(This is a guest blog post from guest blogger John Sullivan, Esquire, a lawyer who focuses his practice on DBE disparity studies. He can be reached at jcharlessullivan@yahoo.com)
Last month ground was broken on the first high speed rail system in the United States. The California High Speed Rail will run from Los Angeles to San Francisco, with trains traveling at speeds exceeding 200 miles per hour. Eventually the system will total 800 miles with two dozen stations.
Not surprisingly the project will not be cheap. Presently the price tag is over $91 billion. But that $91 billion is nearly triple the original estimate of only five years ago, so the price tag will quite possibly climb into twelve figures. It’s the biggest construction project in America.
Also unsurprisingly, the project is generating lawsuits. The lawsuit most likely to enjoy a quick victory, however, has not been filed. That would be a challenge to the California High Speed Rail Authority’s race-based set aside.
30% of every contract dollar (at the current estimated cost of $91 billion that would be $27 billion) must go to businesses certified in four groups. The constitutionality of preferences benefitting three of these groups is clear: small businesses, disabled veteran businesses enterprises, and micro businesses.
Preferences benefitting a fourth group, though, are just as clearly unconstitutional. The California High Speed Rail Authority has a 10% goal for Disadvantaged Business Enterprises (DBEs). White males are not presumed disadvantaged for the purposes of becoming certified as a DBE. Women, as well as all other races and ethnicities, are presumed disadvantaged. That makes DBEs a racial preference.
Racial preferences in public contracts like the California High Speed Rail are only allowed if discrimination in the market area has been identified. This is done with a disparity study. This has been required since the US Supreme Court decided Croson 25 years ago. Across the country more than 200 disparity studies have been completed. There is no disparity study for the California High Speed Rail and so no evidence of discrimination.
There is not even an explanation why the DBE goal is 10%. The California High Speed Rail Authority is a recipient of federal Department of Transportation funds and as such must set goals based on the level of DBE participation expected “absent the effects of discrimination.” (49 Code of Federal Regulations sec. 26.45 (b)) The 10% figure seems to have been picked out of the air.
The biggest construction project in America is awarding contracts unconstitutionally.
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.
