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

Legal Standards for Government Affirmative Action Contracting Programs
• Anecdotal evidence gathered at IDOT’s public hearings on the DBE program;
• Data on DBE involvement in construction projects in markets without DBE goals; 50 and
• IDOT’s “zero goal” experiment, where DBEs received approximately 1.5 percent of the
total value of the contracts. This was designed to test the results of “race-neutral”
contracting policies, that is, the utilization of DBEs on contracts without goals.
Based upon this record, the court of appeals agreed with the trial court’s judgment that the
Program was narrowly tailored. IDOT’s plan was based upon sufficient proof of discrimination
such that race-neutral measures alone would be inadequate to assure that DBEs operate on a
“level playing field” for government contracts.
The stark disparity in DBE participation rates on goals and non-goals contracts, when
combined with the statistical and anecdotal evidence of discrimination in the relevant
marketplaces, indicates that IDOT’s 2005 DBE goal represents a “plausible lower-bound
estimate” of DBE participation in the absence of discrimination.… Plaintiff presented no
persuasive evidence contravening the conclusions of IDOT’s studies, or explaining the
disparate usage of DBEs on goals and non-goals contracts.… IDOT’s proffered evidence
of discrimination against DBEs was not limited to alleged discrimination by prime
contractors in the award of subcontracts. IDOT also presented evidence that
discrimination in the bonding, insurance, and financing markets erected barriers to DBE
formation and prosperity. Such discrimination inhibits the ability of DBEs to bid on
prime contracts, thus allowing the discrimination to indirectly seep into the award of
prime contracts, which are otherwise awarded on a race- and gender-neutral basis. This
indirect discrimination is sufficient to establish a compelling governmental interest in a
DBE program…. Having established the existence of such discrimination, a
governmental entity has a compelling interest in assuring that public dollars, drawn from
the tax contributions of all citizens, do not serve to finance the evil of private prejudice. 51
2. U.S. Department of Defense’s Small Disadvantaged Business Program
In 2008, the Federal Circuit Court of Appeals struck down the Department of Defense (DOD)
program for Small Disadvantaged Businesses (SDBs) in Rothe Development Corporation v. U.S.
Department of Defense. 52 The program set an overall annual goal of five percent for DOD
contracting with SDBs and authorized various race-conscious measures to meet the goal.
50 Northern Contracting III, 473 F.3d at 719 (“Also of note, IDOT examined the system utilized by the Illinois
State Toll Highway Authority, which does not receive federal funding; though the Tollway has a DBE goal of 15
percent, this goal is completely voluntary -- the average DBE usage rate in 2002 and 2003 was 1.6 percent. On
the basis of all of this data, IDOT adopted 22.77 percent as its Fiscal Year 2005 DBE goal.”).
51 Northern Contracting II, at *82 (internal citations omitted); see Croson, 488 U.S. at 492.
52 Rothe Development Corporation v. U.S. Department of Defense, 545 F.3d 1023 (Fed. Cir. 2008). We note that
the jurisdiction of the Court of Appeals for the Federal Circuit is limited to the jurisdiction described in 28
U.S.C. §§ 1292 (c) and (d) and 1295. Pursuant to 28 U.S.C. § 1295(a)(2), jurisdiction in Rothe was based upon
NERA Economic Consulting 29