Public contracting should be based on transparency, not race

March 31, 2015 | By RALPH KASARDA


Last week’s unfortunate ruling by a federal judge tossing out a case against government discrimination shows just how entrenched racial preferences have become.  In Midwest Fence v. United States Department of Transportation, a small guard rail installation subcontractor submitted the lowest bids on multiple highway construction contracts in Illinois.  But the government pressured prime contractors to reject those bids and favor other subcontractors on the basis of their race.  Without even holding oral argument, the judge granted summary judgment in favor of three government agencies and held that racial preferences were fine.

Racial preferences are never fine.  To favor one race, means to disfavor another.  The Equal Protection Clause of the Fourteenth Amendment to the United States Constitution guarantees every person the right to be treated equally by state government without regard to race.  The Fifth Amendment to the United States Constitution provides the same guarantee with respect to the federal government.  As Alexander Bickel wrote in Morality of Consent:

The lesson of the great decisions of the Supreme Court and the lesson of contemporary history have been the same for at least a generation: discrimination on the basis of race is illegal, immoral, unconstitutional, inherently wrong, and destructive of democratic society.

That’s why the Supreme Court holds that states may prohibit discrimination and preferences based on race.  Arizona, California, Michigan, Nebraska, Oklahoma, and Washington indeed do ban racial preferences in the operation of public contracting, education, and employment.

Such a ban in Illinois would not have helped Midwest Fence, because its case primarily challenges the notorious Federal Disadvantaged Business Enterprise (DBE) Program.  Even states that ban racial preferences must implement the DBE Program as a condition for receiving vast sums of federal money to fund needed highway construction projects.  States receiving federal highway funds must follow federal regulations that include a two-step goal setting process that almost always leads to race-conscious subcontractor hiring goals – racial preferences.  That’s what Midwest Fence was up against.

Racial preferences in government contracting can only be justified if they are narrowly tailored to remedy racial discrimination.  In Fisher v. University of Texas, the Supreme Court held that as part of the narrow tailoring analysis, the government has “the ultimate burden of demonstrating, before turning to racial classifications, that available, workable race-neutral alternatives do not suffice.”

In 2015, there are always workable race-neutral alternatives to racial preferences.  First, as the Supreme Court noted in City of Richmond v. J.A. Croson Co., if the government had evidence that nonminority contractors were systematically excluding minority businesses from subcontracting opportunities it could take action to end the discriminatory exclusion.  The appropriate response would be to take measures against those who discriminate on the basis of race or other illegitimate criteria and provide relief to the victim of such discrimination.  It should be noted that Illinois has not taken action against any prime contractors for engaging in racial discrimination, because it has not identified any prime contractors engaging in discrimination.

Second, federal and state governments could make public contracting completely transparent – even at the subcontracting level.  No contractors ever accuse state governments of discriminating against general contractors in the award of prime contracts, even when statistics may show a disparity in the amount of prime contract dollars flowing to minority contractors.  That is because states typically award prime contracts in a process that has been designed to eliminate discrimination and favoritism.  State laws generally require prime contractors to submit sealed bids, which are then publically opened on a certain date and made available for inspection.  The contractor who wins the contract is the one who was able to put together the lowest bid.  Courts should ask why a similar race-neutral process has not been designed for subcontracts on public highway projects.  Such a process would allow state governments to do what everyone expects them to do when tax dollars may be funding the evils of discrimination: identify the discrimination and eradicate it.

Finally, the federal government could make the DBE Program conform to the Supreme Court’s holding in Fisher by making the entire program color-blind.  That could easily be accomplished by defining the business that receives the preference – the disadvantaged business enterprise – by the size of the firm and the income of the owner, instead of the race and gender of the owner as is done now.  Even without this easy change, states could be required to implement and evaluate race-neutral small business subcontractor goals before having to resort to race-conscious DBE goals.

PLF attorneys filed a brief in support of Midwest Fence, and are waiting to see if there will be an appeal to the United States Court of Appeals for the Seventh Circuit.