(This post is a guest blog post from John Sullivan, Esquire. John specializes in DBE issues and disparity studies. His website is www.crosonlegalservices.com and his he can be reached via email at jcharlessullivan@yahoo.com)
During the last week of its just-concluded term, the United States Supreme Court ruled on the constitutionality of racial preferences at the University of Texas. The impact of Fisher v. Texas is not limited to preferences in public education. Fisher poses a serious threat to the USDOT Disadvantaged Business Enterprise program.
Why does Fisher threaten the constitutionality of the DBE program? In Fisher the Supreme Court ruled that any race conscious preferences, like those benefitting DBEs on USDOT contracts, are permissible only if the government has shown that “workable race-neutral alternatives do not suffice.”
Very few state DOTs have invested much effort in evaluating the race neutral parts of their DBE programs. It’s true that USDOT regulations require every state DOT to maximize the race neutral portion of its annual DBE goal. In reality, state DOTs seldom do what Fisher insists on: “serious, good faith consideration of workable race-neutral alternatives.”
For instance: it is often suggested that the largest USDOT projects like interstate construction and tunnel work be unbundled. This would allow smaller firms – both DBEs and non-DBEs – to effectively compete for these otherwise prohibitively large contracts. How often does unbundling happen? Is the effectiveness of doing so ever examined with any care?
There are probably dozens of state DOTs with bonding assistance programs. How often are these programs given “good faith consideration” of their effectiveness? If the programs aren’t evaluated, how can the agency know that workable race neutral alternatives do not exist?
Fisher may impact DBE preferences on construction contract with particular force. Certain industries get hit hardest by the DBE goals: guardrails and fencing, signage, and landscaping are examples. DBEs inevitably gravitate to these fields as subcontractors. That’s understandable; DBEs are more likely to be selected by the prime when a DBE goal has to be met and these are the specialties where goals are most often set.
In those specialties where DBE subs thrive, non-DBE subs struggle. Current court challenges to the constitutionality of state DBE programs reflect this: Geyer Signal v. Minnesota DOT and Midwest Fence v. Illinois DOT.
USDOT regs anticipate this result by prohibiting an over-concentration of DBEs in any specialty. To date, no court has struck down a DBE program due to over-concentration of DBEs. After Fisher, with its insistence on good faith consideration of race neutral alternatives, that may be changing.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
