Here is one I have not seen before, a project that threatens to get derailed because the general contractor proactively included M/WBE goals in its contract.  The story reported in the Baltimore Business Journal  involves M/WBE hiring goals in Whiting-Turner’s contract to build the Horseshoe Casino in Baltimore.  According to the story, Whiting Turner, the project’s general contractor, preemptively set M/WBE participation goals before the Maryland Lottery and Gaming Control Commission, the state agency in charge of the project, set its official M/WBE hiring goals.  Whiting-Turner established a 25% MBE goal and a 2% WBE goal.  However, the Maryland Minority Contractors Association believes that goal is arbitrary and too low and is threaten to bring suit to prevent the project from proceeding until the state sets its official hiring goals for the project.  Interestingly, the Maryland Governors office concedes that state’s MBE regulations apply to the project.

There are several interesting aspects of this story.  First, there is the issue of standing.  As a threshold matter, the MCA must demonstrate that it has a protected right or interest that the Gaming Commission actions has harmed.  However, the MCA has no “right” to have a certain amount of work set aside to its members.  In fact, strict quotas and set aside are invalid.

Second, if Whiting-Turner already has a contract with the Gaming Commission with W/MBE hiring goals that the Commission accepted, the Commission would be in a tough legal position to demand that Whiting -Turner change those goals.  Whiting-Turner would be on sound legal ground to refuse any change to the W/MBE goals in its contract with the Commission.

Finally, the legal theory that the Minority Contractors Association is positing to challenge the goals is interesting.  The MCA claims that the State must establish hiring goals based upon a disparity study and is apparently relying upon the Maryland District Court’s holding in Associated Util. Contractors of Maryland, Inc. v. Mayor & City Council of Baltimore, 83 F. Supp. 2d 613, 622 (D. Md. 2000).  What’s interesting is that case involved the challenge to MBE program by a — largely — non-minority contractor’s association, who claimed that their non-minority members would be injured by the program.  The holding in that case reaffirmed the long standing proposition that in order to survive constitutional muster courts would apply a strict scrutiny analysis to MBE programs and that in order to survive such scrutiny that state proposing the race based program needs to come forward with compelling evidence of discrimination, i.e. a disparity study.

Here, a challenge to Whiting-Turner’s contract based on this theory could very well blow up in the MCA’s face because a disparity study is used to just the constitutionality of the program.  If the Court comes back and requires a disparity study which shows that the goals should be less than what Whiting Turner proposed, it could trigger a lawsuit by non-minority firms while also decreasing the number of minority firms participating on the project.

The MCA may want to rethink their strategy here.

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