I am amazed that contractors know so much about constitutional law. It is all a result of reading or hearing about cases on the constitutionality of the MBE/DBE programs over the last 25-plus years. Contractors know the difference between a “facial” challenge and an “as applied” challenge and have become familiar with the requirements that an MBE/DBE program be based on a “compelling government interest” and be “narrowly tailored.”
I last wrote about a case testing the constitutionality of the DBE program in my November 2000 column. I discussed the Adarand decision where the 10th U.S. Circuit Court of Appeals concluded the TEA-21 DBE legislation and the 1999 U.S. DOT regulations were facially constitutional.
Since then, both the 8th Circuit and the 9th Circuit have looked at the DBE program as applied by the state DOTs: In Sherbrooke Turf, the 8th Circuit upheld TEA-21 on its face and as applied by the states of Minnesota and Nebraska. In Western States Paving, the 9th Circuit found the Washington DOT DBE program unconstitutional as applied.
In their analysis, the 8th and 9th circuits concluded that it was unnecessary for states to establish that their DBE programs were premised upon a compelling government interest. But having a compelling government interest is only half of the equation.
Both circuits then turned to whether the states’ implementation of TEA-21 was narrowly tailored to achieve Congress’s remedial objective. They both agreed that to be narrowly tailored, a national program must be limited to those parts of the country where its race-based measures are demonstrably needed. Thus, both circuits considered whether discrimination had actually occurred in the respective states. Finally, both circuits agreed, to the extent the federal government delegates the tailoring function, a state’s implementation becomes critically relevant to the constitutionality of the program as applied.
Both Minnesota and Nebraska had hired outside consulting firms to conduct statistical analyses of the availability and capacity of DBEs in their local markets, and the 8th Circuit relied upon those studies to hold that the states’ DBE programs independently satisfied strict scrutiny’s narrow tailoring requirement. But in Western States Paving, the 9th Circuit found there were no completed or valid statistical studies done by the state of Washington to establish the existence of discrimination in its highway contracting industry. Based on this lack of evidence, Washington failed to prove that its as-applied DBE program was narrowly tailored.
Although the court found Washington’s DBE program closely tracked U.S. DOT’s sample DBE program, including setting annual goals, it noted the DBE regulations do not establish a nationwide DBE program. It is the state’s responsibility to implement a DBE program that comports with TEA-21. Additionally, a state must meet the maximum feasible portion of its goal through race-neutral means. Only when race-neutral efforts prove inadequate do the regulations authorize a state to use race-conscious contract goals to achieve the balance of its DBE goal.
In Western States Paving, the U.S. unambiguously conceded that TEA-21’s race-conscious measures can be constitutionally applied only in those states where the effects of discrimination are present. Moreover, according to the court, even when discrimination is present within a state, a remedial program is only narrowly tailored if its application is limited to those minority groups that have actually suffered discrimination. The court’s opinion, as a practical matter, requires that the nine states in the 9th Circuit provide evidence of discrimination based on disparity studies.
