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

Legal Standards for Government Affirmative Action Contracting Programs
was a segregated city and “City government was implicated in that history.” After the election of
Harold Washington as the first African American mayor, several reports focused on the
exclusion of minorities and women from City procurement opportunities as well as pervasive
employment discrimination by City departments. Mayor Washington imposed an executive order
mandating that at least 25 percent of City contracts be awarded to minority-owned businesses
and 5 percent to women-owned businesses.
In response to Croson, Chicago commissioned a Blue Ribbon Panel to recommend an effective
program that would survive constitutional challenge. Based upon the Panel’s Report, and 18 days
of hearings with over 40 witnesses and 170 exhibits, Chicago adopted a new program in 1990
that retained the 25 percent MBE and 5 percent WBE goals; added a Target Market, wherein
contracts were limited to bidding only by M/WBEs; and provided that larger construction
contracts could have higher goals.
The court held that the playing field for minorities and women in the Chicago area construction
industry in 2003 was still not level. The City presented a great amount of statistical evidence.
Despite the plaintiff’s attacks about over-aggregation and disaggregation of data and which firms
were included in the analyses, “a reasonably clear picture of the Chicago construction industry
emerged.… While the size of the disparities was disputed, it is evident that minority firms, even
after adjustment for size, earn less and work less, and have less sales compared to other
businesses.”
That does not mean, however, that speculation about the greater number of M/WBEs that did
exist in the absence of discrimination is sufficient to support a current race-based remedy. At the
same time, that there was perhaps overutilization of M/WBEs on City projects was not sufficient
to abandon remedial efforts, as that result is “skewed by the program itself.”
Further, while it is somewhat unclear whether disparities for Asians and Hispanics result from
discrimination or the language and cultural barriers common to immigrants, there were two areas
“where societal explanations do not suffice.” The first is the market failure of prime contractors
to solicit M/WBEs for non-goals work. Chicago’s evidence was consistent with that presented of
the effects of the discontinuance or absence of race-conscious programs throughout the country.
Not only did the plaintiff fail to present credible alternative explanations for this universal
phenomenon but also this result “follows as a matter of economics.… [P]rime contractors,
without any discriminatory intent or bias, are still likely to seek out the subcontractors with
whom they have had a long and successful relationship.… [T]he vestiges of past discrimination
linger on to skew the marketplace and adversely impact M/WBEs disproportionately as more
recent entrants to the industry.… [T]he City has a compelling interest in preventing its tax dollars
from perpetuating a market so flawed by past discrimination that it restricts existing M/WBEs
from unfettered competition in that market.” 100
The judge also relied upon the City’s evidence of discrimination against minorities in the market
for commercial loans. Even the plaintiff’s experts were forced to concede that, at least as to
100 BAGC v. Chicago, 298 F. Supp.2d at 738.
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