Active: State lawsuit challenges illegal minority set-asides in government contracting

Debbie Ferrari has spent the better part of 40 years in California’s construction industry, working as a manager and estimator for an Alameda County trucking company. Over that time, she has mastered the bidding process to acquire jobs for the company’s employees and independent owner-operators alike, including government contracts for public jobs.

The trucking business has its share of difficulties. Some, such as inflation and staggering fuel prices, affect everyone. In Alameda County, however, not all contractors are treated equally. The county employs race-based set-asides, requiring prime contractors to reserve at least 15% of each contract’s dollar amount for minority-owned subcontractors. And because a project often has many subcontractors, this 15% set-aside often works to exclude specialty subcontractors—such as those in trucking—from bidding on public projects altogether.

Racial set-asides in public contracting go back decades, and Debbie has seen first-hand that they’ve served as a boon to connected insiders rather than startup businesses looking to grow.

Alameda County has two racial set asides: The Construction Compliance Program, run by the county’s Public Works Agency, imposes a 15% participation goal for minority-owned businesses for projects with bids of $100,000 or more, and the General Services Agency’s Enhanced Construction Outreach Program, for sealed bid projects that top $125,000.

Prime contractors who do not to meet the 15% threshold risk having their bids tossed out.

This program harms not just specialty subcontractors, who are excluded from honing their craft on public projects if they cannot be certified as minority businesses, but also California taxpayers, who face higher costs for public works, with the subcontractor that is able to do the work at the best price possibly being passed over because it is not “minority-owned.”

The U.S. Constitution’s Fourteenth Amendment and Proposition 209—a California constitutional provision—forbid racial discrimination in public contracting. Alameda County’s discrimination is not only plainly unconstitutional, it is also unjust, because it subverts individual opportunity in the name of set-asides for politically favored groups.

Represented by PLF free of charge, Debbie Ferrari is fighting back. She is joined by Chunhua Liao, a Chinese immigrant that has led grassroots efforts to oppose racial discrimination in California, and the Californians for Equal Rights Foundation (CFER), a nonprofit advocacy organization at the forefront of defending California’s constitutional requirement of equality before the law in public contracting. Together, they seek to stop the county’s race-based distribution of burdens and benefits and to restore equal treatment for all contractors looking to earn a living. 

What’s At Stake?

  • The government cannot award contracts for public services on the basis of race. The government should select its contractors based on their ability to perform the work needed, rather than on the race of their owners.

Case Timeline

March 20, 2024
Court of Appeal for the State of California
May 30, 2023
Appellants Opening Brief
Court of Appeal for the State of California
July 25, 2022
Superior Court of California, County of Alameda