October 15, 2014

Is the denial of preferential treatment discrimination?

By Is the denial of preferential treatment discrimination?

female engineer

One group in the State of Washington thinks so. White female contractors are threatening to sue that state’s department of transportation if they aren’t given preferential treatment based on their race and gender.

The commotion stems from Washington’s implementation of the infamous federal Disadvantaged Business Enterprise (DBE) program. That program was created by Congress to remedy intentional discrimination against minority- and women-owned firms on federally funded public transportation construction and engineering contracts. And therein lies the problem:  Washington admits that it does not have evidence of discrimination against white women-owned firms.

We have filed briefs in opposition to the discriminatory aspects of the DBE program, and posted about it many times. See here, here, and here. Under the program, a state may resort to preferential treatment based on race and sex if it is unable to remedy widespread and systemic discrimination through neutral means. But states must first identify discrimination with specificity, or any attempt to use race as a remedy will violate the Fourteenth Amendment.

Washington tried to find evidence of discrimination. It hired a consulting firm to perform a disparity study to determine if statistical disparities existed for minority- and women-owned firms in transportation construction and engineering contracts. The consulting firm analyzed the total dollars that the state and local agencies awarded to minority- and women-owned firms on more than 11,000 transportation prime contracts and subcontracts executed between 2008 and 2011. But the study’s findings show that white women, as a group, received more contract dollars from the state than what would be expected given their availability for that type of work. Based on those findings, Washington was compelled to seek a waiver from the U.S. Department of Transportation so it could grant race- and sex- based preferences to male and female minority-owned firms, but not to firms owned by white women.

Washington’s DBE program was previously challenged in a case called Western States Paving Co. v. Washington Sate Department of Transportation. There, prime contractors rejected the lowest bids of a nonminority-owned subcontractor, because the subcontractor was not a member of the races preferred by the state’s program. The subcontractor sued and the case wound up before the Ninth Circuit Court of Appeals in 2005, which found the program to be unconstitutional. The court held that each of the principal minority groups benefitted by Washington’s DBE program—Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, and women—must have suffered discrimination within the State. If not, then the DBE program provides those groups who have not encountered discriminatory barriers with an unconstitutional competitive advantage at the expense of both non-minorities and any minority groups that have actually been targeted for discrimination. At that time, Washington lacked evidence that the groups it preferred had suffered discrimination in the award of transportation construction contracts. Now it lacks evidence of discrimination against white women-owned firms.

The predicament in which Washington finds itself demonstrates the problems that arise when government (1) implements ill-conceived programs that grant preferences based on race and sex in a multicultural society; and (2) tries to prove intentional discrimination through statistics alone. Once a state claims it has evidence of extreme discrimination, the federal DBE programs works at the subcontracting level only. Prime contractors don’t receive preferences based on their race and sex. Instead, prime contractors are required to grant preferences to subcontractors of the preferred race and sex.

So does Washington’s disparity study show substantial statistical disparities on subcontracts for all groups except white women-owned firms?  Well, no.  For the entire study period, the disparity study showed no substantial disparities on transportation subcontracts for firms owned by white women, African Americans, Asian-Pacific Americans, Hispanic Americans, and Native Americans.

WSDOT Contract Disparities

But Washington proposes to make prime contractors continue to favor all of these groups with the exception of white females (and white males). Why? In a letter to the U.S. Department of Transportation, Washington claims there are substantial disparities for every other racial group.  Although it does not identify how it made that determination, it appears that Washington is basing its decision on only the statistics from 2010 and 2011, and only after mixing the data together for those years from construction and engineering prime and subcontracts.

WSDOT 2011 Disparities

But can jumbling all that data together to arrive at statistical disparities really prove intentional discrimination in all trades and locations of the state?  The Supreme Court says no. In City of Richmond v. J.A. Croson Co., the Court held that only where there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality’s prime contractors, an inference of discriminatory exclusion could arise.

That means that if a state wanted to determine if statistics showed an inference of discrimination in the award of construction subcontracts, it would have to limit its data to qualified construction subcontracting firms willing and able to perform those contracts.  Mixing in statistics on prime contracts awarded to civil engineering consultants would make no sense. Unfortunately, that appears to be the kind of statistical stew that Washington’s department of transportation is serving.

Will the federal government grant Washington’s waiver request based on the manner in which that state interprets its disparity study? And will white women contractors sue the state if it stops affording them preferential treatment? One almost hopes these things do occur just to see if the courts can untangle this mess.

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