The State of Minority- and Women- Owned ... - Cleveland.com

Legal Standards for Government Affirmative Action Contracting Programs
a. Challenges to the Facial Constitutionality of the Disadvantaged Business
Enterprise Regulations
All courts have held that Congress had strong evidence of widespread race discrimination in the
construction industry. 38 Relevant evidence before Congress included:
• Disparities between the earnings of minority-owned firms and similarly situated nonminority-owned
firms;
• Disparities in commercial loan denial rates between African American business owners
compared to similarly situated non-minority business owners;
• The large and rapid decline in minorities’ participation in the construction industry when
affirmative action programs were struck down or abandoned; and
• Various types of overt and institutional discrimination by prime contractors, trade unions,
business networks, suppliers and sureties against minority contractors. 39
The Eighth Circuit Court of Appeals took a “hard look” at the evidence Congress considered,
and concluded that the legislature had:
[S]pent decades compiling evidence of race discrimination in government highway
contracting, of barriers to the formation of minority-owned construction businesses, and
of barriers to entry. In rebuttal, [the plaintiffs] presented evidence that the data were
susceptible to multiple interpretations, but they failed to present affirmative evidence that
no remedial action was necessary because minority-owned small businesses enjoy nondiscriminatory
access to and participation in highway contracts. Thus, they failed to meet
their ultimate burden to prove that the DBE program is unconstitutional on this ground. 40
Next, the regulations were facially narrowly tailored. Unlike the prior program, 41 Part 26
provides that:
• The overall goal must be based upon demonstrable evidence of the number of DBEs
ready, willing, and able to participate on the recipient’s federally assisted contracts.
38 See also Western States, 407 F.3d at 993 (“In light of the substantial body of statistical and anecdotal material
considered at the time of TEA-21’s enactment, Congress had a strong basis in evidence for concluding that-in at
least some parts of the country-discrimination within the transportation contracting industry hinders minorities’
ability to compete for federally funded contracts.”).
39 See id., 407 F.3d at 992-93.
40 Sherbrooke, 345 F.3d. at 970; see also Adarand VII, 228 F.3d at 1175 (Plaintiff has not met its burden “of
introducing credible, particularized evidence to rebut the government’s initial showing of the existence of a
compelling interest in remedying the nationwide effects of past and present discrimination in the federal
construction procurement subcontracting market.”).
41 49 C.F.R. Part 23.
NERA Economic Consulting 25