Socio-economic policies

Army Lawyer, Jan-Feb, 2003

Affirmative Action in Government Contracting

Adarand: Supreme Court Dismisses Long-Standing Case

For several years, this publication has analyzed the Adarand affirmative action cases. (1) These cases began when the United States District Court for the District of Colorado held that the "DBE [Disadvantaged Business Enterprise] Program as administered by the [Central Federal Lands Highway Division] within Colorado" was constitutional. (2) The United States Court of Appeals for the Tenth Circuit (Tenth Circuit) affirmed the district court's holding, (3) and the United States Supreme Court remanded the case to the Court of Appeals and directed it to apply "strict scrutiny" analysis instead of the intermediate standard of review applied earlier. (4) On remand, the Tenth Circuit reversed the district court's decision (5) and held that the pertinent provisions of the program were unconstitutional under a strict scrutiny analysis. (6)

The Supreme Court's second review of the Adarand cases could have ended with a landmark decision for race-based initiatives in federal contracting. Instead, the Supreme Court dismissed the writ of certiorari as improvidently granted. (7) The Court reasoned that the Tenth Circuit had shifted its focus from statutes and regulations pertaining to federally funded state and local highway contracts, (8) to statutes and regulations pertaining to direct procurement of Department of Transportation (DOT) funds for highway construction on federal lands. (9) The Court refused to address this latter issue because the Tenth Circuit had specifically held that the plaintiff lacked standing to challenge agency decisions in this area. (10) The Court dismissed the writ, "effectively stalling Adarand's litigation--at least for now." (11)

The Adarand Legacy Lingers

Race-based preferences in federal contracting continue to be an issue in spite of the dismissal of Adarand. In Rothe Development Corp. v. U.S. Department of Defense, (12) the Court of Appeals for the Federal Circuit (CAFC) vacated a district court decision that upheld the constitutionality of Section 1207 (the 1207 Program) of the National Defense Authorization Act of 1987. The 1207 Program provision at issue authorizes the Department of Defense (DOD) to raise the bids of non-Small Disadvantaged Businesses (SDBs) by ten percent to attain the five percent SDB contracting goal. (13) The DOD's ability to meet the five percent SDB contracting goal may explain the reason the issue is moot, at least to some. (14)

In Sherbrooke Turf Inc. v. Minnesota Department of Transportation, (15) the United States District Court for the District of Minnesota held that the latest version of the affirmative action program for federally funded highway contractors survives the strict scrutiny analysis prescribed in Adarand III. (16) Sherbrooke Turf, Inc. (Sherbrooke), a firm owned and operated by caucasian males, provides landscaping services for land adjacent to highways. Sherbrooke submitted subcontracting bids on two federally assisted, state-administered highway projects. In both instances, the prime contractor awarded the contract to a DBE subcontractor who submitted a higher bid in the case of one project, and omitted services that were often necessary in the case of another. (17) Sherbrooke sued, claiming that the Minnesota Department of Transportation's (MnDOT) DBE program violated the Equal Protection Clause of the U.S. Constitution. (18)

Referring to a congressional "Benchmark Study," the Sherbrooke court held that Minnesota's implementation of the federal program met the "compelling interest" requirement because "[t]he record makes clear that Congress had a sufficient evidentiary basis on which to conclude that the persistence of racism and discrimination in highway subcontracting warranted a race-conscious procurement program." (19) The court also noted several features of the program that demonstrate its narrow tailoring to serve the compelling government interest of addressing the persistence of racism and discrimination in highway subcontracting. First, the program emphasized the use of race-neutral measures to meet the MnDOT goals. (20) Second, the program was limited in duration. (21) Third, the program barred any "rigid quotas," permitted states to deviate from the aspirational national ten percent goal, and permitted states to apply for exemptions. (22) Last, the plaintiff failed to show that its inability to secure an award on either project was related to the MnDOT program. (23)

Thus far, Sherbrooke has not percolated up to the Supreme Court. The Adarand VI dismissal assures that the plaintiff in Sherbrooke will remain focused on federally funded projects that are delegated to state and local governments. While some state and local governments wrestle with harmonizing race-conscious measures with Adarand's strict scrutiny analysis, others may simply avoid the issue altogether by eliminating the programs that include race-conscious provisions. (24)

It's All in the Classification