinpartanddissentinginpart)).Inthatcontext,a“rigidnumericalquota,”thecourtnotedparticularlydisservesthecauseofnarrowtailoring.Id.at1177,citing,Croson,508,Asforburdensimposedonthirdparties,thecourtpointedtoapluralityoftheCourtinWygantthatstated:
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AspartofthisNation’sdedicationtoeradicatingracialdiscrimination,innocentpersonsmaybecalledupontobearsomeoftheburdenoftheremedy.“Wheneffectuatinga limitedandproperlytailoredremedytocuretheeffectsofpriordiscrimination, such a ‘sharing of the burden’ by innocent parties is notimpermissible.”476U.S.at280–81(Op.ofPowell,J.)(quotingFullilove,448U.S.at484(plurality))(furtherquotationsandfootnoteomitted).Weareguidedbythatbenchmark.
Id.at1177.
JusticeO’Connor’smajorityopinioninCrosonaddedafurtherfactortothecourt’sanalysis:under–orover‐inclusivenessoftheDBEclassification.Id.at1177.InCroson,theSupremeCourtstruckdownanaffirmativeactionprogramasinsufficientlynarrowlytailoredinpartbecause“thereisnoinquiryintowhetherornottheparticularMBEseekingaracialpreferencehassufferedfromtheeffectsofpastdiscrimination....[T]heinterestinavoidingthebureaucraticeffortnecessarytotailorremedialrelieftothosewhotrulyhavesufferedfromtheeffectsofpriordiscriminationcannotjustifyarigidlinedrawnonthebasisofasuspectclassification.”Id.,quoting,Croson,488U.S.at508(citationomitted).Thus,thecourtsaiditmustbeespeciallycarefultoinquireintowhethertherehasbeenanefforttoidentifyworthyparticipantsinDBEprogramsorwhethertheprogramsinquestionpaintwithtoobroad—ortoonarrow—abrush.Id.
ThecourtstatedmorespecificguidancewasfoundinAdarandIII,whereinremandingforstrictscrutiny,theSupremeCourtidentifiedtwoquestionsapparentlyofparticularimportanceintheinstantcase:(1)“[c]onsiderationoftheuseofrace‐neutralmeans;”and(2)“whethertheprogram[is]appropriatelylimited[soas]nottolastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.”Id.at1177,quoting,AdarandIII,515U.S.at237–38(internalquotationsandcitationsomitted).ThccourtthusengagedinathoroughanalysisofthefederalprograminlightofAdarandIII’sspecificquestionsonremand,andtheforegoingnarrow‐tailoringfactors:(1)theavailabilityofrace‐neutralalternativeremedies;(2)limitsonthedurationoftheSCCandDBEcertificationprograms;(3)flexibility;(4)numericalproportionality;(5)theburdenonthirdparties;and(6)over–orunder‐inclusiveness.Id.at1178.
ItissignificanttonotethatthecourtindeterminingtheFederalDBEProgramis“narrowlytailored”focusedonthefederalregulations,49CFRPart26,andinparticular§26.1(a),(b),and(f).Thecourtpointedoutthatthefederalregulationsinstructrecipientsasfollows:
[y]oumustmeetthemaximumfeasibleportionofyouroverallgoalbyusingrace‐neutralmeansoffacilitatingDBEparticipation,49CFR§26.51(a)(2000);seealso49CFR§26.51(f)(2000)(ifarecipientcanmeetitsoverallgoalthroughrace‐neutralmeans,itmustimplementitsprogramwithouttheuseofrace‐consciouscontractingmeasures),andenumeratealistofrace‐neutralmeasures,see49CFR§26.51(b)(2000).Thecurrentregulationsalsooutlineseveralrace‐neutralmeansavailabletoprogramrecipientsincludingassistanceinovercomingbondingandfinancingobstacles,providingtechnicalassistance,establishingprogramstoassiststart‐upfirms,andothermethods.See49CFR§26.51(b).Wethereforearedealingherewithrevisionsthatemphasizethecontinuingneedtoemploynon‐race‐consciousmethodsevenastheneedforrace‐consciousremediesisrecognized.228F.3dat1178‐1179.
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InconsideringwhethertheFederalDBEProgramisnarrowlytailored,thecourtalsoaddressedtheargumentmadebythecontractorthattheprogramisover‐andunder‐inclusiveforseveralreasons,includingthatCongressdidnotinquireintodiscriminationagainsteachparticularminorityracialorethnicgroup.Thecourtheldthatinsofarasthescopeofinquirysuggestedwasaparticularstate’sconstructionindustryalone,thiswouldbeatoddswithitsholdingregardingthecompellinginterestinCongress’spowertoenactnationwidelegislation.Id.at1185‐1186.
Thecourtstatedthatbecauseofthe“unreliabilityofracialandethniccategoriesandthefactthatdiscriminationcommonlyoccursbasedonmuchbroaderracialclassifications,”extrapolatingfindingsofdiscriminationagainstthevariousethnicgroups“ismoreaquestionofnomenclaturethanofnarrowtailoring.”Id.Thecourtfoundthatthe“Constitutiondoesnoterectabarriertothegovernment’sefforttocombatdiscriminationbasedonbroadracialclassificationsthatmightpreventitfromenumeratingparticularethnicoriginsfallingwithinsuchclassifications.”Id.
Holding.MindfuloftheSupremeCourt’smandatetoexerciseparticularcareinexamininggovernmentalracialclassifications,thecourtconcludedthatthe1996SCCwasinsufficientlynarrowlytailoredasappliedinthiscase,andwasthusunconstitutionalunderAdarandIII‘sstrictstandardofscrutiny.Nonetheless,afterexaminingthecurrent(post1996)SCCandDBEcertificationprograms,thecourtheldthatthe1996defectshavebeenremedied,andthecurrentfederalDBEprogramsnowmettherequirementsofnarrowtailoring.Id.at1178.
Finally,theTenthCircuitdidnotspecificallyaddressachallengetothelettingoffederally‐fundedconstructioncontractsbystatedepartmentsoftransportation.ThecourtpointedoutthatplaintiffAdarand“concededthatitschallengeintheinstantcaseisto‘thefederalprogram,implementedbyfederalofficials,’andnottothelettingoffederally‐fundedconstructioncontractsbystateagencies.”228F.3dat1187.ThecourtheldthatitdidnothavebeforeitasufficientrecordtoenableittoevaluatetheseparatequestionofColoradoDOT’simplementationofrace‐consciouspolicies.Id.at1187‐1188.Therefore,thecourtdidnotaddresstheconstitutionalityofanasappliedattackontheimplementationofthefederalprogrambytheColoradoDOTorotherlocalorstategovernmentsimplementingtheFederalDBEProgram.
Thecourtthusreversedthedistrictcourtandremandedthecase.
Recent District Court Decisions
10. Midwest Fence Corporation v. United States DOT and Federal Highway Administration, the Illinois DOT, the Illinois State Toll Highway Authority, et al., 84 F. Supp. 3d 705, 2015 WL 1396376 (N.D. Ill, 2015), affirmed, 840 F.3d 932 (7th Cir. 2016).187
InMidwestFenceCorporationv.USDOT,theFHWA,theIllinoisDOTandtheIllinoisStateTollHighwayAuthority,CaseNo.1:10‐3‐CV‐5627,UnitedStatesDistrictCourtfortheNorthern 18749CFRPart26(ParticipationbyDisadvantagedBusinessEnterprisesinDepartmentofTransportationFinancialAssistance
Programs(“FederalDBEProgram”).SeetheTransportationEquityActforthe21stCentury(TEA‐21)asamendedandreauthorized(“MAP‐21,”“SAFETEA”and“SAFETEA‐LU”),andtheUnitedStatesDepartmentofTransportation(“USDOT”or“DOT”)regulationspromulgatedtoimplementTEA‐21theFederalregulationsknownasMovingAheadforProgressinthe21stCenturyAct(“MAP‐21”),PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.;precededbyPubL.109‐59,TitleI,§1101(b),August10,2005,119Stat.1156;precededbyPubL.105‐178,TitleI,§1101(b),June9,1998,112Stat.107.
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DistrictofIllinois,EasternDivision,PlaintiffMidwestFenceCorporation,whichisaguardrail,bridgerailandfencingcontractorownedandcontrolledbywhitemaleschallengedtheconstitutionalityandtheapplicationoftheUSDOT,DisadvantagedBusinessEnterprise(“DBE”)Program.Inaddition,MidwestFencesimilarlychallengedtheIllinoisDepartmentofTransportation’s(“IDOT”)implementationoftheFederalDBEProgramforfederally‐fundedprojects,IDOT’simplementationofitsownDBEProgramforstate‐fundedprojectsandtheIllinoisStateTollwayHighwayAuthority’s(“Tollway”)separateDBEProgram.
Thefederaldistrictcourtin2011issuedanOpinionandOrderdenyingtheDefendants’MotiontoDismissforlackofstanding,denyingtheFederalDefendants’MotiontoDismisscertainCountsoftheComplaintasamatteroflaw,grantingIDOTDefendants’MotiontoDismisscertainCountsandgrantingtheTollwayDefendants’MotiontoDismisscertainCounts,butgivingleavetoMidwesttorepleadsubsequenttothisOrder.MidwestFenceCorp.v.UnitedStatesDOT,IllinoisDOT,etal.,2011WL2551179(N.D.Ill.June27,2011).
MidwestFenceinitsThirdAmendedComplaintchallengedtheconstitutionalityoftheFederalDBEProgramonitsfaceandasapplied,andchallengedtheIDOT’simplementationoftheFederalDBEProgram.MidwestFencealsosoughtadeclarationthattheUSDOTregulationshavenotbeenproperlyauthorizedbyCongressandadeclarationthatSAFETEA‐LUisunconstitutional.MidwestFencesoughtrelieffromtheIDOTDefendants,includingadeclarationthatstatestatutesauthorizingIDOT’sDBEProgramforState‐fundedcontractsareunconstitutional;adeclarationthatIDOTdoesnotfollowtheUSDOTregulations;adeclarationthattheIDOTDBEProgramisunconstitutionalandotherreliefagainsttheIDOT.TheremainingCountssoughtreliefagainsttheTollwayDefendants,includingthattheTollway’sDBEProgramisunconstitutional,andarequestforpunitivedamagesagainsttheTollwayDefendants.Thecourtin2012grantedtheTollwayDefendants’MotiontoDismissMidwestFence’srequestforpunitivedamages.
Equalprotectionframework,strictscrutinyandburdenofproof.Thecourtheldthatunderastrictscrutinyanalysis,theburdenisonthegovernmenttoshowbothacompellinginterestandnarrowlytailoring.84F.Supp.3dat720.Thegovernmentmustdemonstrateastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.Id.SincetheSupremeCourtdecisioninCroson,numerouscourtshaverecognizedthatdisparitystudiesprovideprobativeevidenceofdiscrimination.Id.Thecourtstatedthataninferenceofdiscriminationmaybemadewithempiricalevidencethatdemonstratesasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorsandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.Id.Thecourtsaidthatanecdotalevidencemaybeusedincombinationwithstatisticalevidencetoestablishacompellinggovernmentalinterest.Id.
Inadditiontoproviding“hardproof”tobackitscompellinginterest,thecourtstatedthatthegovernmentmustalsoshowthatthechallengedprogramisnarrowlytailored.Id.at720.Whilenarrowtailoringrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives,”thecourtsaiditdoesnotrequire“exhaustionofeveryconceivablerace‐neutralalternative.”Id.,citingGrutterv.Bollinger,539U.S.306,339(2003);Fischerv.Univ.ofTexasatAustin,133S.Ct.2411,2420(2013).
Oncethegovernmentalentityhasshownacceptableproofofacompellinginterestinremedyingpastdiscriminationandillustratedthatitsplanisnarrowlytailoredtoachievethisgoal,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplan
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isunconstitutional.84F.Supp.3dat721.Tosuccessfullyrebutthegovernment’sevidence,achallengermustintroduce“credible,particularizedevidence”ofitsown.Id.
Thiscanbeaccomplished,accordingtothecourt,byprovidinganeutralexplanationforthedisparitybetweenDBEutilizationandavailability,showingthatthegovernment’sdataisflawed,demonstratingthattheobserveddisparitiesarestatisticallyinsignificant,orpresentingcontrastingstatisticaldata.Id.Conjectureandunsupportedcriticismsofthegovernment’smethodologyareinsufficient.Id.
Standing.ThecourtfoundthatMidwesthadstandingtochallengetheFederalDBEProgram,IDOT’simplementationofit,andtheTollwayProgram.Id.at722.Thecourt,however,didnotfindthatMidwesthadpresentedanyfactssuggestingitsinabilitytocompeteonanequalfootingfortheTargetMarketProgramcontracts.TheTargetMarketProgramidentifiedavarietyofremedialactionsthatIDOTwasauthorizedtotakeincertainDistricts,whichincludedindividualcontractgoals,DBEparticipationincentives,aswellasset‐asides.Id.at722‐723.
ThecourtnotedthatMidwestdidnotidentifyanycontractsthatweresubjecttotheTargetMarketProgram,noridentifyanyset‐asidesthatwereinplaceinthesedistrictsthatwouldhavehindereditsabilitytocompeteforfencingandguardrailswork.Id.at723.MidwestdidnotallegethatitwouldhavebidoncontractssetasidepursuanttotheTargetMarketProgramhaditnotbeenpreventedfromdoingso.Id.BecausenothingintherecordMidwestprovidedsuggestedthattheTargetMarketProgramimpededMidwest’sabilitytocompeteforworkintheseDistricts,thecourtdismissedMidwest’sclaimrelatingtotheTargetMarketProgramforlackofstanding.Id.
FacialchallengetotheFederalDBEProgram.Thecourtfoundthatremedyingtheeffectsofraceandgenderdiscriminationwithintheroadconstructionindustryisacompellinggovernmentalinterest.ThecourtalsofoundthattheFederalDefendantshavesupportedtheircompellinginterestwithastrongbasisinevidence.Id.at725.TheFederalDefendants,thecourtsaid,presentedanextensivebodyoftestimony,reports,andstudiesthattheyclaimprovidedthestrongbasisinevidencefortheirconclusionthatraceandgender‐basedclassificationsarenecessary.Id.ThecourttookjudicialnoticeoftheexistenceofCongressionalhearingsandreportsandthecollectionofevidencepresentedtoCongressinsupportoftheFederalDBEProgram’s2012reauthorizationunderMAP‐21,includingbothstatisticalandanecdotalevidence.Id.
Thecourtalsoconsideredareportfromaconsultantwhoreviewed95disparityandavailabilitystudiesconcerningminority‐andwomen‐ownedbusinesses,aswellasanecdotalevidence,thatwerecompletedfrom2000to2012.Id.at726.Sixty‐fourofthestudieshadpreviouslybeenpresentedtoCongress.Id.Thestudiesexamineprocurementforover100publicentitiesandfundingsourcesacross32states.Id.Theconsultant’sreportopinedthatmetricssuchasfirmrevenue,numberofemployees,andbondinglimitsshouldnotbeconsideredwhendeterminingDBEavailabilitybecausetheyareall“likelytobeinfluencedbythepresenceofdiscriminationifitexists”andcouldpotentiallyresultinabuilt‐indownwardbiasintheavailabilitymeasure.Id.
Tomeasuredisparity,theconsultantdividedDBEutilizationbyavailabilityandmultipliedby100tocalculatea“disparityindex”foreachstudy.Id.at726.Thereportfound66percentofthestudiesshowedadisparityindexof80orbelow,thatis,significantlyunderutilizedrelativetotheiravailability.Id.Thereportalsoexamineddatathatshowedlowerearningsandbusinessformationratesamongwomenandminorities,evenwhenvariablessuchasageandeducationwereheldconstant.Id.Thereportconcludedthatthedisparitieswerenotattributabletofactors
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otherthanraceandsexandwereconsistentwiththepresenceofdiscriminationinconstructionandrelatedprofessionalservices.Id.
ThecourtdistinguishedtheFederalCircuitdecisioninRotheDev.Corp.v.Dep’t.ofDef.,545F.3d1023(Fed.Cir.2008)wheretheFederalCircuitCourtheldinsufficienttherelianceononlysixdisparitystudiestosupportthegovernment’scompellinginterestinimplementinganationalprogram.Id.at727,citingRothe,545F.3dat1046.ThecourtherenotedtheconsultantreportsupplementsthetestimonyandreportspresentedtoCongressinsupportoftheFederalDBEProgram,whichcourtshavefoundtoestablisha“strongbasisinevidence”tosupporttheconclusionthatrace‐andgender‐consciousactionisnecessary.Id.
ThecourtfoundthroughtheevidencepresentedbytheFederalDefendantssatisfiedtheirburdeninshowingthattheFederalDBEProgramstandsonastrongbasisinevidence.Id.at727.TheMidwestexpert’ssuggestionthatthestudiesusedinconsultant’sreportdonotproperlyaccountforcapacity,thecourtstated,doesnotcompelthecourttofindotherwise.ThecourtquotingAdarandVII,228F.3dat1173(10thCir.2000)saidthatgeneralcriticismofdisparitystudies,asopposedtoparticularevidenceunderminingthereliabilityoftheparticulardisparitystudiesrelieduponbythegovernment,isoflittlepersuasivevalueanddoesnotcompelthecourttodiscountthedisparityevidence.Id.Midwestfailedtopresent“affirmativeevidence”thatnoremedialactionwasnecessary.Id.
FederalDBEProgramisnarrowlytailored.Oncethegovernmenthasestablishedacompellinginterestforimplementingarace‐consciousprogram,itmustshowthattheprogramisnarrowlytailoredtoachievethisinterest.Id.at727.Indeterminingwhetheraprogramisnarrowlytailored,courtsexamineseveralfactors,including(a)thenecessityforthereliefandefficacyofalternativerace‐neutralmeasures,(b)theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions,(c)therelationshipofthenumericalgoalstotherelevantlabormarket,and(d)theimpactofthereliefontherightsofthirdparties.Id.Thecourtstatedthatcourtsmayalsoassesswhetheraprogramis“overinclusive.”Id.at728.ThecourtfoundthateachoftheabovefactorssupportstheconclusionthattheFederalDBEProgramisnarrowlytailored.Id.
First,thecourtsaidthatunderthefederalregulations,recipientsoffederalfundscanonlyturntorace‐andgender‐consciousmeasuresaftertheyhaveattemptedtomeettheirDBEparticipationgoalthroughrace‐neutralmeans.Id.at728.Thecourtnotedthatrace‐neutralmeansincludemakingcontractingopportunitiesmoreaccessibletosmallbusinesses,providingassistanceinobtainingbondingandfinancing,andofferingtechnicalandothersupportservices.Id.Thecourtfoundthattheregulationsrequireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.
Second,thefederalregulationscontainprovisionsthatlimittheFederalDBEProgram’sdurationandensureitsflexibility.Id.at728.ThecourtfoundthattheFederalDBEProgramlastsonlyaslongasitscurrentauthorizingactallows,notingthatwitheachreauthorization,CongressmustreevaluatetheFederalDBEPrograminlightofsupportingevidence.Id.ThecourtalsofoundthattheFederalDBEProgramaffordsrecipientsoffederalfundsandprimecontractorssubstantialflexibility.Id.at728.Recipientsmayapplyforexemptionsorwaivers,releasingthemfromprogramrequirements.Id.PrimecontractorscanapplytoIDOTfora“goodfaitheffortswaiver”onanindividualcontractgoal.Id.
Thecourtstatedtheavailabilityofwaiversisparticularlyimportantinestablishingflexibility.Id.at728.ThecourtrejectedMidwest’sargumentthatthefederalregulationsimposeaquotain
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lightoftheProgram’sexplicitwaiverprovision.Id.Basedontheavailabilityofwaivers,coupledwithregularcongressionalreview,thecourtfoundthattheFederalDBEProgramissufficientlylimitedandflexible.Id.
Third,thecourtsaidthattheFederalDBEProgramemploysatwo‐stepgoal‐settingprocessthattiesDBEparticipationgoalsbyrecipientsoffederalfundstolocalmarketconditions.Id.at728.ThecourtpointedoutthattheregulationsdelegategoalsettingtorecipientsoffederalfundswhotailorDBEparticipationtolocalDBEavailability.Id.ThecourtfoundthattheFederalDBEProgram’sgoal‐settingprocessrequiresstatestofocusonestablishingrealisticgoalsforDBEparticipationthatarecloselytiedtotherelevantlabormarket.Id.
Fourth,thefederalregulations,accordingtothecourt,containprovisionsthatseektominimizetheProgram’sburdenonnon‐DBEs.Id.at729.Thecourtpointedoutthefollowingprovisionsaimtokeeptheburdenonnon‐DBEsminimal:theFederalDBEProgram’spresumptionofsocialandeconomicdisadvantageisrebuttable;raceisnotadeterminativefactor;intheeventDBEsbecome“overconcentrated”inaparticularareaofcontractwork,recipientsmusttakeappropriatemeasurestoaddresstheoverconcentration;theuseofrace‐neutralmeasures;andtheavailabilityofgoodfaitheffortswaivers.Id.
ThecourtsaidMidwest’sprimaryargumentisthatthepracticeofstatestoawardprimecontractstothelowestbidder,andthefactthefederalregulationsprescribethatDBEparticipationgoalsbeappliedtothevalueoftheentirecontract,undulyburdensnon‐DBEsubcontractors.Id.at729.MidwestarguedthatbecausemostDBEsaresmallsubcontractors,settinggoalsasapercentageofallcontractdollars,whilerequiringaremedytocomeonlyfromsubcontractingdollars,undulyburdenssmaller,specializednon‐DBEs.Id.ThecourtfoundthatthefactinnocentpartiesmaybearsomeoftheburdenofaDBEprogramisitselfinsufficienttowarranttheconclusionthataprogramisnotnarrowlytailored.Id.ThecourtalsofoundthatstrongpolicyreasonssupporttheFederalDBEProgram’sapproach.Id.
ThecourtstatedthatcongressionaltestimonyandtheexpertreportfromtheFederalDefendantsprovideevidencethattheFederalDBEProgramisnotoverlyinclusive.Id.at729.Thecourtnotedthereportobservedstatisticallysignificantdisparitiesinbusinessformationandearningsratesinall50statesforallminoritygroupsandfornon‐minoritywomen.Id.
ThecourtsaidthatMidwestdidnotattempttorebuttheFederalDefendants’evidence.Idat729.Therefore,becausetheFederalDBEProgramstandsonastrongbasisinevidenceandisnarrowlytailoredtoachievethegoalofremedyingdiscrimination,thecourtfoundtheProgramisconstitutionalonitsface.Id.at729.ThecourtthusgrantedsummaryjudgmentinfavoroftheFederalDefendants.Id.
As‐appliedchallengetoIDOT’simplementationoftheFederalDBEProgram.InadditiontochallengingtheFederalDBEProgramonitsface,Midwestalsoarguedthatitisunconstitutionalasapplied.Id.at730.ThecourtstatedbecausetheFederalDBEProgramisappliedtoMidwestthroughIDOT,thecourtmustexamineIDOT’simplementationoftheFederalDBEProgram.Id.FollowingtheSeventhCircuit’sdecisioninNorthernContractingv.IllinoisDOT,thecourtsaidthatwhethertheFederalDBEProgramisunconstitutionalasappliedisaquestionofwhetherIDOTexceededitsauthorityinimplementingit.Id.at730,citingNorthernContracting,Inc.v.Illinois,473F.3d715at722(7thCir.2007).Thecourt,quotingNorthernContracting,heldthatachallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.Id.
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IDOTnotonlyappliestheFederalDBEProgramtoUSDOT‐assistedprojects,butitalsoappliestheFederalDBEProgramtostate‐fundedprojects.Id.at730.Thecourt,therefore,helditmustdeterminewhethertheIDOTDefendantshaveestablishedacompellingreasontoapplytheIDOTProgramtostate‐fundedprojectsinIllinois.Id.
ThecourtpointedoutthattheFederalDBEProgramdelegatesthenarrowtailoringfunctiontothestate,andthus,IDOTmustdemonstratethatthereisademonstrableneedfortheimplementationoftheFederalDBEProgramwithinitsjurisdiction.Id.at730.Accordingly,thecourtassessedwhetherIDOThasestablishedevidenceofdiscriminationinIllinoissufficientto(1)supportitsapplicationoftheFederalDBEProgramtostate‐fundedcontracts,and(2)demonstratethatIDOT’simplementationoftheFederalDBEProgramislimitedtoaplacewhererace‐basedmeasuresaredemonstrablyneeded.Id.
IDOT’sevidenceofdiscriminationandDBEavailabilityinIllinois.TheevidencethatIDOThaspresentedtoestablishtheexistenceofdiscriminationinIllinoisincludedtwostudies,onethatwasdonein2004andtheotherin2011.Id.at730.Thecourtsaidthatthe2004studyuncovereddisparitiesinearningsandbusinessformationratesamongwomenandminoritiesintheconstructionandengineeringfieldsthatthestudyconcludedwereconsistentwithdiscrimination.IDOTmaintainedthatthe2004studyandthe2011studymustbereadinconjunctionwithoneanother.Id.Thecourtfoundthatthe2011studyprovidedevidencetoestablishthedisparityfromwhichIDOT’sinferenceofdiscriminationprimarilyarises.Id.
The2011studycomparedtheproportionofcontractingdollarsawardedtoDBEs(utilization)withtheavailabilityofDBEs.Id.at730.Thestudydeterminedavailabilitythroughmultiplesources,includingbidderslists,prequalifiedbusinesslists,andothermethodsrecommendedinthefederalregulations.Id.ThestudyappliedNAICScodestodifferenttypesofcontractwork,assigninggreaterweighttocategoriesofworkinwhichIDOThadexpendedthemostmoney.Id.at731.Thisresultedina“weighted”DBEavailabilitycalculation.Id.
The2011studyexaminedprimeandsubcontractsandanecdotalevidenceconcerningraceandgenderdiscriminationintheIllinoisroadconstructionindustry,includingone‐on‐oneinterviewsandasurveyofmorethan5,000contractors.Id.at731.The2011study,thecourtsaid,containedaregressionanalysisofprivatesectordataandfounddisparitiesinearningsandbusinessownershipratesamongminoritiesandwomen,evenwhencontrollingforrace‐andgender‐neutralvariables.Id.
ThestudyconcludedthattherewasastatisticallysignificantunderutilizationofDBEsintheawardofbothprimeandsubcontractsinIllinois.Id.at731.Forexample,thecourtnotedthedifferencethestudyfoundinthepercentageofavailableprimeconstructioncontractorstothepercentageofprimeconstructioncontractsunder$500,000,andthepercentageofavailableconstructionsubcontractorstotheamountofpercentageofdollarsreceivedofconstructionsubcontracts.Id.
IDOTpresentedcertainevidencetomeasureDBEavailabilityinIllinois.Thecourtpointedoutthatthe2004studyandtwosubsequentGoal‐SettingReportswereusedinestablishingIDOT’sDBEparticipationgoal.Id.at731.The2004studyarrivedatIDOT’s22.77percentDBEparticipationgoalinaccordancewiththetwo‐stepprocessdefinedinthefederalregulations.Id.Thecourtstatedthe2004studyemployedaseven‐step“customcensus”approachtocalculatebaselineDBEavailabilityundersteponeoftheregulations.Id.
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TheprocessbeginsbyidentifyingtherelevantmarketsinwhichIDOToperatesandthecategoriesofbusinessesthataccountforthebulkofIDOTspending.Id.at731.TheindustriesandcountiesinwhichIDOTexpendsrelativelymorecontractdollarsreceiveproportionatelyhigherweightsintheultimatecalculationofstatewideDBEavailability.Id.Thestudythencountsthenumberofbusinessesintherelevantmarkets,andidentifieswhichareminority‐andwomen‐owned.Id.Toensuretheaccuracyofthisinformation,thestudyprovidesthatittakesadditionalstepstoverifytheownershipstatusofeachbusiness.Id.Understeptwooftheregulations,thestudyadjustedthisfigureto27.51percentbasedonCensusBureaudata.Id.Accordingtothestudy,theadjustmenttakesintoaccountitsconclusionthatbaselinenumbersareartificiallylowerthanwhatwouldbeexpectedinarace‐neutralmarketplace.Id.
IDOTusedseparateGoal‐SettingReportsthatcalculatedIDOT’sDBEparticipationgoalpursuanttothetwo‐stepprocessinthefederalregulations,drawingfrombidderslists,DBEdirectories,andthe2011studytocalculatebaselineDBEavailability.Id.at731.ThestudyandtheGoal–SettingReportsgavegreaterweighttothetypesofcontractworkinwhichIDOThadexpendedrelativelymoremoney.Id.at732.
CourtrejectedMidwestargumentsastothedataandevidence.ThecourtrejectedthechallengesbyMidwesttotheaccuracyofIDOT’sdata.Forexample,Midwestarguedthattheanecdotalevidencecontainedinthe2011studydoesnotprovediscrimination.Id.at732.Thecourtstated,however,whereanecdotalevidencehasbeenofferedinconjunctionwithstatisticalevidence,itmaylendsupporttothegovernment’sdeterminationthatremedialactionisnecessary.Id.Thecourtnotedthatanecdotalevidenceonitsowncouldnotbeusedtoshowageneralpolicyofdiscrimination.Id.
ThecourtrejectedanotherargumentbyMidwestthatthedatacollectedafterIDOT’simplementationoftheFederalDBEProgrammaybebiasedbecauseanythingobservedaboutthepublicsectormaybeaffectedbytheDBEProgram.Id.at732.Thecourtrejectedthatargumentfindingpost‐enactmentevidenceofdiscriminationpermissible.Id.
Midwest’smainobjectiontotheIDOTevidence,accordingtothecourt,isthatitfailedtoaccountforcapacitywhenmeasuringDBEavailabilityandunderutilization.Id.at732.MidwestarguedthatIDOT’sdisparitystudiesfailedtoruleoutcapacityasapossibleexplanationfortheobserveddisparities.Id.
IDOTarguedthatonprimecontractsunder$500,000,capacityisavariablethatmakeslittledifference.Id.at732‐733.Primecontractsofvaryingsizesunder$500,000weredistributedtoDBEsandnon‐DBEsalikeatapproximatelythesamerate.Id.at733.IDOTalsoarguedthatthroughregressionanalysis,the2011studydemonstratedfactorsotherthandiscriminationdidnotaccountforthedisparitybetweenDBEutilizationandavailability.Id.
ThecourtstatedthatdespiteMidwest’sargumentthatthe2011studytookinsufficientmeasurestoruleoutcapacityasarace‐neutralexplanationfortheunderutilizationofDBEs,theSupremeCourthasindicatedthataregressionanalysisneednottakeintoaccount“allmeasurablevariables”toruleoutrace‐neutralexplanationsforobserveddisparities.Id.at733,quotingBazemorev.Friday,478U.S.385,400(1986).
Midwestcriticismsinsufficient,speculativeandconjecture–noindependentstatisticalanalysis;IDOTfollowedNorthernContractinganddidnotexceedthefederalregulations.ThecourtfoundMidwest’scriticismsinsufficienttorebutIDOT’sevidenceofdiscriminationordiscreditIDOT’smethodsofcalculatingDBEavailability.Id.at733.
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First,thecourtsaid,the“evidence”offeredbyMidwest’sexpertreports“isspeculativeatbest.”Id.ThecourtfoundthatforareasonablejurytofindinfavorofMidwest,Midwestwouldhavetocomeforwardwith“credible,particularizedevidence”ofitsown,suchasaneutralexplanationforthedisparity,orcontrastingstatisticaldata.Id.ThecourtheldthatMidwestfailedtomaketheshowinginthiscase.Id.
Second,thecourtstatedthatIDOT’smethodofcalculatingDBEavailabilityisconsistentwiththefederalregulationsandhasbeenendorsedbytheSeventhCircuit.Id.at733.Thefederalregulations,thecourtsaid,approveavarietyofmethodsforaccuratelymeasuringready,willing,andavailableDBEs,suchastheuseofDBEdirectories,CensusBureaudata,andbidderslists.Id.Thecourtfoundthatthesearethemethodsthe2011studyadoptedincalculatingDBEavailability.Id.
ThecourtsaidthattheSeventhCircuitCourtofAppealsapprovedthe“customcensus”approachasconsistentwiththefederalregulations.Id.at733,citingtoNorthernContractingv.IllinoisDOT,473F.3dat723.ThecourtnotedtheSeventhCircuitrejectedtheargumentthatavailabilityshouldbebasedonasimplecountofregisteredandprequalifiedDBEsunderIllinoislaw,findingnorequirementinthefederalregulationsthatarecipientmustsonarrowlydefinethescopeofready,willing,andavailablefirms.Id.Thecourtalsorejectedthenotionthatanavailabilitymeasureshoulddistinguishbetweenprimeandsubcontractors.Id.at733‐734.
Thecourtheldthatthroughthe2004and2011studies,andGoal–SettingReports,IDOTprovidedevidenceofdiscriminationintheIllinoisroadconstructionindustryandamethodofDBEavailabilitycalculationthatisconsistentwithboththefederalregulationsandtheSeventhCircuitdecisioninNorthernContractv.IllinoisDOT.Id.at734.ThecourtsaidthatinresponsetotheSeventhCircuitdecisionandIDOT’sevidence,Midwestofferedonlyconjectureabouthowthesestudiessupposedfailuretoaccountforcapacitymayormaynothaveimpactedthestudies’result.Id.
ThecourtpointedoutthatalthoughMidwest’sexpert’sreports“castdoubtonthevalidityofIDOT’smethodology,theyfailedtoprovideanyindependentstatisticalanalysisorotherevidencedemonstratingactualbias.”Id.at734.Withoutthisshowing,thecourtstated,therecordfailstodemonstratealackofevidenceofdiscriminationoractualflawsinIDOT’savailabilitycalculations.Id.
Burdenonnon–DBEsubcontractors;overconcentration.Thecourtaddressedthenarrowtailoringfactorconcerningwhetheraprogram’sburdenonthirdpartiesisundueorunreasonable.ThepartiesdisagreedaboutwhethertheIDOTprogramresultedinanoverconcentrationofDBEsinthefencingandguardrailindustry.Id.at734‐735.IDOTpreparedanoverconcentrationstudycomparingthetotalnumberofprequalifiedfencingandguardrailcontractorstothenumberofDBEsthatalsoperformthattypeofworkanddeterminedthatnooverconcentrationproblemexisted.Midwestpresenteditsevidencerelatingtooverconcentration.Id.at735.ThecourtfoundthatMidwestdidnotshowIDOT’sdeterminationthatoverconcentrationdoesnotexistamongfencingandguardrailcontractorstobeunreasonable.Id.at735.
ThecourtstatedthefactIDOTsetscontractgoalsasapercentageoftotalcontractdollarsdoesnotdemonstratethatIDOTimposesanundueburdenonnon‐DBEsubcontractors,buttothecontrary,IDOTisactingwithinthescopeofthefederalregulationsthatrequiresgoalstobesetinthismanner.Id.at735.Thecourtnotedthatitrecognizessettinggoalsasapercentageoftotalcontractvalueaddressesthewidespread,indirecteffectsofdiscriminationthatmayprevent
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DBEsfromcompetingasprimesinthefirstplace,andthatasharingoftheburdenbyinnocentparties,herenon‐DBEsubcontractors,ispermissible.Id.ThecourtheldthatIDOTcarrieditsburdeninprovidingpersuasiveevidenceofdiscriminationinIllinois,andfoundthatsuchsharingoftheburdenispermissiblehere.Id.
Useofrace–neutralalternatives.ThecourtfoundthatIDOTidentifiedseveralrace‐neutralprogramsitusedtoincreaseDBEparticipation,includingitsSupportiveServices,Mentor–Protégé,andModelContractorPrograms.Id.at735.Theprogramsprovideworkshopsandtrainingthathelpsmallbusinessesbuildbondingcapacity,gainaccesstofinancialandprojectmanagementresources,andlearnaboutspecificprocurementopportunities.Id.IDOTconductedseveralstudiesincludingzero‐participationgoalscontractsinwhichtherewasnoDBEparticipationgoal,andfoundthatDBEsreceivedonly0.84percentofthetotaldollarvalueawarded.Id.
ThecourtheldIDOTwascompliantwiththefederalregulations,notingthatintheNorthernContractingv.IllinoisDOTcase,theSeventhCircuitfoundIDOTemployedalmostallofthemethodssuggestedintheregulationstomaximizeDBEparticipationwithoutresortingtorace,includingprovidingassistanceinobtainingbondingandfinancing,implementingasupportiveservicesprogram,andprovidingtechnicalassistance.Id.at735.ThecourtagreedwiththeSeventhCircuit,andfoundthatIDOThasmadeserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.
Durationandflexibility.ThecourtpointedoutthatthestatestatutethroughwhichtheFederalDBEProgramisimplementedislimitedindurationandmustbereauthorizedeverytwotofiveyears.Id.at736.ThecourtreviewedevidencethatIDOTgranted270ofthe362goodfaithwaiverrequeststhatitreceivedfrom2006to2014,andthatIDOTgranted1,002post‐awardwaiversonover$36millionincontractingdollars.Id.ThecourtnotedthatIDOTgrantedtheonlygoodfaitheffortswaiverthatMidwestrequested.Id.
ThecourtheldtheundisputedfactsestablishedthatIDOTdidnothavea“no‐waiverpolicy.”Id.at736.Thecourtfoundthatitcouldnotconcludethatthewaiverprovisionswereimpermissiblyvague,andthatIDOTtookintoconsiderationthesubstantialguidanceprovidedinthefederalregulations.Id.at736‐737.BecauseMidwest’sownexperiencedemonstratedtheflexibilityoftheFederalDBEPrograminpractice,thecourtsaiditcouldnotconcludethattheIDOTprogramamountstoanimpermissiblequotasystemthatisunconstitutionalonitsface.Id.at737.
ThecourtagainstatedthatMidwesthadnotpresentedanyaffirmativeevidenceshowingthatIDOT’simplementationoftheFederalDBEProgramimposesanundueburdenonnon‐DBEs,failstoemployrace‐neutralmeasures,orlacksflexibility.Id.at737.Accordingly,thecourtgrantedIDOT’smotionforsummaryjudgment.
Facialandas–appliedchallengestotheTollwayprogram.TheIllinoisTollwayProgramexistsindependentlyoftheFederalDBEProgram.MidwestchallengedtheTollwayProgramasunconstitutionalonitsfaceandasapplied.Id.at737.LiketheFederalandIDOTDefendants,theTollwaywasrequiredtoshowthatitscompellinginterestinremedyingdiscriminationintheIllinoisroadconstructionindustryrestsonastrongbasisinevidence.Id.TheTollwayreliedona2006disparitystudy,whichexaminedthedisparitybetweentheTollway’sutilizationofDBEsandtheiravailability.Id.
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Thestudyemployeda“customcensus”approachtocalculateDBEavailability,andexaminedtheTollway’scontractdatatodetermineutilization.Id.at737..The2006studyreportedstatisticallysignificantdisparitiesforallraceandsexcategoriesexamined.Id.Thestudyalsoconductedan“economy‐wideanalysis”examiningotherraceandsexdisparitiesinthewiderconstructioneconomyfrom1979to2002.Id.Controllingforrace‐andgender‐neutralvariables,thestudyshowedasignificantnegativecorrelationbetweenaperson’sraceorsexandtheirearningpowerandabilitytoformabusiness.Id.
Midwest’schallengestotheTollwayevidenceinsufficientandspeculative.In2013,theTollwaycommissionedanewstudy,whichthecourtnotedwasnotcomplete,buttherewasan“economy‐wideanalysis”similartotheanalysisdonein2006thatupdatedcensusdatagatheredfrom2007to2011.Id.at737‐738.Theupdatedcensusanalysis,accordingtothecourt,controlledforvariablessuchaseducation,ageandoccupationandfoundlowerearningsandratesofbusinessformationamongwomenandminoritiesascomparedtowhitemen.Id.at738.
MidwestattackedtheTollway’s2006studysimilartohowitattackedtheotherstudieswithregardtoIDOT’sDBEProgram.Id.at738.Forexample,Midwestattackedthe2006studyasbeingbiasedbecauseitfailedtotakeintoaccountcapacityindeterminingthedisparities.Id.TheTollwaydefendedthe2006studyarguingthatcapacitymetricsshouldnotbetakenintoaccountbecausetheTollwayassertedtheyarethemselvesaproductofindirectdiscrimination,theconstructionindustryiselasticinnature,andthatfirmscaneasilyrampuporratchetdowntoaccommodatethesizeofaproject.Id.TheTollwayalsoarguedthatthe“economy‐wideanalysis”revealedanegativecorrelationbetweenanindividual’sraceandsexandtheirearningpowerandabilitytoownorformabusiness,showingthattheunderutilizationofDBEsisconsistentwithdiscrimination.Id.at738.
TosuccessfullyrebuttheTollway’sevidenceofdiscrimination,thecourtstatedthatMidwestmustcomeforwardwithaneutralexplanationforthedisparity,showthattheTollway’sstatisticsareflawed,demonstratethattheobserveddisparitiesareinsignificant,orpresentcontrastingdataofitsown.Id.at738‐739.Again,thecourtfoundthatMidwestfailedtomakethisshowing,andthattheevidenceofferedthroughtheexpertreportsforMidwestwasfartoospeculativetocreateadisputedissueoffactsuitablefortrial.Id.at739.Accordingly,thecourtfoundtheTollwayDefendantsestablishedastrongbasisinevidencefortheTollwayProgram.Id.
TollwayProgramisnarrowlytailored.AstodeterminingwhethertheTollwayProgramisnarrowlytailored,MidwestalsoarguedthattheTollwayProgramimposedanundueburdenonnon‐DBEsubcontractors.LikeIDOT,theTollwaysetsindividualcontractgoalsasapercentageofthevalueoftheentirecontractbasedontheavailabilityofDBEstoperformparticularlineitems.Id.at739.
Thecourtreiteratedthatsettinggoalsasapercentageoftotalcontractdollarsdoesnotdemonstrateanundueburdenonnon‐DBEsubcontractors,andthattheTollway’smethodofgoalsettingisidenticaltothatprescribedbythefederalregulations,whichthecourtalreadyfoundtobesupportedbystrongpolicyreasons.Id.at739.Thecourtstatedthatthesharingofaremedialprogram’sburdenisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at739.ThecourtheldtheTollwayProgram’sburdenonnon‐DBEsubcontractorstobepermissible.Id.
Inaddressingtheefficacyofrace‐neutralmeasures,thecourtfoundtheTollwayimplementedrace‐neutralprogramstoincreaseDBEparticipation,includingaprogramthatallowssmaller
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contractstobeunbundledfromlargerones,aSmallBusinessInitiativethatsetsasidecontractsforsmallbusinessesonarace‐neutralbasis,partnershipswithagenciesthatprovidesupportservicestosmallbusinesses,andotherprogramsdesignedtomakeiteasierforsmallercontractorstodobusinesswiththeTollwayingeneral.Id.at739‐740.ThecourtheldtheTollway’srace‐neutralmeasuresareconsistentwiththosesuggestedunderthefederalregulationsandfoundthattheavailabilityoftheseprograms,whichmirrorIDOT’s,demonstratesserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at740.
Inconsideringtheissueofflexibility,thecourtfoundtheTollwayProgram,liketheFederalDBEProgram,providesforwaiverswhereprimecontractorsareunabletomeetDBEparticipationgoals,buthavemadegoodfaitheffortstodoso.Id.at740.LikeIDOT,thecourtsaidtheTollwayadherestothefederalregulationsindeterminingwhetherabidderhasmadegoodfaithefforts.Id.AsundertheFederalDBEProgram,theTollwayProgramalsoallowsbidderswhohavebeendeniedwaiverstoappeal.Id.
From2006to2011,thecourtstated,theTollwaygrantedwaiversonapproximately20percentofthe200primeconstructioncontractsitawarded.Id.at740.BecausetheTollwaydemonstratedthatwaiversareavailable,routinelygranted,andawardedordeniedbasedonguidancefoundinthefederalregulations,thecourtfoundtheTollwayProgramsufficientlyflexible.Id.
Midwestpresentednoaffirmativeevidence.ThecourtheldtheTollwayDefendantsprovidedastrongbasisinevidencefortheirDBEProgram,whereasMidwest,didnotcomeforwardwithanyconcrete,affirmativeevidencetoshakethisfoundation.Id.at740.ThecourtthusheldtheTollwayProgramwasnarrowlytailoredandgrantedtheTollwayDefendants’motionforsummaryjudgment.Id.
NoticeofAppeal.MidwestFenceCorporationfiledaNoticeofAppealtotheUnitedStatesCourtofAppealsfortheSeventhCircuit.See,840F.3d932(7thCir.2016)discussedabove.
11. Geyer Signal, Inc. v. Minnesota, DOT, 2014 WL 1309092 (D. Minn. March 31, 2014)
InGeyerSignal,Inc.,etal.v.MinnesotaDOT,USDOT,FederalHighwayAdministration,etal.,CaseNo.11‐CV‐321,UnitedStatesDistrictCourtfortheDistrictCourtofMinnesota,theplaintiffsGeyerSignal,Inc.anditsownerfiledthislawsuitagainsttheMinnesotaDOT(MnDOT)seekingapermanentinjunctionagainstenforcementandadeclarationofunconstitutionalityoftheFederalDBEProgramandMinnesotaDOT’simplementationoftheDBEProgramonitsfaceandasapplied.GeyerSignalsoughtaninjunctionagainsttheMinnesotaDOTprohibitingitfromenforcingtheDBEProgramor,alternatively,fromimplementingtheProgramimproperly;adeclaratoryjudgmentdeclaringthattheDBEProgramviolatestheEqualprotectionelementoftheFifthAmendmentoftheUnitedStatesConstitutionand/ortheEqualProtectionclauseoftheFourteenthAmendmenttotheUnitedStatesConstitutionandisunconstitutional,or,inthealternativethatMinnesotaDOT’simplementationoftheProgramisanunconstitutionalviolationoftheEqualProtectionClause,and/orthattheProgramisvoidforvagueness;andotherrelief.
Proceduralbackground.PlaintiffGeyerSignalisasmall,family‐ownedbusinessthatperformstrafficcontrolworkgenerallyonroadconstructionprojects.GeyerSignalisafirmownedbyaCaucasianmale,whoalsoisanamedplaintiff.
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SubsequenttothelawsuitfiledbyGeyerSignal,theUSDOTandtheFederalHighwayAdministrationfiledtheirMotiontopermitthemtointerveneasdefendantsinthiscase.TheFederalDefendant‐IntervenorsrequestedinterventiononthecaseinordertodefendtheconstitutionalityoftheFederalDBEProgramandthefederalregulationsatissue.TheFederalDefendant‐IntervenorsandtheplaintiffsfiledaStipulationthattheFederalDefendant‐Intervenorshavetherighttointerveneandshouldbepermittedtointerveneinthematter,andconsequentlytheplaintiffsdidnotcontesttheFederalDefendant‐Intervenor’sMotionforIntervention.TheCourtissuedanOrderthattheStipulationofIntervention,agreeingthattheFederalDefendant‐Intervenorsmayinterveneinthislawsuit,beapprovedandthattheFederalDefendant‐Intervenorsarepermittedtointerveneinthiscase.
TheFederalDefendantsmovedforsummaryjudgmentandtheStatedefendantsmovedtodismiss,orinthealternativeforsummaryjudgment,arguingthattheDBEProgramonitsfaceandasimplementedbyMnDOTisconstitutional.TheCourtconcludedthattheplaintiffs,GeyerSignalanditswhitemaleowner,KevinKissner,raisednogenuineissueofmaterialfactwithrespecttotheconstitutionalityoftheDBEProgramfaciallyorasapplied.Therefore,theCourtgrantedtheFederalDefendantsandtheStatedefendants’motionsforsummaryjudgmentintheirentirety.
PlaintiffsallegedthatthereisinsufficientevidenceofacompellinggovernmentalinteresttosupportaracebasedprogramforDBEuseinthefieldsoftrafficcontrolorlandscaping.(2014WL1309092at*10)Additionally,plaintiffsallegedthattheDBEProgramisnotnarrowlytailoredbecauseit(1)treatstheconstructionindustryasmonolithic,leadingtoanoverconcentrationofDBEparticipationintheareasoftrafficsignalandlandscapingwork;(2)allowsrecipientstosetcontractgoals;and(3)setsgoalsbasedonthenumberofDBEsthereare,nottheamountofworkthoseDBEscanactuallyperform.Id.*10.PlaintiffsalsoallegedthattheDBEProgramisunconstitutionallyvaguebecauseitallowsprimecontractorstousebidsfromDBEsthatarehigherthanthebidsofnon‐DBEs,providedtheincreaseinpriceisnotunreasonable,withoutdefiningwhatincreasedcostsare“reasonable.”Id.
Constitutionalclaims.TheCourtstatesthatthe“heartofplaintiffs’claimsisthattheDBEProgramandMnDOT’simplementationofitareunconstitutionalbecausetheimpactofcuringdiscriminationintheconstructionindustryisoverconcentratedinparticularsub‐categoriesofwork.”Id.at*11.TheCourtnotedthatbecauseDBEsare,bydefinition,smallbusinesses,plaintiffscontendthey“simplycannotperformthevastmajorityofthetypesofworkrequiredforfederally‐fundedMnDOTprojectsbecausetheylackthefinancialresourcesandequipmentnecessarytoconductsuchwork.Id.
Asaresult,plaintiffsclaimedthatDBEsonlycompeteincertainsmallareasofMnDOTwork,suchastrafficcontrol,trucking,andsupply,buttheDBEgoalsthatprimecontractorsmustmeetarespreadoutovertheentirecontract.Id.PlaintiffsassertedthatprimecontractorsareforcedtodisproportionatelyuseDBEsinthosesmallareasofwork,andthatnon–DBEsinthoseareasofworkareforcedtobeartheentireburdenof“correctingdiscrimination”,whilethevastmajorityofnon‐DBEsinMnDOTcontractinghaveessentiallynoDBEcompetition.Id.
PlaintiffsthereforearguedthattheDBEProgramisnotnarrowlytailoredbecauseitmeansthatanyDBEgoalsareonlybeingmetthroughafewareasofworkonconstructionprojects,whichburdennon‐DBEsinthosesectorsanddonotalleviateanyproblemsinothersectors.Id.at#11.
PlaintiffsbroughttwofacialchallengestotheFederalDBEProgram.Id.PlaintiffsallegethattheDBEProgramisfaciallyunconstitutionalbecauseitis“fatallypronetooverconcentration”
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whereDBEgoalsaremetdisproportionatelyinareasofworkthatrequirelittleoverheadandcapital.Id.at11.Second,plaintiffsallegedthattheDBEProgramisunconstitutionallyvaguebecauseitrequiresprimecontractorstoacceptDBEbidseveniftheDBEbidsarehigherthanthosefromnon‐DBEs,providedtheincreasedcostis“reasonable”withoutdefiningareasonableincreaseincost.Id.
Plaintiffsalsobroughtthreeas‐appliedchallengesbasedonMnDOT’simplementationoftheDBEProgram.Id.at12.First,plaintiffscontendedthatMnDOThasunconstitutionallyappliedtheDBEProgramtoitscontractingbecausethereisnoevidenceofdiscriminationagainstDBEsingovernmentcontractinginMinnesota.Id.Second,theycontendedthatMnDOThassetimpermissiblyhighgoalsforDBEparticipation.Finally,plaintiffsarguedthattotheextenttheDBEFederalProgramallowsMnDOTtocorrectforoverconcentration,ithasfailedtodoso,renderingitsimplementationoftheProgramunconstitutional.Id.
A.Strictscrutiny.ItisundisputedthatstrictscrutinyappliedtotheCourt’sevaluationoftheFederalDBEProgram,whetherthechallengeisfacialoras‐applied.Id.at*12.Understrictscrutiny,a“statute’srace‐basedmeasures‘areconstitutionalonlyiftheyarenarrowlytailoredtofurthercompellinggovernmentalinterests.’”Id.at*12,quotingGrutterv.Bollinger,539U.S.306,326(2003).
TheCourtnotesthattheDBEProgramalsocontainsagenderconsciousprovision,aclassificationtheCourtsaysthatwouldbesubjecttointermediatescrutiny.Id.at*12,atn.4.BecauseraceisalsousedbytheFederalDBEProgram,however,theProgrammustultimatelymeetstrictscrutiny,andtheCourtthereforeanalyzestheentireProgramforitscompliancewithstrictscrutiny.Id.
B.Facialchallengebasedonoverconcentration.TheCourtsaysthatinordertoprevailonafacialchallenge,theplaintiffmustestablishthatnosetofcircumstancesexistunderwhichtheFederalDBEProgramwouldbevalid.Id.at*12.TheCourtstatesthatplaintiffsbeartheultimateburdentoprovethattheDBEProgramisunconstitutional.Idat*.
1.Compellinggovernmentalinterest.TheCourtpointsoutthattheEighthCircuitCourtofAppealshasalreadyheldthefederalgovernmenthasacompellinginterestinnotperpetuatingtheeffectsofracialdiscriminationinitsowndistributionoffederalfundsandinremediatingtheeffectsofpastdiscriminationinthegovernmentcontractingmarketscreatedbyitsdisbursements.Id.*13,quotingAdarandConstructors,Inc.v.Slater,228F.3d1147,1165(10thCir.2000).Theplaintiffsdidnotdisputethatremedyingdiscriminationinfederaltransportationcontractingisacompellinggovernmentalinterest.Id.at*13.Inaccessingtheevidenceofferedinsupportofafindingofdiscrimination,theCourtconcludedthatdefendantshavearticulatedacompellinginterestunderlyingenactmentoftheDBEProgram.Id.
Second,theCourtstatesthatthegovernmentmustdemonstrateastrongbasisintheevidencesupportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthecompellinginterest.Id.at*13.Inassessingtheevidenceofferedinsupportofafindingofdiscrimination,theCourtconsidersbothdirectandcircumstantialevidence,includingpost‐enactmentevidenceintroducedbydefendantsaswellastheevidenceinthelegislativehistoryitself.Id.ThepartychallengingtheconstitutionalityoftheDBEProgrambearstheburdenofdemonstratingthatthegovernment’sevidencedidnotsupportaninferenceofpriordiscrimination.Id.
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Congressionalevidenceofdiscrimination:disparitystudiesandbarriers.PlaintiffsarguedthattheevidencerelieduponbyCongressinreauthorizingtheDBEProgramisinsufficientandgenerallycritiquethereports,studies,andevidencefromtheCongressionalrecordproducedbytheFederalDefendants.Id.at*13.But,theCourtfoundthatplaintiffsdidnotraiseanyspecificissueswithrespecttotheFederalDefendants’profferedevidenceofdiscrimination.Id.*14.PlaintiffshadarguedthatnopartycouldeveraffordtoretainanexperttoanalyzethenumerousstudiessubmittedasevidencebytheFederalDefendantsandfindalloftheflaws.Id.*14.FederalDefendantshadproffereddisparitystudiesfromthroughouttheUnitedStatesoveraperiodofyearsinsupportoftheFederalDBEProgram.Id.at*14.Basedonthesestudies,theFederalDefendants’consultantconcludedthatminoritiesandwomenformedbusinessesatdisproportionatelylowerratesandtheirbusinessesearnstatisticallylessthanbusinessesownedbymenornon‐minorities.Id.at*6.
TheFederalDefendants’consultantalsodescribedstudiessupportingtheconclusionthatthereiscreditdiscriminationagainstminority‐andwomen‐ownedbusinesses,concludedthatthereisaconsistentandstatisticallysignificantunderutilizationofminority‐andwomen‐ownedbusinessesinpubliccontracting,andspecificallyfoundthatdiscriminationexistedinMnDOTcontractingwhennorace‐consciouseffortswereutilized.Id.*6.TheCourtnotesthatCongresshadconsideredaplethoraofevidencedocumentingthecontinuedpresenceofdiscriminationintransportationprojectsutilizingFederaldollars.Id.at*5.
TheCourtconcludedthatneitheroftheplaintiffs’contentionsestablishedthatCongresslackedasubstantialbasisintheevidencetosupportitsconclusionthatrace‐basedremedialactionwasnecessarytoaddressdiscriminationinpublicconstructioncontracting.Id.at*14.TheCourtrejectedplaintiffs’argumentthatbecauseCongressfoundmultipleformsofdiscriminationagainstminority‐andwomen‐ownedbusiness,thatevidenceshowedCongressfailedtoalsofindthatsuchbusinessesspecificallyfacediscriminationinpubliccontracting,orthatsuchdiscriminationisnotrelevanttotheeffectthatdiscriminationhasonpubliccontracting.Id.
TheCourtreferencedthedecisioninAdarandConstructors,Inc.228F.3dat1175‐1176.InAdarand,theCourtfoundevidencerelevanttoCongressionalenactmentoftheDBEProgramtoincludethatbothrace‐basedbarrierstoentryandtheongoingrace‐basedimpedimentstosuccessfacedbyminoritysubcontractingenterprisesarecausedeitherbycontinuingdiscriminationorthelingeringeffectsofpastdiscriminationontherelevantmarket.Id.at*14.
TheCourt,citingagainwithapprovalthedecisioninAdarandConstructors,Inc.,foundtheevidencepresentedbythefederalgovernmentdemonstratestheexistenceoftwokindsofdiscriminatorybarrierstominoritysubcontractingenterprises,bothofwhichshowastronglinkbetweenracialdisparitiesinthefederalgovernment’sdisbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.Id.at*14,quoting,AdarandConstructors,Inc.228F.3dat1167‐68.Thefirstdiscriminatorybarriersaretotheformationofqualifiedminoritysubcontractingenterprisesduetoprivatediscrimination.Id.Theseconddiscriminatorybarriersaretofaircompetitionbetweenminorityandnon‐minoritysubcontractingenterprises,againduetoprivatediscrimination.Id.Bothkindsofdiscriminatorybarriersprecludeexistingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.Id.
Accordingly,theCourtfoundthatCongress’considerationofdiscriminatorybarrierstoentryforDBEsaswellasdiscriminationinexistingpubliccontractingestablishastrongbasisintheevidenceforreauthorizationoftheFederalDBEProgram.Id.at*14.
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CourtrejectsPlaintiffs’generalcritiqueofevidenceasfailingtomeettheirburdenofproof.TheCourtheldthatplaintiffs’generalcritiqueofthemethodologyofthestudiesrelieduponbytheFederalDefendantsissimilarlyinsufficienttodemonstratethatCongresslackedasubstantialbasisintheevidence.Id.at*14.TheCourtstatedthattheEighthCircuitCourtofAppealshasalreadyrejectedplaintiffs’argumentthatCongresswasrequiredtofindspecificevidenceofdiscriminationinMinnesotainordertoenactthenationalProgram.Id.at*14.
Finally,theCourtpointedoutthatplaintiffshavefailedtopresentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoandparticipationinhighwaycontracts.Id.at*15.Thus,theCourtconcludedthatplaintiffsfailedtomeettheirultimateburdentoprovethattheFederalDBEProgramisunconstitutionalonthisground.Id.at*15,quotingSherbrookeTurf,Inc.,345F.3dat971–73.
Therefore,theCourtheldthatplaintiffsdidnotmeettheirburdenofraisingagenuineissueofmaterialfactastowhetherthegovernmentmetitsevidentiaryburdeninreauthorizingtheDBEFederalProgram,andgrantedsummaryjudgmentinfavoroftheFederalDefendantswithrespecttothegovernment’scompellinginterest.Id.at*15.
2.Narrowlytailored.TheCourtstatesthatseveralfactorsareexaminedindeterminingwhetherrace‐consciousremediesarenarrowlytailored,andthatnumerousFederalCourtshavealreadyconcludedthattheDBEFederalProgramisnarrowlytailored.Id.at*15.PlaintiffsinthiscasedidnotdisputethevariousaspectsoftheFederalDBEProgramthatcourtshavepreviouslyfoundtodemonstratenarrowlytailoring.Id.Instead,plaintiffsargueonlythattheFederalDBEProgramisnotnarrowlytailoredonitsfacebecauseofoverconcentration.
Overconcentration.Plaintiffsarguedthatiftherecipientsoffederalfundsuseoverallindustryparticipationofminoritiestosetgoals,yetlimitactualDBEparticipationtoonlydefinedsmallbusinessesthatarelimitedintheworktheycanperform,thereisnowaytoavoidoverconcentrationofDBEparticipationinafew,limitedareasofMnDOTwork.Id.at*15.Plaintiffsassertedthatsmallbusinessescannotperformmostofthetypesofworkneededornecessaryforlargehighwayprojects,andiftheyhadthecapitaltodoit,theywouldnotbesmallbusinesses.Id.at*16.Therefore,plaintiffsarguedtheDBEProgramwillalwaysbeoverconcentrated.Id.
TheCourtstatesthatinorderforplaintiffstoprevailonthisfacialchallenge,plaintiffsmustestablishthattheoverconcentrationitidentifiesisunconstitutional,andthattherearenocircumstancesunderwhichtheFederalDBEProgramcouldbeoperatedwithoutoverconcentration.Id.TheCourtconcludesthatplaintiffs’claimfailsonthebasisthattherearecircumstancesunderwhichtheFederalDBEProgramcouldbeoperatedwithoutoverconcentration.Id.
First,theCourtfoundthatplaintiffsfailtoestablishthattheDBEProgramgoalswillalwaysbefulfilledinamannerthatcreatesoverconcentration,becausetheymisapprehendthenatureofthegoalsettingmandatedbytheDBEProgram.Id.at*16.TheCourtstatesthatrecipientssetgoalsforDBEparticipationbasedonevidenceoftheavailabilityofready,willingandableDBEstoparticipateonDOT‐assistedcontracts.Id.TheDBEProgram,accordingtotheCourt,necessarilytakesintoaccount,whendetermininggoals,thattherearecertaintypesofworkthatDBEsmayneverbeabletoperformbecauseofthecapitalrequirements.Id.Inotherwords,ifthereisatypeofworkthatnoDBEcanperform,therewillbenodemonstrableevidenceoftheavailabilityofready,willingandableDBEsinthattypeofwork,andthosenon‐existentDBEs
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willnotbefactoredintothelevelofDBEparticipationthatalocalitywouldexpectabsenttheeffectsofdiscrimination.Id.
Second,theCourtfoundthateveniftheDBEProgramcouldhavetheincidentaleffectofoverconcentrationinparticularareas,theDBEProgramfaciallyprovidesamplemechanismsforarecipientoffederalfundstoaddresssuchaproblem.Id.at*16.TheCourtnotesthatarecipientretainssubstantialflexibilityinsettingindividualcontractgoalsandspecificallymayconsiderthetypeofworkinvolved,thelocationofthework,andtheavailabilityofDBEsfortheworkoftheparticularcontract.Id.Ifoverconcentrationpresentsitselfasaproblem,theCourtpointsoutthatarecipientcanaltercontractgoalstofocuslessoncontractsthatrequireworkinanalreadyoverconcentratedareaandinsteadinvolveothertypesofworkwhereoverconcentrationofDBEsisnotpresent.Id.
ThefederalregulationsalsorequirecontractorstoengageingoodfaitheffortsthatrequirebreakingoutthecontractworkitemsintoeconomicallyfeasibleunitstofacilitateDBEparticipation.Id.Therefore,theCourtfound,theregulationsanticipatethepossibleissueidentifiedbyplaintiffsandrequireprimecontractorstosubdivideprojectsthatwouldotherwisetypicallyrequiremorecapitalorequipmentthanasingleDBEcanacquire.Id.Also,theCourt,statesthatrecipientsmayobtainwaiversoftheDBEProgram’sprovisionspertainingtooverallgoals,contractgoals,orgoodfaithefforts,if,forexample,localconditionsofoverconcentrationthreatenoperationoftheDBEProgram.Id.
TheCourtalsorejectsplaintiffsclaimthat49CFR§26.45(h),whichprovidesthatrecipientsarenotallowedtosubdividetheirannualgoalsinto“group‐specificgoals”,butrathermustprovideforparticipationbyallcertifiedDBEs,asevidencethattheDBEProgramleadstooverconcentration.Id.at*16.TheCourtnotesthatothercourtshaveinterpretedthisprovisiontomeanthatrecipientscannotapportionitsDBEgoalamongdifferentminoritygroups,andthereforetheprovisiondoesnotappeartoprohibitrecipientsfromidentifyingparticularoverconcentratedareasandremedyingoverconcentrationinthoseareas.Id.at*16.And,eveniftheprovisionoperatedasplaintiffssuggested,thatprovisionissubjecttowaiveranddoesnotaffectarecipient’sabilitytotailorspecificcontractgoalstocombatoverconcentration.Id.at*16,n.5.
TheCourtstateswithrespecttooverconcentrationspecifically,thefederalregulationsprovidethatrecipientsmayuseincentives,technicalassistance,businessdevelopmentprograms,mentor‐protégéprograms,andotherappropriatemeasuresdesignedtoassistDBEsinperformingworkoutsideofthespecificfieldinwhichtherecipienthasdeterminedthatnon‐DBEsareundulyburdened.Id.at*17.AllofthesemeasurescouldbeusedbyrecipientstoshiftDBEsfromareasinwhichtheyareoverconcentratedtootherareasofwork.Id.at*17.
Therefore,theCourtheldthatbecausetheDBEProgramprovidesnumerousavenuesforrecipientsoffederalfundstocombatoverconcentration,theCourtconcludedthatplaintiffs’facialchallengetotheProgramfails,andgrantedtheFederalDefendants’motionforsummaryjudgment.Id.
C.Facialchallengedbasedonvagueness.TheCourtheldthatplaintiffscouldnotmaintainafacialchallengeagainsttheFederalDBEProgramforvagueness,astheirconstitutionalchallengestotheProgramarenotbasedintheFirstAmendment.Id.at*17.TheCourtstatesthattheEighthCircuitCourtofAppealshasheldthatcourtsneednotconsiderfacialvaguenesschallengesbaseduponconstitutionalgroundsotherthantheFirstAmendment.Id.
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TheCourtthusgrantedFederalDefendants’motionforsummaryjudgmentwithrespecttoplaintiffs’facialclaimforvaguenessbasedontheallegationthattheFederalDBEProgramdoesnotdefine“reasonable”forpurposesofwhenaprimecontractorisentitledtorejectaDBEs’bidonthebasisofpricealone.Id.
D.As‐AppliedChallengestoMnDOT’sDBEProgram:MnDOT’sprogramheldnarrowlytailored.Plaintiffsbroughtthreeas‐appliedchallengesagainstMnDOT’simplementationoftheFederalDBEProgram,allegingthatMnDOThasfailedtosupportitsimplementationoftheProgramwithevidenceofdiscriminationinitscontracting,setsinappropriategoalsforDBEparticipation,andhasfailedtorespondtooverconcentrationinthetrafficcontrolindustry.Id.at*17.
1.Allegedfailuretofindevidenceofdiscrimination.TheCourtheldthatastate’simplementationoftheFederalDBEProgrammustbenarrowlytailored.Id.at*18.ToshowthatastatehasviolatedthenarrowtailoringrequirementoftheFederalDBEProgram,theCourtsaysachallengermustdemonstratethat“betterdatawasavailable”andtherecipientoffederalfunds“wasotherwiseunreasonableinundertaking[its]thoroughanalysisandinrelyingonitsresults.”Id.,quotingSherbrookTurf,Inc.at973.
Plaintiffs’expertcritiquedthestatisticalmethodsusedandconclusionsdrawnbytheconsultantforMnDOTinfindingthatdiscriminationagainstDBEsexistsinMnDOTcontractingsufficienttosupportoperationoftheDBEProgram.Id.at*18.Plaintiffs’expertalsocritiquedthemeasuresofDBEavailabilityemployedbytheMnDOTconsultantandthefacthemeasureddiscriminationinbothprimeandsubcontractingmarkets,insteadofsolelyinsubcontractingmarkets.Id.
Plaintiffspresentnoaffirmativeevidencethatdiscriminationdoesnotexist.TheCourtheldthatplaintiffs’disputeswithMnDOT’sconclusionthatdiscriminationexistsinpubliccontractingareinsufficienttoestablishthatMnDOT’simplementationoftheFederalDBEProgramisnotnarrowlytailored.Id.at*18.First,theCourtfoundthatitisinsufficienttoshowthat“datawassusceptibletomultipleinterpretations,”instead,plaintiffsmust“presentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoandparticipationinhighwaycontracts.”Id.at*18,quotingSherbrookeTurf,Inc.,345F.3dat970.Here,theCourtfound,plaintiffs’experthasnotpresentedaffirmativeevidenceuponwhichtheCourtcouldconcludethatnodiscriminationexistsinMinnesota’spubliccontracting.Id.at*18.
Asforthemeasuresofavailabilityandmeasurementofdiscriminationinbothprimeandsubcontractingmarkets,bothofthesepracticesareincludedinthefederalregulationsaspartofthemechanismsforgoalsetting.Id.at*18.TheCourtfoundthatitwouldmakelittlesensetoseparateprimecontractorandsubcontractoravailability,whenDBEswillalsocompeteforprimecontractsandanysuccesswillbereflectedintherecipient’scalculationofsuccessinmeetingtheoverallgoal.Id.at*18,quotingNorthernContracting,Inc.v.Illinois,473F.3d715,723(7thCir.2007).BecausethesefactorsarepartofthefederalregulationsdefiningstategoalsettingthattheEighthCircuitCourtofAppealshasalreadyapprovedinassessingMnDOT’scompliancewithnarrowtailoringinSherbrookeTurf,theCourtconcludedthesecriticismsdonotestablishthatMnDOThasviolatedthenarrowtailoringrequirement.Id.at*18.
Inaddition,theCourtheldthesecriticismsfailtoestablishthatMnDOTwasunreasonableinundertakingitsthoroughanalysisandrelyingonitsresults,andconsequentlydonotshowlackofnarrowtailoring.Id.at*18.Accordingly,theCourtgrantedtheStatedefendants’motionforsummaryjudgmentwithrespecttothisclaim.
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2.Allegedinappropriategoalsetting.PlaintiffssecondchallengewastotheaspirationalgoalsMnDOThassetforDBEperformancebetween2009and2015.Id.at*19.TheCourtfoundthatthegoalsettingviolationstheplaintiffsallegedarenotthetypesofviolationsthatcouldreasonablybeexpectedtorecur.Id.PlaintiffsraisednumerousargumentsregardingthedataandmethodologyusedbyMnDOTinsettingitsearliergoals.Id.But,plaintiffsdidnotdisputethateverythreeyearsMnDOTconductsanentirelynewanalysisofdiscriminationintherelevantmarketandestablishesnewgoals.Id.Therefore,disputesoverthedatacollectionandcalculationsusedtosupportgoalsthatarenolongerineffectaremoot.Id.Thus,theCourtonlyconsideredplaintiffs’challengestothe2013–2015goals.Id.
Plaintiffsraisedthesamechallengestothe2013–2015goalsasitdidtoMnDOT’sfindingofdiscrimination,namelythatthegoalsrelyonmultipleapproachestoascertaintheavailabilityofDBEsandrelyonameasurementofdiscriminationthataccountsforbothprimeandsubcontractingmarkets.Id.at*19.BecausethesechallengesidentifyonlyadifferentinterpretationofthedataanddonotestablishthatMnDOTwasunreasonableinrelyingontheoutcomeoftheconsultants’studies,plaintiffshavefailedtodemonstrateamaterialissueoffactrelatedtoMnDOT’snarrowtailoringasitrelatestogoalsetting.Id.
3.Allegedoverconcentrationinthetrafficcontrolmarket.Plaintiffs’finalargumentwasthatMnDOT’simplementationoftheDBEProgramviolatestheEqualProtectionClausebecauseMnDOThasfailedtofindoverconcentrationinthetrafficcontrolmarketandcorrectforsuchoverconcentration.Id.at*20.MnDOTpresentedanexpertreportthatreviewedfourdifferentindustriesintowhichplaintiffs’workfallsbasedonNAICscodesthatfirmsconductingtrafficcontrol‐typeworkidentifythemselvesby.Id.Afterconductingadisproportionalitycomparison,theconsultantconcludedthattherewasnotstatisticallysignificantoverconcentrationofDBEsinplaintiffs’typeofwork.
Plaintiffs’expertfoundthatthereisoverconcentration,butrelieduponsixothercontractorsthathavepreviouslybidonMnDOTcontracts,whichplaintiffsbelieveperformthesametypeofworkasplaintiff.Id.at*20.But,theCourtfoundplaintiffshaveprovidednoauthorityforthepropositionthatthegovernmentmustconformitsimplementationoftheDBEProgramtoeveryindividualbusiness’self‐assessmentofwhatindustrygrouptheyfallintoandwhatotherbusinessesaresimilar.Id.
TheCourtheldthattorequiretheStatetorespondtoandadjustitscalculationsonaccountofsuchachallengebyasinglebusinesswouldplaceanimpossibleburdenonthegovernmentbecauseanindividualbusinesscouldalwaysmakeanargumentthatsomeoftheotherentitiesintheworkareathegovernmenthasgroupeditintoarenotalike.Id.at*20.This,theCourtstates,wouldrequirethegovernmenttorunendlessiterationsofoverconcentrationanalysestosatisfyeachbusinessthatnon‐DBEsarenotbeingundulyburdenedinitsself‐definedgroup,whichwouldbequiteburdensome.Id.
BecauseplaintiffsdidnotshowthatMnDOT’srelianceonitsoverconcentrationanalysisusingNAICscodeswasunreasonableorthatoverconcentrationexistsinitstypeofworkasdefinedbyMnDOT,ithasnotestablishedthatMnDOThasviolatednarrowtailoringbyfailingtoidentifyoverconcentrationorfailingtoaddressit.Id.at*20.Therefore,theCourtgrantedtheStatedefendants’motionforsummaryjudgmentwithrespecttothisclaim.
III.ClaimsUnder42U.S.C.§1981and42U.S.C.§2000.BecausetheCourtconcludedthatMnDOT’sactionsareincompliancewiththeFederalDBEProgram,itsadherencetothatProgramcannotconstituteabasisforaviolationof§1981.Id.at*21.Inaddition,becausethe
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CourtconcludedthatplaintiffsfailedtoestablishaviolationoftheEqualProtectionClause,itgrantedthedefendants’motionsforsummaryjudgmentonthe42U.S.C.§2000dclaim.
Holding.Therefore,theCourtgrantedtheFederalDefendants’motionforsummaryjudgmentandtheStates’defendants’motiontodismiss/motionforsummaryjudgment,anddismissedalltheclaimsassertedbytheplaintiffs.
12. Dunnet Bay Construction Company v. Gary Hannig, in its official capacity as Secretary of Transportation for the Illinois DOT and the Illinois DOT, 2014 WL 552213 (C.D. Ill. 2014), affirmed, Dunnet Bay Construction Co. v. Borggren, Illinois DOT, et al., 799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015).
InDunnetBayConstructionCompanyv.GaryHannig,initsofficialcapacityasSecretaryoftheIllinoisDOTandtheIllinoisDOT,2014WL552213(C.D.Ill.Feb.12,2014),plaintiffDunnetBayConstructionCompanybroughtalawsuitagainsttheIllinoisDepartmentofTransportation(IDOT)andtheSecretaryofIDOTinhisofficialcapacitychallengingtheIDOTDBEProgramanditsimplementationoftheFederalDBEProgram,includinganallegedunwritten“nowaiver”policy,andclaimingthattheIDOT’sprogramisnotnarrowlytailored.
MotiontoDismisscertainclaimsgranted.IDOTinitiallyfiledaMotiontoDismisscertainCountsoftheComplaint.TheUnitedStatesDistrictCourtgrantedtheMotiontoDismissCountsI,IIandIIIagainstIDOTprimarilybasedonthedefenseofimmunityundertheEleventhAmendmenttotheUnitedStatesConstitution.TheOpinionheldthatclaimsinCountsIandIIagainstSecretaryHannigofIDOTinhisofficialcapacityremainedinthecase.
Inaddition,theotherCountsoftheComplaintthatremainedinthecasenotsubjecttotheMotiontoDismiss,soughtdeclaratoryandinjunctivereliefanddamagesbasedonthechallengetotheIDOTDBEProgramanditsapplicationbyIDOT.PlaintiffDunnetBayallegedtheIDOTDBEProgramisunconstitutionalbasedontheunwrittenno‐waiverpolicy,requiringDunnetBaytomeetDBEgoalsanddenyingDunnetBayawaiverofthegoalsdespiteitsgoodfaithefforts,andbasedonotherallegations.DunnetBaysoughtadeclaratoryjudgmentthatIDOT’sDBEprogramdiscriminatesonthebasisofraceintheawardoffederal‐aidhighwayconstructioncontractsinIllinois.
MotionsforSummaryJudgment.SubsequenttotheCourt’sOrdergrantingthepartialMotiontoDismiss,DunnetBayfiledaMotionforSummaryJudgment,assertingthatIDOThaddepartedfromthefederalregulationsimplementingtheFederalDBEProgram,thatIDOT’simplementationoftheFederalDBEProgramwasnotnarrowlytailoredtofurtheracompellinggovernmentalinterest,andthattherefore,theactionsofIDOTcouldnotwithstandstrictscrutiny.2014WL552213at*1.IDOTalsofiledaMotionforSummaryJudgment,allegingthatallapplicableguidelinesfromthefederalregulationswerefollowedwithrespecttotheIDOTDBEProgram,andbecauseIDOTisfederallymandatedanddidnotabuseitsfederalauthority,IDOT’sDBEProgramisnotsubjecttoattack.Id.
IDOTfurtherassertedinitsMotionforSummaryJudgmentthatthereisnoEqualProtectionviolation,claimingthatneithertherejectionofthebidbyDunnetBay,northedecisiontore‐bidtheproject,wasbaseduponDunnetBay’srace.IDOTalsoassertedthat,becauseDunnetBaywasrelyingontherightsofothersandwasnotdeniedequalopportunitytocompeteforgovernmentcontracts,DunnetBaylackedstandingtobringaclaimforracialdiscrimination.
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Factualbackground.PlaintiffDunnetBayConstructionCompanyisownedbytwowhitemalesandisengagedinthebusinessofgeneralhighwayconstruction.IthasbeenqualifiedtoworkonIDOThighwayconstructionprojects.Inaccordancewiththefederalregulations,IDOTpreparedandsubmittedtotheUSDOTforapprovalaDBEProgramgoverningfederallyfundedhighwayconstructioncontracts.Forfiscalyear2010,IDOTestablishedanoverallaspirationalDBEgoalof22.77percentforDBEparticipation,anditprojectedthat4.12percentoftheoverallgoalcouldbemetthroughraceneutralmeasuresandtheremaining18.65percentwouldrequiretheuseofrace‐consciousgoals.2014WL552213at*3.IDOTnormallyachievedsomewherebetween10and14percentparticipationbyDBEs.Id.TheoverallaspirationalgoalwasbaseduponastatewidedisparitystudyconductedonbehalfofIDOTin2004.
UtilizationgoalsundertheIDOTDBEProgramDocumentaredeterminedbaseduponanassessmentforthetypeofwork,locationofthework,andtheavailabilityofDBEcompaniestodoapartofthework.Id.at*4.Eachpayitemforaproposedcontractisanalyzedtodetermineifthereareatleasttwoready,willing,andableDBEstoperformthepayitem.Id.ThecapacityoftheDBEs,theirwillingnesstoperformtheworkintheparticulardistrict,andtheirpossessionofthenecessaryworkforceandequipmentarealsofactorsintheoveralldetermination.Id.
Initially,IDOTcalculatedtheDBEgoalfortheEisenhowerProjecttobe8percent.WhengoalswerefirstsetontheEisenhowerProject,takingintoaccounteveryitemlistedforwork,themaximumpotentialgoalforDBEparticipationfortheEisenhowerProjectwas20.3percent.Eventually,anoverallgoalofapproximately22percentwasset.Id.at*4.
Atthebidopening,DunnetBay’sbidwasthelowestreceivedbyIDOT.ItslowbidwasoverIDOT’sestimatefortheproject.DunnetBay,initsbid,identified8.2percentofitsbidforDBEs.ThesecondlowbidderprojectedDBEparticipationof22percent.DunnetBay’sDBEparticipationbiddidnotmeetthepercentageparticipationinthebiddocuments,andthusIDOTconsideredDunnetBay’sgoodfaitheffortstomeettheDBEgoal.IDOTrejectedDunnetBay’sbiddeterminingthatDunnetBayhadnotdemonstratedagoodfaithefforttomeettheDBEgoal.Id.at*9.
TheCourtfoundthatalthoughitwasthelowbidderfortheconstructionproject,DunnetBaydidnotmeetthegoalforparticipationofDBEsdespiteitsallegedgoodfaithefforts.IDOTcontendeditfollowedallapplicableguidelinesinhandlingtheDBEProgram,andthatbecauseitdidnotabuseitsfederalauthorityinadministeringtheProgram,theIDOTDBEProgramisnotsubjecttoattack.Id.at*23.IDOTfurtherassertedthatneitherrejectionofDunnetBay’sbidnorthedecisiontore‐bidtheProjectwasbasedonitsraceorthatofitsowners,andthatDunnetBaylackedstandingtobringaclaimforracialdiscriminationonbehalfofothers(i.e.,smallbusinessesoperatedbywhitemales).Id.at*23.
TheCourtfoundthatthefederalregulationsrecommendanumberofnon‐mandatory,non‐exclusiveandnon‐exhaustiveactionswhenconsideringabidder’sgoodfaitheffortstoobtainDBEparticipation.Id.at*25.ThefederalregulationsalsoprovidethestateDOTmayconsidertheabilityofotherbidderstomeetthegoal.Id.
IDOTimplementingtheFederalDBEProgramisactingasanagentofthefederalgovernmentinsulatedfromconstitutionalattackabsentshowingthestateexceededfederalauthority.TheCourtheldthatastateentitysuchasIDOTimplementingacongressionallymandatedprogrammayrely“onthefederalgovernment’scompellinginterestinremedyingtheeffectsofpassdiscriminationinthenationalconstructionmarket.”Id.at*26,quotingNorthernContractingCo.,Inc.v.Illinois,473F.3d715at720‐21(7thCir.2007).Inthese
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instances,theCourtstated,thestateisactingasanagentofthefederalgovernmentandis“insulatedfromthissortofconstitutionalattack,absentashowingthatthestateexceededitsfederalauthority.“Id.at*26,quotingNorthernContracting,Inc.,473F.3dat721.TheCourtheldthataccordingly,any“challengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.“Id.at*26,quotingNorthernContracting,Inc.,473.F.3dat722.Therefore,theCourtidentifiedthekeyissueasdeterminingifIDOTexceededitsauthoritygrantedunderthefederalrulesorifDunnetBay’schallengesareforeclosedbyNorthernContracting.Id.at*26.
TheCourtfoundthatIDOTdidinfactemployathoroughprocessbeforearrivingatthe22percentDBEparticipationgoalfortheEisenhowerProject.Id.at*26.TheCourtalsoconcluded“becausethefederalregulationsdonotspecifyaprocedureforarrivingatcontractgoals,itisnotapparenthowIDOTcouldhaveexceededitsfederalauthority.AnychallengeonthisfactorfailsunderNorthernContracting.”Id.at*26.Therefore,theCourtconcludedthereisnobasisforfindingthattheDBEgoalwasarbitrarilysetorthatIDOTexceededitsfederalauthoritywithrespecttothisfactor.Id.at*27.
The“no‐waiver”policy.TheCourtheldthattherewasnotano‐waiverpolicyconsideringallthetestimonyandfactualevidence.Inparticular,theCourtpointedoutthatawaiverwasinfactgrantedinconnectionwiththesamebidlettingatissueinthiscase.Idat*27.TheCourtfoundthatIDOTgrantedawaiveroftheDBEparticipationgoalforanotherconstructioncontractoronadifferentcontract,butunderthesamebidlettinginvolvedinthismatter.Id.
Thus,theCourtheldthatDunnetBay’sassertionthatIDOTadopteda“no‐waiver”policywasunsupportedandcontrarytotherecordevidence.Id.at*27.TheCourtfoundtheundisputedfactsestablishedthatIDOTdidnothavea“no‐waiver”policy,andthatIDOTdidnotexceeditsfederalauthoritybecauseitdidnotadopta“no‐waiver”policy.Id.Therefore,theCourtagainconcludedthatanychallengebyDunnetBayonthisfactorfailedpursuanttotheNorthernContractingdecision.
IDOT’sdecisiontorejectDunnetBay’sbidbasedonlackofgoodfaitheffortsdidnotexceedIDOT’sauthorityunderfederallaw.TheCourtfoundthatIDOThassignificantdiscretionunderfederalregulationsandisoftencalledupontomakea“judgmentcall”regardingtheeffortsofthebidderintermsofestablishinggoodfaithattempttomeettheDBEgoals.Id.at*28.TheCourtstateditwasunabletoconcludethatIDOTerredindeterminingDunnetBaydidnotmakeadequategoodfaithefforts.Id.TheCourtsurmisedthatthestrongestevidencethatDunnetBaydidnottakeallnecessaryandreasonablestepstoachievetheDBEgoalisthatitsDBEparticipationwasunder9percentwhileotherbidderswereabletoreachthe22percentgoal.Id.Accordingly,theCourtconcludedthatIDOT’sdecisionrejectingDunnetBay’sbidwasconsistentwiththeregulationsanddidnotexceedIDOT’sauthorityunderthefederalregulations.Id.
TheCourtalsorejectedDunnetBay’sargumentthatIDOTfailedtoprovideDunnetBaywithawrittenexplanationastowhyitsgoodfaitheffortswerenotsufficient,andthusthereweredeficiencieswiththereconsiderationofDunnetBay’sbidandeffortsasrequiredbythefederalregulations.Id.at*29.TheCourtfounditwasunabletoconcludethatatechnicalviolationsuchastoprovideDunnetBaywithawrittenexplanationwillprovideanyrelieftoDunnetBay.Id.Additionally,theCourtfoundthatbecauseIDOTrebidtheproject,DunnetBaywasnotprejudicedbyanydeficiencieswiththereconsideration.Id.
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TheCourtemphasizedthatbecauseofthedecisiontorebidtheproject,IDOTwasnotevenrequiredtoholdareconsiderationhearing.Id.at*24.BecausethedecisiononreconsiderationastogoodfaitheffortsdidnotexceedIDOT’sauthorityunderfederallaw,theCourtheldDunnetBay’sclaimfailedundertheNorthernContractingdecision.Id.
DunnetBaylackedstandingtoraiseanequalprotectionclaim.TheCourtfoundthatDunnetBaywasnotdisadvantagedinitsabilitytocompeteagainstaraciallyfavoredbusiness,andneitherIDOT’srejectionofDunnetBay’sbidnorthedecisiontorebidwasbasedontheraceofDunnetBay’sownersoranyclass‐basedanimus.Idat*29.TheCourtstatedthatDunnetBaydidnotpointtoanyotherbusinessthatwasgivenacompetitiveadvantagebecauseoftheDBEgoals.Id.DunnetBaydidnotciteanycaseswhichinvolveplaintiffsthataresimilarlysituatedtoit‐businessesthatarenotatacompetitivedisadvantageagainstminority‐ownedcompaniesorDBEs‐andhavebeendeterminedtohavestanding.Id.at*30.
TheCourtconcludedthatanycompanysimilarlysituatedtoDunnetBayhadtomeetthesameDBEgoalunderthecontract.Id.DunnetBay,theCourtheld,wasnotatacompetitivedisadvantageand/orunabletocompeteequallywiththosegivenpreferentialtreatment.Id.
DunnetBaydidnotpointtoanothercontractorthatdidnothavetomeetthesamerequirementsitdid.TheCourtthusconcludedthatDunnetBaylackedstandingtoraiseanequalprotectionchallengebecauseithadnotsufferedaparticularizedinjurythatwascausedbyIDOT.Id.at*30.DunnetBaywasnotdeprivedoftheabilitytocompeteonanequalbasis.Id.Also,basedontheamountofitsprofits,DunnetBaydidnotqualifyasasmallbusiness,andtherefore,itlackedstandingtovindicatetherightsofahypotheticalwhite‐ownedsmallbusiness.Id.at*30.BecausetheCourtfoundthatDunnetBaywasnotdeniedtheabilitytocompeteonanequalfootinginbiddingonthecontract,DunnetBaylackedstandingtochallengetheDBEProgrambasedontheEqualProtectionClause.Id.at*30.
DunnetBaydidnotestablishequalprotectionviolationevenifithadstanding.TheCourtheldthatevenifDunnetBayhadstandingtobringanequalprotectionclaim,IDOTstillisentitledtosummaryjudgment.TheCourtstatedtheSupremeCourthasheldthatthe“injuryinfact”inanequalprotectioncasechallengingaDBEProgramisthedenialofequaltreatmentresultingfromtheimpositionofthebarrier,nottheultimateinabilitytoobtainthebenefit.Id.at*31.DunnetBay,theCourtsaid,impliedthatbutforthealleged“no‐waiver”policyandDBEgoalswhichwerenotnarrowlytailoredtoaddressdiscrimination,itwouldhavebeenawardedthecontract.TheCourtagainnotedtherecordestablishedthatIDOTdidnothavea“no‐waiver”policy.Id.at*31.
TheCourtalsofoundthatbecausethegravamenofequalprotectionliesnotinthefactofdeprivationofarightbutintheinvidiousclassificationofpersons,itdoesnotappearDunnetBaycanassertaviableclaim.Id.at*31.TheCourtstateditisunawareofanyauthoritywhichsuggeststhatDunnetBaycanestablishanequalprotectionviolationevenifitcouldshowthatIDOTfailedtocomplywiththeregulationsrelatingtotheDBEProgram.Id.TheCourtsaidthatevenifIDOTdidemploya“no‐waiverpolicy,”suchapolicywouldnotconstituteanequalprotectionviolationbecausethefederalregulationsdonotconferspecificentitlementsuponanyindividuals.Id.at*31.
Inordertosupportanequalprotectionclaim,theplaintiffwouldhavetoestablishitwastreatedlessfavorablythananotherentitywithwhichitwassimilarlysituatedinallmaterialrespects.Id.at*51.Basedontherecord,theCourtstateditcouldonlyspeculatewhetherDunnetBayoranotherentitywouldhavebeenawardedacontractwithoutIDOT’sDBEProgram.But,theCourt
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founditneednotspeculateastowhetherDunnetBayoranothercompanywouldhavebeenawardedthecontract,becausewhatisimportantforequalprotectionanalysisisthatDunnetBaywastreatedthesameasotherbidders.Id.at*31.EverybidderhadtomeetthesamepercentagegoalforsubcontractingtoDBEsormakegoodfaithefforts.Id.BecauseDunnetBaywasheldtothesamestandardsaseveryotherbidder,itcannotestablishitwasthevictimofdiscriminationpursuanttotheEqualProtectionClause.Id.Therefore,IDOT,theCourtheld,isentitledtosummaryjudgmentonDunnetBay’sclaimsundertheEqualProtectionClauseandunderTitleVI.
Conclusion.TheCourtconcludedIDOTisentitledtosummaryjudgment,holdingDunnetBaylackedstandingtoraiseanequalprotectionchallengebasedonrace,andthatevenifDunnetBayhadstanding,DunnetBaywasunabletoshowthatitwouldhavebeenawardedthecontractintheabsenceofanyviolation.Id.at*32.Anyotherfederalclaims,theCourtheld,wereforeclosedbytheNorthernContractingdecisionbecausethereisnoevidenceIDOTexceededitsauthorityunderfederallaw.Id.Finally,theCourtfoundDunnetBayhadnotestablishedthelikelihoodoffutureharm,andthuswasnotentitledtoinjunctiverelief.
13. M.K. Weeden Construction v. State of Montana, Montana Department of Transportation, et al., 2013 WL 4774517 (D. Mont.) (September 4, 2013)
Thiscaseinvolvedachallengebyaprimecontractor,M.K.WeedenConstruction,Inc.(“Weeden”)againsttheStateofMontana,MontanaDepartmentofTransportationandothers,totheDBEProgramadoptedbyMDTimplementingtheFederalDBEProgramat49CFRPart26.WeedensoughtanapplicationforTemporaryRestrainingOrderandPreliminaryInjunctionagainsttheStateofMontanaandtheMDT.
Factualbackgroundandclaims.Weedenwasthelowdollarbidderwithabidof$14,770,163.01ontheArrowCreekSlideProject.Theprojectreceivedfederalfunding,andassuch,wasrequiredtocomplywiththeUSDOT’sDBEProgram.2013WL4774517at*1.MDThadestablishedanoverallgoalof5.83percentDBEparticipationinMontana’shighwayconstructionprojects.OntheArrowCreekSlideProject,MDTestablishedaDBEgoalof2percent.Id.
PlaintiffWeeden,althoughitsubmittedthelowdollarbid,didnotmeetthe2percentDBErequirement.2013WL4774517at*1.Weedenclaimedthatitsbidreliedupononly1.87percentDBEsubcontractors(althoughthecourtpointsoutthatWeeden’sbidactuallyidentifiedonly.81percentDBEsubcontractors).Weedenwastheonlybidderoutofthesixbidderswhodidnotmeetthe2percentDBEgoal.Theotherfivebiddersexceededthe2percentgoal,withbidsrangingfrom2.19percentDBEparticipationto6.98percentDBEparticipation.Id.at*2.
WeedenattemptedtoutilizeagoodfaithexceptiontotheDBErequirementundertheFederalDBEProgramandMontana’sDBEProgram.MDT’sDBEParticipationReviewCommitteeconsideredWeeden’sgoodfaithdocumentationandfoundthatWeeden’sbidwasnon‐compliantastotheDBErequirement,andthatWeedenfailedtodemonstrategoodfaitheffortstosolicitDBEsubcontractorparticipationinthecontract.2013WL4774517at*2.WeedenappealedthatdecisiontotheMDTDBEReviewBoardandappearedbeforetheBoardatahearing.TheDBEReviewBoardaffirmedtheCommitteedecisionfindingthatWeeden’sbidwasnotincompliancewiththecontractDBEgoalandthatWeedenhadfailedtomakeagoodfaithefforttocomplywiththegoal.Id.at*2.TheDBEReviewBoardfoundthatWeedenhadreceivedaDBEbidfortrafficcontrol,butWeedendecidedtoperformthatworkitselfinordertoloweritsbidamount.Id.at*2.Additionally,theDBEReviewBoardfoundthatWeeden’smassemailto
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158DBEsubcontractorswithoutanyfollowupwasaproformaeffortnotcreditedbytheReviewBoardasanactiveandaggressiveefforttoobtainDBEparticipation.Id.
PlaintiffWeedensoughtaninjunctioninfederaldistrictcourtagainstMDTtopreventitfromlettingthecontracttoanotherbidder.WeedenclaimedthatMDT’sDBEProgramviolatedtheEqualProtectionClauseoftheU.S.ConstitutionandtheMontanaConstitution,assertingthattherewasnosupportingevidenceofdiscriminationintheMontanahighwayconstructionindustry,andtherefore,therewasnogovernmentinterestthatwouldjustifyfavoringDBEentities.2013WL4774517at*2.WeedenalsoclaimedthatitsrighttoDueProcessundertheU.S.ConstitutionandMontanaConstitutionhadbeenviolated.Specifically,WeedenclaimedthatMDTdidnotprovidereasonablenoticeofthegoodfaitheffortrequirements.Id.
NoproofofirreparableharmandbalanceofequitiesfavorMDT.First,theCourtfoundthatWeedendidnotproveforacertaintythatitwouldsufferirreparableharmbasedontheCourt’sconclusionthatinthepastfouryears,Weedenhadobtainedsixstatehighwayconstructioncontractsvaluedatapproximately$26million,andthatMDThad$50millionmoreinhighwayconstructionprojectstobeletduringtheremainderof2013alone.2013WL4774517at*3.Thus,theCourtconcludedthatasdemonstratedbyitspastperformance,WeedenhasthecapacitytoobtainotherhighwayconstructioncontractsandthusthereislittleriskofirreparableinjuryintheeventMDTawardstheProjecttoanotherbidder.Id.
Second,theCourtfoundthebalanceoftheequitiesdidnottipinWeeden’sfavor.2013WL4774517at*3.WeedenhadassertedthatMDTandUSDOTrulesregardinggoodfaitheffortstoobtainDBEsubcontractorparticipationareconfusing,non‐specificandcontradictory.Id.TheCourtheldthatitisobvioustheotherfivebidderswereabletomeetandexceedthe2percentDBErequirementwithoutanydifficultywhatsoever.Id.TheCourtfoundthatWeeden’sbidisnotresponsivetotherequirements,thereforeisnotandcannotbethelowestresponsiblebid.Id.Thebalanceoftheequities,accordingtotheCourt,donottiltinfavorofWeeden,whodidnotmeettherequirementsofthecontract,especiallywhennumerousotherbiddersablydemonstratedanabilitytomeetthoserequirements.Id.
Nostanding.TheCourtalsoquestionedwhetherWeedenraisedanyseriousissuesonthemeritsofitsequalprotectionclaimbecauseWeedenisaprimecontractorandnotasubcontractor.SinceWeedenisaprimecontractor,theCourthelditisclearthatWeedenlacksArticleIIIstandingtoassertitsequalprotectionclaim.Id.at*3.TheCourtheldthataprimecontractor,suchasWeeden,isnotpermittedtochallengeMDT’sDBEProjectasifitwereanon‐DBEsubcontractorbecauseWeedencannotshowthatitwassubjectedtoaracialorgender‐basedbarrierinitscompetitionfortheprimecontract.Id.at*3.BecauseWeedenwasnotdeprivedoftheabilitytocompeteonequalfootingwiththeotherbidders,theCourtfoundWeedensufferednoequalprotectioninjuryandlacksstandingtoassertanequalprotectionclaimasitwereanon‐DBEsubcontractor.Id.
CourtappliesAGCv.CaliforniaDOTcase;evidencesupportsnarrowlytailoredDBEprogram.Significantly,theCourtfoundthatevenifWeedenhadstandingtopresentanequalprotectionclaim,MDTpresentedsignificantevidenceofunderutilizationofDBE’sgenerally,evidencethatsupportsanarrowlytailoredraceandgenderpreferenceprogram.2013WL4774517at*4.Moreover,theCourtnotedthatalthoughWeedenpointsoutthatsomebusinesscategoriesinMontana’shighwayconstructionindustrydonothaveahistoryofdiscrimination(namely,thecategoryofconstructionbusinessesincontrasttothecategoryofprofessionalbusinesses),theNinthCircuit“hasrecentlyrejectedasimilarargumentrequiringtheevidenceofdiscriminationineverysinglesegmentofthehighwayconstructionindustrybeforea
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preferenceprogramcanbeimplemented.”Id.,citingAssociatedGeneralContractorsv.CaliforniaDept.ofTransportation,713F.3d1187(9thCir.2013)(holdingthatCaltrans’DBEprogramsurvivedstrictscrutiny,wasnarrowlytailored,didnotviolateequalprotection,andwassupportedbysubstantialstatisticalandanecdotalevidenceofdiscrimination).
TheCourtstatedthatparticularlyrelevantinthiscase,“theNinthCircuitheldthatCalifornia’sDBEprogramneednotisolateconstructionfromengineeringcontractsorprimefromsubcontractstodeterminewhethertheevidenceineachandeverycategorygivesrisetoaninferenceofdiscrimination.”Id.at4,citingAssociatedGeneralContractorsv.CaliforniaDOT,713F.3dat1197.Instead,accordingtotheCourt,California–and,byextension,Montana–“isentitledtolookattheevidence‘initsentirety’todeterminewhetherthereare‘substantialdisparitiesinutilizationofminorityfirms’practicedbysomeelementsoftheconstructionindustry.”2013WL4774517at*4,quotingAGCv.CaliforniaDOT,713F.3dat1197.TheCourt,alsoquotingthedecisioninAGCv.CaliforniaDOT,said:“ItisenoughthattheanecdotalevidencesupportsCaltrans’statisticaldatashowingapervasivepatternofdiscrimination.”Id.at*4,quotingAGCv.CaliforniaDOT,713F.3dat1197.
TheCourtpointedoutthatthereisnoallegationthatMDThasexceededanyfederalrequirementordoneotherthancompliedwithUSDOTregulations.2013WL4774517at*4.Therefore,theCourtconcludedthatgiventhesimilaritiesbetweenWeeden’sclaimandAGC’sequalprotectionclaimagainstCaliforniaDOTintheAGCv.CaliforniaDOTcase,itdoesnotappearlikelythatWeedenwillsucceedonthemeritsofitsequalprotectionclaim.Id.at*4.
DueProcessclaim.TheCourtalsorejectedWeeden’sbaldassertionthatithasaprotectedpropertyrightinthecontractthathasnotbeenawardedtoitwherethegovernmentagencyretainsdiscretiontodeterminetheresponsivenessofthebid.TheCourtfoundthatMontanalawrequiresthatanawardofapubliccontractforconstructionmustbemadetothelowestresponsiblebidderandthattheapplicableMontanastatuteconfersuponthegovernmentagencybroaddiscretionintheawardofapublicworkscontract.Thus,alowerbiddersuchasWeedenrequiresnovestedpropertyrightinacontractuntilthecontracthasbeenawarded,whichhereobviouslyhadnotyetoccurred.2013WL4774517at*5.Inanyevent,theCourtnotedthatWeedenwasgrantednotice,hearingandappealforMDT’sdecisiondenyingthegoodfaithexceptiontotheDBEcontractrequirement,andthereforeitdoesnotappearlikelythatWeedenwouldsucceedonitsdueprocessclaim.Id.at*5.
HoldingandVoluntaryDismissal.TheCourtdeniedplaintiffWeeden’sapplicationforTemporaryRestrainingOrderandPreliminaryInjunction.Subsequently,WeedenfiledaNoticeofVoluntaryDismissalWithoutPrejudiceonSeptember10,2013.
14. Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., U.S.D.C., E.D. Cal. Civil Action No. S‐09‐1622, Slip Opinion (E.D. Cal. April 20, 2011), appeal dismissed based on standing, on other grounds Ninth Circuit held Caltrans’ DBE Program constitutional, Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187 (9th Cir. 2013)
ThiscaseinvolvedachallengebytheAssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.(“AGC”)againsttheCaliforniaDepartmentofTransportation(“Caltrans”),totheDBEprogramadoptedbyCaltransimplementingtheFederalDBEProgramat49CFRPart26.
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TheAGCsoughtaninjunctionagainstCaltransenjoiningitsuseoftheDBEprogramanddeclaratoryrelieffromthecourtdeclaringtheCaltransDBEprogramtobeunconstitutional.
Caltrans’DBEprogramseta13.5percentDBEgoalforitsfederally‐fundedcontracts.The13.5percentgoal,asimplementedbyCaltrans,includedutilizinghalfrace‐neutralmeansandhalfrace‐consciousmeanstoachievethegoal.SlipOpinionTranscriptat42.Caltransdidnotincludeallminoritiesintherace‐consciouscomponentofitsgoal,excludingHispanicmalesandSubcontinentAsianAmericanmales.Id.at42.Accordingly,therace‐consciouscomponentoftheCaltransDBEprogramappliedonlytoAfricanAmericans,NativeAmericans,AsianPacificAmericans,andwhitewomen.Id.
CaltransestablishedthisgoalanditsDBEprogramfollowingadisparitystudyconductedbyBBCResearch&Consulting,whichincludedgatheringstatisticalandanecdotalevidenceofraceandgenderdisparitiesintheCaliforniaconstructionindustry.SlipOpinionTranscriptat42.
Thepartiesfiledmotionsforsummaryjudgment.ThedistrictcourtissueditsrulingatthehearingonthemotionsforsummaryjudgmentgrantingCaltrans’motionforsummaryjudgmentinsupportofitsDBEprogramanddenyingthemotionforsummaryjudgmentfiledbytheplaintiffs.SlipOpinionTranscriptat54.ThecourtheldCaltrans’DBEprogramapplyingandimplementingtheprovisionsoftheFederalDBEProgramisvalidandconstitutional.Id.at56.
ThedistrictcourtanalyzedCaltrans’implementationoftheDBEprogramunderthestrictscrutinydoctrineandfoundtheburdenofjustifyingdifferenttreatmentbyethnicityorgenderisonthegovernment.ThedistrictcourtappliedtheNinthCircuitCourtofAppealsrulinginWesternStatesPavingCompanyv.WashingtonStateDOT,407F.3d983(9thCir.2005).Thecourtstatedthatthefederalgovernmenthasacompellinginterest“inensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectsofeitherpublicorprivatediscriminationwithinthetransportationcontractingindustry.”SlipOpinionTranscriptat43,quotingWesternStatesPaving,407F.3dat991,citingCityofRichmondv.J.A.CrosonCompany,488U.S.469(1989).
ThedistrictcourtpointedoutthattheNinthCircuitinWesternStatesPavingandtheTenthCircuitCourtofAppealsandtheEighthCircuitCourtofAppealshaveupheldthefacialvalidityoftheFederalDBEProgram.
ThedistrictcourtstatedthatbasedonWesternStatesPaving,thecourtisrequiredtolookattheCaltransDBEprogramitselftoseeifthereisastrongbasisinevidencetoshowthatCaltransisactingforaproperpurposeandiftheprogramitselfhasbeennarrowlytailored.SlipOpinionTranscriptat45.Thecourtconcludedthatnarrowtailoring“doesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butitdoesrequireserious,good‐faithconsiderationofworkablerace‐neutralalternatives.”SlipOpinionTranscriptat45.
ThedistrictcourtidentifiedtheissuesaswhetherCaltranshasestablishedacompellinginterestsupportedbyastrongbasisinevidenceforitsprogram,anddoesCaltrans’race‐consciousprogrammeetthestrictscrutinyrequired.SlipOpinionTranscriptat51‐52.ThecourtalsophrasedtheissueaswhethertheCaltransDBEprogram,“whichdoesgivepreferencebasedonraceandsex,whetherthatprogramisnarrowlytailoredtoremedytheeffectsofidentifieddiscrimination…”,andwhetherCaltranshascompliedwiththeNinthCircuit’sguidanceinWesternStatesPaving.SlipOpinionTranscriptat52.
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Thedistrictcourtheld“thatCaltranshasdonewhattheNinthCircuithasrequiredittodo,whatthefederalgovernmenthasrequiredittodo,andthatitclearlyhasimplementedaprogramwhichissupportedbyastrongbasisinevidencethatgivesrisetoacompellinginterest,andthatitsrace‐consciousprogram,theaspectoftheprogramthatdoesimplementrace‐consciousalternatives,itdoesunderastrict‐scrutinystandardmeettherequirementthatitbenarrowlytailoredassetforthinthecaselaw.”SlipOpinionTranscriptat52.
Thecourtrejectedtheplaintiff’sargumentsthatanecdotalevidencefailedtoidentifyspecificactsofdiscrimination,finding“therearenumerousinstancesofspecificdiscrimination.”SlipOpinionTranscriptat52.ThedistrictcourtfoundthataftertheWesternStatesPavingcase,Caltranswenttoaraciallyneutralprogram,andtheevidenceshowedthattheprogramwouldnotmeetthegoalsofthefederally‐fundedprogram,andthefederalgovernmentbecameconcernedaboutwhatwasgoingonwithCaltrans’programapplyingonlyrace‐neutralalternatives.Id.at52‐53.ThecourtthenpointedoutthatCaltransengagedinan“extensivedisparitystudy,anecdotalevidence,bothofwhichiswhatwasmissing”intheWesternStatesPavingcase.Id.at53.
ThecourtconcludedthatCaltrans“didexactlywhattheNinthCircuitrequired”andthatCaltranshasgone“asfarasisrequired.”SlipOpinionTranscriptat53.
Thecourtheldthatasamatteroflaw,theCaltransDBEprogramis,underWesternStatesPavingandtheSupremeCourtcases,“clearlyconstitutional,”and“narrowlytailored.”SlipOpinionTranscriptat56.ThecourtfoundtherearesignificantdifferencesbetweenCaltrans’programandtheprogramintheWesternStatesPavingcase.Id.at54‐55.InWesternStatesPaving,thecourtsaidtherewerenostatisticalstudiesperformedtotryandestablishthediscriminationinthehighwaycontractingindustry,andthatWashingtonsimplycomparedtheproportionofDBEfirmsinthestatewiththepercentageofcontractingfundsawardedtoDBEsonrace‐neutralcontractstocalculateadisparity.Id.at55.
ThedistrictcourtstatedthattheNinthCircuitinWesternStatesPavingfoundthistobeoversimplifiedandentitledtolittleweight“becauseitdidnottakeintoaccountfactorsthatmayaffecttherelativecapacityofDBEstoundertakecontractingwork.”SlipOpinionTranscriptat55.Whereas,thedistrictcourtheldthe“disparitystudyusedbyCaltranswasmuchmorecomprehensiveandaccountedforthisandotherfactors.”Id.at55.ThedistrictnotedthattheStateofWashingtondidnotintroduceanyanecdotalinformation.Thedifferenceinthiscase,thedistrictcourtfound,“isthatthedisparitystudyincludesbothextensivestatisticalevidence,aswellasanecdotalevidencegatheredthroughsurveysandpublichearings,whichsupportthestatisticalfindingsoftheunderutilizationfacedbyDBEswithouttheDBEprogram.Addtothattheanecdotalevidencesubmittedinsupportofthesummaryjudgmentmotionaswell.AndthisevidencebeforetheCourtclearlysupportsafindingthatthisprogramisconstitutional.”Id.at56.
Thecourtheldthatbecause“Caltrans’DBEprogramisbasedonsubstantialstatisticalandanecdotalevidenceofdiscriminationintheCaliforniacontractingindustryandbecausetheCourtfindsthatitisnarrowlytailored,theCourtupholdstheprogramasconstitutional.”SlipOpinionTranscriptat56.
ThedecisionofthedistrictcourtwasappealedtotheNinthCircuitCourtofAppeals.TheNinthCircuitdismissedtheappealbasedonlackofstandingbytheAGC,SanDiegoChapter,butruledonthemeritsonalternativegroundsholdingconstitutionalCaltrans’DBEProgram.SeediscussionaboveofAGC,SDCv.Cal.DOT.
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15. Geod Corporation v. New Jersey Transit Corporation, et al., 746 F. Supp.2d 642, 2010 WL 4193051 (D. N. J. October 19, 2010)
Plaintiffs,whitemaleownersofGeodCorporation(“Geod”),broughtthisactionagainsttheNewJerseyTransitCorporation(“NJT”)allegingdiscriminatorypracticesbyNJTindesigningandimplementingtheFederalDBEProgram.746F.Supp2dat644.TheplaintiffsallegedthattheNJT’sDBEprogramviolatedtheUnitedStatesConstitution,42U.S.C.§1981,TitleVIoftheCivilRightsActof1964,42U.S.C.§2000(d)andstatelaw.ThedistrictcourtpreviouslydismissedthecomplaintagainstallDefendantsexceptforNJTandconcludedthatagenuineissuematerialfactexistedonlyastowhetherthemethodusedbyNJTtodetermineitsDBEgoalsduring2010weresufficientlynarrowlytailored,andthusconstitutional.Id.
NewJerseyTransitProgramandDisparityStudy.NJTreliedontheanalysisofconsultantsfortheestablishmentoftheirgoalsfortheDBEprogram.Thestudyestablishedtheeffectsofpastdiscrimination,thedistrictcourtfound,bylookingatthedisparityandutilizationofDBEscomparedtotheiravailabilityinthemarket.Id.at648.Thestudyusedseveraldatasetsandaveragedthefindingsinordertocalculatethisratio,including:(1)theNewJerseyDBEvendorList;(2)aSurveyofMinority‐OwnedBusinessEnterprises(SMOBE)andaSurveyofWomen‐OwnedEnterprises(SWOBE)asdeterminedbytheU.S.CensusBureau;and(3)detailedcontractfilesforeachracialgroup.Id.
Thecourtfoundthestudydeterminedanaverageannualutilizationof23percentforDBEs,andtoexaminepastdiscrimination,severalanalyseswereruntomeasurethedisparityamongDBEsbyrace.Id.at648.TheStudyfoundthatallbutonecategorywasunderutilizedamongtheracialandethnicgroups.Id.AllgroupsotherthanAsianDBEswerefoundtobeunderutilized.Id.
Thecourtheldthatthetestutilizedbythestudy,“conductedtoestablishapatternofdiscriminationagainstDBEs,provedthatdiscriminationoccurredagainstDBEsduringthepre‐qualificationprocessandinthenumberofcontractsthatareawardedtoDBEs.Id.at649.ThecourtfoundthatDBEsaremorelikelythannon‐DBEstobepre‐qualifiedforsmallconstructioncontracts,butarelesslikelytopre‐qualifyforlargerconstructionprojects.Id.
Forfiscalyear2010,thestudyconsultantfollowedthe“three‐stepprocesspursuanttoUSDOTregulationstoestablishtheNJTDBEgoal.”Id.at649.First,theconsultantdetermined“thebasefigurefortherelativeavailabilityofDBEsinthespecificindustriesandgeographicalmarketfromwhichDBEandnon‐DBEcontractorsaredrawn.”Id.Indeterminingthebasefigure,theconsultant(1)definedthegeographicmarketplace,(2)identified“therelevantindustriesinwhichNJTransitcontracts,”and(3)calculated“theweightedavailabilitymeasure.”Id.at649.
Thecourtfoundthatthestudyconsultantusedpoliticaljurisdictionalmethodsandvirtualmethodstopinpointthelocationofcontractsand/orcontractorsforNJT,anddeterminedthatthegeographicalmarketplaceforNJTcontractsincludedNewJersey,NewYorkandPennsylvania.Id.at649.TheconsultantusedcontractfilesobtainedfromNJTanddataobtainedfromDun&BradstreettoidentifytheindustrieswithwhichNJTcontractsinthesegeographicalareas.Id.TheconsultantthenusedexistingandestimatedexpendituresintheseparticularindustriestodetermineweightscorrespondingtoNJTcontractingpatternsinthedifferentindustriesforuseintheavailabilityanalysis.Id.
TheavailabilityofDBEswascalculatedbyusingthefollowingdata:UnifiedCertificationProgramBusinessDirectoriesforthestatesofNewJersey,NewYorkandPennsylvania;NJTVendorList;Dun&Bradstreetdatabase;2002SurveyofSmallBusinessOwners;andNJTPre‐
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QualificationList.Id.at649‐650.Theavailabilityrateswerethen“calculatedbycomparingthenumberofready,willing,andableminorityandwomen‐ownedfirmsinthedefinedgeographicmarketplacetothetotalnumberofready,willing,andablefirmsinthesamegeographicmarketplace.Id.TheavailabilityratesineachindustrywereweighedinaccordancewithNJTexpenditurestodetermineabasefigure.Id.
Second,theconsultantadjustedthebasefigureduetoevidenceofdiscriminationagainstDBEprimecontractorsanddisparitiesinsmallpurchasesandconstructionpre‐qualification.Id.at650.Thediscriminationanalysisexamineddiscriminationinsmallpurchases,discriminationinpre‐qualification,tworegressionanalyses,anEssexCountydisparitystudy,marketdiscrimination,andpreviousutilization.Id.at650.
TheFinalRecommendationsReportnotedthatthereweresizeabledifferencesinthesmallpurchasesawardstoDBEsandnon‐DBEswiththeawardstoDBEsbeingsignificantlysmaller.Id.at650.DBEswerealsofoundtobelesslikelytobepre‐qualifiedforcontractsover$1millionincomparisontosimilarlysituatednon‐DBEs.Id.Theregressionanalysisusingthedummyvariablemethodyieldedanaverageestimateofadiscriminatoryeffectof‐28.80percent.Id.Thediscriminationregressionanalysisusingtheresidualdifferencemethodshowedthatonaverage12.2percentofthecontractamountdisparityawardedtoDBEsandnon‐DBEswasunexplained.Id.
Theconsultantalsoconsideredevidenceofdiscriminationinthelocalmarketinaccordancewith49CFR§26.45(d).TheFinalRecommendationsReportcitedinthe2005EssexCountyDisparityStudysuggestedthatdiscriminationinthelabormarketcontributedtotheunexplainedportionoftheself‐employment,employment,unemployment,andwagegapsinEssexCounty,NewJersey.Id.at650.
TheconsultantrecommendedthatNJTfocusonincreasingthenumberofDBEprimecontractors.Becausequalitativeevidenceisdifficulttoquantify,accordingtotheconsultant,onlytheresultsfromtheregressionanalyseswereusedtoadjustthebasegoal.Id.Thebasegoalwasthenadjustedfrom19.74percentto23.79percent.Id.
Third,inordertopartitiontheDBEgoalbyrace‐neutralandrace‐consciousmethods,theconsultantanalyzedtheshareofallDBEcontractdollarswonwithnogoals.Id.at650.Healsoperformedtwodifferentregressionanalyses:oneinvolvingpredictedDBEcontractdollarsandDBEreceiptsifthegoalwassetatzero.Id.at651.ThesecondmethodutilizedpredictedDBEcontractdollarswithgoalsandpredictedDBEcontractdollarswithoutgoalstoforecasthowmuchfirmswithgoalswouldreceivehadtheynotincludedthegoals.Id.Theconsultantaveragedhisresultsfromallthreemethodstoconcludethatthefiscalyear2010NJTaportionoftherace‐neutralDBEgoalshouldbe11.94percentandaportionoftherace‐consciousDBEgoalshouldbe11.84percent.Id.at651.
Thedistrictcourtappliedthestrictscrutinystandardofreview.Thedistrictcourtalreadydecided,inthecourseofthemotionsforsummaryjudgment,thatcompellinginterestwassatisfiedasNewJerseywasentitledtoadoptthefederalgovernment’scompellinginterestinenactingTEA‐21anditsimplementingregulations.Id.at652,citingGeodv.N.J.TransitCorp.,678F.Supp.2d276,282(D.N.J.2009).Therefore,thecourtlimiteditsanalysistowhetherNJT’sDBEprogramwasnarrowlytailoredtofurtherthatcompellinginterestinaccordancewith“itsgrantofauthorityunderfederallaw.”Id.at652citingNorthernContracting,Inc.v.IllinoisDepartmentofTransportation,473F.3d715,722(7thCir.2007).
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ApplyingNorthernContractingv.Illinois.Thedistrictcourtclarifieditspriorrulingin2009(see678F.Supp.2d276)regardingsummaryjudgment,thatthecourtagreedwiththeholdinginNorthernContracting,Inc.v.Illinois,that“achallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.”Id.at652quotingNorthernContracting,473F.3dat721.ThedistrictcourtinGeodfollowedtheSeventhCircuitexplanationthatwhenastatedepartmentoftransportationisactingasaninstrumentoffederalpolicy,aplaintiffcannotcollaterallyattackthefederalregulationsthroughachallengetoastate’sprogram.Id.at652,citingNorthernContracting,473F.3dat722.Therefore,thedistrictcourtheldthattheinquiryislimitedtothequestionofwhetherthestatedepartmentoftransportation“exceededitsgrantofauthorityunderfederallaw.”Id.at652‐653,quotingNorthernContracting,473F.3dat722andcitingalsoTennesseeAsphaltCo.v.Farris,942F.2d969,975(6thCir.1991).
ThedistrictcourtfoundthattheholdingandanalysisinNorthernContractingdoesnotcontradicttheEighthCircuit’sanalysisinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964,970‐71(8thCir.2003).Id.at653.ThecourtheldthattheEighthCircuit’sdiscussionofwhethertheDBEprogramsasimplementedbytheStateofMinnesotaandtheStateofNebraskawerenarrowlytailoredfocusedonwhetherthestateswerefollowingtheUSDOTregulations.Id.at653citingSherbrookeTurf,345F.3d973‐74.Therefore,“onlywhenthestateexceedsitsfederalauthorityisitsusceptibletoanas‐appliedconstitutionalchallenge.”Id.at653quotingWesternStatesPavingCo.,Inc.v.WashingtonStateDepartmentofTransportation,407F.3d983(9thCir.2005)(McKay,C.J.)(concurringinpartanddissentinginpart)andcitingSouthFloridaChapteroftheAssociatedGeneralContractorsv.BrowardCounty,544F.Supp.2d1336,1341(S.D.Fla.2008).
Thecourtheldtheinitialburdenofprooffallsonthegovernment,butoncethegovernmenthaspresentedproofthatitsaffirmativeactionplanisnarrowlytailored,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplanisunconstitutional.Id.at653.
InanalyzingwhetherNJT’sDBEprogramwasconstitutionallydefective,thedistrictcourtfocusedonthebasisofplaintiffs’argumentthatitwasnotnarrowlytailoredbecauseitincludesinthecategoryofDBEsracialorethnicgroupsastowhichtheplaintiffsallegedNJThadnoevidenceofpastdiscrimination.Id.at653.Thecourtfoundthatmostofplaintiffs’argumentscouldbesummarizedasquestioningwhetherNJTpresenteddemonstrableevidenceoftheavailabilityofready,willingandableDBEsasrequiredby49CFR§26.45.Id.ThecourtheldthatNJTfollowedthegoalsettingprocessrequiredbythefederalregulations.Id.ThecourtstatedthatNJTbeganthisprocesswiththe2002disparitystudythatexaminedpastdiscriminationandfoundthatallofthegroupslistedintheregulationswereunderutilizedwiththeexceptionofAsians.Id.at654.Incalculatingthefiscalyear2010goals,theconsultantusedcontractfilesanddatafromDun&BradstreettodeterminethegeographicallocationcorrespondingtoNJTcontractsandthenfurtherfocusedthatinformationbyweightingtheindustriesaccordingtoNJT’suse.Id.
TheconsultantusedvariousmethodstocalculatetheavailabilityofDBEs,including:theUCPBusinessDirectoriesforthestatesofNewJersey,NewYorkandPennsylvania;NJTVendorList;Dun&Bradstreetdatabase;2002SurveyofSmallBusinessOwners;andNJTPre‐QualificationList.Id.at654.ThecourtstatedthatNJTonlyutilizedoneoftheexampleslistedin49CFR§26.45(c),theDBEdirectoriesmethod,informulatingthefiscalyear2010goals.Id.
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Thedistrictcourtpointedout,however,theregulationsstatethatthe“examplesareprovidedasastartingpointforyourgoalsettingprocessandthattheexamplesarenotintendedasanexhaustivelist.Id.at654,citing46CFR§26.45(c).Thecourtconcludedtheregulationsclarifythatothermethodsorcombinationsofmethodstodetermineabasefiguremaybeused.Id.at654.
ThecourtstatedthatNJThadusedthesemethodsinsettinggoalsforprioryearsasdemonstratedbythereportsfor2006and2009.Id.at654.Inaddition,thecourtnotedthattheSeventhCircuitheldthatacustomcensus,theDun&Bradstreetdatabase,andtheIDOT’slistofDBEswereanacceptablecombinationofmethodswithwhichtodeterminethebasefigureforTEA‐21purposes.Id.at654,citingNorthernContracting,473F.3dat718.
Thedistrictcourtfoundthattheexpertwitnessforplaintiffshadnotconvincedthecourtthatthedatawerefaulty,andthetestimonyattrialdidnotpersuadethecourtthatthedataorregressionanalysesrelieduponbyNJTwereunreliableorthatanothermethodwouldprovidemoreaccurateresults.Id.at654‐655.
Thecourtindiscussingsteptwoofthegoalssettingprocesspointedoutthatthedataexaminedbytheconsultantislistedintheregulationsasproperevidencetobeusedtoadjustthebasefigure.Id.at655,citing49CFR§26.45(d).ThesedataincludedevidencefromdisparitystudiesandstatisticaldisparitiesintheabilityofDBEstogetpre‐qualification.Id.at655.Theconsultantstatedthatevidenceofsocietaldiscriminationwasnotusedtoadjustthebasegoalandthattheadjustmenttothegoalwasbasedonthediscriminationanalysis,whichcontrolsforsizeoffirmandeffectofhavingaDBEgoal.Id.at655.
ThedistrictcourtthenanalyzedNJT’sdivisionoftheadjustedgoalintorace‐consciousandrace‐neutralportions.Id.at655.Thecourtnotedthatnarrowlytailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butinsteadrequiresserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at655.ThecourtagreedwithWesternStatesPavingthatonly“whenrace‐neutraleffortsproveinadequatedotheseregulationsauthorizeaStatetoresorttorace‐consciousmeasurestoachievetheremainderofitsDBEutilizationgoal.”Id.at655,quotingWesternStatesPaving,407F.3dat993‐94.
ThecourtfoundthatthemethodsutilizedbyNJThadbeenusedbyitonpreviousoccasions,whichwereapprovedbytheUSDOT.Id.at655.ThemethodsusedbyNJT,thecourtfound,alsocompliedwiththeexampleslistedin49CFR§26.51,includingarrangingsolicitations,timesforthepresentationofbids,quantities,specifications,anddeliveryschedulesinwaysthatfacilitateDBEparticipation;providingpre‐qualificationassistance;implementingsupportiveservicesprograms;andensuringdistributionofDBEdirectories.Id.at655.ThecourtheldthatbasedonthesereasonsandfollowingtheNorthernContracting,Inc.v.Illinoislineofcases,NJT’sDBEprogramdidnotviolatetheConstitutionasitdidnotexceeditsfederalauthority.Id.at655.
However,thedistrictcourtalsofoundthatevenundertheWesternStatesPavingCo.,Inc.v.WashingtonStateDOTstandard,theNJTprogramstillwasconstitutional.Id.at655.AlthoughthecourtfoundthattheappropriateinquiryiswhetherNJTexceededitsfederalauthorityasdetailedinNorthernContracting,Inc.v.Illinois,thecourtalsoexaminedtheNJTDBEprogramunderWesternStatesPavingCo.v.WashingtonStateDOT.Id.at655‐656.ThecourtstatedthatunderWesternStatesPaving,aCourtmust“undertakeanas‐appliedinquiryintowhether[thestate’s]DBEprogramisnarrowlytailored.”Id.at656,quotingWesternStatesPaving,407F.3dat997.
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ApplyingWesternStatesPaving.ThedistrictcourtthenanalyzedwhethertheNJTprogramwasnarrowlytailoredapplyingWesternStatesPaving.Underthefirstprongofthenarrowlytailoringanalysis,aremedialprogramisonlynarrowlytailoredifitsapplicationislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.Id.at656,citingWesternStatesPaving,407F.3dat998.Thecourtacknowledgedthataccordingtothe2002FinalReport,theratiosofDBEutilizationtoDBEavailabilitywas1.31.Id.at656.However,thecourtfoundthattheplaintiffs’argumentfailedasthefactsinWesternStatesPavingweredistinguishablefromthoseofNJT,becauseNJTdidreceivecomplaints,i.e.,anecdotalevidence,ofthelackofopportunitiesforAsianfirms.Id.at656.NJTemployeestestifiedthatAsianfirmsinformallyandformallycomplainedofalackofopportunitytogrowandindicatedthattheDBEProgramwasassistingwiththisissue.Id.Inaddition,plaintiff’sexpertconcededthatAsianfirmshavesmalleraveragecontractamountsincomparisontonon‐DBEfirms.Id.
TheplaintiffreliedsolelyontheutilizationrateasevidencethatAsiansarenotdiscriminatedagainstinNJTcontracting.Id.at656.Thecourtheldthiswasinsufficienttoovercometheconsultant’sdeterminationthatdiscriminationdidexistagainstAsians,andthusthisgroupwasproperlyincludedintheDBEprogram.Id.at656.
ThedistrictcourtrejectedPlaintiffs’argumentthatthefirststepofthenarrowtailoringanalysiswasnotmetbecauseNJTfocusesitsprogramonsub‐contractorswhenNJT’sexpertidentified“primecontracting”astheareainwhichNJTprocurementsevidencediscrimination.Id.at656.Thecourtheldthatnarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternativebutitdoesrequireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at656,citingSherbrookTurf,345F.3dat972(quotingGrutterv.Bollinger,539U.S.306,339,(2003)).Initseffortstoimplementrace‐neutralalternatives,thecourtfoundNJTattemptedtobreaklargercontractsupinordertomakethemavailabletosmallercontractorsandcontinuestodosowhenlogisticallypossibleandfeasibletotheprocurementdepartment.Id.at656‐657.
ThedistrictcourtfoundNJTsatisfiedthethirdprongofthenarrowlytailoredanalysis,the“relationshipofthenumericalgoalstotherelevantlabormarket.”Id.at657.Finally,underthefourthprong,thecourtaddressedtheimpactonthird‐parties.Id.at657.Thecourtnotedthatplacingaburdenonthirdpartiesisnotimpermissibleaslongasthatburdenisminimized.Id.at657,citingWesternStatesPaving,407F.3dat995.Thecourtstatedthatinstanceswillinevitablyoccurwherenon‐DBEswillbebypassedforcontractsthatrequireDBEgoals.However,TEA‐21anditsimplementingregulationscontainprovisionsintendedtominimizetheburdenonnon‐DBEs.Id.at657,citingWesternStatesPaving,407F.3dat994‐995.
ThecourtpointedouttheNinthCircuitinWesternStatesPavingfoundthatinclusionofregulationsallowingfirmsthatwerenotpresumedtobeDBEstodemonstratethattheyweresociallyandeconomicallydisadvantaged,andthusqualifiedforDBEprograms,aswellasthenetworthlimitations,weresufficienttominimizetheburdenonDBEs.Id.at657,citingWesternStatesPaving,407F.3dat955.ThecourtheldthattheplaintiffsdidnotprovideevidencethatNJTwasnotcomplyingwithimplementingregulationsdesignedtominimizeharmtothirdparties.Id.
Therefore,evenifthedistrictcourtutilizedtheas‐appliednarrowtailoringinquirysetforthinWesternStatesPaving,NJT’sDBEprogramwouldnotbefoundtoviolatetheConstitution,asthecourthelditwasnarrowlytailoredtofurtheracompellinggovernmentalinterest.Id.at657.
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16. Geod Corporation v. New Jersey Transit Corporation, et seq. 678 F.Supp.2d 276, 2009 WL 2595607 (D.N.J. August 20, 2009)
PlaintiffsGeodanditsofficers,whoarewhitemales,suedtheNJTandstateofficialsseekingadeclarationthatNJT’sDBEprogramwasunconstitutionalandinviolationoftheUnitedStates5thand14thAmendmenttotheUnitedStatesConstitutionandtheConstitutionoftheStateofNewJersey,andseekingapermanentinjunctionagainstNJTforenforcingorutilizingitsDBEprogram.TheNJT’sDBEprogramwasimplementedinaccordancewiththeFederalDBEProgramandTEA‐21and49CFRPart26.
ThepartiesfiledcrossMotionsforSummaryJudgment.TheplaintiffGeodchallengedtheconstitutionalityofNJT’sDBEprogramformultiplereasons,includingallegingNJTcouldnotjustifyestablishingaprogramusingrace‐andsex‐basedpreferences;theNJT’sdisparitystudydidnotprovideasufficientfactualpredicatetojustifytheDBEProgram;NJT’sstatisticalevidencedidnotestablishdiscrimination;NJTdidnothaveanecdotaldataevidencinga“strongbasisinevidence”ofdiscriminationwhichjustifiedarace‐andsex‐basedprogram;NJT’sprogramwasnotnarrowlytailoredandover‐inclusive;NJTcouldnotshowanexceedinglypersuasivejustificationforgenderpreferences;andthatNJT’sprogramwasnotnarrowlytailoredbecauserace‐neutralalternativesexisted.Inopposition,NJTfiledaMotionforSummaryJudgmentassertingthatitsDBEprogramwasnarrowlytailoredbecauseitfullycompliedwiththerequirementsoftheFederalDBEProgramandTEA‐21.
Thedistrictcourtheldthatstatesandtheiragenciesareentitledtoadoptthefederalgovernments’compellinginterestinenactingTEA‐21anditsimplementingregulations.2009WL2595607at*4.Thecourtstatedthatplaintiff’sargumentthatNJTcannotestablishtheneedforitsDBEprogramwasa“redherring,whichisunsupported.”TheplaintiffdidnotquestiontheconstitutionalityofthecompellinginterestoftheFederalDBEProgram.Thecourtheldthatallstates“inheritthefederalgovernments’compellinginterestinestablishingaDBEprogram.”Id.
ThecourtfoundthatestablishingaDBEprogram“isnotcontingentuponastateagencydemonstratinganeedforsame,asthefederalgovernmenthasalreadydoneso.”Id.Thecourtconcludedthatthisreasoningrenderedplaintiff’sassertionsthatNJT’sdisparitystudydidnothavesufficientfactualpredicateforestablishingitsDBEprogram,andthatnoexceedinglypersuasivejustificationwasfoundtosupportgenderbasedpreferences,aswithoutmerit.Id.ThecourtheldthatNJTdoesnotneedtojustifyestablishingitsDBEprogram,asithasalreadybeenjustifiedbythelegislature.Id.
Thecourtnotedthatbothplaintiff’sanddefendant’sargumentswerebasedonanallegedsplitintheFederalCircuitCourtsofAppeal.PlaintiffGeodreliesonWesternStatesPavingCompanyv.WashingtonStateDOT,407F.3d983(9thCir.2005)forthepropositionthatanas‐appliedchallengetotheconstitutionalityofaparticularDBEprogramrequiresademonstrationbytherecipientoffederalfundsthattheprogramisnarrowlytailored.Idat*5.Incontrast,theNJTreliedprimarilyonNorthernContracting,Inc.v.StateofIllinois,473F.3d715(7thCir.2007)forthepropositionthatifaDBEprogramcomplieswithTEA‐21,itisnarrowlytailored.Id.
ThecourtviewedthevariousFederalCircuitCourtofAppealsdecisionsasfactspecificdeterminationswhichhaveledtothepartiesdistinguishingcaseswithoutanysubstantivedifferenceintheapplicationoflaw.Id.
ThecourtreviewedthedecisionsbytheNinthCircuitinWesternStatesPavingandtheSeventhCircuitofNorthernContracting.InWesternStatesPaving,thedistrictcourtstatedthattheNinth
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CircuitheldforaDBEprogramtopassconstitutionalmuster,itmustbenarrowlytailored;specifically,therecipientoffederalfundsmustevidencepastdiscriminationintherelevantmarketinordertoutilizeraceconsciousDBEgoals.Id.at*5.TheNinthCircuit,accordingtodistrictcourt,madeafactspecificdeterminationastowhethertheDBEprogramcompliedwithTEA‐21inordertodecideiftheprogramwasnarrowlytailoredtomeetthefederalregulation’srequirements.Thedistrictcourtstatedthattherequirementthatarecipientmustevidencepastdiscrimination“isnothingmorethanarequirementoftheregulation.”Id.
ThecourtstatedthattheSeventhCircuitinNorthernContractingheldarecipientmustdemonstratethatitsprogramisnarrowlytailored,andthatgenerallyarecipientisinsulatedfromthissortofconstitutionalattackabsentashowingthatthestateexceededitsfederalauthority.Id.,citingNorthernContracting,473F.3dat721.ThedistrictcourtheldthatimplicitinNorthernContractingisthefactonemaychallengetheconstitutionalityofaDBEprogram,asitisapplied,totheextentthattheprogramexceedsitsfederalauthority.Id.
Thecourt,therefore,concludedthatitmustdeterminefirstwhetherNJT’sDBEprogramcomplieswithTEA‐21,thenwhetherNJTexceededitsfederalauthorityinitsapplicationofitsDBEprogram.Inotherwords,thedistrictcourtstateditmustdeterminewhethertheNJTDBEprogramcomplieswithTEA‐21inordertodeterminewhethertheprogram,asimplementedbyNJT,isnarrowlytailored.Id.
ThecourtpointedoutthattheEighthCircuitCourtofAppealsinSherbrookTurf,Inc.v.MinnesotaDOT,345F.3d964(8thCir.2003)foundMinnesota’sDBEprogramwasnarrowlytailoredbecauseitwasincompliancewithTEA‐21’srequirements.TheEighthCircuitinSherbrook,accordingtothedistrictcourt,analyzedtheapplicationofMinnesota’sDBEprogramtoensurecompliancewithTEA‐21’srequirementstoensurethattheDBEprogramimplementedbyMinnesotaDOTwasnarrowlytailored.Id.at*5.
ThecourtheldthatTEA‐21delegatestoeachstatethatacceptsfederaltransportationfundstheresponsibilityofimplementingaDBEprogramthatcomportswithTEA‐21.InordertocomportwithTEA‐21,thedistrictcourtstatedarecipientmust(1)determineanappropriateDBEparticipationgoal,(2)examineallevidenceandevaluatewhetheranadjustment,ifany,isneededtoarriveattheirgoal,and(3)iftheadjustmentisbasedoncontinuingeffectsofpastdiscrimination,providedemonstrableevidencethatislogicallyanddirectlyrelatedtotheeffectforwhichtheadjustmentissought.Id.at*6,citingWesternStatesPavingCompany,407F.3dat983,988.
First,thedistrictcourtstatedarecipientoffederalfundsmustdetermine,atthelocallevel,thefigurethatwouldconstituteanappropriateDBEinvolvementgoal,basedontheirrelativeavailabilityofDBEs.Id.at*6,citing49CFR§26.45(c).Inthiscase,thecourtfoundthatNJTdiddetermineabasefigurefortherelativeavailabilityofDBEs,whichaccountedfordemonstrableevidenceoflocalmarketconditionsandwasdesignedtoberationallyrelatedtotherelativeavailabilityofDBEs.Id.ThecourtpointedoutthatNJTconductedadisparitystudy,andthedisparitystudyutilizedNJT’sDBElistsfromfiscalyears1995‐1999andCensusDatatodetermineitsbaseDBEgoal.Thecourtnotedthattheplaintiffs’argumentthatthedatausedinthedisparitystudywerestalewaswithoutmeritandhadnobasisinlaw.Thecourtfoundthatthedisparitystudytookintoaccounttheprimaryindustries,primarygeographicmarket,andraceneutralalternatives,thenadjusteditsgoaltoencompassthesecharacteristics.Id.at*6.
ThecourtstatedthattheuseofDBEdirectoriesandCensusdataarewhatthelegislatureintendedforstateagenciestoutilizeinmakingabaseDBEgoaldetermination.Id.Also,thecourt
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statedthat“perhapsmoreimportantly,NJT’sDBEgoalwasapprovedbytheUSDOTeveryyearfrom2002until2008.”Id.at*6.Thus,thecourtfoundNJTappropriatelydeterminedtheirDBEavailability,whichwasapprovedbytheUSDOT,pursuantto49CFR§26.45(c).Id.at*6.ThecourtheldthatNJTdemonstrateditsoverallDBEgoalisbasedondemonstrableevidenceoftheavailabilityofready,willing,andableDBEsrelativetoallbusinessesready,willing,andabletoparticipateinDOTassistedcontractsandreflectsitsdeterminationofthelevelofDBEparticipationitwouldexpectabsenttheeffectsofdiscrimination.Id.
Alsoofsignificance,thecourtpointedoutthatplaintiffsdidnotprovideanyevidencethatNJTdidnotsetaDBEgoalbasedupon49C.F.§26.45(c).ThecourtthusheldthatgenuineissuesofmaterialfactremainonlyastowhetherareasonablejurymayfindthatthemethodusedbyNJTtodetermineitsDBEgoalwassufficientlynarrowlytailored.Id.at*6.
Thecourtpointedoutthattodeterminewhatadjustmenttomake,thedisparitystudyexaminedqualitativedatasuchasfocusgroupsonthepre‐qualificationstatusofDBEs,workingwithprimecontractors,securingcredit,anditseffectonDBEparticipation,aswellasprocurementofficerinterviewstoanalyze,andcompareandcontrasttheirrelationshipswithnon‐DBEvendorsandDBEvendors.Id.at*7.ThisqualitativeinformationwasthencomparedtoDBEbidsandDBEgoalsforeachyearinquestion.NJT’sadjustmenttoitsDBEgoalalsoincludedananalysisoftheoveralldisparityratio,aswellas,DBEutilizationbasedonrace,genderandethnicity.Id.Adecompositionanalysiswasalsoperformed.Id.
ThecourtconcludedthatNJTprovidedevidencethatit,ataminimum,examinedthecurrentcapacityofDBEstoperformworkinitsDOT‐assistedcontractingprogram,asmeasuredbythevolumeofworkDBEshaveperformedinrecentyears,aswellasutilizingthedisparitystudyitself.Thecourtpointedoutthereweretwomethodsspecificallyapprovedby49CFR§26.45(d).Id.
ThecourtalsofoundthatNJTtookintoaccountraceneutralmeasurestoensurethatthegreatestpercentageofDBEparticipationwasachievedthroughraceandgenderneutralmeans.Thedistrictcourtconcludedthat“critically,”plaintiffsfailedtoprovideevidenceofanother,moreperfect,methodthatcouldhavebeenutilizedtoadjustNJT’sDBEgoal.Id.at*7.ThecourtheldthatgenuineissuesofmaterialfactremainonlyastowhetherNJT’sadjustmenttoitsDBEgoalissufficientlynarrowlytailoredandthusconstitutional.Id.
NJT,thecourtfound,adjusteditsDBEgoaltoaccountfortheeffectsofpastdiscrimination,notingthedisparitystudytookintoaccounttheeffectsofpastdiscriminationinthepre‐qualificationprocessofDBEs.Id.at*7.Thecourtquotedthedisparitystudyasstatingthatitfoundnon‐trivialandstatisticallysignificantmeasuresofdiscriminationincontractamountsawardedduringthestudyperiod.Id.at*8.
Thecourtfound,however,thatwhatwas“gravelycritical”aboutthefindingofthepasteffectsofdiscriminationisthatitonlytookintoaccountsixgroupsincludingAmericanIndian,Hispanic,Asian,blacks,womenand“unknown,”butdidnotincludeananalysisofpastdiscriminationfortheethnicgroup“Iraqi,”whichisnowagroupconsideredtobeaDBEbytheNJT.Id.Becausethedisparityreportincludedacategoryentitled“unknown,”thecourtheldagenuineissueofmaterialfactremainsastowhether“Iraqi”islegitimatelywithinNJT’sdefinedDBEgroupsandwhetherademonstrablefindingofdiscriminationexistsforIraqis.Therefore,thecourtdeniedbothplaintiffs’anddefendants’MotionsforSummaryJudgmentastotheconstitutionalityofNJT’sDBEprogram.
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ThecourtalsoheldthatbecausethelawwasnotclearlyestablishedatthetimeNJTestablisheditsDBEprogramtocomplywithTEA‐21,theindividualstatedefendantswereentitledtoqualifiedimmunityandtheirMotionforSummaryJudgmentastothestateofficialswasgranted.Thecourt,inaddition,heldthatplaintiff’sTitleVIclaimsweredismissedbecausetheindividualdefendantswerenotrecipientsoffederalfunds,andthattheNJTasaninstrumentalityoftheStateofNewJerseyisentitledtosovereignimmunity.Therefore,thecourtheldthattheplaintiff’sclaimsbasedontheviolationof42U.S.C.§1983weredismissedandNJT’sMotionforSummaryJudgmentwasgrantedastothatclaim.
17. South Florida Chapter of the Associated General Contractors v. Broward County, Florida, 544 F. Supp.2d 1336 (S.D. Fla. 2008)
Plaintiff,theSouthFloridaChapteroftheAssociatedGeneralContractors,broughtsuitagainsttheDefendant,BrowardCounty,FloridachallengingBrowardCounty’simplementationoftheFederalDBEProgramandBrowardCounty’sissuanceofcontractspursuanttotheFederalDBEProgram.PlaintifffiledaMotionforaPreliminaryInjunction.ThecourtconsideredonlythethresholdlegalissueraisedbyplaintiffintheMotion,namelywhetherornotthedecisioninWesternStatesPavingCompanyv.WashingtonStateDepartmentofTransportation,407F.3d983(9thCir.2005)shouldgoverntheCourt’sconsiderationofthemeritsofplaintiffs’claim.544F.Supp.2dat1337.Thecourtidentifiedthethresholdlegalissuepresentedasessentially,“whethercompliancewiththefederalregulationsisallthatisrequiredofDefendantBrowardCounty.”Id.at1338.
TheDefendantCountycontendedthatasarecipientoffederalfundsimplementingtheFederalDBEProgram,allthatisrequiredoftheCountyistocomplywiththefederalregulations,relyingoncaselawfromtheSeventhCircuitinsupportofitsposition.544F.Supp.2dat1338,citingNorthernContractingv.Illinois,473F.3d715(7thCir.2007).Theplaintiffsdisagreed,andcontendedthattheCountymusttakeadditionalstepsbeyondthoseexplicitlyprovidedforinthefederalregulationstoensuretheconstitutionalityoftheCounty’simplementationoftheFederalDBEProgram,asadministeredintheCounty,citingWesternStatesPaving,407F.3d983.ThecourtfoundthattherewasnocaselawonpointintheEleventhCircuitCourtofAppeals.Id.at1338.
NinthCircuitApproach:WesternStates.ThedistrictcourtanalyzedtheNinthCircuitCourtofAppealsapproachinWesternStatesPavingandtheSeventhCircuitapproachinMilwaukeeCountyPaversAssociationv.Fiedler,922F.2d419(7thCir.1991)andNorthernContracting,473F.3d715.ThedistrictcourtinBrowardCountyconcludedthattheNinthCircuitinWesternStatesPavingheldthatwhetherWashington’sDBEprogramisnarrowlytailoredtofurtherCongress’sremedialobjectivedependsuponthepresenceorabsenceofdiscriminationintheState’stransportationcontractingindustry,andthatitwaserrorforthedistrictcourtinWesternStatesPavingtoupholdWashington’sDBEprogramsimplybecausethestatehadcompliedwiththefederalregulations.544F.Supp.2dat1338‐1339.ThedistrictcourtinBrowardCountypointedoutthattheNinthCircuitinWesternStatesPavingconcludeditwouldbenecessarytoundertakeanas‐appliedinquiryintowhetherthestate’sprogramisnarrowlytailored.544F.Supp.2dat1339,citingWesternStatesPaving,407F.3dat997.
Inafootnote,thedistrictcourtinBrowardCountynotedthattheUSDOT“appearsnottobeofonemindonthisissue,however.”544F.Supp.2dat1339,n.3.Thedistrictcourtstatedthatthe“UnitedStatesDOThas,inanalysispostedonitsWebsite,implicitlyinstructedstatesandlocalitiesoutsideoftheNinthCircuittoignoretheWesternStatesPavingdecision,whichwouldtendtoindicatethatthisagencymaynotconcurwiththe‘opinionoftheUnitedStates’as
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representedinWesternStates.”544F.Supp.2dat1339,n.3.ThedistrictcourtnotedthattheUnitedStatestookthepositionintheWesternStatesPavingcasethatthe“statewouldhavetohaveevidenceofpastorcurrenteffectsofdiscriminationtouserace‐consciousgoals.”544F.Supp.2dat1338,quotingWesternStatesPaving.
TheCourtalsopointedoutthattheEighthCircuitCourtofAppealsinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964(8thCir.2003)reachedasimilarconclusionasinWesternStatesPaving.544F.Supp.2dat1339.TheEighthCircuitinSherbrooke,likethecourtinWesternStatesPaving,“concludedthatthefederalgovernmenthaddelegatedthetaskofensuringthatthestateprogramsarenarrowlytailored,andlookedtotheunderlyingdatatodeterminewhetherthoseprogramswere,infact,narrowlytailored,ratherthansimplyrelyingonthestates’compliancewiththefederalregulations.”544F.Supp.2dat1339.
SeventhCircuitApproach:MilwaukeeCountyandNorthernContracting.ThedistrictcourtinBrowardCountynextconsideredtheSeventhCircuitapproach.TheDefendantsinBrowardCountyagreedthattheCountymustmakealocalfindingofdiscriminationforitsprogramtobeconstitutional.544F.Supp.2dat1339.TheCounty,however,tookthepositionthatitmustmakethisfindingthroughtheprocessspecifiedinthefederalregulations,andshouldnotbesubjecttoalawsuitifthatprocessisfoundtobeinadequate.Id.Insupportofthisposition,theCountyreliedprimarilyontheSeventhCircuit’sapproach,firstarticulatedinMilwaukeeCountyPaversAssociationv.Fiedler,922F.2d419(7thCir.1991),thenreaffirmedinNorthernContracting,473F.3d715(7thCir.2007).544F.Supp.2dat1339.
BasedontheSeventhCircuitapproach,insofarasthestateismerelydoingwhatthestatuteandfederalregulationsenvisageandpermit,theattackonthestateisanimpermissiblecollateralattackonthefederalstatuteandregulations.544F.Supp.2dat1339‐1340.Thisapproachconcludesthatastate’sroleinthefederalprogramissimplyasanagent,andinsofar“asthestateismerelycomplyingwithfederallawitisactingastheagentofthefederalgovernmentandisnomoresubjecttobeingenjoinedonequalprotectiongroundsthanthefederalcivilservantswhodraftedtheregulations.”544F.Supp.2dat1340,quotingMilwaukeeCountyPavers,922F.2dat423.
TheNinthCircuitaddressedtheMilwaukeeCountyPaverscaseinWesternStatesPaving,andattemptedtodistinguishthatcase,concludingthattheconstitutionalityofthefederalstatuteandregulationswerenotatissueinMilwaukeeCountyPavers.544F.Supp.2dat1340.In2007,theSeventhCircuitfollowedupthecritiquesmadeinWesternStatesPavingintheNorthernContractingdecision.Id.TheSeventhCircuitinNorthernContractingconcludedthatthemajorityinWesternStatesPavingmisreaditsdecisioninMilwaukeeCountyPaversasdidtheEighthCircuitCourtofAppealsinSherbrooke.544F.Supp.2dat1340,citingNorthernContracting,473F.3dat722,n.5.ThedistrictcourtinBrowardCountypointedoutthattheSeventhCircuitinNorthernContractingemphasizedagainthatthestateDOTisactingasaninstrumentoffederalpolicy,andaplaintiffcannotcollaterallyattackthefederalregulationsthroughachallengetothestateDOT’sprogram.544F.Supp.2dat1340,citingNorthernContracting,473F.3dat722.
ThedistrictcourtinBrowardCountystatedthatothercircuitshaveconcurredwiththisapproach,includingtheSixthCircuitCourtofAppealsdecisioninTennesseeAsphaltCompanyv.Farris,942F.2d969(6thCir.1991).544F.Supp.2dat1340.ThedistrictcourtinBrowardCountyheldthattheTenthCircuitCourtofAppealstookasimilarapproachinEllisv.Skinner,961F.2d912(10thCir.1992).544F.Supp.2dat1340.ThedistrictcourtinBrowardCountyheldthattheseCircuitCourtsofAppealhaveconcludedthat“whereastateorcountyfullycomplieswiththefederalregulations,itcannotbeenjoinedfromcarryingoutitsDBEprogram,becauseanysuch
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attackwouldsimplyconstituteanimpropercollateralattackontheconstitutionalityoftheregulations.”544F.Supp.2dat1340‐41.
ThedistrictcourtinBrowardCountyheldthatitagreedwiththeapproachtakenbytheSeventhCircuitCourtofAppealsinMilwaukeeCountyPaversandNorthernContractingandconcludedthat“theappropriatefactualinquiryintheinstantcaseiswhetherornotBrowardCountyhasfullycompliedwiththefederalregulationsinimplementingitsDBEprogram.”544F.Supp.2dat1341.Itissignificanttonotethattheplaintiffsdidnotchallengetheas‐appliedconstitutionalityofthefederalregulationsthemselves,butratherfocusedtheirchallengeontheconstitutionalityofBrowardCounty’sactionsincarryingouttheDBEprogram.544F.Supp.2dat1341.ThedistrictcourtinBrowardCountyheldthatthistypeofchallengeis“simplyanimpermissiblecollateralattackontheconstitutionalityofthestatuteandimplementingregulations.”Id.
ThedistrictcourtconcludedthatitwouldapplythecaselawassetoutintheSeventhCircuitCourtofAppealsandconcurringcircuits,andthatthetrialinthiscasewouldbeconductedsolelyforthepurposeofestablishingwhetherornottheCountyhascompliedfullywiththefederalregulationsinimplementingitsDBEprogram.544F.Supp.2dat1341.
Subsequently,therewasaStipulationofDismissalfiledbyallpartiesinthedistrictcourt,andanOrderofDismissalwasfiledwithoutatrialofthecaseinNovember2008.
18. Western States Paving Co. v. Washington DOT, USDOT & FHWA, 2006 WL 1734163 (W.D. Wash. June 23, 2006) (unpublished opinion)
ThiscasewasbeforethedistrictcourtpursuanttotheNinthCircuit’sremandorderinWesternStatesPavingCo.WashingtonDOT,USDOT,andFHWA,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).Inthisdecision,thedistrictcourtadjudicatedcrossMotionsforSummaryJudgmentonplaintiff’sclaimforinjunctionandfordamagesunder42U.S.C.§§1981,1983,and§2000d.
BecausetheWSDOTvoluntarilydiscontinueditsDBEprogramaftertheNinthCircuitdecision,supra,thedistrictcourtdismissedplaintiff’sclaimforinjunctivereliefasmoot.Thecourtfound“itisabsolutelyclearinthiscasethatWSDOTwillnotresumeorcontinuetheactivitytheNinthCircuitfoundunlawfulinWesternStates,”andcitedspecificallytotheinformationallettersWSDOTsenttocontractorsinformingthemoftheterminationoftheprogram.
Second,thecourtdismissedWesternStatesPaving’sclaimsunder42U.S.C.§§1981,1983,and2000dagainstClarkCountyandtheCityofVancouverholdingneithertheCityortheCountyactedwiththerequisitediscriminatoryintent.ThecourtheldtheCountyandtheCityweremerelyimplementingtheWSDOT’sunlawfulDBEprogramandtheiractionsinthisrespectwereinvoluntaryandrequirednoindependentactivity.ThecourtalsonotedthattheCountyandtheCitywerenotpartiestotheprecisediscriminatoryactionsatissueinthecase,whichoccurredduetotheconductofthe“Statedefendants.”Specifically,theWSDOT—andnottheCountyortheCity—developedtheDBEprogramwithoutsufficientanecdotalandstatisticalevidence,andimproperlyreliedontheaffidavitsofcontractorsseekingDBEcertification“whoaverredthattheyhadbeensubjectto‘generalsocietaldiscrimination.’”
Third,thecourtdismissedplaintiff’s42U.S.C.§§1981and1983claimsagainstWSDOT,findingthembarredbytheEleventhAmendmentsovereignimmunitydoctrine.However,thecourtallowedplaintiff’s42U.S.C.§2000dclaimtoproceedagainstWSDOTbecauseitwasnotsimilarlybarred.ThecourtheldthatCongresshadconditionedthereceiptoffederalhighway
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fundsoncompliancewithTitleVI(42U.S.C.§2000detseq.)andthewaiverofsovereignimmunityfromclaimsarisingunderTitleVI.Section2001specificallyprovidesthat“aStateshallnotbeimmuneundertheEleventhAmendmentoftheConstitutionoftheUnitedStatesfromsuitinFederalcourtforaviolationof…TitleVI.”ThecourtheldthatthislanguageputtheWSDOTonnoticethatitfacedprivatecausesofactionintheeventofnoncompliance.
ThecourtheldthatWSDOT’sDBEprogramwasnotnarrowlytailoredtoserveacompellinggovernmentinterest.Thecourtstressedthatdiscriminatoryintentisanessentialelementofaplaintiff’sclaimunderTitleVI.TheWSDOTarguedthatevenifsovereignimmunitydidnotbarplaintiff’s§2000dclaim,WSDOTcouldbeheldliablefordamagesbecausetherewasnoevidencethatWSDOTstaffknewoforconsciouslyconsideredplaintiff’sracewhencalculatingtheannualutilizationgoal.Thecourtheldthatsincethepolicywasnot“faciallyneutral”—andwasinfact“specificallyraceconscious”—anyresultingdiscriminationwasthereforeintentional,whetherthereasonfortheclassificationwasbenignoritspurposeremedial.Assuch,WSDOT’sprogramwassubjecttostrictscrutiny.
InorderforthecourttoupholdtheDBEprogramasconstitutional,WSDOThadtoshowthattheprogramservedacompellinginterestandwasnarrowlytailoredtoachievethatgoal.ThecourtfoundthattheNinthCircuithadalreadyconcludedthattheprogramwasnotnarrowlytailoredandtherecordwasdevoidofanyevidencesuggestingthatminoritiescurrentlysufferorhavesuffereddiscriminationintheWashingtontransportationcontractingindustry.ThecourtthereforedeniedWSDOT’sMotionforSummaryJudgmentonthe§2000dclaim.TheremedyavailabletoWesternStatesremainsforfurtheradjudicationandthecaseiscurrentlypending.
19. Northern Contracting, Inc. v. Illinois, 2005 WL 2230195 (N.D. Ill., 2005), affirmed, 473 F.3d 715 (7th Cir. 2007)
Thisdecisionisthedistrictcourt’sorderthatwasaffirmedbytheSeventhCircuitCourtofAppeals.ThisdecisionisinstructiveinthatitisoneoftherecentcasestoaddressthevalidityoftheFederalDBEProgramandlocalandstategovernments’implementationoftheprogramasrecipientsoffederalfunds.Thecasealsoisinstructiveinthatthecourtsetforthadetailedanalysisofrace‐,ethnicity‐,andgender‐neutralmeasuresaswellasevidentiarydatarequiredtosatisfyconstitutionalscrutiny.
Thedistrictcourtconductedatrialafterdenyingtheparties’MotionsforSummaryJudgmentinNorthernContracting,Inc.v.StateofIllinois,IllinoisDOT,andUSDOT,2004WL422704(N.D.Ill.March3,2004),discussedinfra.Thefollowingsummarizestheopinionofthedistrictcourt.
NorthernContracting,Inc.(the“plaintiff”),anIllinoishighwaycontractor,suedtheStateofIllinois,theIllinoisDOT,theUnitedStatesDOT,andfederalandstateofficialsseekingadeclarationthatfederalstatutoryprovisions,thefederalimplementingregulations(“TEA‐21”),thestatestatuteauthorizingtheDBEprogram,andtheIllinoisDBEprogramitselfwereunlawfulandunconstitutional.2005WL2230195at*1(N.D.Ill.Sept,8,2005).
UnderTEA‐21,arecipientoffederalfundsisrequiredtomeetthe“maximumfeasibleportion”ofitsDBEgoalthroughrace‐neutralmeans.Id.at*4(citingregulations).IfarecipientprojectsthatitcannotmeetitsoverallDBEgoalthroughrace‐neutralmeans,itmustestablishcontractgoalstotheextentnecessarytoachievetheoverallDBEgoal.Id.(citingregulation).[ThecourtprovidedanoverviewofthepertinentregulationsincludingcompliancerequirementsandqualificationsforDBEstatus.]
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Statisticalevidence. Tocalculateits2005DBEparticipationgoals,IDOTfollowedthetwo‐stepprocesssetforthinTEA‐21:(1)calculationofabasefigurefortherelativeavailabilityofDBEs,and(2)considerationofapossibleadjustmentofthebasefiguretoreflecttheeffectsoftheDBEprogramandthelevelofparticipationthatwouldbeexpectedbutfortheeffectsofpastandpresentdiscrimination.Id.at*6.IDOTengagedinastudytocalculateitsbasefigureandconductacustomcensustodeterminewhetheramorereliablemethodofcalculationexistedasopposedtoitspreviousmethodofreviewingabidder’slist.Id.
IncompliancewithTEA‐21,IDOTusedastudytoevaluatethebasefigureusingasix‐partanalysis:(1)thestudyidentifiedtheappropriateandrelevantgeographicmarketforitscontractingactivityanditsprimecontractors;(2)thestudyidentifiedtherelevantproductmarketsinwhichIDOTanditsprimecontractorscontract;(3)thestudysoughttoidentifyallavailablecontractorsandsubcontractorsintherelevantindustrieswithinIllinoisusingDun&Bradstreet’sMarketplace;(4)thestudycollectedlistsofDBEsfromIDOTand20otherpublicandprivateagencies;(5)thestudyattemptedtocorrectforthepossibilitythatcertainbusinesseslistedasDBEswerenolongerqualifiedor,alternatively,businessesnotlistedasDBEsbutqualifiedassuchunderthefederalregulations;and(6)thestudyattemptedtocorrectforthepossibilitythatnotallDBEbusinesseswerelistedinthevariousdirectories.Id.at*6‐7.Thestudyutilizedastandardstatisticalsamplingproceduretocorrectforthelattertwobiases.Id.at*7.Thestudythuscalculatedaweightedaveragebasefigureof22.7percent.Id.
IDOTthenadjustedthebasefigurebasedupontwodisparitystudiesandsomereportsconsideringwhethertheDBEavailabilityfigureswereartificiallylowduetotheeffectsofpastdiscrimination.Id.at*8.OnestudyexamineddisparitiesinearningsandbusinessformationratesasbetweenDBEsandtheirwhitemale‐ownedcounterparts.Id.AnotherstudyincludedasurveyreportingthatDBEsarerarelyutilizedinnon‐goalsprojects.Id.
IDOTconsideredthreereportspreparedbyexpertwitnesses.Id.at*9.Thefirstreportconcludedthatminority‐andwomen‐ownedbusinesseswereunderutilizedrelativetotheircapacityandthatsuchunderutilizationwasduetodiscrimination.Id.Thesecondreportconcluded,aftercontrollingforrelevantvariablessuchascreditworthiness,“thatminoritiesandwomenarelesslikelytoformbusinesses,andthatwhentheydoformbusinesses,thosebusinessesachievelowerearningsthandidbusinessesownedbywhitemales.”Id.Thethirdreport,againcontrollingforrelevantvariables(education,age,maritalstatus,industryandwealth),concludedthatminority‐andfemale‐ownedbusinesses’formationratesarelowerthanthoseoftheirwhitemalecounterparts,andthatsuchbusinessesengageinadisproportionateamountofgovernmentworkandcontractsasaresultoftheirinabilitytoobtainprivatesectorwork.Id.
IDOTalsoconductedaseriesofpublichearingsinwhichanumberofDBEownerswhotestifiedthatthey“wererarely,ifever,solicitedtobidonprojectsnotsubjecttodisadvantaged‐firmhiringgoals.”Id.Additionally,witnessesidentified20primecontractorsinIDOTDistrict1alonewhorarelyorneversolicitedbidsfromDBEsonnon‐goalsprojects.Id.TheprimecontractorsdidnotrespondtoIDOT’srequestsforinformationconcerningtheirutilizationofDBEs.Id.
Finally,IDOTreviewedunremediatedmarketdatafromfourdifferentmarkets(theIllinoisStateTollHighwayAuthority,theMissouriDOT,CookCounty’spublicconstructioncontracts,anda“non‐goals”experimentconductedbyIDOTbetween2001and2002),andconsideredpastutilizationofDBEsonIDOTprojects.Id.at*11.Afteranalyzingallofthedata,thestudyrecommendedanupwardadjustmentto27.51percent.However,IDOTdecidedtomaintainitsfigureat22.77percent.Id.
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IDOT’srepresentativetestifiedthattheDBEprogramwasadministeredona“contract‐by‐contractbasis.”Id.ShetestifiedthatDBEgoalshavenoeffectontheawardofprimecontractsbutthatcontractsareawardedexclusivelytothe“lowestresponsiblebidder.”IDOTalsoallowedcontractorstopetitionforawaiverofindividualcontractgoalsincertainsituations(e.g.,wherethecontractorhasbeenunabletomeetthegoaldespitehavingmadereasonablegoodfaithefforts).Id.at*12.Between2001and2004,IDOTreceivedwaiverrequestson8.53percentofitscontractsandgrantedthreeoutoffour;IDOTalsoprovidedanappealprocedureforadenialfromawaiverrequest.Id.
IDOTimplementedanumberofrace‐andgender‐neutralmeasuresbothinitsfiscalyear2005planandinresponsetothedistrictcourt’searliersummaryjudgmentorder,including:
1. A“promptpaymentprovision”initscontracts,requiringthatsubcontractorsbepaidpromptlyaftertheycompletetheirwork,andprohibitingprimecontractorsfromdelayingsuchpayments;
2. AnextensiveoutreachprogramseekingtoattractandassistDBEandothersmallfirmsenterandachievesuccessintheindustry(includingretaininganetworkofconsultantstoprovidemanagement,technicalandfinancialassistancetosmallbusinesses,andsponsoringnetworkingsessionsthroughoutthestatetoacquaintsmallfirmswithlargercontractorsandtoencouragetheinvolvementofsmallfirmsinmajorconstructionprojects);
3. Reviewingthecriteriaforprequalificationtoreduceanyunnecessaryburdens;
4. “Unbundling”largecontracts;and
5. AllocatingsomecontractsforbiddingonlybyfirmsmeetingtheSBA’sdefinitionofsmallbusinesses.
Id.(internalcitationsomitted).IDOTwasalsointheprocessofimplementingbondingandfinancinginitiativestoassistemergingcontractorsobtainguaranteedbondingandlinesofcredit,andestablishingamentor‐protégéprogram.Id.
ThecourtfoundthatIDOTattemptedtoachievethe“maximumfeasibleportion”ofitsoverallDBEgoalthroughrace‐andgender‐neutralmeasures.Id.at*13.ThecourtfoundthatIDOTdeterminedthatrace‐andgender‐neutralmeasureswouldaccountfor6.43percentofitsDBEgoal,leaving16.34percenttobereachedusingrace‐andgender‐consciousmeasures.Id.
Anecdotalevidence. AnumberofDBEownerstestifiedtoinstancesofperceiveddiscriminationandtothebarrierstheyface.Id.TheDBEownersalsotestifiedtodifficultiesinobtainingworkintheprivatesectorand“unanimouslyreportedthattheywererarelyinvitedtobidonsuchcontracts.”Id.TheDBEownerstestifiedtoareluctancetosubmitunsolicitedbidsduetotheexpenseinvolvedandidentifiedspecificfirmsthatsolicitedbidsfromDBEsforgoalsprojectsbutnotfornon‐goalsprojects.Id.Anumberofthewitnessesalsotestifiedtospecificinstancesofdiscriminationinbidding,onspecificcontracts,andinthefinancingandinsurancemarkets.Id.at*13‐14.Onewitnessacknowledgedthatallsmallfirmsfacedifficultiesinthefinancingandinsurancemarkets,buttestifiedthatitisespeciallyburdensomeforDBEswho“frequentlyareforcedtopayhigherinsuranceratesduetoracialandgenderdiscrimination.”Id.at*14.TheDBEwitnessesalsotestifiedtheyhaveobstaclesinobtainingpromptpayment.Id.
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Theplaintiffcalledanumberofnon‐DBEbusinessownerswhounanimouslytestifiedthattheysolicitbusinessequallyfromDBEsandnon‐DBEsonnon‐goalsprojects.Id.Somenon‐DBEfirmownerstestifiedthattheysolicitbidsfromDBEsonagoalsprojectforworktheywouldotherwisecompletethemselvesabsentthegoals;otherstestifiedthatthey“occasionallyawardworktoaDBEthatwasnotthelowbidderinordertoavoidscrutinyfromIDOT.”Id.Anumberofnon‐DBEfirmownersaccusedoffailingtosolicitbidsfromDBEsonnon‐goalsprojectstestifiedanddeniedtheallegations.Id.at*15.
Strictscrutiny. Thecourtappliedstrictscrutinytotheprogramasawhole(includingthegender‐basedpreferences).Id.at*16.Thecourt,however,setforthadifferentburdenofproof,findingthatthegovernmentmustdemonstrateidentifieddiscriminationwithspecificityandmusthavea“‘strongbasisinevidence’toconcludethatremedialactionwasnecessary,beforeitembarksonanaffirmativeactionprogram…Ifthegovernmentmakessuchashowing,thepartychallengingtheaffirmativeactionplanbearsthe‘ultimateburden’ofdemonstratingtheunconstitutionalityoftheprogram.”Id.Thecourtheldthatchallengingparty’sburden“canonlybemetbypresentingcredibleevidencetorebutthegovernment’sproffereddata.”Id.at*17.
Tosatisfystrictscrutiny,thecourtfoundthatIDOTdidnotneedtodemonstrateanindependentcompellinginterest;however,aspartofthenarrowlytailoredprong,IDOTneededtoshow“thatthereisademonstrableneedfortheimplementationoftheFederalDBEProgramwithinitsjurisdiction.”Id.at*16.
ThecourtfoundthatIDOTpresented“anabundance”ofevidencedocumentingthedisparitiesbetweenDBEsandnon‐DBEsintheconstructionindustry.Id.at*17.Theplaintiffarguedthatthestudywas“erroneousbecauseitfailedtolimititsDBEavailabilityfigurestothosefirms…registeredandpre‐qualifiedwithIDOT.”Id.TheplaintiffalsoallegedthecalculationsoftheDBEutilizationratewereincorrectbecausethedataincludedIDOTsubcontractsandprimecontracts,despitethefactthatthelatterareawardedtothelowestbidderasamatteroflaw.Id.Accordingly,theplaintiffallegedthatIDOT’scalculationofDBEavailabilityandutilizationrateswasincorrect.Id.
Thecourtfoundthatotherjurisdictionshadutilizedthecustomcensusapproachwithoutsuccessfulchallenge.Id.at*18.Additionally,thecourtfound“thattheremedialnatureofthefederalstatutescounselsforthecastingofabroadernetwhenmeasuringDBEavailability.”Id.at*19.ThecourtfoundthatIDOTpresented“anarrayofstatisticalstudiesconcludingthatDBEsfacedisproportionatehurdlesinthecredit,insurance,andbondingmarkets.”Id.at*21.Thecourtalsofoundthatthestatisticalstudieswereconsistentwiththeanecdotalevidence.Id.Thecourtdidfind,however,that“therewasnoevidenceofevenasingleinstanceinwhichaprimecontractorfailedtoawardajobtoaDBEthatofferedthelowbid.This…is[also]supportedbythestatisticaldata…whichshowsthatatleastatthelevelofsubcontracting,DBEsaregenerallyutilizedatarateinlinewiththeirability.”Id.at*21,n.31.Additionally,IDOTdidnotverifytheanecdotaltestimonyofDBEfirmownerswhotestifiedtobarriersinfinancingandbonding.However,thecourtfoundthatsuchverificationwasunnecessary.Id.at*21,n.32.
Thecourtfurtherfound:
ThatsuchdiscriminationindirectlyaffectstheabilityofDBEstocompeteforprimecontracts,despitethefactthattheyareawardedsolelyonthebasisoflowbid,cannotbedoubted:‘[E]xperienceandsizearenotrace‐andgender‐neutralvariables…[DBE]constructionfirmsaregenerallysmallerandlessexperiencedbecauseofindustrydiscrimination.’
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Id.at*21,citingConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003).
ThepartiesstipulatedtothefactthatDBEutilizationgoalsexceedDBEavailabilityfor2003and2004.Id.at*22.IDOTalleged,andthecourtsofound,thatthehighutilizationongoalsprojectswasduetothesuccessoftheDBEprogram,andnottoanabsenceofdiscrimination.Id.ThecourtfoundthatthestatisticaldisparitiescoupledwiththeanecdotalevidenceindicatedthatIDOT’sfiscalyear2005goalwasa“‘plausiblelower‐boundestimate’ofDBEparticipationintheabsenceofdiscrimination.”Id.ThecourtfoundthattheplaintiffdidnotpresentpersuasiveevidencetocontradictorexplainIDOT’sdata.Id.
Theplaintiffarguedthatevenifacceptedatfacevalue,IDOT’smarketplacedatadidnotsupporttheimpositionofrace‐andgender‐consciousremediesbecausetherewasnoevidenceofdirectdiscriminationbyprimecontractors.Id.ThecourtfoundfirstthatIDOT’sindirectevidenceofdiscriminationinthebonding,financing,andinsurancemarketswassufficienttoestablishacompellingpurpose.Id.Second,thecourtfound:
[M]oreimportantly,plaintifffailstoacknowledgethat,inenactingitsDBEprogram,IDOTactednottoremedyitsownpriordiscriminatorypractices,butpursuanttofederallaw,whichbothauthorizedandrequiredIDOTtoremediatetheeffectsofprivatediscriminationonfederally‐fundedhighwaycontracts.Thisisafundamentaldistinction…[A]stateorlocalgovernmentneednotindependentlyidentifyacompellinginterestwhenitsactionscomeinthecourseofenforcingafederalstatute.
Id.at*23.ThecourtdistinguishedBuildersAss’nofGreaterChicagov.CountyofCook,123F.Supp.2d1087(N.D.Ill.2000),aff’d256F.3d642(7thCir.2001),notingthattheprograminthatcasewasnotfederally‐funded.Id.at*23,n.34.
Thecourtalsofoundthat“IDOThasdoneitsbesttomaximizetheportionofitsDBEgoal”throughrace‐andgender‐neutralmeasures,includinganti‐discriminationenforcementandsmallbusinessinitiatives.Id.at*24.Theanti‐discriminationeffortsincluded:aninternetwebsitewhereaDBEcanfileanadministrativecomplaintifitbelievesthataprimecontractorisdiscriminatingonthebasisofraceorgenderintheawardofsub‐contracts;andrequiringcontractorsseekingprequalificationtomaintainandproducesolicitationrecordsonallprojects,bothpublicandprivate,withandwithoutgoals,aswellasrecordsofthebidsreceivedandaccepted.Id.Thesmallbusinessinitiativeincluded:“unbundling”largecontracts;allocatingsomecontractsforbiddingonlybyfirmsmeetingtheSBA’sdefinitionofsmallbusinesses;a“promptpaymentprovision”initscontracts,requiringthatsubcontractorsbepaidpromptlyaftertheycompletetheirwork,andprohibitingprimecontractorsfromdelayingsuchpayments;andanextensiveoutreachprogramseekingtoattractandassistDBEandothersmallfirmsDBEandothersmallfirmsenterandachievesuccessintheindustry(includingretaininganetworkofconsultantstoprovidemanagement,technicalandfinancialassistancetosmallbusinesses,andsponsoringnetworkingsessionsthroughoutthestatetoacquaintsmallfirmswithlargercontractorsandtoencouragetheinvolvementofsmallfirmsinmajorconstructionprojects).Id.
Thecourtfound“[s]ignificantly,plaintiffdidnotquestiontheefficacyorsincerityoftheserace‐andgender‐neutralmeasures.”Id.at*25.Additionally,thecourtfoundtheDBEprogramhadsignificantflexibilityinthatutilizedcontract‐by‐contractgoalsetting(withoutafixedDBEparticipationminimum)andcontainedwaiverprovisions.Id.ThecourtfoundthatIDOTapproved70percentofwaiverrequestsalthoughwaiverswererequestedononly8percentof
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allcontracts.Id.,citingAdarandConstructors,Inc.v.Slater“AdarandVII”,228F.3d1147,1177(10thCir.2000)(citingforthepropositionthatflexibilityandwaiverarecriticallyimportant).
ThecourtheldthatIDOT’sDBEplanwasnarrowlytailoredtothegoalofremedyingtheeffectsofracialandgenderdiscriminationintheconstructionindustry,andwasthereforeconstitutional.
20. Northern Contracting, Inc. v. State of Illinois, Illinois DOT, and USDOT, 2004 WL 422704 (N.D. Ill. March 3, 2004)
ThisistheearlierdecisioninNorthernContracting,Inc.,2005WL2230195(N.D.Ill.Sept.8,2005),seeabove,whichresultedintheremandofthecasetoconsidertheimplementationoftheFederalDBEProgrambytheIDOT.ThiscaseinvolvesthechallengetotheFederalDBEProgram.TheplaintiffcontractorsuedtheIDOTandtheUSDOTchallengingthefacialconstitutionalityoftheFederalDBEProgram(TEA‐21and49CFRPart26)aswellastheimplementationoftheFederalProgrambytheIDOT(i.e.,theIDOTDBEProgram).ThecourtheldvalidtheFederalDBEProgram,findingthereisacompellinggovernmentalinterestandthefederalprogramisnarrowlytailored.ThecourtalsoheldthereareissuesoffactregardingwhetherIDOT’sDBEProgramisnarrowlytailoredtoachievethefederalgovernment’scompellinginterest.ThecourtdeniedtheMotionsforSummaryJudgmentfiledbytheplaintiffandbyIDOT,findingtherewereissuesofmaterialfactrelatingtoIDOT’simplementationoftheFederalDBEProgram.
ThecourtinNorthernContracting,heldthatthereisanidentifiedcompellinggovernmentalinterestforimplementingtheFederalDBEProgramandthattheFederalDBEProgramisnarrowlytailoredtofurtherthatinterest.Therefore,thecourtgrantedtheFederaldefendants’MotionforSummaryJudgmentchallengingthevalidityoftheFederalDBEProgram.Inthisconnection,thedistrictcourtfollowedthedecisionsandanalysisinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964(8thCir.2003)andAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000)(“AdarandVII”),cert.grantedthendismissedasimprovidentlygranted,532U.S.941,534U.S.103(2001).Thecourtheld,likethesetwoCourtsofAppealsthathaveaddressedthisissue,thatCongresshadastrongbasisinevidencetoconcludethattheDBEProgramwasnecessarytoredressprivatediscriminationinfederally‐assistedhighwaysubcontracting.ThecourtagreedwiththeAdarandVIIandSherbrookeTurfcourtsthattheevidencepresentedtoCongressissufficienttoestablishacompellinggovernmentalinterest,andthatthecontractorshadnotmettheirburdenofintroducingcredibleparticularizedevidencetorebuttheGovernment’sinitialshowingoftheexistenceofacompellinginterestinremedyingthenationwideeffectsofpastandpresentdiscriminationinthefederalconstructionprocurementsubcontractingmarket.2004WL422704at*34,citingAdarandVII,228F.3dat1175.
Inaddition,thecourtanalyzedthesecondprongofthestrictscrutinytest,whetherthegovernmentprovidedsufficientevidencethatitsprogramisnarrowlytailored.Inmakingthisdetermination,thecourtlookedatseveralfactors,suchastheefficacyofalternativeremedies;theflexibilityanddurationoftherace‐consciousremedies,includingtheavailabilityofwaiverprovisions;therelationshipsbetweenthenumericalgoalsandrelevantlabormarket;theimpactoftheremedyonthirdparties;andwhethertheprogramisover‐or‐under‐inclusive.Thenarrowtailoringanalysiswithregardtotheas‐appliedchallengefocusedonIDOT’simplementationoftheFederalDBEProgram.
First,thecourtheldthattheFederalDBEProgramdoesnotmandatetheuseofrace‐consciousmeasuresbyrecipientsoffederaldollars,butinfactrequiresonlythatthegoalreflectthe
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recipient’sdeterminationofthelevelofDBEparticipationitwouldexpectabsenttheeffectsofthediscrimination.49CFR§26.45(b).Thecourtrecognized,asfoundintheSherbrookeTurfandAdarandVIIcases,thattheFederalRegulationsplacestrongemphasisontheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipationingovernmentcontracting,thatalthoughnarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,itdoesrequire“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”2004WL422704at*36,citingandquotingSherbrookeTurf,345F.3dat972,quotingGrutterv.Bollinger,539U.S.306(2003).ThecourtheldthattheFederalregulations,whichprohibittheuseofquotasandseverelylimittheuseofset‐asides,meetthisrequirement.ThecourtagreedwiththeAdarandVIIandSherbrookeTurfcourtsthattheFederalDBEProgramdoesrequirerecipientstomakeaseriousgoodfaithconsiderationofworkablerace‐neutralalternativesbeforeturningtorace‐consciousmeasures.
Second,thecourtfoundthatbecausetheFederalDBEProgramissubjecttoperiodicreauthorization,andrequiresrecipientsofFederaldollarstoreviewtheirprogramsannually,theFederalDBEschemeisappropriatelylimitedtolastnolongerthannecessary.
Third,thecourtheldthattheFederalDBEProgramisflexibleformanyreasons,includingthatthepresumptionthatwomenandminorityaresociallydisadvantagedisdeemedrebuttedifanindividual’spersonalnetworthexceeds$750,000.00,andafirmownedbyindividualwhoisnotpresumptivelydisadvantagedmayneverthelessqualifyforsuchstatusifthefirmcandemonstratethatitsownersaresociallyandeconomicallydisadvantaged.49CFR§26.67(b)(1)(d).ThecourtfoundotheraspectsoftheFederalRegulationsprovideampleflexibility,includingrecipientsmayobtainwaiversorexemptionsfromanyrequirements.RecipientsarenotrequiredtosetacontractgoaloneveryUSDOT‐assistedcontract.Ifarecipientestimatesthatitcanmeettheentiretyofitsoverallgoalsforagivenyearthroughrace‐neutralmeans,itmustimplementtheProgramwithoutsettingcontractgoalsduringtheyear.Ifduringthecourseofanyyearinwhichitisusingcontractgoalsarecipientdeterminesthatitwillexceeditsoverallgoals,itmustadjusttheuseofrace‐consciouscontractgoalsaccordingly.49CFR§26.51(e)(f).RecipientsalsoadministeringaDBEProgramingoodfaithcannotbepenalizedforfailingtomeettheirDBEgoals,andarecipientmayterminateitsDBEProgramifitmeetsitsannualoverallgoalthroughrace‐neutralmeansfortwoconsecutiveyears.49CFR§26.51(f).Further,arecipientmayawardacontracttoabidder/offerorthatdoesnotmeettheDBEParticipationgoalssolongasthebidderhasmadeadequategoodfaitheffortstomeetthegoals.49CFR§26.53(a)(2).Theregulationsalsoprohibittheuseofquotas.49CFR§26.43.
Fourth,thecourtagreedwiththeSherbrookeTurfcourt’sassessmentthattheFederalDBEProgramrequiresrecipientstobaseDBEgoalsonthenumberofready,willingandabledisadvantagedbusinessinthelocalmarket,andthatthisexerciserequiresrecipientstoestablishrealisticgoalsforDBEparticipationintherelevantlabormarkets.
Fifth,thecourtfoundthattheDBEProgramdoesnotimposeanunreasonableburdenonthirdparties,includingnon‐DBEsubcontractorsandtaxpayers.ThecourtfoundthattheFederalDBEProgramisalimitedandproperlytailoredremedytocuretheeffectsofpriordiscrimination,asharingoftheburdenbypartiessuchasnon‐DBEsisnotimpermissible.
Finally,thecourtfoundthattheFederalDBEProgramwasnotover‐inclusivebecausetheregulationsdonotprovidethateverywomenandeverymemberofaminoritygroupisdisadvantaged.Preferencesarelimitedtosmallbusinesseswithaspecificaverageannualgrossreceiptsoverthreefiscalyearsof$16.6millionorless(atthetimeofthisdecision),andbusinesseswhoseowners’personalnetworthexceed$750,000.00areexcluded.49CFR§
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26.67(b)(1).Inaddition,afirmownedbyawhitemalemayqualifyassociallyandeconomicallydisadvantaged.49CFR§26.67(d).
ThecourtanalyzedtheconstitutionalityoftheIDOTDBEProgram.ThecourtadoptedthereasoningoftheEighthCircuitinSherbrookeTurf,thatarecipient’simplementationoftheFederalDBEProgrammustbeanalyzedunderthenarrowtailoringanalysisbutnotthecompellinginterestinquiry.Therefore,thecourtagreedwithSherbrookeTurfthatarecipientneednotestablishadistinctcompellinginterestbeforeimplementingtheFederalDBEProgram,butdidconcludethatarecipient’simplementationoftheFederalDBEProgrammustbenarrowlytailored.ThecourtfoundthatissuesoffactremainintermsofthevalidityoftheIDOT’sDBEProgramasimplementedintermsofwhetheritwasnarrowlytailoredtoachievetheFederalGovernment’scompellinginterest.Thecourt,therefore,deniedthecontractorplaintiff’sMotionforSummaryJudgmentandtheIllinoisDOT’sMotionforSummaryJudgment.
21. Sherbrooke Turf, Inc. v. Minnesota DOT, 2001 WL 1502841, No. 00‐CV‐1026 (D. Minn. 2001) (unpublished opinion), affirmed 345 F.3d 964 (8th Cir. 2003)
SherbrookeinvolvedalandscapingservicecontractorownedandoperatedbyCaucasianmales.ThecontractorsuedtheMinnesotaDOTclaimingtheFederalDBEprovisionsoftheTEA‐21areunconstitutional.Sherbrookechallengedthe“federalaffirmativeactionprograms,”theUSDOTimplementingregulations,andtheMinnesotaDOT’sparticipationintheDBEProgram.TheUSDOTandtheFHWAintervenedasFederaldefendantsinthecase.Sherbrooke,2001WL1502841at*1.
TheUnitedStatesDistrictCourtinSherbrookereliedsubstantiallyontheTenthCircuitCourtofAppealsdecisioninAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000),inholdingthattheFederalDBEProgramisconstitutional.Thedistrictcourtaddressedtheissueof“randominclusion”ofvariousgroupsasbeingwithinthePrograminconnectionwithwhethertheFederalDBEProgramis“narrowlytailored.”ThecourtheldthatCongresscannotenactanationalprogramtoremedydiscriminationwithoutrecognizingclassesofpeoplewhosehistoryhasshownthemtobesubjecttodiscriminationandallowingstatestoincludethosepeopleinitsDBEProgram.
ThecourtheldthattheFederalDBEProgramattemptstoavoidthe“potentiallyinvidiouseffectsofprovidingblanketbenefitstominorities”inpart,
byrestrictingastate’sDBEpreferencetoidentifiedgroupsactuallyappearinginthetargetstate.Inpractice,thismeansMinnesotacanonlycertifymembersofoneoranothergroupaspotentialDBEsiftheyarepresentinthelocalmarket.Thisminimizesthechancethatindividuals—simplyonthebasisoftheirbirth—willbenefitfromMinnesota’sDBEprogram.Ifagroupisnotpresentinthelocalmarket,oriftheyarefoundinsuchsmallnumbersthattheycannotbeexpectedtobeabletoparticipateinthekindsofconstructionworkTEA‐21covers,thatgroupwillnotbeincludedintheaccountingusedtosetMinnesota’soverallDBEcontractinggoal.
Sherbrooke,2001WL1502841at*10(D.Minn.).
Thecourtrejectedplaintiff’sclaimthattheMinnesotaDOTmustindependentlydemonstratehowitsprogramcomportswithCroson’sstrictscrutinystandard.Thecourtheldthatthe“Constitutioncallsoutfordifferentrequirementswhenastateimplementsafederalaffirmative
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actionprogram,asopposedtothoseoccasionswhenastateorlocalityinitiatestheProgram.”Id.at*11(emphasisadded).ThecourtinafootnoteruledthatTEA‐21,beingafederalprogram,“relievesthestateofanyburdentoindependentlycarrythestrictscrutinyburden.”Id.at*11n.3.ThecourtheldstatesthatestablishDBEprogramsunderTEA‐21and49CFRPart26areimplementingaCongressionally‐requiredprogramandnotestablishingalocalone.Assuch,thecourtconcludedthatthestateneednotindependentlyproveitsDBEprogrammeetsthestrictscrutinystandard.Id.
22. Gross Seed Co. v. Nebraska Department of Roads, Civil Action File No. 4:00CV3073 (D. Neb. May 6, 2002), affirmed 345 F.3d 964 (8th Cir. 2003)
TheUnitedStatesDistrictCourtfortheDistrictofNebraskaheldinGrossSeedCo.v.Nebraska(withtheUSDOTandFHWAasInterveners),thattheFederalDBEProgram(codifiedat49CFRPart26)isconstitutional.ThecourtalsoheldthattheNebraskaDepartmentofRoads(“NebraskaDOR”)DBEProgramadoptedandimplementedsolelytocomplywiththeFederalDBEProgramis“approved”bythecourtbecausethecourtfoundthat49CFRPart26andTEA‐21wereconstitutional.
Thecourtconcluded,similartothecourtinSherbrookeTurf,thattheStateofNebraskadidnotneedtoindependentlyestablishthatitsprogrammetthestrictscrutinyrequirementbecausetheFederalDBEProgramsatisfiedthatrequirement,andwasthereforeconstitutional.ThecourtdidnotengageinathoroughanalysisorevaluationoftheNebraskaDORProgramoritsimplementationoftheFederalDBEProgram.ThecourtpointsoutthattheNebraskaDORProgramisadoptedincompliancewiththeFederalDBEProgram,andthattheUSDOTapprovedtheuseofNebraskaDOR’sproposedDBEgoalsforfiscalyear2001,pendingcompletionofUSDOT’sreviewofthosegoals.Significantly,however,thecourtinitsfindingsdoesnotethattheNebraskaDORestablisheditsoverallgoalsforfiscalyear2001baseduponanindependentavailability/disparitystudy.
ThecourtupheldtheconstitutionalityoftheFederalDBEProgrambyfindingtheevidencepresentedbythefederalgovernmentandthehistoryofthefederallegislationaresufficienttodemonstratethatpastdiscriminationdoesexist“intheconstructionindustry”andthatracialandgenderdiscrimination“withintheconstructionindustry”issufficienttodemonstrateacompellinginterestinindividualareas,suchashighwayconstruction.ThecourtheldthattheFederalDBEProgramwassufficiently“narrowlytailored”tosatisfyastrictscrutinyanalysisbasedagainontheevidencesubmittedbythefederalgovernmentastotheFederalDBEProgram.
23. Klaver Construction, Inc. v. Kansas DOT, 211 F. Supp.2d 1296 (D. Kan. 2002)
ThisisanothercasethatinvolvedachallengetotheUSDOTRegulationsthatimplementTEA‐21(49CFRPart26),inwhichtheplaintiffcontractorsoughttoenjointheKansasDepartmentofTransportation(“DOT”)fromenforcingitsDBEProgramonthegroundsthatitviolatestheEqualProtectionClauseundertheFourteenthAmendment.Thiscaseinvolvesadirectconstitutionalchallengetoracialandgenderpreferencesinfederally‐fundedstatehighwaycontracts.ThiscaseconcernedtheconstitutionalityoftheKansasDOT’simplementationoftheFederalDBEProgram,andtheconstitutionalityofthegender‐basedpoliciesofthefederalgovernmentandtherace‐andgender‐basedpoliciesoftheKansasDOT.Thecourtgrantedthefederalandstatedefendants’(USDOTandKansasDOT)MotionstoDismissbasedonlackof
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standing.ThecourtheldthecontractorcouldnotshowthespecificaspectsoftheDBEProgramthatitcontendsareunconstitutionalhavecauseditsallegedinjuries.
G. Recent Decisions and Authorities Involving Federal Procurement That May Impact DBE and MBE/WBE Programs
1. Rothe Development, Inc. v. U.S. Dept. of Defense, U.S. Small Business Administration, et al., 836 F3d 57, 2016 WL 4719049 (D.C. Cir. 2016), cert. denied, 2017 WL 1375832 (2017), affirming on other grounds, Rothe Development, Inc. v. U.S. Dept. of Defense, U.S. Small Business Administration, et al., 107 F.Supp. 3d 183 (D.D.C. 2015)
Inasplitdecision,themajorityofathreejudgepaneloftheUnitedStatesCourtofAppealsfortheDistrictofColumbiaCircuitupheldtheconstitutionalityofsection8(a)oftheSmallBusinessAct,whichwaschallengedbyPlaintiff‐AppellantRotheDevelopmentInc.(Rothe).RotheallegedthatthestatutorybasisoftheUnitedStatesSmallBusinessAdministration’s8(a)businessdevelopmentprogram(codifiedat15U.S.C.§637),violateditsrighttoequalprotectionundertheDueProcessClauseoftheFifthAmendment.836F.3d57,2016WL4719049,at*1.Rothecontendsthestatutecontainsaracialclassificationthatpresumescertainracialminoritiesareeligiblefortheprogram.Id.Thecourtheld,however,thatCongressconsideredandrejectedstatutorylanguagethatincludedaracialpresumption.Id.Congress,accordingtothecourt,choseinsteadtohingeparticipationintheprogramonthefaciallyrace‐neutralcriterionofsocialdisadvantage,whichitdefinedashavingsufferedracial,ethnic,orculturalbias.Id.
ThechallengedstatuteauthorizestheSmallBusinessAdministration(SBA)toenterintocontractswithotherfederalagencies,whichtheSBAthensubcontractstoeligiblesmallbusinessesthatcompeteforthesubcontractsinashelteredmarket.Id*1.Businessesownedby“sociallyandeconomicallydisadvantaged”individualsareeligibletoparticipateinthe8(a)program.Id.Thestatutedefinessociallydisadvantagedindividualsaspersons“whohavebeensubjectedtoracialorethnicprejudiceorculturalbiasbecauseoftheiridentityasamemberofagroupwithoutregardtotheirindividualqualities.”Id.,quoting15U.S.C.§627(a)(5).
TheSection8(a)statuteisrace‐neutral.ThecourtrejectedRothe’sallegations,findinginsteadthattheprovisionsoftheSmallBusinessActthatRothechallengesdonotontheirfaceclassifyindividualsbyrace.Id*1.ThecourtstatedthatSection8(a)usesfaciallyrace‐neutraltermsofeligibilitytoidentifyindividualvictimsofdiscrimination,prejudice,orbias,withoutpresumingthatmembersofcertainracial,ethnic,orculturalgroupsqualifyassuch.Id.Thecourtsaidthatmakesthisstatutedifferentfromotherstatutes,whichexpresslylimitparticipationincontractingprogramstoracialorethnicminoritiesorspecificallydirectthirdpartiestopresumethatmembersofcertainracialorethnicgroups,orminoritiesgenerally,areeligible.Id.
Incontrasttothestatute,thecourtfoundthattheSBA’sregulationimplementingthe8(a)programdoescontainaracialclassificationintheformofapresumptionthatanindividualwhoisamemberofoneoffivedesignatedracialgroupsissociallydisadvantaged.Id*2,citing13C.F.R.§124.103(b).Thiscase,thecourtheld,doesnotpermitittodecidewhethertherace‐basedregulatorypresumptionisconstitutionallysound,becauseRothehaselectedtochallengeonlythestatute.Id.Rothe’sdefinitionoftheracialclassificationitattacksinthiscase,accordingtothecourt,doesnotincludetheSBA’sregulation.Id.
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Becausethecourtheldthestatute,unliketheregulation,lacksaracialclassification,andbecauseRothehasnotallegedthatthestatuteisotherwisesubjecttostrictscrutiny,thecourtappliedrational‐basisreview.Idat*2.Thecourtstatedthestatute“readilysurvives”therationalbasisscrutinystandards.Id*2.Thecourt,therefore,affirmedthejudgmentofthedistrictcourtgrantingsummaryjudgmenttotheSBAandtheDepartmentofDefense,albeitondifferentgrounds.Id.
Thus,thecourtheldthecentralquestiononappealiswhetherSection8(a)warrantsstrictjudicialscrutiny,whichthecourtnotedthepartiesandthedistrictcourtbelievethatitdid.Id*2.Rothe,thecourtsaid,advancedonlythetheorythatthestatute,onitsface,Section8(a)oftheSmallBusinessAct,containsaracialclassification.Id*2.
Thecourtfoundthatthedefinitionoftheterm“sociallydisadvantaged”doesnotcontainaracialclassificationbecauseitdoesnotdistributeburdensorbenefitsonthebasisofindividualclassifications,itisrace‐neutralonitsface,anditspeaksofindividualvictimsofdiscrimination.Id*3.Onitsface,thecourtstatedthetermenvisionsaindividual‐basedapproachthatfocusesonexperienceratherthanonagroupcharacteristic,andthestatuterecognizesthatnotallmembersofaminoritygrouphavenecessarilybeensubjectedtoracialorethnicprejudiceorculturalbias.Id.Thecourtsaidthatthestatutedefinitionoftheterm“socialdisadvantaged”doesnotprovideforpreferentialtreatmentbasedonanapplicant’srace,butratheronanindividualapplicant’sexperienceofdiscrimination.Id*3.
Thecourtdistinguishedcasesinvolvingsituationsinwhichdisadvantagednon‐minorityapplicantscouldnotparticipate,butthecourtsaidtheplaintermsofthestatutepermitindividualsinanyracetobeconsidered“sociallydisadvantaged.”Id*3.Thecourtnoteditskeypointisthatthestatuteiseasilyreadnottorequireanygroup‐basedracialorethnicclassification,statingthestatutedefinessociallydisadvantagedindividualsasthoseindividualswhohavebeensubjectedtoracialorethnicprejudiceorculturalbias,notthoseindividualswhoaremembersorgroupsthathavebeensubjectedtoprejudiceorbias.Id.
ThecourtpointedoutthattheSBA’simplementationofthestatute’sdefinitionmaybebasedonaracialclassificationiftheregulationscarryitoutinamannerthatgivespreferencebasedonraceinsteadofindividualexperience.Id*4.But,thecourtfound,RothehasexpresslydisclaimedanychallengetotheSBA’simplementationofthestatute,andasaresult,theonlyquestionbeforethemiswhetherthestatuteitselfclassifiesbasedonrace,whichthecourtheldmakesnosuchclassification.Id*4.Thecourtdeterminedthestatutorylanguagedoesnotcreateapresumptionthatamemberofaparticularracialorethnicgroupisnecessarilysociallydisadvantaged,northatawhitepersonisnot.Id*5.
Thedefinitionofsocialdisadvantage,accordingtothecourt,doesnotamounttoaracialclassification,foritultimatelyturnsonabusinessowner’sexperienceofdiscrimination.Id*6.Thestatutedoesnotinstructtheagencytolimitthefieldtocertainracialgroups,ortoracialgroupsingeneral,nordoesittelltheagencytopresumethatanyonewhoisamemberofanyparticulargroupis,bythatmembershipalone,sociallydisadvantaged.Id.
ThecourtnotedthattheSupremeCourtandthiscourt’sdiscussionsofthe8(a)programhaveidentifiedtheregulations,notthestatute,asthesourceofitsracialpresumption.Id*8.ThecourtdistinguishedSection8(d)oftheSmallBusinessActascontainingarace‐basedpresumption,butfoundinthe8(a)programtheSupremeCourthasexplainedthattheagency(notCongress)presumesthatcertainracialgroupsaresociallydisadvantaged.Id.at*7.
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TheSBAstatutedoesnottriggerstrictscrutiny.Thecourtheldthatthestatutedoesnottriggerstrictscrutinybecauseitisrace‐neutral.Id*10.ThecourtpointedoutthatRothedoesnotarguethatthestatutecouldbesubjectedtostrictscrutiny,evenifitisfaciallyneutral,onthebasisthatCongressenacteditwithadiscriminatorypurpose.Id*9.IntheabsenceofsuchaclaimbyRothe,thecourtdetermineditwouldnotsubjectafaciallyrace‐neutralstatutetostrictscrutiny.Id.Theforeseeabilityofraciallydisparateimpact,withoutinvidiouspurpose,thecourtstated,doesnottriggerstrictconstitutionalscrutiny.Id.
Becausethestatutedoesnottriggerstrictscrutiny,thecourtfoundthatitneednotanddoesnotdecidewhetherthedistrictcourtcorrectlyconcludedthatthestatuteisnarrowlytailoredtomeetacompellinginterest.Id*10.Instead,thecourtconsideredwhetherthestatuteissupportedbyarationalbasis.Id.Thecourtheldthatitplainlyissupportedbyarationalbasis,becauseitbearsarationalrelationtosomelegitimateend.Id*10.
Thestatute,thecourtstated,aimstoremedytheeffectsofprejudiceandbiasthatimpedebusinessformationanddevelopmentandsuppressfaircompetitionforgovernmentcontracts.Id.Counteractingdiscrimination,thecourtfound,isalegitimateinterest,andincertaincircumstancesqualifiesascompelling.Id*11.Thestatutoryscheme,thecourtsaid,isrationallyrelatedtothatend.Id.
Thecourtdeclinedtoreviewthedistrictcourt’sadmissibilitydeterminationsastotheexpertwitnessesbecauseitstatedthatitwouldaffirmthedistrictcourt’sgrantofsummaryjudgmentevenifthedistrictcourtabuseditsdiscretioninmakingthosedeterminations.Id*11.Thecourtnotedtheexpertwitnesstestimonyisnotnecessaryto,norinconflictwith,itsconclusionthatSection8(a)issubjecttoandsurvivesrational‐basisreview.Id.
Otherissues.Thecourtdeclinedtoreviewthedistrictcourt’sadmissibilitydeterminationsastotheexpertwitnessesbecauseitstatedthatitwouldaffirmthedistrictcourt’sgrantofsummaryjudgmentevenifthedistrictcourtabuseditsdiscretioninmakingthosedeterminations.Id*11.Thecourtnotedtheexpertwitnesstestimonyisnotnecessaryto,norinconflictwith,itsconclusionthatSection8(a)issubjecttoandsurvivesrational‐basisreview.Id.
Inaddition,thecourtrejectedRothe’scontentionthatSection8(a)isanunconstitutionaldelegationoflegislativepower.Id*11.BecausetheargumentispremisedontheideathatCongresscreatedaracialclassification,whichthecourthashelditdidnot,Rothe’salternativeargumentondelegationalsofails.Id.
DissentingOpinion.Therewasadissentingopinionbyoneofthethreemembersofthecourt.ThedissentingjudgestatedinherviewthattheprovisionsoftheSmallBusinessActatissuearenotfaciallyrace‐neutral,butcontainaracialclassification.Id*12.ThedissentingjudgesaidthattheactprovidesmembersofcertainracialgroupsanadvantageinqualifyingforSection8(a)’scontractpreferencebyvirtueoftheirrace.Id*13.
ThedissentingopinionpointedoutthatallthepartiesandthedistrictcourtfoundthatstrictscrutinyshouldbeappliedindeterminingwhethertheSection8(a)programviolatesRothe’srighttoequalprotectionofthelaws.Id*16.Intheviewofthedissentingopinionthestatutorylanguageincludesaracialclassification,andtherefore,thestatuteshouldbesubjecttostrictscrutiny.Id*22.
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2. Rothe Development Corp. v. U.S. Dept. of Defense, et al., 545 F.3d 1023 (Fed. Cir. 2008)
AlthoughthiscasedoesnotinvolvetheFederalDBEProgram(49CFRPart26),itisananalogouscasethatmayimpactthelegalanalysisandlawrelatedtothevalidityofprogramsimplementedbyrecipientsoffederalfunds,includingtheFederalDBEProgram.Additionally,itunderscorestherequirementthatrace‐,ethnic‐andgender‐basedprogramsofanynaturemustbesupportedbysubstantialevidence.InRothe,anunsuccessfulbidderonafederaldefensecontractbroughtsuitallegingthattheapplicationofanevaluationpreference,pursuanttoafederalstatute,toasmalldisadvantagedbidder(SDB)towhomacontractwasawarded,violatedtheEqualProtectionclauseoftheU.S.Constitution.ThefederalstatutechallengedisSection1207oftheNationalDefenseAuthorizationActof1987andasreauthorizedin2003.Thestatuteprovidesagoalthat5percentofthetotaldollaramountofdefensecontractsforeachfiscalyearwouldbeawardedtosmallbusinessesownedandcontrolledbysociallyandeconomicallydisadvantagesindividuals.10U.S.C.§2323.CongressauthorizedtheDepartmentofDefense(“DOD”)toadjustbidssubmittedbynon‐sociallyandeconomicallydisadvantagedfirmsupwardsby10percent(the“PriceEvaluationAdjustmentProgram”or“PEA”).
Thedistrictcourtheldthefederalstatute,asreauthorizedin2003,wasconstitutionalonitsface.Thecourtheldthe5percentgoalandthePEAprogramasreauthorizedin1992andappliedin1998wasunconstitutional.ThebasisofthedecisionwasthatCongressconsideredstatisticalevidenceofdiscriminationthatestablishedacompellinggovernmentalinterestinthereauthorizationofthestatuteandPEAprogramin2003.CongresshadnotdocumentedorconsideredsubstantialstatisticalevidencethattheDODdiscriminatedagainstminoritysmallbusinesseswhenitenactedthestatutein1992andreauthorizeditin1998.Theplaintiffappealedthedecision.
TheFederalCircuitfoundthatthe“analysisofthefacialconstitutionalityofanactislimitedtoevidencebeforeCongresspriortothedateofreauthorization.”413F.3d1327(Fed.Cir.2005)(affirminginpart,vacatinginpart,andremanding324F.Supp.2d840(W.D.Tex.2004).ThecourtlimiteditsreviewtowhetherCongresshadsufficientevidencein1992toreauthorizetheprovisionsin1207.Thecourtheldthatforevidencetoberelevanttoastrictscrutinyanalysis,“theevidencemustbeproventohavebeenbeforeCongresspriortoenactmentoftheracialclassification.”TheFederalCircuitheldthatthedistrictcourterredinrelyingonthestatisticalstudieswithoutfirstdeterminingwhetherthestudieswerebeforeCongresswhenitreauthorizedsection1207.TheFederalCircuitremandedthecaseanddirectedthedistrictcourttoconsiderwhetherthedatapresentedwassooutdatedthatitdidnotprovidetherequisitestrongbasisinevidencetosupportthereauthorizationofsection1207.
OnAugust10,2007theFederalDistrictCourtfortheWesternDistrictofTexasinRotheDevelopmentCorp.v.U.S.Dept.ofDefense,499F.Supp.2d775(W.D.Tex.Aug10,2007)issueditsOrderonremandfromtheFederalCircuitCourtofAppealsdecisioninRothe,413F.3d1327(FedCir.2005).Thedistrictcourtupheldtheconstitutionalityofthe2006ReauthorizationofSection1207oftheNationalDefenseAuthorizationActof1987(10USC§2323),whichpermitstheU.S.DepartmentofDefensetoprovidepreferencesinselectingbidssubmittedbysmallbusinessesownedbysociallyandeconomicallydisadvantagedindividuals(“SDBs”).Thedistrictcourtfoundthe2006Reauthorizationofthe1207Programsatisfiedstrictscrutiny,holdingthatCongresshadacompellinginterestwhenitreauthorizedthe1207Programin2006,thattherewassufficientstatisticalandanecdotalevidencebeforeCongresstoestablishacompellinginterest,andthatthereauthorizationin2006wasnarrowlytailored.
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Thedistrictcourt,amongitsmanyfindings,foundcertainevidencebeforeCongresswas“stale,”thattheplaintiff(Rothe)failedtorebutotherevidencewhichwasnotstale,andthatthedecisionsbytheEighth,NinthandTenthCircuitsinthedecisionsinConcreteWorks,AdarandConstructors,SherbrookeTurfandWesternStatesPaving(discussedaboveandbelow)wererelevanttotheevaluationofthefacialconstitutionalityofthe2006Reauthorization.
2007OrderoftheDistrictCourt(499F.Supp.2d775). IntheSection1207Act,Congresssetagoalthat5percentofthetotaldollaramountofdefensecontractsforeachfiscalyearwouldbeawardedtosmallbusinessesownedandcontrolledbysociallyandeconomicallydisadvantagedindividuals.Inordertoachievethatgoal,CongressauthorizedtheDODtoadjustbidssubmittedbynon‐sociallyandeconomicallydisadvantagedfirmsupto10percent.10U.S.C.§2323(e)(3).Rothe,499F.Supp.2d.at782.PlaintiffRothedidnotqualifyasanSDBbecauseitwasownedbyaCaucasianfemale.AlthoughRothewastechnicallythelowestbidderonaDODcontract,itsbidwasadjustedupwardby10percent,andathirdparty,whoqualifiedasaSDB,becamethe“lowest”bidderandwasawardedthecontract.Id.Rotheclaimsthatthe1207ProgramisfaciallyunconstitutionalbecauseittakesraceintoconsiderationinviolationoftheEqualProtectioncomponentoftheDueProcessClauseoftheFifthAmendment.Id.at782‐83.Thedistrictcourt’sdecisiononlyreviewedthefacialconstitutionalityofthe2006Reauthorizationofthe2007Program.
ThedistrictcourtinitiallyrejectedsixlegalargumentsmadebyRotheregardingstrictscrutinyreviewbasedontherejectionofthesameargumentsbytheEighth,Ninth,andTenthCircuitCourtsofAppealintheSherbrookeTurf,WesternStatesPaving,ConcreteWorks,AdarandVIIcases,andtheFederalCircuitCourtofAppealinRothe.Rotheat825‐833.
ThedistrictcourtdiscussedandcitedthedecisionsinAdarandVII(2000),SherbrookeTurf(2003),andWesternStatesPaving(2005),asholdingthatCongresshadacompellinginterestineradicatingtheeconomicrootsofracialdiscriminationinhighwaytransportationprogramsfundedbyfederalmonies,andconcludingthattheevidencecitedbythegovernment,particularlythatcontainedinTheCompellingInterest(a.k.a.theAppendix),morethansatisfiedthegovernment’sburdenofproductionregardingthecompellinginterestforarace‐consciousremedy.Rotheat827.BecausetheUrbanInstituteReport,whichpresenteditsanalysisof39stateandlocaldisparitystudies,wascross‐referencedintheAppendix,thedistrictcourtfoundthecourtsinAdarandVII,SherbrookeTurf,andWesternStatesPaving,alsoreliedonitinsupportoftheircompellinginterestholding.Id.at827.
ThedistrictcourtalsofoundthattheTenthCircuitdecisioninConcreteWorksIV,321F.3d950(10thCir.2003),establishedlegalprinciplesthatarerelevanttothecourt’sstrictscrutinyanalysis.First,Rothe’sclaimsfordeclaratoryjudgmentontheracialconstitutionalityoftheearlier1999and2002Reauthorizationsweremoot.Second,thegovernmentcanmeetitsburdenofproductionwithoutconclusivelyprovingtheexistenceofpastorpresentracialdiscrimination.Third,thegovernmentmayestablishitsowncompellinginterestbypresentingevidenceofitsowndirectparticipationinracialdiscriminationoritspassiveparticipationinprivatediscrimination.Fourth,oncethegovernmentmeetsitsburdenofproduction,Rothemustintroduce“credible,particularized”evidencetorebutthegovernment’sinitialshowingoftheexistenceofacompellinginterest.Fifth,Rothemayrebutthegovernment’sstatisticalevidencebygivingarace‐neutralexplanationforthestatisticaldisparities,showingthatthestatisticsareflawed,demonstratingthatthedisparitiesshownarenotsignificantoractionable,orpresentingcontrastingstatisticaldata.Sixth,thegovernmentmayrelyondisparitystudiestosupportitscompellinginterest,andthosestudiesmaycontrolfortheeffectthatpre‐existingaffirmativeactionprogramshaveonthestatisticalanalysis.Id.at829‐32.
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BasedonConcreteWorksIV,thedistrictcourtdidnotrequirethegovernmenttoconclusivelyprovethatthereispervasivediscriminationintherelevantmarket,thateachpresumptivelydisadvantagedgroupsufferedequallyfromdiscrimination,orthatprivatefirmsintentionallyandpurposefullydiscriminatedagainstminorities.Thecourtfoundthattheinferenceofdiscriminatoryexclusioncanarisefromstatisticaldisparities.Id.at830‐31.
ThedistrictcourtheldthatCongresshadacompellinginterestinthe2006Reauthorizationofthe1207Program,whichwassupportedbyastrongbasisintheevidence.ThecourtreliedinsignificantpartuponsixstateandlocaldisparitystudiesthatwerebeforeCongresspriortothe2006Reauthorizationofthe1207Program.ThecourtbasedthisevidenceonitsfindingthatSenatorKennedyhadreferencedthesedisparitystudies,discussedandsummarizedfindingsofthedisparitystudies,andRepresentativeCynthiaMcKinneyalsocitedthesamesixdisparitystudiesthatSenatorKennedyreferenced.Thecourtstatedthatbasedonthecontentofthefloordebate,itfoundthatthesestudieswereputbeforeCongresspriortothedateoftheReauthorizationofSection1207.Id.at838.
Thedistrictcourtfoundthatthesesixstateandlocaldisparitystudiesanalyzedevidenceofdiscriminationfromadiversecross‐sectionofjurisdictionsacrosstheUnitedStates,and“theyconstituteprimafacieevidenceofanation‐widepatternorpracticeofdiscriminationinpublicandprivatecontracting.”Id.at838‐39.Thecourtfoundthatthedatausedinthesesixdisparitystudiesisnot“stale”forpurposesofstrictscrutinyreview.Id.at839.ThecourtdisagreedwithRothe’sargumentthatallthedatawerestale(datainthestudiesfrom1997through2002),“becausethisdatawasthemostcurrentdataavailableatthetimethatthesestudieswereperformed.”Id.Thecourtfoundthatthegovernmentalentitiesshouldbeabletorelyonthemostrecentlyavailabledatasolongasthosedataarereasonablyup‐to‐date.Id.Thecourtdeclinedtoadopta“bright‐linerulefordeterminingstaleness.”Id.
ThecourtreferredtothereliancebytheNinthCircuitandtheEighthCircuitontheAppendixtoaffirmtheconstitutionalityoftheUSDOTMBE[nowDBE]Program,andrejectedfiveyearsasabright‐lineruleforconsideringwhetherdataare“stale.”Id.atn.86.Thecourtalsostatedthatit“acceptsthereasoningoftheAppendix,whichthecourtfoundstatedthatforthemostpart“thefederalgovernmentdoesbusinessinthesamecontractingmarketsasstateandlocalgovernments.Therefore,theevidenceinstateandlocalstudiesoftheimpactofdiscriminatorybarrierstominorityopportunityincontractingmarketsthroughoutthecountryisrelevanttothequestionofwhetherthefederalgovernmenthasacompellinginteresttotakeremedialactioninitsownprocurementactivities.”Id.at839,quoting61Fed.Reg.26042‐01,26061(1996).
ThedistrictcourtalsodiscussedadditionalevidencebeforeCongressthatitfoundinCongressionalCommitteeReportsandHearingRecords.Id.at865‐71.ThecourtnotedSBAReportsthatwerebeforeCongresspriortothe2006Reauthorization.Id.at871.
ThedistrictcourtfoundthatthedatacontainedintheAppendix,theBenchmarkStudy,andtheUrbanInstituteReportwere“stale,”andthecourtdidnotconsiderthosereportsasevidenceofacompellinginterestforthe2006Reauthorization.Id.at872‐75.ThecourtstatedthattheEighth,NinthandTenthCircuitsreliedontheAppendixtoupholdtheconstitutionalityoftheFederalDBEProgram,citingtothedecisionsinSherbrookeTurf,AdarandVII,andWesternStatesPaving.Id.at872.ThecourtpointedoutthatalthoughitdoesnotrelyonthedatacontainedintheAppendixtosupportthe2006Reauthorization,thefacttheEighth,Ninth,andTenthCircuitsreliedonthesedatatoupholdtheconstitutionalityoftheFederalDBEProgramasrecentlyas2005,convincedthecourtthatabright‐linestalenessruleisinappropriate.Id.at874.
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AlthoughthecourtfoundthatthedatacontainedintheAppendix,theUrbanInstituteReport,andtheBenchmarkStudywerestaleforpurposesofstrictscrutinyreviewregardingthe2006Reauthorization,thecourtfoundthatRotheintroducednoconcrete,particularizedevidencechallengingthereliabilityofthemethodologyorthedatacontainedinthesixstateandlocaldisparitystudies,andotherevidencebeforeCongress.ThecourtfoundthatRothefailedtorebutthedata,methodologyoranecdotalevidencewith“concrete,particularized”evidencetothecontrary.Id.at875.Thedistrictcourtheldthatbasedonthestudies,thegovernmenthadsatisfieditsburdenofproducingevidenceofdiscriminationagainstAfricanAmericans,AsianAmericans,HispanicAmericans,andNativeAmericansintherelevantindustrysectors.Id.at876.
ThedistrictcourtfoundthatCongresshadacompellinginterestinreauthorizingthe1207Programin2006,whichwassupportedbyastrongbasisofevidenceforremedialaction.Id.at877.Thecourtheldthattheevidenceconstitutedprimafacieproofofanationwidepatternorpracticeofdiscriminationinbothpublicandprivatecontracting,thatCongresshadsufficientevidenceofdiscriminationthroughouttheUnitedStatestojustifyanationwideprogram,andtheevidenceofdiscriminationwassufficientlypervasiveacrossraciallinestojustifygrantingapreferencetoallfivepurportedlydisadvantagedracialgroups.Id.
Thedistrictcourtalsofoundthatthe2006Reauthorizationofthe1207Programwasnarrowlytailoredanddesignedtocorrectpresentdiscriminationandtocounterthelingeringeffectsofpastdiscrimination.Thecourtheldthatthegovernment’sinvolvementinbothpresentdiscriminationandthelingeringeffectsofpastdiscriminationwassopervasivethattheDODandtheDepartmentofAirForcehadbecomepassiveparticipantsinperpetuatingit.Id.ThecourtstateditwaslawofthecaseandcouldnotbedisturbedonremandthattheFederalCircuitinRotheIIIhadheldthatthe1207Programwasflexibleinapplication,limitedindurationanditdidnotundulyimpactontherightsofthirdparties.Id.,quotingRotheIII,262F.3dat1331.
Thedistrictcourtthusconductedanarrowlytailoredanalysisthatreviewedthreefactors:
1. Theefficacyofrace‐neutralalternatives;
2. Evidencedetailingtherelationshipbetweenthestatednumericalgoalof5percentandtherelevantmarket;and
3. Over‐andunder‐inclusiveness.
Id.ThecourtfoundthatCongressexaminedtheefficacyofrace‐neutralalternativespriortotheenactmentofthe1207Programin1986andthattheseprogramswereunsuccessfulinremedyingtheeffectsofpastandpresentdiscriminationinfederalprocurement.Id.ThecourtconcludedthatCongresshadattemptedtoaddresstheissuesthroughrace‐neutralmeasures,discussedthosemeasures,andfoundthatCongress’adoptionofrace‐consciousprovisionswerejustifiedbytheineffectivenessofsuchrace‐neutralmeasuresinhelpingminority‐ownedfirmsovercomebarriers.Id.Thecourtfoundthatthegovernmentseriouslyconsideredandenactedrace‐neutralalternatives,buttheserace‐neutralprogramsdidnotremedythewidespreaddiscriminationthataffectedthefederalprocurementsector,andthatCongresswasnotrequiredtoimplementorexhausteveryconceivablerace‐neutralalternative.Id.at880.Rather,thecourtfoundthatnarrowtailoringrequiresonly“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”Id.
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Thedistrictcourtalsofoundthatthe5percentgoalwasrelatedtotheminoritybusinessavailabilityidentifiedinthesixstateandlocaldisparitystudies.Id.at881.Thecourtconcludedthatthe5percentgoalwasaspirational,notmandatory.Id.at882.Thecourtthenexaminedandfoundthattheregulationsimplementingthe1207Programwerenotover‐inclusiveforseveralreasons.
November4,2008decisionbytheFederalCircuitCourtofAppeals. OnNovember4,2008,theFederalCircuitCourtofAppealsreversedthejudgmentofthedistrictcourtinpart,andremandedwithinstructionstoenterajudgment(1)denyingRotheanyreliefregardingthefacialconstitutionalityofSection1207asenactedin1999or2002,(2)declaringthatSection1207asenactedin2006(10U.S.C.§2323)isfaciallyunconstitutional,and(3)enjoiningapplicationofSection1207(10U.S.C.§2323).
TheFederalCircuitCourtofAppealsheldthatSection1207,onitsface,asreenactedin2006,violatedtheEqualProtectioncomponentoftheFifthAmendmentrighttodueprocess.ThecourtfoundthatbecausethestatuteauthorizedtheDODtoaffordpreferentialtreatmentonthebasisofrace,thecourtappliedstrictscrutiny,andbecauseCongressdidnothavea“strongbasisinevidence”uponwhichtoconcludethattheDODwasapassiveparticipantinpervasive,nationwideracialdiscrimination—atleastnotontheevidenceproducedbytheDODandreliedonbythedistrictcourtinthiscase—Section1207failedtomeetthisstrictscrutinytest.545F.3dat1050.
Strictscrutinyframework.TheFederalCircuitCourtofAppealsrecognizedthattheSupremeCourthasheldagovernmentmayhaveacompellinginterestinremedyingtheeffectsofpastorpresentracialdiscrimination.545F.3dat1036.ThecourtcitedthedecisioninCroson,488U.S.at492,thatitis“beyonddisputethatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxcontributionsofallcitizens,donotservetofinancetheevilofprivateprejudice.”545F.3d.at1036,quotingCroson,488U.S.at492.
Thecourtheldthatbeforeresortingtorace‐consciousmeasures,thegovernmentmustidentifythediscriminationtoberemedied,publicorprivate,withsomespecificity,andmusthaveastrongbasisofevidenceuponwhichtoconcludethatremedialactionisnecessary.545F.3dat1036,quotingCroson,488U.S.at500,504.Althoughthepartychallengingthestatutebearstheultimateburdenofpersuadingthecourtthatitisunconstitutional,theFederalCircuitstatedthatthegovernmentfirstbearsaburdentoproducestrongevidencesupportingthelegislature’sdecisiontoemployrace‐consciousaction.545F.3dat1036.
Evenwherethereisacompellinginterestsupportedbystrongbasisinevidence,thecourtheldthestatutemustbenarrowlytailoredtofurtherthatinterest.Id.Thecourtnotedthatanarrowtailoringanalysiscommonlyinvolvessixfactors:(1)thenecessityofrelief;(2)theefficacyofalternative,race‐neutralremedies;(3)theflexibilityofrelief,includingtheavailabilityofwaiverprovisions;(4)therelationshipwiththestatednumericalgoaltotherelevantlabormarket;(5)theimpactofreliefontherightsofthirdparties;and(6)theoverinclusivenessorunderinclusivenessoftheracialclassification.Id.
Compellinginterest–strongbasisinevidence. TheFederalCircuitpointedoutthatthestatisticalandanecdotalevidencereliefuponbythedistrictcourtinitsrulingbelowincludedsixdisparitystudiesofstateorlocalcontracting.TheFederalCircuitalsopointedoutthatthedistrictcourtfoundthatthedatacontainedintheAppendix,theUrbanInstituteReport,andtheBenchmarkStudywerestaleforpurposesofstrictscrutinyreviewofthe2006Authorization,andtherefore,thedistrictcourtconcludedthatitwouldnotrelyonthosethreereportsas
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evidenceofacompellinginterestforthe2006reauthorizationofthe1207Program.545F.3d1023,citingtoRotheVI,499F.Supp.2dat875.SincetheDODdidnotchallengethisfindingonappeal,theFederalCircuitstatedthatitwouldnotconsidertheAppendix,theUrbanInstituteReport,ortheDepartmentofCommerceBenchmarkStudy,andinsteaddeterminedwhethertheevidencereliedonbythedistrictcourtwassufficienttodemonstrateacompellinginterest.Id.
Sixstateandlocaldisparitystudies. TheFederalCircuitfoundthatdisparitystudiescanberelevanttothecompellinginterestanalysisbecause,asexplainedbytheSupremeCourtinCroson,“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedby[a]localityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”545F.3dat1037‐1038,quotingCroson,488U.S.C.at509.TheFederalCircuitalsocitedtothedecisionbytheFifthCircuitCourtofAppealsinW.H.ScottConstr.Co.v.CityofJackson,199F.3d206(5thCir.1999)thatgivenCroson’semphasisonstatisticalevidence,othercourtsconsideringequalprotectionchallengestominority‐participationprogramshavelookedtodisparityindices,ortocomputationsofdisparitypercentages,indeterminingwhetherCroson’sevidentiaryburdenissatisfied.545F.3dat1038,quotingW.H.Scott,199F.3dat218.
TheFederalCircuitnotedthatadisparitystudyisastudyattemptingtomeasurethedifference‐ordisparity‐betweenthenumberofcontractsorcontractdollarsactuallyawardedminority‐ownedbusinessesinaparticularcontractmarket,ontheonehand,andthenumberofcontractsorcontractdollarsthatonewouldexpecttobeawardedtominority‐ownedbusinessesgiventheirpresenceinthatparticularcontractmarket,ontheotherhand.545F.3dat1037.
Staleness. TheFederalCircuitdeclinedtoadoptaperserulethatdatamorethanfiveyearsoldarestaleperse,whichrejectedtheargumentputforthbyRothe.545F.3dat1038.Thecourtpointedoutthatthedistrictcourtnotedothercircuitcourtshavereliedonstudiescontainingdatamorethanfiveyearsoldwhenconductingcompellinginterestanalyses,citingtoWesternStatesPavingv.WashingtonStateDepartmentofTransportation,407F.3d983,992(9thCir.2005)andSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964,970(8thCir.2003)(relyingontheAppendix,publishedin1996).
TheFederalCircuitagreedwiththedistrictcourtthatCongress“shouldbeabletorelyonthemostrecentlyavailabledatasolongasthatdataisreasonablyup‐to‐date.”545F.3dat1039.TheFederalCircuitaffirmedthedistrictcourt’sconclusionthatthedataanalyzedinthesixdisparitystudieswerenotstaleattherelevanttimebecausethedisparitystudiesanalyzeddatapertainedtocontractsawardedasrecentlyas2000oreven2003,andbecauseRothedidnotpointtomorerecent,availabledata.Id.
BeforeCongress. TheFederalCircuitfoundthatforevidencetoberelevantinthestrictscrutinyanalysis,it“mustbeproventohavebeenbeforeCongresspriortoenactmentoftheracialclassification.”545F.3dat1039,quotingRotheV,413F.3dat1338.TheFederalCircuithadissueswithdeterminingwhetherthesixdisparitystudieswereactuallybeforeCongressforseveralreasons,includingthattherewasnoindicationthatthesestudiesweredebatedorreviewedbymembersofCongressorbyanywitnesses,andbecauseCongressmadenofindingsconcerningthesestudies.545F.3dat1039‐1040.However,thecourtdetermineditneednotdecidewhetherthesixstudieswereputbeforeCongress,becausethecourtheldinanyeventthatthestudiesdidnotprovideasubstantiallyprobativeandbroad‐basedstatisticalfoundationnecessaryforthestrongbasisinevidencethatmustbethepredicatefornation‐wide,race‐consciousaction.Id.at1040.
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ThecourtdidnotethatfindingsregardingdisparitystudiesaretobedistinguishedfromformalfindingsofdiscriminationbytheDOD“whichCongresswasemphaticallynotrequiredtomake.”Id.at1040,footnote11(emphasisinoriginal).TheFederalCircuitcitedtheDeanv.CityofShreveportcasethatthe“governmentneednotincriminateitselfwithaformalfindingofdiscriminationpriortousingarace‐consciousremedy.”545F.3dat1040,footnote11quotingDeanv.CityofShreveport,438F.3d448,445(5thCir.2006).
Methodology. TheFederalCircuitfoundthatthereweremethodologicaldefectsinthesixdisparitystudies.Thecourtfoundthattheobjectionstotheparametersusedtoselecttherelevantpoolofcontractorswasoneofthemajordefectsinthestudies.545F.3dat1040‐1041.
Thecourtstatedthatingeneral,“[a]disparityratiolessthan0.80”—i.e.,afindingthatagivenminoritygroupreceivedlessthan80percentoftheexpectedamount—“indicatesarelevantdegreeofdisparity,”and“mightsupportaninferenceofdiscrimination.”545F.3dat1041,quotingthedistrictcourtopinioninRotheVI,499F.Supp.2dat842;andcitingEngineeringContractorsAssociationofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3d895,914(11thCir.1997).Thecourtnotedthatthisdisparityratioattemptstocalculatearatiobetweentheexpectedcontractamountofagivenrace/gendergroupandtheactualcontractamountreceivedbythatgroup.545F.3dat1041.
Thecourtconsideredtheavailabilityanalysis,orbenchmarkanalysis,whichisutilizedtoensurethatonlythoseminority‐ownedcontractorswhoarequalified,willingandabletoperformtheprimecontractsatissueareconsideredwhenperformingthedenominatorofadisparityratio.545F.3dat1041.Thecourtcitedtoanexpertusedinthecasethata“crucialquestion”indisparitystudiesistodevelopacrediblemethodologytoestimatethisbenchmarkshareofcontractsminoritieswouldreceiveintheabsenceofdiscriminationandthetouchstoneformeasuringthebenchmarkistodeterminewhetherthefirmisready,willing,andabletodobusinesswiththegovernment.545F.3dat1041‐1042.
ThecourtconcludedthecontentionbyRothe,thatthesixstudiesmisappliedthis“touchstone”ofCrosonanderroneouslyincludedminority‐ownedfirmsthatweredeemedwillingorpotentiallywillingandable,withoutregardtowhetherthefirmwasqualified,wasnotadefectthatsubstantiallyundercuttheresultsoffourofthesixstudies,because“thebulkofthebusinessesconsideredinthesestudieswereidentifiedinwaysthatwouldtendtoestablishtheirqualifications,suchasbytheirpresenceoncitycontractrecordsandbidderlists.”545F.3dat1042.Thecourtnotedthatwithregardtothesestudiesavailableprimecontractorswereidentifiedviacertificationlists,willingnesssurveyofchambermembershipandtradeassociationmembershiplists,publicagencyandcertificationlists,utilizedprimecontractor,bidderlists,countyandothergovernmentrecordsandothertypelists.Id.
Thecourtstateditwaslessconfidentinthedeterminationofqualifiedminority‐ownedbusinessesbythetwootherstudiesbecausetheavailabilitymethodologyemployedinthosestudies,thecourtfound,appearedlesslikelytohaveweededoutunqualifiedbusinesses.Id.However,thecourtstateditwasmoretroubledbythefailureoffiveofthestudiestoaccountofficiallyforpotentialdifferencesinsize,or“relativecapacity,”ofthebusinessincludedinthosestudies.545F.3dat1042‐1043.
Thecourtnotedthatqualifiedfirmsmayhavesubstantiallydifferentcapacitiesandthusmightbeexpectedtobringinsubstantiallydifferentamountsofbusinessevenintheabsenceofdiscrimination.545F.3dat1043.TheFederalCircuitreferredtotheEleventhCircuitexplanationsimilarlythatbecausefirmsarebigger,biggerfirmshaveabiggerchancetowin
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biggercontracts,andthusonewouldexpectthebigger(onaverage)non‐MWBEfirmstogetadisproportionatelyhigherpercentageoftotalconstructiondollarsawardedthanthesmallerMWBEfirms.545F.3dat1043quotingEngineeringContractorsAssociation,122F.3dat917.Thecourtpointedoutitsissueswiththestudiesaccountingfortherelativesizesofcontractsawardedtominority‐ownedbusinesses,butnotconsideringtherelativesizesofthebusinessesthemselves.Id.at1043.
Thecourtnotedthatthestudiesmeasuredtheavailabilityofminority‐ownedbusinessesbythepercentageoffirmsinthemarketownedbyminorities,insteadofbythepercentageoftotalmarketplacecapacitythosefirmscouldprovide.Id.Thecourtsaidthatforadisparityratiotohaveasignificantprobativevalue,thesametimeperiodandmetric(dollarsornumbers)shouldbeusedinmeasuringtheutilizationandavailabilityshares.545F.3dat1044,n.12.
Thecourtstatedthatwhiletheseparametersrelatingtothefirmsizemayhaveensuredthateachminority‐ownedbusinessinthestudiesmetacapacitythreshold,theseparametersdidnotaccountfortherelativecapacitiesofbusinessestobidformorethanonecontractatatime,whichfailurerenderedthedisparityratioscalculatedbythestudiessubstantiallylessprobativeontheirown,ofthelikelihoodofdiscrimination.Id.at1044.Thecourtpointedoutthatthestudiescouldhaveaccountedforfirmsizeevenwithoutchangingthedisparityratiomethodologiesbyemployingregressionanalysistodeterminewhethertherewasastatisticallysignificantcorrelationbetweenthesizeofafirmandtheshareofcontractdollarsawardedtoit.545F.3dat1044citingtoEngineeringContractorsAssociation,122F.3dat917.Thecourtnotedthatonlyoneofthestudiesconductedthistypeofregressionanalysis,whichincludedtheindependentvariablesofafirm‐ageofacompany,ownereducationlevel,numberofemployees,percentofrevenuefromtheprivatesectorandownerexperienceforindustrygroupings.Id.at1044‐1045.
Thecourtstated,to“beclear,”thatitdidnotholdthatthedefectsintheavailabilityandcapacityanalysesinthesesixdisparitystudiesrenderthestudieswhollyunreliableforanypurpose.Id.at1045.Thecourtsaidthatwherethecalculateddisparityratiosarelowenough,thecourtdoesnotforeclosethepossibilitythataninferenceofdiscriminationmightstillbepermissibleforsomeoftheminoritygroupsinsomeofthestudiedindustriesinsomeofthejurisdictions.Id.Thecourtrecognizedthataminority‐ownedfirm’scapacityandqualificationsmaythemselvesbeaffectedbydiscrimination.Id.Thecourtheld,however,thatthedefectsitnoteddetracteddramaticallyfromtheprobativevalueofthesixstudies,andinconjunctionwiththeirlimitedgeographiccoverage,renderedthestudiesinsufficienttoformthestatisticalcoreofthestrongbasisandevidencerequiredtoupholdthestatute.Id.
Geographiccoverage. Thecourtpointedoutthatwhereasmunicipalitiesmustnecessarilyidentifydiscriminationintheimmediatelocalitytojustifyarace‐basedprogram,thecourtdoesnotthinkthatCongressneedstohavehadevidencebeforeitofdiscriminationinall50statesinordertojustifythe1207program.Id.Thecourtstressed,however,thatinholdingthesixstudiesinsufficientinthisparticularcase,“wedonotnecessarilydisapproveofdecisionsbyothercircuitcourtsthathaverelied,directlyorindirectly,onmunicipaldisparitystudiestoestablishafederalcompellinginterest.”545F.3dat1046.Thecourtstatedinparticular,theAppendixreliedonbytheNinthandTenthCircuitsinthecontextofcertainrace‐consciousmeasurespertainingtofederalhighwayconstruction,referencestheUrbanInstituteReport,whichitselfanalyzedover50disparitystudiesandreliedforitsconclusionsonover30ofthosestudies,afarbroaderbasisthanthesixstudiesprovidedinthiscase.Id.
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Anecdotalevidence. Thecourtheldthatgivenitsholdingregardingstatisticalevidence,itdidnotreviewtheanecdotalevidencebeforeCongress.Thecourtdidpointout,however,thattherewasnotevidencepresentedofasingleinstanceofallegeddiscriminationbytheDODinthecourseofawardingaprimecontract,ortoasingleinstanceofallegeddiscriminationbyaprivatecontractoridentifiedastherecipientofaprimedefensecontract.545F.3dat1049.ThecourtnotedthislackofevidenceinthecontextoftheopinioninCrosonthatifagovernmenthasbecomeapassiveparticipantinasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry,thenthatgovernmentmaytakeaffirmativestepstodismantletheexclusionarysystem.545F.3dat1048,citingCroson,488U.S.at492.
TheFederalCircuitpointedoutthattheTenthCircuitinConcreteWorksnotedtheCityofDenverofferedmorethandollaramountstolinkitsspendingtoprivatediscrimination,butinsteadprovidedtestimonyfromminoritybusinessownersthatgeneralcontractorswhousethemincityconstructionprojectsrefusetousethemonprivateprojects,withtheresultthatDenverhadpaidtaxdollarstosupportfirmsthatdiscriminatedagainstotherfirmsbecauseoftheirrace,ethnicityandgender.545F.3dat1049,quotingConcreteWorks,321F.3dat976‐977.
Inconcluding,thecourtstatedthatitstresseditsholdingwasgroundedintheparticularitemsofevidenceofferedbytheDOD,and“shouldnotbeconstruedasstatingblanketrules,forexampleaboutthereliabilityofdisparitystudies.AstheFifthCircuithasexplained,thereisno‘precisemathematicalformula’toassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”545F.3dat1049,quotingW.H.ScottConstr.Co.,199F.3dat218n.11.
Narrowlytailoring. TheFederalCircuitonlymadetwoobservationsaboutnarrowlytailoring,becauseitheldthatCongresslackedtheevidentiarypredicateforacompellinginterest.First,itnotedthatthe1207Programwasflexibleinapplication,limitedinduration,andthatitdidnotundulyimpactontherightsofthirdparties.545F.3dat1049.Second,thecourtheldthattheabsenceofstronglyprobativestatisticalevidencemakesitimpossibletoevaluateatleastoneoftheothernarrowlytailoringfactors.WithoutsolidbenchmarksfortheminoritygroupscoveredbytheSection1207,thecourtsaiditcouldnotdeterminewhetherthe5percentgoalisreasonablyrelatedtothecapacityoffirmsownedbymembersofthoseminoritygroups—i.e.,whetherthatgoaliscomparabletotheshareofcontractsminoritieswouldreceiveintheabsenceofdiscrimination.”545F.3dat1049‐1050.
3. Rothe Development, Inc. v. U.S. Dept. of Defense and Small Business Administration, 107 F. Supp. 3d 183, 2015 WL 3536271 (D.D.C. 2015), affirmed on other grounds, 836 F.3d 57, 2016 WL 4719049 (D.C. Cir. 2016).
PlaintiffRotheDevelopment,Inc.isasmallbusinessthatfiledthisactionagainsttheU.S.DepartmentofDefense(“DOD”)andtheU.S.SmallBusinessAdministration(“SBA”)(collectively,“Defendants”)challengingtheconstitutionalityoftheSection8(a)Programonitsface.
TheconstitutionalchallengethatRothebringsinthiscaseisnearlyidenticaltothechallengebroughtinthecaseofDynaLanticCorp.v.UnitedStatesDepartmentofDefense,885F.Supp.2d237(D.D.C.2012).TheplaintiffinDynaLanticsuedtheDOD,theSBA,andtheDepartmentofNavyallegingthatSection8(a)wasunconstitutionalbothonitsfaceandasappliedtothemilitarysimulationandtrainingindustry.SeeDynaLantic,885F.Supp.2dat242.DynaLantic’scourtdisagreedwiththeplaintiff’sfacialattackandheldtheSection8(a)Programasfacially
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constitutional.SeeDynaLantic,885F.Supp.2dat248‐280,283‐291.(SeealsodiscussionofDynaLanticinthisAppendixbelow.)
ThecourtinRothestatesthattheplaintiffRothereliesonsubstantiallythesamerecordevidenceandnearlyidenticallegalargumentsasintheDynaLanticcase,andurgesthecourttostrikedowntherace‐consciousprovisionsofSection8(a)ontheirface,andthustodepartfromDynaLantic’sholdinginthecontextofthiscase.2015WL3536271at*1.BoththeplaintiffRotheandtheDefendantsfiledcross‐motionsforsummaryjudgmentaswellasmotionstolimitorexcludetestimonyofeachother’sexpertwitnesses.ThecourtconcludesthatDefendants’expertsmeettherelevantqualificationstandardsundertheFederalRules,andthereforedeniesplaintiffRothe’smotiontoexcludeDefendants’experttestimony.Id.Bycontrast,thecourtfoundsufficientreasontodoubtthequalificationsofoneofplaintiff’sexpertsandtoquestionthereliabilityofthetestimonyoftheother;consequently,thecourtgrantstheDefendants’motionstoexcludeplaintiff’sexperttestimony.
Inaddition,thecourtinRotheagreeswiththecourt’sreasoninginDynaLantic,andthusthecourtinRothealsoconcludesthatSection8(a)isconstitutionalonitsface.Accordingly,thecourtdeniesplaintiff’smotionforsummaryjudgmentandgrantsDefendants’cross‐motionforsummaryjudgment.
DynaLantic Corp. v. Department of Defense. ThecourtinRotheanalyzedtheDynaLanticcase,andagreedwiththefindings,holdingandconclusionsofthecourtinDynaLantic.See2015WL3536271at*4‐5.ThecourtinRothenotedthatthecourtinDynaLanticengagedinadetailedexaminationofSection8(a)andtheextensiverecordevidence,includingdisparitystudiesonracialdiscriminationinfederalcontractingacrossvariousindustries.Id.at*5.ThecourtinDynaLanticconcludedthatCongresshadacompellinginterestineliminatingtherootsofracialdiscriminationinfederalcontracting,fundedbyfederalmoney,andalsothatthegovernmenthadestablishedastrongbasisinevidencetosupportitsconclusionthatremedialactionwasnecessarytoremedythatdiscrimination.Id.at*5.Thisconclusionwasbasedonthefindingthegovernmentprovidedextensiveevidenceofdiscriminatorybarrierstominoritybusinessformationandminoritybusinessdevelopment,aswellassignificantevidencethat,evenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinbothpublicandprivatesectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.at*5,citingDynaLantic,885F.Supp.2dat279.
ThecourtinDynaLanticalsofoundthatDynaLantichadfailedtopresentcredible,particularizedevidencethatunderminedthegovernment’scompellinginterestorthatdemonstratedthatthegovernment’sevidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.2015WL3536271at*5,citingDynaLantic,at279.
Withrespecttonarrowtailoring,thecourtinDynaLanticconcludedthattheSection8(a)Programisnarrowlytailoredonitsface,andthatsinceSection8(a)race‐consciousprovisionswerenarrowlytailoredtofurtheracompellingstateinterest,strictscrutinywassatisfiedinthecontextoftheconstructionindustryandinotherindustriessuchasarchitectureandengineering,andprofessionalservicesaswell.Id.ThecourtinRothealsonotedthatthecourtinDynaLanticfoundthatDynaLantichadthusfailedtomeetitsburdentoshowthatthechallengeprovisionswereunconstitutionalinallcircumstancesandheldthatSection8(a)wasconstitutionalonitsface.Id.
Defendants’expertevidence.OneofDefendants’expertsusedregressionanalysis,claimingtohaveisolatedtheeffectinminorityownershiponthelikelihoodofasmallbusinessreceiving
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governmentcontracts,specificallyusinga“logitmodel”toexaminegovernmentcontractingdatainordertodeterminewhetherthedatashowanydifferenceintheoddsofcontractsbeingwonbyminority‐ownedsmallbusinessesrelativetoothersmallbusinesses.2015WL3536271at*9.Theexpertcontrolledforothervariablesthatcouldinfluencetheoddsofwhetherornotagivenfirmwinsacontract,suchasbusinesssize,age,andlevelofsecurityclearance,andconcludedthattheoddsofminority‐ownedsmallfirmsandnon‐8(a)SDBfirmswinningcontractswerelowerthansmallnon‐minorityandnon‐SDBfirms.Id.Inaddition,theDefendants’expertfoundthatnon‐8(a)minority‐ownedSDBsarestatisticallysignificantlylesslikelytowinacontractinindustriesaccountingfor94.0%ofcontractactions,93.0%ofdollarsawarded,andinwhich92.2%ofnon‐8(a)minority‐ownedSDBsareregistered.Id.Also,theexpertfoundthatthereisnoindustrywherenon‐8(a)minority‐ownedSDBshaveastatisticallysignificantadvantageintermsofwinningacontractfromthefederalgovernment.Id.
ThecourtrejectedRothe’scontentionthattheexpertopinionisbasedoninsufficientdata,andthatitsanalysisofdatarelatedtoasubsetoftherelevantindustrycodesistoonarrowtosupportitsscientificconclusions.Id.at*10.Thecourtfoundconvincingtheexpert’sresponsetoRothe’scritiqueabouthisdataset,explainingthat,fromamathematicalperspective,excludingcertainNAICScodesandanalyzingdataatthethree‐digitlevelactuallyincreasesthereliabilityofhisresults.Theexpertoptedtousecodesatthethree‐digitlevelasacompromise,balancingtheneedtohavesufficientdataineachindustrygroupingandtherecognitionthatmanyfirmscanswitchproductionwithinthebroaderthree‐digitcategory.Id.TheexpertalsoexcludedcertainNAICSindustrygroupsfromhisregressionanalysesbecauseofincompletedata,irrelevance,orbecausedataissuesinagivenNAICSgrouppreventedtheregressionmodelfromproducingreliableestimates.Id.Thecourtfoundthattheexpert’sreasoningwithrespecttotheexclusionsandassumptionshemakesintheanalysisarefullyexplainedandscientificallysound.Id.
Inaddition,thecourtfoundthatpost‐enactmentevidencewasproperlyconsideredbytheexpertandthecourt.Id.Thecourtfoundthatnearlyeverycircuittoconsiderthequestionoftherelevanceofpost‐enactmentevidencehasheldthatreviewingcourtsneednotlimitthemselvestotheparticularevidencethatCongressrelieduponwhenitenactedthestatuteatissue.Id.,citingDynaLantic,885F.Supp.2dat257.
Thus,thecourtheldthatpost‐enactmentevidenceisrelevanttoconstitutionalreview,inparticular,followingthecourtinDynaLantic,whenthestatuteisover30yearsoldandtheevidenceusedtojustifySection8(a)isstaleforpurposesofdeterminingacompellinginterestinthepresent.Id.,citingDynaLanticat885F.Supp.2dat258.ThecourtalsopointsoutthatthestatuteitselfcontemplatesthatCongresswillreviewthe8(a)Programonacontinuingbasis,whichrenderstheuseofpost‐enactmentevidenceproper.Id.
ThecourtalsofoundDefendants’additionalexpert’stestimonyasadmissibleinconnectionwiththatexpert’sreviewoftheresultsofthe107disparitystudiesconductedthroughouttheUnitedStatessincetheyear2000,allbut32ofwhichweresubmittedtoCongress.Id.at*11.ThisexperttestifiedthatthedisparitystudiessubmittedtoCongress,takenasawhole,providestrongevidenceoflarge,adverse,andoftenstatisticallysignificantdisparitiesbetweenminorityparticipationinbusinessenterpriseactivityandtheavailabilityofthosebusinesses;thedisparitiesarenotexplainedsolelybydifferencesinfactorsotherthanraceandsexthatareuntaintedbydiscrimination;andthedisparitiesareconsistentwiththepresenceofdiscriminationinthebusinessmarket.Id.at*12.
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ThecourtrejectsRothe’scontentionstoexcludethisexperttestimonymerelybasedontheargumentbyRothethatthefactualbasisfortheexpert’sopinionisunreliablebasedonallegedflawsinthedisparitystudiesorthatthefactualbasisfortheexpert’sopinionsareweak.Id.ThecourtstatesthatevenifRothe’scontentionsarecorrect,anattackontheunderlyingdisparitystudiesdoesnotnecessitatetheremedyofexclusion.Id.
Plaintiff’sexpert’stestimonyrejected.Thecourtfoundthatoneofplaintiff’sexpertswasnotqualifiedbasedonhisownadmissionsregardinghislackoftraining,education,knowledge,skillandexperienceinanystatisticaloreconometricmethodology.Id.at*13.Plaintiff’sotherexpertthecourtdeterminedprovidedtestimonythatwasunreliableandinadmissibleashispreferredmethodologyforconductingdisparitystudies“appearstobewelloutsideofthemainstreaminthisparticularfield.”Id.at*14.Theexpert’smethodologyincludedhisassertionthattheonlyproperwaytodeterminetheavailabilityofminority‐ownedbusinessesistocountthosecontractorsandsubcontractorsthatactuallyperformorbidoncontracts,whichthecourtrejectedasnotreliable.Id.
TheSection8(a)Programisconstitutionalonitsface.ThecourtfoundpersuasivethecourtdecisioninDynaLantic,andheldthatinasmuchasRotheseekstore‐litigatethelegalissuespresentedinthatcase,thiscourtdeclinesRothe’sinvitationtodepartfromtheDynaLanticcourt’sconclusionthatSection8(a)isconstitutionalonitsface.Id.at*15.
ThecourtreiterateditsagreementwiththeDynaLanticcourtthatracialclassificationsareconstitutionalonlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterest.Id.at*17.Todemonstrateacompellinginterest,thegovernmentdefendantsmustmaketwoshowings:firstthegovernmentmustarticulatealegislativegoalthatisproperlyconsideredacompellinggovernmentalinterest,andsecondthegovernmentmustdemonstrateastrongbasisinevidencesupportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthatinterest.Id.at*17.Insodoing,thegovernmentneednotconclusivelyprovetheexistenceofracialdiscriminationinthepastorpresent.Id.Thegovernmentmayrelyonbothstatisticalandanecdotalevidence,althoughanecdotalevidencealonecannotestablishastrongbasisinevidenceforthepurposesofstrictscrutiny.Id.
Ifthegovernmentmakesbothshowings,theburdenshiftstotheplaintifftopresentcredible,particularizedevidencetorebutthegovernment’sinitialshowingofacompellinginterest.Id.Onceacompellinginterestisestablished,thegovernmentmustfurthershowthatthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.Id.
ThecourtheldthatthegovernmentarticulatedandestablishedcompellinginterestfortheSection8(a)Program,namely,remedyingrace‐baseddiscriminationanditseffects.Id.Thecourtheldthegovernmentalsoestablishedastrongbasisinevidencethatfurtheringthisinterestrequiresrace‐basedremedialaction–specifically,evidenceregardingdiscriminationingovernmentcontracting,whichconsistedofextensiveevidenceofdiscriminatorybarrierstominoritybusinessformationandforcefulevidenceofdiscriminatorybarrierstominoritybusinessdevelopment.Id.at*17,citingDynaLantic,885F.Supp.2dat279.
ThegovernmentdefendantsinthiscaserelieduponthesameevidenceasintheDynaLanticcaseandthecourtfoundthatthegovernmentprovidedsignificantevidencethatevenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinboththeprivateandpublicsectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.at*17.ThecourtheldthatRothehasfailedtorebuttheevidenceofthe
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governmentwithcredibleandparticularizedevidenceofitsown.Id.at*17.Furthermore,thecourtfoundthatthegovernmentdefendantsestablishedthattheSection8(a)Programisnarrowlytailoredtoachievetheestablishedcompellinginterest.Id.at*18.
Thecourtfound,citingagreementwiththeDynaLanticcourt,thattheSection8(a)Programsatisfiesallsixfactorsofnarrowtailoring.Id.First,alternativerace‐neutralremedieshaveprovedunsuccessfulinaddressingthediscriminationtargetedwiththeProgram.Id.Second,theSection8(a)Programisappropriatelyflexible.Id.Third,Section8(a)isneitherovernorunder‐inclusive.Id.Fourth,theSection8(a)Programimposestemporallimitsoneveryindividual’sparticipationthatfulfilledthedurationalaspectofnarrowtailoring.Id.Fifth,therelevantaspirationalgoalsforSDBcontractingparticipationarenumericallyproportionate,inpartbecausetheevidencepresentedestablishedthatminorityfirmsareready,willingandabletoperformworkequaltotwotofivepercentofgovernmentcontractsinindustriesincludingbutnotlimitedtoconstruction.Id.Andsix,thefactthattheSection8(a)Programreservescertaincontractsforprogramparticipantsdoesnot,onitsface,createanimpermissibleburdenonnon‐participatingfirms.Id.;citingDynaLantic,885F.Supp.2dat283‐289.
Accordingly,thecourtconcurredcompletelywiththeDynaLanticcourt’sconclusionthatthestrictscrutinystandardhasbeenmet,andthattheSection8(a)Programisfaciallyconstitutionaldespiteitsrelianceonrace‐consciouscriteria.Id.at*18.Thecourtfoundthatonbalancethedisparitystudiesonwhichthegovernmentdefendantsrelyreveallarge,statisticallysignificantbarrierstobusinessformationamongminoritygroupsthatcannotbeexplainedbyfactorsotherthanrace,anddemonstratethatdiscriminationbyprimecontractors,privatesectorcustomers,suppliersandbondingcompaniescontinuestolimitminoritybusinessdevelopment.Id.at*18,citingDynaLantic,885F.Supp.2dat261,263.
Moreover,thecourtfoundthattheevidenceclearlyshowsthatqualified,eligibleminority‐ownedfirmsareexcludedfromcontractingmarkets,andaccordinglyprovidespowerfulevidencefromwhichaninferenceofdiscriminatoryexclusioncouldarise.Id.at*18.ThecourtconcurredwiththeDynaLanticcourt’sconclusionthatbasedontheevidencebeforeCongress,ithadastrongbasisinevidencetoconcludetheuseofrace‐consciousmeasureswasnecessaryin,atleast,somecircumstances.Id.at*18,citingDynaLantic,885F.Supp.2dat274.
Inaddition,inconnectionwiththenarrowtailoringanalysis,thecourtrejectedRothe’sargumentthatSection8(a)race‐consciousprovisionscannotbenarrowlytailoredbecausetheyapplyacrosstheboardinequalmeasures,forallpreferredraces,inallmarketsandsectors.Id.at*19.ThecourtstatedthepresumptionthataminorityapplicantissociallydisadvantagedmayberebuttediftheSBAispresentedwithcredibleevidencetothecontrary.Id.at*19.Thecourtpointedoutthatanypersonmaypresentcredibleevidencechallenginganindividual’sstatusassociallyoreconomicallydisadvantaged.Id.ThecourtsaidthatRothe’sargumentisincorrectbecauseitisbasedonthemisconceptionthatnarrowtailoringnecessarilymeansaremedythatislaser‐focusedonasinglesegmentofaparticularindustryorarea,ratherthanthecommonunderstandingthatthe“narrowness”ofthenarrow‐tailoringmandaterelatestotherelationshipbetweenthegovernment’sinterestandtheremedyitprescribes.Id.
Conclusion.Thecourtconcludedthatplaintiff’sfacialconstitutionalchallengetotheSection8(a)Programfailed,thatthegovernmentdefendantsdemonstratedacompellinginterestforthegovernment’sracialclassification,thepurportedneedforremedialactionissupportedbystrongandunrebuttedevidence,andthattheSection8(a)programisnarrowlytailoredtofurtheritscompellinginterest.Id.at*20.
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4. DynaLantic Corp. v. United States Dept. of Defense, et al., 885 F.Supp.2d 237, 2012 WL 3356813 (D.D.C., 2012), appeals voluntarily dismissed, United States Court of Appeals, District of Columbia, Docket Numbers 12‐5329 and 12‐5330 (2014)
Plaintiff,theDynaLanticCorporation(“DynaLantic”),isasmallbusinessthatdesignsandmanufacturesaircraft,submarine,ship,andothersimulatorsandtrainingequipment.DynaLanticsuedtheUnitedStatesDepartmentofDefense(“DoD”),theDepartmentoftheNavy,andtheSmallBusinessAdministration(“SBA”)challengingtheconstitutionalityofSection8(a)oftheSmallBusinessAct(the“Section8(a)program”),onitsfaceandasapplied:namely,theSBA’sdeterminationthatitisnecessaryorappropriatetosetasidecontractsinthemilitarysimulationandtrainingindustry.2012WL3356813,at*1,*37.
TheSection8(a)programauthorizesthefederalgovernmenttolimittheissuanceofcertaincontractstosociallyandeconomicallydisadvantagedbusinesses.Id.at*1.DynaLanticclaimedthattheSection8(a)isunconstitutionalonitsfacebecausetheDoD’suseoftheprogram,whichisreservedfor“sociallyandeconomicallydisadvantagedindividuals,”constitutesanillegalracialpreferenceinviolationoftheequalprotectioninviolatingitsrighttoequalprotectionundertheDueProcessClauseoftheFifthAmendmenttotheConstitutionandotherrights.Id.at*1.DynaLanticalsoclaimedtheSection8(a)programisunconstitutionalasappliedbythefederaldefendantsinDynaLantic’sspecificindustry,definedasthemilitarysimulationandtrainingindustry.Id.
AsdescribedinDynaLanticCorp.v.UnitedStatesDepartmentofDefense,503F.Supp.2d262(D.D.C.2007)(seebelow),thecourtpreviouslyhaddeniedMotionsforSummaryJudgmentbythepartiesanddirectedthemtoproposefutureproceedingsinordertosupplementtherecordwithadditionalevidencesubsequentto2007beforeCongress.503F.Supp.2dat267.
TheSection8(a)Program.TheSection8(a)programisabusinessdevelopmentprogramforsmallbusinessesownedbyindividualswhoarebothsociallyandeconomicallydisadvantagedasdefinedbythespecificcriteriasetforthinthecongressionalstatuteandfederalregulationsat15U.S.C.§§632,636and637;see13CFR§124.“Sociallydisadvantaged”individualsarepersonswhohavebeen“subjectedtoracialorethnicprejudiceorculturalbiaswithinAmericansocietybecauseoftheiridentitiesasmembersofgroupswithoutregardtotheirindividualqualities.”13CFR§124.103(a);seealso15U.S.C.§637(a)(5).“Economicallydisadvantaged”individualsarethosesociallydisadvantagedindividuals“whoseabilitytocompeteinthefreeenterprisesystemhasbeenimpairedduetodiminishedcapitalandcreditopportunitiesascomparedtoothersinthesameorsimilarlineofbusinesswhoarenotsociallydisadvantaged.”13CFR§124.104(a);seealso15U.S.C.§637(a)(6)(A).DynaLanticCorp.,2012WL3356813at*2.
Individualswhoaremembersofcertainracialandethnicgroupsarepresumptivelysociallydisadvantaged;suchgroupsinclude,butarenotlimitedto,BlackAmericans,HispanicAmericans,NativeAmericans,Indiantribes,AsianPacificAmericans,NativeHawaiianOrganizations,andotherminorities.Id.at*2quoting15U.S.C.§631(f)(1)(B)‐(c);seealso13CFR§124.103(b)(1).Allprospectiveprogramparticipantsmustshowthattheyareeconomicallydisadvantaged,whichrequiresanindividualtoshowanetworthoflessthan$250,000uponenteringtheprogram,andashowingthattheindividual’sincomeforthreeyearspriortotheapplicationandthefairmarketvalueofallassetsdonotexceedacertainthreshold.2012WL3356813at*3;see13CFR§124.104(c)(2).
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Congresshasestablishedan“aspirationalgoal”forprocurementfromsociallyandeconomicallydisadvantagedindividuals,whichincludesbutisnotlimitedtotheSection8(a)program,offivepercentofprocurementsdollarsgovernmentwide.See15U.S.C.§644(g)(1).DynaLantic,at*3.Congresshasnot,however,establishedanumericalgoalforprocurementfromtheSection8(a)programspecifically.SeeId.EachfederalagencyestablishesitsowngoalbyagreementbetweentheagencyheadandtheSBA.Id.DoDhasestablishedagoalofawardingapproximatelytwopercentofprimecontractdollarsthroughtheSection8(a)program.DynaLantic,at*3.TheSection8(a)programallowstheSBA,“wheneveritdeterminessuchactionisnecessaryandappropriate,”toenterintocontractswithothergovernmentagenciesandthensubcontractwithqualifiedprogramparticipants.15U.S.C.§637(a)(1).Section8(a)contractscanbeawardedona“solesource”basis(i.e.,reservedtoonefirm)orona“competitive”basis(i.e.,betweentwoormoreSection8(a)firms).DynaLantic,at*3‐4;13CFR124.501(b).
Plaintiff’sbusinessandthesimulationandtrainingindustry.DynaLanticperformscontractsandsubcontractsinthesimulationandtrainingindustry.Thesimulationandtrainingindustryiscomposedofthoseorganizationsthatdevelop,manufacture,andacquireequipmentusedtotrainpersonnelinanyactivitywherethereisahuman‐machineinterface.DynaLanticat*5.
Compellinginterest.TheCourtrulesthatthegovernmentmustmaketwoshowingstoarticulateacompellinginterestservedbythelegislativeenactmenttosatisfythestrictscrutinystandardthatracialclassificationsareconstitutionalonlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterests.”DynaLantic,at*9.First,thegovernmentmust“articulatealegislativegoalthatisproperlyconsideredacompellinggovernmentinterest.”Id.quotingSherbrookeTurfv.Minn.DOT.,345F.3d964,969(8thCir.2003).Second,inadditiontoidentifyingacompellinggovernmentinterest,“thegovernmentmustdemonstrate‘astrongbasisinevidence’supportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthatinterest.”DynaLantic,at*9,quotingSherbrooke,345F.3d969.
Afterthegovernmentmakesaninitialshowing,theburdenshiftstoDynaLantictopresent“credible,particularizedevidence”torebutthegovernment’s“initialshowingofacompellinginterest.”DynaLantic,at*10quotingConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950,959(10thCir.2003).ThecourtpointsoutthatalthoughCongressisentitledtonodeferenceinitsultimateconclusionthatrace‐consciousactioniswarranted,itsfact‐findingprocessisgenerallyentitledtoapresumptionofregularityanddeferentialreview.DynaLantic,at*10,citingRotheDev.Corp.v.U.S.Dep’tofDef.(“RotheIII“),262F.3d1306,1321n.14(Fed.Cir.2001).
ThecourtheldthatthefederalDefendantsstateacompellingpurposeinseekingtoremediateeitherpublicdiscriminationorprivatediscriminationinwhichthegovernmenthasbeena“passiveparticipant.”DynaLantic,at*11.TheCourtrejectedDynaLantic’sargumentthatthefederalDefendantscouldonlyseektoremedydiscriminationbyagovernmentalentity,ordiscriminationbyprivateindividualsdirectlyusinggovernmentfundstodiscriminate.DynaLantic,at*11.TheCourtheldthatitiswellestablishedthatthefederalgovernmenthasacompellinginterestinensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectofeitherpublicorprivatediscriminationwithinanindustryinwhichitprovidesfunding.DynaLantic,at*11,citingWesternStatesPavingv.WashingtonStateDOT,407F.3d983,991(9thCir.2005).
TheCourtnotedthatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxdollarsofallcitizens,donotservetofinancetheevilsof
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privateprejudice,andsuchprivateprejudicemaytaketheformofdiscriminatorybarrierstotheformationofqualifiedminoritybusinesses,precludingfromtheoutsetcompetitionforpubliccontractsbyminorityenterprises.DynaLanticat*11quotingCityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1995),andAdarandConstructors,Inc.v.Slater,228F.3d1147,1167‐68(10thCir.2000).Inaddition,privateprejudicemayalsotaketheformof“discriminatorybarriers”to“faircompetitionbetweenminorityandnon‐minorityenterprises...precludingexistingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.”DynaLantic,at*11,quotingAdarandVII,228F.3dat1168.
Thus,theCourtconcludedthatthegovernmentmayimplementrace‐consciousprogramsnotonlyforthepurposeofcorrectingitsowndiscrimination,butalsotopreventitselffromactingasa“passiveparticipant”inprivatediscriminationintherelevantindustriesormarkets.DynaLantic,at*11,citingConcreteWorksIV,321F.3dat958.
EvidencebeforeCongress.TheCourtanalyzedthelegislativehistoryoftheSection8(a)program,andthenaddressedtheissueastowhethertheCourtislimitedtotheevidencebeforeCongresswhenitenactedSection8(a)in1978andreviseditin1988,orwhetheritcouldconsiderpost‐enactmentevidence.DynaLantic,at*16‐17.TheCourtfoundthatnearlyeverycircuitcourttoconsiderthequestionhasheldthatreviewingcourtsmayconsiderpost‐enactmentevidenceinadditiontoevidencethatwasbeforeCongresswhenitembarkedontheprogram.DynaLantic,at*17.TheCourtnotedthatpost‐enactmentevidenceisparticularlyrelevantwhenthestatuteisoverthirtyyearsold,andevidenceusedtojustifySection8(a)isstaleforpurposesofdeterminingacompellinginterestinthepresent.Id.TheCourtthenfollowedthe10thCircuitCourtofAppeals’approachinAdarandVII,andreviewedthepost‐enactmentevidenceinthreebroadcategories:(1)evidenceofbarrierstotheformationofqualifiedminoritycontractorsduetodiscrimination,(2)evidenceofdiscriminatorybarrierstofaircompetitionbetweenminorityandnon‐minoritycontractors,and(3)evidenceofdiscriminationinstateandlocaldisparitystudies.DynaLantic,at*17.
TheCourtfoundthatthegovernmentpresentedsufficientevidenceofbarrierstominoritybusinessformation,includingevidenceonrace‐baseddenialofaccesstocapitalandcredit,lendingdiscrimination,routineexclusionofminoritiesfromcriticalbusinessrelationships,particularlythroughclosedor“oldboy”businessnetworksthatmakeitespeciallydifficultforminority‐ownedbusinessestoobtainwork,andthatminoritiescontinuetoexperiencebarrierstobusinessnetworks.DynaLantic,at*17‐21.TheCourtconsideredaspartoftheevidentiarybasisbeforeCongressmultipledisparitystudiesconductedthroughouttheUnitedStatesandsubmittedtoCongress,andqualitativeandquantitativetestimonysubmittedatCongressionalhearings.Id.
TheCourtalsofoundthatthegovernmentsubmittedsubstantialevidenceofbarrierstominoritybusinessdevelopment,includingevidenceofdiscriminationbyprimecontractors,privatesectorcustomers,suppliers,andbondingcompanies.DynaLantic,at*21‐23.TheCourtagainbasedthisfindingonrecentevidencesubmittedbeforeCongressintheformofdisparitystudies,reportsandCongressionalhearings.Id.
Stateandlocaldisparitystudies.AlthoughtheCourtnotedtherehavebeenhundredsofdisparitystudiesplacedbeforeCongress,theCourtconsidersinparticularstudiessubmittedbythefederalDefendantsof50disparitystudies,encompassingevidencefrom28statesandtheDistrictofColumbia,whichhavebeenbeforeCongresssince2006.DynaLantic,at*25‐29.TheCourtstateditreviewedthestudieswithafocusontwoindicatorsthatothercourtshavefoundrelevantinanalyzingdisparitystudies.First,theCourtconsideredthedisparityindices
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calculated,whichwasadisparityindex,calculatedbydividingthepercentageofMBE,WBE,and/orDBEfirmsutilizedinthecontractingmarketbythepercentageofM/W/DBEfirmsavailableinthesamemarket.DynaLantic,at*26.TheCourtsaidthatnormally,adisparityindexof100demonstratesfullM/W/DBEparticipation;theclosertheindexistozero,thegreatertheM/W/DBEdisparityduetounderutilization.DynaLantic,at*26.
Second,theCourtreviewedthemethodbywhichstudiescalculatedtheavailabilityandcapacityofminorityfirms.DynaLantic,at*26.TheCourtnotedthatsomecourtshavelookedcloselyatthesefactorstoevaluatethereliabilityofthedisparityindices,reasoningthattheindicesarenotprobativeunlesstheyarerestrictedtofirmsofsignificantsizeandwithsignificantgovernmentcontractingexperience.DynaLantic,at*26.TheCourtpointedoutthatalthoughdiscriminatorybarrierstoformationanddevelopmentwouldimpactcapacity,theSupremeCourtdecisioninCrosonandtheCourtofAppealsdecisioninO’DonnellConstructionCo.v.DistrictofColumbia,etal.,963F.2d420(D.C.Cir.1992)“requiretheadditionalshowingthateligibleminorityfirmsexperiencedisparities,notwithstandingtheirabilities,inordertogiverisetoaninferenceofdiscrimination.”DynaLantic,at*26,n.10.
Analysis:Strongbasisinevidence.Basedonananalysisofthedisparitystudiesandotherevidence,theCourtconcludedthatthegovernmentarticulatedacompellinginterestfortheSection8(a)programandsatisfieditsinitialburdenestablishingthatCongresshadastrongbasisinevidencepermittingrace‐consciousmeasurestobeusedundertheSection8(a)program.DynaLantic,at*29‐37.TheCourtheldthatDynaLanticdidnotmeetitsburdentoestablishthattheSection8(a)programisunconstitutionalonitsface,findingthatDynaLanticcouldnotshowthatCongressdidnothaveastrongbasisinevidenceforpermittingrace‐consciousmeasurestobeusedunderanycircumstances,inanysectororindustryintheeconomy.DynaLantic,at*29.
TheCourtdiscussedandanalyzedtheevidencebeforeCongress,whichincludedextensivestatisticalanalysis,qualitativeandquantitativeconsiderationoftheuniquechallengesfacingminoritiesfromallbusinesses,andanexaminationoftheirrace‐neutralmeasuresthathavebeenenactedbypreviousCongresses,buthadfailedtoreachtheminorityownedfirms.DynaLantic,at*31.TheCourtsaidCongresshadspentdecadescompilingevidenceofracediscriminationinavarietyofindustries,includingbutnotlimitedtoconstruction.DynaLantic,at*31.TheCourtalsofoundthatthefederalgovernmentproducedsignificantevidencerelatedtoprofessionalservices,architectureandengineering,andotherindustries.DynaLantic,at*31.TheCourtstatedthatthegovernmenthastherefore“establishedthatthereareatleastsomecircumstanceswhereitwouldbe‘necessaryorappropriate’fortheSBAtoawardcontractstobusinessesundertheSection8(a)program.DynaLantic,at*31,citing15U.S.C.§637(a)(1).
Therefore,theCourtconcludedthatinresponsetoplaintiff’sfacialchallenge,thegovernmentmetitsinitialburdentopresentastrongbasisinevidencesufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.DynaLantic,at*31.TheCourtalsofoundthattheevidencefromaroundthecountryissufficientforCongresstoauthorizeanationwideremedy.DynaLantic,at*31,n.13.
RejectionofDynaLantic’srebuttalarguments.TheCourtheldthatsincethefederalDefendantsmadetheinitialshowingofacompellinginterest,theburdenshiftedtotheplaintifftoshowwhytheevidencereliedonbyDefendantsfailstodemonstrateacompellinggovernmentalinterest.DynaLantic,at*32.TheCourtrejectedeachofthechallengesbyDynaLantic,includingholdingthat:thelegislativehistoryissufficient;thegovernmentcompiledsubstantialevidencethatidentifiedprivateracialdiscriminationwhichaffectedminority
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utilizationinspecificindustriesofgovernmentcontracting,bothbeforeandaftertheenactmentoftheSection8(a)program;anyflawsintheevidence,includingthedisparitystudies,DynaLantichasidentifiedinthedatadonotrisetothelevelofcredible,particularizedevidencenecessarytorebutthegovernment’sinitialshowingofacompellinginterest;DynaLanticcitednoauthorityinsupportofitsclaimthatfraudintheadministrationofrace‐consciousprogramsissufficienttoinvalidateSection8(a)programonitsface;andCongresshadstrongevidencethatthediscriminationissufficientlypervasiveacrossraciallinestojustifygrantingapreferenceforallfivegroupsincludedinSection8(a).DynaLantic,at*32‐36.
Inthisconnection,theCourtstateditagreedwithCrosonanditsprogenythatthegovernmentmayproperlybedeemeda“passiveparticipant”whenitfailstoadjustitsprocurementpracticestoaccountfortheeffectsofidentifiedprivatediscriminationontheavailabilityandutilizationofminority‐ownedbusinessesingovernmentcontracting.DynaLantic,at*34.Intermsofflawsintheevidence,theCourtpointedoutthattheproponentoftherace‐consciousremedialprogramisnotrequiredtounequivocallyestablishtheexistenceofdiscrimination,norisitrequiredtonegateallevidenceofnon‐discrimination.DynaLantic,at*35,citingConcreteWorkIV,321F.3dat991.Rather,astrongbasisinevidenceexists,theCourtstated,whenthereisevidenceapproachingaprimafaciecaseofaconstitutionalorstatutoryviolation,notirrefutableordefinitiveproofofdiscrimination.Id,citingCroson,488U.S.500.Accordingly,theCourtstatedthatDynaLantic’sclaimthatthegovernmentmustindependentlyverifytheevidencepresentedtoitisunavailing.Id.DynaLantic,at*35.
AlsointermsofDynaLantic’sargumentsaboutflawsintheevidence,theCourtnotedthatDefendantsplacedintherecordapproximately50disparitystudieswhichhadbeenintroducedordiscussedinCongressionalHearingssince2006,whichDynaLanticdidnotrebutorevendiscussanyofthestudiesindividually.DynaLantic,at*35.DynaLanticassertedgenerallythatthestudiesdidnotcontrolforthecapacityofthefirmsatissue,andwerethereforeunreliable.Id.TheCourtpointedoutthatCongressneednothaveevidenceofdiscriminationinall50statestodemonstrateacompellinginterest,andthatinthiscase,thefederalDefendantspresentedrecentevidenceofdiscriminationinasignificantnumberofstatesandlocalitieswhich,takentogether,representsabroadcross‐sectionofthenation.DynaLantic,at*35,n.15.TheCourtstatedthatwhilenotallofthedisparitystudiesaccountedforthecapacityofthefirms,manyofthemdidcontrolforcapacityandstillfoundsignificantdisparitiesbetweenminorityandnon‐minorityownedfirms.DynaLantic,at*35.Inshort,theCourtfoundthatDynaLantic’s“generalcriticism”ofthemultitudeofdisparitystudiesdoesnotconstituteparticularevidenceunderminingthereliabilityoftheparticulardisparitystudiesandthereforeisoflittlepersuasivevalue.DynaLantic,at*35.
IntermsoftheargumentbyDynaLanticastorequiringproofofevidenceofdiscriminationagainsteachminoritygroup,theCourtstatedthatCongresshasastrongbasisinevidenceifitfindsevidenceofdiscriminationissufficientlypervasiveacrossraciallinestojustifygrantingapreferencetoallfivedisadvantagedgroupsincludedinSection8(a).TheCourtfoundCongresshadstrongevidencethatthediscriminationissufficientlypervasiveacrossraciallinestojustifyapreferencetoallfivegroups.DynaLantic,at*36.Thefactthatspecificevidencevaries,tosomeextent,withinandbetweenminoritygroups,wasnotabasistodeclarethisstatutefaciallyinvalid.DynaLantic,at*36.
Facialchallenge:Conclusion.TheCourtconcludedCongresshadacompellinginterestineliminatingtherootsofracialdiscriminationinfederalcontractingandhadestablishedastrongbasisofevidencetosupportitsconclusionthatremedialactionwasnecessarytoremedythatdiscriminationbyprovidingsignificantevidenceinthreedifferentarea.First,itprovided
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extensiveevidenceofdiscriminatorybarrierstominoritybusinessformation.DynaLantic,at*37.Second,itprovided“forceful”evidenceofdiscriminatorybarrierstominoritybusinessdevelopment.Id.Third,itprovidedsignificantevidencethat,evenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinboththepublicandprivatesectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.TheCourtfoundtheevidencewasparticularlystrong,nationwide,intheconstructionindustry,andthattherewassubstantialevidenceofwidespreaddisparitiesinotherindustriessuchasarchitectureandengineering,andprofessionalservices.Id.
As‐appliedchallenge.DynaLanticalsochallengedtheSBAandDoD’suseoftheSection8(a)programasapplied:namely,theagencies’determinationthatitisnecessaryorappropriatetosetasidecontractsinthemilitarysimulationandtrainingindustry.DynaLantic,at*37.Significantly,theCourtpointsoutthatthefederalDefendants“concedethattheydonothaveevidenceofdiscriminationinthisindustry.”Id.Moreover,theCourtpointsoutthatthefederalDefendantsadmittedthatthere“isnoCongressionalreport,hearingorfindingthatreferences,discussesormentionsthesimulationandtrainingindustry.”DynaLantic,at*38.ThefederalDefendantsalsoadmitthattheyare“unawareofanydiscriminationinthesimulationandtrainingindustry.”Id.Inaddition,thefederalDefendantsadmitthatnoneofthedocumentstheyhavesubmittedasjustificationfortheSection8(a)programmentionsoridentifiesinstancesofpastorpresentdiscriminationinthesimulationandtrainingindustry.DynaLantic,at*38.
ThefederalDefendantsmaintainthatthegovernmentneednottieevidenceofdiscriminatorybarrierstominoritybusinessformationanddevelopmenttoevidenceofdiscriminationinanyparticularindustry.DynaLantic,at*38.TheCourtconcludesthatthefederalDefendants’positionisirreconcilablewithbindingauthorityupontheCourt,specifically,theUnitedStatesSupremeCourt’sdecisioninCroson,aswellastheFederalCircuit’sdecisioninO’DonnellConstructionCompany,whichadoptedCroson’sreasoning.DynaLantic,at*38.TheCourtholdsthatCrosonmadeclearthegovernmentmustprovideevidencedemonstratingtherewereeligibleminoritiesintherelevantmarket.DynaLantic,at*38.TheCourtheldthatabsentanevidentiaryshowingthat,inahighlyskilledindustrysuchasthemilitarysimulationandtrainingindustry,thereareeligibleminoritieswhoarequalifiedtoundertakeparticulartasksandareneverthelessdeniedtheopportunitytothrivethere,thegovernmentcannotcomplywithCroson’sevidentiaryrequirementtoshowaninferenceofdiscrimination.DynaLantic,at*39,citingCroson,488U.S.501.TheCourtrejectsthefederalgovernment’spositionthatitdoesnothavetomakeanindustry‐basedshowinginordertoshowstrongevidenceofdiscrimination.DynaLantic,at*40.
TheCourtnotesthattheDepartmentofJusticehasrecognizedthatthefederalgovernmentmusttakeanindustry‐basedapproachtodemonstratingcompellinginterest.DynaLantic,at*40,citingCortezIIIServiceCorp.v.NationalAeronautics&SpaceAdministration,950F.Supp.357(D.D.C.1996).InCortez,theCourtfoundtheSection8(a)programconstitutionalonitsface,butfoundtheprogramunconstitutionalasappliedtotheNASAcontractatissuebecausethegovernmenthadprovidednoevidenceofdiscriminationintheindustryinwhichtheNASAcontractwouldbeperformed.DynaLantic,at*40.TheCourtpointedoutthattheDepartmentofJusticehadadvisedfederalagenciestomakeindustry‐specificdeterminationsbeforeofferingset‐asidecontractsandspecificallycautionedthemthatwithoutsuchparticularizedevidence,set‐asideprogramsmaynotsurviveCrosonandAdarand.DynaLantic,at*40.
TheCourtrecognizedthatlegislationconsideredinCroson,AdarandandO’Donnellwereallrestrictedtooneindustry,whereasthiscasepresentsadifferentfactualscenario,becauseSection8(a)isnotindustry‐specific.DynaLantic,at*40,n.17.TheCourtnotedthatthe
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governmentdidnotproposeanalternativeframeworktoCrosonwithinwhichtheCourtcananalyzetheevidence,andthatinfact,theevidencethegovernmentpresentedinthecaseisindustryspecific.Id.
TheCourtconcludedthatagencieshavearesponsibilitytodecideiftherehasbeenahistoryofdiscriminationintheparticularindustryatissue.DynaLantic,at*40.AccordingtotheCourt,itneednottakeaparty’sdefinitionof“industry”atfacevalue,andmaydeterminetheappropriateindustrytoconsiderisbroaderornarrowerthanthatproposedbytheparties.Id.However,theCourtstated,inthiscasethegovernmentdidnotarguewithplaintiff’sindustrydefinition,andmoresignificantly,itprovidednoevidencewhatsoeverfromwhichaninferenceofdiscriminationinthatindustrycouldbemade.DynaLantic,at*40.
Narrowlytailoring.Inadditiontoshowingstrongevidencethatarace‐consciousprogramservesacompellinginterest,thegovernmentisrequiredtoshowthatthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.DynaLantic,at*41.TheCourtconsideredseveralfactorsinthenarrowlytailoringanalysis:theefficacyofalternative,race‐neutralremedies,flexibility,over‐orunder‐inclusivenessoftheprogram,duration,therelationshipbetweennumericalgoalsandtherelevantlabormarket,andtheimpactoftheremedyonthirdparties.Id.
TheCourtanalyzedeachofthesefactorsandfoundthatthefederalgovernmentsatisfiedallsixfactors.DynaLantic,at*41‐48.TheCourtfoundthatthefederalgovernmentpresentedsufficientevidencethatCongressattemptedtouserace‐neutralmeasurestofosterandassistminorityownedbusinessesrelatingtotherace‐consciouscomponentinSection8(a),andthattheserace‐neutralmeasuresfailedtoremedytheeffectsofdiscriminationonminoritysmallbusinessowners.DynaLantic,at*42.TheCourtfoundthattheSection8(a)programissufficientlyflexibleingrantingrace‐consciousreliefbecauseraceismaderelevantintheprogram,butitisnotadeterminativefactororarigidracialquotasystem.DynaLantic,at*43.TheCourtnotedthattheSection8(a)programcontainsawaiverprovisionandthattheSBAwillnotacceptaprocurementforawardasan8(a)contractifitdeterminesthatacceptanceoftheprocurementwouldhaveanadverseimpactonsmallbusinessesoperatingoutsidetheSection8(a)program.DynaLantic,at*44.
TheCourtfoundthattheSection8(a)programwasnotover‐andunder‐inclusivebecausethegovernmenthadstrongevidenceofdiscriminationwhichissufficientlypervasiveacrossraciallinestoallfivedisadvantagedgroups,andSection8(a)doesnotprovidethateverymemberofaminoritygroupisdisadvantaged.DynaLantic,at*44.Inaddition,theprogramisnarrowlytailoredbecauseitisbasednotonlyonsocialdisadvantage,butalsoonanindividualizedinquiryintoeconomicdisadvantage,andthatafirmownedbyanon‐minoritymayqualifyassociallyandeconomicallydisadvantaged.DynaLantic,at*44.
TheCourtalsofoundthattheSection8(a)programplacesanumberofstrictdurationallimitsonaparticularfirm’sparticipationintheprogram,placestemporallimitsoneveryindividual’sparticipationintheprogram,andthataparticipant’seligibilityiscontinuallyreassessedandmustbemaintainedthroughoutitsprogramterm.DynaLantic,at*45.Section8(a)’sinherenttimelimitandgraduationprovisionsensurethatitiscarefullydesignedtoendureonlyuntilthediscriminatoryimpacthasbeeneliminated,andthusitisnarrowlytailored.DynaLantic,at*46.
Inlightofthegovernment’sevidence,theCourtconcludedthattheaspirationalgoalsatissue,allofwhichwerelessthanfivepercentofcontractdollars,arefaciallyconstitutional.DynaLantic,at*46‐47.Theevidence,theCourtnoted,establishedthatminorityfirmsareready,willing,and
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abletoperformworkequaltotwotofivepercentofgovernmentcontractsinindustriesincludingbutnotlimitedtoconstruction.Id.TheCourtfoundtheeffectsofpastdiscriminationhaveexcludedminoritiesfromformingandgrowingbusinesses,andthenumberofavailableminoritycontractorsreflectsthatdiscrimination.DynaLantic,at*47.
Finally,theCourtfoundthattheSection8(a)programtakesappropriatestepstominimizetheburdenonthirdparties,andthattheSection8(a)programisnarrowlytailoredonitsface.DynaLantic,at*48.TheCourtconcludedthatthegovernmentisnotrequiredtoeliminatetheburdenonnon‐minoritiesinordertosurvivestrictscrutiny,butalimitedandproperlytailoredremedytocuretheeffectsofpriordiscriminationispermissibleevenwhenitburdensthirdparties.Id.TheCourtpointstoanumberofprovisionsdesignedtominimizetheburdenonnon‐minorityfirms,includingthepresumptionthataminorityapplicantissociallydisadvantagedmayberebutted,anindividualwhoisnotpresumptivelydisadvantagedmayqualifyforsuchstatus,the8(a)programrequiresanindividualizeddeterminationofeconomicdisadvantage,anditisnotopentoindividualswhosenetworthexceeds$250,000regardlessofrace.Id.
Conclusion.TheCourtconcludedthattheSection8(a)programisconstitutionalonitsface.TheCourtalsoheldthatitisunabletoconcludethatthefederalDefendantshaveproducedevidenceofdiscriminationinthemilitarysimulationandtrainingindustrysufficienttodemonstrateacompellinginterest.Therefore,DynaLanticprevailedonitsas‐appliedchallenge.DynaLantic,at*51.Accordingly,theCourtgrantedthefederalDefendants’MotionforSummaryJudgmentinpart(holdingtheSection8(a)programisvalidonitsface)anddenieditinpart,andgrantedtheplaintiff’sMotionforSummaryJudgmentinpart(holdingtheprogramisinvalidasappliedtothemilitarysimulationandtrainingindustry)anddenieditinpart.TheCourtheldthattheSBAandtheDoDareenjoinedfromawardingprocurementsformilitarysimulatorsundertheSection8(a)programwithoutfirstarticulatingastrongbasisinevidencefordoingso.
Appealsvoluntarilydismissed,andStipulationandAgreementofSettlementApprovedandOrderedbyDistrictCourt.ANoticeofAppealandNoticeofCrossAppealwerefiledinthiscasetotheUnitedStatesCourtofAppealsfortheDistrictofColumbiabytheUnitedStatusandDynaLantic:DocketNumbers12‐5329and12‐5330.Subsequently,theappealswerevoluntarilydismissed,andthepartiesenteredintoaStipulationandAgreementofSettlement,whichwasapprovedbytheDistrictCourt(Jan.30,2014).Thepartiesstipulatedandagreedinteralia,asfollows:(1)theFederalDefendantswereenjoinedfromawardingprimecontractsundertheSection8(a)programforthepurchaseofmilitarysimulationandmilitarysimulationtrainingcontractswithoutfirstarticulatingastrongbasisinevidencefordoingso;(2)theFederalDefendantsagreedtopayplaintiffthesumof$1,000,000.00;and(3)theFederalDefendantsagreedtheyshallrefrainfromseekingtovacatetheinjunctionenteredbytheCourtforatleasttwoyears.
TheDistrictCourtonJanuary30,2014approvedtheStipulationandAgreementofSettlement,andSoOrderedthetermsoftheoriginal2012injunctionmodifiedasprovidedintheStipulationandAgreementofSettlement.
5. DynaLantic Corp. v. United States Dept. of Defense, et al., 503 F. Supp.2d 262 (D.D.C. 2007)
DynaLanticCorp.involvedachallengetotheDOD’sutilizationoftheSmallBusinessAdministration’s(“SBA”)8(a)BusinessDevelopmentProgram(“8(a)Program”).InitsOrderofAugust23,2007,thedistrictcourtdeniedbothparties’MotionsforSummaryJudgmentbecausetherewasnoinformationintherecordregardingtheevidencebeforeCongresssupportingits
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2006reauthorizationoftheprograminquestion;thecourtdirectedthepartiestoproposefutureproceedingstosupplementtherecord.503F.Supp.2d262,263(D.D.C.2007).
Thecourtfirstexplainedthatthe8(a)Programsetsagoalthatnolessthan5percentoftotalprimefederalcontractandsubcontractawardsforeachfiscalyearbeawardedtosociallyandeconomicallydisadvantagedindividuals.Id.Eachfederalgovernmentagencyisrequiredtoestablishitsowngoalforcontractingbutthegoalsarenotmandatoryandthereisnosanctionforfailingtomeetthegoal.Uponapplicationandadmissionintothe8(a)Program,smallbusinessesownedandcontrolledbydisadvantagedindividualsareeligibletoreceivetechnological,financial,andpracticalassistance,andsupportthroughpreferentialawardofgovernmentcontracts.Forthepastfewyears,the8(a)ProgramwastheprimarypreferentialtreatmentprogramtheDODusedtomeetits5percentgoal.Id.at264.
ThiscasearosefromaNavycontractthattheDODdecidedtoawardexclusivelythroughthe8(a)Program.Theplaintiffownedasmallcompanythatwouldhavebidonthecontractbutforthefactitwasnotaparticipantinthe8(a)Program.AftermultiplejudicialproceedingstheD.C.Circuitdismissedtheplaintiff’sactionforlackofstandingbutgrantedtheplaintiff’smotiontoenjointhecontractprocurementpendingtheappealofthedismissalorder.TheNavycancelledtheproposedprocurementbuttheD.C.Circuitallowedtheplaintifftocircumventthemootnessargumentbyamendingitspleadingstoraiseafacialchallengetothe8(a)programasadministeredbytheSBAandutilizedbytheDOD.TheD.C.Circuitheldtheplaintiffhadstandingbecauseoftheplaintiff’sinabilitytocompeteforDODcontractsreservedto8(a)firms,theinjurywastraceabletotherace‐consciouscomponentofthe8(a)Program,andtheplaintiff’sinjurywasimminentduetothelikelihoodthegovernmentwouldinthefuturetrytoprocureanothercontractunderthe8(a)Programforwhichtheplaintiffwasready,willing,andabletobid.Id.at264‐65.
Onremand,theplaintiffamendeditscomplainttochallengetheconstitutionalityofthe8(a)Programandsoughtaninjunctiontopreventthemilitaryfromawardinganycontractformilitarysimulatorsbasedupontheraceofthecontractors.Id.at265.Thedistrictcourtfirstheldthattheplaintiff’scomplaintcouldbereadonlyasachallengetotheDOD’simplementationofthe8(a)Program[pursuantto10U.S.C.§2323]asopposedtoachallengetotheprogramasawhole.Id.at266.Thepartiesagreedthatthe8(a)Programusesrace‐consciouscriteriasothedistrictcourtconcludeditmustbeanalyzedunderthestrictscrutinyconstitutionalstandard.Thecourtfoundthatinordertoevaluatethegovernment’sproffered“compellinggovernmentinterest,”thecourtmustconsidertheevidencethatCongressconsideredatthepointofauthorizationorreauthorizationtoensurethatithadastrongbasisinevidenceofdiscriminationrequiringremedialaction.ThecourtcitedtoWesternStatesPavinginsupportofthisproposition.Id.ThecourtconcludedthatbecausetheDODprogramwasreauthorizedin2006,thecourtmustconsidertheevidencebeforeCongressin2006.
ThecourtcitedtotherecentRothedecisionasdemonstratingthatCongressconsideredsignificantevidentiarymaterialsinitsreauthorizationoftheDODprogramin2006,includingsixrecentlypublisheddisparitystudies.Thecourtheldthatbecausetherecordbeforeitinthepresentcasedidnotcontaininformationregardingthis2006evidencebeforeCongress,itcouldnotruleontheparties’MotionsforSummaryJudgment.Thecourtdeniedbothmotionsanddirectedthepartiestoproposefutureproceedingsinordertosupplementtherecord.Id.at267.
APPENDIX C.
Quantitative Analysis
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 1
APPENDIX C. Quantitative Analysis
Figure C‐1. Percentage of all workers 25 and older with at least a four‐year degree, Virginia Beach and the United States, 2012‐2016
Note:
**/++ Denotes statistically significant differences from non‐Hispanic whites (for minority groups), and from men (for women), at the 95% confidence level for the United States as a whole and Virginia Beach, respectively.
The Virginia Beach marketplace is defined in this study as Chesapeake City, Norfolk City, Portsmouth City, and Virginia Beach City.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐1indicatesthat,comparedtonon‐HispanicwhiteAmericansworkingintheVirginiaBeachmarketplace,smallerpercentagesofBlackAmericansandHispanicAmericanshavefour‐yearcollegedegrees.Incontrast,alargerpercentageofAsianAmericanshavefour‐yearcollegedegrees.Inaddition,alargerpercentageofwomenthanmenworkingintheVirginiaBeachmarketplacehavefour‐yearcollegedegrees.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 2
Figure C‐2. Percent representation of minorities in various industries in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between minority workers in the specified industry and all industries is statistically significant at the 95% confidence level.
The representation of minorities among all Virginia Beach workers is 29% for Black Americans, 7% for Hispanic Americans, 6% for Asian Americans, 1% for Native Americans, 0% for Other race minorities and 43% for all minorities considered together.
"Other race minority" includes Census respondents who do not identify with the racial categories defined by the U.S. Census Bureau.
Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, scientific research, and veterinary services industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select Other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and Other personal were combined into one category of childcare, hair, and nails.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐2indicatesthattheindustriesintheVirginiaBeachmarketplacewiththehighestrepresentationsofminorityworkersarechildcare,hair,andnails;healthcare;andotherservices.IndustriesintheVirginiaBeachmarketplacewiththelowestrepresentationsofminorityworkersareconstruction;wholesaletrade;andextractionandagriculture.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 3
Figure C‐3. Percent representation of women in various industries in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between women workers in the specified industry and all industries is statistically significant at the 95% confidence level.
The representation of women among all Virginia Beach workers is 46%.
Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, scientific research, and veterinary services industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and other personal services were combined into one category of childcare, hair, and nails.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐3indicatesthattheindustriesintheVirginiaBeachmarketplacewiththehighestrepresentationsofwomenworkersarechildcare,hair,andnails;healthcare;andeducation.IndustriesintheVirginiaBeachmarketplacewiththelowestrepresentationsofwomenworkersaremanufacturing;extractionandagriculture;andconstruction.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 4
Figure C‐4. Demographic characteristics of workers in study‐related industries and all industries, Virginia Beach and the United States, 2012‐2016
Note: ** Denotes that the difference in proportions between workers in each study‐related industry and workers in all industries is statistically significant at the 95% confidence level. * Denotes that the difference in proportions between workers in each study‐related industry and workers in all industries is statistically significant at the 90% confidence level.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐4indicatesthatcomparedtoallindustriesconsideredtogether,therearesmallerpercentagesofBlackAmericans,AsianAmericans,andwomenworkingintheVirginiaBeachmarketplace’sconstructionindustry.Similarly,therearesmallerpercentagesofBlackAmericans,HispanicAmericans,andwomenworkinginthearchitectureandengineeringindustry.ThereisalsoasmallerpercentageofHispanicAmericansworkingintheprofessionalservicesindustry,andasmallerpercentageofwomenworkinginthegoodsandservices
Virginia Beach
Race/ethnicity
Black American 29.4 % 17.7 % ** 12.4 % ** 40.9 % ** 31.4 % **
Asian American 5.7 2.5 ** 5.0 7.4 6.5 **
Hispanic American 6.5 13.6 ** 4.5 * 3.6 ** 6.3
Native American 0.8 0.4 0.7 0.4 1.1
Other race minority 0.2 0.0 0.3 0.7 0.2
Total minority 42.5 % 34.1 % 22.8 % 53.0 % 45.6 %
Non‐Hispanic white 57.5 % 65.9 % ** 77.2 % ** 47.0 % ** 54.4 % **
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Gender
Women 46.4 % 10.4 % ** 32.3 % ** 68.5 % ** 41.2 % **
Men 53.6 89.6 ** 67.7 ** 31.5 ** 58.8 **
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
United States
Race/ethnicity
Black American 12.3 % 5.9 % ** 6.3 % ** 15.9 % ** 12.3 % *
Asian American 6.1 1.9 ** 9.5 ** 6.3 ** 6.8 **
Hispanic American 16.4 26.2 ** 8.4 ** 13.4 ** 20.4 **
Native American 1.2 1.3 ** 0.8 ** 1.0 ** 1.1 **
Other race minority 0.2 0.2 0.2 0.2 0.2
Total minority 36.1 % 35.7 % 25.2 % 36.8 % 40.8 %
Non‐Hispanic white 63.9 % 64.3 % ** 74.8 % ** 63.2 % ** 59.2 % **
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Gender
Women 47.2 % 9.1 % ** 37.6 % ** 66.0 % ** 37.1 % **
Men 52.8 90.9 ** 62.4 ** 34.0 ** 62.9 **
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
(n=225,700)
Architecture &
Engineering
(n=205,446)
Goods &
Services
(n=4,004)
Goods &
Services
(n=1,204,538)
Architecture &
Engineering
(n=839)
Professional
Services
(n=744)
Professional
Services
All Industries Construction
(n=7,643,801) (n=461,045)
All Industries Construction
(n=26,889) (n=1,467)
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 5
industry.Incontrast,comparedtoallindustriescombined,thereisalargerpercentageofHispanicAmericansworkingintheconstructionindustryintheVirginiaBeachmarketplace.Inaddition,largerpercentagesofBlackAmericansworkintheprofessionalservicesandgoodsandservicesindustriesintheVirginiaBeachmarketplacethaninallindustriescombined.ThereisalsoalargerpercentageofwomenworkingintheprofessionalservicessectorandalargerpercentageofAsianAmericansworkinginthegoodsandservicesindustry.
Figure C‐5. Percent representation of minorities in selected construction occupations in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between minority workers in the specified occupation and all construction occupations considered together is statistically significant at the 95% confidence level.
† Denotes that significant differences in proportions were not reported due to small sample size.
The representation of minorities among all Virginia Beach construction workers is 18% for Black Americans, 14% for Hispanic Americans, 2% for Asian Americans, 0% for Native Americans, 0% for Other race minorities, and 34% for all minorities considered together.
"Other race minority" includes Census respondents who do not identify with the racial categories provided by the U.S. Census Bureau.
Plasterers and stucco masons; iron and steel workers; and glaziers had no minority representation within Virginia Beach.
Crane and tower operators, dredge, excavating and loading machine operators, paving, surfacing and tamping equipment operators and other construction equipment operators were combined into the single category of miscellaneous construction equipment operators.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 6
FigureC‐5indicatesthattheconstructionoccupationswiththehighestrepresentationsofminorityworkersintheVirginiaBeachmarketplacearecementmasonsandterrazzoworkers;drywallinstallers,ceilingtileinstallersandtapers;andhelpers.
Figure C‐6. Percent representation of women in selected construction occupations in Virginia Beach, 2012‐2016
Note: ** Denotes that the difference in proportions between women workers in the specified occupation and all construction occupations considered together is statistically significant at the 95% confidence level.
† Denotes that significant differences in proportions were not reported due to small sample size.
The representation of women among all Virginia Beach construction workers is 10%.
Crane and tower operators, dredge, excavating and loading machine operators, paving, surfacing and tamping equipment operators and other construction equipment operators were combined into the single category of miscellaneous construction equipment operators.
Roofers; electricians; brickmasons, blockmasons, and stonemasons; pipelayers, plumbers, pipefitters, and steamfitters; iron and steel workers; miscellaneous construction equipment operators; cement masons and terrazzo workers; drywall installers, ceiling tile installers, and tapers; helpers; plasterers and stucco masons; carpet, floor, and tile installers and finishers; and glaziers had no representation of women in Virginia Beach.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
FigureC‐6indicatesthattheconstructionoccupationsintheVirginiaBeachmarketplacewiththehighestrepresentationsofwomenworkersaresecretaries;drivers,salesworkers,andtruckdrivers;andsheetmetalworkers.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 7
Figure C‐7. Percentage of workers who worked as a manager in each study‐related industry, Virginia Beach and the United States, 2012‐2016
Note:
*, ** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 90% and 95% confidence level, respectively.
† Denotes that significant differences in proportions were not reported due to small sample size.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
C‐7indicatesthat,comparedtonon‐HispanicwhiteAmericans,smallerpercentagesofBlackAmericansworkasmanagersintheconstructionandgoodsandservicesindustries;andasmallerpercentageofHispanicAmericansworkasmanagersintheconstructionindustry.Comparedtomen,asmallerpercentageofwomenworkasmanagersinthearchitectureandengineeringindustry.Incontrast,alargerpercentageofnon‐Hispanicwhitewomenthanmenworkasmanagersintheconstructionindustry.
Virginia Beach
Race/ethnicity
Black American 2.8 % ** 8.3 % 2.4 % 5.8 % **
Asian American 6.6 3.3 7.9 12.7
Hispanic American 4.5 ** 2.9 0.0 7.0
Native American 10.7 † 0.0 † 39.3 † 7.4
Other Race Minority 0.0 † 0.0 † 0.0 † 0.0 †
Non‐Hispanic white 11.8 5.5 4.8 8.7
Gender
Women 14.6 % * 2.4 % ** 4.1 % 8.2 %
Men 8.5 7.0 3.7 7.8
All individuals 9.1 % 5.5 % 4.0 % 7.9 %
United States
Race/ethnicity
Black American 5.0 % ** 2.2 % ** 2.6 % ** 4.3 % **
Asian American 11.0 2.7 ** 6.0 ** 9.8 **
Hispanic American 3.1 ** 2.9 ** 3.3 ** 4.5 **
Native American 5.8 ** 3.7 3.6 ** 5.5 **
Other Race Minority 6.3 ** 2.5 * 5.7 5.7 **
Non‐Hispanic white 10.5 4.1 7.2 8.2
Gender
Women 10.0 % ** 2.4 % ** 4.4 % ** 7.0 % **
Men 8.0 4.5 8.6 7.1
All individuals 9.1 % 3.7 % 5.8 % 7.1 %
Construction
Goods &
Services
Goods &
Services
Construction
Professional
Services
Professional
Services
Architecture &
Engineering
Architecture &
Engineering
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 8
Figure C‐8. Mean annual wages, Virginia Beach and the United States, 2012‐2016
Note:
The sample universe is all non‐institutionalized, employed individuals aged 25‐64 that are not in school, the military, or self‐employed.
**/++ Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level for Virginia Beach and the United States as a whole, respectively.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐8indicatesthat,comparedtonon‐HispanicwhiteAmericans,BlackAmericans,AsianAmericans,HispanicAmericans,NativeAmericans,andotherraceminoritiesintheVirginiaBeachmarketplacehavelowermeanannualwages.Inaddition,non‐HispanicwhitewomenintheVirginiaBeachmarketplaceexhibitlowermeanannualwagesthanmen.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 9
Figure C‐9. Predictors of annual wages (regression), Virginia Beach, 2012‐2016
Note:
The regression includes 12,699 observations.
The sample universe is all non‐institutionalized, employed individuals aged 25‐64 that are not in school, the military, or self‐employed.
For ease of interpretation, the exponentiated form of the coefficients is displayed in the figure.
*, ** Denotes statistical significance at the 90% and 95% confidence levels, respectively.
For comparison, Asian Pacific American and Subcontinent Asian American were combined into the Asian American group due to small sample size.
The referent for each set of categorical variables is as follows: non‐Hispanic whites for the race variables, male for the gender variable, high school diploma for the education variables, manufacturing for industry variables, and Northeast for the region variables.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐9indicatesthat,comparedtobeinganon‐HispanicwhiteAmericanintheVirginiaBeachmarketplace,beingBlackAmerican,AsianAmerican,HispanicAmericanorotherraceminorityisrelatedtolowerannualwages,evenafteraccountingforvariousotherpersonalcharacteristics.(Forexample,themodelindicatesthatbeingBlackAmericanisassociatedwithmakingapproximately$0.81foreverydollarthatanon‐HispanicwhiteAmericanmakes,allelsebeingequal.)Inaddition,beingawomanisrelatedtolowerannualwagescomparedtobeingamanintheVirginiaBeachmarketplace,evenafteraccountingforvariousotherpersonalcharacteristics.
Variable
Constant 9466.553 **
Black American 0.813 **
Asian American 0.852 **
Hispanic American 0.879 **
Native American 0.903
Other minority group 0.613 **
Women 0.781 **
Less than high school education 0.853 **
Some college 1.122 **
Four‐year degree 1.442 **
Advanced degree 2.016 **
Disabled 0.862 **
Military experience 1.002
Speaks English well 1.289 *
Age 1.050 **
Age‐squared 1.000 **
Married 1.086 **
Children 1.007
Number of people over 65 in household 0.910 **
Public sector worker 1.171 **
Manager 1.308 **
Part time worker 0.361 **
Extraction and agriculture 0.768
Construction 0.805 **
Wholesale trade 0.897 **
Retail trade 0.714 **
Transportation, warehouse, & information 1.020
Professional services 1.051 **
Education 0.652 **
Health care 1.061 **
Other services 0.682 **
Public administration and social services 0.908 **
Exponentiated
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 10
Figure C‐10. Predictors of annual wages (regression), United States, 2012‐2016
Note:
The regression includes 4,032,836 observations.
The sample universe is all non‐institutionalized, employed individuals aged 25‐64 that are not in school, the military, or self‐employed.
For ease of interpretation, the exponentiated form of the coefficients is displayed in the figure.
** Denotes statistical significance at the 95% confidence level.
The referent for each set of categorical variables is as follows: non‐Hispanic whites for the race variables, male for the gender variable, high school diploma for the education variables, manufacturing for industry variables, and Northeast for the region variables.
Source:
BBC Research & Consulting from 2011‐2015 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐10indicatesthat,comparedtobeinganon‐HispanicwhiteAmericanintheUnitedStates,beingBlackAmerican,AsianAmerican,HispanicAmerican,NativeAmerican,orotherraceminorityisrelatedtolowerannualwages,evenafteraccountingforvariousotherpersonalcharacteristics.(Forexample,themodelindicatesthatbeingBlackAmericanisassociatedwithmakingapproximately$0.85foreverydollarthatanon‐HispanicwhiteAmericanmakes,allelsebeingequal.)Inaddition,beingawomanisrelatedtolowerannualwages,comparedtobeingaman,evenafteraccountingforvariousotherpersonalcharacteristics.
Variable
Constant 7166.063 **
Black American 0.846 **
Asian American 0.988 **
Hispanic American 0.926 **
Native American 0.889 **
Other minority group 0.929 **
Women 0.779 **
Less than high school education 0.853 **
Some college 1.199 **
Four‐year degree 1.677 **
Advanced degree 2.326 **
Disabled 0.792 **
Military experience 0.994 **
Speaks English well 1.347 **
Age 1.058 **
Age‐squared 0.999 **
Married 1.117 **
Children 1.011 **
Number of people over 65 in household 0.908 **
Midwest 0.881 **
South 0.895 **
West 0.986 **
Public sector worker 1.109 **
Manager 1.306 **
Part time worker 0.365 **
Extraction and agriculture 0.963 **
Construction 0.936 **
Wholesale trade 0.974 **
Retail trade 0.756 **
Transportation, warehouse, & information 1.041 **
Professional services 1.073 **
Education 0.662 **
Health care 1.008 **
Other services 0.716 **
Public administration and social services 0.832 **
Exponentiated
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 11
Figure C‐11. Home Ownership Rates, Virginia Beach and the United States, 2012‐2016
Note:
The sample universe is all households.
*,** Denotes statistically significant differences from non‐Hispanic whites at the 90% and 95% confidence levels for the Virginia Beach marketplace
++ Denotes statistically significant differences from non‐Hispanic whites at the 95% confidence level for the United States as a whole.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐11indicatesthat,comparedtonon‐HispanicwhiteAmericans,smallerpercentagesofBlackAmericans,HispanicAmericans,andNativeAmericansownhomesintheVirginiaBeachmarketplace.
Figure C‐12. Median home values, Virginia Beach and the United States, 2012‐2016
Note:
The sample universe is all owner‐occupied housing units.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐12indicatesthatBlackAmerican,HispanicAmerican,NativeAmericanandotherminorityhomeownersintheVirginiaBeachmarketplaceownhomesoflowermedianvaluethannon‐HispanicwhiteAmericanhomeowners.Incontrast,AsianAmericanhomeownersintheVirginiaBeachmarketplaceownhomesofequalvaluetonon‐HispanicwhiteAmericanhomeowners.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 12
Figure C‐13. Denial rates of conventional purchase loans for high‐income households, Virginia Beach and the United States, 2007 and 2016
Note:
High‐income borrowers are those households with 120% or more of the HUD area median family income (MFI).
Native Americans are combined with Pacific Islanders due to small sample size.
Source:
FFIEC HMDA data 2007 and 2016. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.
FigureC‐13indicatesthatin2016,BlackAmericans;AsianAmericans,HispanicAmericans;andNativeAmericansorOtherPacificIslandersintheVirginiaBeachmarketplaceweredeniedconventionalhomepurchaseloansathigherratesthannon‐HispanicwhiteAmericans.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 13
Figure C‐14. Percent of conventional home purchase loans that were subprime, Virginia Beach and the United States, 2007 and 2016
Note:
Native Americans are combined with Pacific Islanders due to small sample size.
Source:
FFIEC HMDA data 2007 and 2016. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.
FigureC‐14indicatesthatin2016,BlackAmericans,AsianAmericans,andHispanicAmericansintheVirginiaBeachmarketplacewereawardedsubprimeconventionalhomepurchaseloansatgreaterratesthannon‐HispanicwhiteAmericans.
Figure C‐15. Business loan denial rates, South Atlantic Division and the United States, 2003
Note:
**, ++ Denotes statistically significant differences from non‐Hispanic white men (for minority groups and women) at the 95% confidence level for the United States as a whole and the South Atlantic Division, respectively.
The South Atlantic Division comprises North Carolina, South Carolina, Delaware, the District of Columbia, Florida, Georgia, Maryland, Virginia, and West Virginia.
Source:
BBC Research & Consulting from 2003 Survey of Small Business Finance.
FigureC‐15indicatesthat,in2003,minority‐andwoman‐ownedbusinessesintheSouthAtlanticDivisionweredeniedbusinessloansatagreaterratethanbusinessesownedbynon‐Hispanicwhitemen.IntheUnitedStatesasawhole,BlackAmerican‐ownedbusinessesweredeniedbusinessloansatagreaterratethanbusinessesownedbynon‐Hispanicwhitemen.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 14
Figure C‐16. Businesses that did not apply for loans due to fear of denial, South Atlantic Division and the United States, 2003
Note:
**, ++ Denotes statistically significant differences from non‐Hispanic white men (for minority groups and women) at the 95% confidence level for the United States as a whole and the South Atlantic Division, respectively.
The South Atlantic Division comprises North Carolina, South Carolina, Delaware, the District of Columbia, Florida, Georgia, Maryland, Virginia, and West Virginia.
Source:
BBC Research & Consulting from 2003 Survey of Small Business Finance.
FigureC‐16indicatesthat,in2003,minority‐andwoman‐ownedbusinessesintheSouthAtlanticDivisionweremorelikelythanbusinessesownedtonotapplyforbusinessloansbyduetoafearadenial.IntheUnitedStatesasawhole,BlackAmerican‐,HispanicAmerican‐andnon‐Hispanicwhitewoman‐ownedbusinessesweremorelikelythanbusinessesownedbynon‐Hispanicwhitementonotapplyforbusinessloansduetoafearofdenial.
Figure C‐17. Mean values of approved business loans, South Atlantic Division and the United States, 2003
Note:
**, ++ Denotes statistically significant differences from non‐Hispanic white men (for minority groups and women) at the 95% confidence level for the United States as a whole and the South Atlantic Division, respectively.
The South Atlantic Division comprises North Carolina, South Carolina, Delaware, the District of Columbia, Florida, Georgia, Maryland, Virginia, and West Virginia.
Source:
BBC Research & Consulting from 2003 Survey of Small Business Finance.
FigureC‐17indicatesthat,in2003,minority‐andwoman‐ownedbusinessesintheUnitedStateswhoreceivedbusinessloanswereapprovedforloansthatwereworthlessthanloansthatbusinessesownedbynon‐Hispanicwhitemenreceived.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 15
Figure C‐18. Self‐employment rates in study‐related industries, Virginia Beach and the United States, 2012‐2016
Note:
** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 95% confidence level.
† Denotes that significant differences in proportions were not reported due to small sample size.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐18indicatesthatBlackAmericansworkingacrossallindustriesintheVirginiaBeachmarketplace(construction,architectureandengineering,professionalservices,andgoodsandservices)exhibitedlowerratesofself‐employment(i.e.,businessownership)thannon‐HispanicwhiteAmericans.Inaddition,HispanicAmericansinthearchitectureandengineeringindustryexhibitedlowerratesofself‐employmentthannon‐HispanicwhiteAmericans.WomenworkingintheprofessionalservicesindustryintheVirginiaBeachmarketplacealsoexhibitedlowerratesofself‐employmentthanmen.
Virginia Beach
Race/ethnicity
Black American 14.3 % ** 2.8 % ** 6.4 % ** 4.9 % **
Asian American 17.0 13.2 13.5 10.3
Hispanic American 19.6 2.9 ** 10.8 5.3
Native American 43.4 † 0.0 † 0.0 † 1.5
Other Race Minority 0.0 † 0.0 † 0.0 † 24.7 †
Non‐Hispanic white 25.2 12.4 13.7 8.0
Gender
Women 17.8 % 12.7 % 8.5 % ** 6.4 %
Men 22.9 9.7 14.8 7.4
All individuals 22.3 % 10.7 % 10.4 % 7.0 %
United States
Race/ethnicity
Black American 17.8 % ** 15.5 % ** 7.0 % ** 4.9 % **
Asian American 23.1 ** 12.7 ** 12.5 ** 10.2
Hispanic American 17.7 ** 16.3 ** 10.1 ** 7.6 **
Native American 18.4 ** 21.4 13.7 ** 7.6 **
Other Race Minority 23.1 14.9 ** 14.8 * 8.2 **
Non‐Hispanic white 26.1 23.1 17.9 10.0
Gender
Women 16.1 % ** 20.8 % * 12.5 % ** 7.1 % **
Men 24.0 21.2 19.0 9.9
All individuals 23.2 % 21.1 % 14.7 % 8.8 %
Construction
Construction
Goods &
Services
Goods &
Services
Professional
Services
Professional
Services
Architecture &
Engineering
Architecture &
Engineering
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 16
Figure C‐19. Predictors of business ownership in construction (probit regression), Virginia Beach, 2012‐2016
Note:
The regression includes 1,322 observations.
*,** Denote statistical significance at the 90% and 95% confidence levels, respectively.
Other race minority omitted from the regression due to small sample size.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa.
FigureC‐19indicatesthat,comparedtobeinganon‐HispanicwhiteAmerican,beingaBlackAmericanintheVirginiaBeachmarketplaceisrelatedtoalowerlikelihoodofowningaconstructionbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.Inaddition,beingawomanintheVirginiaBeachmarketplace(ascomparedtoaman)isrelatedtoalowerlikelihoodofowningaconstructionbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.
Variable
Constant ‐1.3672 *
Age 0.0002
Age‐squared 0.0002
Married 0.0852
Disabled 0.0874
Number of children in household ‐0.0341
Number of people over 65 in household ‐0.1195
Owns home 0.1821
Home value ($000s) 0.0001
Monthly mortgage payment ($000s) 0.0314
Interest and dividend income ($000s) 0.0046
Income of spouse or partner ($0000s) ‐0.0002
Speaks English well 0.1183
Less than high school education ‐0.0360
Some college ‐0.0856
Four‐year degree ‐0.4149 **
Advanced degree ‐0.3952
Black American ‐0.3077 **
Asian American ‐0.1464
Hispanic American 0.1035
Native American 0.4897
Women ‐0.3270 **
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 17
Figure C‐20. Disparities in business ownership rates for Virginia Beach construction workers, 2012‐2016
Note: The benchmark figure can only be estimated for records with observed (rather than imputed) dependent variable values. Thus, the study team made comparisons between actual and benchmark self‐employment rates only for the subset of the sample for which the dependent variable was observed.
Analyses are limited to those groups that showed negative coefficients that were statistically significant in the regression model.
Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐20indicatesthatBlackAmericansownconstructionbusinessesintheVirginiaBeachmarketplaceataratethatis65percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans(i.e.,non‐HispanicwhiteAmericanswhosharethesamepersonalcharacteristics).Similarly,non‐HispanicwhitewomenownconstructionbusinessesintheVirginiaBeachmarketplaceataratethatis64percentthatofsimilarly‐situatednon‐Hispanicwhitemen.
Figure C‐21. Predictors of business ownership in Architecture & Engineering (probit regression), Virginia Beach, 2012‐2016
Note:
The regression includes 766 observations.
*, ** Denote statistical significance at the 90% and 95% confidence levels, respectively.
Other race minority and Native American omitted from the regression due to small sample size.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐21indicatesthatbeingaminorityorbeingawomanisnotrelatedtothelikelihoodofowninganarchitectureandengineeringbusinessintheVirginiaBeachmarketplaceafteraccountingforvariousotherpersonalcharacteristics.
Group
Black American 15.3% 23.4% 65
Non‐Hispanic white women 19.5% 30.7% 64
Self‐Employment Rate Disparity Index
Actual Benchmark (100 = Parity)
Variable
Constant ‐2.0259
Age 0.0381
Age‐squared ‐0.0002
Married ‐0.2022
Disabled ‐0.0784
Number of children in household 0.0899
Number of people over 65 in household 0.3706 **
Owns home 0.2399
Home value ($000s) 0.0006 *
Monthly mortgage payment ($000s) ‐0.0149
Interest and dividend income ($000s) 0.0064
Income of spouse or partner ($0000s) 0.0002
Speaks English well ‐0.7902
Less than high school education ‐0.0955
Some college ‐0.3152
Four‐year degree 0.0324
Advanced degree ‐0.0595
Black American ‐0.6699
Asian American ‐0.1225
Hispanic American ‐0.6939
Women 0.2183
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 18
Figure C‐22. Predictors of business ownership in professional services (regression), Virginia Beach, 2012‐2016
Note:
The regression includes 651 observations.
*, ** Denote statistical significance at the 90% and 95% confidence levels, respectively.
Other race minority, Native American and speaks English well omitted from the regression due to small sample size.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐22indicatesthatbeingaminorityorbeingawomanisnotrelatedtothelikelihoodofowningaprofessionalservicesbusinessintheVirginiaBeachmarketplaceafteraccountingforvariousotherpersonalcharacteristics.
Variable
Constant ‐3.4555 **
Age 0.0725 **
Age‐squared ‐0.0006 *
Married 0.1961
Disabled 0.2293
Number of children in household ‐0.0347
Number of people over 65 in household 0.1617
Owns home ‐0.0380
Home value ($000s) 0.0012 *
Monthly mortgage payment ($000s) ‐0.2213 *
Interest and dividend income ($000s) ‐0.0033
Income of spouse or partner ($0000s) 0.0026 *
Less than high school education ‐0.2799
Some college ‐0.0093
Four‐year degree 0.3567
Advanced degree 0.3269
Black American 0.0436
Asian American ‐0.1511
Hispanic American ‐0.0542
Women ‐0.2005
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 19
Figure C‐23. Predictors of business ownership in goods and services (regression), Virginia Beach, 2012‐2016
Note:
The regression includes 3,468 observations.
*, ** Denote statistical significance at the 90% and 95% confidence levels, respectively.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.
FigureC‐23indicatesthatbeingaminorityorbeingawomanisnotrelatedtothelikelihoodofowningagoodsandservicesbusinessintheVirginiaBeachmarketplaceafteraccountingforvariousotherpersonalcharacteristics.
Variable
Constant ‐3.6654 **
Age 0.0991 **
Age‐squared ‐0.0009 **
Married 0.2554 **
Disabled 0.2496 *
Number of children in household 0.1069 **
Number of people over 65 in household 0.0387
Owns home ‐0.3428 **
Home value ($000s) 0.0005 **
Monthly mortgage payment ($000s) 0.1338 **
Interest and dividend income ($000s) 0.0014
Income of spouse or partner ($0000s) 0.0001
Speaks English well ‐0.4685 **
Less than high school education 0.1070
Some college 0.0721
Four‐year degree 0.0366
Advanced degree ‐0.0312
Black American ‐0.1758
Asian American ‐0.0279
Hispanic American ‐0.1374
Native American ‐0.5593
Other minority group 1.1272
Women ‐0.0064
Coefficient
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 20
Figure C‐24. Rates of business closure, expansion, and contraction, Virginia and the United States, 2002‐2006
Note:
Data only include only privately‐held businesses.
Equal Gender Ownership refers to those businesses for which ownership is split evenly between women and men.
Statistical significance of these results cannot be determined, because sample sizes were not reported.
Source:
Lowrey, Ying. 2010. “Race/Ethnicity and Establishment Dynamics, 2002‐2006.” U.S. Small Business Administration Office of Advocacy. Washington D.C.
Lowrey, Ying. 2014. "Gender and Establishment Dynamics, 2002‐2006." U.S. Small Business Administration Office of Advocacy. Washington D.C.
FigureC‐24indicatesthatBlackAmerican‐,AsianAmerican‐,andHispanicAmerican‐ownedbusinessesinVirginiashowhigherclosureratesthanwhiteAmerican‐ownedbusinesses.Woman‐ownedbusinessesinVirginiaalsoshowhigherclosureratesthanbusinessesownedbymen.BlackAmerican‐andAsianAmerican‐ownedbusinessesinVirginiashowlowerexpansionratesthanwhiteAmerican‐ownedbusinesses.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 21
Figure C‐25. Mean annual business receipts (in thousands), Virginia Beach‐Norfolk‐Newport News, VA‐NC Metro Area and the United States, 2012
Note:
Includes employer and non‐employer firms. Does not include publicly‐traded companies or other firms not classifiable by race/ethnicity and gender.
All race/ethnicity and gender categories include Hispanic Americans. Estimates for Non‐Hispanic race/ethnic groups are not available for metropolitan statistical areas. Those estimates are only available at the state level.
Source:
2012 Survey of Business Owners, part of the U.S. Census Bureau’s 2012 Economic Census.
FigureC‐25indicatesthat,in2012,BlackAmerican‐;AsianAmerican‐;HispanicAmerican‐;AmericanIndianandAlaskanNative‐;andNativeHawaiianandotherPacificIslander‐ownedbusinessesintheVirginiaBeach‐Norfolk‐NewportNewsMetroAreashowedlowermeanannualbusinessreceiptsthannon‐HispanicwhiteAmerican‐ownedbusinesses.Inaddition,woman‐ownedbusinessesintheregionshowedlowermeanannualbusinessreceiptsthanbusinessesownedbymen.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 22
Figure C‐26. Mean annual business owner earnings, Virginia Beach and the United States, 2012‐2016
Note:
The sample universe is business owners age 16 and older who reported positive earnings. All amounts in 2016 dollars.
**, ++ Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level for Virginia Beach and the United States as a whole, respectively.
† Denotes that significant differences in proportions were not reported due to small sample size.
Other race minority omitted due to small sample size.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
FigureC‐26indicatesthattheownersofBlackAmerican‐ownedbusinessesandHispanicAmerican‐ownedbusinessesintheVirginiaBeachmarketplaceearnlessonaveragethantheownersofnon‐HispanicwhiteAmerican‐ownedbusinesses.Inaddition,theownersofwoman‐ownedbusinessesintheVirginiaBeachmarketplaceearnlessonaveragethantheownersofbusinessesownedbymen.
BBC RESEARCH & CONSULTING – FINAL REPORT APPENDIX C, PAGE 23
Figure C‐27. Predictors of business owner earnings (regression), Virginia Beach, 2012‐2016
Note:
The regression includes 999 observations.
For ease of interpretation, the exponentiated form of the coefficients is displayed in the figure.
The sample universe is business owners age 16 and older who reported positive earnings. All amounts in 2016 dollars.
*, ** Denotes statistical significance at the 90% and 95% confidence level, respectively.
Other race minority omitted from the regression due to small sample size.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables and men for the gender variable.
Source:
BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
FigureC‐27indicatesthat,comparedtobeingtheownerofamale‐ownedbusinessintheVirginiaBeachmarketplace,beingtheownerofafemale‐ownedbusinessisrelatedtolowerbusinessearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.
Figure C‐28. Predictors of business owner earnings (regression), United States, 2012‐2016
Note:
The regression includes 436,401 observations.
For ease of interpretation, the exponentiated form of the coefficients is displayed in the figure.
The sample universe is business owners age 16 and over who reported positive earnings. All amounts in 2015 dollars.
*, ** Denotes statistical significance at the 90% and 95% confidence level, respectively.
The referent for each set of categorical variables is as follows: high school diploma for the education variables, non‐Hispanic whites for the race variables, and men for the gender variable.
Source:
BBC Research & Consulting from 2011‐2015 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/..
FigureC‐28indicatesthat,comparedtobeingtheownerofanon‐HispanicwhiteAmerican‐ownedbusinessintheUnitedStates,beinganownerofaBlackAmerican‐orNativeAmerican‐ownedbusinessisrelatedtolowerearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.Inaddition,comparedtobeingtheownerofamale‐ownedbusinessintheUnitedStates,beingtheownerofafemale‐ownedbusinessisrelatedtolowerearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.
Variable
Constant 777.253 **
Age 1.136 **
Age‐squared 0.999 **
Married 1.110
Speaks English well 0.911
Disabled 0.910
Less than high school 1.001
Some college 0.919
Four‐year degree 1.253
Advanced degree 1.579 *
Black American 0.785
Asian American 0.702
Hispanic American 1.189
Native American 1.177
Women 0.635 **
Exponentiated
Coefficient
Variable
Constant 533.957 **
Age 1.149 **
Age‐squared 0.999 **
Married 1.241 **
Speaks English well 1.144 **
Disabled 0.580 **
Less than high school 0.749 **
Some college 1.041 **
Four‐year degree 1.312 **
Advanced degree 1.895 **
Black American 0.818 **
Asian American 1.102 **
Hispanic American 1.042 **
Native American 0.681 **
Other race minority 1.115 *
Women 0.533 **
Exponentiated
Coefficient
APPENDIX D.
Qualitative Information about Marketplace Conditions
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 1
APPENDIX D. Qualitative Information about Marketplace Conditions
AppendixDpresentsqualitativeinformationthatthestudyteamcollectedthroughin‐depthinterviews,publicmeetings,andtelephonesurveysconductedaspartofthedisparitystudy.AppendixDispresentedin10parts:A. Introduction and backgrounddescribeswithwhomthestudyteammettocollectthe
informationsummarizedinAppendixDandhowthatinformationwascollected.
B. Background on the contracting industry summarizesinformationabouthowbusinessesbecomeestablishedandtheirsize.PartBalsopresentsinformationabouttheeffectsofthelocaleconomyandbusinessowners’experiencespursingpublicandprivatesectorwork.
C. Working as a prime contractor or subcontractorsummarizesinformationaboutthemixofbusinesses’primecontractandsubcontractworkandhowtheyobtainthatwork.PartCalsopresentsinformationonbusinessowners’experiencesworkingwithminority‐andwoman‐ownedbusinessesandotherbusinesses.
D. Keys to business successsummarizesinformationaboutcertainbarrierstodoingbusinessandkeystosuccess,includingaccesstofinancing.
E. Potential barriers to doing business in the regionpresentsinformationaboutpotentialbarrierstodoingworkintheVirginiaBeacharea,includingbonding,insurance,andexperienceswiththeCityofVirginiaBeach(City)processes.
F. Allegations of unfair treatmentpresentsinformationaboutexperienceswithunfairtreatment,includingbidshopping;treatmentduringperformanceofwork;andallegationsofunfavorableworkenvironmentforminoritiesandwomen.
G. Additional information regarding any race ‐ or gender‐based discriminationincludesadditionalinformationconcerningpotentialracial/ethnic‐orgender‐baseddiscrimination.Topicsincludestereotypicalattitudesaboutminoritiesandwomenandallegationsofclosedor“goodol’boy”networksthatadverselyaffectopportunitiesforminority‐andwoman‐ownedbusinesses.
H. Insights regarding neutral measures presentsinformationaboutbusinessassistanceprograms,effortstoopencontractingprocesses,andotherstepstoremovebarriersforsmallbusinesses.
I. Insights regarding race ‐ or gender‐based measures presentscommentsaboutassistanceprogramsbasedontheraceorgenderofbusinessowners.
J. MBE /WBE/SWaM certification presentsinformationaboutminority‐andwoman‐ownedbusinessenterprise(MBE/WBE)certificationandSmall,Women‐ownedandMinority‐ownedBusinesses(SWaM)certificationandthecertificationprocess.Italsopresents
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 2
informationaboutadvantagesanddisadvantagesthatbusinessesexperiencebecauseoftheircertificationasanMBE,WBE,orSWaMbusiness.
A. Introduction and Background
Businessownersandmanagers;tradeassociationrepresentatives;andotherinterestedpartieshadtheopportunitytodiscusstheirexperiencesworkingintheVirginiaBeachmarketplacebyparticipatinginoneormoreofthefollowing:
In‐depthinterviews;
Availabilitysurveys;and
Publicmeetings.
Thestudyteamconductedpublicmeetings,in‐depthinterviews,andtelephonesurveysbetweenFebruary2018andJuly2018.Duringtheinterviews,surveys,andmeetings,participantshadopportunitiestodiscusstheirexperiencesworkinginthelocalcontractingindustry;experiencesworkingwiththeCityandotherpublicagencies;experienceswithpotentialbarriersordiscriminationbasedonraceorgender;andothermattersrelevanttodoingbusinessintheVirginiaBeachmarketplace.Throughoutthestudyprocess,theCityandthestudyteamencouragedbusinessownerstosubmitwrittentestimonyandcommentsconcerningthesematters.
In‐depth interviews. Thestudyteamconductedin‐depthinterviewswith45businessesbasedintherelevantgeographicmarketarea.1Mostoftheinterviewswereconductedwiththeownerorotherofficerofthebusiness.Intervieweesincludedindividualsrepresentingconstructionbusinesses;architectureandengineeringbusinesses;professionalservicesbusinesses;goodsandcommoditiesbusinesses;andotherservicesbusinesses.Thestudyteamidentifiedinterviewparticipantsprimarilyfromarandomsampleofbusinessesthatwasstratifiedbybusinesstypeandtheraceandgenderofthebusinessowners.Theinterviewsincludeddiscussionsaboutinterviewees’perceptionsandexperiencesregardingthelocalcontractingindustry;theCity’scontractingpoliciesandpractices;anyallegationsofunfairtreatmentofminoritiesandwomen;andexperienceswithcertificationprograms(e.g.,theSWaMProgram).
Ofthebusinessesinterviewed,someworkexclusivelyorprimarilyasprimecontractorsorsubcontractors,whereasothersworkinbothcapacities.Thebusinessesinterviewedrepresentedminority‐ownedbusinesses,woman‐ownedbusinesses,service‐disabledveteran‐ownedbusinesses,SWaMbusinesses,andbusinessesownedbynon‐Hispanicwhitemen.SomeofthosebusinesseswereMBE‐certified,WBE‐certified,SWaM‐certified,orheldothercertifications.EachbusinessthatthestudyteaminterviewedhadconductedworkintheVirginiaBeacharea.AllintervieweesareidentifiedinAppendixDbyrandomintervieweenumbers(i.e.,#1,#2,#3,etc.).
Becauseintervieweeswereoftenquitespecificintheircomments,inmanycasesthestudyteamreportsintervieweecommentsinaggregatetominimizethechancethatinterviewees(orother 1TherelevantgeographicmarketareaincludesChesapeake.Norfolk,Portsmouth,andVirginiaBeachinVirginia.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 3
individualsorbusinessesmentionedduringtheinterviews)couldbeidentified.ThestudyteamreportstheraceandgenderofeachbusinessownerandwhethereachintervieweerepresentsanMBE‐certifiedbusiness,aWBE‐certifiedbusiness,aSWaM‐certifiedbusiness,orabusinessthatdidnotreporthavinganytypeofcertification.
Availability surveys.Asapartoftheavailabilitysurveysthatthestudyteamconductedforthedisparitystudy,businessownersandmanagerswereaskedwhethertheircompanieshaveexperiencedbarriersordifficultiesassociatedwithbusinessstartuporexpansionwithintheindustryorwhetherthecompanyhasencounteredbarriersinobtainingwork.Atotalof106businessesprovidedcomments.ThestudyteamanalyzedresponsestothosequestionsandprovidedexamplesofdifferenttypesofcommentsinAppendixD.AvailabilitysurveycommentsareindicatedthroughoutAppendixDbytheprefix“AS.”Fordetailsaboutavailabilitysurveys,seeChapter5andAppendixE.
Public meetings. Aspartofthedisparitystudy,thestudyteamconductedthreepublicmeetingsinVirginiaBeach,Virginia.Thepublicmeetingswereheldattwolocationsoverthreedays:
MeyeraE.OberndorfCentralLibraryAuditorium(October16,2018andOctober18,2018;commentsidentifiedwiththeprefix“MOC”);and
KempsvilleHighSchoolCafeteria(October17,2018;commentsidentifiedwiththeprefix“KHS”).
PublicmeetingparticipantsrepresentedbusinessesandorganizationsthroughouttheCity.Thenumberingofcommentsfromaparticularpublichearing(e.g.,MOC#1,MOC#2)indicatestheorderinwhichparticipantsgaveoraltestimonyatthehearing.Forsimplicity,AppendixDreferstobothpublicmeetingparticipantsandthoseprovidingwrittentestimonyas“interviewees”inthesamewayasindividualswhoparticipatedinin‐depthinterviews.TheCityandthestudyteamalsoencouragedbusinessownerstosubmitwrittentestimonytothestudyteamthroughoutthecourseofthestudy.Thestudyteamreceivedwrittentestimonyfromthreebusinesses.
B. Background on the Contracting Industry
PartBsummarizesinformationrelatedto:
Howbusinessesbecomeestablished;
Employmentsizeofbusinesses;
Sizesandlocationsofcontractsthatbusinessesperform;
Effectsofthelocaleconomyonbusinesses;
Currentmarketplaceconditions;and
Businessowners’experiencespursuingpublicandprivatesectorwork.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 4
How businesses become established. Manyintervieweesreportedthattheircompanieswerestarted(orpurchased)byindividualswithpreviouslyestablishedconnectionsintheirrespectiveindustries.
In2007,aBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirmboughttheNorfolkofficeofnon‐minoritymedicalservicesfirmwherehehadworkedfor11.5years.[#1]
Whenaskedhowandwhenthefirmwasfounded,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmstated,“Twoofthefoundershaveretiredandoneisstillthere.Thefirmwasfoundedbythreemen33yearsago.”[#9]
TheHispanicAmericanfemalerepresentativeofanewspapercompanynotedthatsheknewthepreviousowners,aHispanicmarriedcouple,andthattheyhadstarteditasaretirementbusiness.Later,thecoupledecidedtopursueotherthingsandin1999soldthecompanytothecurrentowner,whowasalsoseekingaretirementbusiness.“Wethoughtitwasareallygoodproduct.Itwasaverygoodnewspaperandwedidn’twantittogobythewayside.”[#18]
Whenaskedaboutthecircumstancesinwhichthecompanywasformed,theHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatthefirmwaspurchasedfromthepreviousownersin2011,andhethenacquired51percentownership.Heexplained,“Whatspurredmewasanopportunitytobuildandgrowanoperationalbusinessinourarea.Iwasjustcomingoutofthemilitary,andIwantedtomakeagoofownershipandtrytobuildagreatteamandgivegreatservicetoourcustomers.”[#28]
Anon‐HispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthattheelectricalportionofthefirmwasfoundedinFrancein1955.Heexplained,“In1989thecompanymadeitsfirstpurchaseofaU.S.‐ownedelectricaldistributor,whichwaslocatedinMaryland.Thefirmcontinuedtopurchasecompaniesoverthelast43years,makingtheparentcompanythelargestwholesaleelectricaldistributorintheU.S.,whichincludesatotalof19operatingcompanies.”[#35]
Anon‐HispanicwhitemalerepresentativeofanelevatorcompanyreportedthatthefirmwasfoundedinSwitzerlandin1890byaman.[#36]
Whenaskedaboutthecircumstancesinwhichthecompanywasformed,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanyrespondedthatitwasfoundedbyaBlackAmericanmaninearly1970,asheneededtosupporthisfamily.[#39]
Many firm owners worked in the industry before starting their own businesses.Examplesfromthein‐depthinterviewsincludethefollowing:
TheBlackAmericanmaleownerofaminority‐ownedrealestatedevelopmentfirmstated,“[We]firstgotstartedin1995andstartedinvestinginrealestateandwantedtolearnanddomoreprojects,sowebegantolearnabouttherealestatedevelopmentbusinessbyworkingalongsideaprominentmajority‐ownedfirm,theneventuallylaunchedmyownfirm.”[#2]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 5
Whenaskedaboutthehistoryandbywhomthefirmwasfoundedandthecircumstancesinwhichitwasformed,anon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmnoted,“Iworkedforalarge,nationalfirmandwasjustlookingforsomemoreflexibility,andtherewasanicheforqualifiedDBEsinmymarket.Well,notonlydidVDOThaveDBErequirements,alotofmunicipalitiesweregoingtowardsgoalsandlotsofthemarealittlebitmorestringentuponthat.”[#3]
Whengivingabriefhistoryofthefirm,thenon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certifiedengineeringandtestingfirmreportedthatpreviouslyshehadbeenworkingwithalargemajoritymediaandcommunicationsfirmandbyemployeecontractwasnotallowedtoworkforaprofitableboard.Shewasalwayswiththecompanyfromthebeginningin2002andhelpedfinancethebusiness.SheisalsoaClassAcertifiedcontractorandisnowpresidentofthefirm.[#5]
Amalerepresentativeofanon‐Hispanicwhite‐ownedlandscapematerialsfirmstatedthattheowneroriginallyfoundedhislandscapingbusinessandneededtofindagoodsupplierofmulchmaterialandequipment,sohestartedhisownlandscapematerialscompany.[#6]
Whengivingabriefhistoryofthefirm,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmreportedthathehadbeeninthegeotechnicalindustryforover20years.HegraduatedfromVirginiaTechandmanagedconstructionforacoupleofyearsandrelocatedtoMarylandwhereheearnedhisP.E.HeworkedinVirginiaBeachforaboutnineyearswithaprivatefirmdoinggeotechnicalengineeringandmaterialtesting.Afterwards,hestartedhisfirm.[#7]
TheBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmnotedthathestartedasaconsultantandearnedhislicensein2006.Hetaughtforanumberofyearsandhasworkedwiththelocalhousingauthorityintheirdraftingandgraphics.Healsoworkedwithalocalminority‐ownedarchitecturalfirmfor15years.Helefttoworkforamajorityfirmashestudiedandpreparedtotakethelicenseexam.[#8]
Themalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmmentionedthecompanywasstartedbyaJohnsHopkinsprofessorwhospecializedintoxicology.Thepowercompanyknewabouthisspecialtyandhelpedhimdevelopthecompanyanditgrewintoapubliccompany.Thefounderwassemi‐retiredbythenandboughtoutthepublicsideandmadeitanemployee‐ownedcompany.[#10]
Thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmmentioned,“Thecompanywasstartedaftertheywentoutofbusiness,previouslytheydidmajorrepairstotanksonalargescale.Thesameownersstartedanewbusinessfocusingoninspections.Theyjustwantedtogosmallerinsizeandinscopeofwork.Thefirstcompanywasverylargeandtheyrepairedtanksandpipelines.Nowwecleanandinspect.”[#11]
TheHispanicAmericanfemaleownerofatranslationagencyreportedshehadherowninsuranceagencyinanotherstate.Shenoticedseveralclientsneededinterpretationandtranslationhelp.Shevoluntarilyprovidedherassistanceandthendecidedtosellherinsuranceagencyandstartherinterpreterandtranslatorbusinessin2007.[#13]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 6
Thenon‐Hispanicwhitefemaleownerofacomputersupportfirmstatedshelostherjob10yearsago.Shelookedintoacomputersoftwareprogramcompanyownedbyaformerschoolteacher.Shebecamealicenseeofthesoftware.Thefirmstartedoutwithjustherandfivecomputers,andnowshehas75laptopsandasmanyastenpeople.Themarketblewupfasterthanshecouldmanageit.Shedidn’tmakeaprofitforthefirstfiveyearsandcouldn’tgetaloan.Allthemoneywentbackintothebusiness.Thebusinesswasparent‐funded,theeconomytankedandparentsweremorejudiciousaboutspendingextrafortheprogramabovethecostofchildcare.Thenon‐Hispanicwhitefemaleownerthefirmthenwenttoprivatepreschoolsdirectlyasacurriculumoptionforthem.Sheworkedwithallthestudentsinthepreschools.Theworkhasbeensteady.[#14]
Thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnotedthathercurrentmaleco‐ownerleftjournalisminSeptember1991.Hepartneredwithanotherbroadcastjournalistandstartedtheagency27yearsago.Thatpartnershiplasted2years,thenthefemalepartnerlefttodootherthings.Thenon‐HispanicwhitefemaleownerofapublicrelationsandmarketingfirmlefthercareertojointheagencyinFebruaryof1993.[#15]
TheBlackAmericanmaleownerofabusinessmanagementconsultingfirmnotedhewasaskedbyseveralbusinessownersabouthowtomanagetheirbusinessesaswellasdevelopmentofstrategicplans.Hewasofferinghisexpertiseatnochargeinitially,thenheformedhisfirmin2017.[#17]
Thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnotedthatthenon‐HispanicwhitemalefounderemigratedfromNorthernIrelandafterworkingintheMiddleEast.Hisdegreewasinstructuralengineering.Thefirmthefounderworkedforwasstructuralengineeringandthefirmwasrequestedtoconductinspectionsbutdidnotwanttoprovidethoseservices.Thenon‐Hispanicwhitemalefounderstartedhisownfirmin1984,providingconstruction,testing,andinspectionservices.Theownerstartedwithjusthimselfthenhiredanotherperson.“Our[firm]wasthefirstfirminthemetroDCareaconcentratingonthispartofthebusiness.OurfootprintisnowPhiladelphia,Maryland,DC,NorthernVirginia,Richmond,andNorfolk.We’vebeenhere20yearsinHamptonRoads;wealsohaveofficesdownintheCarolinasandalongtheCentralGulfCoast.Over50percentofourtotalcompanyvolume,whichruns10or12milliondollarsayear,isrighthereRichmond,Norfolk,DC.”[#19]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmindicatedthatthefirmwasfoundedin1997byoneHispanicAmericanmaninVirginiaBeach,Virginia.Shealsoindicatedthataround2010theownerincorporatedajanitorialdivisionwhichwaslatersoldin2017.Afterthesaleofthejanitorialdivision,theownerwentbacktothecommercialrenovationbusinessonly.[#25]
Whenaskedhowthefirmwasformed,anon‐HispanicwhitemalerepresentativeofaWBE‐andSWaM‐certifiedmechanicalcontractingfirmexplainedthathehasbeendoingthistypeofworksince1973sohedecidedtostarthisownbusiness.In2010therewasachangeofownershipandhiswife,anon‐Hispanicwhitewoman,becametheownerofthefirm.Hefurtherindicatedthatthischangewasmadesothatthecompanycouldhaveaccesstocontracts.“Itwastosetupawoman‐ownedbusinessforgovernmentcontracts.”[#26]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 7
Whenaskedaboutthecircumstancesinwhichthecompanywasformed,anon‐Hispanicwhitemalerepresentativeofapubliclyheldmanufacturingequipmentfirmstated,“Thefirmwasfoundedbyonemanbackin1976duetoaneedforportablepumpingequipmentonarentalbasis.”[#29]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanyworkedforadoorcompanyandlikedwhathewasdoing.Hebelievedhecoulddothesame,sohelefthisjobandstartedhisowncompanyin2004doingthesamethingasthecompanyheworkedfor,providingconstructiondoors.[#30]
Whenaskedthecircumstancesinwhichthecompanywasformed,theBlackAmericanmaleownerofaplumbingcompanystated,"Iwasworkingforaplumbingcompanyanddecidedtoleavein2007tostartmyownplumbingcompany.Iwantedtheexperienceofbeingmyownemployer."[#31]
TheBlackAmericanmaleownerofanHVACcompanystartedinjuniorhighschoolwithabusinessfirst,thenwasalocksmith.Healwayswantedhisownbusiness.Beingalocksmithwasnotenoughtosucceedbecauseofnothavingenoughcustomerstosustainhisbusiness.Consequently,hetookclassesatTidewaterCommunityCollege(TCC)forHVACandcompletedclassestobeaJourneymanTradesman.AfterayearworkingatanHVACcompany,hereceivedhisMastersandgotajobsubbingforafewyears,thenwentoutonhisown.[#33]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanywenttoschoolandreceivedadegreeinblueprintandgraphicsthatputhimonthepathtostartinghiscompany.Heworkedforacompanyandmadeallofthegrowth[advancements]hecould,thendecidedtoleaveandbuildhisowncompanyin1990.[#38]
A few firm owners indicated that relationships among family members were instrumental in
establishing their businesses. Forexample:
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmjustsoldabigengineeringcompanytothepublic.Hisbrotherleftanotherlargeengineeringfirm.Heandhisbrotherstartedthecompanydoingsimilarservices.“Wefelttherewasaneedinthemarketplaceforadifferenttypeofengineeringcompany.”[#16]
TheAsian‐PacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmworkedinamajorcorporation:alargefurnituremanufacturerinWashington,D.C.Herhusbandpassedaway,andsheleftthatexecutivepositionandmovedbacktoVirginiaBeach.Shehadsomeofheroldclientscallhertoprovideservicesforthem.Shedidn’thaveanyonetolandthecontractson.Shestartedherbusinessandstartedworkingwithheroldclients.[#20]
TheBlackAmericanmaleownerofaDBE‐,WBE‐,MBE‐,andSWaM‐certifiedconstructionfirmstated,"I'mamechanicalengineerbytrade.Iwasbuildingsubmarinesforabout16yearsatalocalshipyard,gotintoconstructiononmyown[ontheside].Atthetimethehousingmarketwascrazy;weweremakinggoodmoney.Isaidtomyself,well,doIwanttostayandbuildsubmarinesandmakesomebodyelsewealthyortryandmakemyselfwealthy?Mywifeismypartner;sheknowsthebusinessinandoutfrommarketingandsoforth,sowebecamecertifiedandthat'showwegotstarted."[#21]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 8
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanywascuttinggrasssincehighschoolandlovedit.HebecameapartnerwithhisBlackAmericanmalebrotherin1987,thentookthebusinessoverbyhimself.HeservicesPortsmouth,NewportNews,Chesapeake,andVirginiaBeach.HestartedinSuffolkwithlargeapartmentcomplexesandanythingthatwouldgeneratemoney.[#23]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatthefirmwasfoundedin2012byherselfandherhusband.Shealsoreportedthatbothsheandherhusbandhaveconstructionindustrybackgrounds.“WhenmyhusbandandIdecidedthatweweregoingtogoaftersomegovernmentcontracts,wethoughtthatitwouldprobablybenefitourcompanytohavemeasthemajorityownersothatwecouldgoafterthesecontractsasawoman‐owned/minority‐ownedbusiness.Westartedoutasasoleproprietorandin2012wedecidedtomakeitaS‐Corporation.”[#34]
Whenaskedaboutthecircumstancesinwhichthecompanywasformed,theBlackAmericanmaleownerofaflooringcompanystatedhehadwatchedhisfatherrunhisflooringcompanyanddecidedtodothesameandhaveaflooringinstallationcompanyalso.HeoriginallyhadasoleproprietorshipbutneededtoseparatehispersonalfinancesfrombusinessfinancessohechangedthenameandbecameanLLC.[#37]
Other firm owners were going into retirement or leaving the military and wanted to open their
own businesses. Forexample:
TheBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedthatafterspending21yearsintheNavyandtimeasanelectronicsconsultantwithanHVACbackground,hedecidedheneededtobemorehands‐onandbeganhisowncompany.Hehadbeenlaidoffandspentayearseekingworkbeforedecidingtostarthisowncompany.[#4]
Thenon‐HispanicwhitefemaleownerofastaffingagencyrecalledthatthefirmstartedafterherhusbandretiredfromtheNavy.Shewasaformerdentalhygienist.Bothwerelookingforsomethingtodo,andtheydecidedtostartabusiness.TheystartedthefranchiseaftermeetingthefranchisorinTexasthroughastaffingagency.[#12]
Thenon‐Hispanicwhitemaleownerofaservicedisabledveteran‐owned(SDVO)andSWaM‐certifiedgeneralcontractingfirmsaidthat,afterbeingoutofthemilitaryfor15years,heworkedforacompany.Heeventuallyquitthatcompanyandstartedhisownbusinessin2010.[#22]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanystatedshefoundedthecompanyin2014asanLLCinNorfolk,Virginia,toprovidejobstoothers,especiallyveterans,intheconstructionfield.[#24]
Anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyindicatedthatthefirmwasfoundedbyaDepartmentofTransportation(DOT)firefighterin2009.Heexplainedthatitwasfirststartedasasidebusinesstogivetheownersomethingtodoonhistimeoff.Hestated,“Itwentfromhim,twoemployees,andtwotruckstoalargerwarehouse,adozenvehicles,andtenemployees.”[#27]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyfoundedhisbusinessin2012afterretiringfromthemilitary.Hestated,"IdecidedIwanted
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toworkoutsideaftermymilitaryduty.Iwantedtodostreetsweepingandoutsidecleaningofsidewalksandstreets."[#32]
Employment size of businesses. Mostofthefirmsthatthestudyteaminterviewedaresmallbusinessesthathavefull‐timeandpart‐timeemployees.
Manyfirmsthatthestudyteaminterviewedhadlessthan15full‐timeemployees.[Forexample,#5,#8,#21,#22,#30,#31,#32,#37,#39]
Somefirmsreportedhavingmorethan15full‐timeemployees[Forexample,#1,#4,#6,#25,#28,#29,#36,#38]
Afewintervieweesreportedthatthebusinessowneristheonlyemployeeofthecompany.[Forexample,#2,#24,#33]
Somefirmsreportedhavingfull‐timeandpart‐timeemployees[Forexample,#3,#23,#26,#27,#34,#35]
Sizes and locations of contracts businesses perform. IntervieweesdiscussedthesizesofcontractstheyperformandthelocationswheretheirfirmsbidonorperformcontractsintheVirginiaBeachareaandinotherstates.
Some business owners reported that their firms typically perform small contracts.Forexample:
Whenaskedwhatsizecontractsherfirmbidson,thenon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmstated,“Beinganengineeringfirm,wedon’tbidoncontracts;theyarequalification‐based.Iwouldsay50percentofmyworkisprobablycontractsthatareunder$10,000.Another20to30percentareunder$50,000andtheremainingare$50,000‐$150,000.”[#3]
TheBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedthecontractshisfirmworksonarenothighdollarcontracts,frequentlymentioningprojectslessthan$5,000andashighas$20,000.MostlargejobsarenotHVACjobs.[#4]
Whenaskedhowfarawaythefirmtypicallyseeksorobtainsbusiness,themalerepresentativeofanon‐Hispanicwhite‐ownedlandscapematerialsfirmreported,“Fiftymilesisasfaraswewouldgo.Wereallydon’tdoprojects.Wesupplythematerialsandthat’sit.Thesizeoftheordersvaries.”[#6]
Whenaskedwhatsizeofcontractsorordersthefirmbidsorperformson,andhowfarawaythefirmtypicallyseeksorobtainsbusiness,thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnotedthata$2500to$5000permonthretaineristhesizeofcontractsherbusinessnormallypursues.Theywillpickupsmallerprojectsthatareshort‐term.TheynormallyworkinHamptonRoads,ormaybeRichmond;theywanttobealocalfirm.[#15]
TheHispanicAmericanfemalerepresentativeofanewspapercompanynotedthattheydonotbidforcontracts.Theyseekadsintherangeof$30forclassifiedads,upto$1500forafull‐pagead,andwouldgoasfarasNorthCarolinaandRichmondforadvertisingrevenue.[#18]
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Anon‐HispanicwhitemalerepresentativeofaWBE‐andSWaM‐certifiedmechanicalcontractingfirmindicatedthatthefirmtypicallyseeksorobtainsbusinesswithintheTidewaterareaandtypicallybidsonaverage$10,000to$15,000,orless,oncontracts.[#26]
Whenaskedwhatsizesofcontractsorordershisfirmbidsonorperforms,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanynotedthathedoesservicecallsstartingat$100,withto$50,000anduponcontracts.ThecompanytravelsasfarasToano,VA;Elizabeth,NC;andthroughoutHamptonRoadsforcontracts.[#30]
TheBlackAmericanmaleownerofaplumbingcompanytravelsasfarasWilliamsburg,VAandthroughouttheHamptonRoadsareatoseekorobtainbusiness.Thecontractsandordersonwhichthefirmwillbidorperformcanbeworthupto$10,000.[#31]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstatedthatthefirmcurrentlyhasnogovernmentcontracts.Sheexplainedthatthefirmistryingtostartthreedivisions.Thefirstdivisionisservicingrealestateagentsorsmallrepairswhichaverageabout$1,000.Theseconddivisionisresidentialremodelingwhichaveragesabout$20,000.Thethirddivisioniscommercialwhichaveragesabout$10,000.ThefirmtypicallyseeksorobtainsbusinessasfarawayasNewportNewsandSuffolk,VA.[#34]
Whenaskedthesizesofcontractsorordersthathisfirmbidsonorperforms,theBlackAmericanmaleownerofaflooringcompanynotedthathedoesnothaveaClassCcontractor’slicense,sohecanonlybidonjobs$1,000orlessinVirginia.ThefirmtypicallyseeksorobtainsbusinessasfarasNorthDakota;Detroit,MI;andanywherewithinthecontinentalU.S.[#37]
Mostintervieweesindicatedthattheircompaniesperformbothsmallandlargecontracts.Forexample:
Whenaskedhowfarawaythefirmtypicallyseeksorobtainsbusiness,theAsianAmericanmaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmreported,“WewentasfarasDelaware.”Thenon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certifiedengineeringandtestingfirmstated,“We’recertifiedinMarylandandDelawareaswellasVirginia.Ourcontractsrangefrom$500tofourmillion.”[#5]
Whenaskedwhatsizecontractsthefirmbidson,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmreported,“Anywherefrom$10,000to$1million.”Hehasbeenfocusingmoreonfederalcontractssincehavinglittlesuccesswithlocalopportunities.[#7]
Whenaskedhowfarawaythefirmtypicallyseeksorobtainsbusinessandwhatsizecontractsthefirmbidsorperformson,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnoted,“Wetrytostayregional—mostlyHamptonRoads—andthesizeofcontractsvaries.”[#9]
Whenaskedhowfarawaythefirmtypicallyseeksorobtainsbusinessandwhatsizecontractsthefirmbidson,themalerepresentativeofanon‐Hispanicwhite‐owned
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environmentalremediationfirmstated,“Wehave27to28officesthroughoutthecountryandGuam.Thesizeofcontractsdependsonthetypeofjob:federal,commercial,ormunicipal."Hegavearangeof$20,000to$240million.Henotedthepercentagesofcontractsare65percentfederal;15to20percentcommercial;and15to20percentmunicipal.[#10]
Whenaskedwhatsizecontractsorordersthefirmbidsonandhowfarthefirmtypicallyseeksorobtainsbusiness,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnoted,“Itvaries.Theprivatesectorrangeisacouplethousanddollarsto40to50thousand.Inthegovernmentsector,wegouptoamillion.Wegoworldwide[toobtainbusiness].”[#11]
Whenaskedwhatsizecontractsthefirmperformsorbidsonandhowfarawaythefirmtypicallyseeksorobtainsbusiness,theHispanicAmericanfemaleownerofatranslationagencynoted,"Contractpursuitscouldrangefrom$2500andup.Italldependsonhavingtimeandthestafftofulfillthecontract.Icouldhandleajobanywhereinthestateiftheprojectdoesn’trequiremetobeonsiteandtranslationcanbecompletedviacomputer,andlocallyforinterpretationservicestheagencywillgoasfarasWilliamsburgandElizabethCity.”[#13]
Thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnotedthefirmbidsoncontractsrangingfrom$1500to$3million.One‐thirdtoone‐quarteroftheirworkisinthefederalsector.ThosecontractsareinHawaii,Denver,Texas,Illinois,Wyoming,andsomeprojectsoverseasareintheMiddleEastorNearEast.[#19]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnotedthefirmbidsoncontractsrangingfrom$10,000to$15,000upto$135million.Shewillgoanywheretoseekorobtainbusiness.Shehasworkedinall50statesandGuantanamoBay,Cuba.[#20]
Whenaskedwhatsizesofcontractsorordersthefirmbidsorperformsonandhowfarawaythefirmtypicallyseeksorobtainsbusiness,anon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,"Contractsrangebetween$200,000andupto$15million.WewillgofarnorthofRichmond,VAandsouthtoElizabethCity,NCandCharleston,SC."[#22]
Whenaskedwhatsizesofcontractsorordershisfirmbidsonorperformsandthelocationshisfirmseeksorobtainsbusiness,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanynotedthatcontractsandordersvaryannually.ThecompanywilltravelasfarasRichmond,VAforbusiness.[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmindicated,"Thefirmbidsonanythingfromacouplethousandto$2millionandtypicallywilltravelasfarasWilliamsburg,Windsor,andFranklin,Virginia.Idon’tknowifwe’vedoneanythingsouthoftheborderinNorthCarolina.”[#25]
Whenaskedaboutthesizeofcontractsorordersthefirmbidsorperformsandhowfarawaythefirmtypicallyseeksorobtainsbusiness,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyindicated,"Wetypicallyseekorobtainbusiness
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withina600‐to700‐mileradius.DuetoDOTregulationswetrytostaywithinan11‐hourdrivetime(FL,GA,NC,SC,PA,etc.).We'renotinanyspecificcontractswithanycompany;it'susuallydoneonaper‐loadbasiscalculatedbymiles."[#27]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmreportedthatthefirmtypicallyseeksorobtainsbusinessthroughouttheU.S.HeindicatedthatthefirmmainlyobtainsbusinessinVirginiaandNorthCarolina.Thefirmbidsoneverythingfrom$500upto$15million.[#28]
Whenaskedwhatsizesofcontractsorordersthefirmbidsonorperformsandhowfarawaythefirmtypicallyseeksorobtainsbusiness,anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmreportedthatthereisnominimumormaximum.Hestated,“Differentjobswillvaryinsize.Theminimumisonedollar,themaxcouldbeuptoorinexcessofonemilliondollars.Wehave44locationsacrosstheU.S.”[#29]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanystatedthatthefirmbidsorperformsoncontractsandordersfrom$10to$1million.ThefirmtypicallyseeksorobtainsbusinessfromElizabethCity,NCtoSuffolkandNewportNews,VA.[#35]
Anon‐Hispanicwhitemalerepresentativeofanelevatorcompanystatedthatthefirmbidsonorperformsonprojectsfrom$1000tomultiplemillionsofdollars.Thefirmtypicallyseeksorobtainsbusinessinternationally.[#36]
Whenaskedwhatsizesofcontractsorordersherfirmbidsorperformson,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynotedthattheydonotdoalotofbidding.Privatesectorbusinessis95percentoftheirtotal.Theydid$1millionofbusinessin2010.ThefirmtypicallyseeksorobtainsbusinessasfarasWilliamsburg,VAanddownasfarasthenorthernpartofNorthCarolina.[#39]
A few interviewees reported that their companies typically perform large contracts. Forexample:
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnoted,“Wedon’thavemanyongoingcontracts.”TheyhaveonewiththeCityandonewiththeNavy.Thesizerangeofcontractsonwhichhisfirmwillbidorperformwasahalfamillionupto$1million.“Wewouldn’tgooutsideofVirginiatopursuebusiness,butwedoworkallovertheworld.WeworkmostlyforlargeA&Efirms;we’reaspecialtyengineeringcompanyandmostlargeA&Efirmsdon’thaveourspecialtyengineeringinhouse.Theydon’tuseitenough.So,theycallusforthesespecialprojects.”[#16]
Whenaskedwhatsizeofcontractsorordersthecompanyhasbidorperformedon,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynotedthathishighestcontractjobwasa28,000sq.ft.buildinginGaffney,S.C.for$180,000.ThecompanytypicallytravelsthroughoutthecontinentalU.S.,toseekorobtainbusiness.[#38]
Effects of the local economy on businesses. Duringin‐depthinterviews,bothsmallandlargefirmsdiscussedwhethertheirfirmshadgrownordeclinedinresponsetolocalmarketconditionsandthereasonsforthismarketresponse.
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Many interviewees indicated increasing business opportunities and income growth for their
companies.Forexample:
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,anAsianAmericanmaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmstated,“We’regrowingatabout20to25percentsincewestarted.”[#5]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,themalerepresentativeofanon‐Hispanicwhite‐ownedlandscapematerialsfirmstated,“Steady.It’ssloweddownandchangedwithabout10percentgrowth.Weaddedmoretothebusinessevents,likeweddings,about10yearsagotoaddtoour10percentgrowth.”[#6]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmstatedthatheisontargetwiththeyearshehasinthebusiness.Hereportedthatheisstartingtogetmorecontracts.[#7]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,themalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmstated,“Wehavehadphenomenalgrowthsince2004.Weattributethegrowthtostayingintheenvironmentalindustryinsteadofotherindustries.Wehaveamentor‐protégéjointventurewithaNativeAmericanwoman‐ownedsmallbusiness.Shewasan8Aandweworkedwithherfirmforthelastfouryears.Shegraduatedfrom8Aandtheyrenewedwithanotherwoman‐ownedSBEjointventureunderthenewSBArules.”[#10]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnoted,“IthinkI’mintheverybeginningofmygrowth.It’sbeenthreeyears;stillearly.IwentfromsmallprojectswhereI’mprojectmanagingthebackendofjobs,butthenIranthisbigcontract.Iwasthesubcontractorastheprogrammanagerforthisbigorganization.I’mkindofclimbingthecurve.”[#20]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanynotedthathisrevenuesareintherangeof$800,000to$1,200,000peryear.Itisagoodmid‐sizedlandscapingcompanythatrecyclesclientsoften.Growthhasbeenverygood.[#23]
Whenaskedhowthefirmhasgrowncomparedtotheindustryaverage,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyexplainedthatthefirmisprettyaverage.Hesaid,“ForthecoupleofyearsthatI’vebeenherewehavegained.Ouryearlyrevenuehasgoneup.We’vecontinuedtogrowbusiness‐wise.Asamatterofafact,wearelookingfortwomoreemployees.”[#27]
Whenaskedtodescribethegrowthofhisfirm,theHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmsaid,“Weareconstantlylookingfornewopportunities.We’retryingtocompeteinachallengingenvironment.Wearefightingforresources,butourgoalistocontinuetogrowandexpand
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yearoveryearandwe’veaccomplishedthatoverthepastfivetosixyearssuccessfully.”[#28]
TheBlackAmericanmaleownerofanHVACcompanynoted,“IwentbacktoschooltotakebusinesscoursessoIcouldgrowmybusiness.Irealizethatthingslikeeducationcanholdyoubackifyoudonotknowwhattodo;educationisimportant.Buildinggoodcreditiskeytogrowth;distributorsdonotreporttoD&Bwhereyoucanestablishagoodcredithistory.Nothavingthatfromdistributorsdoesnothelpmebuildmycreditandultimatelythesuccessofmybusiness.”[#33]
Most interviewees indicated that their firms had not grown or had become smaller. Forexample:
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmreplied,“Ithinktheyhavemaintainedthesamenumberofemployees,offandon,mostlythroughoutthe33years.”[#9]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnoted,“Wewanttostaysmall.Nomorethan25to30employees.Theownerswanttohaveexistingstafffocusongettingtheircertificationsandgettingpromoted.Weknowwhatwedo,wedoitwell,sowejustkindofsticktothat.”[#11]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,thenon‐HispanicwhitefemaleownerofastaffingagencynotedtheyboughtaVirginiaBeachfranchiseofficeinaseamlessprocess.“We’vebeenbig,we’vebeensmall,rightnowwe’remanageable.Comparedtotheindustryrightnow,we’rejustoneinthepack.”[#12]
Whenaskedhowthegrowthordeclineoftheagencycomparestotheaveragefortheindustry,theHispanicAmericanfemaleownerofatranslationagencynoted,“Thereismuchgrowthinthearea.There’salotofworkaround.Youjusthavetobepersistent,connectwiththerightcontractorsothatyoucanstillbeindependent.IthinkI’minthemiddleofthepackrightnow.”[#13]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnoted,“We’restable.Somethingshavebeenverylong‐term,somethingscomeandgo,someprojectscomebackyearafteryear.”[#15]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnoted,“We’renotgrowingsignificantly.Wehaven’ttriedtogrowthiscompanywithmorethansevenpeople.Tenpeoplewasthemaxwehadbefore;there’sonlyalimitedamountofbusinesswecandowith10people.So,wehaven’tmadeaninvestmentinhiringpeopletotrytogrowincapacity.”[#16]
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Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theHispanicAmericanfemalerepresentativeofanewspapernoted,“Ithinkthatwe’vesortofhitthetopandwe’resortofonthedownunlesswedothingsthataregoingtochange.”Theyhavegrownthepaperfromeightpagesto20pagesandfromonceamonthtotwiceamonth.Shementionedthattheyhavemademanycontactsandsharedalotofinformationinthecommunity.[#18]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanynoted,“Growthisslowbutincreasing.Itishardtofindemployeesthataredependableandskilled.”[#30]
Whenaskedhowthegrowthofthefirmhascomparedtotheaveragefortheindustry,theBlackAmericanmaleownerofaplumbingcompanynotedthathisrevenuesarebelowthestandard.[#31]
Other business owners commented on the growth or decline of their firms compared to the
average for their industry. Whenthestudyteamaskedintervieweeshowthegrowthordeclineoftheirfirmscomparedtotheaveragefortheindustry,businessownerssharedthesecomments:
Whenaskedhowthegrowthofthefirmcomparestotheaveragefortheindustry,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmstated,“Growthisgradual.”[#4]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstated,“I’mdefinitelynotaheadofthecurve.Whenotherfirmsgetsomuchwork,wegetthecrumbs.We’reinthegrowthmodewhenitcomestotheprivatesector.Wearecurrentlybelowtheindustryaverage.Afirmofmymagnitudeshouldbeatleastsomewherebetweenhalfamilliontothreequartersofamillionannually.We’relikeone‐thirdofthat.”[#8]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnoted,“We’vebeeninthemiddleofthepackuntilthelastfewyears.We’reaheadoftheindustry.We’vehadgoodyears.Wemadeapurchaselastyearthatstrengthenedourservicelines.”[#19]
Whenaskedhowthefirmhasgrowncomparedtotheindustryaverage,anAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmexplainedthatthereissuchalargegapbetweenthebigcompaniesandthesmallercompanies.Shesaid,“Ithinkourgrowthisverygoodcomparedtoyouraveragesmallbusiness.WhenIsaysmallbusiness,Iknowsomeofthesebigfirmsarestillconsideredsmallbusinessintermsofwhattheyclassifyassmallbusiness.Lastyearwewerejustshortofhittingamilliondollarsinprofits.ThisyearI’mhopingwe’llhitthatandgoover.”[#34]
Whenaskedhowthefirmhasgrowncomparedtotheindustryaverage,anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanystated,“Thefirmisaheadoftheindustryaverage.”[#35]
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Whenaskedhowthefirmhasgrowncomparedtotheindustryaverage,anon‐Hispanicwhitemalerepresentativeofanelevatorcompanystated,“Wearesecondamongstthetopfour.”[#36]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynoted,“Growthisaveragebecauseofthecompetitionthatsurroundsthearea.Itcouldbebetter.”[#38]
Whenaskedhowthegrowthordeclineofthefirmcomparestotheaveragefortheindustry,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynoted,“Icannotdoanaveragebecauseofdiscriminationagainstwomenintheindustry.”[#39]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativefromaprintandsignshopstated,“Thelocaleconomyhasmadeittough.Whenthebottomfelloutintheconstructionindustrywefeltitbecausewedoalotofsignagepertainingtothat,andwedoallofthecopyingforthem.”[AS#28]
Current marketplace conditions. Manyintervieweesdescribedcurrentmarketplaceconditionsandhowtheseconditionsdifferintheprivateandpublicsectors.Intervieweesalsodescribedchangestheyhadseeninmarketplaceconditionsovertime.
Many interviewees indicated that current marketplace conditions are good. Examplesofthosecommentsincludedthefollowing:
Whenaskedaboutwhatchangesinthemarketplaceconditionsthefirmhasseen,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnoted,“It’spickedupbigtime.”[#9]
Whenaskedaboutwhatchangesinthemarketplaceconditionsthefirmhasseen,amalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmrepliedthathisfirmseesthisareaasonefortheirfirm’sgrowth.Theyplantohavemoreofapresenceinthelocalarea.Theconditionsarethesameinthepublicandprivatesectorsforthem.[#10]
Thenon‐Hispanicwhitefemaleownerofastaffingagencynoted,“MarketplaceconditionsareprettyrobustforseniorITpositionsbecausethatskillsetisinhugedemand.There’sashortageofpeopletofillthedemandforseniorIT,whichisthechangeinmarketconditions.Wehavetogooutsideofthestatetoenticepeopletorelocatetothisareatotakethesepositions.”[#12]
Thenon‐Hispanicwhitefemaleownerofacomputersupportfirmnoted,"Themarketplaceconditionisrightformybusiness.Theeconomyhaschangedintheprivatesectorforthebetter.Parentshavemoremoneytospend."[#14]
AHispanicAmericanfemalerepresentativeofanewspapercompanynotedthemarketisgoodforthoselookingtohire.“AlotofHispanicshaveleftthearea,someforjobs.Ithinkofitasimmigrationtoo.Theopportunitiesarebetteronthepublicside;Iwouldliketopursuethatalotmore.”[#18]
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Anon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnotedthemarketisgood.Heexpressed,“Wedoalotofworkdownhere,onboththegovernmentsideandprivateside.”Henotedthefactorsinthelocalmarketplaceinclude,“Economicdevelopmentdownhere.Therearemarketsthathavedrivers.TidewaterorCoastalVirginiahasthemilitary.Ofcourse,militaryconstructionhasbeendownsincesequestration.Andit’sbeendownsofarunderthisCongressthoughthereisthemilitaryfundingbill,butwehaven’tseenthatfundingtranslateintomilitaryconstruction.We’rehopefulsincesequestration;allofthesefacilityneedsthatthemilitaryhashavenotgottenbetter.It’snotonlyrenovationandrepairthat’sbeingdeferred,butit’snewconstructiontomeetincreasingdemands,alotofprojectsontheshelf.”[#19]
Anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmindicated,“Themarketconditionsarecompetitiveinthelocalarea.”[#29]
Whenaskedtodescribethecurrentmarketplaceconditionsinthelocalarea,anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanystatedthatconditionsareexcellent.[#35]
Whenaskedaboutchangesinmarketplaceconditions,anon‐Hispanicwhitemalerepresentativeofanelevatorcompanystated,“Theonlythingisthatpriceisamuchmoredrivenfactor.Marketplaceconditionsareverycompetitive.”[#36]
Some interviewees indicated that changes in marketplace conditions affected minorities or
their companies. Forexample:
Whenaskedtodescribethecurrentmarketplaceconditionsinthelocalarea,aBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirmreported,“[Iam]concernedaboutthehealthcare/insuranceissue.Iamwaitingtoseehowitshakesout.Insurancewantspatientstopaymoreofthecost.Smallbusinessownersaregettingleftoutwhodon’thaveenoughemployeestogetongroupplans.”[#1]
Whenaskedwhatchangesinmarketplaceconditionshasheseen,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicated,“Overtheyears,governmentworkhasbecomeless.”[#4]
Whenaskedaboutchangesinthemarketplaceconditionsthefirmhasseen,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmreportedthattheconditionshaveflattenedoutsome.Structuralengineershavecombinedtheirskillsettobenamedthespecialinspector.Thischangehastakenthethird‐partyinspectionfromhisindustry.[#7]
Thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnoted,"Marketplaceconditionsmakeitharderwiththemediatogetstoriescovered.It’shardertogetweekendcoverage.Therearemoreonlineopportunities.Therearemorenewscaststoday,andtheyhavetofillmorecontent.So,you’relikelytogetyourstorytoaironmultiplebroadcasts,sothat’sagoodthing.So,wehavetriedtobemorecreativeovertheyears.Wetrytocomeupideasthatwillgenerateattention.Therearepositivesandnegativestothecurrentmarketplace.”[#15]
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Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnotedhisbusinessdoesnotchangebymarketconditionsbutbyregulations.“Whenthingsarebuilt,certainregulationshavetobefollowed,sothat’showalotofourbusinessworksout.”[#16]
Whenaskedtodescribethecurrentmarketplaceconditionsinthelocalarea,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaysthatprocessesneedtobeupdatedinthisareainordertohavelesspaperwork,consumelesstimedoingpaperwork,andstreamlinetheprocesses.[#23]
Whenaskedtodescribethecurrentmarketplaceconditionsinthelocalarea,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstated,“Thereseemstobealargeselectiontochoosefromcurrently.We’vebeenextremelybusyforoverayearnon‐stopandhonestly,Idon’tseeanendinsight.Themarketplaceisveryactiverightnow.”[#25]
Whenaskedwhatchangesinmarketplaceconditionsshehasseen,anAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstated,“Thereisreallyalotofemphasisintargetednetworking.Ihearitfromalotofprocurementdirectorsandmanagers,thatifyouputyourselfinfrontofthebuyersthenthey’remorelikelytothinkofyouwhenajobiscomingup.”[#34]
Whenaskedaboutchangesinmarketplaceconditions,theBlackAmericanmaleownerofaflooringcompanynotedthatthepriceforinstallationhasgonedownwhileeverythingelseisup,forexamplegasandmaterials.[#37]
Whenaskedtodescribethecurrentmarketplaceconditionsinthelocalarea,theBlackAmericanfemaleowneranSBE‐certifiedconcretecompanysaid,“Itseemslikewhenitcomestominorities,everythingisgiventothewhites,andnowLatinosareworkingforalittlebitofmoney.ThismakesithardonBlackAmericanfirms.”[#39]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofacateringserviceexpressed,“Wehaveafoodtruck,andtheregulationsarestrictandhurtsourbusiness.”[AS#2]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thesalesmanagerforanautomobiledealershipexpressed,“Ruleschangedandmadeitharderonthelocationofmybusiness.”[AS#3]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofacateringservicenoted,“StartingthebusinessinVirginiahasbeenalittledifficult.”[AS#5]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofalocksmithshopexpressed,“Wehavehadtroubleduetobuildingandfirecodesrelatedtothetypeofworkwedo.”[AS#6]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanautomobiledealershipexpressed,“Wehavehaddifficultieswithexpanding.Thecityhastoomanyrulesandregulations.”[AS#7]
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WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofacateringcompanynoted,“VirginiaBeachisverydifficulttostartabusinessinandcomplywiththeunknownregulations.”[AS#10]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thegeneralmanagerofasecurityguardservicescompanyexpressed,“Abusinessthatisnotminority‐ownedorwoman‐ownedisnon‐competitive.AlargecompanydoesnotdowellinVirginiaBeach.”[AS#11]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanoutdoorlawncareandemploymentagencystated,“There’ssomanylawsthatIneedtoknowofthatIalmostneedtohiresomebodyfull‐timejusttomanagethat.Allofthelittlerulesandregulationsandaspeciallicensejusttoputdowngrassseed,whenJoeHomeownercanputdownwhatevergrassseedhewants.Anotherthingisitiscoveredunderpesticide[that]ifIwantputanythingdownIhavetohavealicense.Icanunderstandthat,butthelicensingprocessisajoke.Theydonothingtoproperlyteachpeopleonwhatchemicalsyouuse,andIcandoitillegallyforayear,whichIcanthenuseasmyexperiencetohaveajob.Imeanthat’scoolonthatsideofthings.”[AS#16]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofaconstructionmaterialsagencyexpressed,“Theydon’tawardcontractstonon‐minoritiesveryoften,makingithardforanormalwhitepersoninthecountry.”AS#34
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofageotechnicalengineeringfirmstated,“WehadtroubleworkingwiththeCityofVirginiaBeach;theyseemtoworkwithlargercompaniesratherthansmallerones.”[AS#39]
TheBlackAmericanmaleownerofanMBE‐certifiedrealestatedevelopmentfirmstated,“InareaswherethereisarealopportunitytoinvitequalifiedminoritybusinesstooccupyspaceintheCity’seconomicpowerstructure,VirginiaBeacheffectivelyclosesitsdoors.Ifmy11‐yeareffortasaprominentBlackAmericanbusinessmanwithaccesstopowerhasbeendifficult,forothersthechallengewillremainanimpossibility.Bytheverymandateofitsdiversecitizens,theCityofVirginiaBeachmustbetakentotaskandmadeaccountableforitsperpetuationofstructuralandinstitutionalbias.”[WT#2]
ThemaleownerofanSBE‐certifiedhospitalitycompanystated,“Publicdistrustofcityleadership.Transparencyofthedealscouldrevivepublictrust.LackofpublictrustgivesCouncilanexcusetodenyprojectsthatcanbegoodforthecommunity.Ultimatelyauditsandvotinginnewleadershipistheonlywaytogetoutofthismess.Thankfully,italreadystartedwiththemayorleaving.”[WT#3]
Theownerofadentalpracticestated,“IamconcernedaboutaccountabilityandthattheCityofVirginiaBeachpolicymakerstreatpeopleofcolorappropriatelyasundertheguidelinesofwhatwasimportantforrelocationissues.Wedidnothaveapositiveexperience,IjustwanttobeproactiveandsuggestthattheCitywritepoliciesforsmallbusinessownerslikeourselves.”[MOC#1]
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Business owners’ experiences pursuing public and private sector work. Intervieweesdiscusseddifferencesbetweenpublicandprivatesectorwork.
A majority of the interviewees indicated that their firms conduct both public sector and private
sector work. [Forexample,#1,#2,#3,#4,#6,#7,#8,#11,#12,#15,#16,#18,#19,#20,#23,#24,#25,#26,#27,#28,#29,#30,#32,#34,#35,#36,#38]
Some interviewees reported that all of their work is conducted in the private sector. [Forexample,#17,#37,#39]
Someintervieweesreportedthatalloftheirworkisconductedinthepublicsector.[Forexample,#22,#31]
Many owners and managers reported that they preferred private sector work over public
sector work. Somecommentersindicatedthatprivatesectorcontractswereeasiertoperform,moreprofitable,andmorestraightforwardthanpublicsectorcontracts.Examplesofthesecommentsinclude:
Afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnoted,“It’seasiertogetmorebusinessontheprivatesidebecauseoftherelationshipsandalotofrespectforthefirm.Ourpresidenthasbeenaroundalongtimeandisverywellrespected.”Shenotedprofitmarginsarebetterintheprivatesector.[#9]
Thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnotedtheirpublicprofitmarginisbetterwiththegovernment.“We’reabletonegotiatealittlebitmorewiththegovernment.Governmenthasrigorouscertificationsbeforeyoucanbid.Theprivatefirmsareallaboutthebottomline.Theydon’thavetoputoutanRFP.Theydon’thavetoqualifyyou.Themoneyisbasicallywhatmakestheirdecision.Theyareverymoney‐driven.Wecangetprivatejobsfaster,versusgovernmentwhichcantakemonths.”[#11]
Thenon‐Hispanicwhitefemaleownerofacomputersupportfirmnoted,“Thereisalotofredtapeinthepublicschools.Theprivateschoolswereeasy;Igettotalktothedirectordirectly.Withthepublicschools,Ihavetobeinsomesystem.Itbecameoverwhelmingtome.Thepublicschoolsusuallydidn’thavethefundingformytypeofservice."[#14]
Several interviewees described differences in profitability between the private and public
sectors. Examplesofthosecommentsincludethefollowing:
TheBlackAmericanmaleownerofamechanicalcontractingfirmindicatedoftentimesthepublicsectorwilllimithispotentialforprofitability.Hehasworkedhardforyearstogetgoodpricingforparts,andhisexperienceisthatthepublicsectorwouldnotallowpricemarkupsonparts,requiringacopyofpartsinvoices.So,tocoveroverhead,hemustrelyonlaborchargesandsometimesthenumbersdon’taddup.Headded“Thethingtheysayis‘Playthegame’.Idon’tbelieveinplayingthegamewiththegovernment.That’llgetyouintroublereallyquick.”[#4]
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TheAsianAmericanmaleownerandthenon‐HispanicwhitefemaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmbothnotedthatitisproject‐specificbutthatpublicsectorprofitabilityismoreconsistent.[#5]
Whenaskedwhetherprofitabilitydiffersbetweentheprivateandpublicsectors,amalerepresentativeofanon‐Hispanicwhite‐ownedlandscapematerialsfirmnoted,“Wehaveonlybeenableto[competeon]thematerialssideofthebusiness,nottheequipmentside.Wecompeteagainstthelargerequipmentmanufacturersinthearea.Thelargerfirmscanjustgiveitaway.”[#6]
Whenaskedwhetherprofitabilitydiffersbetweentheprivateandpublicsectors,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmnoted,“Yes,thepublicsectorisbetterforDBEsbecauseoftherequirementsincontracts.”[#7]
TheHispanicAmericanfemaleownerofatranslationagencynoted,“Thepublicsectoringeneral,ifyouknowwheretogo,it’saprocess.Yougottolearnhowtogothroughandunderstand.Justkeepgoingthroughtheprocessuntilyoulearnhowgovernmentcontractingworks.Profitmarginisbetterinthepublicsector.Theprivatesectorisaboutrelationships.Theprivatesectorisalittletighterwithfunds.Iftheydon’tlikeyourprice,they’llwalkaway.”[#13]
Thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnoted,“It’shardertogetthegovernmentwork.It’soften[a]morelabor‐intensiveprocess.RFPsaregoingtobevery,veryspecific.Whenyou’resubmittingproposalstotheprivatesector,there’snoformat.Withtheprivatesector,especiallywhentheycometous,it’samatterof‘Doesthismeetyourbudget?’”[#15]
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnoted,“Withthepublicsectorthere’sjustabiggerlearningcurveinteractingwiththecustomers,becauseinalotofcasestherearelotsofdifferentcustomers.Withthedifferentdepartments,differentpersonhere,differentpersonthere,that’salittlebitofachallengeinthebeginningstages.Theprivatesectoriseasierbecauseyouarejustdealingwithonepointofcontact.Idon’tthinktheprofitmarginsaresignificantlydifferentbetweenthetwo.”[#16]
Whenaskedaboutanyprofitabilitydifferencesbetweenworkinginthepublicsectorversustheprivatesector,theHispanicAmericanfemalerepresentativeofanewspapernoted,“Ithinkthepublicisaloteasier.Onceyougetin,iftheyadvertise,it’salotmorestraightforward.Theydon’thavetobidfortheadvertising.Thepublicsectorsimplybuystheadsoutright.Theprofitmarginisbetterwiththepublicsectorbecausethere’slessgoingbackandforth.Theprivatesectorismainlycomprisedofsmallbusinesses,andthere’smorechurningofrevenueinthatsector.[#18]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmstatedthatinthepublicsector,thegovernmentdoesnotwanttohavearelationship.Itismostlyperformance‐basedandstrictlybytherules.Thereisnogiveinthecontracts.Theprofitmarginsareless,andtheymustcompeteforthebusiness.Intheprivatesector,thereismoregiveinthecontracts.Theycanmaketheirowndecisions.Onceyougetintotheprivatesectororcorporation,itiseasiertogetthework.Theywillnotcompetefortheworklikeinthepublicsector.Onceyoubuildtherelationshipinthe
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corporateworld,youcanmakealittlemoremoney.Thatisnotthecaseinthegovernmentsector.[#20]
Whenaskedifprofitabilitydiffersbetweentheprivateandpublicsectors,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysays,“Itdoesdiffermarkedly.Publicsectorsarelowbiddersanddoallinsidecontractwork.Privatesectorpaysmoremoneywitheasierchangeorderswhenneeded.Itismostoftendifficulttogetchangeordersapprovedingovernmentsector.”[#23]
Whenaskedifprofitabilitydiffersbetweentheprivateandpublicsectors,theminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanyexpressed,“Itdoesdiffermarkedly.Publicsectordependsonthedollaramountwonandthebudgetneeds.Privatesectorpaysmoreofapercentagebutusuallyisdollarcapped.”[#24]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatprofitabilitymaybeslightlyhigherinprivatesectorwork.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmstatedthatprofitabilitybetweenthepublicandprivatesectorsdiffers.Hesaid,“Yes,theprivatesectorworkisalotmoreefficient,andthereisalotlessredtapeyouhavetogothrough.Youcanseeahigherprofitabilityinmostcases.”[#28]
Whenaskedifprofitabilitydiffersbetweentheprivateandpublicsectors,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Itdoesdiffer.Thepublicsectorhasmoremoneytospendthantheprivatesector.WehavetofollowOSHArulesandguidelines.Theprivatesectorhasmoreprofitbutthereismoretotackleduetosafetyguidelines.”[#30]
Whenaskedifprofitabilitydiffersbetweentheprivateandpublicsectors,anon‐Hispanicwhitemalerepresentativeofanelevatorcompanyindicatedthatitdoes;thegovernmenthasastandingrate.[#36]
Whenaskedifprofitabilitydiffersbetweentheprivateandpublicsectors,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Definitely,thereisadifference.Inthepublicsectoryoucanchargewhatyouwant.Thepriceislockedinforthegeneralcontractor.”[#39]
C. Working as a Prime Contractor or Subcontractor
Businessownersandmanagersdiscussed:
Mixofprimecontractandsubcontractwork;
Primecontractors’decisionstosubcontractwork;
Preferencestodobusinessasaprimecontractor;and
Subcontractors’methodsforobtainingworkfromprimecontractors.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 23
Mix of prime contract and subcontract work. Mostfirmsthatthestudyteaminterviewedreportedthattheyworkasbothprimecontractorsandassubcontractors.Theyalsodescribedhowtheyobtainworkandreasonstheypreferredprivatesectorworkoverpublicsectorwork.
Thestudyteaminterviewedafewfirmsthatprimarilyworkassubcontractorsbutonoccasionalsoworkasprimecontractors.[Forexample,#3,#7,#12,#13,#19,#20,#22,#24,#27,#32,#39]
Otherfirmsreportedthattheyusuallyworkasprimecontractorsbutwillalsoserveassubcontractors.[Forexample,#1,#4,#5,#11,#23,#25,#26,#30,#37]
Afewfirmsreportedthattheyalwaysworkasprimecontractors.[Forexample,#8,#9,#28,#31,#33,#34,#36]
Prime contractors’ decisions to subcontract work. Thestudyteamaskedbusinessownerswhetherandhowtheysubcontractoutworkwhentheyaretheprimecontractor.
One prime contractor expressed that they usually perform all of the work or rarely subcontract
work. Forexample,aBlackAmericanmaleowneroftheminority‐ownedcommercialrealestatedevelopmentfirmdoesnotusesubcontractorsduetothenatureofhisbusiness.[#2]
Interviewees from companies that use subcontractors indicated that they use firms with which
they have an existing relationship.Bothmajority‐ownedfirmsandminority‐andwoman‐ownedbusinessesthatusesubcontractorsmadesuchcomments.
Whenaskedhowsheselectssubcontractors,anon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmnoted,“UsuallyIlookattheDBEwebsitebasedonthecriteria,thenIgobypastperformanceorrelationships.”[#3]
Whenaskedhowtheyselectsub‐contractors,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmreported,“It’swhowelikedealingwith.It’spersonalpreference.”[#9]
Whenaskedifthereweresubcontractorswithwhomthefirmhasestablishedrelationshipsandpreferstowork,anon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Yes.”[#22]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanyexpressed,“TherearesubsthatIhaveestablishedrelationshipswithandwilluseallofthetimewhentheyareavailable.”[#24]
Whenaskedhowthefirmselectssubcontractors,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmexplainedthatthefirmhasestablishedrelationshipswithsubcontractors.Shealsoreportedthatselectioniscontingentuponavailability,location,andskill.[#25]
A few of the interviewees expressed they rarely solicit or do not solicit MBE/WBE/DBE/SBE
subcontractors for bids or quotes because of established business relationships or a variety of
other reasons. Examplesofthesecommentsinclude:
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 24
WhenaskedifthefirmsolicitsMBE/WBE/DBE/SBEsubcontractorsforbidsandquotes,aBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmnoted,“Ihaven’tgottentothepointwhereIneedthem.”[#8]
WhenaskedifthefirmsolicitsMBE/WBE/DBE/SBEsubcontractorsforbidsandquotes,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmrespondedno.[#9]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanysaysherarelysolicitsMBE/WBE/SWaM/DBE/SBEsubcontractorsforbids.[#32]
A few of the interviewees discussed a variety of reasons that there are subcontractors they
will not work with. Forexample:
Whenaskediftherearesubcontractorshewouldnotworkwith,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmreplied,“Yes,becauseofthequalityoftheworkandcontractualconfusionabouttheirroleontheproject.”[#7]
TheBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstatedthattherearesubcontractorshewon’tworkwithbecausetheyinsistongettingaportionoftheirfeeupfrontandhedoesn’thavethatkindofcashflow.[#8]
Preferences to do business as a prime contractor.Afewintervieweessaidthattheircompaniesmostlyworkasprimecontractorsandprefertodoso.Examplesofthosecommentsincludethefollowing:
Whenaskedwhythefirmpreferstodoworkasaprimecontractor,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicated,“IamreluctanttopartnerwithotherfirmsunlessIreallyknowthepeople.Ithinkthereisalotofliabilitywiththat.”[#4]
Whenaskedwhythefirmtypicallyservesasaprimecontractor,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmreportedthatthecompanyisageneralcontractorwithanestablishedclientbaseandthefirmrarelyhastheneedtobidasasubcontractor.Shedidindicatethatthefirmisonafewlistsasasubcontractorbuthaveonlyservedinthatcapacityonetimeinthepasttwoyears.[#25]
Whenaskedwhythefirmpreferstodoworkasaprimecontractor,theBlackAmericanmaleownerofaplumbingcompanystated,"Weareprimesduetothelackofemployees,andImostlydealwithhomeowners."[#31]
Whenaskedwhyhepreferstodoprimecontractingwork,theBlackAmericanmaleownerofanHVACcompanynotedthathedoesnothavetodosubcontractinganymore.[#33]
Whenaskedwhythefirmtypicallyservesasaprimecontractor,theAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatitgivesthefirmmorecontrolovertheproject.[#34]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 25
Whenaskedwhythefirmprimarilyservesasaprimecontractor,anon‐Hispanicwhitemalerepresentativeofanelevatorcompanystated,“Wearekindofourownseparateentity;therereallyisn’tanyonetosubcontract[to].”[#36]
Subcontractors’ methods for obtaining work from prime contractors. Intervieweeswhoworkedassubcontractorshadvaryingmethodsofmarketingtoandobtainingworkfromprimecontractors.Someintervieweessaidthatthereareprimestheywouldnotworkwithforavarietyofreasons.
Many business owners and managers rely on existing relationships and word‐of‐mouth to
obtain work from prime contractors.Examplesofthosecommentsinclude:
Whenaskedhowtheyobtainprojectsasasubcontractor,themalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmmentionedtheyknowthelocalfirmswellandwillcallthem.Thoserelationshipsarecultivatedthroughnetworking.Theymaybeabletoutilizetheirjointventurearrangementwithawoman‐ownedsmallbusinesstohelpthemmeettheirSBEandWBEgoals.[#10]
TheHispanicAmericanfemaleownerofatranslationagencynotedsheobtainsworkasasubcontractorthroughpreviousprofessionalrelationships.Shestated,“Iknowsomebodythatknowsme,andtheyhaveaprojectcomingupandthey’llapproachme.It’sthesameforboththeprivateandpublicsectors.”[#13]
Whenaskedhowthefirmmarketstoprimes,thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnotedhemarketshisfirmtoprimes.“Westayintouchwiththem;Icallthem.Weworkforthem,andIvisitthem.”[#16]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnotedshemarketstoprimes.Withherlongevityinthebusinessworld,sheknowswhichprimestogotoforworkthroughhernetwork.[#20]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanygetsonprojectsbyword‐of‐mouth,jobboards,andbymovingsuperintendentswhogofromonejobtoanother.[#23]
Whenaskedhowhisfirmgetsonprojectsasasubcontractor,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyreportedthathisfirmgetsonprojectsduetoword‐of‐mouthandreputation.[#27]
Whenaskedhowthecompanygetsonprojectsasasubcontractor,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Wegetonprojectsbyword‐of‐mouth,primecontractorsrequest,emailsforbids,andrelationshipswithothercontractors.”[#30]
Some business owners said they solicit to prime contractors to obtain work. Forexample:
Whenaskedhowhemarketshisfirmtoprimes,theBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirmnoted,“Togetonprojectsasasub[wemake]phonecalls,attendmeetings,reachouttowinningcontractor,andmatchmakingeventspriortobidcomingout.”[#1]
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Whenaskedhowthefirmgetsworkfromprimecontractors,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnotedthattheygetonprojectsasasubcontractorbyworkingdirectlywiththeownerorforthecontractor.Theygetsalesleadsandotherleadresources.Theprojectsarealldoneinbothpublicandprivatesectorssimilarly.Theymarkettoprimesmostlybyphonecalls,handshakes,face‐to‐faces,occasionalemails,alsowithtargetandstrategysheets.[#19]
Whenaskedifhemarketshisfirmtoprimes,anon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Wemarketbyjustcallingthem[theprimes]andgoingintotalktothem.”[#22]
Whenaskedhowthefirmfindsoutwhichprimesarebiddingonaproject,theminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanysaidshereceivesemailalerts,SWaMemails,andgoestowebsitestofindopportunities.Shealsogoestovendorappsonwebsitesandprocurementdepartments,sendingherinformationsothatherfirmcanbeconsidered.[#24]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanygetsonprojectsbydoor‐to‐doorsolicitation,reachingouttoprimecontractorstogetsomeofthework.Hesaystherearenominorityset‐asidesinthisbusiness.[#32]
ABlackAmericanmaleownerofaflooringcompanysaidhegetscallsfromprimestodoworkonprojects.Healsomarketstoprimesviaword‐of‐mouth.Hewillgotodifferentcompaniesthatarehiringandapplyforjobsorprojects.[#37]
Some business owners said that they are routinely solicited for bids from prime contractors or do not need to proactively market to them. Forexample:
Whenaskedhowsheobtainsprojectsasasubconsultant,anon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmstatedthatinthefirstcoupleofyearsofbusiness,shepickedupthephone,seekingtobeonateamwhenshewasawareofaproject.Nowthatlargerfirmsareawareofherfirm,shesimplygetsthecalltobeonteamsasasubconsultant.[#3]
Whenaskedhowthefirmgetsonprojectsasasubcontractor,thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnotedthatcompaniescallthemtooffersubcontractingopportunities.[#15]
Whenaskedhowthefirmmarketstoprimes,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatherfirmtypicallyknowsbecausetheyreceiveaninvitationtobid.Sheexplainedthattheownerattendsfocusandnetworkinggroupswherehehashisfingeronthepulseastowhatconstructionprojectsareunfoldinginthearea.Shestatedthattheydon’tmarkettoanyone.Shesaid,“Wearereviewingandtrackingwhat’sgoingon.”[#25]
Whenaskedhowhisfirmlandsprojectsasasubcontractor,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmreportedthathisfirmreceivesaninvitationtobidorissometimesaskedbytheowners.[#28]
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A few of the interviewees indicated that there are primes they will not work with. Examplesoftheircommentsincluded:
Afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnotedthereareprimestheywon’tworkwithbecauseofpoorpastperformance,qualityoftheirdrawings,orpaymentproblems.[#9]
Themalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmnotedthereareprimestheywon’tworkwithbecauseofpaymentrecord,safetyrecord,orethicalproblemsliketryingtotaketheircustomersawayfromthem.[#10]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnoted,“ThereareprimesIwon’tworkwithbecauseIhadtospendmoneytogetmymoney.Iftheyeveraskmeagain,I’llaskforadeposit.”[#20]
Whenaskedifthereareprimesthatthefirmwillnotworkwith,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Yes,becausetheyusedmynameandstatustomeetaquota,butdidn’tgivemeanywork.”[#22]
In general, interviewees reported that they have never been denied the opportunity to submit
a bid or price quote to a prime. [Forexample,#7,#13,#16,#17,#19,#22,#23,#25,#27,#28,#30,#32,#34,#38]
Some interviewees reported they have been denied the opportunity to submit a bid or price
quote to a prime.Examplesoftheircommentsincludethefollowing:
Whenaskedifthefirmhadeverbeendeniedtheopportunitytosubmitabidorpricequotetoaprime,theBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirmreportedthathisfirmhadbeendeniedworkwithprimesbecausetheprimeswouldperformtheworkaloneandwithoutsubcontractors.[#1]
Whenaskedifshehadeverbeendeniedtheopportunitytosubmitabidtoaprime,thenon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmstated,“I’vegotten‘Thankyou,ourteam’sfull.’Idon’tbid.It’sbasedoffqualifications.”[#3]
Whenaskedifthefirmhadeverbeendeniedtheopportunitytosubmitabidtoaprime,theAsianAmericanmaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmnoted,“Sometimes,yes.Theysay,‘Wedon’tneedhelponthisone.We’llletyouknow.Wegotitcovered.’”[#5]
Whenaskedifthefirmwaseverdeniedtheopportunitytosubmitabidorpricequotetoaprime,amalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmresponded,“Yes,thatiswhenthefirmdoesn’tbringanyvaluetotheteam.”[#10]
Whenaskedifthefirmhadeverbeendeniedtheopportunitytosubmitabidorpricequotetoaprime,theBlackAmericanmaleownerofaDBE‐,WBE‐,MBE‐,andSWaM‐certifiedconstructionfirmstated,“Yeah,absolutely.Whentheygoinandchecktheboxes,ifyoudon’thaveanyoneofthose,you’relikelybeingdenied.Itdoesn’tmeanyou’renotqualified,itjustmeansyou’rebeingdeniedbecauseyou’renotacertifiedcompany.”[#21]
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TheBlackAmericanmaleownerofaflooringcompanysaysthathewasdeniedtheopportunitytobidbecausehewastoldthathispricewastoohigh.[#37]
D. Keys to Business Success
Thestudyteamaskedfirmownersandmanagersaboutbarrierstodoingbusinessandwhatittakestobecompetitive.Topicsthatinterviewersdiscussedwithbusinessownersandmanagersincluded:
Personnelandlabor;
Equipment;
Accesstomaterials;
Financing;and
Otherfactors.
Personnel and labor. Manybusinessownersandmanagersindicatedthattheyhadexperiencedbarriersorwereawareofbarriersinobtainingpersonnelorthelaborneededfortheircompanies.Forexample:
Whenaskedwhatittakestobecompetitiveintheirlineofbusiness,aBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmresponded,“Certifiedpersonnelbydifferentagenciesandsizeofyourstaff.”[#7]
Whenaskedwhatittakesforafirmtobecompetitiveintheirlineofbusiness,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnotedthatitisdependentonpricingandcertificationsofthestaff.[#11]
TheHispanicAmericanfemaleownerofatranslationagencynotedthat,tobecompetitiveinherlineofbusiness,afirmmustshowprofessionalismandwhenyoudeliver,peoplewillpaywhatyouaskfor.[#13]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,theBlackAmericanmaleownerofaDBE‐,WBE‐,MBE‐,andSWaM‐certifiedconstructionfirmstated,“Oneword,‘Teaming.’Youhavetohaveagoodteam.Youhavetohaveamarketingteam,financialteam,businessdevelopmentteam,trainingteam,andpersonnel.Ifyoudon'thaveateamaroundandyoutrytodoeverythingyourselfthat'swherethefailurecomes.Itcan'tbedonebyoneperson."[#21]
Whenaskedwhatittakesforafirmtobecompetitiveinhislineofbusiness,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmstated,“Youhavetohavethebestpeople.It’samandatoryrequirement;it’sthesecretsaucetobeingsuccessfulineitherthecommercialorthesecurityintegration.Youhavetohavethebestpeople.Getthemtrained,keepthemtrained,andretainthem.Youwantpositive,upbeatpeoplethataredriven.”[#28]
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Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmstated,“Theyhavetobeproperlystaffedwithmanpowerandequipment.”[#29]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofanHVACcompanysaid,“Advertising,finances,andemployeestodotheworkonceyougetit.[They]arewhatittakestobecompetitive.”[#33]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofanHVACcompanyexpressed,“Unavailabilityofqualifiedpersonnelhasbeenahugebarrier.”[AS#29]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofalandscapingcompanystated,“Wehaveissuestryingtofindemployees,settinginterviews,andhavingthemshowup.”[AS#32]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofalandscapingcompanyexpressed,“There’salwaysproblemsfindinggoodemployees.Toomanylazypeople.Thistypeofworkisdirty,wet,sweaty,andhot.”[AS#41]
Arepresentativeofanarchitectureandengineeringfirmexpressed,“Fromanemploymentpointofviewwegooutandtrytofindwomenandminoritiestoenterintoengineeringandarchitecturecareers.InthestateofVirginia,thereisnotanengineeringprograminthehistoricallyblackcollegesanduniversitiesofVirginia.So,itcreatesahurdleforthoseindividualstoevengetintotheprofession.”[MOC#2]
Equipment. Mostbusinesseshadnotexperiencedbarriersinobtainingequipmentanddidnotthinksuchbarriersexisted.
A few of the interviewees expressed barriers with obtaining equipment.Forexample:
Whenaskedifobtainingequipmentwasapotentialbarrier,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmstated,“Yes,asanewbusinessobtainingequipmenthasbeenahugebarrierforus.”[#7]
Whenaskedifobtainingequipmentwasapotentialbarrier,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmexpressed,“Yes,obtainingequipmentisdifficultforastart‐upbusiness.Itmakesitevenharderwhenyouareunabletogetthecorrectfinancing.”[#22]
Whenaskedifequipmentisapotentialbarrier,theBlackAmericanmaleownerofaplumbingcompanystated,“Yes,sometimeswecan’taffordtheequipmentweneedsowemakedowithwhatwehave.”[#31]
Whenaskedifobtainingequipmentwasapotentialbarrier,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanystated,“Ihadtousemyowncapitaltogetequipment.Yes,itcanbeabarrierifyoudon’thaveenoughcapital.”[#32]
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Access to materials. Aswithotherpotentialbarriers,intervieweesreportedarangeofexperienceswithaccesstomaterials.Forexample:
Amalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmstatedthattobecompetitiveintheirlineofworktheymusthaveagreatsafetyrecordandhighevaluations,quality,management,andcostcontrols.[#10]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanysaysthathehadnobondingcapacity.Hecouldnotfindanyonetohelpwithbonding,sohecouldnotgetteamingopportunities.[#32]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanystated,“Youjusthavetobuyrightsothatyoucansellright.”[#35]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofaflooringcompanysaid,"Findingadistributortopurchaseandsellmyownproducttoandforpeoplewhohireme."[Inotherwords,beingabletopurchasehisproductatwholesalepricesandthensellthemtohiscustomersatmarked‐upprices.][#37]
Financing. Aswithotherissues,interviewees’perceptionsoffinancingasabarrierdependedontheirexperiences.Tosomeitwasabarrier,andtoothersitwasnot.
Most interviewees indicated that financing is a barrier for small and minority‐ and woman‐
owned firms.Examplesoftheircommentsincludethefollowing:
Whenaskedifobtainingfinancingwasapotentialbarrier,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmexpressed,“Yes,we’vehadahardtimeobtainingfinancing.”[#7]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,ofcourseobtainingfinancingisabarrier.”[#39]
Whenaskedifobtainingfinancingwasapotentialbarrier,theBlackAmericanmaleownerofaDBE‐,WBE‐,MBE‐,andSWaM‐certifiedconstructionfirmexpressed,“Welldefinitely,ofcoursefinancingisalwaysanissue.Ifyoudon’thavemoney,youdon’thaveaworkforce,thenyougotaproblem.”[#21]
Whenaskedifobtainingfinancingwasapotentialbarrier,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Yes,financingisdifficultforastart‐up.”[#22]
TheBlackAmericanmaleownerofaplumbingcompanystated,“Yes,obtainingfinancialbackingisapotentialbarrierduetothehighratestoborrow.”[#31]
Whenaskedifobtainingfinancingisapotentialbarrier,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyexpressed,“Yes,regardingobtainingfinancialbackingisabarrierespeciallyforperformancebonds.”[#32]
Whenaskedifobtainingfinancingwasapotentialbarrier,theBlackAmericanmaleownerofanHVACcompanysaid,“Therecouldbe.Itisoutthere.ClassCcontractsmusthave
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collateraltobecomeClassBcontractor.Ittakesupto$10,000inbusinessmoneyscaleineachclassifiedcategorytogetit.”[#33]
TheBlackAmericanmaleownerofaflooringcompanysaid,“Yes,obtainingfinancinghasbeenabarrier.Iamalwaysdeniedornotabletofindfinancingopportunities.”[#37]
Whenaskedifobtainingfinancingwasapotentialbarrier,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,whypeopledonotbelieveblackcompaniescandoworkbecausetheyareblackamazesme.Manyblackcompaniesdonothavefinancesandcannotcarry120days.”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,ofcourseobtainingfinancingisabarrier.”[#39]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofaprintingcompanynoted,“Wehaven’treallytriedtodostufflocally.So,ourbarrierswouldbefunding.Wehaven’tbeenmeetingwiththerightpeople.”[AS#42]
Some interviewees indicated that financing has not been a barrier for their companies. [Forexample:#1,#4,#5,#24,#25,#30,#34,#35]
Other factors. Beyondthefactorsdiscussedabove,manybusinessownersdescribedotherfactorsconcerningwhatittakestobecompetitive.
Some business owners specifically mentioned relationships and relationship‐building as
factors to be competitive in their line of business.Examplesofsuchcommentsincludethefollowing:
Afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmstatedthat,tobecompetitiveintheirlineofwork,“Wedesignbasedonconstructability.Weworkcloselywiththegeneralcontractorsasopposedtofightingthem.Thereisalotofrespecttherebetweenthetwo.Ifyoucanbuilditthewayitwasdesignedorclosetoorfindawaytosavemoney,wecancomewiththesameproductorbetter.”[#9]
Tobecompetitiveinherlineofwork,thenon‐Hispanicwhitefemaleownerofacomputersupportfirmindicated,“Networking,beingabletoknowwhototalkto,andbeingabletogetpeopletoanswerthephone.”[#14]
Tobecompetitiveinthislineofwork,thenon‐Hispanicwhitefemaleownerofapublicrelationsandmarketingfirmnoted,"Youhavetobecurrentonallmediaopportunities.Youhavetohavestrongrelationshipswiththemediatokeepupwiththat,notonlywithlong‐standingjournalistsandbroadcasters,butnewpeople.Iwilloftensetupmeetingswithpeoplewewanttogettoknowbetter,sothattheyknowuswhenwe’repitchingtothem.”[#15]
TheHispanicAmericanfemalerepresentativeofanewspapercompanynotedthattobecompetitiveinherbusiness,“Youhavetostayontopofmeetingpeople,followingthroughwiththosepeople,callingthemback,emailingthem,stayingintouch,andcontinuetobeatevents.”Shenotedonehastokeepthingsfreshandstayencouraged.[#18]
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Some business owners cited qualifications, reputation, quality work, and other factors to be
competitive in their line of business.Examplesofsuchcommentsincludethefollowing:
TheBlackAmericanmaleownerofabusinessmanagementconsultingfirmnoted,“SinceI’vedonethistypeofworkforsolong,experienceiswhatittakestobecompetitiveinmylineofbusiness:mybackgroundandmyexperience.I’vedonethisyearinandyearout.Notjusttheday‐to‐dayoperationsofthesebusinesses,butalsothestrategicplanningthatittakes.Ifyou’renotplanningfor60months,it’shardtodeterminethatthisdecisionyou’remakingtodayistherightone.”[#17]
Whenaskedwhatittakestobecompetitiveinherlineofbusiness,theAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmsaid,“Experienceandthemoney.TheexperienceforthetypeofworkIdoishuge.”[#20]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthattheymustbereliable,fairlypriced,providequalitycraftsmanshipconsistently,andhavegoodcustomerservice.Shesaid,“Ifyouarenotconsistentandifyouarenotreliableandofferqualitycraftsmanship,youwillnotbecalledonagain.”[#25]
Whenaskedwhatittakeforafirmtobecompetitiveinthislineofbusiness,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyindicatedthatreliabilityandcomparablepricingisnecessarytobecompetitive.[#27]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,theAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstatedthatittakestargetedmarketing,gettinginfrontofthepeoplewhomakethedecisions,gettingcertified,andatrackrecord.[#34]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanycommented,“Goodqualitywork;itisallaboutquality.Ifyouareaminoritybusiness,youhavetobeontopofyourgamealldownthelinefromthetoptothebottom.”[#38]
Other interviewees said that pricing is a competitiveness factor in their line of business.Forexample:
Themalerepresentativeofanon‐Hispanicwhite‐ownedlandscapematerialsfirmnoted,“[The]marketplaceisgood.Tobecompetitiveinourindustry,thepricehastoberight.”[#6]
Whenaskedwhatittakesforafirmtobecompetitiveintheirlineofbusiness,thenon‐Hispanicwhitefemaleownerofastaffingagencynoted,“Probablypricingandobviouslygoodservice.”[#12]
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnotedthatpriceiswhatittakestobecompetitiveinhislineofbusiness.Hisserviceshavenotgainedanyvaluesincehestarted.Hechargesthesamepricesnowashedid26yearsago.[#16]
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Whenaskedwhatittakestobecompetitiveinhislineofbusiness,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnoted,“Forthegeotechtestingandinspection,that’sprettycommoditized.That’sgoingtobeinpartexperience‐driven,butit’llbescoredmostheavilyonpricetowhichwearebuilttobeverycompetitive.Nowthereareservices[onwhich]weprovidecommissioning,whichisalittlemorespecialized,andthat’sgotalittlebettermarginbecauseit’sallprofessionals.It’sallgraduateengineersandpeoplewith20plusyearsofexperience.”Henotedthathisfirmisbuilttobalanceprivateandpublicsectorsandtodiversifytheirclientbase,especiallyduringrecessions.[#19]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Ifyoudon’talreadyhavecontractsandprofits,noonewilluseyou,butyoudon’tgetprofitsunlessyougetthosecontracts.Bythetimewefoundoutaboutabid,it’salreadybeendecidedwhowon.Maxresponsetimeis30days,fivedays,and10days.Ifyou’rejustfindingoutaboutaproject30daysbeforethebid,it’stoolate.Lowbiddersgetbids,butthenchangeordersraisethecosthigherthanwhattheoriginalbidwas,andhigherthanthosewholostthebid.Youjusthavetoplaythegame.”[#22]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,anon‐Hispanicwhitemalerepresentativeofanelevatorcompanyindicatedthatitwouldtakeexpertiseandpricepoint.[#36]
A few business owners reported a variety of other factors to be competitive in their line of
business.Examplesofsuchcommentsincludethefollowing:
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicated,“Itcomesdowntoacompanymarketingitself.Theworkwon’tcometoyou.Youhavetogogetit.”[#4]
Whenaskedwhatittakesforafirmtobecompetitiveinthislineofbusiness,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmnoted,“Toprobablybecomesuccessfulsomewhereelseandcomeback.You’renotgoingtobesuccessfulhere.IhavehadinternstoleavehereandbecomeverysuccessfulinCharlotteandAtlanta.Youstayhere[inVirginia]andit’snotgoingtohappen.”[#8]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaysthatafirmneedstojustdowhattheyaregoodatandgetpaidthemostfordoingagoodjob.[#23]
Whenaskedwhatittakestobecompetitiveinhislineofbusiness,theBlackAmericanmaleownerofaplumbingcompanystated,“Acompanyneedstobetechnicallyadvancedwithgreatcustomerserviceskillsandup‐to‐datewithproceduresandtechnology.”[#31]
E. Potential Barriers to Doing Business in the Region
Thestudyteamaskedintervieweesaboutpotentialbarriersthatfirmsmightfaceinthelocalmarketplacewhentheyarestartingintheirlineofbusinessortryingtogroworstayinbusiness.Topicsincluded:
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Learningaboutworkandmarketing;
Bondingrequirementsandobtainingbonds;
Insurancerequirementsandobtaininginsurance;
Prequalificationrequirements;
Licensesandpermits;
Otherunnecessarilyrestrictivecontractspecifications;
Biddingprocesses;
Non‐pricefactorspublicagenciesorothersusetomakecontractawards;
Timelypaymentbythecustomerorprimecontractor;and
ExperiencewithCityprocesses.
Learning about work and marketing. Duringthein‐depthanecdotalinterviewsandpublichearings,intervieweesdiscussedopportunitiesforfirmownersandmanagerstoidentifypublicsectorworkandothercontractopportunities.Manybusinessownerssaidthatitwasmoredifficultforsmallerfirmstomarketandidentifycontractopportunities.Examplesofsuchcommentsincludethefollowing:
Numerous interviewees described difficulties learning about work and contract opportunities,
including contract opportunities with the City of Virginia Beach.Examplesofthosecommentsincludedthefollowing:
TheBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmnotedthatitwasmoredifficulttofindoutaboutprojectsintheVirginiaBeachDepartmentofPublicWorksandDepartmentofPublicUtilitiesthanotherpublicagencies.[#7]
Thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmsuggested,“Thecityshoulddosomethingthatfeelsmoreopenandfeelsmoretransparentforustohaveanopportunitytomeetandgettoknow.Forajurisdiction,muchofitisprescribedabouthowtheyhavetomoveforwardinaprocurementprocess.Ialsoknowthatduringthecourseofprocurement,peoplewilltendtowanttoworkwithpeoplethattheyknowandhaveworkedwithbefore.So,ifyouhaven’tworkedwithmebefore,givemeanopportunitytogettoknowyousothatIcanhaveanopportunitytoshowyouwhatwecando.We’renotayoungbusiness.Wehaveaskedtocomedownandtalkandwehavenotbeengiventhatopportunity.Theyhavenotreplied.It’sfrustrating:in10years,wehavenotbeensuccessfulgettingintoseeanybody.We’redoingworkinYorktown,Norfolk,HamptonRoads.WehaveatrackrecordinVirginiaBeachontheprivateside.”[#19]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmhasnotbidonanycontractswiththeCity.ShementionedthatVirginiaBeachbidsdonotshowupineVA[Virginia’seProcurementMarketplace].TheprocurementsitetheCityusesisverydifficulttonavigate.ShenotedshedoesnotseemanybidopportunitieswiththeCity.[#20]
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Whenaskedhowthefirmlearnsaboutworkwithpublicagencies,theBlackAmericamaleownerofaplumbingcompanyindicated,"IamnotawareofanyVirginiaBeachworkopportunitiesoffered.Ihavenoknowledgeofhowtobecomeawareofthoseopportunitiesastheycomeup.Theremustbesomekindofcontactviaemailormailtobeabletoknowwhenopportunitiescomeup."[#31]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofapestcontrolcompanystated,“Obtainingworkistoughbecauseofpricingandthelackofunderstandinginpricingbycustomers.”[AS#1]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofanofficefurniturestorenoted,“Ifeellikewehavenotbeengivenenoughopportunities.Wehaven’thadachancetoworkwithVirginia.Therereallyhaven’tbeenalotofadvantageswhenhavingtodoworkforVirginiaBeach.”[AS#4]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofacomputersoftwaredevelopmentcompanynoted,“ItisveryhardtogetattentionasanewcompanyintheCityofVirginiaBeach.Wearetheonlycompanyinthestatethatdoeswhatwedo.Wedoworkwithothercitiesandit’sveryhardtogetworkinVirginiaBeach.Ourproductischeaperthantheonecurrentlybeingused.”[AS#13]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanadvertisingagencyexpressed,“IthinkVirginiaBeachisatoughercityinregardstogettingcontractworkasaminoritybusiness.IdoknowVirginiaBeachisnotfulfillingthevoidthey’remeanttofillinregardstominoritybusinesses,andI’dliketoaidinthatortoknowhowtobestgoaboutthat.”[AS#18]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanenvironmentalconsultingagencyexpressed,“Youcannotgetjobsunlessyouareaminority.”[AS#19]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofabuildingconstructioncompanystated,“WehaveexperiencedsomedifficultybreakingintogovernmentcontractworkwiththeCityofVirginiaBeach.”[AS#31]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofaconstructionfencingcompanynoted,“Obtainingworkhasbeenabarrier.It’shardtofindopportunitiesforveterans.”[AS#36]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofabuildingconstructioncompanystated,“AllofthesurroundingcitiesthattheycallHamptonRoad,eachhavetheirownwayofdoingbusiness.So,itmakesitdifficultforavendortodotheirbusiness.WeneedsomethingforsmallbusinessessothatIcanmakerevenue.”[AS#38]
Many interviewees, including minorities and women, indicated that they were not aware of,
had not experienced, or did not believe that there are barriers based on race/ethnicity/gender
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related to learning about work or marketing their companies. Examplesofsuchcommentsincluded:
WhenaskedwhetheritwaseasierorhardertofindoutaboutPublicWorksworkopportunities,relativetootherpublicagencies,theAsianAmericanmaleownerandthenon‐HispanicwhitefemaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmreportedthattheydon’thavetroublefindingoutaboutopportunities.Theysimplyaren’tawardedanycontractsfromPublicWorks.[#5]
Whenaskedifhehasexperiencedbarrierswithlearningaboutworkduetogenderorracediscrimination,theBlackAmericanmaleownerofabusinessmanagementconsultingfirmstatedthathestronglybelievesthatthereisracialdiscrimination.“Thereareanumberoffactorsthere;it’snotjustsimplyaracefactor.Ithinktheissueisalotofwhatwesee,particularlyinthecommercialB2Bspace,isnotnecessarilybasedonthemeritsbut[rather]basedonwhoyouknow.Inotherwords,ifyouaren’tevenawarethatthere’sanopportunity,howdoyoutakeadvantageoftheopportunity?Bythetimetheopportunityispublic,thedecisionisprobablyalreadymadebecausethepeoplewhohavehadaccesstowhatthisthingisgoingtolooklikeandwhattheparticularsare,they’vealreadylinedup.Theygottheirpricing.Everythingisinline.You’renotstartingatthesamestartingpoint.Ithinkthat’stheissue.”[#17]
Whenaskedifthereisapotentialbarrierinlearningaboutworkormarketing,anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmstated,“Wehavein‐housemarketingandthepotentialprojectsarebroadcasted.”[#29]
Bonding requirements and obtaining bonds. Onebusinessmanagerreportedlittleornoproblemobtainingbonds,orthatbondingwasnotanissue.Thatcommentincludedanon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthattheonlybarrierherfirmhasexperiencedisafinancialbarrier.Sheexplainedthatherfirmobtainedthebond,butitwasalittlemoredifficult.Shestatedithadnothingtodowiththeowners’gender,race,orethnicity.Shesaid,“Iguessitwouldbethesameforanyonewhowalkedintoabankwantingtoobtainabondoraloan.They’regoingtolookatyourcredithistory,andthey’regoingtolookatyourfinancialabilitytorepayshouldsomethinghappen.”[#25]
Someintervieweesindicatedthattheirfirmshadwitnessedpotentialbarriersforsmallbusinessownerstoobtainbonding.Forexample:
Whenaskedifbondingrequirementsarepotentialbarriers,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanystated,“Yes,forbondingrequirementsandobtainingbonds,becausewehavetohavethemoneybeforegettingawarded.Itshouldonlybearequirementiftheyouhavebeenawardedtheproject.”[#23]
Whenaskedifthereareanypotentialbarriersregardingbondingrequirementsandobtainingbonds,theHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmsaid,“Bondingitselfisdiscriminatorytoeverybody.Idon’tcarewhoitis,bondingsucks.It’saverychallengingdifferentbeastthat
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wantsatotallydifferentrequirementfromanybodyelseinreality.It’shardforeverybodytoget.Wefinallygotourownbondingprogram,butwe’reusingtheSBAonitanditcostmoremoney,whichmakesitharderforustowinwork.”[#28]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanystated,“Yes,bondingrequirementsandobtainingbondsareapotentialbarrierbecauseitisverydifficulttoget.Ireceiveda$200,000bondbutitwasnotenough.Thebondrequirementsweretoohightobeabletogetwork.”[#32]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofastreetsweepingagencynoted,“Wehavedifficultyinobtainingsecuritybonds.”[AS#30]
Insurance requirements and obtaining insurance. Duringthein‐depthanecdotalinterviews,intervieweesdiscussedwhetherinsurancerequirementsandobtaininginsurancewerebarriers.
One business owner reported little or no problem obtaining insurance, or that insurance was not an issue. Forexample,whenaskedifinsurancerequirementsandobtaininginsurancewereapotential barrier, the Black Americanmale owner of a plumbing company stated, “Obtaininginsuranceisfairlyeasy.”[#31]
Most interviewees indicated that they were not aware of, had not had any personal
experience with or believe there is not discrimination with insurance requirements or
obtaining insurance. [Forexample,#1,#4,#22,#24,#32,#34,#35]
Prequalification requirements. Oneintervieweeindicatedthatprequalificationrequirementswerenotanissue.[Forexample,#16]
Most business owners reported that prequalification requirements presented a barrier to
bidding on public contracts.Examplesofthosecommentsincludethefollowing:
TheBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmnotedthattheVirginiaBeachDepartmentofPublicWorksandDepartmentofPublicUtilitiesdidrequireprequalificationlikesizeandpastworkhistory.“Thosethingstieyourhandsespeciallyasanewbusiness.”[#7]
Whenaskedifprequalificationrequirementsareapotentialbarrier,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanystatedthatsometimesthisisaproblem.“Therecanbealotofregulationchangesthatcanaffectprequalificationrequirements.”[#23]
Whenaskedifthereareanybarrierspertainingtoprequalificationrequirements,theHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmstated,“It’snotdiscriminatory.Thehardestthingaboutprequalificationisthatyouhavetohavetheexperiencetoprovethatyoucandothejob,butyoucan’tdothejobwithoutexperience.”[#28]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanysaid,"Iranintoprequalificationrequirementsalot,likeexperiencelevelforsweepingand
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janitorialworkandnumberofyearsinbusiness.Thiscandefinitelybeabarrierfornewbusinesses."[#32]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofaconsultingengineeringfirmstated,“MeetingcriteriaforpriorworkhistorywiththeCityhasbeenachallenge.”[AS#24]
TheownerofaSWaM‐certifiedarchitecturefirmexpressed,“Iamoftheopinionitboilsdowntodefactoexclusion.Whenhiringcommitteesaremadeupofprojectmanagerswhohavepreviouslyworkedforthefirmapplyingfortheposition.Whenthemajorityofpointsweightedareon‘experience’minorityfirmshavehistoricallybeenexcludedfromgainingviathewinningbids.Whenthereviewcommitteesaremadeupofallmalememberswherethescoringisexclusivelysubjectivewithnowrittenguidelines,I’moftheopinionthe‘GoodOl’Boys’willalwayscomeoutontop.”[WT#1]
Licenses and permits. Certainlicenses,permits,andcertificationsarerequiredforbothpublicandprivatesectorprojects.Duringin‐depthinterviews,thestudyteamaskedintervieweeswhetherobtaininglicensesandpermitswasabarrier.Examplesofthosecommentsincludethefollowing:
Whenaskedaboutbarrierspertainingtolicensesandpermits,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanystated,“It’sallamoneygame.We’vehadsomeissueswiththegovernmentbecausefromoneyeartothenexttheychangewhatIDtheywillaccept.They’vechangedtheirsystemthreetimesoverthepastfiveyears,andeachtimeyouhavetogogetnewcredentials.”Hefurtherindicateditismoreofanissuewithourgovernmentanditisverycostly.HeexplainedthatmostofthedriversforhisfirmhaveaTWICcard(transportationworker’sIDcard).Heindicatedthatthecostforeachcardis$150,andifitneedstobereplaceditcanbeveryexpensivetodoso.[#27]
Whenaskedaboutbarrierspertainingtolicensesandpermits,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyexpressedhehasexperiencedbarriersgettinglicensesandpermits.[#32]
Whenaskediflicensesandpermitshavebeenabarrier,theBlackAmericanmaleownerofaflooringcompanystated,“NothavingaC‐Classlicensehasstoppedmefromgettingcontractsover$1,000inVirginia.”[#37]
Most business owners and managers reported that obtaining licenses and permits was not a
barrier to doing business in the City of Virginia Beach or did not apply to their company.[Forexample,#1,#2,#3,#4,#5,#7,#8,#20,#22,#23,#25,#28,#29,#31,#33,#34,#36]
Other unnecessarily restrictive contract specifications. Thestudyteamaskedbusinessownersandmanagersifcontractspecifications,particularlyonpublicsectorcontracts,restrictopportunitiestoobtainingwork.
Some owners indicated that some specifications are overly restrictive and present barriers. Itappearsthatsomebusinesseschoosenottobidorareprecludedfrombiddingduetowhatbusinessownersandmanagersperceivetobeoverly‐restrictivecontractrequirements.Examplesofthosecommentsincludethefollowing:
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Whenaskediftherewereanyrestrictivebarriersonthecontractingside,theBlackAmericanmaleownerofaDBE‐,WBE‐,MBE‐,andSWaM‐certifiedconstructionfirmstated,"Theydoifit'sasecuredareatogointo.Therearealsoeducationrestrictionstobeaprojectmanagerorworkonamilitarybaseoratagovernmentfacility:youarerequiredtohaveafour‐yeardegree.Therearealsocertificationrequirementsforjobsthathaveset‐asidegoals,ifyoudon'thavecertificationyoucan'tbetheprime.Sothat'saproblemthere."[#21]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanyexpressedheisconfrontedallthetimewithrestrictivecontractspecificationsandbiddingproceduresdesignedtokeepminoritiesfrombiddingorgettingtheawards.[#23]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyexpressed,“Pre‐bidrequirementswilldoyouin.Ineedsomeonewhocouldwritetobidoncontracts.”[#32]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynotedtherehasbeenaproblemwithunnecessarilyrestrictivecontractspecificationsandbiddingprocedures.[#39]
Many business owners and managers reported that they had not experienced or witnessed
unnecessarily restrictive contract specifications or bidding procedures. [Forexample,#1,#4,#22,#34,#35,#36]
Bidding processes. Intervieweessharedanumberofcommentsaboutbiddingprocesses.
Most business owners shared a variety reasons that bidding processes presented a barrier to
obtaining work.Examplesofthosecommentsincludethefollowing:
Whenaskedaboutbiddingprocessesbeingabarrierforsmallbusinesses,theBlackAmericanmaleownerofaminority‐ownedcommercialrealestatedevelopmentfirmnoted,"TheCityshouldnotlet[the]Cityworkwithadeveloperthenbidit.That’sbid‐riggingandcreatesahugebarrierforsmallbusinesses.”[#2]
TheBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicated,“TheCitycouldbemorespecificinthescopeofwork.Atonepoint,Ithoughttherewasa‘goodol’boys’system.”Hedidrealizehehadtomarkethimselfandprovehimself.Hisrecommendationistospreadtheworkouttoeveryone.“TheCityhasimprovedovertheyearsinusingtheMinorityBusinessCouncilandconsolidatinginformation.Knowingwhomtotalktohasalwaysbeenachallenge.Itshouldbeeasiertoseewhatthewinningbidsareandhowmuchthebidsweresore‐bidderscanhavesomeidea[of]howtheyneedtocompete.”Healsoindicatedhesometimeswondersifsomeworkisfashionedtofavoraparticularcompanyevenifitwasn’tthelowbidder.Hehasfrequentlybenefitedfromthatwhengovernments,includingVirginiaBeach,wouldcallhimforaquote,andevenifhecouldn’tofferthelowestbid,hewouldbeaskedtogiveanumberandtheagencywouldseeiftheycouldjustifyitbecausetheyknewhiswork.[#4]
TheAsianAmericanmaleownerandthenon‐HispanicwhitefemaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmreportedthattheprocessisn’thard,theyjust
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don’tgetafairopportunitytobeawardedPublicWorksjobs.Theynotedthatit’sthesamePublicWorksstaffpersonthatistheproblem.Asanengineeringfirm,theydon’tbid.Theyonlysubmitqualifications.Threefirmsareinvitedforinterviews.Theagencywillpickoneforcontractthennegotiatetheirprice.“Sometimeswe’retheonlyDBEthat’sthere.It’sfavoritism.”[#5]
TheBlackAmericanmaleownerofabusinessmanagementconsultingfirmnotedthatallarefactorsthatcanbebarriersrelatedtobusinessesbeingunder‐capitalized.“Thereareinefficiencies.Itistoughtocompeteagainstsomecompaniesthatareverticallyintegrated.”Healsomentionedthatsomebidsarewrittentosuchspecificitythatitseemstheyhavealreadymadetheirchoice.Henotedthatitishardtogetexperienceifyoudon’tgetthebusiness,butyoucan’tgetthebusinesswithoutexperience.[#17]
Anon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnotedtheyhavenothadanycontractswiththeCityofVirginiaBeachinatleast10years.Whenaskedwhichagencieshe’sreachedoutto,hesaid“Itwasalonglist,adozenorso:Parks&Rec,PublicWorks,PublicUtilities,andPlanning.”Thenatureoftheprojectsincludedgeotechnical,greenorbrownprojects,pre‐development,ordevelopment.“Wewouldbidasaprimeforthose.Thosearenormallycontractedbytheagencydirectlywithus.”Theyarebiddingonprojectsbutarenotgettingthework,andtherepresentativestatedthatthesamefirmhaswonthebusinesseachtime.Hisfirmhasnotreceivedanydebriefsordirection;theyhaverequesteddebriefsbuthaveyettoreceiveanyreplies.[#19]
WhenaskedwhatotherrecommendationsshemayhavefortheCityorotherpublicagenciesintheVirginiaBeacharea(includingexperiencesworkingwiththeCity),anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstated,“ElectroniccommunicationishugeandtheCitymaymissoutonsomeexcellentopportunitiesbynotparticipating.Bymakingthebidprocessandthecontractingprocessastransparentaspossible[it]wouldmakeiteasierandlessfrustratingforeveryoneinvolved.TherehavebeentimesI’vehadtomakephonecallsandthepeopleI’mspeakingwitharejustasfrustratedasIambecausethingsjustaren’tasstreamlinedastheymaybecouldbe.”[#25]
Whenaskedifheisawareofpotentialbarriersordiscriminationbeingaproblemforhisfirminthelocalmarketplace,eitherintheprivatesectororthepublicsector,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Minorityfirmsareputonbidstofulfillrequirements,butwhentheprimegetsthecontracttheydonotgivetheminoritycompanyanyoftheworkorawardeddollarsfortheworkbidon.Theminorityfirmhelpedtowinthecontractbutprimedoesnotfollowthroughwithusingtheminoritysubcontractorthathelpedtowinthebid.”[#30]
Whenaskedaboutbiddingprocesses,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanystated,“Yes,thepublicsectorisopentoeverybodybutmustbidlowtogetjob,thenlosebecausepricewastoolow.Ihavetoknowhowtobidontheseopportunities.Theprivatesectorhasbiggercompaniestoworkwith.Itishardbecauseyoumustknowthecontractlanguage.Ifyoudonot,itmakesithardertobidbecauseitwillnotbewritteninthelanguagethatwillwin,whichmakesitevenharder.”[#32]
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Whenaskedaboutthebiddingprocesses,theBlackAmericanmaleownerofaflooringcompanysaid,“Thereshouldbemoreaccessibilityforsmallerbusinessesandcontractors[forbiddingopportunities].”[#37]
WhenaskedifshehadanyrecommendationsrelatedtoimprovingtheParks&Recreation’sadministrationofcontractsorpaymentmethods,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Thereisaneedtochangesomeofthelaws.Administrationcan’tkeepbiddingtheamountofmoneytheywant.Makeitafairplayingfield.Thebiddingprocessistoodifficult;[ittakes]toomuchtimeandtoomuchmoneywithoutanROI.”[#39]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofasecurityguardservicescompanynoted,“Inregardstothestandingofthebusiness,therearealotofsecuritycompaniesinthearea.Weareasmallbusiness,anditisdifficultforustostayincompetitionbecausethebiggercompaniescanofferlowerrates.”[AS#9]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofabusinessplanningcompanyexpressed,“VirginiaBeachgoesoutsideoftheareatogiveawards.”[AS#14]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofaninteriordesigncompanyexpressed,“Iwouldthinkwe’reatadisadvantagebecauseofthesizeofourorganizationandthepricing.Wecan’tcompetewithlargercompanies.”[AS#21]
ThemaleownerofanSBE‐certifiedhospitalitycompanynoted,“Behind‐doordealsthatcreatedisplacement.Theseverebendingandviolatingtherulesofeconomicincentiveprogramsbehindcloseddoorsnotonlygivesdistinctadvantagestothepreferreddeveloperwhencompeting,butthenegativeeffectstoexistingbusinessesisharmful.Createbidprocesscommissionthatdealswithprocessandprocurement.”[WT#3]
Other interviewees reported that they were not aware of or had not experienced barriers
related to race, ethnicity or gender regarding the bidding process.[Forexample,#4,#16,#22]
Non‐price factors public agencies or others use to make contract awards. Duringin‐depthinterviews,manyfirmownersandmanagersmadeobservationsaboutthosenon‐pricefactors.
A few business owners reported that experience requirements were a barrier to doing business
for a variety of reasons. Others did not think so. Examplesofthosecommentswereasfollows.
Whenaskedaboutnon‐pricefactorspublicagenciesorothersusetomakecontractawards,theBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmnoted,“It’smoreculture.”Heexpressedthatalotofthefirmsarelargerthataresuccessfulare“so‐calledminoritybusinessesthathavethewifelistedas[the]ownerinordertowinthecontracts.”HehasnotfoundasuccessfulpathtowinningcontractswithVirginiaBeach.Hesuggested,"[Theagencyshould]packagecontractsinawaythatsmallerfirmshavearealisticchanceofwinningandbreakingitupinsmallerpieces.TheCityshouldhavemore
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match‐makingeventslikeVDOTandChesapeake.ItseemsthattheCityistryingtoimprovealacklusterreputation.”HebelievestheCityistryingtogetmoreparticipation.Hehasnotseenanythingrelevantforhimtobidonasaprimeorasub.[#7]
Whenaskedifthereanypotentialbarrierspertainingtofactorspublicagenciesorothersusetomakecontractawards,theHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmsaid,“Therearegoals,butthereisnomandate,soattheendoftheday,whytry?It’sbasedonlowprice.”[#28]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Youmustbefairlyrecognized.Changelawssominoritiescangetin.Donotmakestipulationsforbiddingsohighyoucannotmeetthem.Thereshouldbenoin‐housecollaborationforyourfavoritecontractortogetbids.”[#39]
Other business owners were not aware of, had not had experience with, or believed that there
are not any barriers or discrimination in getting or gaining experience or expertise.[Forexample,#1,#4,#22,#32]
Timely payment by the customer or prime. Slowpaymentornon‐paymentbythecustomerorprimecontractorwereoftenmentionedbyintervieweesasbarrierstosuccessinbothpublicandprivatesectorwork.Examplesofsuchcommentsincludethefollowing:
TheBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicated,“Sometimespaymentcandragonduetolostinvoicesandotherdelays,butforthemostpartVirginiaBeachisprompt.Idon’tunderstandwhyworkthatisalreadyapprovedtakesweekstoprocesspayment.ThelargerproblemsarethelistofthingsIcan’tchargefor,likeparts,equipment,andmileage,andmultipleopinionsaboutwhetherajobissatisfactorilycompleted.”[#4]
Whenaskediftimelypaymentbythecustomerorprimeisapotentialbarrier,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstated,“Yes,majorityfirmswouldholdaportionofmypayment.Theyholditinthebankbecauseit’scashonhand.Theywillholdyourmoney,andtheywillputitinthebankinescrow.”[#8]
Whenaskedifthefirmhasexperiencedbarriersinpaymentsasfarasslowpaymentornonpayment,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanyreportedthattherearesomechallengeswithafewcustomersregardingtimelypayments.[#27]
TheBlackAmericanmaleownerofanHVACcompanyhashadsomeslowpaymentsbecausesometimesthecustomerjustdoesnothaveit[money]atthetimeofservice,soheworkswiththemtopaybysettingupapaymentarrangement.[#33]
Whenaskedifthecompanyhasexperienceddiscriminationinpaymentsasfarasslowpaymentornonpayment,theBlackAmericanmaleownerofaflooringcompanysaid,“Ihavehadafew.IdidahotelinStanton,VAonasubcontractingjobwhereIwaspartiallypaid.Theystilloweme$3,000fromFebruary[2018].”[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynotedthatpeopleheworksforonaregularbasispayslowly,andhehashadtousea
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collectionagency.Privatesectorsometimesputsmoneyinescrow,butittakesalongtimetogetthepaymentbecausethehousemustbesold.Theydonottellthecontractorthatthemoneytopaythemisinanescrowaccountthatcannotbeallocateduntilafterthejobisdoneandhebillsthem.[#38]
Whenaskediftimelypaymentbythecustomerorprimehasbeenapotentialbarrier,theBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynotedthatpaymentisslow,usually30days.[#39]
A few interviewees said that they typically do not have difficulty getting paid in a timely
manner, because the timeframe was specified in their contracts.Forexample:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanygetshispaymentagreementsstraightup‐frontsothattherearenoissues.Hegetshispayontimewithoutanyhassles.[#23]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyreceiveshispaymentsontime.[#32]
Most interviewees said they were not aware of, had not had personal experience with, or did
not believe there are barriers in timely payment by a customer or prime.[Forexample,#1,#2,#3,#5,#6,#22,#24,#25,#27,#28,#29,#30,#31,#33,#34,#35,#36]
Experience with City processes. InadditiontofactorscommontocontractingamongpublicagenciesinVirginiaBeach,intervieweeshadmanycommentsspecifictotheCity’sprocesses.
A few interviewees described difficulty navigating or understanding the procurement process.Examplesofthosecommentsincludethefollowing:
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,themarketingmanagerofaconsultingengineeringfirmnoted,“IamnotfamiliarwithwheretogoinVirginiaBeachforprocurements.”[AS#25]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,arepresentativeofacontractingagencynoted,“OurexperienceinworkingwiththeCityhasbeenverylimited.Theydon’tsubcontractdirectlytosmallbusinesssincetheyhaveafive‐yearwaitinglist.”[AS#40]
A few interviewees expressed concern that the same companies receive City contracts
repeatedly.Forexample:
AnAsianAmericanmaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmstated,“WehaveworkedwithVirginiaBeachCityPublicSchools,CityofVirginiaBeachPublicUtilities.WehadnoluckwithPublicWorks.For15yearswe’vegoneinforaninterviewandhavelosttothesamecompany.WehavegottennocontractswithPublicWorksfor15outtheir18‐yearexistence.Wedon’tgetanyfeedback.Thelasttwointerviews,weneverheardbackfromthemforadebrief.IwouldsayPublicWorksistheworst,inmyopinion.”[#5]
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ThemaleownerofanSBE‐certifiedhospitalitycompanynoted,“ToomuchfocusonafewdevelopersleadstolackofinvestmentininfrastructuretocreateanenvironmentthatcandrivenewandinnovativecompaniestoVirginiaBeach.TheCityisverybusyworkingdealswithdevelopers,thereforecreatingunfaircompetition.Thisdoesnotenablebusinessestogroworganically.Givethebusinessesthetoolstosucceedandletcompetitionpickthewinnersandlosers,notthepoliticians.”[WT#3]
Other interviewees recommended changes in, or more oversight of, City payment policies. Forexample:
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatitischallenging.Hestated,“It’sbidworld.Theyreallydon’tcareaboutanythingelseotherthanlowestprice.Everybodyfightsforthebottom.Unlessyouwanttodosomethingforfreeorclosetoit,it’sarealchallenge.WedidaprojectinNorfolkwherewewerecloseandlosttoanout‐of‐statecompany.”Hesaid,“Ithinkit’skindofmessedupbecausewewereverymuchneck‐and‐neckonpricing,andwewerethelocalteamthatthetaxrevenuescouldgobackintotheCity.TheygaveittoacompanyoutofAlabama.Wemakedecisionslikethatallthetimeinthemunicipalities,anditdoesn’tmakesense.”[#28]
Whenaskedwhatelse,ifanything,shouldbedonetoenhancetheavailabilityandparticipationofsmallbusinesses,includingMBE/WBE/SWaM/DBE/SBEs,theAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstatedthattheCityshouldgetintouchwithacompanyassoonastheirbusinesslicenseapplicationiscomplete.Sheexplainedthataprecursororacheck‐offboxaskingiftheirfirmisinterestedinworkingwiththeCitymaybehelpful.Shesaid,“Rightnowit’slikeIgotabusinesslicensefromtheCityandI’monmyown.It’suptometofindoutallofthisinformation.Itwouldhavebeenniceifitwasintroduced.ItcouldbeawelcomefromtheCityofVirginiaBeach.”SheindicatedthataworkforcedevelopmentprogramintheCityofVirginiaBeachmaybehelpful.[#34]
Two interviewees had specific comments about participation goals. Examplesofthesecommentsincludethefollowing:
TheBlackAmericanmaleownerofanMBE‐certifiedrealestatedevelopmentfirmnoted,“ThoughtheVirginiaBeachCityCounciladoptedaresolutionin2008settinga10percentgoalforminorityparticipationinCitycontractswithinoneyearoftheresolution’sadoption,theCityhasyettoreachthismeagermark10yearslater.WhereasthelocaleconomyinVirginiaBeachisheavilydependentupontourismandrestartproperty,theCityhasneversetastatisticalstandardtomeasureminorityparticipationinrealestatedevelopment.”[WT#2]
TheownerofaVBE‐andSDVO‐certifiedcompanyexpressed,“ThestateofVirginiahaslessthanonepercentofgivingworktoveteransontheircontracts.Nooneismeasuringthesetgoals.Theyhavetomeasure;theyhavetobeheldaccountable,andtheyhavetohelpcreatesmalljobsorsmallbusinessjobs.Thatwillhelpchangetheeconomyaroundhere.”[KHS#1]
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A few business owners recommended that the City let companies know more about the notification or bid process. Forexample:
WhenaskedifhehadanyrecommendationsfortheCitytoimproveitsnotificationorbidprocess,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“TheCityshouldsendoutRFPstothesubcontractorlist.VirginiaBeachshouldhaveasubcontractorlisttoworkfrom.”[#23]
Whenaskedifhehasanypersonalexperienceswithapotentialbarrier,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanyexpressed,"Yes,havingtomeetwiththeadministratorsversusthedecisionmakersisawaytogivetheminoritybusinesstherun‐aroundversusgettingtothedecision‐makerfordetailsofworkandcontractbids.”[#30]
WhenaskedwhatrecommendationshehadfortheCityorotherpublicagenciesintheVirginiaBeacharea,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Makingus[minorities]awareofwhatisgoingon.They[theCity]needtobeawareofwhotheminoritiesarethatactuallybid.”[#38]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofacarpetcompanystated,“[In]thebidprocess[it]istoughtogetaholdoftherightperson.TheCityshouldpostmorejobopportunitiesonasiteandmakeiteasilyavailable.”[AS#35]
Theownerofapharmacyclinicexpressed,“MyexperiencewiththeCityhasbeenwhenyougointothecontractthepeoplethatawardedyouhadgoodintentions,butwhenyoustartdealingwithpeoplethatyouareactuallyprovidingtheservicesfor,thatiswhenyoustartgettingthepushbackonthethingsthatareinplace.Somepeoplemightthinkyoujustgotthejobbasedonwhoyouare.Theyaregoingtodoeverythingintheirpowertomakesurethatyoufailatyourjob.Thentheycomebackandsay,‘Well,youweregiventhejobopportunity,youjustcouldn’tcometoform.’”[MOC#3]
F. Allegations of Unfair Treatment
Intervieweesdiscussedpotentialareasofunfairtreatment,including:
Bidshopping;
Bidmanipulation;
Treatmentbyprimecontractorsandcustomersduringperformanceofthework;
Unfavorableworkenvironmentforminoritiesorwomen;and
Approvalofworkbyprimecontractorsandcustomers.
Bid shopping. Afewbusinessownersreportedexperiencingbidshopping.Otherintervieweeshadnotexperiencedbidshoppingorwerenotawareofit.[Forexample,#1,#4,#22,#24,#32]
A few interviewees reported that they had experiences with bid shopping.Examplesofsuchcommentsincludethefollowing:
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Whenaskedifbidshoppingwasconsideredabarrier,thenon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certifiedengineeringandtestingfirmexpressed,“That’sabarrierforeverybody.”[#5]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofalandscapingcompanynoted,“Idon’tworkwiththeCitybecausethey’realwayslookingforthelowestbidder.”[AS#33]
Bid manipulation. Someintervieweesdiscussedissuesandconcernswithbidmanipulation,aboveandbeyondbidshopping.
TheBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedhesometimeswondersifbidsarewrittenwithaqualifyingfirminmind.[#4]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofamanagementconsultingfirmstated,“IlookedintobiddingonacontractfortheVirginiaBeachPublicLibraryandtherecreationcenter.However,thebidwasclearlyforbiggercompanieswithinsurancerequirementsandeverything.Iftheyhadunbundledit,thatwouldhaveallowedforsmallercompaniestocompete.Thecontractsareawardedforsuchalongperiodoftime;iftheymadeitforashorteramountitwouldgetmorepeopletobidonit.Whenthebidscomeup,theysometimessetamandatoryconferenceintwodays.Ithinktheyshouldallowmoretime,unlessitwasanemergency.Smallercompaniesneedmoretimeformandatoryconferences.”[AS#26]
ThemaleownerofanSBE‐certifiedhospitalitycompanynoted,“Recentattentiontolackofminorityinclusioninmajorprojects…Inmyopinion,raceisnottheissue:itisclearlycronyism.Thedealsareandhavebeenworkedoutbehindcloseddoorsbeforeotherscanhaveafairshot.Thishasbeendocumentedandisafact.Developersthataretoldtheywillgetmoreafterthebidprocessandcanaffordtobidmore,thereforewinningthebids.Thesolutionistohaveanopenandfairprocesswithequalopportunitytobidonthemajorprojects.Everyoneplaysbythesamerules.”[WT#3]
Treatment by prime contractors and customers during performance of the work. Mostbusinessownersandmanagersreportedthattheyhadnotseenorexperiencedunfairtreatmentduringworkorcontract/projectperformance.
A few business owners reported that they have seen or experienced unfair treatment during the work or contract/project performance. Forexample:
Whenaskedifhehadexperiencedstereotypicalattitudesonthepartofcustomersandbuyers,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedhehasbeenatCitypre‐bidconferenceswherehereceivedthefeelingitwouldn’tgowell.Overtime,thosefeelingsfadedandheisbetterknownfortheworkhedoes.[#4]
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TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmhadabadexperiencewithaprivateprimewhousedherasascapegoat.[#20]
Whenaskediftreatmentbyaprimeorcustomerduringperformanceofworkwasapotentialbarrier,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“Yes,therewasoneprimethatwasdishonestinhistaskorders.”[#22]
Unfavorable work environment for minorities or women. Thestudyteamaskedbusinessownersiftherewasanunfavorableworkenvironmentforminoritiesorwomen,suchasanyharassmentonjobsites.Oneintervieweesaidthattherewas.Forexample,whenaskedifhehadexperiencedunfavorableworkenvironmentsforminoritiesandwomen,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstated,“Yes.”[#8]
Other interviewees commented about government resistance to using MBEs and WBEs. Forexample:
Whenaskedaboutpotentialbarriers,theBlackAmericanmaleownerofaminority‐ownedcommercialrealestatedevelopmentfirmstated,“TheCityhascronyismandimplicitbiasthatholdminoritiesandwomenback.”[#2]
WhenaskedifhehadexperiencedgovernmentresistancefortheuseofMBE/WBE/DBE/SBEfirms,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedfirmexpressed,“Yes,IhaveexperiencedresistancebygovernmentofficialsoutoffearthatIcan’tperformwell.”[#8]
Approval of work by prime contractors and customers. Intervieweesdiscussedwhetherapprovalofworkbyprimecontractorsorcustomerspresentedabarrierforbusinesses.TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Peopletreatmeprettygood.Idon’tstepontoes,justdothework.”Hedoesnotgofurtherwithanyworkuntiltheworkisapproved,especiallywhenhedoesworkfortheVirginiaBeachCityPublicSchools.[#38]
Some business owners reported that they have seen double standards in the performance of
work. Forexample:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanydoesworkfortheDepartmentofParks&Recreation.Hebelievesthattheinspectorshavedoublestandardsforthecontractors.Heexpressed,"WehavealsoworkedforPublicUtilities,buttheydonothavethesameinspectordoublestandardissuesaswiththeParks&RecreationDepartment.PublicUtilitiesinspectorsarereallygoodandunbiased."[#23]
WhenaskedifthecompanyhadexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanenvironmentalconsultingagencystated,“Doublestandardswiththeirinspectionstaff.Cityemployeesareviolatingthecodeofethics.”[AS#27]
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TheownerofanMBE‐certifiedconcretecontractingcompanynoted,“Wehavenoticedthatcertaincityinspectorsseemtobealittlehardertoworkwiththanothers.Onewasevenreprimandedfordoingsomuch.Overall,theexperiencehasbeenagoodone,butyoucandefinitelyfeeltheracialtensionfromcertainindividuals.TheCityhascomealongway,butdefinitelystillhasawaytogo!”[WT#4]
G. Additional Information Regarding any Race‐ or Gender‐based Discrimination
Intervieweesdiscussedadditionalpotentialareasofanyracial/ethnicorgender‐baseddiscrimination,including:
Stereotypicalattitudesrelatedtorace,ethnicity,orgender;and
“Goodol’boy”networkorotherclosednetworks.
Stereotypical attitudes related to race, ethnicity of gender. Severalintervieweesindicatedthattheyhadeitherexperiencedorwereawareofstereotypicalattitudesonthepartofcustomersandbuyersbasedonrace,ethnicity,orgender.Forexample:
TheHispanicfemaleeditorandpublisherofanewspapernotedthatsometimesshefeelssheandherhusbandmaybetreatedunfairlybecauseoftheiraccents.[#18]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmstatedshehasexperiencedbarriersbecauseofhergenderandrace.Shebelievesitwasverydifficultyearsagointhelocalmarket.Shewastheonlywomaninateamofmen.ShewasinvolvedintheconstructionbusinessinNewYork.Shestated,“InNewYork,itwastoughbeingaSouthernwoman.Whattheuniondoesn’twanttoseeisaSouthern,minoritywomantellingthemwhattodo.”Shemainlysawgenderdiscriminationwhensheworkedforalargecorporationasanemployee.[#20]
Whenaskedifhehasexperiencedstereotypicalattitudesfromcustomersorbuyers,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysays,“Yes,allthetime.Wearestereotypedthatblackfirmscannotdotheworkoraren’tcapable.”[#23]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,therecanbeskepticismastowhethertheminorityfirmscandothework.”[#30]
Whenaskedofanypersonalexperienceswithpotentialbarriers,theBlackAmericanmaleownerofaplumbingcompanynoted,"Yes,sometimesthey[customers]willquestionmyabilitytodotheworkbecauseofmyrace."[#31]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatshehasheardofstereotypicalattitudesonthepartofcustomersandbuyers.Shestated,“IthinkyouhearofitmoreinVirginiaBeachthanyoudoinNorfolk.”[#34]
WhenaskedifthecompanyhadexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofanengineeringservicescompanystated,“I
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 49
don’tthinkthattheCityhasshownthatitisextremelyinterestedindoingbusinesswithminorities.”[AS#17]
WhenaskedifthecompanyhasexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofadesignservicesagencyexpressed,“Discrimination,I’dsaythatbecauseI’mupinagewheremostpeopleareretired.SometimeswhatIdoorwhoIamarenotvalued.WhatIdoisnotmainstream,andalotofpeopledon’tgetit.”[AS#23]
TheBlackAmericanmaleownerofanMBE‐certifiedrealestatedevelopmentfirmexpressed,“Myexpertiseandfinancialwherewithalenabledmetoproposeworld‐classprojectsthatwouldundoubtedlyhavegeneratedthousandsofjobsandsubstantialrevenuefortheCityofVirginiaBeach.Despitetheinherentmeritsoftheprojectsproposed,theyweresummarilyrejectedwithoutthebenefitofreasonableexplanationorproofofinfeasibility.Infact,inquiriesastowhytheselucrativeprojectsweredeclinedelicitedevasive,offhandresponsessuchas,‘Wedon’twantacookiecutterprojectorachainrestaurant,’or‘Someoneelsehadabetterproject,’or‘We’renotreadytodevelopthatsite.’Afterthecitycontinuedtofailinitscivicobligationtoprovidecogentprofessionalreasonstosupporttherejectionoftheprofitablerealestatedevelopmentdealsthatmycompanyproffered,Ibegantoconcludethatracialdiscriminationandsystemicbiasmayhavebeenthedeterminingfactorsinrenderingmyproposalsdeadonarrival.”[WT#2]
Oneintervieweeindicatedshehasnotexperiencedstereotypicalattitudesrelatedtoraceorgender.Forexample,thenon‐Hispanicwhitefemaleownerofacomputersupportfirmindicatedthatbeingawomanisaneasierpathwaytogetintoaschool,soshedidnotexperiencebarriersbecauseofgender.[#14]
“Good ol’ boy” network or other closed business networks. Manyintervieweeshadeitherexperiencedorwereawareoftheexistenceofa“goodol’boy”networkorotherclosedbusinessnetworks.
Those who reported the existence of a closed or “good ol’ boy” network included minority,
female, and white male interviewees.Examplesofsuchcommentsincluded:
Whenaskedaboutwhatchangesinthemarketplaceconditionsthefirmhasseen,theBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstated,“HamptonRoadsisoffthebeatenpath.Thisisamilitarymecca.Idon’tbelongtothegoodoldboys;they’relikevacuumcleaners,andthey’lltakeitall.”[#8]
TheHispanicAmericanfemalerepresentativeofanewspapercompanynotedtherearebarrierswhenshegoestoaskforadsfromtraditionalbusinesseslikebanks.“Theyarestilla‘goodol’boy’network.Idon’tthinktheyvalueitasmuch.Theydon’trecognizethattheworldisreallychanging.Theydon’trecognizethatthefaceoftheUnitedStatesischanging.Somebusinesses,I’mverysurprised,buttheydon’t.”[#18]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysays,“Theprivatesectorhasthe‘goodol’boy’syndromewhichkeepsjobsfromminorities.Otherwisetherearenohardcorebarriersotherthanthat.Thegovernment
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sectorhassomanynewregulationsthatyoucannotkeepupwith,toocomplicatedandtimeconsuming.”[#23]
Whenaskedifclosednetworksarebarriers,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstated,“Idon’tknowifwe’veeverexperiencedabarrierduetothat.Wemayhaveexperiencedbenefitsfromit.Idon’tknowofanyoneexperiencingabarriertoit.IguessIknowingeneralthatthatstuffhappens.”[#25]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystatedthat,“Yes,a‘goodol’boy’networkisstillaround!"[#30]
TheBlackAmericanmaleownerofaplumbingcompanystated,“Yes,absolutely,a‘goodol’boy’networkcausedmetogointobusinessformyself,becauseIcouldnotgetadvancementswhereIwasworkingandIwastheonlyblackguyemployedthere.”[#31]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyexpressed,“Ofcourse!Weknowthe‘goodol’boy’networkisoutthere.Thesamepeoplegetthesamejobs.Thisiswhathurtsmybusinessgrowth.”[#32]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatshehasexperiencedthe‘goodol’boy’network.Shesaid,“I’vebeentoldthatifyou’renotpartofthatgroupthatyourchanceofgettinganyworkisslimtonone.”[#34]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompany,whenaskedaboutthe‘goodol’boy’network,commented,“WhenIwasfirstcomingupinthistrade,IwasusedastheminoritycompanyinthistradeintheVirginiaBeacharea.Onlythreepaintingcontractorswereherewhogotallofthebusiness.The‘goodol’boy’networkdefinitelyexists.”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Yes,absolutelya‘goodol’boy’networkstronglyexists!Youseeitnowinpoliticsandineverythingnow.”[#39]
WhenaskedifthecompanyhadexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,thepresidentofamanagementconsultingfirmstated,“Ithinkthatalotoftimesit’s[theCityofVirginiaBeach],the‘goodol’boy’network.”[AS#22]
WhenaskedifthecompanyhadexperiencedbarriersordifficultiesinVirginiaBeachassociatedwithobtainingwork,theownerofageneralcontractingagencyexpressed,“Forthelast20years,gettingworkhasbeenhard.The‘goodol’boy’systemisaliveandwell.”[AS#37]
TheownerofaSWaM‐certifiedarchitecturefirmnoted,“Firstandforemost,afirmcannotgainmunicipalityexperienceiftheyarenevergivenachancetoperform.Secondlyevenifthemicro,SWaM,orminorityfirmhassomeexperiencethatcouldmirrortheexperiencewanted,thiscriterionissoheavilyweightedthatamicro,SWaMorminorityfirmstillcouldnotamassenoughpointstogetshortlisted.Subsequently,the‘goodol’boy’firmwinsagain.”[WT#1]
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TheownerofanMBE‐certifiedconcretecontractingcompanyexpressed,“Gettinginwiththecitywasveryhardinthebeginning.Theydefinitelyworkoffofthe‘goodol’boys’club.”[WT#4]
TheBlackAmericanownerofanarchitecturalcompanystated,“VirginiaBeachiscontrolledbywhatIcallthe‘goodol’boys’.Theyrunanddealwiththings.IamimpressedthattheCitycouncilofVirginiaBeachevencameupwiththeideatodoa10percentset‐aside.Theyjustcouldn’tfollowthrough;thereasonisCitycouncilreallycan’tcontrolyougettingwork.Theymakethelaw,thentheypassittothedepartmentchairsanddirectors.Thosearethepeople[who]controlwhogetsthemoney.It’snotCitycouncil.”[KHS#2]
H. Insights Regarding Neutral Measures
Thestudyteamaskedbusinessownersandmanagersabouttheirviewsofpotentialrace‐andgender‐neutralmeasuresthatmighthelpsmallbusinesses,orallbusinesses,obtainworkintheCityofVirginiaBeach.Intervieweesdiscussedvarioustypesofpotentialmeasuresand,inmanycases,maderecommendationsforspecificprogramsandprogramtopics.ThefollowingpagesofthisAppendixreviewcommentspertainingto:
Technicalassistanceandsupportservices;
On‐the‐jobtrainingprogram;
Mentor‐protégérelationships;
Jointventurerelationships;
Financingassistance;
Bondingassistance;
Assistanceinobtainingbusinessinsurance;
Assistanceinusingemergingtechnology;
Informationonpublicagencycontractingproceduresandbiddingopportunities;
Pre‐bidconferenceswheresubcontractorscanmeetprimecontractors;
Otheragencyoutreachsuchasvendorfairsandevents;
Streamliningorsimplificationofbiddingprocedures;
Breakinguplargecontractsintosmallerpieces;
Smallbusinessset‐asides;
Mandatorysubcontractingminimums;and
Othermeasures.
Technical assistance and support services. Thestudyteamdiscussedtechnicalassistanceandotherbusinesssupportprogramswithinterviewees.Somewereawareoftechnicalassistanceandsupportservicesthatmightbenefitsmallbusinesses,includingMBEsandWBEs.Otherswerenot.Forexample:
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 52
Most interviewees indicated that they were not aware of and had not experienced any
technical assistance and support services but thought such services would be very helpful for
small businesses. Examplesofcommentsincludethefollowing:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yes,thereneedstobebetterdetailsandmorehelpwithrequiredpaperworkload.”[#23]
Whenaskedabouttechnicalassistanceandsupportservicesthatmightbenefitallsmallbusinesses,includingMBE/WBE/SWaM/DBE/SBEs,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatshehasnothadanyexperiencewithprogramslikethat.Shefurtherexplainedthatifprogramslikethatexistitcouldbenefitsmallbusinesses.Sheindicatedthatfindingqualityaccountingandbookkeepingservicescouldbedifficultbecausetypicallysmallbusinessescan’taffordtopaythesalarynecessary.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthattechnicalassistanceandsupportservices(e.g.,bookkeeping,estimating,andbidding)wouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,supportserviceswouldbehelpful.Ineedbetterdetailsandmorehelpwithrequiredpaperworkload.”[#30]
Whenaskediftechnicalassistanceandsupportserviceswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaplumbingcompanystated,“Yes,iftheCityhasthem.”[#31]
TheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanystated,“ItwouldbegreatbutIdonotknowofany.”[#32]
TheBlackAmericanmaleownerofanHVACcompanystated,“Yes,technicalassistanceandsupportserviceswouldbehelpful.”[#33]
Whenaskediftechnicalassistanceandsupportservicesbeingofferedintheareawouldbehelpful,theAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstatedthatitwouldbe.Shefurtherindicatedthatbiddingisabigissueanditneedstobeaddressed.[#34]
Whenaskediftechnicalassistanceandsupportserviceswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaflooringcompanysaid,“Yes,Ineedtechnicalassistanceandsupportservices.”[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanystated,"Yes,technicalassistanceandsupportserviceswouldbehelpful."[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Yes,technicalassistanceandsupportserviceswouldbegood.”[#39]
Many interviewees indicated that they were not aware of or had not had any experience with
technical assistance and support services.[Forexample,#1,#4,#6,#10,#22,#24,#35,#36]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 53
On‐the‐job training programs. Somebusinessownersinterviewedwereawareof,andsupportiveof,on‐the‐jobtrainingprograms.Someintervieweesdescribedtrainingprogramsthatmightbebeneficialtosmallbusinesses.Forexample:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yes,moreon‐the‐job‐trainingwillhelpnewbusinessesandretainlaborersthatareskilled.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthateventhoughshehasnopersonalexperiencewiththisprogramshebelievesthaton‐the‐jobtrainingisbeneficialinallareas.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthaton‐the‐jobtrainingprogramswouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanysaid,“Yes,moreon‐the‐job‐trainingwillhelpnewbusinessesandretainlaborersthatareskilled.”[#30]
Whenaskedabouton‐the‐jobtraining,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanyexpressed,“Itwouldbeawesometohave.”[#32]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Yes,moreon‐the‐job‐trainingwillhelp.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthaton‐the‐jobtrainingwasuseful.[#34]
Whenaskedifon‐the‐jobtrainingprogramswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaflooringcompanysaid,“No,thatwouldcostmore,andmoneywouldhavetocomefromsomewhere,creatingmorestrainonmybusiness.”[#37]
Whenaskedifon‐the‐jobtrainingprogramswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,becauseIhirefromtheprobationsystemtohelpinmateswhohaveservedtheirtimeandaretryingtoreestablishthemselvesbackintonormallife.”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,moreon‐the‐job‐trainingwillhelpnewbusinesses.”[#39]
Mentor‐protégé relationships. Somebusinessownershadfavorablecommentsaboutmentor‐protégéprogramsandbelievedtheyarehelpful.Forexample:
Whenaskedifmentor‐protégérelationshipswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedheparticipatedwiththeSCOREprograminVirginiaBeach,andtheyhelpedhimfindoutwhatresourceswereavailable,likewritingabusinessplanorfinancing.[#4]
TheAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmstated,“Iwouldlovetogetinamentor‐protégéprogram.Ihavenotdonethatyet.”[#20]
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Whenaskedifamentor‐protégérelationshipwouldbehelpfultosmallbusinesses,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“I’veheardofthese,butdon’tknowaboutthem.”[#22]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yes,dependsonthementorschosenandhoweffectivetheycanbeforthementee.”[#23]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanyexpressed,“Iwouldliketohaveamentor‐protégérelationshipwitharoofingcompanytosubmitforSDOVbusiness.”[#24]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthat,eventhoughshehasnopersonalexperiencewiththistypeofprogram,shebelievesthatmentor‐protégérelationshipsarebeneficialtosmallbusinesses,especiallynewstartups.Shesaid,“Sometimesyoudon’tknowwhatyoudon’tknow,andhavingsomeonetoguideyouthroughthatcouldbeveryhelpful.”[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatmentor‐protégérelationshipswouldbehelpfulforsmallbusinesses.[#28]
Whenaskedifamentor‐protégérelationshipwouldbehelpful,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanysaid,“Yes,alotofsmallminority‐ownedbusinessesneedtobeshowntheropes.”[#30]
TheBlackAmericanmaleownerofaplumbingcompanysaid,"Yesmentor‐protégérelationshipswouldbebeneficialinordertoseeanotherpointofview."[#31]
Whenaskedaboutmentor‐protégérelationships,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanynotedthatmentor‐protégérelationshipswouldbegreatifbiggercompanieswouldmentor,becausehisbusinessmighthavesucceededintheprivatesector.[#32]
TheBlackAmericanmaleownerofanHVACcompanysaid,“YesbecauseIhavenobusinessbackgroundsoguidanceinweakareaswouldbebeneficial.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatmentor‐protégérelationshipsarehelpful.[#34]
Whenaskedifmentor‐protégérelationshipswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaflooringcompanysaid,“Yes,becausethey[mentors]arealreadyinthefieldtohelpmelearn.”[#37]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,mentor‐protégérelationshipswouldbegood.”[#39]
Joint venture relationships. Intervieweesalsodiscussedjointventurerelationships.
Some of the business owners interviewed had favorable comments about joint venture
programs.Forexample:
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 55
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yes,youshouldhavejointventurerelationshipsformajorprojectswithapayguarantee.”Hefindsittobegoodbecausethatwaybothbusinessesareprimecontractorsloggingperformanceasprimes.[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatshehasnopersonalexperience,butgiventhepropercircumstances,itcouldbebeneficialtostartups.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatjointventurerelationshipswouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanysaid,“Yes,jointventurerelationshipsshouldexistformorework.”[#30]
Whenaskedaboutjointventurerelationships,theBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanynotedthathisbusinessmighthavesucceededifhehadbeenabletoformajointventurewithabiggercompany.[#32]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Yes,ajointventurerelationshipbringsmorerevenues.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatjointventurerelationshipsarehelpful.[#34]
Whenaskedifjointventurerelationshipswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaflooringcompanysaid,“Yes,becauseIwouldbeabletogetthroughatleastoneprojectwiththejointventure.”[#37]
Whenaskedifjointventurerelationshipswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,itcouldleadtosomethinggood.”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,thereshouldbejointventurerelationships.”[#39]
Financing assistance. Businessownershaddifferingviewsabouthowfinancingprogramshelpsmallbusinesses.Examplesofsuchcommentsinclude:
Most business owners indicated that financing assistance would be helpful to small businesses. Forexample:
TheBlackAmericanmaleownerofalandscapingandlawnmaintenancecompanysaid,“Yes,financingassistancewouldhelpalotwithperformancebonds.YouonlybuyperformancebondswhentheCityagreesthatthefirmisgoingtodothework.Itisbetternottohavethosehighexpensesuntilnecessary.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatwithherpreviousemployershehadsomeexperiencewithinventoryfinancingprograms.Shefurtherexplainedthatshefoundthattheseprogramsareverybeneficialinthattheyallowthebusinesstostockwhattheyneedtosell.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 56
Shesaid,“Havinginventoryonhandsometimeswillmakethedifferencebetweenasaleandanon‐sale.”[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatfinancingassistancewouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanysaid,“Yes,financingassistancewouldbehelpfulifandwhenneeded.”[#30]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Yes,financingassistancewouldbehelpful.”[#33]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatfinancingassistancewouldbehelpful.[#34]
WhenaskediffinancingassistancewouldbehelpfulforsmallbusinessestheBlackAmericanmaleownerofaflooringcompanysaid,“Yes,financingassistancewouldbehelpful,financinghasbeenabarrierIamalwaysdeniedornotabletofindfinancingopportunities.”[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynotedthatfinancingassistancewouldbehelpfulifneeded.[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,itwouldhelptohavefinancingassistance.”[#39]
Bonding assistance. Thestudyteamdiscussedexperienceswithbondingassistanceprogramswithintervieweesduringin‐depthinterviews.Somebusinessownerswereeitherawareoforhadparticipatedinbondingassistanceprograms.Manyotherswerenot.Examplesoftheircommentsinclude:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yes,bondingassistanceisneeded.[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatshebelievesbondingassistancewouldbehugelybeneficialtosmallbusinesses.Shefurtherexplainedthatherfirmhashadsomedifficultyobtainingbondssimplybecauseoffinancialreasons.Shesaid,“Ifyoudon’thave$3milliondollarsinthebank,theydon’twanttobondyoufor$3milliondollars.Ifyouhad$3milliondollarsinthebankyoumightnotnecessarilyneedthatbond.”[#25]
AHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatbondingassistancewouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanysaid,“Yes,bondingassistancewouldbehelpful,whilewemightnotneeditnowbutprobablywillinthefuture.”[#30]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 57
WhenaskedaboutbondingassistancetheBlackAmericanmaleownerofanSDVO‐andSWaM‐certifiedjanitorialcompanysaid,“Itdefinitelymustbesomekindofwaytogetaroundit[bonding].”[#32]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatbondingassistancewouldbehelpful.[#34]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,bondingassistancewouldhelp.”[#39]
Assistance in obtaining business insurance. Experienceswithbusinessinsuranceassistanceprogramswerealsodiscussedwithintervieweesduringin‐depthinterviews.
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatassistanceinobtainingbusinessinsurancewouldbebeneficial.Sheexplainedthatbusinessinsuranceisabsolutelycrucialbecauseyoudon’tknowwhatcanhappenonajobsite.Shefurtherexplainedthatnothavingpropersufficientcoveragecouldcloseyourdoors.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatassistanceinobtainingbusinessinsurancewouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,assistanceinobtainingbusinessinsurancewouldbehelpful.”[#30]
Whenaskedifassistanceinobtainingbusinessinsurancewouldbehelpful,theAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatitwouldbe.Shefurtherexplainedthatitwouldbehelpfulforothercompanieslikeherfirmtohaveanexcellentinsurancecompanythattheycurrentlyworkwith.[#34]
Whenaskedifassistanceinobtainingbusinessinsurancewouldbehelpful,theBlackAmericanmaleownerofaflooringcompanysaid,“Yes,itwouldhelpmakeiteasiertogetjobs.”[#37]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Yes,assistanceinobtainingbusinessinsurancecanhelp.”[#39]
Assistance in using emerging technology. Intervieweesalsodiscussedprogramsthatassistintheuseofemergingtechnology(e.g.,electronicbidding)duringin‐depthinterviews.
Some business owners said that they believe emerging technology programs assist or benefit
small businesses.Forexample:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysays,“Yes,assistanceinusingemergingtechnologywouldbeveryhelpful.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatsheloveselectronicbiddingandconsidersitabenefit.[#25]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 58
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatassistanceinusingemergingtechnology(e.g.,electronicbidding)wouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,assistanceinusingemergingtechnologywouldbehelpful.”[#30]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Yes,assistanceinusingemergingtechnologywouldbeveryhelpful.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatassistanceinusingemergingtechnologyisuseful.[#34]
TheBlackAmericanmaleownerofaflooringcompanysaid,"Yes,assistanceinusingemergingtechnologyisgoodandwouldbehelpfulforsmallbusinesses."[#37]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Yes,assistanceinusingemergingtechnologywouldbeveryhelpful.”[#39]
Most interviewees indicated that they were not aware of and had not had experience in using
emerging technology assistance programs.[Forexample,#1,#2,#3,#4,#5,#6,#7,#8,#9,#10,#11,#12,#13,#14,#15,#16,#17,#18,#19,#24,#26,#27,#29,#31,#32,#35,#36,#38]
Information on public agency contracting procedures and bidding opportunities. Mostintervieweesindicatedthatmoreinformationonpublicagencycontractingproceduresandbiddingopportunitieswouldbehelpful.
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysayseVAislimited.“Thereneedstobeeasy‐to‐findandincorporateintoafirm’sarsenaloninformationonpublicagencycontractingproceduresandbiddingopportunities.[#23]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,theredefinitelyneedstobeinformationonpublicagencycontractingproceduresandbiddingopportunities.”[#30]
TheBlackAmericanmaleownerofaplumbingcompanystated,“Yes,informationonpublicagencycontractingproceduresandbiddingopportunitieswouldbehelpfulforsmallbusinesses.”[#31]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Informationonpublicagencycontractingproceduresandbiddingopportunitywouldhelp.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatinformationonpublicagencycontractingproceduresandbiddingopportunitieswouldbehelpful.[#34]
TheBlackAmericanmaleownerofaflooringcompanysaid,"Yes,informationonpublicagencycontractingproceduresandbiddingopportunitiesisneeded."[#37]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynoted,“Yes,thereshouldbecontractingproceduresandbiddingopportunitiesmadepublic.”[#39]
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Pre‐bid conferences where subcontractors can meet primes. Somebusinessownersthoughtthatpre‐bidconferenceswereuseful,whileothersdidnot.Forexample:
Whenaskedifpre‐bidconferenceswheresubcontractorsandprimesmeetwouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofanSBA‐andSWaM‐certifiedmechanicalcontractingfirmindicatedhehasattendedtheseandtheyarehelpful.[#4]
Whenaskedifpre‐bidconferenceswheresubcontractorsmeetprimeswouldbehelpfulforsmallbusinesses,thenon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaidhehasattendedoneheldbyaveterans’organizationandfoundittobeveryhelpful.[#22]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatpre‐bidconferenceswheresubcontractorsmeetprimeswouldbeveryhelpful.Shefurtherexplainedthatitwouldbebeneficialtoboththesubcontractorandtheprime.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatpre‐bidconferenceswheresubcontractorsmeetprimeswouldbehelpfulforsmallbusinesses.[#28]
Anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmindicatedthathisfirmattendspre‐bidconferenceswheresubcontractorsmeetprimesasasuppliertoseeiftheprimeorsubcontractorneedstheirservices.Hestated,“Itishelpfulforus.”[#29]
TheBlackAmericanmaleownerofaplumbingcompanystated,"Yes,thereshouldbepre‐bidconferenceswheresubsandprimescanmeet."[#31]
TheBlackAmericanmaleownerofanHVACcompanyexpressed,“Pre‐bidconferenceswheresubsandprimesmeetwouldhelpinexposureformorejobs.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatpre‐bidconferenceswheresubcontractorsmeetprimeswouldbehelpful.[#34]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthatpre‐bidconferenceswheresubcontractorsmeetprimeswouldbehelpful.[#35]
TheBlackAmericanmaleownerofaflooringcompanysaid,"Pre‐bidconferenceswheresubsandprimescanmeetwouldbeveryhelpfulforsmallbusinesses."[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,"Yes,havingpre‐bidconferenceswheresubsandprimescanmeetwouldbehelpfulforsmallbusinesses."[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynoted,“Pre‐bidconferenceswheresubsandprimesmeetaregood.”[#39]
Other agency outreach, such as vendor fairs and events. Somebusinessownersandmanagersreportedthatoutreachefforts,likevendorfairsandnetworkingevents,wereuseful.Othersnolongerregularlyattendthoseevents.
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Examples of positive comments about agency outreach include the following:
Whenaskedifshehadanyfinalcommentsorrecommendationsforthecity,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmmentioned,“TheCitycoulddoanoutreachprogram.Haveeachdirectorofthedepartmentsandhaveanoutreachprogramwheretheyintroducethemselves.Itwouldbesimilartowhatgeneralcontractorsdotoreachoutandtalktobusinesses.TheCitydoesn’treachout.Theypost,theypublicize,andtheyarenotinteracting.Haveanevent.Theyarenotwelcoming.”[#9]
Whenaskedifhehadanyfinalcommentsorrecommendationsforthecity,themalerepresentativeofanon‐Hispanicwhite‐ownedenvironmentalremediationfirmmentionedhavingindustrydaysandseminars(basedontheCity’sprojectedopportunities)tocultivaterelationships,promotehigh‐techindustry,pushknowledgetocommunitygroups,workwithorganizationsliketheNationalContractingManagementAssociationandprofessionalassociations,andsendemailblastsaboutcontractopportunitiesandnetworkingevents.[Itshouldbe]ajointeffortbetweentheCityandorganizationstoconnectwithminorityandsmallbusinesses.[#10]
Whenaskedforadditionalcommentsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,thenon‐HispanicwhitefemaleownerofapublicrelationsandmarketingfirmnotedtheCityhasn’treachedouttothemandaskedwhattheCitycandoforthemasasmallbusiness.“TheCityknowsus.”ShesuggestedthattheCityshouldcelebratethosebusinesseswhohavebeenaroundalongtimetoshowappreciation.SheaddedthatsuchacknowledgementscouldgoalongwaywithretentionofthoseVirginiaBeach‐basedsmallbusinesses.ShealsosuggestedthattheCityoreconomicdevelopersshouldinvitesmallbusinessestoaneventtomakethemawareofopportunities.Thereneedstobemorerecognition.[#15]
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmmentioned,“Idon’tknowhowtheyreachout.Ihaven’thadaconversationwithanybodyintheCity’sSWaMprogramorDisadvantagedBusinessProgram.IknowitispartofthissubmittalthatI’llmaketoday.WehavetosubmitaplantoshowthesubconsultantsthatI’lluseandtheircertificationstatusesandI’llshowabouthowmuchrevenuewethinktheymightgetfromourcontractoveragivenyear.Ihaven’tspokenwithanybodyinthatdepartment.Theyhaven’treachedouttomeandIhaven’treachedouttothem.Iknowit’satwo‐waystreet,butIdon’tknowwhattheycandoforme.Ishouldask.”[#16]
Whenaskedifshehadanycommentsorrecommendationsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,theAsianPacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmstated,“IftheCityisnotgoingtoparticipateinSWaMthentheyneedtohostdiversityconferencesthemselvestoeducatecontractorsabouthowtodobusinesswiththeCity.Theyneedtodotheconferencesacoupletimesayear.TheyneedtoputsomerealteethintogettingsmallbusinessesworkintheCityofVirginiaBeachandnotgoingtotheirfavorites.Makingtheirfavoritesfollowtheirplan.”ShenotedtheCityhasfavoritedevelopersandcontractors,butthattheCityneedstomakethemtracktheirspendwithdiversecontractors.[#20]
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TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanynoted,“Agencyoutreachisnottooeffective.Thereisnoreturnoninvestmentsuchastime,handoutmaterials,etc.giventobuyerswhentheyprobablyjusttrashthemgoingthroughthemotions.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatotheragencyoutreach(e.g.,vendorfairsandevents,opportunitiestomeetbuyers)wouldbebeneficial.Shesaid,“Typicallywhenyouhearaboutsomethinglikethatit’sinLasVegasorsomehotspot.”Shefurtherindicatedthatusuallythereisnothinggoingonlocally.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatotheragencyoutreachwouldbehelpfulforsmallbusinesses.[#28]
Whenaskedifotheragencyoutreachwouldbehelpful,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,butunlessthereisarelationshipbuilt,thereneedstobeamorepersonalinvolvement.Relationshipscounttogettingcurrentandfuturebusinessfromagenciesorprivatesectorcustomers.”[#30]
TheBlackAmericanmaleownerofaplumbingcompanynoted,"Agencyoutreachisneededandcanhelp."[#31]
TheBlackAmericanmaleownerofanHVACcompanynoted,“Yes,agencyoutreachishelpful.”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatotheragencyoutreachwouldbehelpful.[#34]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthatotheragencyoutreachwouldbehelpful.[#35]
TheBlackAmericanmaleownerofaflooringcompanynotedthatagencyoutreachforvendors—likefairs,events,andopportunitiestomeetbuyers—wouldbeveryhelpful.[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynotedthatagencyoutreachwouldbegood.[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanynotedthatotheragencyoutreachwouldbehelpful.[#39]
Streamlining or simplification of bidding procedures. Severalbusinessownerssaidthatstreamliningorsimplifyingbiddingprocedureswouldbehelpful.Forexample:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaid,“Yestostreamliningandsimplificationofbiddingprocedure!Paperworkisakilleroftime,pricemargins,andreality.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatstreamliningbiddingprocedureswouldbefantastic.
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Shefurtherexplainedthatsometimeagoshestartedtheprocessofstreamliningthemoststringentrequirementssothatthefirmwouldreducere‐biddingorbidrejections.[#25]
TheHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatstreamliningorsimplificationofbiddingprocedureswouldbehelpfulforsmallbusinesses.[#28]
Whenaskedifstreamliningorsimplificationofbiddingproceduresishelpful,anon‐Hispanicwhitemalerepresentativeofapublicly‐heldmanufacturingequipmentfirmstated,“It’sprettysimple.It’snotdifficult.”[#29]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,streamliningofthebiddingprocedureswouldbehelpful.Thereisaneedforassistanceincompletingwhatagenciesareaskingforincompletingcontractbidpaperwork.”[#30]
Whenaskedifstreamliningofthebiddingprocedureswouldbehelpful,theBlackAmericanmaleownerofanHVACcompanystated,“Yes,togettothemeatofthematter!”[#33]
TheAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatstreamliningorsimplificationofbiddingprocedureswouldbehelpful.[#34]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthatstreamliningofbiddingprocedureswouldbehelpful.[#35]
TheBlackAmericanmaleownerofaflooringcompanystated,“Yes,streamliningofthebiddingprocedurewouldbehelpful.”[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,simplificationofthebiddingprocedurewouldbehelpful!”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanystated,“Yesstreamliningandsimplificationofbiddingprocedurewouldbeveryhelpful!”[#39]
Breaking up large contracts into smaller pieces. Thesizeofcontractsandunbundlingofcontractsweretopicsofinteresttomanyinterviewees.
Business owners indicated that breaking up large contracts into smaller components would be
helpful. Examplesofthosecommentsincludethefollowing:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanysaysyestobreakinguplargecontractsintosmallerpiecesitgivesmoreopportunitiestogetawards.[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatbreakinguplargecontractsintosmallerpiecescouldbebeneficialforsubcontractors.Shefurtherexplainedthatitcouldalsobebeneficialtoprimesinthatanewgeneralcontractingconstructioncompanywhodoesnothavethefinancialbackingtosupportanentire$2millioncontractcouldhandleasmallerportion,e.g.$500thousand.[#25]
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AHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthatbreakinguplargecontractsintosmallerpieceswouldbehelpfulforsmallbusinesses.[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,breakinguplargecontractsintosmallerpieceswouldbehelpfulforsmallbusinesses.”[#30]
TheBlackAmericanmaleownerofaplumbingcompanyexpressed,“Yes,breakinguplargecontractsintosmallerpiecescangetsmallerbusinessespiecesofthework.”[#31]
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanywhenaskedaboutbreakinguplargecontractsintosmallerpiecessaidyes.However,heneededinterpretersandwriterswhoknewhowtobeeffectiveinbidwriting.Hebelievesitwouldbeawesometodothis.[#32]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Yes,breakinguplargecontractsintosmallerpieceswouldbehelpfultobusinesseslikemyselfbecauseIcanonlydoacertainamountofwork[onthecontracts].”[#33]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatbreakinguplargecontractsintosmallerpieceswouldbehelpful.[#34]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthatbreakinguplargecontractsintosmallerpieceswouldbehelpful.[#35]
TheBlackAmericanmaleownerofaflooringcompanysaid,“Yes,breakinguplargecontractsintosmallerpieceswouldbehelpful.”[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanystatedyestobreakinguplargecontractsintosmallerpieces,“Iwouldlovetoseethathappen!”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,breakinguplargecontractsintosmallerpieceswouldbehelpful.”[#39]
Small business set‐asides. Thestudyteamdiscussedtheconceptofsmallbusinessset‐asideswithbusinessownersandmanagers.Thattypeofprogramwouldlimitbiddingforcertaincontractstofirmsqualifyingassmallbusinesses.Mostintervieweesthoughtsmallbusinessset‐asideswouldbebeneficialforsmallbusinesses.[Forexample,#11,#28,#34,#35,#37,#38,#39]
Whenaskedifsmallbusinessset‐asideswouldbehelpfulforsmallbusinessesanon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaidhehasheardthattheydothoseandthinkstheywouldbehelpful.[#22]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanystated,“Yes,smallbusinessset‐asideslimitingcontractbidstocertifiedsmallbusinesswouldbehelpfultoleveltheplayingfield.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatsheseessmallbusinessset‐asides(biddinglimitedto
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certifiedsmallbusinesses)ashelpfulaslongastheydon’tgooverboardwheretheybegintoset‐asidehugeproportionsofcontractsforsmallbusinessesandleaveoutthepool.Shesaid,“Ifeelstronglythateverybodydeservesanopportunityandthosewhoaregiventheopportunityshouldworkhardtoachievethat.”[#25]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,smallbusinessset‐asideslimitingcontractbidstocertifiedminoritybusinesswouldgivemoreopportunities.”[#30]
Whenaskedifsmallbusinessset‐asideswouldbehelpfulforsmallbusinesses,theBlackAmericanmaleownerofaplumbingcompanystated,“Yes,smallbusinessset‐asideswouldbeahugehelp.”[#31]
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanygetsonprojectsbydoor‐to‐doorsolicitation,reachingouttoprimecontractorstogetsomeofthework.Hestated,“Yes,smallbusinessset‐asideswouldhelpwithlimitingcontractbidstocertifiedsmallbusiness,therearenominoritysetasidesinthisbusiness.”[#32]
TheBlackAmericanmaleownerofanHVACcompanywhenaskedifsmallbusinessset‐asidesaregood,henoted,“Itwouldmakesuresmallbusinessescanstayinbusiness.”[#33]
Mandatory subcontracting minimums. Somebusinessownersandmanagerssupportedrequiringaminimumlevelofsubcontractingonprojects.
Comments in support of mandatory subcontracting minimums include the following:
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanystated,“Yes,mandatorysubcontractingminimumslike15‐20percentofthecontractshouldbearequirementtobesubcontractedout.”[#23]
Anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatmandatorysubcontractingminimums(requiringthataminimumpercentageofacontractbesubcontractedout)couldbehelpfulforsmallsubcontractorsaslongasitdidn’tgetoutofhandtoexcludeothers.Shesaid,“Everyonedeservesanopportunity.”[#25]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Yes,mandatorysubcontractingminimumsshouldexist.”[#30]
TheBlackAmericanmaleownerofaplumbingcompanystated,"Yes,mandatorysubcontractingminimumsshouldberequired."[#31]
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanystated,“Yes,mandatorysubcontractingminimumslike51percentveterancontrolforsubcontractorswouldbehelpfulforsmallbusinesses.”[#32]
Whenaskedaboutmandatorysubcontractingminimumsbeinghelpfulforsmallbusinesses,theBlackAmericanmaleownerofanHVACcompany,said,“Yes.”[#33]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatmandatorysubcontractingminimumswouldbehelpful.[#34]
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TheBlackAmericanmaleownerofaflooringcompanysaid,"Yesmandatorysubcontractingminimumswouldbeveryhelpfulforsmallbusinesses."[#37]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,"Yes,mandatorysubcontractingminimumsshoulddependonthesizeofthecontract,andwouldbehelpfulforsmallbusinesses."[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanyexpressedthatamandatorysubcontractingminimumwouldbegood.[#39]
Other measures. Somebusinessownersidentifiedotherneutralmeasuresforconsideration.Forexample:
TheAsian‐PacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmstated,“Yes,it’simportanttohaveadebriefwhetheryouwinorlosebecauseyouwanttoknowwhatyouwanttocontinuetodoandyouwanttoknowwhatyoudon’twanttodoagain.That’sextremelyimportant.Alotapeopledon’tdothatbutthat’sveryimportant.”[#20]
Arepresentativeofanarchitectureandengineeringfirmstated,“WehavebeentryingtogetthedefinitionofasmallbusinesschangedinthecommonwealthofVirginia.ThecurrentdefinitionforasmallbusinessinVirginiais250peopleregardlessofyourannualrevenue.So,youcouldhaveatrilliondollarsinrevenue,aslongasyouarelessthan250peopleyouareasmallbusiness.EverytimeItalktothecityaboutrefiningthedefinitiontomakeitreallyarepresentativeofsmallbusinesses,theyresistedtodothatbecausetheylumpsmallwomenandminoritybusinessestogetherinonebigpileintermsofhowmuchtheyreportgoestothatdisadvantagedgroup.Oncewerefinethedefinitionforasmallbusinesstheyaresayingthattheywon’tbeabletomeettheirgoals.Ithinkitisproblematicthatyoudon’treallyhaveatruedefinitionforwhatasmallbusinessis,thenyouaremisreportingthenumberofcontractsthatdogotowomenandminorities.”[MOC#2]
I. Insights Regarding Race‐ or Gender‐based Measures
Interviewees,participantsinpublichearings,andotherindividualsmadeanumberofcommentsaboutrace‐andgender‐basedmeasuresthatpublicagenciesuse,includingMBEcontractgoals.Commentsregarded:
Supportforrace‐/ethnicity‐orgender‐basedmeasures;
TheCity’sSWaMProgram;
MBE/WBEfrontsorfraud;and
Disadvantagesoftheprogram.
Support for race‐/ethnicity‐ or gender‐based measures. Therewereafewcommentsinfavoroftherace/ethnicity/gender‐basedprograms,includingMBEcontractgoals.
WhenaskedabouthisknowledgeandexperiencewithspecificareasofprogramsorinitiativesthatmightbenefitallsmallbusinessesincludingMBE/WBE/SWaM/DBE/SBEstheBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservices
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firmnotedthatODUhadaprogramthatusedtobecalledPTAC.Trainingmeetingsledbyformerbusinessowners.NorfolkandVa.Beachusedtohavejointmeetings.Theyweremoredesignedforstart‐upsthanforamorematurebusiness.[#1]
Whenaskedwhatprogramshavebeenhelpfultohissmallbusiness,aBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmmentionedSBA,BOWDCenter/VDOT,PTACandChesapeakeEconomicDevelopment.“Theyhavebeendiligentincommunication,relevantcontentandrelevantassistance.”[#7]
Whenaskedwhatprogramshavebeenhelpfultohissmallbusiness,aBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmnoted,“Thestateagencywashelpfulwithadministrativesupport.”[#8]
Whenaskedwhatprogramshavebeenhelpfultothebusiness,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnoted,“Theseprogramsthataimtoassistsmallbusinesshavebeenhelpfulnetworkingevents,beingabletoexposeourservicestoprocurementofficersthatmightnotbeaware.DepartmentofEnergyhassummits.LabsintheDepartofEnergyarerunbyprimes,becauseeverysingleoneineachstateisranbydifferentfolks,it’sveryhardtogetwork.”[#11]
Whenaskedwhatprogramshavebeenhelpfultosmallbusinesses,thenon‐Hispanicwhitefemaleownerofastaffingagencynoted,“SBAloanandChesapeakeEconomicDevelopmentAlliancehavebeenagoodsoundingboard.Theyhavebeengoodifweneededinformationoncertainthingsinthearea.They’vebeenaresource.”[#12]
Whenaskedwhatprogramshavebeenhelpfultothebusiness,theHispanicAmericanfemaleownerofatranslationagencynotedshewasawareoftheWomen’sBusinessCenteratOldDominionUniversityandOpportunity,Inc.inNorfolkforworkforcecenterandtheworkforcecenteronthePeninsula.ShealsomentionedtheonlineSBAresources.ShealsomentionedtheChambers,specificallytheHispanicChamber.[#13]
Whenaskedwhatprogramshavebeenhelpfultothebusiness,theBlackAmericanmaleownerofabusinessmanagementconsultingfirmmentionedtheSBA;Chamber’sSCOREandsomebankinginstitutionsarestartingtobealittlebitmoreamenabletohelpingminority‐ownedbusinesswiththeirfinancingandwiththeircapitalstructures.They’vehiredpeoplewhoarelookingintothosemarkets,whichissmart.Theyarerecognizingthattheycan’tignorethatmarketforever.Therealissuethatwe’renotaddressingisthiswholeissueofdowemakesurethatwe’relevelingtheplayingfield.Attheendoftheday,evenifyouhavethecapital,evenifyou’reabletodothejob,ifyou’renotcompetingonalevelplayingfieldwitheverybodyelse,noneofitmatters.”[#17]
Whenaskedwhatprogramsthathavebeenhelpfultothebusiness,theHispanicfemaleeditorandpublisherofanewspapermentionedawarenessofSWaM,SBAloansandSCORE.[#18]
Whenaskedwhatprogramshavebeenhelpfultothebusiness,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmmentionedprogramsviahighereducationinstitutionsthatconducttrainingforSBEfirms.HespecificallymentionedGeorgeMasonUniversityforDepartmentofEnergyprojects.He
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advisedthatmanyoftheprogramsaretailoredmoreforstart‐upsandthattheyneedprogramsformorematurebusinessesseekingprocurementopportunities.“Networkingforpartnershipsbetweenandagenciesandsmallbusinessesandalsotobeatechnicalresourcetosmallbusinessesthataretryingtofigureouthowtomanagetheprocurementprocess.”[#19]
Whenaskedarethereprogramsthatyoufindhelpfultosmallbusinessesincludingminorityandwomen‐ownedfirmsanon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaid,“TheCommonwealthofVirginiasendsemailsformonthlymeetings,andVirginiaBeachholdsmeetingsatthelibrary.Theyhelpbutforastart‐uptheyareoverwhelming.”[#22]
Whenaskedaboutpotentialmeasuresorprogramsthatyouareawareofthatseemparticularlyhelpfultosmallbusinessesincludingminority‐andwomen‐ownedfirms,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthattherearefinancialprogramsthatarehelpful.SheindicatedthatAmericanExpressofferssmallbusinessfinancingandworkingcapitalforsmallbusinesses.Shefurtherexplainedthatshedoesn’tknowofanythatarenothelpful.Shestatedthatshedoesseethecertificationsashelpfulastheyallowthebusinessestogainaccesstopublicsectorjobs.[#25]
Whenaskedaboutpotentialmeasuresorprogramsthatheisawareofthatseemparticularlyhelpfultosmallbusinessesincludingminority‐andwoman‐ownedfirms.Anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanystated,“Ithinkbeingregisteredasawoman‐ownedbusinesshelpsusout.Especiallywithourgovernmentsideofthefreight.Theylookfortheminority‐ownedbusinessesandsupportthemverywell.Ithinkit’sbeenapositiveforus.”[#27]
Whenaskedaboutpotentialmeasuresorprogramsthatheisawareofthatseemparticularlyhelpfultosmallbusinessesincludingminority‐andwomen‐ownedfirms,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthathewasnotawareofanyprograms.Hesaid,“Otherthanthecertifications,youdon’tgetalotofhelp.”[#28]
Whenaskedwhatelseifanythingshouldbedonetoenhancetheavailabilityandparticipationofsmallbusinesses,includingMBE/WBE/SWaM/DBE/SBEs,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Supplyanddemanddriveavailabilityandparticipation.So,thereshouldbemoredemandcreatedasthereisalreadyasupplyofminoritybusinesseswhowanttoreceiveawardsandcontracts.”[#30]
Whenaskedifthereareprogramsthatareparticularlyhelpfulorunhelpful,theBlackAmericanmaleownerofanHVACcompanystated,“SWaM,MicroBusiness,TidewaterBuilders’Associationhasfreeclassesforstart‐uporjobplacement.”[#33]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstatedthatsheisawareofsomeprogramsaimedtohelpsmallbusinessesthatarehelpful.Shesaid,“We’relookingtopartnerwithWOTC,theworkreleaseprogramforpeoplethathavebeenincarcerated.”Sheexplainedthatherfirmwillhelptotraintheseindividuals,givethemjobs,andhelpthemtobecomeproductivecitizens.ShealsostatedthatODU’s
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Women’sBusinessCenterishelpful.Shesaid,“Alotoftimessmallbusinessesdon’tknowwheretogotogetthisinformation.”SheexplainedthattheWomen’sBusinessCenterisagreatresourceforsmallbusinesses.[#34]
Anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanystated,“TheyareverygoodaboutgettingpricingfromSWaMdistributorsthatareavailable.”[#35]
Whenaskedifthereareprogramsthatareparticularlyhelpfulorunhelpful,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanynotedthatSWaMishelpful.[#38]
The City’s Small, Women‐owned, and Minority‐owned Business (SWaM) Program. TherewereseveralpositiveandcriticalcommentsabouttheSWaMprogram.
A few interviewees recommended that improvements be made in the implementation of the City’s SWaM Program. Forexample:
WhenaskedwhatisyourexperiencewiththeCity’sSWaMprogram,oranyprogramsandwhatcommentsorrecommendationsdoyouhave,anon‐HispanicwhitefemalerepresentativeofanMBE‐certifiedHispanicAmerican‐ownedgeneralcontractingfirmstatedthatherpreviousemployerwasawoman‐ownedsmallbusiness.Shefurtherexplainedthatshedidexperiencesomebenefitsinthatthefirmreceivedfirstconsiderationforsales.Shesaid,“Iwouldsuggestthattheapplicationprocessbestreamlined.Thereasonthatthecertificationexpiredforthiscompanywasthedifficultylevelintheapplicationprocessanditjustbecamenotworthit.”[#25]
AHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmindicatedthathisexperiencewiththeCity’sSWaMprogram,oranyotherprogramshavebeenchallenging.Hestated,“Itsbidworld,theyreallydon’tcareaboutanythingelseotherthanlowestprice.Everybodyfightsforthebottom.Unlessyouwanttodosomethingforfreeorclosetoit,it’sarealchallenge.TheCityshouldmovefromlowestpricetobestquality.”[#28]
One interviewee reported a positive experience with the City’s SWaM Program. Whenaskedwhathisfirm’sexperiencewiththeCity’sSWaMprogramoranyprogramsare,anon‐Hispanicwhitemalerepresentativeofanelectricaldistributioncompanyindicatedthatitisfineasis.Hesaid,“TheyincludeSWaMvendorsalongwithus.Iftheyaremorecompetitive,theygetthebusiness.Wedon’treallyhavealotofstrongminoritydistributorslocally.”[#35]
One business owner expressed his opinion about the lack of opportunity with the SWaM
program.WhenaskedwhathisexperiencewiththeCity’sSWaMprogram,oranyprograms,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Thereisnotrueshotathavingtheopportunitytogetthebid.”[#30]
MBE/WBE/SBE fronts or fraud. SomeintervieweescommentedontheirexperienceswithoropinionsregardingpotentialMBE/WBE/SBEfrontsorfraud.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 69
A few interviewees reported knowledge of fronts or fraud. Someintervieweesgavefirst‐personaccountsofinstancesthattheypersonallywitnessed,whereasothersspokeofless‐specificinstancesorsecond‐handaccounts.Forexample:
Anon‐HispanicwhitemaleownerofanSDVO‐andSWaM‐certifiedgeneralcontractingfirmsaidhehasonlyseenfraudwithSDVOcertifications.[#22]
AnAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatshehasheardofMBE/WBE/SWaM/DBE/SBEsfrontsorfrauds.[#34]
ABlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,therearefrontsbutIhavenotexperiencedfraud.”[#38]
Disadvantages of the program. AfewbusinessownerscommentedondisadvantagesoftheMBE,WBE,andSWaMprogram.
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanynoted,“Certificationsaremeanttobegoodbutusedinthewrongway.Theintentisgoodbutthegovernmentneedstogobacktotheoriginalintent.”[#32]
Whenaskedifthereweredisadvantagestotheprogram,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,thereisgovernmentalresistancetousingminority‐certifiedcompanies.”[#38]
J. MBE/WBE/SWaM Certification
BusinessownersandmanagersdiscussedtheprocessforMBEcertification,WBEcertification,SWaMcertificationandothercertifications,includingcommentsrelatedto:
Difficultyofbecomingcertified;
Advantagesanddisadvantagesofcertification;and
Recommendationsaboutimprovingthecertificationprocess.
Difficulty of becoming certified. Manyintervieweescommentedonhowdifficultitwastobecomecertified.Othersindicatedlackofawarenessofthecertificationprocessandthelargeamountsofpaperworkinvolved.
Some interviewees reported difficulties with or lack of awareness of the certification process
and the large amounts of paperwork involved.Examplesofsuchcommentsincludedthefollowing:
Whenaskedifthecertificationprocesswaseasyordifficult,anon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certifiedengineeringandtestingfirmnoted,“ForVirginia,it’sdifficultfortheDBEandrenewaloftheSWaMcertification.They’rejustnotveryknowledgeableororganized.Theyhaveimplementedsomenewchangessoeverything’sautomatednow.So,Ithinkthat’sastepintherightdirection,I’llgivethemthatcredit.ForMaryland,submittedit.Icantrackitonline.Theyweremissingacoupleofthings.Theycommunicatedwithme.IcouldseewhereIwasthewholetimeintheprocess,andwegotourletter.ForDelaware,evensmoother,it’snotthosefolksweren’tpaying
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 70
attentionbecausetheyaskedformorestuffthatwasmissing,it’sjustthattheycommunicated.”[#5]
Whenaskedifthecertificationprocesswaseasyordifficult,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmreportedtherewereseveralissueswhentheypursuedtheirmicrobusinesscertificationwiththestate.“Wehadtostartoverafewtimeswhenpaperworkwasmissing.Wehadtojumpthroughseveralhoops.”[#9]
Whenaskedifcertificationprocesswaseasyordifficult,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnotedthattherewasalotofpaperworkfortheNativeAmericancertification.Initiallytheywerewoman‐owned(thewife)thentheyswitchedtoNativeAmericanandSDVO(thehusband).[#11]
TheAsian‐PacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnotedthecertificationprocessisnoteasy.WithherWOSBandWBENCcertificationprocesses,shebelievessheshouldalreadybecertifiedasan8afirm.Shenotedthatyouhavetodojustasmuch,ifnotmore,togetthoseassomeofthefederalcertifications.[#20]
TheBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanybelievesthatthecertificationprocessesisreasonablydifficult,definitelynoteasy.Hedoesn’tlikethepaperworkinvolvedwithgettingcertified.[#23]
Whenaskedifthecertificationprocessiseasyordifficult,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmsaid,“It’saroyalpain.Theinitialcertificationprocessisverychallengingwhenyouhavemultiplepartners.Therecertificationisverychallengingaswellbecauseit’ssopaperworkheavyanddriven.It’severyyearandyou’realwayshavingtosendthesamepaperworkeverytime.”Hefurtherindicatedthatthesystemisnotuserfriendlyaseachcertificationrequiresdifferentpaperwork.Hesaid,“Itcanbeburdensome.”[#28]
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanystated,"Thecertificationprocessisdifficultthereisalotofpaperwork,alotofquestions,makingithardtogetSDVOSBcertificationwithouttheexperienceofothercertifications."[#32]
Whenaskedifthecertificationprocessiseasyordifficult,anAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmstated,“Theamountofpaperworkassociatedwiththecertificationprocessmakesitdifficult.”[#34]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanybelievesthatthecertificationprocessesisdifficultandveryexpensive.[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanybelievesthatthecertificationprocessesaredifficult.Allofthepaperwork[time]andmoneyyouhavetoputoutforsmallbusinessisaproblem.Usually,thereisnoreturnontheinvestment(ROI).[#39]
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A few interviewees reported that the lack of availability of the certification employees was a problem. Forexample:
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnoteditiseasytogetcertifiedbuthardertogetrecertified.Heexplainedthattheyrequestedlotsofdocumentsbutthere’snowaytouploadthemornocleardirectionastohowtosubmitdocuments.“It’shardtogetrecertifiedthroughtheVirginiaSWaMDepartmentwhenyoucan’tevengetsomebodyonthephone.It’sanautomatedansweringmachine.Ihaven’tfoundanycombinationofkeysthatgetsmetoalivepersonyet.”[#16]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanybelievesthatthecertificationprocessesarereasonablydifficult,definitelynoteasy.Shedoesnotlikethepaperworkinvolvedwithgettingcertified.Sheexpressed,“DBEisthehardestduetotheproblemwithreachingthecontractperson.”[#24]
Other interviewees reported that that the certification process was not difficult.[Forexample,#3,#7,#8,#25,#27]
Thenon‐Hispanicwhitemalerepresentativeofaconsultingengineeringfirmnoted,“Onceyougetontheothersideofit[certification],itwasn’tthatbad.Therearesomethatareonerous,butthat’sfine.Everyownergotaprocess.Theyhavepeoplethatthey’reaccountabletoregardingthequalityoftheirprocess.”[#19]
WhenaskedisthecertificationprocesseasyordifficulttheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanystated,“Thecertificationprocessiseasy,Ijustgoonlineandfillouttherequiredpaperwork.Thepaperworkhastobecorrectortherewillbeproblems.”[#30]
Advantages and disadvantages of MBE/WBE/SWaM certification. InterviewsandpublichearingsincludedbroaddiscussionoftheadvantagesanddisadvantagesofMBE/WBE/SWaMcertification.
Some owners of MBE‐, WBE‐, and SWaM‐certified firms indicated that certification had helped
their businesses gain opportunities to work with the City or a prime contractor.Forexample:
WhenaskedaboutherexperiencewithherDBEcertificationanditsbenefits,anon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmstated,“Absolutelycertificationhasbeenabenefit.TheDBEcertification,asIlooktomyfuturemarket,initiallyIwashopefulIwouldhavemuchmorefootinginthefederalmarketbutIthinkmybiggestgrowthopportunityisinthestateandmunicipalmarket,justbecauseoftheDBE.Iwouldbehard‐pressedatthestateleveltoworkotherthanbeingaDBE.Atthemunicipallevel,probably50‐50,dependsonwhatprojectitis.”[#3]
WhenaskedabouttheexperiencewithSWaMcertificationanditsbenefits,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnoted,“Itwillhelpusifwewanttoteamwithalargefirm,iftheydon’thavestructuralengineeringin‐house.Thenwecanassistorhelpsincetheyhavetomeetthosegoals.”[#9]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 72
WhenaskedabouttheexperiencewithSWaMcertificationexperienceanditsbenefits,thenon‐HispanicwhitefemalerepresentativeofanMBE‐,DBE‐,SBE‐,andSWaM‐certifiedNativeAmerican‐ownedenvironmentalengineeringfirmnotedthatitallowsthemtogetinthedoorandgetmorepointsinthepointsystem.[#11]
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmnotedthattheonlybenefitofhiscertificationiswhenhe’steamingwithprimeswhohavearequirementtohavecertifiedfirmsontheirteam.[#16]
Whenaskedwhatthebenefitsofthecertificationsare,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmnoted,“Itgivesusanopportunitytodoworkwithownersandclientswhohavegoalsthattheyneedtomeet.Itisnotwhatdriveswhatwedo.Thatisnotfundamentaltoourapproachofhowwedoaproject,buttherearecertainlyclientswhohavegoalstomeetandthisissomethingthatweareabletoprovidetothem.Thoughourpartoftheprojectisnormallyjusttenthsofapercent,verylittleoverallvaluedependingontheservicesthatarepackagedatthemostmaybeapercentandahalf.”[#19]
Whenaskedwhattheadvantageordisadvantagesofcertification,theBlackAmericanmaleownerofaSWaM‐certifiedlandscapingandlawnmaintenancecompanybelievesthathegetscallsforcertainjobsthatmightnototherwisecometohim.Therecanbequickresponsesforsolesourceworkthoughtheyarenotmajorjobsbutcangetcalledalot.[#23]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanybelievesthatonceshegetswithothercompaniesthesecertificationswillbeverylucrativetohercompany.[#24]
Whenaskedaretheredisadvantagesofcertification,anon‐HispanicwhitemalerepresentativeofaWBE‐andSWaM‐certifiedmechanicalcontractingfirmsaid,“No,Ican’tsayitis.Thereareabunchofphoniesouttherethat’sallIknow.Thereareabunchofcrybabiesusingveteransanddisabledpeopletogetacontract.Eitheryoucandoitoryoucan’tdoit,you’dratherstigmatizeyourselfthantotakeajob.It’seitheryouknowthebusinessoryoudon’tknowthebusiness.Idon’tseewheredisabledhasanymoreknowledgethanthepersonthat’snotdisabled,it’sallascam.”[#26]
Whenaskedwhatthebenefitsofcertificationare,anon‐HispanicwhitemalerepresentativeofaWBE‐certifiedtruckingcompanystatedthatgovernmentagenciesseekoutthosetypesofbusinesseswhetherwoman‐ownedorveteran‐owned.Hesaid,“BeforeIworkedhereIworkedforagovernmentcontractingcompanythatwasalsoawoman‐ownedbusiness.Theyreceivedalotofpositivepoints.”Heindicatedthatitwasdefinitelyapositive.[#27]
Whenaskedwhatdoyouseeasbenefitsofcertification,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmstated,“Itisanopportunitytoopenadoorthatisotherwiseclosedandtheremaybesomesetasideopportunities.Asayoungcompanyit’saplacetostart,afoundationifanything.Companiesshouldnotleadwithcertifications,itshouldbelastwhentalkingabouttheirfirms’qualifications.”[#28]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 73
Whenaskedwhatthebenefitsofcertificationare,theBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanyexpressed,“Ourcertificationgetsusmilitarycontractsthatmayhavenotcometouswithoutit.”[#30]
TheBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanybelievesthattherecanbebenefitingettingcontractsfromtheStateandFederalifyoucanwinthem.[#32]
TheBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanystated,"IonlyneedonemorecertificationwhichistheRIPcertification.Itistheregistrationtogoonthemilitarybases.IhavetobecarefulwhoItalktowantingmoneytobecertifiedbecausetheychargealotofmoneytogetthecertificationdone.ItisdifficultandexpensivetogettheRIPcertification.Ifyouarenotcarefulyouwillbetakenadvantageof."[#38]
Some interviews indicated that there are limited advantages, or even disadvantages, to being
certified.Forexample:
Whenaskedtodescribethefirmsexperiencewith[MBE/WBE/DBE/SBE]certification,aBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirmreported,“ThereisnobenefitfrombeingVeteran‐ownedsofar,thereshouldn’tbeadifferentiationbetweenservice‐disabledandveteran‐owned,itshouldbemorebalanced.8agivesustheopportunitytobidwithfirmsofsimilarsize.Itteachesyouhowtocompeteinthemarketplace,givesyouexperienceinhowtoprovideyourservices.The8aprogramisn’tlongenough,bythetimeyoulearnthesystem,it’salmosttimetograduatefromtheprogramwithanother4or5years,youcouldreallyapplyyourknowledge.Theycouldhaveabettersuccessratewithalongertimeperiodintheprogram.[Wehavenot]experiencedanybenefitsofSWaMyet,wejustbecamecertifiedin2017.[#1]
WhenaskediftherearedisadvantagesofcertificationaBlackAmericanmaleownerofanSBAandSWaM‐certifiedmechanicalcontractingfirmindicated,“Itdoesn’treallyhelpmecompetebecauseIstillhavetobeabletodotheworkwithquality.”[#4]
WhenaskedaboutherexperiencewiththeirDBEcertificationanditsbenefits,anon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certifiedengineeringandtestingfirmstated,“It’sabenefitonlargeVDOTprojectsbecausetheyturntousthenrealizewe’rethemostreliableaswellasthemostknowledgeableforthearea.Sometimesitdoesn’thelpuswhatsoever.”AnAsianAmericanmaleownerofaWBE‐andSWaM‐certifiedengineeringandtestingfirmadded,“It’sproject‐specific.Sometimeswhenyoumentionyou’reDBEtosomeone,theimpressionthatyougetisthatyou’renotqualified.Thereasonwhywe’reDBEistogetworknotthequalityofthework.”[#5]
Whenaskedaboutthefirmsexperienceandiftherearedisadvantageswiththecertification,aBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmexpressed,“ItconnectsmetolargerfirmswhowanttouseDBEfirms.TheDBElabelimpliessmallsizeandcapacitytodothework.TheProgramdoesn’tseemtohelpsmallbusinessestobecomecompetitiveorindependent.”[#7]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 74
Whenaskediftherearedisadvantagesofcertification,aBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmstated,“I’mnotoneofthe‘Goodol’boys’.Theindustryisveryprejudiced,socertificationcansometimeslimityourwork.”[#8]
Whenaskedwhatthebenefitsofcertificationsare,theAsian‐PacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmnotedherWOSBandWBENCcertificationshavegottenherintothecorporateworldalot.Shehasn’tgottenanycontractswithherSWaMcertificationatthestateorlocallevels.SheisworkingonamajordealnowwithherSWaMbutnothingdefiniteyet.[#20]
TheBlackAmericanmaleownerofanHVACcompanydoesnotbelievethathecangetjobsfromcertification.HewasSWaMwhenhewasalocksmithbutdidnotgetanythingfromit.Hedoesnotknowifheatingandairconditioningwillbenefitfromcertifications.[#33]
Whenaskedwhatthebenefitsofcertificationare,anAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmindicatedthatasofnowshedoesnotseeabenefittotheMBEandWBEcertifications.Shestated,“Whenyou’regoingaftergovernmentcontractsthey’renotsomuchlookingatthemastheyarelookingatSWaMandDBE.They’reminorincomparisontoSWaMandDBE.Theonedisadvantageisallofthepaperworkinvolved.”[#34]
TheownerofanMBE‐,DBE‐,andSWaM‐certifiedprofessionalservicesfirmstated,“IntermsofcertificationIhaveeverylastoneofthemMBE,DBE‐,andSWaMconsultantsMicro.Ihavedoneitallandstillsometimesitseemsdifficulttogetinthedoorandhavingafaircompetitionaswellasonewhichasmallbusinesscansurviveparticularlyinthecompetitionprocess.”[MOC#3]
Recommendations about improving the certification process.Whenaskediftheyhadanyrecommendationsaboutimprovingthecertificationprocess,manyintervieweesdid.Forexample:
Whenaskeddoyouhaveanycommentsorrecommendationsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,aBlackAmericanmaleownerofanMBE‐,VBE‐,andSWaM‐certifiedmedicalservicesfirm,henotedthereneedstobepolicychangediscussions.[#1]
Whenaskeddoyouhaveanycommentsorrecommendationsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,aBlackAmericanmaleowneroftheminority‐ownedcommercialrealestatedevelopmentfirmnoted,“Ifthecityisseriousabouthavingamoreinclusiveprogram,theymustbemoretransparent,notsayonethinganddoanotherandit’saboutopportunitiesnotset‐asides.[#2]
Whenaskedifshehadanyrecommendationsaboutimprovingthecertificationprocess,anon‐HispanicwhitefemaleownerofaSWaM‐certifiedwoman‐ownedcivilengineeringfirmnoted,“Theinitialapplicationcouldbeasis.Itwouldbeniceiftherewasamaintaineddatabasesothatyougoforyourrenewalsonanannualbasisthatyou’donlyhavetoupdatethosethingsthathavechangedinsteadofgoingthroughthewholethingagain.”[#3]
Whenaskedifshehadanyrecommendationsaboutimprovingthecertificationprocess,anon‐HispanicwhitefemaleownerofanAsianAmericanWBE‐andSWaM‐certified
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 75
engineeringandtestingfirmnoted,“Thecommunication,Ibelievethattheinterfacethattheyhavenowislittlebitbetter.WhenIwentinforourSWaMrecertification,therewerecertainthingstheyneeded,notevenforrecertification,thiswastheyearlysubmittal.So,we’realsoconsideredamicrobusiness.Sointhatsubmittal,itsaidyouhavetogiveusthese3thingsbuttherewasnoplacetouploadthem.So,Ihadtouploadthemelsewhereandwhatdoyouknowtheycamebacktwomonthslaterandsaidyou’remissingthis,youdidn’tuploadit.Theydidn’tgolookforit.So,Ihadtogobackanduploaditagain.Asasmallbusiness,youwanttobeabletodoitinonecompleteswoop.Communicationiskey.”[#5]
Whenaskedifhehadanyrecommendationsaboutimprovingthecertificationprocess,aBlackAmericanmaleownerofaSWaM‐certifiedgeotechnicalengineeringfirmrecommendedthatsmallercompaniesshouldreceivemorehands‐onassistanceandhelpwithfinancialdocuments(taxdocuments,businessplan,administrativesupport).[#7]
Whenaskedifhehadanyrecommendationsaboutimprovingthecertificationprocess,aBlackAmericanmaleownerofaDBE‐andSWaM‐certifiedarchitecturalfirmreported,“Whenit’stimetorecertify,theyshouldgiveyouatleasta6‐monthnoticebecauseofallthepaperwork.Youreallyareoverwhelmedandyoucouldeasilyforget.”[#8]
Whenaskedifshehadanyrecommendationsaboutimprovingthecertificationprocess,afemalerepresentativeofanon‐Hispanicwhite‐ownedSWaM‐certifiedstructuralengineeringfirmnoted,“Theircustomerserviceattitudewasn’tthere.”[#9]
TheHispanicAmericanfemaleownerofatranslationagencydidn’thaveanyrecommendationsfortheCity.ShedidobservethattheCityshoulddomoretoconnectwithcertifiedfirmsandeducatethemaboutwhatthatcertificationmeansforthemandminoritybusinesscounseling.Shestated,“Onceyou’recertified,nowwhat?Thewholeprocessisalittleintimidating.Ithinkweneedtogetthewordoutmoretopeople.Wegottofindmoreincentivesforpeopletowanttobeapartofthis.Givenewerbusinessesmoredirectionandguidanceaboutnextstepsaftertheygettheirbusinesslicense.Havethemcompleteasurveytogivethecitysomeideaofhowtofollowupwiththem.Thecityshouldshowinterestintheirbusinessinsteadofjustregisteringandtakingtheirmoney.Whenyoureachouttopeople,youawakenthatcuriosity.”[#13]
Thenon‐HispanicwhitemaleownerofanSBE‐andSWaM‐certifiedengineeringfirmofferedrecommendationsaboutimprovingthecertificationprocessbyhavingsomeoneavailabletoanswerquestions.Heexpressed,“They’veaskedmeforsomeadditionalinformationontheirwebsite.Icanseeit,buttheydon’tgiveyouavehicletouploadtherequesteddocuments.”[#16]
Whenaskedifhehadanyrecommendationstoimprovethecertificationprocess,thenon‐HispanicwhitemalerepresentativeofanSBE‐andSWaM‐certifiedconsultingengineeringfirmreplied,“Hireus.”Henotedthatthey’vedoneplentyofworkintheareabutnotwiththeCityofVirginiaBeachforatleastthepasttenyears.Hementionedthathisfirmsbidonjobsbutthecitykeepshiringthesamefirmeverytime.Henotedthatiftheyarebeingaskedtoputintheefforttogetcertifiedthenthecityshouldoffercontractsfromtimetotime.“Spreadtheworkaround.Itshouldbeaboutmorethanjusthavingastableofpeoplethatsaylookatallthepeoplewegotcertified,butwe’reonlygoingtogiveoneofthemwork.That’snotfair.”[#19]
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 76
Whenaskedifshehadanyrecommendationstoimprovethecertificationprocess,theAsian‐PacificAmericanfemaleownerofanMBE‐,WBE‐,andSWaM‐certifiedprojectmanagementfirmexpressedthecityshouldcontinueconductinginterviewsandsitevisitsaspartofthecertificationprocess.Althoughusingtheinternetisfaster,shebelievestheystillshouldseethepersonwhoissupposedtobemanagingthebusinessreallyknowswhattheyaredoingandthatthefirmisnotafront.[#20]
TheminorityfemaleownerofanMBE‐,WBE‐,SBE‐,andSWaM‐certifiedconstructionstaffingcompanystated,“TheDBEprocessshouldhaveonepersonwhoonlyhasthetasktoanswerquestionstoquickentheprocess.IttookmeoneandhalfyearstogetmyDBEbecausetherewasnooneIcouldaskquestionsatanygiventimewhenIneededanswers.”[#24]
Whenaskedifhehadanyrecommendationsaboutimprovingthecertificationprocess,anon‐HispanicwhitemalerepresentativeofaWBE‐andSWaM‐certifiedmechanicalcontractingfirmstated,“Justmakeitneutraldon’tmakeselectionsonthebasisofaperson’smentalordisabledqualifications.”[#26]
Whenaskedifhehasanyrecommendationsaboutimprovingthecertificationprocess,aHispanicAmericanmaleownerofanMBE‐andSWaM‐certifiedsecurityintegrationandgeneralcontractingfirmstatedthatthereshouldbeaholisticsystemforallcertifications.Heexplainedthatstandardizationwouldbehelpfulanditwouldreducecostandsavemoney.Hesaid,“Standardizationisthekeytoeverything.”[#28]
TheBlackAmericanmaleownerofanMBE‐andSWaM‐certifiedgaragedoorcompanyexpressed,“Therecouldbemoreassistance,morereachouttohelp,andbettercustomerserviceinhelpingtounderstandwhatisneededwiththepaperwork.”[#30]
Whenaskedifthereareanyrecommendationsforimprovingthecertificationprocess,theBlackAmericanmaleownerofaServiceDisabledVeteran‐OwnedandSWaM‐certifiedjanitorialcompanysaid,"Thereshouldbemorehelporhelponlinewhensmallminoritybusinessesaretryingtodothepaperworkbythemselves."[#32]
TheBlackAmericanmaleownerofanHVACcompanysaid,“Iwouldhavetodocertificationmyselfandassistanceorsometypeofhelpwouldbegood.”[#33]
Whenaskedifshehasanyrecommendationsaboutimprovingthecertificationprocess,anAsianAmericanfemaleownerofanMBE‐andWBE‐certifiedgeneralcontractingfirmreportedthatone‐on‐oneassistancewithbusinessownerstocompletethepaperworkwouldbehelpfulasitcanbeanoverwhelmingprocess.[#34]
Whenaskedifhehadanyrecommendationsabouttheimprovingthecertificationprocess,theBlackAmericanmaleownerofaDBE‐,MBE‐,andSWaM‐certifiedpaintingcompanysaid,“Yes,makesureyouknowwhoshouldbedoinggovernmentcontacts.Youneedtoinvestigatefraudbybadcompanies.”[#38]
TheBlackAmericanfemaleownerofanSBE‐certifiedconcretecompanysaid,“Yes,Ihaverecommendations.Theremustbeafairchanceofgettinginandnothavingstipulationsinthebidstokeepyou[minorities]out.Stopmanipulatingthebids.Ifeellikewearegettingkick‐backs,sonotafairgame.Ibelievethatlawsandrulesshouldbechangedstartingwiththelocal[municipalities].”[#39]
APPENDIX E.
Availability Analysis Approach
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 1
APPENDIX E. Availability Analysis Approach
BBCResearch&Consulting(BBC)usedacustomcensusapproachtoanalyzetheavailabilityofminority‐ownedbusinesses;woman‐ownedbusinesses;andveteran‐ownedbusinessesforconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityofVirginiaBeach(theCity)awards.AppendixEexpandsontheinformationpresentedinChapter5todescribe:
A. Availabilitydata;
B. Representativebusinesses;
C. Availabilitysurveyinstrument;
D. Surveyexecution;and
E. Additionalconsiderations.
A. Availability data
BBCcontractedwithCustomerResearchInternational(CRI)toconducttelephonesurveyswiththousandsofbusinessestablishmentsthroughouttherelevantgeographicmarketareaforCitycontracting,whichBBCidentifiedasChesapeakeCity,NorfolkCity,PortsmouthCity,andVirginiaBeachCityinVirginia.BusinessestablishmentsthatCRIsurveyedwerebusinesseswithlocationsintherelevantgeographicmarketareathatthestudyteamidentifiedasdoingworkinfieldscloselyrelatedtothetypesofcontractsandprocurementsthattheCityawardedbetweenJuly1,2012andJune30,2017(i.e.,thestudyperiod).Thestudyteambeganthesurveyprocessbydeterminingtheworkspecializations,orsubindustries,foreachrelevantCityprimecontractandsubcontractandidentifying8‐digitDun&Bradstreet(D&B)workspecializationcodesthatbestcorrespondedtothosesubindustries.ThestudyteamthencollectedinformationaboutlocalbusinessestablishmentsthatD&Blistedashavingtheirprimarylinesofbusinesswithinthoseworkspecializations.
Aspartofthetelephonesurveyeffort,thestudyteamattemptedtocontact7,013localbusinessestablishmentsthatperformworkthatisrelevanttoCitycontracting.Thattotalincluded2,602constructionestablishments;103architectureandengineeringestablishments;2,637otherprofessionalservicesestablishments;and1,646goodsandservicesestablishments;and25establishmentswithaprimarylineofworkthatturnedouttobeoutsideofthecontractingareasrelevanttothedisparitystudy.(Those25businessestablishmentswerenotconsideredfurtheraspartoftheavailabilityanalysis.)Thestudyteamwasabletosuccessfullycontact3,238ofthosebusinessestablishments(1,145businessestablishmentsdidnothavevalidphonelistings).Ofbusinessestablishmentsthatthestudyteamcontactedsuccessfully,1,045establishmentscompletedavailabilitysurveys.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 2
B. Representative Businesses
TheobjectiveofBBC’savailabilityapproachwasnottocollectinformationabouteachandeverybusinessthatisoperatingintherelevantgeographicmarketarea.Instead,itwastocollectinformationfromalarge,unbiasedsubsetoflocalbusinessesthatappropriatelyrepresentstheentirerelevantbusinesspopulation.ThatapproachallowedBBCtoestimatetheavailabilityofsmalldisadvantagedbusinessesinanaccurate,statistically‐validmanner.Inaddition,BBCdidnotdesigntheresearcheffortsothatthestudyteamwouldcontacteverylocalbusinesspossiblyperformingconstruction;architectureandengineering;otherprofessionalservices;orgoodsandserviceswork.Instead,BBCdeterminedthetypesofworkthatweremostrelevanttoCitycontractingbyreviewingprimecontractandsubcontractdollarsthatwenttodifferenttypesofbusinessesduringthestudyperiod.
FigureE‐1liststhe8‐digitworkspecializationcodeswithinconstruction;architectureandengineering;otherprofessionalservices;andgoodsandservicesthatweremostrelatedtothecontractandprocurementdollarsthattheCityawardedduringthestudyperiod,andthatBBCincludedaspartoftheavailabilityanalysis.Thestudyteamgroupedthosespecializationsintodistinctsubindustries,whicharepresentedasheadingsinFigureE‐1.
C. Availability Survey Instrument
BBCcreatedanavailabilitysurveyinstrumenttocollectinformationfromrelevantbusinessestablishmentslocatedintherelevantgeographicmarketarea.Asanexample,thesurveyinstrumentthatthestudyteamusedwithconstructionestablishmentsispresentedattheendofAppendixE.Thestudyteammodifiedtheconstructionsurveyinstrumentslightlyforusewithestablishmentsworkinginotherindustriesinordertoreflecttermsmorecommonlyusedinthoseindustries(e.g.,thestudyteamsubstitutedthewords“primecontractor”and“subcontractor”with“primeconsultant”and“subconsultant”whensurveyingprofessionalservicesestablishments).1
Survey structure.Theavailabilitysurveyincluded14sections,andCRIattemptedtocoverallsectionswitheachbusinessestablishmentthatthestudyteamsuccessfullycontactedandthatwaswillingtocompleteasurvey.
1. Identification of purpose.ThesurveysbeganbyidentifyingtheCityasthesurveysponsoranddescribingthepurposeofthestudy.(e.g.,“TheCityisconductingasurveytodevelopalistofcompaniesinterestedinprovidingconstruction‐relatedservicestotheCityofVirginiaBeach.”)
2. Verification of correct business name.Thesurveyorverifiedthatheorshehadreachedthecorrectbusiness.Ifthebusinessnamewasnotcorrect,surveyorsaskediftherespondentknewhowtocontactthecorrectbusiness.CRIthenfollowedupwiththecorrectbusinessbasedonthenewcontactinformation(seeareas“X”and“Y”oftheavailabilitysurveyinstrument).
1BBCalsodevelopedafaxande‐mailversionofthesurveyinstrumentforbusinessestablishmentsthatpreferredtocompletethesurveyinthoseformats.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 3
Figure E‐1. Subindustries included in the availability analysis
Industry Code Industry Description Industry Code Industry Description
Architecture and Engineering
Architectural and design services Engineering (Continued)07810000 Landscape counseling and planning 87119909 Professional engineer07810201 Landscape architects 87120101 Architectural engineering
07810202 Landscape counseling services 87480400 Systems analysis and engineering consulting services07810203 Landscape planning services73890600 Interior design services Environmental and planning services73890602 Interior designer 17990801 Asbestos removal and encapsulation73891800 Design services 49590302 Environmental cleanup services73891801 Design, commercial and industrial 87110101 Pollution control engineering87120000 Architectural services 87119906 Energy conservation engineering
87449904 Environmental remediation
Construction management 87480200 Urban planning and consulting services87419902 Construction management 87480201 City planning87420402 Construction project management consultant 87480204 Traffic consultant
87489904 Energy conservation consultant
Engineering 87489905 Environmental consultant87110000 Engineering services 89990703 Natural resource preservation service87110202 Mechanical engineering87110400 Construction and civil engineering Surveying and mapmaking87110401 Building construction consultant 73890802 Photogrammatic mapping87110402 Civil engineering 87130000 Surveying services87110404 Structural engineering 87139901 Photogrammetric engineering87119903 Consulting engineer 87139902 Ariel digital imaging
ConstructionBuilding construction Building construction (Continued)15210104 Repairing fire damage, single‐family houses 15420103 Commercial and office buildings, renovation and repair15220104 Dormitory construction15410000 Industrial buildings and warehouses Concrete work15419903 Food products manufacturing or packing plant construction 17710000 Concrete work15419905 Industrial buildings, new construction15419909 Renovation, remodeling and repairs: industrial buidings Concrete, asphalt, and related products15419912 Warehouse construction 14230000 Crushed and broken granite15420000 Nonresidential construction 14420000 Construction sand and gravel15420100 Commercial and office building contractors 29510000 Asphalt paving mixtures and blocks15420101 Commercial and office building, new construction 32730000 Ready‐mixed concrete15420102 Commercial and office buildings, prefabricated erection 50320503 Concrete building products
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 4
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Construction (Continued)
Concrete, asphalt, and related products Heavy construction (Continued)
50329901 Aggregate 16119901 General contractor, highway and street construction
16119902 Highway and street maintenanceDam and marine construction 16220000 Bridge, tunnel, and elevated highway construction16290100 Dams, waterways, docks, and other marine construction 16229901 Bridge construction
16290110 Marine construction 16229902 Highway construction, elevated
16290113 Waterway construction 16239905 Pumping station construction16290000 Heavy construction
Electrical work 17710301 Blacktop (asphalt) work07820208 Electrical work 17990302 Service station equipment installation, maint., an
07829903 Telephone and telephone equipment installation 17999935 Petroleum storage tank installation, underground07829902 Fire detection and burglar alarm systems specialization07820206 General electrical contractor Masonry, drywall and stonework
17410000 Masonry and other stonework
Elevators, conveyors, and moving walkways35350000 Conveyors and conveying equipment Mechanical contracting services
17110000 Plumbing, heating, air‐conditioningExcavation 17110200 Plumbing contractors07839902 Removal services, bush and tree 17110301 Fire sprinkler system installation16110203 Grading 17110302 Irrigation sprinkler system installation16290105 Drainage system construction 17110400 Heating and air conditioning contractors16290106 Dredging contractor 17110401 Mechanical contractor16290108 Irrigation system construction 17110405 Warm air heating and air conditioning contractor16290400 Land preparation construction 76239902 Refrigeration repair service16290403 Rock removal16299903 Land clearing contractor Other construction services17940000 Excavation work 17810000 Water well drilling17949901 Excavation and grading, building construction 17990000 Special trade contractors
17950000 Wrecking and demolition work 17990103 Playground construction and equipment installation17959902 Demolition, buildings and other structures 17990105 Swimming pool construction17990900 Building site preparation 17990501 Cleaning building exteriors
49710000 Irrigation systems 49590102 Sweeping service: road, airport, parking lot, etc.
Heavy construction Painting and weatherproofing16110000 Highway and street construction 17210000 Painting and paper hanging16110200 Surfacing and paving 17210200 Commercial painting16110204 Highway and street paving contractor 17210303 Pavement marking contractor
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 5
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Construction (Continued)Painting and weatherproofing (Continued) Trucking, hauling and storage
17990200 Coating, caulking, and weather, water, and fireproofing 42120000 Local trucking, without storage17990201 Caulking (construction) 42120401 Furniture moving, local: without storage17990209 Waterproofing 42129905 Dump truck haulage
42130000 Trucking, except localRoofing, siding, and flooring contractors 42139903 Contract haulers17520000 Floor laying and floor work 42149901 Furniture moving and storage, local
17610000 Roofing, siding, and sheetmetal work 42259903 Warehousing, self storage17610103 Roofing contractor17619903 Sheet metal work Water, sewer, and utility lines
17719903 Flooring contractor 16230000 Water, sewer, and utility lines16230200 Communication line and transmission tower construction
Structural metals 16230203 Telephone and communication line construction50510200 Iron and steel (ferrous) products 16230300 Water and sewer line construction
50510216 Steel 16230302 Sewer line construction16230303 Water main construction
Structural steel construction 16239906 Underground utilities contractor15419910 Steel building construction 76990403 Sewer cleaning and rodding17999932 Welding on site
76920000 Welding repair
Goods and Services
Automobiles Automobiles (Continued)37110000 Motor vehicles and car bodies 55719906 Motorcycles
37130102 Truck bodies (motor vehicles) 75140000 Passenger car rental50120000 Automobiles and other motor vehicles 75149902 Rent‐a‐car service50120100 Automotive brokers 75150000 Passenger car leasing
50120101 Automobile auction50120102 Automobiles Cleaning and janitorial services
50120403 Motorcycles 72119901 Laundry collecting and distributing outlet55110000 New and used car dealers 72170000 Carpet and upholstery cleaning
55119901 Automobiles, new and used 72190000 Laundry and garment services55119903 Trucks, tractors, and trailers: new and used 73420200 Pest control services
55210000 Used car dealers 73420202 Exterminating and fumigating55219902 Automobiles, used cars only 73420203 Pest control in structures55710000 Motorcycle dealers 73420204 Termite control
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 6
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Goods and Services (Continued)
Cleaning and janitorial services (Continued) Electrical equipment and supplies (Continued)
73490104 Janitorial service, contract basis 50630000 Electrical apparatus and equipment
73499902 Cleaning service, industrial or commercial 50630206 Electrical supplies
28420000 Polishes and sanitation goods 50630600 Batteries
50870300 Cleaning and maintenance equipment and supplies 50650000 Electronic parts and equipment
50870304 Janitors' supplies 50650300 Electronic parts
59999910 Electronic parts and equipment
Communications equipment
36610102 Communication headgear, telephone Engineering equipment and precision instruments
50650200 Communication equipment 38290000 Measuring and controlling devices
59990601 Audio‐visual equipment and supplies
Equipment maintenance and repair
Computer systems and services 76992206 Hydraulic equipment repair
73780000 Computer maintenance and repair 76992501 Elevators: inspection, service, and repair
73789902 Computer peripheral equipment repair and maintenanceEvent coordination and promotion
Computers and peripherals 72990502 Party planning service50450000 Computers, peripherals, and software 73890300 Advertising, promotional, and trade show services
50459903 Computer software 73890301 Convention and show services50459905 Computers 73890308 Promoters of shows and exhibitions57340000 Computer and software stores 79220105 Entertainment promotion
79991007 Festival operation
Dining and recreational services58129903 Caterers Fencing, guardrails and signs58129906 Contract food services 17999912 Fence construction59419905 Playground equipment73890305 Exhibit construction by industrial contractors Food products, wholesale and retail82999914 Self‐defense and athletic instruction 51469902 Fish, fresh
Doors, windows, and glasswork Furniture17510201 Garage door, installation or erection 25310000 Public building and related furniture17510202 Window and door (prefabricated) installation 50210000 Furniture17930000 Glass and glazing work 50210100 Office and public building furniture52110203 Garage doors, sale and installation 50210106 Office furniture
57129904 Office furniture
Electrical equipment and supplies 57129905 Outdoor and garden furniture36990000 Electrical equipment and supplies
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 7
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Goods and Services (Continued)
Heavy construction equipment Lawn and garden supplies
35310000 Construction machinery 01810105 Plants, potted: growing of
35310604 Cranes 51930202 Nursery stock
50820000 Construction and mining machinery 52610000 Retail nurseries and garden stores
50820300 General construction machinery and equipment
50820303 Cranes, construction Office equipment and supplies
50820304 Excavating machinery and equipment 50440000 Office equipment
50840400 Petroleum industry machinery 51110000 Printing and writing paper
73530000 Heavy construction equipment rental 51119902 Printing paper
73539901 Cranes and aerial lift equipment, rental or leasing 51120000 Stationery and office supplies
73590000 Equipment rental and leasing 51129902 Business forms
59991402 Photocopy machines
Industrial chemicals51910102 Fertilizer and fertilizer materials Other construction materials
32819901 Granite, cut and shaped
Industrial equipment and machinery 34440000 Sheet metalwork35610000 Pumps and pumping equipment 50230401 Carpets35630000 Air and gas compressors 50310000 Lumber, plywood, and millwork35630102 Vacuum pumps, except laboratory 50310100 Building materials, exterior50840000 Industrial machinery and equipment 50319904 Lumber: rough, dressed, and finished
50840800 Materials handling machinery 50320000 Brick, stone, and related material50850000 Industrial supplies 50329902 Brick, except refractory50850300 Valves, pistons, and fittings 50510107 Wire50870000 Service establishment equipment 50859916 Welding supplies76990500 Industrial equipment services 51980100 Paints
52110000 Lumber and other building materials
Landscape services 52110200 Door and window products07810200 Landscape services 52310200 Paint and painting supplies07820000 Lawn and garden services 52510000 Hardware stores07820203 Lawn care services 57130000 Floor covering stores07829903 Landscape contractors 57139901 Carpets52610100 Lawn and garden equipment
Other goodsLawn and garden equipment 36690100 Emergency alarms52610100 Lawn and garden equipment 39930000 Signs and advertising specialties
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 8
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Goods and Services (Continued)
Other goods (Continued) Parking services
50460306 Restaurant equipment and supplies 72991105 Valet parking
50479901 Industrial safety devices: first aid kits and masks 75210000 Automobile parking
50499903 Law enforcement equipment and supplies 75210101 Parking lots
50519903 Foundry products
50640203 Radios Petroleum and petroleum products
50659903 Security control equipment and systems 59830000 Fuel oil dealers
50780200 Refrigerated beverage dispensers
50849905 Hydraulic systems equipment and supplies Plumbing and HVAC supplies50849912 Safety equipment 35850300 Heating equipment, complete50870500 Firefighting equipment 50740000 Plumbing and hydronic heating supplies50879913 Vending machines and supplies 50740300 Plumbing fittings and supplies50990300 Safety equipment and supplies 50740304 Plumbing and heating valves51720200 Engine fuels and oils 50750000 Warm air heating and air conditioning51720203 Gasoline 50750100 Air conditioning and ventilation equipment and supplies51990102 Art goods 50750102 Air filters55510400 Marine supplies and equipment 50780000 Refrigeration equipment and supplies57220000 Household appliance stores57310000 Radio, television, and electronic stores Printing, copying, and mailing59410501 Skin diving, scuba equipment and supplies 27520000 Commercial printing, lithographic59990101 Alarm signal systems 27520101 Offset printing59990200 Art and architectural supplies 27590000 Commercial printing73590600 Party supplies rental services 73310000 Direct mail advertising services73599904 Portable toilet rental 73319903 Mailing list compilers73599910 Tent and tarpaulin rental 73319904 Mailing service73829903 Protective devices, security 73319906 Mailing list brokers73891503 Sign painting and lettering shop 73891600 Mailing and messenger services76991103 Locksmith shop 73891603 Mailbox rental and related service
73899958 Subscription fulfillment services: magazine, newspaper, etc.
Other services37320000 Boatbuilding and repairing Security guard services47259903 Tours, conducted 73810100 Guard services48130201 Internet connectivity services 73810105 Security guard service56990402 Custom tailor87340000 Testing laboratories Security services89990000 Services 73820000 Security systems services
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 9
Figure E‐1. Subindustries included in the availability analysis (Continued)
Industry Code Industry Description Industry Code Industry Description
Goods and Services (Continued)
Traffic signals and street lighting Vehicle parts and supplies (Continued)
36480000 Lighting equipment 37140000 Motor vehicle parts and accessories
50130100 Automotive supplies and parts
Transit services 50150100 Automotive parts and supplies, used
41199902 Ambulance service 50840602 Engines and parts, diesel
41420000 Bus charter service, except local 50850501 Bearings
55310000 Auto and home supply stores
Uniforms, apparels, and linen 55310102 Automotive accessories
56510000 Family clothing stores 55310107 Truck equipment and parts
56610000 Shoe stores 55999905 Utility trailers
56990100 Uniforms and work clothing
56990102 Uniforms Vehicle repair
56990103 Work clothing 75389902 General truck repair
72130000 Linen supply 75490300 Towing services
72130204 Uniform supply
Waste and recycling servicesVehicle parts and supplies 49530200 Refuse collection and disposal services37130100 Truck bodies and parts
Other Professional Services
Advertising, marketing and public relations Business and market research services (Continued)73110000 Advertising agencies 87320107 Opinion research73119901 Advertising consultant 87320109 Survey service: marketing, location, etc.73190100 Transit advertising services 87410000 Management services73360000 Commercial art and graphic design 87410100 Business management87420300 Marketing consulting services 87420000 Management consulting services87430000 Public relations services 87420103 Industrial hygiene consultant87439902 Promotion service 87420104 Maintenance management consultant87439903 Public relations and publicity 87420500 Business planning and organizing services87439904 Sales promotion 87429902 Business management consultant
87429904 General management consultant
Business and market research services 87480302 Telecommunications consultant42269902 Document and office records storage73229902 Collection agency, except real estate Educational services73890000 Business services 82439903 Software training, computer73899953 Translation services 89990600 Lecturing services87320105 Market analysis or research
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 10
Figure E‐1. Subindustries included in the availability analysis (Continued)
Source: BBC Research & Consulting.
Industry Code Industry Description Industry Code Industry Description
Other Professional Services (Continued)
Finance and accounting Human resources and job training services (Continued)
87210200 Accounting services, except auditing 87480100 Testing services
87219901 Billing and bookkeeping service
IT and data services
Health and medical services 73710000 Custom computer programming services
80110400 Psychiatrists and psychoanalysts 73710101 Computer software systems analysis and design, custom
80110402 Psychiatrist 73710301 Computer software development
80490400 Psychologist, psychotherapist and hypnotist 73730000 Computer integrated systems design
80710000 Medical laboratories 73730200 Systems integration services
80829902 Visiting nurse service 73730201 Local area network (LAN) systems integrator
73740104 Service bureau, computer
Health and medical services (Continued) 73790200 Computer related consulting services83610100 Residential care for children 73790201 Computer hardware requirements analysis83610400 Geriatric residential care 73790202 Data processing consultant87420404 Hospital and health services consultant 73790203 Online services technology consultants89991003 Psychological consultant
Real estate managementHuman resources and job training services 65120100 Commercial and industrial building operation73610000 Employment agencies73610100 Placement agencies Scientific and medical research73610101 Executive placement 87319902 Medical research, commercial73610102 Labor contractors (employment agency)73630000 Help supply services Testing services73630103 Temporary help service 73890200 Inspection and testing services87420206 Training and development consultant
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 11
3. Verification of for‐profit business status.Thesurveyoraskedwhethertheorganizationwasafor‐profitbusinessasopposedtoagovernmentornonprofitorganization(QuestionA2).Surveyorscontinuedthesurveywithbusinessesthatresponded“yes”tothatquestion.
4. Confirmation of main lines of business.BusinessesconfirmedtheirmainlinesofbusinessaccordingtoD&B(QuestionA3a).IfD&B’sworkspecializationcodeswereincorrect,businessesdescribedtheirmainlinesofbusiness(QuestionsA3b).Businesseswerealsoaskedtoidentifytheothertypesofworkthattheyperformbeyondtheirmainlinesofbusiness(QuestionA3c).BBCcodedinformationonmainlinesofbusinessandadditionaltypesofworkintoappropriate8‐digitD&Bworkspecializationcodes.
5. Locations and affiliations.Thesurveyoraskedbusinessownersormanagersiftheirbusinesseshadotherlocations(QuestionA4).Thestudyteamalsoaskedbusinessownersormanagerswheretheirbusinesseswereheadquartered(QuestionA5andA6)andiftheirbusinessesweresubsidiariesoraffiliatesofotherbusinesses(QuestionsA7andA8).
6. Past bids or work with government agencies and private sector organizations.Thesurveyoraskedaboutbidsandworkonpastgovernmentandprivatesectorcontracts.CRIaskedthosequestionsinconnectionwithprimecontractsandsubcontracts(QuestionsB1andB2).2
7. Interest in future work.Thesurveyoraskedaboutbusinesses’interestinfutureworkwiththeCity.CRIaskedthosequestionsinconnectionwithbothprimecontractsandsubcontracts(QuestionsB3andB4).3
8. Geographic area.ThesurveyoraskedwhetherbusinessesperformworkorservecustomersinVirginiaBeach(QuestionC1).
9. Year established.Thesurveyoraskedbusinessestoidentifytheapproximateyearinwhichtheywereestablished(QuestionD1).
10. Largest contracts.Thestudyteamaskedbusinessesaboutthevalueofthelargestcontractsonwhichtheyhadbidorhadbeenawardedduringthepastfiveyears.(QuestionsD2andD3).
11. Ownership.Thesurveyoraskedwhetherbusinesseswereatleast51percentownedandcontrolledbyminorities,women,veterans,orindividualswithdisabilities(QuestionsE1throughE5).Ifbusinessesindicatedthattheywereminority‐owned,theywerealsoaskedabouttherace/ethnicityofthebusiness’sownership(QuestionE3).Thestudyteamconfirmedthatinformationthroughseveralotherdatasources,including:
TheCity’sdirectoryofSmall,Woman,andMinority‐owned(SWaM)businesses;
Cityvendordata;
Cityreview;and
InformationfromD&Bandothersources.
2Neithergoodssuppliersnorservicesproviderswereaskedquestionsaboutsubcontractwork.
3Neithergoodssuppliersnorservicesproviderswereaskedquestionsaboutsubcontractwork.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 12
12. Business revenue.Thesurveyoraskedseveralquestionsaboutbusinesses’sizeintermsoftheirrevenues.Forbusinesseswithmultiplelocations,thebusinessrevenuesectionofthesurveyalsoaskedabouttheirrevenuesandnumberofemployeesacrossalllocations(QuestionsF1throughF3).
13. Potential barriers in the marketplace.Thesurveyoraskedanopen‐endedquestionconcerninggeneralinsightsaboutconditionsinthelocalmarketplace(QuestionG1).Inaddition,thesurveyincludedaquestionaskingwhetherrespondentswouldbewillingtoparticipateinafollow‐upinterviewaboutconditionsinthelocalmarketplace(QuestionG2).
14. Contact information.Thesurveyconcludedwithquestionsabouttheparticipant’snameandpositionwiththeorganization(QuestionsH1andH2).
D. Survey Execution
CRIconductedallsurveysin2018.CRImadeuptoeightattemptsduringdifferenttimesofthedayandondifferentdaysoftheweektosuccessfullyreacheachbusinessestablishment.CRIattemptedtosurveyacompanyrepresentativesuchastheowner,manager,orotherofficerwhocouldprovideaccurateanddetailedresponsestosurveyquestions.
Establishments that the study team successfully contacted.FigureE‐2presentsthedispositionofthe7,013businessestablishmentsthatthestudyteamattemptedtocontactforavailabilitysurveysandhowthatnumberresultedinthe5,868establishmentsthatthestudyteamwasabletosuccessfullycontact.
Non‐working or wrong phone numbers.SomeofthebusinesslistingsthatthestudyteampurchasedfromD&BandthatCRIattemptedtocontactwere:
Duplicatephonenumbers(77listings);
Non‐workingphonenumbers(880listings);or
Wrongnumbersforthedesiredbusinesses(188listings).
Somenon‐workingphonenumbersandwrongnumbersresultedfrombusinessesgoingoutofbusinessorchangingtheirnamesandphonenumbersbetweenthetimethatD&Blistedthemandthetimethatthestudyteamattemptedtocontactthem.
Working phone numbers.AsshowninFigureE‐2,therewere5,868businessestablishmentswithworkingphonenumbersthatCRIattemptedtocontact.CRIwasunsuccessfulincontactingmanyofthosebusinessesforvariousreasons:
CRIcouldnotreachanyoneaftereightattemptsatdifferenttimesofthedayandondifferentdaysoftheweekfor2,280establishments.
CRIcouldnotreacharesponsiblestaffmemberafterfiveattemptsatdifferenttimesofthedayondifferentdaysoftheweekfor345establishments.
CRIcouldnotconducttheavailabilitysurveyduetolanguagebarriersforfiveestablishments.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 13
Figure E‐2. Disposition of attempts to survey business establishments
Note:
Availability analysis results are based on a representative, unbiased, and statistically‐valid subset of the relevant business population.
Source:
2017‐18 availability surveys.
Thus,CRIwasabletosuccessfullycontact3,238businessestablishments.
Establishments included in the availability database. FigureE‐3presentsthedispositionofthe3,238businessestablishmentsthatCRIsuccessfullycontactedandhowthatnumberresultedinthe659businessesthatthestudyteamincludedintheavailabilitydatabaseandthatthestudyteamconsideredpotentiallyavailableforCitywork.
Figure E‐3. Disposition of successfully contacted business establishments
Note:
Availability analysis results are based on a representative, unbiased, and statistically‐valid subset of the relevant business population.
Source:
2017‐18 availability surveys.
Establishments not interested in discussing availability for City work.Ofthe3,238businessestablishmentsthatthestudyteamsuccessfullycontacted,1,986establishmentswerenotinterestedindiscussingtheiravailabilityforCitywork.Inaddition,BBCsenthardcopyfaxore‐mailavailabilitysurveysuponrequestbutdidnotreceivecompletedsurveysfrom207establishments.Intotal,1,045successfully‐contactedbusinessestablishmentscompletedavailabilitysurveys.
Establishments available for City work.ThestudyteamdeemedonlyaportionofthebusinessestablishmentsthatcompletedavailabilitysurveysasavailablefortheprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteamexcludedmanyofthebusinessestablishmentsthatcompletedsurveysfromtheavailabilitydatabaseforvariousreasons:
Beginning list 7,013
Less duplicate phone numbers 77
Less non‐working phone numbers 880
Less wrong number/business 188
Unique business listings with working phone numbers 5,868
Less no answer 2,280
Less could not reach responsible staff member 345
Less language barrier 5
Establishments successfully contacted 3,238
Number of
Establishments
Establishments successfully contacted 3,238
Less establishments not interested in discussing availability for VB work 1,986
Less unreturned fax/email surveys 207
Establishments that completed surveys 1,045
Less not a for‐profit business 39
Less line of work outside of study scope 128
Less no interest in future work 159
Less established after study period 25
Less multiple establishments 35
Establishments potentially available for entity work 659
Number of
Establishments
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 14
BBCexcluded39establishmentsthatindicatedthattheirorganizationswerenotfor‐profitbusinesses.
BBCexcluded128establishmentsthatindicatedthattheirmainlinesofbusinesswereoutsideofthestudyscope.
BBCexcluded159establishmentsthatreportednotbeinginterestedineitherprimecontractingorsubcontractingopportunitieswiththeCity.
BBCexcluded25establishmentsthatreportedthattheirbusinesseswereestablishedafterthestudyperiod.
Thirty‐fiveestablishmentsrepresenteddifferentlocationsofthesamebusinesses.Priortoanalyzingresults,BBCcombinedresponsesfrommultiplelocationsofthesamebusinessintoasingledatarecord.
Afterthoseexclusions,BBCcompiledadatabaseof659businessesthatwereconsideredpotentiallyavailableforCitywork.
Coding responses from multi‐location businesses.Responsesfromdifferentlocationsofthesamebusinesswerecombinedintoasinglesummarydatarecordaccordingtoseveralrules:
Ifanyoftheestablishmentsreportedbiddingorworkingonacontractwithinaparticularsubindustry,thestudyteamconsideredthebusinesstohavebidorworkedonacontractinthatsubindustry.
Thestudyteamcombinedthedifferentrolesofwork(i.e.,primecontractororsubcontractor)thatestablishmentsofthesamebusinessreportedintoasingleresponsecorrespondingtotheappropriatesubindustry.Forexample,ifoneestablishmentreportedthatitworksasaprimecontractorandanotherestablishmentreportedthatitworksasasubcontractor,thenthestudyteamconsideredthebusinessasavailableforbothprimecontractsandsubcontractswithintherelevantsubindustry.4
BBCconsideredthelargestcontractthatanyestablishmentsofthesamebusinessreportedhavingbidorworkedonasthebusiness’relativecapacity(i.e.,thelargestcontractforwhichthebusinesscouldbeconsideredavailable).
BBCdeterminedthenumberofemployeesforbusinessesbycalculatingthemodeorthemeanofresponsesfromitsestablishments.
BBCcodedbusinessesasminority‐owned,woman‐owned,veteran‐owned,orservice‐disabledveteran‐ownedifthemajorityofitsestablishmentsreportedsuchstatus.
E. Additional Considerations
BBCmadeseveraladditionalconsiderationsrelatedtoitsapproachtomeasuringavailabilitytoensurethatestimatesoftheavailabilityofbusinessesforCityworkwereaccurateandappropriate.
4Neithergoodsandcommoditiessuppliersnorotherservicesproviderswereaskedquestionsaboutsubcontractwork.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 15
Not providing a count of all businesses available for City work.ThepurposeoftheavailabilityanalysiswastoprovidepreciseandrepresentativeestimatesofthepercentageofCitycontractingdollarsforwhichsmalldisadvantagedbusinessesareready,willing,andabletoperform.TheavailabilityanalysisdidnotprovideacomprehensivelistingofeverybusinessthatcouldbeavailableforCityworkandshouldnotbeusedinthatway.FederalcourtshaveapprovedBBC’sapproachtomeasuringavailability.Inaddition,federalregulationsaroundminority‐andwoman‐ownedbusinessprogramsrecommendsimilarapproachestomeasuringavailabilityfororganizationsimplementingbusinessassistanceprograms.
Not basing the availability analysis on certification directories, prequalification lists, or bidders lists. Federalguidancearoundmeasuringtheavailabilityofminority‐andwoman‐ownedbusinessesrecommendsdividingthenumberofminority‐andwoman‐ownedbusinessesinanorganization’scertificationdirectorybythetotalnumberofbusinessesinthemarketplace(forexample,asreportedinUnitedStatesCensusdata).Asanotheroption,organizationscouldusealistofprequalifiedbusinessesorabidderslisttoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesforitsprimecontractsandsubcontracts.TheprimaryreasonwhyBBCrejectedsuchapproacheswhenmeasuringtheavailabilityofbusinessesforCityworkisthatdividingasimpleheadcountofcertifiedbusinessesbythetotalnumberofbusinessesdoesnotaccountforbusinesscharacteristicsthatarecrucialtoestimatingavailabilityaccurately.ThemethodologythatBBCusedinthisstudytakesacustomcensusapproachtomeasuringavailabilityandaddsseverallayersofrefinementtoasimpleheadcountapproach.Forexample,theavailabilitysurveysthatthestudyteamconductedprovideddataonqualifications,relativecapacity,andinterestinCityworkforeachbusiness,whichallowedBBCtotakeamoredetailedapproachtomeasuringavailability.Courtcasesinvolvingimplementationsofminority‐andwoman‐ownedbusinessprogramshaveapprovedtheuseofsuchapproachestomeasuringavailability.
Selection of specific subindustries.Definingsubindustriesbasedonspecificworkspecializationcodes(e.g.,D&Bindustrycodes)isastandardstepinanalyzingbusinessesinaneconomicsector.Governmentandprivatesectoreconomicdataaretypicallyorganizedaccordingtosuchcodes.Aswithanysuchresearch,therearelimitationswhenchoosingspecificD&Bworkspecializationcodestodefinesetsofestablishmentstobesurveyed.Forexample,itwasnotpossibleforBBCtoincludeallbusinessespossiblydoingworkinrelevantindustrieswithoutconductingsurveyswithnearlyeverybusinesslocatedintherelevantgeographicmarketarea.Inaddition,someindustrycodesareimpreciseandoverlapwithotherbusinessspecialties.Somebusinessesspanseveraltypesofwork,evenataverydetailedlevelofspecificity.Thatoverlapcanmakeclassifyingbusinessesintosinglemainlinesofbusinessdifficultandimprecise.Whenthestudyteamaskedbusinessownersandmanagerstoidentifytheirmainlinesofbusiness,theyoftengavebroadanswers.Forthoseandotherreasons,BBCcollapsedworkspecializationcodesintobroadersubindustriestomoreaccuratelyclassifybusinessesintheavailabilitydatabase.
Non‐response. Ananalysisofnon‐responseconsiderswhetherbusinessesthatwerenotsuccessfullysurveyedaresystematicallydifferentfromthosethatweresuccessfullysurveyedandincludedinthefinaldataset.Thereareopportunitiesfornon‐responsebiasinanysurveyeffort.Thestudyteamconsideredthepotentialfornon‐responsedueto:
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 16
Researchsponsorship;
Workspecializations;and
Languagebarriers.
Research sponsorship.SurveyorsintroducedthemselvesbyidentifyingtheCityasthesurveysponsor,becausebusinessesmaybelesslikelytoanswersomewhatsensitivebusinessquestionsifthesurveyorwasunabletoidentifythesponsor.Inpastsurveyefforts—particularlythoserelatedtoavailabilityanalyses—BBChasfoundthatidentifyingthesponsorsubstantiallyincreasesresponserates.
Work specializations.Businessesinhighlymobilefields,suchastrucking,maybemoredifficulttoreachforavailabilitysurveysthanbusinessesmorelikelytoworkoutoffixedoffices(e.g.,engineeringbusinesses).Thatassertionsuggeststhatresponseratesmaydifferbyworkspecialization.Simplycountingallsurveyedbusinessesacrossworkspecializationstoestimatetheavailabilityofsmalldisadvantagedbusinesseswouldleadtoestimatesthatwerebiasedinfavorofbusinessesthatcouldbeeasilycontactedbytelephone.However,workspecializationasapotentialsourceofnon‐responsebiasintheBBCavailabilityanalysisisminimized,becausetheavailabilityanalysisexaminesbusinesseswithinparticularworkfieldsbeforecalculatingoverallavailabilityestimates.Thus,thepotentialforbusinessesinhighlymobilefieldstobelesslikelytocompleteasurveyislessimportant,becausethestudyteamcalculatedavailabilityestimateswithinthosefieldsbeforecombiningtheminadollar‐weightedfashionwithavailabilityestimatesfromotherfields.Workspecializationwouldbeagreatersourceofnon‐responsebiasifparticularsubsetsofbusinesseswithinaparticularfieldwerelesslikelythanothersubsetstobeeasilycontactedbytelephone.
Response reliability.Businessownersandmanagerswereaskedquestionsthatmaybedifficulttoanswerincludingquestionsabouttheirrevenues.Forthatreason,thestudyteamcollectedcorrespondingD&Binformationfortheirestablishmentsandaskedrespondentstoconfirmthatinformationorprovidemoreaccurateestimates.Further,respondentswerenottypicallyaskedtogiveabsolutefiguresfordifficultquestionssuchasrevenueandcapacity.Rather,theyweregivenrangesofdollarfigures.BBCexploredthereliabilityofsurveyresponsesinanumberofways.
Certification lists.BBCrevieweddatafromtheavailabilitysurveysinlightofinformationfromothersourcessuchasvendorinformationthatthestudyteamcollectedfromtheCity.Forexample,certificationdatabasesincludedataontherace/ethnicityandgenderoftheownersofcertifiedbusinesses.Thestudyteamcomparedsurveyresponsesconcerningbusinessownershipwithsuchinformation.
Contract data.BBCexaminedCitycontractdatatofurtherexplorethelargestcontractsandsubcontractsawardedtobusinessesthatparticipatedintheavailabilitysurveysforthepurposesofassessingcapacity.BBCcomparedsurveyresponsesaboutthelargestcontractsthatbusinesseswonduringthepastfiveyearswithactualCitycontractdata.
City review.TheCityreviewedcontractandvendordatathatthestudyteamcollectedandcompiledaspartoftheavailabilityanalysisandprovidedfeedbackregardingitsaccuracy.
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 17
Availability Survey Instrument [Construction]
Hello. My name is [interviewer name] from Customer Research International. We are calling on behalf of the City of Virginia Beach. This is not a sales call. The City is conducting a survey to develop a list of companies interested in providing construction‐related services to the City of Virginia Beach. The survey should take between 10 and 15 minutes to complete. Who can I speak with to get the information that we need from your firm?
[AFTERREACHINGANAPPROPRIATELYSENIORSTAFFMEMBER,THEINTERVIEWERSHOULDREINTRODUCETHEPURPOSEOFTHESURVEYANDBEGINWITHQUESTIONS.]
[IFASKED,THEINFORMATIONDEVELOPEDINTHESEINTERVIEWSWILLADDTOEXISTINGDATAONCOMPANIESINTERESTEDINWORKINGWITHTHECITY]
X1. I have a few basic questions about your company and the type of work you do. Can you
confirm that this is [firm name]?
1=RIGHT COMPANY – SKIP TO A1
2=NOT RIGHT COMPANY
99=REFUSE TO GIVE INFORMATION – TERMINATE
Y1. What is the name of this firm?
1=VERBATIM
Y2. Can you give me any information about [new firm name]?
1=Yes, same owner doing business under a different name – SKIP TO Y4
2=Yes, can give information about named company
3=Company bought/sold/changed ownership – SKIP TO Y4
98=No, does not have information – TERMINATE
99=Refused to give information – TERMINATE
Y3. Can you give me the complete address or city for [new firm name]?
[NOTE TO INTERVIEWER ‐ RECORD IN THE FOLLOWING FORMAT]:
. STREET ADDRESS
. CITY
. STATE
. ZIP
1=VERBATIM
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 18
Y4. Can you give me the name of the owner or manager of [new firm name]?
[ENTER UPDATED NAME]
1=VERBATIM
Y5. Can I have a telephone number for him/her?
[ENTER UPDATED PHONE]
1=VERBATIM
Y6. Do you work for this new company?
1=YES
2=NO – TERMINATE
A2. Let me confirm that [firm name/new firm name] is a for‐profit business, as opposed to a non‐profit organization, a foundation, or a government office. Is that correct?
1=Yes, a business
2=No, other – TERMINATE
A3a. Let me also confirm what kind of business this is. The information we have from Dun &
Bradstreet indicates that your main line of business is [SIC Code description]. Is that correct?
[NOTE TO INTERVIEWER – IF ASKED, DUN & BRADSTREET OR D&B, IS A COMPANY THAT COMPILES
INFORMATION ON BUSINESSES THROUGHOUT THE COUNTRY]
1=Yes – SKIP TO A3c
2=No
98=(DON'T KNOW)
99=(REFUSED)
A3b. What would you say is the main line of business at [firm name/new firm name]?
[NOTE TO INTERVIEWER – IF RESPONDENT INDICATES THAT FIRM’S MAIN LINE OF BUSINESS IS
“GENERAL CONSTRUCTION” OR GENERAL CONTRACTOR,” PROBE TO FIND OUT IF MAIN LINE OF
BUSINESS IS CLOSER TO BUILDING CONSTRUCTION OR HIGHWAY AND ROAD CONSTRUCTION.]
1=VERBATIM
A3c. What other types of work, if any, does your business perform?
[ENTER VERBATIM RESPONSE]
1=VERBATIM
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 19
A4. Is this the sole location for your business, or do you have offices in other locations?
1=Sole location – SKIP TO A7
2=Have other locations
98=(DON'T KNOW)
99=(REFUSED)
A5. Is this location the headquarters for your business, or is your business headquartered at
another location?
[CONFIRM LOCATION FOR ALL PARTICIPANTS]
1=Headquartered here – SKIP TO A7
2=Headquartered at another location
98=(DON'T KNOW)
99=(REFUSED)
A6. What is the city and state of your business’ headquarters?
(ENTER VERBATIM CITY, ST)
1=VERBATIM
A7. Is your company a subsidiary or affiliate of another firm?
1=Independent – SKIP TO B1
2=Subsidiary or affiliate of another firm
98=(DON'T KNOW) – SKIP TO B1
99=(REFUSED) – SKIP TO B1
A8. What is the name of your parent company?
1=VERBATIM
98=(DON'T KNOW)
99=(REFUSED)
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 20
B1. Next, I have a few questions about your company’s role in doing work or providing
materials related to construction, maintenance, or design. During the past five years, has your
company submitted a bid or received an award for any part of a contract as either a prime
contractor or subcontractor?
[NOTE TO INTERVIEWER: THIS INCLUDES PUBLIC OR PRIVATE SECTOR WORK OR BIDS]
1=Yes
2=No – SKIP TO B3
98=(DON'T KNOW) – SKIP TO B3
99=(REFUSED) – SKIP TO B3
B2. Were those bids or awards to work as a prime contractor, a subcontractor, a
trucker/hauler, a supplier, or any other roles?
[MULTIPUNCH]
1=Prime contractor
2=Subcontractor
3=Trucker/hauler
4=Supplier (or manufacturer)
5= Other ‐ SPECIFY ___________________
98=(DON'T KNOW)
99=(REFUSED)
B3. Please think about future construction, maintenance, or design‐related work as you
answer the following few questions. Is your company interested in working with the City of
Virginia Beach as a prime contractor?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
B4. Is your company interested in working with the City of Virginia Beach as a subcontractor,
trucker/hauler, or supplier?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 21
C1. Now I’m interested in the geographic area in which your company serves customers. Is
your company able to do work or serve customers in Virginia Beach?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
D1. About what year was your firm established?
1=NUMERIC (1600‐2018)
9998 = (DON'T KNOW)
9999 = (REFUSED)
D2. What was the largest prime contract that your company bid on or was awarded during the
past five years in either the public sector or private sector? This includes contracts not yet
complete.
[NOTE TO INTERVIEWER ‐ READ CATEGORIES IF NECESSARY]
1=$100,000 or less
2=More than $100,000 to $250,000
3=More than $250,000 to $500,000
4=More than $500,000 to $1 million
5=More than $1 million to $2 million
6=More than $2 million to $5 million
7=More than $5 million to $10 million
8=More than $10 million to $20 million
9=More than $20 million to $50 million
10=More than $50 million to $100 million
11= More than $100 million to $200 million
12=$200 million or greater
97=(NONE)
98=(DON'T KNOW)
99=(REFUSED)/(NO PRIME BIDS)
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 22
D3. What was the largest subcontract or supply contract that your company bid on or was
awarded during the past five years in either the public sector or private sector? This includes
contracts not yet complete.
[NOTE TO INTERVIEWER ‐ READ CATEGORIES IF NECESSARY]
1=$100,000 or less
2=More than $100,000 to $250,000
3=More than $250,000 to $500,000
4=More than $500,000 to $1 million
5=More than $1 million to $2 million
6=More than $2 million to $5 million
7=More than $5 million to $10 million
8=More than $10 million to $20 million
9=More than $20 million to $50 million
10=More than $50 million to $100 million
11= More than $100 million to $200 million
12=$200 million or greater
97=(NONE)
98=(DON'T KNOW)
99=(REFUSED)/(NO SUB BIDS)
E1. My next questions are about the ownership of the business. A business is defined as
woman‐owned if more than half—that is, 51 percent or more—of the ownership and control
is by women. By this definition, is [firm name / new firm name] a woman‐owned business?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
E2. A business is defined as minority‐owned if more than half—that is, 51 percent or more—of
the ownership and control is by Black American, Asian American, Hispanic American, or Native
American. By this definition, is [firm name || new firm name] a minority‐owned business?
1=Yes
2=No – SKIP TO E4
98=(DON'T KNOW) – SKIP TO E4
99=(REFUSED) – SKIP TO E4
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 23
E3. Would you say that the minority group ownership of your company is mostly Black
American, Asian‐Pacific American, Subcontinent Asian American, Hispanic American, or Native
American?
1=Black American
2=Asian Pacific American (persons whose origins are from Japan, China, Taiwan, Korea, Burma (Myanmar), Vietnam, Laos, Cambodia(Kampuchea),Thailand, Malaysia, Indonesia, the Philippines, Brunei, Samoa, Guam, the U.S. Trust Territories of the Pacific Islands (Republic of Palau), the Common‐wealth of the Northern Marianas Islands, Macao, Fiji, Tonga, Kirbati, Juvalu, Nauru, Federated States of Micronesia, or Hong Kong)
3=Hispanic American (persons of Mexican, Puerto Rican, Cuban, Dominican, Central or South American, or other Spanish or Portuguese culture or origin, regardless of race)
4=Native American (American Indians, Eskimos, Aleuts, or Native Hawaiians)
5=Subcontinent Asian American (persons whose Origins are from India, Pakistan, Bangladesh, Bhutan, the Maldives Islands, Nepal or Sri Lanka)
6=(OTHER ‐ SPECIFY) ___________________
98=(DON'T KNOW)
99=(REFUSED)
E4. A business is defined as veteran‐owned if more than half—that is, 51 percent or more—of
the ownership and control is by a veteran of the U.S. military. By this definition, is [firm name
|| new firm name] a veteran‐owned business?
[NOTE TO INTERVIEWER – U.S. MILITARY SERVICES INCLUDE THE U.S. ARMY, AIR FORCE, NAVY,
MARINES, OR COAST GUARD.]
1=Yes
2=No – SKIP TO F1
98=(DON'T KNOW) – SKIP TO F1
99=(REFUSED) – SKIP TO F1
E5. Does that veteran owner have a physical or mental disability that resulted directly from
their service in the U.S. military?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 24
F1. Just considering your location, Dun & Bradstreet lists the average annual gross revenue of
your company to be [dollar amount]. Is that an accurate estimate for your company’s average
annual gross revenue over the last three years?
1=Yes – SKIP TO F3
2=No
98=(DON'T KNOW) – SKIP TO F3
99=(REFUSED) – SKIP TO F3
F2. What was the average annual gross revenue of your company over the last three years,
just considering your location? Would you say . . .
[READ LIST]
1=Less than $750,000
2=$750,000 ‐ $5.5 Million
3=$5.6 Million ‐ $7.4 Million
4=$7.5 Million ‐ $11 Million
5=$11.1 Million ‐ $15 Million
6=$15.1 Million ‐ $18 Million
7=$18.1 Million ‐ $20.5 Million
8=$20.6 Million ‐ $24 Million
9=$24.1 Million or more
98= (DON'T KNOW)
99= (REFUSED)
F3. [ONLY IF A4 = 2] Roughly, what was the average annual gross revenue of your company,
for all of your locations over the last three years? Would you say . . .
[READ LIST]
1=Less than $750,000
2=$750,000 ‐ $5.5 Million
3=$5.6 Million ‐ $7.4 Million
4=$7.5 Million ‐ $11 Million
5=$11.1 Million ‐ $15 Million
6=$15.1 Million ‐ $18 Million
7=$18.1 Million ‐ $20.5 Million
8=$20.6 Million ‐ $24 Million
9=$24.1 Million or more
98= (DON'T KNOW)
G1. We're interested in whether your company has experienced barriers or difficulties in
Virginia Beach associated with starting or expanding a business in your industry or with
obtaining work. Do you have any thoughts to share on these topics?
1=VERBATIM [PROBE FOR COMPLETE THOUGHTS]
97=(NOTHING/NONE/NO COMMENTS)
98=(DON'T KNOW)
99=(REFUSED)
BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 25
G2. Would you be willing to participate in a follow‐up interview about any of those issues?
1=Yes
2=No
98=(DON'T KNOW)
99=(REFUSED)
H1. Just a few last questions. What is your name?
1=VERBATIM
H2. What is your position at [firm name / new firm name]?
1=Receptionist
2=Owner
3=Manager
4=CFO
5=CEO
6=Assistant to Owner/CEO
7=Sales manager
8=Office manager
9=President
9=(OTHER ‐ SPECIFY) _______________
99=(REFUSED)
Thank you very much for your participation. If you have any questions or concerns, please contact Lavera Tolentino, Minority Business Coordinator at the City of Virginia Beach at telephone 757‐385‐4246.
APPENDIX F.
Disparity Tables
Figure F-1.
Table Time period Contract area Contract role Goals
F-2 07/01/12 - 06/30/17 All industries Prime contracts and subcontracts N/A Goals and no goalsF-3 07/01/12 - 06/30/15 All industries Prime contracts and subcontracts N/A Goals and no goalsF-4 07/01/15 - 06/30/17 All industries Prime contracts and subcontracts N/A Goals and no goalsF-5 07/01/12 - 06/30/17 Construction Prime contracts and subcontracts N/A Goals and no goalsF-6 07/01/12 - 06/30/17 Architecture and engineering Prime contracts and subcontracts N/A Goals and no goalsF-7 07/01/12 - 06/30/17 Other professional services Prime contracts and subcontracts N/A Goals and no goalsF-8 07/01/12 - 06/30/17 Goods and services Prime contracts and subcontracts N/A Goals and no goalsF-9 07/01/12 - 06/30/17 All industries Prime contracts N/A Goals and no goalsF-10 07/01/12 - 06/30/17 All industries Subcontracts N/A Goals and no goalsF-11 07/01/12 - 06/30/17 All industries Prime contracts and subcontracts N/A SWaM GoalsF-12 07/01/12 - 06/30/17 All industries Prime contracts and subcontracts N/A No goalsF-13 07/01/12 - 06/30/17 All industries Prime contracts Large Goals and no goalsF-14 07/01/12 - 06/30/17 All industries Prime contracts Small Goals and no goals
CharacteristicsContract Size
Figure F-2.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 26,322 $1,176,459 $1,176,459
(2) Minority and woman-owned businesses 7,429 $221,800 $221,800 18.9 25.2 -6.4 74.7
(3) Non-Hispanic white woman-owned 3,838 $95,902 $95,902 8.2 13.3 -5.1 61.5
(4) Minority-owned 3,591 $125,898 $125,898 10.7 12.0 -1.3 89.4
(5) Asian American-owned 339 $65,543 $66,330 5.6 0.8 4.9 200+
(6) Black American-owned 3,033 $52,414 $53,043 4.5 8.1 -3.6 55.9
(7) Hispanic American-owned 105 $6,219 $6,293 0.5 2.7 -2.2 19.5
(8) Native American-owned 42 $229 $231 0.0 0.4 -0.4 5.1
(9) Unknown minority-owned 72 $1,495
(10) SWAM-certified 3,061 $101,744 $101,744 8.6
(11) Non-Hispanic white woman-owned SWaM 2,181 $73,118 $73,589 6.3
(12) Minority-owned SWAM 858 $27,974 $28,155 2.4
(13) Asian American-owned SWAM 222 $2,246 $2,301 0.2
(14) Black American-owned SWAM 514 $21,706 $22,240 1.9
(15) Hispanic American-owned SWAM 78 $3,432 $3,516 0.3
(16) Native American-owned SWAM 17 $95 $98 0.0
(17) Unknown minority-owned SWAM 27 $496
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-3.Time period: 07/01/2012 - 06/30/2015Contract area: All industriesContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 16,584 $746,121 $746,121
(2) Minority and woman-owned businesses 4,397 $135,551 $135,551 18.2 24.2 -6.1 74.9
(3) Non-Hispanic white woman-owned 2,222 $61,443 $61,443 8.2 13.8 -5.6 59.7
(4) Minority-owned 2,175 $74,108 $74,108 9.9 10.4 -0.5 95.1
(5) Asian American-owned 201 $40,177 $40,863 5.5 0.5 5.0 200+
(6) Black American-owned 1,796 $28,476 $28,963 3.9 7.4 -3.6 52.2
(7) Hispanic American-owned 83 $4,000 $4,068 0.5 2.1 -1.5 26.6
(8) Native American-owned 39 $210 $213 0.0 0.4 -0.4 6.7
(9) Unknown minority-owned 56 $1,245
(10) SWAM-certified 1,819 $64,875 $64,875 8.7
(11) Non-Hispanic white woman-owned SWaM 1,329 $48,305 $48,687 6.5
(12) Minority-owned SWAM 472 $16,062 $16,189 2.2
(13) Asian American-owned SWAM 135 $1,506 $1,558 0.2
(14) Black American-owned SWAM 237 $12,480 $12,908 1.7
(15) Hispanic American-owned SWAM 63 $1,570 $1,624 0.2
(16) Native American-owned SWAM 17 $95 $99 0.0
(17) Unknown minority-owned SWAM 20 $410
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-4.Time period: 07/01/2015 - 06/30/2017Contract area: All industriesContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 9,738 $430,338 $430,338
(2) Minority and woman-owned businesses 3,032 $86,249 $86,249 20.0 26.9 -6.9 74.4
(3) Non-Hispanic white woman-owned 1,616 $34,458 $34,458 8.0 12.3 -4.3 65.1
(4) Minority-owned 1,416 $51,791 $51,791 12.0 14.6 -2.6 82.3
(5) Asian American-owned 138 $25,366 $25,489 5.9 1.2 4.7 200+
(6) Black American-owned 1,237 $23,938 $24,053 5.6 9.1 -3.6 61.1
(7) Hispanic American-owned 22 $2,219 $2,229 0.5 3.9 -3.4 13.1
(8) Native American-owned 3 $19 $19 0.0 0.3 -0.3 1.4
(9) Unknown minority-owned 16 $250
(10) SWAM-certified 1,242 $36,869 $36,869 8.6
(11) Non-Hispanic white woman-owned SWaM 852 $24,813 $24,910 5.8
(12) Minority-owned SWAM 386 $11,912 $11,959 2.8
(13) Asian American-owned SWAM 87 $739 $748 0.2
(14) Black American-owned SWAM 277 $9,226 $9,329 2.2
(15) Hispanic American-owned SWAM 15 $1,862 $1,882 0.4
(16) Native American-owned SWAM 0 $0 $0 0.0
(17) Unknown minority-owned SWAM 7 $86
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-5.Time period: 07/01/2012 - 06/30/2017Contract area: ConstructionContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 3,445 $525,979 $525,979
(2) Minority and woman-owned businesses 886 $61,948 $61,948 11.8 19.8 -8.0 59.5
(3) Non-Hispanic white woman-owned 485 $48,793 $48,793 9.3 9.6 -0.3 96.4
(4) Minority-owned 401 $13,155 $13,155 2.5 10.2 -7.7 24.6
(5) Asian American-owned 59 $1,061 $1,074 0.2 1.6 -1.4 12.8
(6) Black American-owned 257 $6,676 $6,755 1.3 5.7 -4.4 22.5
(7) Hispanic American-owned 39 $5,058 $5,117 1.0 2.8 -1.8 34.6
(8) Native American-owned 37 $207 $209 0.0 0.0 0.0 117.0
(9) Unknown minority-owned 9 $154
(10) SWAM-certified 703 $54,671 $54,671 10.4
(11) Non-Hispanic white woman-owned SWaM 387 $44,483 $44,483 8.5
(12) Minority-owned SWAM 316 $10,189 $10,189 1.9
(13) Asian American-owned SWAM 29 $768 $780 0.1
(14) Black American-owned SWAM 229 $6,328 $6,425 1.2
(15) Hispanic American-owned SWAM 37 $2,865 $2,909 0.6
(16) Native American-owned SWAM 12 $73 $75 0.0
(17) Unknown minority-owned SWAM 9 $154
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-6.Time period: 07/01/2012 - 06/30/2017Contract area: Architecture and engineeringContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 1,377 $153,581 $153,581
(2) Minority and woman-owned businesses 468 $15,488 $15,488 10.1 32.6 -22.5 30.9
(3) Non-Hispanic white woman-owned 430 $13,376 $13,376 8.7 18.6 -9.9 46.9
(4) Minority-owned 38 $2,112 $2,112 1.4 14.0 -12.7 9.8
(5) Asian American-owned 6 $529 $568 0.4 0.0 0.3 200+
(6) Black American-owned 23 $1,289 $1,382 0.9 9.2 -8.3 9.8
(7) Hispanic American-owned 1 $151 $162 0.1 3.1 -3.0 3.4
(8) Native American-owned 0 $0 $0 0.0 1.7 -1.7 0.0
(9) Unknown minority-owned 8 $142
(10) SWAM-certified 431 $14,436 $14,436 9.4
(11) Non-Hispanic white woman-owned SWaM 384 $12,434 $12,752 8.3
(12) Minority-owned SWAM 34 $1,642 $1,684 1.1
(13) Asian American-owned SWAM 6 $529 $594 0.4
(14) Black American-owned SWAM 19 $819 $920 0.6
(15) Hispanic American-owned SWAM 1 $151 $170 0.1
(16) Native American-owned SWAM 0 $0 $0 0.0
(17) Unknown minority-owned SWAM 8 $142
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-7.Time period: 07/01/2012 - 06/30/2017Contract area: Other professional servicesContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 5,725 $196,174 $196,174
(2) Minority and woman-owned businesses 2,785 $99,362 $99,362 50.6 26.3 24.4 192.6
(3) Non-Hispanic white woman-owned 254 $5,751 $5,751 2.9 10.3 -7.3 28.6
(4) Minority-owned 2,531 $93,611 $93,611 47.7 16.0 31.7 200+
(5) Asian American-owned 59 $62,912 $62,912 32.1 0.1 31.9 200+
(6) Black American-owned 2,441 $29,937 $29,937 15.3 10.4 4.9 146.6
(7) Hispanic American-owned 31 $761 $761 0.4 4.8 -4.4 8.1
(8) Native American-owned 0 $0 $0 0.0 0.7 -0.7 0.0
(9) Unknown minority-owned 0 $0
(10) SWAM-certified 146 $3,904 $3,904 2.0
(11) Non-Hispanic white woman-owned SWaM 87 $2,346 $2,346 1.2
(12) Minority-owned SWAM 59 $1,558 $1,558 0.8
(13) Asian American-owned SWAM 13 $326 $326 0.2
(14) Black American-owned SWAM 27 $1,014 $1,014 0.5
(15) Hispanic American-owned SWAM 19 $217 $217 0.1
(16) Native American-owned SWAM 0 $0 $0 0.0
(17) Unknown minority-owned SWAM 0 $0
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-8.Time period: 07/01/2012 - 06/30/2017Contract area: Goods and servicesContract role: Prime contracts and subcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 15,775 $300,725 $300,725
(2) Minority and woman-owned businesses 3,290 $45,002 $45,002 15.0 30.3 -15.3 49.5
(3) Non-Hispanic white woman-owned 2,669 $27,982 $27,982 9.3 18.8 -9.5 49.4
(4) Minority-owned 621 $17,020 $17,020 5.7 11.4 -5.8 49.5
(5) Asian American-owned 215 $1,040 $1,119 0.4 0.1 0.2 200+
(6) Black American-owned 312 $14,511 $15,611 5.2 10.1 -4.9 51.6
(7) Hispanic American-owned 34 $248 $267 0.1 1.1 -1.0 8.1
(8) Native American-owned 5 $22 $24 0.0 0.1 -0.1 5.3
(9) Unknown minority-owned 55 $1,199
(10) SWAM-certified 1,781 $28,732 $28,732 9.6
(11) Non-Hispanic white woman-owned SWaM 1,323 $13,855 $13,997 4.7
(12) Minority-owned SWAM 449 $14,586 $14,735 4.9
(13) Asian American-owned SWAM 174 $622 $637 0.2
(14) Black American-owned SWAM 239 $13,544 $13,873 4.6
(15) Hispanic American-owned SWAM 21 $198 $203 0.1
(16) Native American-owned SWAM 5 $22 $23 0.0
(17) Unknown minority-owned SWAM 10 $200
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-9.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contractsContract size: N/AGoals: Goals and no goals
(1) All businesses 24,701 $1,048,903 $1,048,903
(2) Minority and woman-owned businesses 7,054 $193,915 $193,915 18.5 24.5 -6.0 75.6
(3) Non-Hispanic white woman-owned 3,560 $72,813 $72,813 6.9 12.5 -5.6 55.4
(4) Minority-owned 3,494 $121,103 $121,103 11.5 11.9 -0.4 96.8
(5) Asian American-owned 323 $65,057 $65,690 6.3 0.8 5.5 200+
(6) Black American-owned 2,978 $50,923 $51,418 4.9 8.0 -3.1 61.1
(7) Hispanic American-owned 99 $3,749 $3,786 0.4 2.7 -2.4 13.2
(8) Native American-owned 37 $207 $209 0.0 0.4 -0.4 4.8
(9) Unknown minority-owned 57 $1,167
(10) SWAM-certified 2,732 $77,448 $77,448 7.4
(11) Non-Hispanic white woman-owned SWaM 1,931 $50,923 $51,115 4.9
(12) Minority-owned SWAM 792 $26,234 $26,333 2.5
(13) Asian American-owned SWAM 217 $1,957 $1,978 0.2
(14) Black American-owned SWAM 475 $20,876 $21,097 2.0
(15) Hispanic American-owned SWAM 73 $3,150 $3,183 0.3
(16) Native American-owned SWAM 12 $73 $74 0.0
(17) Unknown minority-owned SWAM 15 $177
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-10.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: SubcontractsContract size: N/AGoals: Goals and no goals
(1) All businesses 1,621 $127,556 $127,556
(2) Minority and woman-owned businesses 375 $27,885 $27,885 21.9 31.6 -9.7 69.3
(3) Non-Hispanic white woman-owned 278 $23,089 $23,089 18.1 19.2 -1.1 94.3
(4) Minority-owned 97 $4,795 $4,795 3.8 12.4 -8.6 30.4
(5) Asian American-owned 16 $486 $522 0.4 1.0 -0.6 41.9
(6) Black American-owned 55 $1,491 $1,600 1.3 8.4 -7.2 14.9
(7) Hispanic American-owned 6 $2,469 $2,650 2.1 2.8 -0.7 75.1
(8) Native American-owned 5 $22 $24 0.0 0.2 -0.2 9.0
(9) Unknown minority-owned 15 $327
(10) SWAM-certified 329 $24,296 $24,296 19.0
(11) Non-Hispanic white woman-owned SWaM 250 $22,196 $22,530 17.7
(12) Minority-owned SWAM 66 $1,741 $1,767 1.4
(13) Asian American-owned SWAM 5 $289 $359 0.3
(14) Black American-owned SWAM 39 $830 $1,031 0.8
(15) Hispanic American-owned SWAM 5 $282 $350 0.3
(16) Native American-owned SWAM 5 $22 $27 0.0
(17) Unknown minority-owned SWAM 12 $318
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-11.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contracts and subcontractsContract size: N/AGoals: SWaM Goals
(1) All businesses 1,429 $468,254 $468,254
(2) Minority and woman-owned businesses 322 $53,933 $53,933 11.5 21.1 -9.6 54.6
(3) Non-Hispanic white woman-owned 243 $44,164 $44,164 9.4 10.7 -1.3 88.0
(4) Minority-owned 79 $9,768 $9,768 2.1 10.4 -8.3 20.1
(5) Asian American-owned 13 $445 $453 0.1 1.1 -1.1 8.4
(6) Black American-owned 44 $4,260 $4,334 0.9 5.5 -4.6 16.7
(7) Hispanic American-owned 8 $4,874 $4,959 1.1 3.3 -2.2 32.1
(8) Native American-owned 5 $22 $22 0.0 0.4 -0.4 1.3
(9) Unknown minority-owned 9 $166
(10) SWAM-certified 289 $48,019 $48,019 10.3
(11) Non-Hispanic white woman-owned SWaM 216 $40,473 $40,779 8.7
(12) Minority-owned SWAM 60 $7,187 $7,241 1.5
(13) Asian American-owned SWAM 5 $289 $298 0.1
(14) Black American-owned SWAM 35 $4,023 $4,149 0.9
(15) Hispanic American-owned SWAM 7 $2,687 $2,771 0.6
(16) Native American-owned SWAM 5 $22 $23 0.0
(17) Unknown minority-owned SWAM 8 $166
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-12.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contracts and subcontractsContract size: N/AGoals: No goals
(1) All businesses 24,893 $708,205 $708,205
(2) Minority and woman-owned businesses 7,107 $167,867 $167,867 23.7 28.0 -4.3 84.8
(3) Non-Hispanic white woman-owned 3,595 $51,738 $51,738 7.3 14.9 -7.6 49.0
(4) Minority-owned 3,512 $116,130 $116,130 16.4 13.0 3.4 125.7
(5) Asian American-owned 326 $65,098 $65,851 9.3 0.5 8.8 200+
(6) Black American-owned 2,989 $48,153 $48,710 6.9 9.7 -2.9 70.7
(7) Hispanic American-owned 97 $1,344 $1,360 0.2 2.4 -2.2 8.1
(8) Native American-owned 37 $207 $209 0.0 0.4 -0.4 7.3
(9) Unknown minority-owned 63 $1,328
(10) SWAM-certified 2,772 $53,725 $53,725 7.6
(11) Non-Hispanic white woman-owned SWaM 1,965 $32,646 $32,823 4.6
(12) Minority-owned SWAM 798 $20,788 $20,901 3.0
(13) Asian American-owned SWAM 217 $1,957 $1,999 0.3
(14) Black American-owned SWAM 479 $17,683 $18,066 2.6
(15) Hispanic American-owned SWAM 71 $745 $761 0.1
(16) Native American-owned SWAM 12 $73 $75 0.0
(17) Unknown minority-owned SWAM 19 $330
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-13.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contractsContract size: LargeGoals: Goals and no goals
(1) All businesses 1,121 $828,846 $828,846
(2) Minority and woman-owned businesses 148 $135,731 $135,731 16.4 21.6 -5.2 75.7
(3) Non-Hispanic white woman-owned 63 $33,979 $33,979 4.1 11.0 -6.9 37.2
(4) Minority-owned 85 $101,752 $101,752 12.3 10.6 1.7 115.7
(5) Asian American-owned 14 $62,534 $62,821 7.6 0.6 7.0 200+
(6) Black American-owned 66 $36,087 $36,253 4.4 7.0 -2.7 62.1
(7) Hispanic American-owned 4 $2,665 $2,677 0.3 2.7 -2.4 11.9
(8) Native American-owned 0 $0 $0 0.0 0.3 -0.3 0.0
(9) Unknown minority-owned 1 $466
(10) SWAM-certified 66 $45,193 $45,193 5.5
(11) Non-Hispanic white woman-owned SWaM 46 $25,705 $25,808 3.1
(12) Minority-owned SWAM 19 $19,307 $19,385 2.3
(13) Asian American-owned SWAM 1 $346 $347 0.0
(14) Black American-owned SWAM 15 $16,547 $16,614 2.0
(15) Hispanic American-owned SWAM 3 $2,414 $2,424 0.3
(16) Native American-owned SWAM 0 $0 $0 0.0
(17) Unknown minority-owned SWAM 0 $0
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization
Figure F-14.Time period: 07/01/2012 - 06/30/2017Contract area: All industriesContract role: Prime contractsContract size: SmallGoals: Goals and no goals
(1) All businesses 23,580 $220,057 $220,057
(2) Minority and woman-owned businesses 6,906 $58,184 $58,184 26.4 35.1 -8.7 75.3
(3) Non-Hispanic white woman-owned 3,497 $38,833 $38,833 17.6 18.2 -0.6 96.7
(4) Minority-owned 3,409 $19,351 $19,351 8.8 16.9 -8.1 52.1
(5) Asian American-owned 309 $2,523 $2,618 1.2 1.4 -0.2 85.5
(6) Black American-owned 2,912 $14,836 $15,394 7.0 11.7 -4.7 59.7
(7) Hispanic American-owned 95 $1,084 $1,125 0.5 2.9 -2.4 17.8
(8) Native American-owned 37 $207 $214 0.1 0.9 -0.8 11.0
(9) Unknown minority-owned 56 $702
(10) SWAM-certified 2,666 $32,255 $32,255 14.7
(11) Non-Hispanic white woman-owned SWaM 1,885 $25,218 $25,304 11.5
(12) Minority-owned SWAM 773 $6,926 $6,950 3.2
(13) Asian American-owned SWAM 216 $1,611 $1,659 0.8
(14) Black American-owned SWAM 460 $4,329 $4,458 2.0
(15) Hispanic American-owned SWAM 70 $736 $757 0.3
(16) Native American-owned SWAM 12 $73 $76 0.0
(17) Unknown minority-owned SWAM 15 $177
Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.
Unknown minority-owned businesses and unknown MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American-owned businesses (column b, row 5) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.
Source: BBC Research & Consulting Disparity Analysis.
Numbers are rounded to the nearest thousand dollars or tenth of 1 percent. “Woman-owned” refers to non-Hispanic white woman-owned businesses.*Unknown minority-owned businesses and unknown minority-owned MWBEs were allocated to minority and MWBE subgroups proportional to the known total dollars of those groups. For example, if totaldollars of Black American-owned businesses (column b, row 6) accounted for 25 percent of total minority-owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added tocolumn b, row 6 and the sum would be shown in column c, row 6. In addition, column c was adjusted for the sampling weights for the contract elements that local agencies awarded.
(c)
total dollars
(a) (b)
(thousands)*
Estimated
Business Group
Number ofcontractelements
dollarsTotal
(thousands)
(e)(d) (g)
Disparityindex
(f)
Utilization -Availability
Availabilitypercentagepercentage
Utilization