1. Legal Updates for the
Federal DBE Program

2. Legal Updates to the DBE Program
This presentation is an overview of the key court decisions that govern the constitutionality of federal DBE Programs.
We will also discuss basic strategies for avoiding and surviving legal challenges DBE programs.
May require more than one slide

3. CONSTITUTIONAL BASIS

4. Amendment XIV The Fourteenth Amendment's first section includes several clauses:
The Citizenship Clause, Privileges or Immunities Clause, Due Process Clause, and Equal Protection Clause.
The Citizenship Clause provides a broad definition of citizenship, nullifying the Supreme Court’s decision in Dred Scott v. Sandford (1857), which had held that Americans descended from African slaves could not be citizens of the United States

5. Amendment XIV
The 14th Amendment (Amendment XIV) to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments. The amendment addresses citizenship rights and equal protection of the laws and was proposed in response to issues related to former slaves following the American Civil War.

6. Amendment XIV Fourteenth Amendment to the U. S
Amendment XIV Fourteenth Amendment to the U.S. Constitution Section 1 :
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.
No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

7. FOUNDATIONAL CASES

8. The City of Richmond v. J.A. Croson
In City of Richmond v. J.A. Croson, the United States Supreme Court ruled that the City of Richmond’s Minority Business Enterprise (hereinafter “MBE”) program failed to satisfy the requirements of “strict scrutiny.”
“Strict scrutiny” review involves two equal considerations:
First, the need to demonstrate a compelling governmental interest;
Second, implementation of a program or method narrowly-tailored to achieve/remedy the compelling interest

9. Judicial Scrutiny A “compelling governmental interest”
A "narrowly tailored” remedy

10. The City of Richmond v. J.A. Croson cont.
The Court reasoned that a mere statistical disparity between the overall minority population in Richmond (50 percent African- American) and awards of prime contracts to minority-owned firms (0.67 percent to African- American firms) was an irrelevant statistical comparison and insufficient to raise an inference of discrimination.
Croson, 488 U.S. at 509.
“[W]here there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality's prime contractors, an inference of discriminatory exclusion could arise.”

11. The City of Richmond v. J.A. Croson cont.
Regarding the second prong of the strict scrutiny test, the Croson Court ruled that Richmond’s MBE program was not narrowly tailored to redress the effects of discrimination.
First, the Court held that Richmond’s MBE program was not remedial in nature because it provided preferential treatment to minorities such as Eskimos and Aleuts, groups for which there was no evidence of discrimination in Richmond. Thus, the scope of the City's program was too broad.

12. Narrow Tailoring
In addition to determining that a race-based measure serves a compelling government interest, a reviewing court applying strict scrutiny must determine if the measure is narrowly tailored, that is, whether the means chosen to accomplish the government’s asserted purpose are specifically and narrowly framed to accomplish that purpose. . .
Under the Croson framework, any race-conscious plan must be narrowly tailored to ameliorate the effects of past discrimination. Croson’s progeny provide significant guidance on how remedies should be narrowly tailored.
“Generally, while ‘goals’ are permissible, unyielding preferential ‘quotas’ will normally doom an affirmative action plan.”
May require more than one slide

13. Narrow Tailoring cont.
In determining whether a race-conscious remedy is narrowly tailored, we look at factors such as the efficacy of alternative remedies, the flexibility and duration of the race-conscious remedy, the relationship of the numerical goals to the relevant labor market, and the impact of the remedy on third parties
Narrow tailoring does not require exhaustion of every conceivable race-neutral alternative, but it does require serious, good faith consideration of workable race-neutral alternatives.

14. Narrow Tailoring cont.
The necessity for the relief and the efficacy of alternative remedies
The flexibility and duration of the relief, including the availability of waiver provisions
The relationship of the numerical goals to the relevant market
The impact of the relief on the rights of innocent third parties
Factors in determining if a race conscious program is narrowly tailored

15. Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995)
Adarand held the federal government to the same standards as the state and local governments through a process of "reverse incorporation," in which
the Fifth Amendment's Due
Process Clause was held to bind the federal government to the same standards as state and local governments are bound under the 14th Amendment.

16. Have race and/or gender neutral measures been considered?
Narrow Tailoring cont.
Have race and/or gender neutral measures been considered?
Does the program include provisions or mechanisms for periodic review and sunset?
Is relief limited to minority groups for which there is identified discrimination?
Are remedies limited to redressing the discrimination within the boundaries of the enacting jurisdiction?
Are the goals of the program flexible and do they provide waiver provisions?

17. Recent Federal Court Cases

18. Midwest Fence Corp v. U.S. DOT 840 F.3d 932 (7th Cir. 2016)
Found Federal and State of Illinois DBE programs constitutional under facial and “as applied” challenge.
Court Reiterated the Strict Scrutiny standard.
Recognized that several courts (Inc. the U.S. Supreme Court) ruled that remedying past discrimination is a compelling government interest. Satisfying first prong.
the Seventh Circuit aligned itself with the Circuit Courts of Appeals for the Eighth, Ninth, and Tenth Circuits, concluding that the federal DOT program is narrowly tailored to achieve its race- and gender-based governmental interests
The Most recent Circuit Level decision on the Federal DBE Program, addresses constitutionality of DBE Programs

19. Dunnet Bay Construction Co. v. Borggren, 799 F.3d 676 (7th Cir. 2014)
Court rejected constitutional challenge to federal and Illinois state DBE programs, rejecting argument that DBE contract goal-setting was “arbitrary” and that Illinois DOT “manipulated the process” to justify a pre-ordained goal level.
The Decision
…and reasoning in this opinion underscore the flexibility available in DBE programs.
IDOT did not violate
“because the federal regulations do not specify a procedure for arriving at contract goals, it is not apparent how IDOT could have exceeded its federal authority,”
Good Faith Efforts
There is also some helpful discussion about “good faith efforts” to achieve DBE goals, and the justification for rejecting Dunnet Bay’s purported efforts by Illinois DOT in this case. Id

20. Kossman Contracting Co. v. City of Houston (Case No. H-14-1203 (S. D
Kossman Contracting Co. v. City of Houston (Case No. H (S.D. Texas 2016)
Kossman is an M/WBE case, but offers some pertinent statistical analysis in its opinion.
The City of Houston’s M/WBE program is held under intense scrutiny, with emphasis on its Disparity Study and the analysis therein.
This recent decision by a federal District Court in Houston contains a thorough overview of the types of information and statistical analysis which best inform a disparity study.
Evaluates the past and present status of M/WBEs in the City of Houston’s remedial M/WBE program area.
The key feature of the supporting study was a regression analysis addressing availability and utilization. (Id. at pp ) Using both statistical and anecdotal evidence, the study concluded that “business discrimination against M/WBEs existed in the geographic and industry markets for [the City’s] awarding of construction contracts

21. Kossman v. City of Houston cont.
“There is strong evidence of large, adverse, and frequently statistically significant disparities between minority and female participation... We further conclude that these disparities cannot be explained solely, or even primarily, by difference between M/WBE and non-M/WBE business populations in factors untainted by discrimination, and that these differences therefore give rise to a strong inference of the continued presence of discrimination in [Defendant's] market area. There is also strong anecdotal evidence of continuing barriers to the full and fair participation of M/WBEs on [Defendant] contracts and subcontracts, despite the implementation of the M/W/SBE Program, and in the wider Houston construction economy. Remedial efforts remain necessary to ensure that Houston does not function as a passive participant in discrimination.
Kossman, at p. 11.

22. Kossman v. City of Houston cont.
Of significance to DBE cases as well, the Court in Kossman conducted a lengthy legal overview of what it dubbed “Croson’s Continuing Significance.” In this section of the opinion, the Court opined about why a statistical analysis like that presented on behalf of the City of Houston in the present case is necessary and proper under the Equal Protection scheme established by Croson and refined by its (continuing) progeny. Id. at pp , and In many respects, this opinion provides a roadmap for success in implementing and defending a M/WBE program.

23. Questions & Answers

24. Contact Me: Rodney K. Strong Griffin & Strong, PC 235 Peachtree St
Contact Me: Rodney K. Strong Griffin & Strong, PC 235 Peachtree St. NE Suite 400 Atlanta, GA ph fax