DENVER 2018 DISPARITY STUDY...1) DSBO Ordinance Extension – the DSBO ordinance will be extended for eight months, through December 1, 2019, to finalize changes to the ordinance,

DENVER 2018 DISPARITY STUDY

February 28, 2019

As required by § 28-83, D.R.M.C., of the Denver city ordinance, the Division of Small Business Opportunity (DSBO) in the Office of Economic Development (OED) is required to conduct a disparity study approximately every 5 years to evaluate the utilization of minority and women-owned contractors in city procurement of construction, professional design, and goods and services. The results of the study are used to collect evidence of the city’s current contracting practices and assess the need for, and continuation of, the DSBO Minority and Women Business Enterprise (MWBE) program.

OED engaged BBC Research & Consulting (BBC) to conduct a 2018 Disparity Study that examined:

1) The city’s procurement of construction, professional design, goods and services from 2012-2016

2) DSBO’s goal-setting process for contracting with small, minority and woman-owned businesses from 2012-2016

3) Legal precedents and analysis of federal law, state law, Denver city ordinance and case law, including Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000); Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950 (2003), and any recent updates

4) Quantitative and qualitative analysis of the availability, utilization and disparity of minority and women-owned businesses

5) General market-conditions for the seven-county metro Denver business community The findings of the study demonstrate that a disparity still exists in the use of MWBE firms in city procurement practices--and affirms the need to continue DSBO’s use of programmatic measures that are race and gender conscious.

“Information from the disparity study will help the city to continue to encourage the participation of minority and women owned businesses in its contracting and procurement. In addition, it will help the city implement the MWBE and federal DBE programs effectively and in a legally-defensible manner.”

– BBC Research and Consulting, 2018 Disparity Study, City and County of Denver

Next Steps:

Business Equity Leadership Team

At the direction of Mayor Michael B. Hancock, the executive leadership of the largest city agencies and capital programs have convened to form the Business Equity Leadership Team (BELT). Public Works, Denver International Airport, Parks & Recreation, Arts & Venues, General Services, the Elevate Denver Bond project, Department of Finance, and the Mayor’s Office of the National Western Center compose BELT’s membership.

BELT is developing a Master Utilization Plan that will align recommendations from the community and the disparity study to ensure that small, minority and woman-owned businesses are engaged and afforded more opportunities for equitable participation in city contracts. Over the next two years, these agencies and programs will be accountable in implementing BELT’s strategies and tactics and will provide quarterly updates to the Mayor and community. BELT will be releasing the Master Utilization plan in the Spring of 2019.

2019 DSBO Priorities

In response to the results of the 2018 Disparity Study and in cooperation with the Mayor’s Office, Denver City Council, supporting agencies and community partners, DSBO has identified the following priorities for 2019:

1) DSBO Ordinance Extension – the DSBO ordinance will be extended for eight months, through December 1, 2019, to finalize changes to the ordinance, implement rules, regulations, policies and programs.

2) Restructure Goal Setting Procedures – DSBO will set project-specific goals based on scopes of work, market data/considerations and the availability of certified firms.

3) Develop and Implement a Mentor Protégé Program – In coordination with other agencies and programs, DSBO will develop a Mentor Protégé program that will allow small, minority and woman-owned businesses to build capacity and working relationships.

4) Selection Criteria and RFP Language – Re-evaluate and revise the selection criteria and RFP language to adhere to the city’s values supporting business equity.

5) Revising Goods and Services Ordinance – Revise the city’s ordinance to foster greater participation of small, minority and women owned businesses in General Services contracts for goods and services.

6) Unbundling Procurements – Create a pipeline of opportunities for small, minority and woman-owned businesses to prime on city contracts.

7) Contract Compliance – Formalize internal processes that will support the integrity of the DSBO program and ensure that small, minority and woman-owned businesses can perform successfully on contracts.

8) Education and Outreach to Small Business Community – Develop community-friendly tools to help small, minority and woman-owned businesses learn about city contracting processes and bid opportunities.

9) DSBO Staffing – Identify staff and other resources needed to ensure that DSBO’s 2019 priorities are met.

10) Construction Empowerment Initiative (CEI) Recommendations – Review, prioritize, and implement CEI’s recommendations that are in alignment with the city’s mission to create an equitable path to prosperity for all business and residents.

DSBO will continue to keep the community apprised and solicit feedback from stakeholders as it implements these priorities.

The City and County of Denver values the important role that minority, woman and small business enterprises play in the local economy. Their success is essential to job creation and economic growth. The Office of Economic Development’s Division of Small Business Opportunity is committed to advancing the policies, processes, training, compliance, certification and community engagement necessary to propel small businesses forward.

Our team is honored to lead this work and will continue to advance a vibrant economy that works for everyone.

If you have any questions about the 2018 Disparity Study, please contact us at [email protected].

Best,

Eric Hiraga

Executive Director, Denver Office of Economic Development

mailto:[email protected]

FINAL REPORT

2018 Disparity Study

City and County of Denver

Final Report

February 2018

2018 City and County of Denver Disparity Study

Prepared for City and County of Denver Prepared by BBC Research & Consulting 1999 Broadway, Suite 2200 Denver, Colorado 80202‐9750 303.321.2547 fax 303.399.0448 www.bbcresearch.com [email protected]

Table of Contents

BBC RESEARCH & CONSULTING—FINAL REPORT i

ES. Executive Summary

A. Analyses in the Disparity Study ........................................................................................... ES–2

B. Availability Analysis Results ................................................................................................. ES–3

C. Utilization Analysis Results .................................................................................................. ES–5

D. Disparity Analysis Results .................................................................................................... ES–7

E. Program Implementation .................................................................................................. ES–11

1. Introduction

A. Background ........................................................................................................................... 1–2

B. Study Scope ........................................................................................................................... 1–4

C. Study Team Members ........................................................................................................... 1–7

2. Legal Analysis

Programs that Rely Only on Race‐ and Gender‐Neutral Measures ........................................... 2–1

Programs that Rely on Race‐ and Gender‐Neutral and Race‐ and Gender‐Conscious Measures ............................................................................................................................ 2–1

3. Marketplace Conditions

A. Human Capital ....................................................................................................................... 3–2

B. Financial Capital .................................................................................................................... 3–6

C. Business Ownership .............................................................................................................. 3–9

D. Business Success ................................................................................................................. 3–11

E. Summary .............................................................................................................................. 3–13

4. Collection and Analysis of Contract Data

A. Overview of Contracting and Procurement Policies ............................................................. 4–1

B. Collection and Analysis of Contract Data and Procurement Data......................................... 4–5

C. Collection of Vendor Data ..................................................................................................... 4–6

D. Relevant Geographic Market Area ........................................................................................ 4–7

E. Relevant Types of Work ......................................................................................................... 4–7

F. Collection of Bid and Proposal Data .................................................................................... 4–10

G. Agency Review Process ....................................................................................................... 4–10

5. Availability Analysis

A. Purpose of the Availability Analysis ...................................................................................... 5–1

B. Potentially Available Businesses ........................................................................................... 5–1

C. Businesses in the Availability Database ................................................................................. 5–3

D. Availability Calculations ........................................................................................................ 5–3

E. Availability Results ................................................................................................................. 5–6

Table of Contents

BBC RESEARCH & CONSULTING—FINAL REPORT ii

6. Utilization Analysis

Overall Results ........................................................................................................................... 6–1

Contract Goals ........................................................................................................................... 6–1

Contract Role ............................................................................................................................. 6–2

DEN Contracts ........................................................................................................................... 6–3

Industry ..................................................................................................................................... 6–3

Time Period ............................................................................................................................... 6–4

Concentration of Dollars ........................................................................................................... 6–4

7. Disparity Analysis

A. Overview ............................................................................................................................... 7–1

B. Disparity Analysis Results ...................................................................................................... 7–5

C. Statistical Significance ......................................................................................................... 7–11

D. Bid/Proposal Processes ....................................................................................................... 7–13

8. Program Measures

A. Program Overview................................................................................................................. 8–1

B. Race‐ and Gender‐Neutral Measures .................................................................................... 8–2

C. Race‐ and Gender‐Conscious Measures ................................................................................ 8–5

D. Other Organizations’ Program Measures ............................................................................. 8–5

9. Program Implementation

Aspirational MWBE and DBE Goals ........................................................................................... 9–1

Other Program Considerations .................................................................................................. 9–4

Appendices

A. Definitions of Terms

B. Legal Framework and Analysis

C. Quantitative Analysis

D. Qualitative Information about Marketplace Conditions

E. Availability Analysis Approach

F. Disparity Tables

CHAPTER ES.

Executive Summary

BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER ES, PAGE 1

CHAPTER ES. Executive Summary

TheCityandCountyofDenver(TheCity)retainedBBCResearch&Consulting(BBC)toconductadisparitystudytohelprefinetheorganization’simplementationoftheMinority‐andWomen‐ownedBusinessEnterprise(MWBE)Program,theEmergingBusinessEnterprise(EBE)Program,andtheSmallBusinessEnterprise(SBE)Programforitslocally‐fundedcontractsandtheFederalDisadvantagedBusinessEnterprise(DBE)ProgramfortheFederalAviationAdministration(FAA)‐fundedcontractsthattheDenverInternationalAirport(DEN)awards.Theprimaryobjectivesofthoseprogramsrevolvearoundencouragingtheparticipationofsmallbusinessesandminority‐andwoman‐ownedbusinessesinCitycontracting.1Tomeetthatobjective,theCityusesacombinationofrace‐andgender‐neutralandrace‐andgender‐consciousprogrammeasuresaspartofitscontractingpractices.Inthecontextofcontracting,race‐andgender‐neutralmeasuresaremeasuresdesignedtoencouragetheparticipationofsmallbusinessesinagovernmentorganization’scontracting,regardlessoftherace/ethnicityorgenderofthebusinesses’owners.Incontrasttorace‐andgender‐neutralmeasures,race‐andgender‐consciousmeasuresaremeasuresspecificallydesignedtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting,suchasMWBEcontractgoals.

Aspartofthedisparitystudy,BBCassessedwhethertherewereanydisparitiesbetween:

ThepercentageofcontractdollarsthattheCityspentwithminority‐andwoman‐ownedbusinessesduringthestudyperiodbetweenJanuary1,2012andDecember31,2016(i.e.,utilization,orparticipation);and

Thepercentageofcontractdollarsthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceivebasedontheiravailabilitytoperformspecifictypesandsizesoftheCity’sprimecontractsandsubcontracts(i.e.,availability).

Thedisparitystudyalsoexaminedotherquantitativeandqualitativeinformationrelatedto:

ThelegalframeworkrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms;

Localmarketplaceconditionsforminority‐andwoman‐ownedbusinesses;and

ContractingpracticesandbusinessassistanceprogramsthattheCitycurrentlyhasinplace.

TheCitycoulduseinformationfromthestudytohelprefineitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms,includingsettingaspirationalgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracting;determiningwhichprogrammeasurestousetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesin

1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.Informationandresultsforminoritywoman‐ownedbusinessesareincludedalongwiththeircorrespondingracial/ethnicgroups.


Citycontracting;and,ifappropriate,determiningwhichracial/ethnicandgendergroupswouldbeeligibletoparticipateinanyrace‐orgender‐consciousprogrammeasuresthattheCitymightcontinueusinginthefuture.

BBCsummarizeskeyinformationfromthe2018CityofDenverDisparityStudyinfiveparts:

A. Analysesinthedisparitystudy;

B. Availabilityanalysisresults;

C. Utilizationanalysisresults;

D. Disparityanalysisresults;and

E. Programimplementation.

A. Analyses in the Disparity Study

Alongwithmeasuringdisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesinCitycontracts,BBCalsoexaminedotherinformationrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms:

Thestudyteamconductedananalysisoffederalregulations,caselaw,andotherinformationtoguidethemethodologyforthedisparitystudy.Theanalysisincludedareviewoflegalrequirementsrelatedtosmallbusinessandminority‐andwoman‐ownedbusinessprograms,includingtheMWBE,EBE,SBE,andFederalDBEPrograms(seeChapter2andAppendixB).

BBCconductedquantitativeanalysesofoutcomesforminorities;women;andminority‐andwoman‐ownedbusinessesthroughouttherelevantgeographicmarketarea.2Inaddition,thestudyteamcollectedqualitativeinformationaboutpotentialbarriersfacedbyminorities;women;andminority‐andwoman‐ownedbusinessesinthelocalmarketplacethroughin‐depthinterviews,telephonesurveys,publicmeetings,andwrittentestimony(seeChapter3,AppendixC,andAppendixD).

BBCanalyzedthepercentageofrelevantCitycontractingdollarsthatminority‐andwoman‐ownedbusinessesareavailabletoperform.Thatanalysiswasbasedontelephonesurveysthatthestudyteamcompletedwithnearly900businessesthatworkinindustriesrelatedtothespecifictypesofconstruction;professionalservices;andgoodsandservicescontractsthattheCityawards(seeChapter5andAppendixE).

BBCanalyzedthedollarsthatminority‐andwoman‐ownedbusinessesreceivedonmorethan22,000construction;professionalservices;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter6).

BBCexaminedwhethertherewereanydisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesonconstruction;professional

2BBCidentifiedtherelevantgeographicmarketareaforthedisparitystudyasAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersonCountiesinColorado.


services;andgoodsandservicescontractsthattheCityawardedduringthestudyperiod(seeChapter7).

BBCreviewedthemeasuresthattheCityusestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontractingaswellasmeasuresthatotherorganizationsintheregionuse(seeChapter8).

BBCprovidedguidancerelatedtoadditionalprogramoptionsandpotentialchangestocurrentcontractingpracticesfortheCity’sconsideration(seeChapter9).

B. Availability Analysis Results

BBCusedacustomcensusapproachtoanalyzetheavailabilityofminority‐andwoman‐ownedbusinessesforCityprimecontractsandsubcontracts.BBC’sapproachreliedoninformationfromsurveysthatthestudyteamconductedwithpotentiallyavailablebusinesseslocatedintherelevantgeographicmarketareathatperformworkwithinrelevantsubindustries.ThatapproachallowedBBCtodeveloparepresentativeandunbiaseddatabaseofpotentiallyavailablebusinessestoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesinastatistically‐validmanner.

Overall.FigureES‐1presentsdollar‐weightedavailabilityestimatesbyrelevantracial/ethnicandgendergroupforallCitycontractsandprocurements.Overall,theavailabilityofminority‐andwoman‐ownedbusinessesforCitycontractsandprocurementsis23.7percent,indicatingthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceive23.7percentofthedollarsthattheCityawardsinconstruction;professionalservices;andgoodsandservices.Non‐Hispanicwhitewoman‐ownedbusinesses(10.9%)andHispanicAmerican‐ownedbusinesses(6.2%)exhibitedthehighestavailabilitypercentagesamongallgroups.

Figure ES‐1. Overall availability estimates by racial/ethnic and gender group

Note:

Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.

For more detail and results by group, see Figure F‐2 in Appendix F.

Source:

BBC Research & Consulting availability analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.TheCity’suseofsuchcontractgoalsisarace‐andgender‐consciousmeasure.ItisusefultoexamineavailabilityanalysisresultsseparatelyforcontractsthattheCityawardswiththeuseofcontractgoals(goalscontracts)andcontractsthattheCityawardswithouttheuseofgoals(no‐goalscontracts).FigureES‐2presentsavailabilityestimatesseparatelyforgoalsandno‐goalscontracts.AsshowninFigureES‐2,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherisapproximatelyequalacrossgoalscontracts(23.1%)andno‐goalscontracts(24.1%).

Business group

Non‐Hispanic white woman‐owned 10.9 %

Asian American‐owned 3.2 %

Black American‐owned 3.3 %

Hispanic American‐owned 6.2 %

Native American‐owned 0.1 %

Total Minority‐ and Woman‐owned 23.7 %

Availability %


Figure ES‐2. Availability estimates by contract goal status

Note:

Numbers rounded to nearest tenth of 1 percent. Numbers may not sum exactly to totals.

For more detail, see Figures F‐16 and F‐17 in Appendix F.

Source:


Contract role. Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenoperateassubcontractors.Becauseofthattendency,itisusefultoexamineavailabilityestimatesseparatelyforprimecontractsandsubcontracts.FigureES‐3presentsthoseresults.AsshowninFigureES‐3,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherissimilarforCityprimecontracts(23.6%)andsubcontracts(24.4%).

Figure ES‐3. Availability estimates by contract role

Note:



Source:


Industry.BBCexaminedavailabilityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.TheprojectteamcombinedresultsforgoodsandservicescontractsbecausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigureES‐4,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherishighestfortheCity’sprofessionalservicescontracts(40.4%)andlowestforconstructioncontracts(19.0%).

Figure ES‐4. Availability estimates by relevant industry

Note:


For more detail, see Figures F‐5, F‐6, and F‐7 in Appendix F.

Source:


Business group

Non‐Hispanic white woman‐owned 12.2 % 10.0 %

Asian American‐owned 2.0 % 4.0 %

Black American‐owned 2.3 % 4.1 %

Hispanic American‐owned 6.4 % 6.0 %

Native American‐owned 0.2 % 0.1 %

Total Minority‐ and Woman‐owned 23.1 % 24.1 %

Goal Status

Goals

contracts

No‐goals

contracts

Business group







Contract Role

Prime

contracts Subcontracts

Business group

Non‐Hispanic white woman‐owned 10.8 % 15.8 % 7.6 %

Asian American‐owned 1.6 % 2.6 % 8.5 %

Black American‐owned 1.9 % 11.5 % 2.2 %

Hispanic American‐owned 4.6 % 10.4 % 7.9 %

Native American‐owned 0.2 % 0.1 % 0.1 %

Total Minority‐ and Woman‐owned 19.0 % 40.4 % 26.3 %

Industry

Construction

Professional

services

Goods and

services


C. Utilization Analysis Results

BBCmeasuredtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingintermsofutilization—thepercentageofdollarsthatthosebusinessesreceivedonCityprimecontractsandsubcontractsduringthestudyperiod.BBCmeasuredtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsregardlessofwhethertheywerecertifiedassuchwiththeCity.

Overall.FigureES‐5presentsthepercentageofcontractingdollarsthatminority‐andwoman‐ownedbusinesses,consideredtogether,receivedonconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityawardedduringthestudyperiod.AsshowninFigureES‐5,overall,minority‐andwoman‐ownedbusinessesconsideredtogetherreceived14.8percentoftherelevantcontractingdollarsthattheCityawardedduringthestudyperiod.HispanicAmerican‐ownedbusinesses(6.3%)andnon‐Hispanicwhitewoman‐ownedbusinesses(5.3%)exhibitedhigherlevelsofparticipationinCitycontractsthanallothergroups.

Figure ES‐5. Overall utilization results by racial/ethnic and gender group

Note:


For more detail, see Figure F‐2 in Appendix F.

Source:

BBC Research & Consulting utilization analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.Itisusefultoexamineutilizationanalysisresultsseparatelyforgoalscontractsandno‐goalscontracts,becausedoingsoprovidesinformationaboutoutcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandtheefficacyofMWBEandDBEcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.

AsshowninFigureES‐6,minority‐andwoman‐ownedbusinessesconsideredtogethershowedhigherparticipationingoalscontracts(24.1%)thaninno‐goalcontracts(8.4%).Thoseresultsmightindicatetheeffectivenessofcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.However,examiningdisparityanalysisresultsprovidesabetterassessmentoftheefficacyofcontractgoals,becausethoseresultsalsotakeintoaccounttheavailabilityofminority‐andwoman‐ownedbusinessesforgoalsandno‐goalscontracts.

Business group







Utilization %


Figure ES‐6. Utilization results by contract goal status

Note:



Source:


Contract role.Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenoperateassubcontractors.Becauseofthattendency,itisusefultoexamineutilizationresultsseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐7,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwasmuchhigherintheCity’ssubcontracts(42.9%)thanintheCity’sprimecontracts(8.7%).ThevastmajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithprimecontracts.

Figure ES‐7. Utilization results by contract role

Note:



Source:


Industry.BBCexaminedutilizationresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.Theprojectteamcombinedresultsforgoodsandservicescontracts,becausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigureES‐8,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashighestintheCity’sprofessionalservicescontracts(19.4%)andlowestingoodsandgeneralservicescontracts(10.6%).ThemajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereinconstruction,inwhichtheparticipationofminority‐andwoman‐ownedbusinesseswas15.2percent.

Business group







Goal Status

Goals

contracts

No‐goals

contracts

Business group







Contract Role

Prime



Figure ES‐8. Utilization results by relevant industry

Note:



Source:


D. Disparity Analysis Results

Althoughinformationabouttheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsisusefulonitsown,itisevenmoreusefulwhencomparedwiththelevelofparticipationthatmightbeexpectedbasedonthesebusinesses’availabilityforCitywork.BBCcalculateddisparityindicesforeachrelevantbusinessgroupandforvariouscontractsetsbydividingpercentparticipationbypercentavailabilityandmultiplyingby100.Adisparityindexof100indicatesanexactmatchbetweenparticipationandavailabilityforaparticulargroupforaparticularcontractset(referredtoasparity).Adisparityindexoflessthan100indicatesadisparitybetweenparticipationandavailability.Adisparityindexoflessthan80indicatesasubstantialdisparitybetweenparticipationandavailability.

Overall.FigureES‐9presentsdisparityindicesforallrelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thelinedownthecenterofthegraphshowsadisparityindexlevelof100,whichindicatesparitybetweenparticipationandavailability.Forreference,thereisalinedrawnatadisparityindexof100(lineofparity)andatadisparityindexlevelof80(lineofsubstantialdisparity).AsshowninFigureES‐9,overall,theparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityawardedduringthestudyperiodwassubstantiallylowerthanwhatonemightexpectbasedontheiravailabilityforthatwork.Thedisparityindexof63indicatesthatminority‐andwoman‐ownedbusinessesreceivedapproximately$0.63foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityfortherelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Disparityanalysisresultsbyindividualgroupindicatedthat:

Threegroupsexhibiteddisparityindicessubstantiallybelowparity:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof48),AsianAmerican‐ownedbusinesses(disparityindexof38),andBlackAmerican‐ownedbusinesses(disparityindexof48).

HispanicAmerican‐ownedbusinesses(disparityindexof102)andNativeAmerican‐ownedbusinesses(disparityindexof200+)didnotexhibitadisparity.

Business group







Industry

Construction

Professional

services

Goods and

services


Figure ES‐9. Disparity indices by racial/ ethnic and gender group

Note:

Numbers rounded to nearest whole number.


Source:

BBC Research & Consulting disparity analysis.

Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.Itisusefultoexaminedisparityanalysisresultsseparatelyforgoalscontractsandno‐goalscontracts.Assessingwhetheranydisparitiesexistforno‐goalcontractsprovidesusefulinformationaboutoutcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandwhetherthereisevidencethatcertaingroupsfacebarriersaspartoftheagency’scontracting.AsshowninFigureES‐10,minority‐andwoman‐ownedbusinessesconsideredtogethershowedparityongoalscontracts(disparityindexof104),butexhibitedasubstantialdisparityonno‐goalscontracts(disparityindexof35).Disparityanalysisresultsbyindividualgroupindicatedthat:

Non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof67)andAsianAmerican‐ownedbusinesses(disparityindexof59)exhibitedsubstantialdisparitiesongoalscontracts.BlackAmerican‐ownedbusinessalsoexhibitedadisparitythatwasclosetothethresholdofbeingconsideredsubstantial(disparityindexof82)ongoalscontracts;and

AllgroupsexceptNativeAmerican‐ownedbusinesses(disparityindexof200+)exhibitedsubstantialdisparitiesonno‐goalscontracts.


Figure ES‐10. Disparity indices by contract goal status

Note:



Source:


Takentogether,theresultspresentedinFigureES‐10showthattheCity’suseofMWBEandDBEcontractgoalsissomewhateffectiveinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinitscontracts.Moreover,theresultsindicatethatwhentheCitydoesnotuserace‐andgender‐consciousmeasures,nearlyallrelevantbusinessgroupssufferfromsubstantialunderutilizationinCitycontractingandprocurement.

Contract role. Subcontractstendtobemuchsmallerinsizethanprimecontracts.Asaresult,subcontractsareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.Inaddition,theCityusedMWBEandDBEcontractgoalswhenawardingmanycontractsduringthestudyperiod,whichprimarilyaffectsubcontractopportunitiesforminority‐andwoman‐ownedbusinesses.Thus,itmightbereasonabletoexpectbetteroutcomesforminority‐andwoman‐ownedbusinessesonsubcontractsthanonprimecontracts.FigureES‐11presentsdisparityindicesforallrelevantgroupsseparatelyforprimecontractsandsubcontracts.AsshowninFigureES‐11,minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityforprimecontracts(disparityindexof37)butnotforsubcontracts(disparityindexof176).Resultsforindividualgroupsindicatedthat:

AllgroupsshowedsubstantialdisparitiesonprimecontractsexceptforNativeAmerican‐ownedbusinesses(disparityindexof200+).

Nogroupsexhibitedsubstantialdisparitiesonsubcontracts.


Figure ES‐11. Disparity indices by contract role

Note:



Source:


Industry.BBCexamineddisparityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.TheprojectteamcombinedresultsforgoodsandservicescontractsbecausetheCityusessimilarprocurementprocessestoawardthosecontracts.FigureES‐12presentsdisparityindicesforallrelevantgroupsbycontractingarea.Disparityanalysesresultsdifferedbycontractingareaandgroup:

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedadisparityonconstructioncontracts(disparityindexof80).Threeindividualgroupsshowedsubstantialdisparities:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof45),AsianAmerican‐ownedbusinesses(disparityindexof36),andBlackAmerican‐ownedbusinesses(disparityindexof37).

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityonprofessionalservicescontracts(disparityindexof48).Allindividualgroupsshowedsubstantialdisparitiesonthosecontracts.

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityongoodsandservicescontracts(disparityindexof40).AllindividualgroupsshowedsubstantialdisparitiesexceptforNativeAmerican‐ownedbusinesses(disparityindexof105).


Figure ES‐12. Disparity indices by relevant industry

Note: Numbers rounded to nearest whole number.


Source: BBC Research & Consulting disparity analysis.

E. Program Implementation

TheCityshouldreviewstudyresultsandotherrelevantinformationinconnectionwithmakingdecisionsconcerningitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms.Keyconsiderationsofpotentialrefinementarediscussedbelow.Inmakingthoseconsiderations,theCityshouldalsoassesswhetheradditionalresources,changesininternalpolicy,orchangesinstatelawmayberequired.

Aspirational MWBE and DBE goals.TheCityestablishesaspirationalannualgoalsfortheparticipationofcertifiedMBEsandWBEsaspartoftheMWBEProgramandfortheparticipationofcertifiedDBEsaspartofitsimplementationoftheFederalDBEProgram.Resultsfromthedisparitystudy—particularlytheavailabilityanalysisandanalysesofmarketplaceconditions—canbehelpfultotheCityinsettingitsnextaspirationalMWBEandDBEgoals.

Aspirational MWBE goals.TheCitysetsaspirationalannualMWBEgoalsseparatelyforitslocally‐fundedconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Currently,theCityhassetthosegoalsat24percentforconstruction,33percent


forprofessionalservices,and8percentforgoodsandservices.InformationfromtheavailabilityanalysisprovidedinformationthattheCitycanuseasabasisforitsaspirationalMWBEgoals.Forthepurposesofaspirationalgoal‐setting,BBCcalculatedtheavailabilityofpotentialMWBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyMWBE‐certifiedorappearthattheycouldbeMWBE‐certifiedbasedonrevenuerequirementssetforthintheCity’sMWBEProgram—forlocally‐fundedprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.ThatanalysisindicatedthatpotentialMWBEsmightbeexpectedtoreceive20.5percentoftheCity’slocally‐fundedcontractingdollarsbasedontheiravailabilityforthatwork.TheavailabilityofpotentialMWBEsis16.5percentforlocally‐fundedconstructioncontracts;39.5percentforlocally‐fundedprofessionalservicescontracts;and19.8percentforlocally‐fundedgoodsandgeneralservicescontracts.TheCityshouldconsiderthatinformationasitsetsitsnextaspirationalMWBEgoals.

Overall DBE goal.TheCityalsosetsanoverallannualDBEgoalfortheFAA‐fundedcontractsthatDENawards.Currently,theCityhassetthatgoalat14.04percent.ForthepurposesofhelpingtheCitydetermineabasisforitsoverallDBEgoal,BBCcalculatedtheavailabilityofpotentialDBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyDBE‐certifiedorappearthattheycouldbeDBE‐certifiedbasedonrevenuerequirementssetforthin49CodeofFederalRegulationsPart26.65—forFAA‐fundedprimecontractsandsubcontractsthatDENawardedduringthestudyperiod.ThatanalysisindicatedthatpotentialDBEsmightbeexpectedtoreceived16.2percentoftheCity’sFAA‐fundedprimecontractandsubcontractdollarsbasedontheiravailabilityforthatwork.TheCityshouldconsiderthatinformationasitsetsitsnextoverallDBEgoalsforDEN’sFAA‐fundedcontracts.

Goal adjustments. Insettingaspirationalannualgoals,organizationsoftenexamineavailableevidencetodeterminewhetheranadjustmenttoavailabilityisnecessarytoaccountforpastparticipationofminority‐andwomanownedbusinessesintheircontracting;currentconditionsinthelocalmarketplaceforminorities,women,minority‐ownedbusinesses,andwoman‐ownedbusinesses;andotherrelevantfactors.TheFederalDBEProgram—whichorganizationsoftenuseasamodeltosetandadjusttheiraspirationalannualgoals—outlinesseveralfactorsthatorganizationsmightconsiderwhenassessingwhethertoadjusttheirgoals:

1. Volumeofworkminority‐andwoman‐ownedbusinesseshaveperformedinrecentyears;

2. Informationrelatedtoemployment,self‐employment,education,training,andunions;

3. Informationrelatedtofinancing,bonding,andinsurance;and

4. Otherrelevantdata.3

BBCcompletedananalysisofeachoftheabovefactors.MuchoftheinformationthatBBCexaminedwasnoteasilyquantifiablebutisstillrelevanttotheCityasitdetermineswhethertoadjustitsaspirationalMWBEandDBEgoals.DetailedinformationaboutthoseanalysesarepresentedinChapter9.

349CFRSection26.45.


Data collection.TheCitymaintainscomprehensivedataontheprimecontractsandprocurementsthatitawardsandmaintainsthosedatainawell‐organizedandintuitivemanner.However,theCityonlymaintainsdataonthosesubcontractsthatareassociatedwithprimecontractsthatitawardsusingMWBEorDBEcontractgoals.TheCityshouldconsidercollectingcomprehensivedataonallsubcontracts,regardlessofwhethertheyareperformedbyminority‐andwoman‐ownedbusinessesandregardlessofwhethertheyareassociatedwithgoalscontracts.CollectingdataonallsubcontractswillhelpensurethattheCitymonitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.Collectingthefollowingdataonallsubcontractswouldbeappropriate:

Subcontractorname,address,phonenumber,andemailaddress;

Typeofassociatedwork;

Subcontractawardamount;and

Subcontractpaidamount.

TheCityshouldconsidercollectingthosedataaspartofbidsbutalsorequiringprimecontractorstosubmitdataonsubcontractsaspartoftheinvoicingprocessforallcontracts.TheCityshouldtrainrelevantdepartmentstafftocollectandentersubcontractdataaccuratelyandconsistently.

Monitoring minority‐ and woman‐owned business participation. TheCityonlymonitorsminority‐andwoman‐ownedbusinessparticipationongoalscontracts,whichresultsinaskewedrepresentationoftheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingoverall.Disparitystudyresultsindicatethat,duringthestudyperiod,theparticipationofminority‐andwoman‐ownedbusinesseswasmuchlowerincontractsthattheCityawardedwithouttheuseofMWBEorDBEcontractgoalsthaningoalscontracts,despitetheavailabilityofminority‐andwoman‐ownedbusinessesbeingverysimilarforbothcontractsets.ThatresultunderscorestheimportancefortheCitytomonitortheparticipationofminority‐andwoman‐ownedbusinessesinallcontracts,regardlessofwhethercontractgoalsareusedtoawardthem.DoingsowillhelpensurethattheCitymonitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.

Prime contract opportunities.Disparityanalysisresultsindicatedsubstantialdisparitiesformostracial/ethnicandgendergroupsontheprimecontractsthattheCityawardedduringthestudyperiod.TheCityhasestablishedaDefinedSelectionPoolProgram,whichlimitscompetitiononcertainconstructionandgoodsandservicesprimecontractstocertifiedSBEsorEBEs.TheCityshouldconsidercontinuingandevenexpandingtheuseoftheprogramtofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses.

Subcontract opportunities.Overall,minority‐andwoman‐ownedbusinessesdidnotshowdisparitiesonthesubcontractsthattheCityawardedduringthestudyperiod.However,subcontractingaccountedforarelativelysmallpercentageofthetotalcontractingdollarsthattheCityawardedduringthestudyperiod.Toincreasethenumberofsubcontractopportunities,theCitycouldconsiderimplementingaprogramthatrequiresprimecontractorstosubcontractacertainamountofprojectworkaspartoftheirbidsandproposals,regardlessofthe


race/ethnicityorgenderofsubcontractorowners.Forspecifictypesofcontractswheresubcontractingorpartnershipopportunitiesmightexist,theCitycouldsetaminimumpercentageofworktobesubcontracted.Primecontractorswouldthenhavetomeetorexceedthisthresholdinorderfortheirbidstobeconsideredresponsive.IftheCityweretoimplementsuchaprogram,itshouldincludeflexibilityprovisionssuchasagoodfaitheffortsprocess.

Contract goals.TheCityusesMWBEandDBEcontractgoalsonmanyofthecontractsthatitawards.PrimecontractorscanmeetthosegoalsbyeithermakingsubcontractingcommitmentswithcertifiedMWBEorDBEsubcontractorsatthetimeofbidorbysubmittingwaiversshowingthattheymadereasonablegoodfaitheffortstofulfillthegoalsbutcouldnotdoso.Disparityanalysisresultsshowedthatoutcomesforminority‐andwoman‐ownedbusinesseswerebetterongoalscontractsthanno‐goalscontractsduringthestudyperiod,indicatingthattheuseofcontractgoalsisaneffectivemeasureinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracts,particularlyforHispanicAmerican‐ownedbusinesses.TheCityshouldconsidercontinuingitsuseofMWBEandDBEcontractgoalsinthefuture.TheCitywillneedtoensurethattheuseofthosegoalsisnarrowlytailoredandconsistentwithotherrelevantlegalstandards(fordetails,seeChapter2andAppendixB).ItisalsoimportantfortheCitytocontinuetotreatcontractgoalsasonlyonetacticamongmanytoencourageminority‐andwoman‐ownedbusinessparticipationinitscontractingandtonottreattheuseofsuchgoalsasasubstituteforothermeasuresthatmighthelpbuildthecapacityofminority‐andwoman‐ownedbusinessesforCitywork,suchastechnicalassistanceprograms,mentor‐protégéprograms,andfinancialassistance.

Unbundling large contracts.Ingeneral,minority‐andwoman‐ownedbusinessesexhibitedreducedavailabilityforrelativelylargecontractsthattheCityawardedduringthestudyperiod.Inaddition,aspartofin‐depthinterviewsandpublicforums,severalminority‐andwoman‐ownedbusinessesreportedthatthesizeofgovernmentcontractsoftenservesasabarriertotheirsuccess(fordetails,seeAppendixD).Tofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,theCityshouldconsidermakingeffortstounbundlerelativelylargeprimecontractsandevensubcontractsintoseveralsmallercontracts.Forexample,theCityofCharlotte,NorthCarolinaencouragesprimecontractorstounbundlesubcontractingopportunitiesintosmallercontractpiecesthataremorefeasibleforsmallbusinessesandminority‐andwoman‐ownedbusinessestoworkonandacceptssuchattemptsasgoodfaithefforts.Doingsowouldresultinthatworkbeingmoreaccessibletosmallbusinesses,whichinturnmightincreaseopportunitiesforminority‐andwoman‐ownedbusinessesandresultingreaterminority‐andwoman‐ownedbusinessparticipation.

Prompt payment.Aspartofin‐depthinterviews,severalbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,reporteddifficultieswithreceivingpaymentinatimelymanneronCitycontracts,bothwhenworkingasprimecontractorsandassubcontractors(fordetails,seeAppendixD).Manybusinessesalsocommentedthathavingcapitalonhandiscrucialtosmallbusinesssuccess.TheCityshouldconsiderreinforcingitspromptpaymentpolicieswithitsprocurementstaffandprimecontractorsandcouldalsoconsiderautomatingpaymentsdirectlytosubcontractors.Doingsomighthelpensurethatbothprimecontractorsandsubcontractorsreceivepaymentinatimelymanner.Itmayalsohelpensurethatminority‐andwoman‐ownedbusinesseshaveenoughoperatingcapitaltoremainsuccessful.

CHAPTER 1.

Introduction

BBC RESEARCH & CONSULTING—FINAL REPORT CHAPTER 1, PAGE 1

CHAPTER 1. Introduction

Withapopulationofnearly3millionpeopleinitsmetropolitanarea,Denver,ColoradoisoneofthelargestandfastestgrowingcitiesintheUnitedStates.WithitscloseproximitytotheRockyMountains,Denverhasanationalreputationforbeinganactive,outdoor‐orientedcitywithabustlingeconomy.Thecity’sprimaryindustriesincludeaerospaceandaviation;energy;financialservices;informationtechnology;andtelecommunications.Italsoboastsasubstantialgovernmentpresencewithmanyfederalagencieshavingofficesintheregion.

TheCityandCountyofDenver(TheCity)providesmyriadservicestotheresidentswholiveandworkintheregion.Toprovidethoseservices,theCitytypicallyspendsnearly$1billioneachyearincontractdollarstoprocurevariousgoodsandservicesinconstruction;professionalservices;andgoodsandservices.Aspartofitscontractingandprocurement,theCityusesvariousstrategiesandeffortstoencouragetheparticipationofsmallbusinessesandminority‐andwoman‐ownedbusinesses,includingimplementingtheMinority‐andWomen‐ownedBusinessEnterprise(MWBE)Program,theEmergingBusinessEnterprise(EBE)Program,andtheSmallBusinessEnterprise(SBE)Programforitslocally‐fundedcontractsandtheFederalDisadvantagedBusinessEnterprise(DBE)ProgramfortheFederalAviationAdministration(FAA)‐fundedcontractsthattheDenverInternationalAirport(DEN)awards.1,2

TheCityretainedBBCResearch&Consulting(BBC)toconductadisparitystudytohelpevaluatetheeffectivenessofitsimplementationoftheMWBE,EBE,SBE,andFederalDBEProgramsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinitscontractsandprocurements.Aspartofthestudy,BBCexaminedwhetherthereareanydisparitiesbetween:

ThepercentageofcontractdollarsthattheCityspentwithminority‐andwoman‐ownedbusinessesduringthestudyperiod(i.e.,utilization);and

Thepercentageofcontractdollarsthatminority‐andwoman‐ownedbusinessesmightbeexpectedtoreceivebasedontheiravailabilitytoperformspecifictypesandsizesoftheCity’sprimecontractsandsubcontracts(i.e.,availability).

BBCalsoassessedotherquantitativeandqualitativeinformationrelatedto:

ThelegalframeworkrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms;

Localmarketplaceconditionsforminority‐andwoman‐ownedbusinesses;and

ContractingpracticesandbusinessassistanceprogramsthattheCitycurrentlyhasinplace.

1https://library.municode.com/co/denver/codes/code_of_ordinances?nodeId=TITIIREMUCO_CH28HURI_ARTIIINOCOCOREREPRDECOSE

2https://www.ecfr.gov/cgi‐bin/text‐idx?tpl=/ecfrbrowse/Title49/49cfr26_main_02.tpl


ThereareseveralreasonswhythedisparitystudywillbeusefultotheCity:

Thedisparitystudyprovidesanindependentreviewoftheparticipationofminority‐andwoman‐ownedbusinessesintheCity’scontractingandprocurement,whichwillbevaluabletoCityleadershipandexternalstakeholders;

InformationfromthedisparitystudywillbeusefultotheCityasitmakesdecisionsabouttheMWBE,EBE,SBE,andFederalDBEPrograms(e.g.,determiningwhethertheuseofrace‐andgender‐consciousgoalsmightstillbeappropriateinthefuture);

Thedisparitystudyprovidesinsightsintohowtoincreasecontractingopportunitiesforminority‐andwoman‐ownedbusinesses;and

Organizationsthathavesuccessfullydefendedtheirimplementationsofminority‐andwoman‐ownedbusinessprogramsincourthavetypicallyreliedoninformationfromdisparitystudies.

BBCintroducestheCityofDenverDisparityStudyinthreeparts:

A. Background;

B. Studyscope;and

C. Studyteammembers.

A. Background

TheCityimplementstheMWBEProgramforlocally‐fundedcontractsandtheFederalDBEProgramforFAA‐fundedcontractsthatDENawards.ThedisparitystudyincludesinformationthatisrelevanttorefiningtheCity’simplementationofbothprograms.

MWBE Program.Since1991,theCityhasmadevariouseffortstodeterminewhetherrace‐orgender‐baseddiscriminationaffectsthesuccessofminority‐andwoman‐ownedbusinessesattemptingtoparticipateinCitycontractsandprocurements.In1996,theDenverCityCouncilenactedasetofordinancestopromotenondiscriminationintheCity’sconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Thatprogram—referredtohereinastheMWBEProgram—isdesignedtopreventrace‐andgender‐baseddiscriminationagainstminority‐andwoman‐ownedbusinessesandencouragetheirparticipationinCitycontractsandprocurements.

Aspartoftheprogram,theCitysetsaspirationalannualgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesinitsconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Currently,theCityhasseta24percentgoalforconstructioncontracts,a33percentgoalforprofessionalservicescontracts,a5percentgoalforgoodsprocurements,andan8percentgoalforservicesprocurements.ThosegoalsarebasedoninformationfromanavailabilityanalysisthattheCityconductedin2012.FailuretomeetthosegoalsdoesnotautomaticallycausechangesinhowtheCityimplementstheMWBEProgram.However,theCitycontinuouslyconsiderswaystofurtherencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontractingandprocurement.


Federal DBE Program.TheFederalDBEProgramisaprogramdesignedtoincreasetheparticipationofminority‐andwoman‐ownedbusinessesinUnitedStatesDepartmentofTransportation(USDOT)‐fundedcontracts.TheCityreceivesfundsfromtheFAAtooperateDENandisthusrequiredtoimplementtheFederalDBEProgram.3SimilartotheMWBEProgram,akeycomponentoftheCity’simplementationoftheFederalDBEProgramissettinganoverallaspirationalgoalforDBEparticipationinitsFAA‐fundedcontracts.TheCityisrequiredtosetthegoaleverythreeyears,butthegoalisanannualgoalinthattheCitymustmonitorDBEparticipationinitsFAA‐fundedcontractseveryyear.IfDBEparticipationforaparticularyearislessthantheoverallDBEgoalforthatyear,thentheCitymustanalyzethereasonsforthedifferenceandestablishspecificmeasurestoaddressthedifferenceandenableittomeetthegoalinthenextyear.

TheFederalDBEProgramdescribesthestepsanagencymustfollowinestablishingitsoverallgoal.Tobeginthegoal‐settingprocess,anorganizationmustdevelopabasefigurebasedondemonstrableevidenceoftheavailabilityofDBEstoparticipateinitsUSDOT‐fundedcontracts.Then,afterconsideringvariousrelevantfactors,theorganizationcanmakeanupward,downward,ornoadjustmenttoitsbasefigureasitdeterminesitsoverallDBEgoal(referredtoasastep‐2adjustment).Currently,theCityhassetitsoverallDBEgoalat11.9percent,basedoninformationfromanavailabilityanalysisthattheCityconductedin2012.

Program measures. InanefforttomeetitsaspirationalannualgoalsaspartoftheMWBEandFederalDBEPrograms,theCityusesacombinationofrace‐andgender‐neutralmeasuresandrace‐andgender‐consciousmeasurestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontracting.Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofsmallbusinessesinanorganization’scontracting,regardlessoftherace/ethnicityorgenderofbusinesses’owners.Theunderlyinglogicofusingsuchmeasuresisthat,becausemostminority‐andwoman‐ownedbusinessesaresmallbusinesses,implementingmeasuresthatencouragetheparticipationofallsmallbusinessesinanorganization’scontractingwillresultintheincreasedparticipationofalargenumberofminority‐andwoman‐ownedbusinesses.Incontrasttorace‐andgender‐neutralmeasures,race‐andgender‐consciousmeasuresaremeasuresthatarespecificallydesignedtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting(e.g.,participationgoalsforminority‐andwoman‐ownedbusinessonindividualcontracts).4

Race‐ and gender‐neutral measures.TheCityusesvariousrace‐andgender‐neutralmeasuresaspartoftheMWBE,EBE,SBE,andFederalDBEPrograms.Thosemeasuresaredesignedtoencouragetheparticipationofsmallbusinesses—includingmanyminority‐andwoman‐ownedbusinesses—inCitycontractingandprocurement.Specifictypesofrace‐andgender‐neutralmeasuresthattheCityusesinclude:

3TheCityalsoimplementstheAirportConcessionsDisadvantagedBusinessEnterprise(ACDBE)Programtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinconcessionsagreementsatDEN,butanalysesaroundconcessionswereoutsidethescopeofthisstudy.

4AspartoftheFederalDBEProgram,theCityisrequiredtomeetthemaximumfeasibleportionofitsoverallDBEgoalthroughtheuseofrace‐andgender‐neutralprogrammeasures.IftheCitycanmeetitsgoalsolelythroughtheuseofrace‐andgender‐neutralmeasures,itcannotimplementrace‐orgender‐consciousmeasuresaspartoftheprogram.


Contractinginformationandassistance;

Monitoring,evaluation,andreporting;

Technicalassistanceandtraining;

Financeandbondingassistance;and

Networkingandoutreach.

Race‐ and gender‐conscious measures.AspartofboththeMWBEandFederalDBEPrograms,theCitysetsgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesassubcontractorsoncertainindividualcontracts(i.e.,MWBEorDBEcontractgoals).Primecontractorsbiddingoncontractsthatincludesuchgoalsmusteithermeetthegoalsbymakingsubcontractingcommitmentstominority‐or‐woman‐ownedbusinessesorbyrequestinggoodfaitheffortswaivers.TheDivisionofSmallBusinessOpportunity(DSBO)reviewswaiverrequestsandwillgrantwaiversifprimecontractorsdemonstrategoodfaitheffortstowardscompliancewiththegoals.Ifprimecontractorsdonotmeetthegoalsthroughsubcontractingcommitmentsanddonotsubmitacceptablegoodfaitheffortwaivers,thenDSBOmayrejecttheirbids.

IftheCitydeterminesthatthecontinueduseofrace‐orgender‐consciousmeasuresisappropriateforitsimplementationoftheMWBEandFederalDBEPrograms,thenitmustalsodeterminewhichracial/ethnicorgendergroupsareeligibleforparticipationinthosemeasures.Eligibilityforsuchmeasuresislimitedtoonlythoseracial/ethnicorgendergroupsforwhichcompellingevidenceofdiscriminationexistsinthelocalmarketplace.

B. Study Scope

InformationfromthedisparitystudywillhelptheCitycontinuetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontractingandprocurement.Inaddition,itwillhelptheCityimplementtheMWBE,EBE,SBE,andFederalDBEProgramseffectivelyandinalegally‐defensiblemanner.

Definitions of minority‐ and woman‐owned businesses.Tointerpretthecoreanalysespresentedinthedisparitystudy,itisusefultounderstandhowBBCtreatedminority‐andwoman‐ownedbusinessesandbusinessesthatarecertifiedasminority‐ownedbusinessenterprises(MBEs)andwoman‐ownedbusinessenterprises(WBEs)inthestudy.ItisalsoimportanttounderstandhowBBCtreatedbusinessesownedbyminoritywomen.

Minority‐ and woman‐owned businesses.BBCfocuseditsanalysesontheminority‐andwoman‐ownedbusinessgroupsthatareincludedaspartoftheCity’sMWBEProgram:AsianAmerican‐,BlackAmerican‐,HispanicAmerican‐,NativeAmerican‐,andwoman‐ownedbusinesses.BBCanalyzedthepossibilitythatrace‐orgender‐baseddiscriminationaffectedtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurementsbasedspecificallyontherace/ethnicityandgenderofbusinessownership.Therefore,BBCcountedbusinessesasminority‐orwoman‐ownedregardlessofwhethertheywere,orcouldbe,certifiedasMBEs,WBEs,orDBEs.Analyzingtheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesregardlessofcertificationstatusallowedBBCtoassesswhetherthere


arebarriersaffectingminority‐andwoman‐ownedbusinessesspecificallybecauseoftherace/ethnicityandgenderoftheirownersandnottheircertification.

Minority woman‐owned businesses. BBCconsideredfouroptionswhenconsideringhowtoclassifybusinessesownedbyminoritywomen:

1) Classifyingthosebusinessesasbothminority‐ownedandwoman‐owned;

2) Creatinguniquegroupsofminoritywoman‐ownedbusinesses;

3) Classifyingminoritywoman‐ownedbusinesseswithotherwoman‐ownedbusinesses;and

4) Classifyingminoritywoman‐ownedbusinesseswiththeircorrespondingminoritygroups.

RegardingOption1,BBCchosenottocodebusinessesasbothwoman‐ownedandminority‐ownedtoavoiddouble‐countingcertainbusinesseswhenreportingdisparitystudyresults.BBCalsochoseagainstOption2—creatinggroupsofminoritywoman‐ownedbusinessesthatweredistinctfrombusinessesownedbyminoritymen(e.g.,BlackAmericanwoman‐ownedbusinessesversusbusinessesownedbyBlackAmericanmen)—becausethepopulationsizesofsomebusinessgroupswerealreadysolowthatfurtherdisaggregationbygenderwouldhavemadeitevenmoredifficulttointerpretresults.BBCthenconsideredwhethertogroupminoritywoman‐ownedbusinesseswithallotherwoman‐ownedbusinesses(Option3)orwiththeircorrespondingminoritygroups(Option4).BBCchoseOption4(e.g.,groupingBlackAmericanwoman‐ownedbusinesseswithallotherBlackAmerican‐ownedbusinesses).Asaresult,inthisreport,thetermwoman‐ownedbusinessesrefersspecificallytonon‐Hispanicwhitewoman‐ownedbusinesses.

MBE and WBEs.MBEandWBEsareminority‐ownedbusinessesandwoman‐ownedbusinessesthatarespecificallycertifiedassuchbytheCity.AdeterminationofMWBEeligibilityincludesassessingbusinesses’grossrevenuesandbusinessowners’personalnetworth.Someminority‐andwoman‐ownedbusinessesdonotqualifyasMWBEsbecauseofgrossrevenueornetworthrequirementssetforthbytheUnitedStatesSmallBusinessAdministration(SBA).BusinessesseekingMWBEcertificationarerequiredtosubmitanapplicationtoDSBO.Theapplicationisavailableonlineandrequiresbusinessestosubmitvariousinformationincludingbusinessname;contactinformation;licenseinformation;financialinformation;workspecializations;andrace/ethnicityandgenderoftheirowners.DSBOreviewseachapplicationforapproval.Thereviewprocessmayinvolveon‐sitemeetingsandadditionaldocumentationtoconfirmrequiredbusinessinformation.

DBEs.DBEsareminority‐andwoman‐ownedbusinessesthatarespecificallycertifiedassuchthroughtheColoradoUnifiedCertificationProgram(UCP).5AswithMWBEcertification,adeterminationofDBEeligibilityincludesassessingbusinesses’grossrevenuesandbusinessowners’personalnetworth.BusinessesseekingDBEcertificationinColoradoarerequiredtosubmitanapplicationtoeitherDSBOortheColoradoDepartmentofTransportation(CDOT).Theapplicationisavailableonlineandrequiresbusinessestosubmitvariousinformation,including

5Businessesownedbynon‐HispanicwhitemencanbecertifiedasDBEsifthosebusinessesmeettherequirementsin49CodeofFederalRegulationsPart26.


businessname;contactinformation;taxinformation;workspecializations;andrace/ethnicityandgenderoftheowners.DSBOorCDOTreviewseachapplicationforapproval.Thereviewprocessmayinvolveon‐sitemeetingsandadditionaldocumentationtoconfirmrequiredbusinessinformation.

Potential MWBE/DBEs.PotentialMWBE/DBEsareminority‐andwoman‐ownedbusinessesthatareMWBE/DBE‐certifiedorappearthattheycouldbecertifiedbasedonrevenuerequirementssetforthbytheSBA(regardlessofactualcertification).ThestudyteamdidnotcountbusinessesthathavebeendecertifiedorhavegraduatedfromtheMWBEorFederalDBEProgramsaspotentialMWBE/DBEsinthestudy.BBCexaminedtheavailabilityofpotentialMWBE/DBEsaspartofhelpingtheCityestablishaspirationalannualgoalsfortheMWBEandFederalDBEPrograms.

Majority‐owned businesses.Majority‐ownedbusinessesarebusinessesthatarenotownedbyminoritiesorwomen(i.e.,businessesownedbynon‐Hispanicwhitemen).

Analyses in the disparity study.Thestudyteamexaminedwhetherthereareanydisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesonCitycontracts.Inaddition,thestudyteamalsoconducted:

AreviewoflegalissuesrelatedtotheCity’simplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms;

Ananalysisoflocalmarketplaceconditionsforminority‐andwoman‐ownedbusinesses;

AnassessmentoftheCity’scontractingpracticesandbusinessassistanceprograms;and

OtherinformationfortheCitytoconsiderasitrefinesitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms.

Thedisparitystudyfocusedonconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityawardedbetweenJanuary1,2012andDecember31,2016(i.e.,thestudyperiod).Informationfromthedisparitystudyisorganizedasfollows:

Legal framework and analysis.Thestudyteamconductedadetailedanalysisofrelevantfederalregulations,caselaw,statelaw,andotherinformationtoguidethemethodologyforthedisparitystudy.Theanalysisincludedareviewoffederalandstaterequirementsconcerningtheimplementationofminority‐andwoman‐ownedbusinessprograms.ThelegalframeworkandanalysisissummarizedinChapter2andpresentedindetailinAppendixB.

Marketplace conditions.BBCconductedquantitativeanalysesofthesuccessofminoritiesandwomenaswellasminority‐andwoman‐ownedbusinessesinthelocalcontractingandprocurementindustries.BBCcomparedbusinessoutcomesforminoritiesandwomenaswellasminority‐andwoman‐ownedbusinessestooutcomesfornon‐Hispanicwhitemenandbusinessesownedbynon‐Hispanicwhitemen.Inaddition,thestudyteamcollectedqualitativeinformationaboutpotentialbarriersthatminority‐andwoman‐ownedbusinessesfaceintheDenverregionthroughin‐depthinterviewsandpublicmeetings.InformationaboutmarketplaceconditionsispresentedinChapter3,AppendixC,andAppendixD.


Data collection.BBCcollectedcomprehensivedataontheprimecontractsandsubcontractsthattheCityawardedduringthestudyperiodaswellasinformationonthebusinessesthatparticipatedinthosecontracts.ThescopeofBBC’sdatacollectioneffortsispresentedinChapter4.

Availability analysis.BBCassessedthedegreetowhichminority‐andwoman‐ownedbusinessesareready,willing,andabletoperformonCityprimecontractsandsubcontracts.ThatanalysiswasbasedonCitydataandtelephonesurveysthatthestudyteamconductedwiththousandsofbusinessesthatarelocatedintheDenverregionandthatworkinindustriesrelatedtothetypesofcontractsandprocurementsthattheCityawards.ResultsfromtheavailabilityanalysisarepresentedinChapter5andAppendixE.

Utilization analysis.BBCanalyzedprimecontractandsubcontractdollarsthattheCityspentwithminority‐andwoman‐ownedbusinessesoncontractsthatitawardedduringthestudyperiod.ResultsfromtheutilizationanalysisarepresentedinChapter6.

Disparity analysis.BBCexaminedwhethertherewereanydisparitiesbetweentheutilizationandavailabilityofminority‐andwoman‐ownedbusinessesonprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteamalsoassessedwhetheranyobserveddisparitieswerestatisticallysignificant.ResultsfromthedisparityanalysisarepresentedinChapter7andAppendixF.

Program measures. BBCreviewedthemeasuresthattheCityusestoencouragetheparticipationofsmallbusinesses—includingmanyminority‐andwoman‐ownedbusinesses—initscontractingaswellasmeasuresthatotherorganizationsacrossthecountryuse.ThatinformationispresentedinChapter8.

Aspirational annual goals.Basedoninformationfromtheavailabilityanalysisandotherresearch,BBCprovidedtheCitywithinformationthatwillhelpsetaspirationalannualgoalsinconnectionwiththeMWBEandFederalDBEPrograms,includingbasefigurecalculationsandconsiderationsofstep‐2adjustments.InformationabouttheCity’saspirationalannualgoalsispresentedinChapter9.

Program implementation.BBCreviewedtheCity’scontractingpracticesandprogrammeasuresthatarepartofitsimplementationoftheMWBE,EBE,SBE,andFederalDBEPrograms.BBCprovidedguidancerelatedtoadditionalprogramoptionsandchangestocurrentcontractingpractices.Thestudyteam’sreviewandguidanceforbothprogramsispresentedinChapter10.

C. Study Team Members

TheBBCdisparitystudyteamwasmadeupofsixfirmsthat,collectively,possessdecadesofexperiencerelatedtoconductingdisparitystudiesinconnectionwithminority‐andwoman‐ownedbusinessprograms.

BBC (prime consultant).BBCisaDenver‐baseddisparitystudyandeconomicresearchfirm.BBChadoverallresponsibilityforthedisparitystudyandperformedallofthequantitativeanalyses.


Zann & Associates.Zann&AssociatesisaBlackAmericanwoman‐ownedmanagementconsultingfirmbasedinDenver.Zann&Associatesconductedin‐depthinterviewswithbusinesslocatedintheDenverregionaspartofthestudyteam’squalitativeanalysesofmarketplaceconditions.Inaddition,thefirmhelpedfacilitatevariouscommunityengagementefforts.

KDJK Strategies. KDJKStrategiesisaHispanicAmericanwoman‐ownedprofessionalservicesfirmbasedinDenver.Thefirmconductedin‐depthinterviewswithbusinesslocatedintheDenverregionaspartofthestudyteam’squalitativeanalysesofmarketplaceconditions.

Holland & Knight. Holland&Knightisalawfirmwithofficesthroughoutthecountry.Holland&Knightconductedthelegalanalysisthatprovidedthebasisforthestudy.

Customer Research International (CRI).CRIisaSubcontinentAsianAmerican‐ownedsurveyfieldworkfirmbasedinSanMarcos,Texas.CRIconductedtelephonesurveyswiththousandsofbusinesseslocatedintheDenverregiontogatherinformationfortheutilizationandavailabilityanalyses.

Keen Independent Research (Keen Independent). KeenIndependentisanArizona‐basedresearchfirm.KeenIndependenthelpedmanagethein‐depthinterviewprocessaspartofthestudyteam’squalitativeanalysesofmarketplaceconditions.

CHAPTER 2.

Legal Analysis


CHAPTER 2. Legal Analysis

TheCityandCountyofDenver(TheCity)operatestheMinority‐andWoman‐ownedBusinessEnterprise(MWBE)ProgramandtheFederalDisadvantagedBusinessEnterprise(DBE)Programtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitslocally‐fundedandFederalAirportAdministration(FAA)‐fundedcontracts,respectively.1Todoso,theCityreliesonacombinationofrace‐andgender‐neutralmeasuresandrace‐andgender‐consciousmeasuresaspartofitsimplementationofbothprograms.Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofsmallbusinessesinanorganization’scontracting,regardlessoftherace/ethnicityorgenderofbusinesses’owners.Incontrast,race‐andgender‐consciousmeasuresaredesignedtospecificallyencouragetheparticipationofminority‐andwoman‐ownedbusinessesintheorganization’scontracting.

TheCity’suseofMWBEandDBEgoalsonindividualcontractsisconsideredarace‐orgender‐consciousmeasure.Itisinstructivetoreviewlegalstandardssurroundingtheiruse,becausetherearedifferentlegalstandardsfordeterminingtheconstitutionalityofminority‐andwoman‐ownedbusinessprogramsdependingonwhethertheyrelyonlyonrace‐andgender‐neutralmeasuresoracombinationofbothrace‐andgender‐neutralandrace‐andgender‐consciousmeasures.

Programs that Rely Only on Race‐ and Gender‐Neutral Measures

Governmentorganizationsthatimplementcontractingprogramsthatrelyonlyonrace‐andgender‐neutralmeasurestoencouragetheparticipationofsmallbusinessesregardlessoftherace/ethnicityorgenderofbusinessownersmustshowarationalbasisfortheirprograms.Showingarationalbasisrequiresorganizationstodemonstratethattheircontractingprogramsarerationallyrelatedtoalegitimategovernmentinterest.Itisthelowestthresholdforevaluatingthelegalityofgovernmentcontractingprograms.Whencourtsreviewprogramsbasedonarationalbasis,onlythemostegregiousviolationsleadtoprogramsbeingdeemedunconstitutional.

Programs that Rely on Race‐ and Gender‐Neutral and Race‐ and Gender‐Conscious Measures

TheUnitedStatesSupremeCourthasestablishedthatcontractingprogramsthatincludebothrace‐andgender‐neutralandrace‐andgender‐consciousmeasuresmustmeetthestrictscrutinystandardofconstitutionalreview.2Incontrasttoarationalbasisreview,thestrictscrutinystandardpresentsthehighestthresholdforevaluatingthelegalityofgovernmentcontracting

1TheCityalsoimplementstheAirportConcessionsDisadvantagedBusinessEnterprise(ACDBE)Programtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinconcessionsagreementsatDEN,butanalysesaroundconcessionswereoutsidethescopeofthisstudy.

2CertainFederalCourtsofAppealsapplytheintermediatescrutinystandardtogender‐consciousprograms.AppendixBdescribestheintermediatescrutinystandardindetail.


programsshortofprohibitingthemaltogether.ThetwokeyUnitedStatesSupremeCourtcasesthatestablishedthestrictscrutinystandardforsuchprogramsare:

The1989decisioninCityofRichmondv.J.A.CrosonCompany,whichestablishedthestrictscrutinystandardofreviewforrace‐consciousprogramsadoptedbystateandlocalgovernments;3and

The1995decisioninAdarandConstructors,Inc.v.Peña,whichestablishedthestrictscrutinystandardofreviewforfederalrace‐consciousprograms.4

Underthestrictscrutinystandard,agovernmentorganizationmustshowacompellinggovernmentalinteresttouserace‐andgender‐consciousmeasuresandensurethatitsuseofrace‐andgender‐consciousmeasuresisnarrowtailored.Aprogramthatfailstomeeteithercomponentisunconstitutional.

Compelling governmental interest. Agovernmentorganizationmustdemonstrateacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationinordertoimplementrace‐orgender‐consciousmeasures.Anorganizationthatusesrace‐orgender‐consciousmeasuresaspartofaminority‐orwoman‐ownedbusinessprogramhastheinitialburdenofshowingevidenceofdiscrimination—includingstatisticalandanecdotalevidence—thatsupportstheuseofsuchmeasures.Organizationscannotrelyonnationalstatisticsofdiscriminationinanindustrytodrawconclusionsabouttheprevailingmarketconditionsintheirownregions.Rather,theymustassessdiscriminationwithintheirownrelevantmarketareas.5Itisnotnecessaryforagovernmentorganizationitselftohavediscriminatedagainstminority‐orwoman‐ownedbusinessesforittoact.InCityofRichmondv.J.A.CrosonCompany,theSupremeCourtfound,“if[theorganization]couldshowthatithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry…[i]tcouldtakeaffirmativestepstodismantlesuchasystem.”

Narrow tailoring.Inadditiontodemonstratingacompellinggovernmentalinterest,agovernmentagencymustalsodemonstratethatitsuseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Thereareanumberoffactorsthatacourtconsiderswhendeterminingwhethertheuseofsuchmeasuresisnarrowlytailoredincluding:

Thenecessityofsuchmeasuresandtheefficacyofalternative,race‐andgender‐neutralmeasures;

Thedegreetowhichtheuseofsuchmeasuresislimitedtothosegroupsthatactuallysufferdiscriminationinthelocalmarketplace;

Thedegreetowhichtheuseofsuchmeasuresisflexibleandlimitedinduration,includingtheavailabilityofwaiversandsunsetprovisions;

3CityofRichmondv.J.A.CrosonCompany,488U.S.469(1989).

4AdarandConstructors,Inc.v.Peña,515U.S.200(1995).

5Seee.g.,ConcreteWorks,Inc.v.CityandCountyofDenver(“ConcreteWorksI”),36F.3d1513,1520(10thCir.1994).


Therelationshipofanynumericalgoalstotherelevantbusinessmarketplace;and

Theimpactofsuchmeasuresontherightsofthirdparties.6

Manygovernmentorganizationshaveusedinformationfromdisparitystudiesaspartofdeterminingwhethertheircontractingpracticesareaffectedbyrace‐orgender‐baseddiscriminationandensuringthattheiruseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Specifically,organizationshaveassessedevidenceofanydisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesfortheircontractsandprocurements.InCityofRichmondv.J.A.CrosonCompany,theUnitedStatesSupremeCourtheldthat,“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”LowercourtdecisionssinceCityofRichmondv.J.A.CrosonCompanyhaveheldthatacompellinggovernmentalinterestmustbeestablishedforeachracial/ethnicandgendergrouptowhichrace‐andgender‐consciousmeasuresapply.

Meeting the strict scrutiny standard.Manyprogramshavefailedtomeetthestrictscrutinystandard,becausetheyhavefailedtomeetthecompellinggovernmentalinterestrequirement,thenarrowtailoringrequirement,orboth.However,manyotherprogramshavemetthestrictscrutinystandardandcourtshavedeemedthemtobeconstitutional.OnesuchprogramistheCityofDenver’sMWBEProgram,whichwaschallengedinConcreteWorks,Inc.v.CityandCountyofDenver.Inthecase,ConcreteWorks,Inc.challengedtheconstitutionalityofanaffirmativeactionordinancethatestablishedparticipationgoalsforminority‐andwoman‐ownedbusinessesforcertainCityconstructionandprofessionalservicescontracts.TheordinanceandsubsequentordinanceswerebasedinpartoninformationfromaseriesofdisparitystudiesthattheCityconductedbeginningin1989.

ThedistrictcourtruledinfavorofConcreteWorks,Inc.andconcludedthattheordinancesviolatedtheFourteenthAmendment.However,theCityappealedtherulingtotheTenthCircuitCourtofAppeals,andtheCourtofAppealsheldthattheCityhadestablishedacompellinggovernmentalinteresttohavearace‐andgender‐consciousprogramtolimitrace‐andgender‐baseddiscrimination.7ConcreteWorks,Inc.v.CityandCountyofDenverisinstructive,becauseitisoneoftheonlydecisionstoupholdthevalidityofalocalminority‐andwoman‐ownedbusinessprogram.AppendixBpresentstheConcreteWorkscaseandotherrelevantcaselawingreaterdetail.

6See,e.g.,AGC,SDCv.Caltrans,713F.3dat1198‐1199;Rothe,545F.3dat1036;WesternStatesPaving,407F3dat993‐995;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;Eng’gContractorsAss’n,122F.3dat927(internalquotationsandcitationsomitted).

7TheCourtofAppealsdidnotaddresstheissueofwhethertheordinanceswerenarrowlytailored,becauseitheldthedistrictcourtwasbarredunderthelawofthecasedoctrinefromconsideringthatissuesinceitwasnotraisedonappealbyConcreteWorks,Inc.aftertheyhadlostthatissueonsummaryjudgmentinanearlierdecision.

CHAPTER 3.

Marketplace Conditions


CHAPTER 3. Marketplace Conditions

Historically,therehavebeenmyriadlegal,economic,andsocialobstaclesthathaveimpededminoritiesandwomenfromacquiringthehumanandfinancialcapitalnecessarytostartandoperatesuccessfulbusinesses.Barrierssuchasslavery,racialoppression,segregation,race‐baseddisplacement,andlabormarketdiscriminationproducedsubstantialdisparitiesforminoritiesandwomen,theeffectsofwhicharestillapparenttoday.Thosebarrierslimitedopportunitiesforminoritiesintermsofbotheducationandworkplaceexperience.1,2,3,4

Similarly,manywomenwererestrictedtoeitherbeinghomemakersortakinggender‐specificjobswithlowpayandlittlechanceforadvancement.5

Inthe19thandearly20thcenturies,minoritiesinColoradofacedbarriersthatweresimilartothosethatminoritiesfacednationwide.DiscriminatorytreatmentwascommonforminoritiesinDenver.BlackAmericanswereforcedtoliveinracially‐segregatedneighborhoods;sendtheirchildrentosegregatedschools;anduseseparatefacilitiesatarearestaurantsandculturalinstitutions.Disparatetreatmentalsoextendedintothelabormarket.Minoritieswereconcentratedinlowwageworkwithfewopportunitiesforadvancement.6,7,8

Inthemiddleofthe20thcentury,manylegalandworkplacereformsopenedupnewopportunitiesforminoritiesandwomennationwide.Brownv.BoardofEducation,TheEqualPayAct,TheCivilRightsAct,andTheWomen’sEducationalEquityActoutlawedmanyformsofrace‐andgender‐baseddiscrimination.Workplacesadoptedformalizedpersonnelpoliciesandimplementedprogramstodiversifytheirstaffs.9Thosereformsincreaseddiversityinworkplacesandreducededucationalandemploymentdisparitiesforminoritiesandwomen10,11,12,13However,despitethoseimprovements,minoritiesandwomencontinuetofacebarriers—suchasincarceration,residentialsegregation,andfamilyresponsibilities—thathavemadeitmoredifficulttoacquirethehumanandfinancialcapitalnecessarytostartandoperatebusinessessuccessfully.14,15,16

FederalCourtsandtheUnitedStatesCongresshaveconsideredbarriersthatminorities;women;andminority‐andwoman‐ownedbusinessesfaceinalocalmarketplaceasevidencefortheexistenceofrace‐andgender‐baseddiscriminationinthatmarketplace.17,18,19TheUnitedStatesSupremeCourtandotherfederalcourtshaveheldthatanalysesofconditionsinalocalmarketplaceforminorities;women;andminority‐andwoman‐ownedbusinessesareinstructiveindeterminingwhetheragencies’implementationsofminority‐andwoman‐ownedbusinessprogramsareappropriateandjustified.Thoseanalyseshelpagenciesdeterminewhethertheyarepassivelyparticipatinginanyrace‐orgender‐baseddiscriminationthatmakesitmoredifficultforminority‐andwoman‐ownedbusinessestosuccessfullycompetefortheircontracts.Passiveparticipationindiscriminationreferstoagenciesunintentionallyperpetuatingrace‐orgender‐baseddiscriminationsimplybyoperatingwithindiscriminatorymarketplaces.Manycourtshaveheldthatpassiveparticipationinanyrace‐orgender‐baseddiscrimination


establishesacompellinggovernmentalinterestforagenciestotakeremedialactiontoaddresssuchdiscrimination.20,21,22

Thestudyteamconductedquantitativeandqualitativeanalysestoassesswhetherminorities;women;andminority‐andwoman‐ownedbusinessesfaceanybarriersintheDenverconstruction;professionalservices;andgoodsandservicesindustries.Thestudyteamalsoexaminedthepotentialeffectsthatanysuchbarriershaveontheformationandsuccessofminority‐andwoman‐ownedbusinessesandontheirparticipationin,andavailabilityfor,contractsthattheCityofDenverawards.Thestudyteamexaminedlocalmarketplaceconditionsprimarilyinfourareas:

Humancapital,toassesswhetherminoritiesandwomenfaceanybarriersrelatedtoeducation,employment,andgainingmanagerialexperienceinrelevantindustries;

Financialcapital,toassesswhetherminoritiesandwomenfaceanybarriersrelatedtowages,homeownership,personalwealth,andaccesstofinancing;

Businessownershiptoassesswhetherminoritiesandwomenownbusinessesatratesthatarecomparabletothatofnon‐Hispanicwhitemen;and

Successofbusinessestoassesswhetherminority‐andwoman‐ownedbusinesseshaveoutcomesthataresimilartothoseofbusinessesownedbynon‐Hispanicwhitemen.

TheinformationinChapter3comesfromexistingresearchintheareaofrace‐andgender‐baseddiscriminationaswellasfromprimaryresearchthatthestudyteamconductedofcurrentmarketplaceconditions.AdditionalquantitativeandqualitativeanalysesofmarketplaceconditionsarepresentedinAppendixCandAppendixD,respectively.

A. Human Capital

Humancapitalisthecollectionofpersonalknowledge,behavior,experience,andcharacteristicsthatmakeupanindividual’sabilitytoperformandsucceedinparticularlabormarkets.Humancapitalfactorssuchaseducation,businessexperience,andmanagerialexperiencehavebeenshowntoberelatedtobusinesssuccess.23,24,25,26Anyrace‐orgender‐basedbarriersinthoseareasmaymakeitmoredifficultforminoritiesandwomentoworkinrelevantindustriesandpreventsomeofthemfromstartingandoperatingbusinessessuccessfully.

Education.Barriersassociatedwitheducationalattainmentmayprecludeentryoradvancementincertainindustries,becausemanyoccupationsrequireatleastahighschooldiploma,andsomeoccupations—suchasoccupationsinprofessionalservices—requireatleastafour‐yearcollegedegree.Inaddition,educationalattainmentisastrongpredictorofbothincomeandpersonalwealth,whicharebothshowntoberelatedtobusinessformationandsuccess.27,28Nationally,minoritieslagbehindnon‐Hispanicwhitesintermsofbotheducationalattainmentandthequalityofeducationthattheyreceive.29,30Minoritiesarefarmorelikelythannon‐Hispanicwhitestoattendschoolsthatdonotprovideaccesstocoreclassesinscienceandmath.31Inaddition,BlackAmericanstudentsaremorethanthreetimesmorelikelythannon‐Hispanicwhitestobeexpelledorsuspendedfromhighschool.32Forthoseandotherreasons,minoritiesarefarlesslikelythannon‐Hispanicwhitestoattendcollege;enrollathighly‐ormoderatelyselectivefour‐yearinstitutions;orearncollegedegrees.33


EducationaloutcomesforminoritiesinDenveraresimilartothoseforminoritiesnationwide.Thestudyteam’sanalysesoftheDenverlaborforceindicatethatcertainminoritygroupsarefarlesslikelythannon‐Hispanicwhitestoearnacollegedegree.Figure3‐1presentsthepercentageofDenverworkersthathaveearnedafour‐yearcollegedegreebyracial/ethnicandgendergroup.AsshowninFigure3‐1,BlackAmerican,AsianPacificAmerican,HispanicAmerican,andNativeAmericanworkersinDenveraresubstantiallylesslikelythannon‐Hispanicwhiteworkerstohavefour‐yearcollegedegrees.

Figure 3‐1. Percentage of workers 25 and older with at least a four‐year college degree, Denver, 2012‐2016

Note:

** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 95% confidence level.

Source:

BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

Employment and management experience.Animportantprecursortobusinessownershipandsuccessisacquiringdirectworkandmanagementexperienceinrelevantindustries.Anybarriersthatlimitminoritiesandwomenfromacquiringthatexperiencecouldpreventthemfromstartingandoperatingrelatedbusinessesinthefuture.

Employment.Onanationallevel,priorindustryexperiencehasbeenshowntobeanimportantindicatorforbusinessownershipandsuccess.However,minoritiesandwomenareoftenunabletoacquirerelevantworkexperience.Minoritiesandwomenaresometimesdiscriminatedagainstinhiringdecisions,whichimpedestheirentryintothelabormarket.34,35,36Whenemployed,minoritiesandwomenareoftenrelegatedtoperipheralpositionsinthelabormarketandtoindustriesthatexhibitalreadyhighconcentrationsofminoritiesorwomen.37,38,39,40,41Inaddition,minoritiesareincarceratedatahigherratethannon‐HispanicwhitesinColoradoandnationwide,whichcontributestoanumberoflabordifficulties,includingdifficultiesfindingsjobsandrelativelyslowwagegrowth.42,43,44,45

Thestudyteam’sanalysesofthelaborforceinDenverarelargelyconsistentwiththosefindings.Figures3‐2and3‐3presenttherepresentationsofminorityandwomenworkersinvariousDenverindustries.AsshowninFigure3‐2,theDenverindustrieswiththehighestrepresentationsofminorityworkersareconstruction;otherservices;andchildcare,hair,andnails.TheDenverindustrieswiththelowestrepresentationsofminorityworkersareextractionandagriculture;education;andarchitectureandengineering.


Figure 3‐2. Percent representation of minorities in various industries, Denver, 2012‐2016

Note: *, ** Denotes that the difference in proportions between minority workers in the specified industry and all industries is statistically significant at the 90% and 95% confidence level, respectively.

The representation of minorities among all Denver workers is 5 percent for Black Americans, 19 percent for Hispanic Americans, 4 percent for Asian Pacific Americans, 1 percent for Subcontinent Asian Americans, 1 percent for Native Americans, 0 percent for Other race minorities, and 30 percent for all minorities considered together.

Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, and scientific research industries were combined to one category of Professional Services. Workers in the rental and leasing; travel; investigation; waste remediation; arts; entertainment; recreation; accommodations; food services; and select other services were combined into one category of other services. Workers in child day care services, barber shops, beauty salons, nail salons, and other personal were combined into one category of childcare, hair, and nails.

Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

Figures3‐3indicatesthattheDenverindustrieswiththehighestrepresentationsofwomenworkersarechildcare,hair,andnails;healthcare;andeducation.TheDenverindustrieswiththelowestrepresentationsofwomenworkersareextractionandagriculture;manufacturing;andconstruction.

Management experience.Managerialexperienceisanessentialpredictorofbusinesssuccess.However,race‐andgender‐baseddiscriminationremainsapersistentobstacletogreaterdiversityinmanagementpositions.46,47,48Nationally,minoritiesandwomenarefarlesslikelythannon‐Hispanicwhitementoworkinmanagementpositions.49,50SimilaroutcomesappeartoexistforminoritiesandwomeninDenver.ThestudyteamexaminedtheconcentrationofminoritiesandwomeninmanagementpositionsintheDenverconstruction;professionalservices;andgoodsandservicesindustries.Figure3‐4presentsthoseresults.


Figure 3‐3. Percent representation of women in various industries, Denver, 2012‐2016

Note: ** Denotes that the difference in proportions between women workers in the specified industry and all industries is statistically significant at the 95% confidence level.

The representation of women among all Denver workers is 46 percent.

Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, and scientific research industries were combined to one category of Professional Services. Workers in the rental and leasing; travel; investigation; waste remediation; arts; entertainment; recreation; accommodations; food services; and select other services were combined into one category of other services. Workers in child day care services, barber shops, beauty salons, nail salons, and other personal were combined into one category of childcare, hair, and nails.


AsshowninFigure3‐4:

Comparedtonon‐Hispanicwhites,smallerpercentagesofBlackAmericans,HispanicAmericans,andNativeAmericansworkasmanagersintheDenverconstructionindustry.Inaddition,alargerpercentageofwomenthanmenworkasmanagersintheDenverconstructionindustry.

Comparedtonon‐Hispanicwhites,smallerpercentagesofBlackAmericans,AsianPacificAmericans,andHispanicAmericansworkasmanagersintheDenverprofessionalservicesindustry.

Comparedtonon‐Hispanicwhites,smallerpercentagesofBlackAmericans,AsianPacificAmericans,HispanicAmericans,NativeAmericans,andotherraceminoritiesworkasmanagersintheDenvergoodsandservicesindustry.Inaddition,asmallerpercentageofwomenthanmenworkasmanagersintheDenvergoodsandservicesindustry.


Figure 3‐4. Percentage of workers who worked as a manager in Denver, 2012‐2016

Note:

*, ** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 90% and 95% confidence level, respectively.

† Denotes that significant differences in proportions were not reported due to small sample size.

Source:


Intergenerational business experience.Havingafamilymemberwhoownsabusinessandisworkinginthatbusinessisanimportantpredictorofbusinessownershipandbusinesssuccess.Suchexperienceshelpentrepreneursgainaccesstoimportantopportunitynetworks;obtainknowledgeofbestpracticesandbusinessetiquette;andreceivehands‐onexperienceinhelpingtorunbusinesses.However,atleastnationally,minoritieshavesubstantiallyfewerfamilymemberswhoownbusinessesandbothminoritiesandwomenhavefeweropportunitiestobeinvolvedwiththosebusinesses.51,52Thatlackofexperiencemakesitmoredifficultforminoritiesandwomentosubsequentlystarttheirownbusinessesandoperatethemsuccessfully.

B. Financial Capital

Inadditiontohumancapital,financialcapitalhasbeenshowntobeanimportantindicatorofbusinessformationandsuccess.53,54,55Individualscanacquirefinancialcapitalthroughmanysources,includingemploymentwages,personalwealth,homeownership,andfinancing.Ifrace‐orgender‐baseddiscriminationexistsinthosecapitalmarkets,minoritiesandwomenmayhavedifficultyacquiringthecapitalnecessarytostart,operate,orexpandbusinesses.

Wages and income.Wageandincomegapsbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenarewell‐documentedthroughoutthecountry,evenwhenresearchershavestatisticallycontrolledforvariousfactorsunrelatedtoraceandgender.56,57,58Forexample,nationalincomedataindicatethat,onaverage,BlackAmericansandHispanicAmericanshavehouseholdincomesthatarelessthantwo‐thirdsthoseofnon‐Hispanicwhites.59,60Womenhavealsofacedconsistentwageandincomegapsrelativetomen.Nationally,themedianhourlywageofwomenisstillonly84percentthemedianhourlywageofmen.61Suchdisparitiesmakeitdifficultforminoritiesandwomentouseemploymentwagesasasourceofbusinesscapital.

BBCobservedwagegapsinDenverconsistentwiththosethatresearchershaveobservednationally.Figure3‐5presentsmeanannualwagesforDenverworkersbyrace/ethnicityandgender.AsshowninFigure3‐5,BlackAmericans,HispanicAmericans,NativeAmericans,andotherraceminoritiesinDenverearnsubstantiallylessthannon‐Hispanicwhites.Inaddition,womenworkersearnsubstantiallylessthanmen.BBCalsoconductedregressionanalysesto

Denver

Race/ethnicity

Black American 5.6 % ** 6.2 % ** 3.7 % **

Asian Pacific American 12.2 % 5.8 % ** 4.4 % **

Subcontinent Asian American 0.0 % † 9.0 % 9.7 %

Hispanic American 2.6 % ** 6.4 % ** 2.5 % **

Native American 3.9 % ** 11.3 % 3.3 % **

Other Race Minority 6.9 % † 0.0 % † 0.0 % *

Non‐Hispanic white 16.8 % 9.8 % 8.6 %

Gender

Women 14.5 % ** 8.7 % 6.3 % *

Men 10.5 % 9.5 % 7.3 %

All individuals 10.9 % 9.2 % 6.9 %

Goods &

ServicesConstruction

Professional

Services


assesswhetherwagedisparitiesexistevenafteraccountingforvariousrace‐andgender‐neutralfactorssuchasage,education,andfamilystatus.ThoseanalysesindicatedthatbeingBlackAmerican,AsianPacificAmerican,SubcontinentAsianAmerican,HispanicAmerican,NativeAmerican,orotherraceminoritywasassociatedwithsubstantiallylowerwagesthanbeingnon‐Hispanicwhite,evenafteraccountingforvariousrace‐andgender‐neutralfactors.Similarly,beingawomanwasassociatedwithlowerearningsthanbeingaman(fordetails,seeFigureC‐10inAppendixC).

Figure 3‐5. Mean annual wages, Denver, 2012‐2016

Note:

The sample universe is all non‐institutionalized, employed individuals aged 25‐64 that are not in school, the military, or self‐employed.

** Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level.

Source:


Personal wealth.Anotherimportantpotentialsourceofbusinesscapitalispersonalwealth.Aswithwagesandincome,therearesubstantialdisparitiesbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenintermsofpersonalwealth.62,63Forexample,in2010,BlackAmericansandHispanicAmericansacrossthecountryexhibitedaveragehouseholdnetworththatwas5percentand1percentthatofnon‐Hispanicwhites,respectively.InColoradoandnationwide,approximatelyone‐quarterofBlackAmericansandHispanicAmericansarelivinginpoverty,aboutdoublethecomparableratesfornon‐Hispanicwhites.64Wealthinequalitiesalsoexistforwomenrelativetomen.Forexample,themedianwealthofnon‐marriedwomennationallyisapproximatelyone‐thirdthatofnon‐marriedmen.65

Homeownership.Homeownershipandhomeequityhavebeenshowntobekeysourcesofbusinesscapital.66,67However,minoritiesappeartofacesubstantialbarriersnationwideinowninghomes.Forexample,BlackAmericansandHispanicAmericansownhomesatlessthantwo‐thirdstherateofnon‐Hispanicwhites.68Discriminationisatleastpartlytoblameforthosedisparities.Researchindicatesthatminoritiescontinuetobegivenlessinformationonprospectivehomesandhavetheirpurchaseoffersrejectedbecauseoftheirrace.69,70Minoritieswhoownhomestendtoownhomesthatareworthsubstantiallylessthanthoseofnon‐Hispanicwhitesandalsotendtoaccruesubstantiallylessequity.71,72Differencesinhomevaluesandequitybetweenminoritiesandnon‐Hispanicwhitescanbeattributed—atleast,inpart—tothedepressedpropertyvaluesthattendtoexistinracially‐segregatedneighborhoods.73,74


MinoritiesappeartofacehomeownershipbarriersinDenverthataresimilartothoseobservednationally.BBCexaminedhomeownershipratesinDenverforrelevantracial/ethnicgroups.AsshowninFigure3‐6,BlackAmericans,AsianPacificAmericans,SubcontinentAsianAmericans,HispanicAmericans,andNativeAmericansinDenverexhibithomeownershipratesthataresignificantlylowerthanthatofnon‐Hispanicwhites.

Figure 3‐6. Home Ownership Rates, Denver, 2012‐2016

Note:

The sample universe is all households.

** Denotes statistically significant differences from non‐Hispanic whites at the 95% confidence level.

Source:


Figure3‐7presentsmedianhomevaluesamonghomeownersofdifferentracial/ethnicgroupsinDenver.Consistentwithnationaltrends,homeownersofcertainminoritygroups—BlackAmericans,HispanicAmericans,NativeAmericans,andotherraceminorities—ownhomesthat,onaverage,areworthsubstantiallylessthanthoseofnon‐Hispanicwhites.

Figure 3‐7. Median home values, Denver Region, 2012‐2016

Note:

The sample universe is all owner‐occupied housing units.

Source:


Access to financing. Minoritiesandwomenfacemanybarriersintryingtoaccesscreditandfinancing,bothforhomepurchasesandforbusinesscapital.Researchershaveoftenattributedthosebarrierstovariousformsofrace‐andgender‐baseddiscriminationthatexistincreditmarkets.75,76,77,78,79,80Thestudyteamsummarizesresultsrelatedtodifficultiesthatminorities;women;andminority‐andwoman‐ownedbusinessesfaceinthehomecreditandbusinesscreditmarkets.

Home credit.Minoritiesandwomencontinuetofacebarrierswhentryingtoaccesscredittopurchasehomes.Examplesofsuchbarriersincludediscriminatorytreatmentofminoritiesandwomenduringthepre‐applicationphaseanddisproportionatetargetingofminorityandwomenborrowersforsubprimehomeloans.81,82,83,84,85Race‐andgender‐basedbarriersinhomecredit


markets,aswellastherecentforeclosurecrisis,haveledtodecreasesinhomeownershipamongminoritiesandwomenandhaveerodedtheirlevelsofpersonalwealth.86,87,88,89

Toexaminehowminoritiesfareinthehomecreditmarketrelativetonon‐Hispanicwhites,thestudyteamanalyzedhomeloandenialratesforhigh‐incomehouseholdsbyrace/ethnicity.ThestudyteamanalyzedthosedataforDenverandtheUnitedStatesasawhole.AsshowninFigure3‐8,allrelevantminoritygroupsexhibithigherhomeloandenialratesthannon‐HispanicwhiteswhenconsideringboththeUnitedStatesandDenverinparticular.Inaddition,thestudyteam’sanalysesindicatethatcertainminoritygroupsinDenveraremorelikelythannon‐Hispanicwhitestoreceivesubprimemortgages(fordetails,seeFigureC‐14inAppendixC).

Figure 3‐8. Denial rates of conventional purchase loans for high‐income households, Denver and the United States, 2016

Note:

High‐income borrowers are those households with 120% or more of the HUD area median family income (MFI).

Source:

FFIEC HMDA data. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.

Business credit.Minority‐andwoman‐ownedbusinessesfacesubstantialdifficultiesaccessingbusinesscreditaswell.Forexample,duringloanpre‐applicationmeetings,minority‐ownedbusinessesaregivenlessinformationaboutloanproducts,aresubjectedtomorecreditinformationrequests,andareofferedlesssupportthantheirnon‐Hispanicwhitecounterparts.90

ResearchershaveshownthatBlackAmerican‐ownedbusinessesandHispanicAmerican‐ownedbusinessesaremorelikelytoforegosubmittingbusinessloanapplicationsandaremorelikelytobedeniedbusinesscreditwhentheydoseekloans,evenafteraccountingforvariousrace‐andgender‐neutralfactors.91,92,93Inaddition,womenarelesslikelytoapplyforcreditandreceiveloansoflessvaluewhentheydo.94,95Withoutequalaccesstobusinesscapital,minority‐andwoman‐ownedbusinessesmustoperatewithlesscapitalthanbusinessesownedbynon‐Hispanicwhitemenandrelymoreonpersonalfinances.96,97,98,99

C. Business Ownership

Nationally,therehasbeensubstantialgrowthinthenumberofminority‐andwoman‐ownedbusinessesinrecentyears.Forexample,from2007to2012,thenumberofwoman‐ownedbusinessesincreasedby27percent,thenumberofBlackAmerican‐ownedbusinessesincreasedby35percent,andthenumberofHispanicAmerican‐ownedbusinessesincreasedby46percent.100Despitetheprogressthatminoritiesandwomenhavemadewithregardtobusinessownership,importantbarriersinstartingandoperatingbusinessesremain.BlackAmericans,HispanicAmericans,andwomenarestilllesslikelytostartbusinessesthannon‐Hispanicwhitemen.101,102,103,104Inaddition,althoughratesofbusinessownershiphaveincreasedamong


minoritiesandwomen,theyhavebeenunabletopenetrateallindustriesevenly.Minoritiesandwomendisproportionatelyownbusinessesinindustriesthatrequirelesshumanandfinancialcapitaltobesuccessfulandthatalreadyincludelargeconcentrationsofindividualsfromdisadvantagedgroups.105,106,107ThestudyteamexaminedratesofbusinessownershipintheDenverconstruction;professionalservices;andgoodsandservicesindustriesbyrace/ethnicityandgender.AsshowninFigure3‐9:

BlackAmericans,AsianPacificAmericans,andHispanicAmericansexhibitlowerratesofbusinessownershipthannon‐HispanicwhitesintheDenverconstructionindustry.Inaddition,womenexhibitlowerratesofbusinessownershipthanmen.

BlackAmericans,AsianPacificAmericans,SubcontinentAsianAmericans,andHispanicAmericansexhibitlowerratesofbusinessownershipthannon‐HispanicwhitesintheDenverprofessionalservicesindustry.

BlackAmericans,SubcontinentAsianAmericans,andHispanicAmericansexhibitlowerratesofbusinessownershipthannon‐HispanicwhitesintheDenvergoodsandservicesindustry.

Figure 3‐9. Self‐employment rates in Denver, 2012‐2016

Note:

*,** Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 90% and 95% confidence levels, respectively.


Source:

BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

BBCalsoconductedregressionanalysestodeterminewhetherdifferencesinbusinessownershipratesbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenexistevenafterstatisticallycontrollingforvariousrace‐andgender‐neutralfactorssuchasincome,education,andfamilialstatus.Thestudyteamconductedthoseanalysesseparatelyforeachrelevantindustry.Figure3‐10presentstherace/ethnicityandgenderfactorsthatweresignificantlyandindependentlyrelatedtobusinessownershipforeachrelevantindustry.

Denver

Race/ethnicity

Black American 14.3 % ** 7.9 % ** 6.8 % **

Asian Pacific American 17.9 % * 7.8 % ** 11.3 %

Subcontinent Asian American 0.0 % † 3.3 % ** 5.8 % **


Native American 18.2 % 15.5 % 16.3 %

Other Race Minority 23.9 % † 4.8 % † 6.6 %


Gender

Women 16.4 % ** 19.4 % ** 13.3 %

Men 21.4 % 16.9 % 12.5 %

All individuals 20.9 % 17.9 % 12.8 %

Construction

Goods &

Services

Professional

Services


Figure 3‐10. Statistically significant relationships between race/ethnicity and gender and business ownership in study‐related industries in Denver, 2012‐2016

Source:


AsshowninFigure3‐10,evenafteraccountingforrace‐andgender‐neutralfactors:

BeingHispanicAmericanorawomanwasassociatedwithlowerratesofbusinessownershipintheconstructionindustry.

BeingBlackAmerican,AsianPacificAmerican,orSubcontinentAsianAmericanwasassociatedwithlowerratesofbusinessownershipintheprofessionalservicesindustry.

BeingBlackAmericanorSubcontinentAsianAmericanwasassociatedwithlowerratesofbusinessownershipinthegoodsandservicesindustry.

Thus,disparitiesinbusinessownershipratesbetweenminoritiesandnon‐Hispanicwhitesandbetweenwomenandmenarenotcompletelyexplainedbydifferencesinrace‐andgender‐neutralfactorssuchasincome,education,andfamilialstatus.Disparitiesinbusinessownershipratesexistforseveralgroupsinallrelevantindustriesevenafteraccountingforsuchfactors.

D. Business Success

Thereisagreatdealofresearchindicatingthat,nationally,minority‐andwoman‐ownedbusinessesfareworsethanbusinessesownedbynon‐Hispanicwhitemen.Forexample,BlackAmericans,NativeAmericans,HispanicAmericans,andwomenexhibithigherratesofmovingfrombusinessownershiptounemploymentthannon‐Hispanicwhitesandmen.Inaddition,minority‐andwoman‐ownedbusinesseshavebeenshowntobelesssuccessfulthanbusinessesownedbynon‐Hispanicwhitesandmenusinganumberofdifferentindicatorssuchasprofits,closurerates,andbusinesssize(butalsoseeRobbandWatson2012).108,109,110Thestudyteamexamineddataonbusinessclosure,businessreceipts,andbusinessownerearningstofurtherexplorethesuccessofminority‐andwoman‐ownedbusinessesinDenver.

Business closure. ThestudyteamexaminedtheratesofclosureamongColoradobusinessesbytherace/ethnicityandgenderoftheowners.Figure3‐11presentsthoseresults.AsshowninFigure3‐11,BlackAmerican‐ownedbusinesses,AsianAmerican‐ownedbusinesses,andHispanicAmerican‐ownedbusinessesinColoradoappeartocloseathigherratesthannon‐Hispanicwhite‐ownedbusinesses.Inaddition,woman‐ownedbusinessesinColoradoappeartocloseathigherratesthanbusinessesownedbymen.Increasedratesofbusinessclosureamong

Industry and Group

Construction

Hispanic American ‐0.3820

Women ‐0.4076

Professional Services

Black American ‐0.3617

Asian Pacific American ‐0.4676

Subcontinent Asian American ‐0.7729

Goods and Services


Subcontinent Asian American ‐0.4132

Coefficient


minority‐andwoman‐ownedbusinessesmayhaveimportanteffectsontheiravailabilityforgovernmentcontractsinColoradoandDenver.

Figure 3‐11. Rates of business closure in Colorado, 2002‐2006

Note:

Data include only to non‐publicly held businesses.

Equal Gender Ownership refers to those businesses for which ownership is split evenly between women and men.

Statistical significance of these results cannot be determined, because sample sizes were not reported.

Source:

Lowrey, Ying. 2010. “Race/Ethnicity and Establishment Dynamics, 2002‐2006.” U.S. Small Business Administration Office of Advocacy. Washington D.C.

Lowrey, Ying. 2014. "Gender and Establishment Dynamics, 2002‐2006." U.S. Small Business Administration Office of Advocacy. Washington D.C.

Business receipts. BBCalsoexamineddataonbusinessreceiptstoassesswhetherminority‐andwoman‐ownedbusinessesinDenverearnasmuchasbusinessesownedbywhitesorbusinessesownedbymen,respectively.Figure3‐12showsmeanannualreceiptsforDenverbusinessesbytherace/ethnicityandgenderofowners.Thoseresultsindicatethatin2012allrelevantminoritygroupsinDenvershowedlowermeanannualbusinessreceiptsthanbusinessesownedbywhites.Inaddition,woman‐ownedbusinessesinDenvershowedlowermeanannualbusinessreceiptsthanbusinessesownedbymen.

Figure 3‐12. Mean annual business receipts (in thousands), Denver‐Aurora, CO CSA, 2012

Note:

Includes employer and non‐employer firms. Does not include publicly‐traded companies or other firms not classifiable by race/ethnicity and gender.

Source:

2012 Survey of Business Owners, part of the U.S. Census Bureau’s 2012 Economic Census.

Business owner earnings.ThestudyteamanalyzedbusinessownerearningstoassesswhetherminoritiesandwomeninDenverearnasmuchfromthebusinessesthattheyownasnon‐Hispanicwhitesandmendo.AsshowninFigure3‐13,BlackAmericans,HispanicAmericans,andNativeAmericansearnedlessonaveragefromtheirbusinessesthannon‐Hispanicwhitesearnedfromtheirbusinesses.Inaddition,womeninDenverearnedlessfromtheirbusinessesthanmenearnedfromtheirbusinesses.BBCalsoconductedregressionanalysestodeterminewhetherearningsdisparitiesinDenverexistevenafterstatisticallycontrollingfor


variousrace‐andgender‐neutralfactorssuchasage,education,andfamilystatus.TheresultsofthoseanalysesindicatedthatbeingBlackAmericanorawomanwasassociatedwithsubstantiallylowerbusinessownerearnings(fordetails,seeFigureC‐27inAppendixC).

Figure 3‐13. Mean annual business owner earnings, Denver, 2012‐2016

Note:

The sample universe is business owners age 16 and older who reported positive earnings. All amounts in 2016 dollars.

** Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level.


Source:


E. Summary

BBC’sanalysesofmarketplaceconditionsindicatethatminorities;women;andminority‐andwoman‐ownedbusinessesfacesubstantialbarriersnationwideandinDenver.Existingresearch,aswellasprimaryresearchthatthestudyteamconducted,indicatethatrace‐andgender‐baseddisparitiesexistintermsofacquiringhumancapital,accruingfinancialcapital,owningbusinesses,andoperatingsuccessfulbusinesses.Inmanycases,thereisevidencethatthosedisparitiesexistevenafteraccountingforvariousrace‐andgender‐neutralfactorssuchasage,income,education,andfamilialstatus.Thereisalsoevidencethatmanydisparitiesaredue—atleast,inpart—torace‐andgender‐baseddiscrimination.

BarriersinthemarketplacelikelyhaveimportanteffectsontheabilityofminoritiesandwomentostartbusinessesinrelevantDenverindustries—construction;professionalservices;andgoodsandservices—andoperatingthosebusinessessuccessfully.Anydifficultiesthatminoritiesandwomenfaceinstartingandoperatingbusinessesmayreducetheiravailabilityforgovernmentagencyworkandmayalsoreducethedegreetowhichtheyareabletosuccessfullycompeteforgovernmentcontracts.Inaddition,theexistenceofbarriersintheDenvermarketplaceindicatesthatgovernmentagenciesinthestatearepassivelyparticipatinginrace‐andgender‐baseddiscriminationthatmakesitmoredifficultforminority‐andwoman‐ownedbusinessestosuccessfullycompetefortheircontracts.Manycourtshaveheldthatpassiveparticipationinanyrace‐orgender‐baseddiscriminationestablishesacompellinggovernmentalinterestforagenciestotakeremedialactiontoaddresssuchdiscrimination.


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92Blanchflower,DavidG.,PhillipB.Levine,andDavidJ.Zimmerman.2003.“DiscriminationintheSmallBusinessCreditMarket.”TheReviewofEconomicsandStatistics85(4):930–43.

93Bates,TimothyandAliciaRobb.2016.“ImpactsofOwnerRaceandGeographicContextonAccesstoSmallBusinessFinancing.”EconomicDevelopmentQuarterly30(2):159‐170.94Mijid,NaranchimegandAlexandraBernasek.2013.“GenderandtheCreditRationingofSmallBusinesses.”TheSocialScienceJournal50(1):55–65.95Treichel,MonicaZimmermanandJonathanA.Scott.2006.“Women‐OwnedBusinessesandAccesstoBankCredit:EvidencefromThreeSurveysSince1987.”VentureCapital8(1):51–67.

96Coleman,SusanandAliciaRobb.2009.“AComparisonofNewFirmFinancingbyGender:EvidencefromtheKauffmanFirmSurveyData.”SmallBusinessEconomics33(4):397–411.


97Robb,AliciaandRobertFairlie.2007.“AccesstoFinancialCapitalamongU.S.Businesses:TheCaseofAfricanAmericanFirms.”TheAnnalsoftheAmericanAcademyofPoliticalandSocialScience613(1):47–72.

98Robb,Alicia,SusanColeman,andDaneStangler.2014.SourcesofEconomicHope:Women’sEntrepreneurship.KansasCity,KS:EwingMarionKauffmanFoundation.RetrievedNovember3,2016(http://www.kauffman.org/what‐we‐do/research/2014/11/sources‐of‐economic‐hope‐womens‐entrepreneurship).

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101Fairlie,RobertW.andAliciaM.Robb.2009b.“GenderDifferencesinBusinessPerformance:EvidencefromtheCharacteristicsofBusinessOwnersSurvey.”SmallBusinessEconomics33(4):375–95.

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107Bahn,Kate,ReginaWillensky,andAnnieMcgrew.2016.AProgressiveAgendaforInclusiveandDiverseEntrepreneurship.WashingtonD.C.:CenterforAmericanProgress.RetrievedDecember1,2016(https://www.americanprogress.org/issues/economy/reports/2016/10/13/146019/a‐progressive‐agenda‐for‐inclusive‐and‐diverse‐entrepreneurship/).108Fairlie,RobertW.andAliciaM.Robb.2008.RaceandEntrepreneurialSuccess:Black‐,Asian‐,andWhite‐OwnedBusinessesintheUnitedStates.Cambridge,Mass.:MITPress.

109Coleman,SusanandAliciaRobb.2009.“AComparisonofNewFirmFinancingbyGender:EvidencefromtheKauffmanFirmSurveyData.”SmallBusinessEconomics33(4):397–411.

110Robb,AliciaM.andJohnWatson.2012.“GenderDifferencesinFirmPerformance:EvidencefromNewVenturesintheUnitedStates.”JournalofBusinessVenturing27(5):544–58.

CHAPTER 4.

Collection and Analysis of Contract Data


CHAPTER 4. Collection and Analysis of Contract Data

Chapter4providesanoverviewofthepoliciesthattheCityandCountyofDenver(theCity)usestoawardcontractsandprocurements;thecontractsandprocurementsthatthestudyteamanalyzedaspartofthedisparitystudy;andtheprocessthatthestudyteamusedtocollectrelevantprimecontractandsubcontractdataforthedisparitystudy.Chapter4isorganizedintosevenparts:

A. Overviewofcontractingandprocurementpolicies;

B. Collectionandanalysisofcontractandprocurementdata;

C. Collectionofvendordata;

D. Relevantgeographicmarketarea;

E. Relevanttypesofwork;

F. Collectionofbidandproposaldata;and

G. Agencyreviewprocess.

A. Overview of Contracting and Procurement Policies

TheCityandCountyofDenver’sDivisionofSmallBusinessOpportunity(DSBO)providesguidancetoalldepartmentsandcontractingofficerstoensureconsistencyinprocurementproceduresandcompliancewithCitycoderegardingcontractingandprocurement.TheCityhasdevelopeddetailedguidelinesforprocuringconstructionanddesignservicesaswellasgoodsandservices.ThoseguidelineswerelastupdatedinMay2011andarefoundinExecutiveOrder8,MemorandumA.

SeveraldepartmentswithintheCityawardcontractswithinconstruction;professionalservices;andgoodsandservices.However,themajorityofthosecontractsareprocuredthroughtheDepartmentofPublicWorks,DenverInternationalAirport(DEN),andthePurchasingDepartment.Contractsthatthosethreedepartmentsawardedduringthestudyperiodaccountedfor88percentofthecontractsthatthestudyteamanalyzedaspartofthedisparitystudy.Thecontractingpoliciesofthosethreedepartmentsaredescribedbelow.

Public Works. CityCouncilandtheMayor’sOfficeprovideoversightonallcontractsandprocurementsthatPublicWorksawards.Forallconstructionanddesignservicescontracts,PublicWorksadvertisessolicitationsintheDailyJournal;onWork4Denver,whichisthePublicWorksContractAdministrationwebpage;andthroughQwestCDN,whichisanonlinebidplatform.VendorsmustdownloadsolicitationsthroughQwestCDNandarechargedafeetodoso.Solicitationsincludeadescriptionoftherequiredservices,evaluationcriteria,submissioninformation,andcontactinformationforaCityrepresentative.

Construction.PublicWorksawardsconstructionsolicitationsthroughhardbid,constructionmanager/generalcontractor,design/build,ormasteron‐call/integratedcontractingprocesses,


althoughthemajorityofPublicWorkscontractsareawardedthroughahardbidprocess(i.e.,tothelowestresponsiveandresponsiblebidder).Aspartofahardbidprocess,thecontractadministratorandprojectmanagerareresponsibleforpreparingeachconstructionsolicitationandadvertisingitthroughtheappropriatechannels.Theybegineachsolicitationbyconductingapre‐bidconferencetobringtogetherpotentialbiddersandsubcontractorstolearnmoreabouttheopportunity.Allqualifiedbiddersarethenrequiredtosubmitasealedbidbytheduedatetobeconsideredforthecontract.PublicworkscollectsallbidsandsendsthemtotheprojectmanagerandDSBO.Thedepartmentthenawardsthecontracttothelowestresponsiveandresponsiblebidder.

Professional services.Professionalservicessolicitationsareawardedthroughqualifications‐basedselectionprocesses(i.e.,factorsotherthancostaretakenintoconsideration).Aqualifications‐basedselectionprocessallowsPublicWorkstonegotiateacontractforprofessionalservicesatafairandreasonablepricewiththebestqualifiedfirm.Therearetwotypesofqualifications‐basedselectionprocessesthatPublicWorksuses:

PublicWorkssometimesusesadirectselectionprocessbywhichthedepartmentselectsanawardeefromwrittenproposalsanddoesnotrequireinterviews;or

PublicWorksusesamulti‐stepselectionprocessbywhichinterestedconsultantssubmitproposals,andthenthedepartmentdevelopsashortlistofthethreemostqualifiedfirmsandinterviewsthembeforeselectinganawardee.

RegardlessofwhetherPublicWorksusesadirectselectionprocessoramulti‐stepselectionprocess,thecontractadministratorisresponsibleforpreparingeachsolicitationandadvertisingitthroughtheappropriatechannels.PublicWorkscollectsallresponsesandsendsthemtotheprojectmanagerandDSBO.Aselectioncommitteeconvenestorevieweachproposalinordertoensureafairandopenselectionprocess.Thecommitteedevelopsevaluationcriteriaandscoreseachproposalbasedonthosecriteria.Oncethecommitteeselectsaconsultant,theprojectmanagernegotiatesfairandreasonablecompensationforthedesiredservices.

DEN.CityCouncilandtheMayor’sOfficealsoprovideoversightonallcontractsandprocurementsthatDENawards.TheCityhassetthefollowingthresholdsforwhenCityCouncilapprovalisrequiredforDENcontractsandprocurements:

Constructioncontractsworth$5millionormore;

Professionalservicescontractsworth$500,000ormore;and

Allrevenueagreements,grants,landagreements.

DENcurrentlyawardsthreetypesofcontractsandprocurements:expenditurecontracts,whichincludebothlargeconstructionandprofessionalservicescontracts;informalprocurements,whichincludesmallprofessionalservicescontracts;andrevenuecontracts.Revenuecontractswerenotincludedaspartofthedisparitystudyandsoarenotdiscussedfurther.

Expenditure contracts.Expenditurecontractsincludelargeconstructionandprofessionalservicecontractsandareawardedusingformalbidprocesses.Formalbidprocessesincludedifferentprocurementvehiclessuchasrequestsforproposals(RFPs),requestsforinformation


(RFIs),invitationsforbids(IFBs),andrequestsforquotes(RFQs),whichareallreferredtohereinasRFxs.PriortothereleaseofanRFx,DENhostsoutreachsessionstoinformthecommunityoftheupcomingopportunity.Fourtosixweekspriortotheduedate,theRFxisadvertisedonDEN’swebsite.Ifnecessary,apre‐proposalconferenceisheldtwoweeksafterRFxadvertisingtoexplainprocurementrequirementsandanswerpotentialproposers’questions.Inaddition,thereisaquestion‐and‐answerperiodtoallowinterestedbusinessestosubmitquestionspertainingtotheRFx.RFxresponsescanbesubmittedinpersontotheAirportOfficeBuilding,bymailtotheDENCopyCenter,orthroughDEN’selectronicportal.

Toensureafairandopenprocess,theContractAdministratorfortheRFxwillconvenecommunitymembersandairlinememberstoserveonanevaluationpanel.ThelistofpanelmembersissubmittedtoDEN’sChiefExecutiveOfficer(CEO)forapproval.Panelmembersthenparticipateinatrainingtoprovideguidanceontheirrolesandtheevaluationprocess.Theevaluationpanelreviewsandscoreseachproposalbasedonthecriteriasetbythecontractadministrator.Insomeinstances,theevaluationpanelwillinterviewrespondersandscoretheirinterviewsaspartoftheevaluationprocess.Thecontractadministratorwillcomputescoresandconductameetingwiththeprojectmanager,sponsoringSeniorVicePresident,andotherstakeholders.ThegroupwilldraftaSelectionRecommendationMemo,whichitthensubmitstotheCEOforapproval.Thesuccessfulrespondentwillthenbenotifiedofcontractaward.

Informal procurements.DENawardsprofessionalservicescontractsworthlessthan$100,000usinginformationprocesses.Aspartoftheprocess,thecontractadministratorcollectsatleastthreebidsfromvendorswhoareknowntoperformthedesiredwork.Allbidsarereviewedandevaluatedbytheprojectmanagementteam,anditthenselectsthebidfromthemostqualifiedvendor.

Purchasing. TheCity’sPurchasingDivisionisresponsibleforthepurchasesofgoodsandservices.PurchasingfollowstheprocurementpoliciesoutlinedintheCharter,DenverRevisedMunicipalCode(D.R.M.C.),ExecutiveOrders,andtheFiscalAccountabilityRules.Goodsandgeneralservicepurchasescanbecategorizedintothreecategories:

Procurementsworth$10,000orless(openmarket);

Procurementsworthmorethan$10,000butlessthan$50,000(informalsolicitations);and

Procurementsworth$50,000ormore(formalsolicitations).

Open market. Forgoodsandservicesworth$10,000orless,aCitybuyerdetermineswhetherasolicitationisnecessary.Openmarketproceduresdonotrequireformaladvertisingnoraretheyrequiredtobeopentothepublic.Inmanycases,openmarketprocurementsdonotrequireproofofinsuranceorbonding.

Informal solicitations.Forgoodsandservicesworthmorethan$10,000butlessthan$50,000,Purchasingusesaninformalsolicitationprocess.ACitybuyercansolicitvendorsforbidsviae‐mail,fax,mail,ortelephone.Informalsolicitationsarenotrequiredtobeadvertisednoraretheyopentothepublic.Inmanycases,informalsolicitationsdonotrequireproofofinsuranceorbonding.


Formal solicitations.Forgoodsandservicesworth$50,000ormore,formalsolicitationsarerequired.Aformalsolicitationincludesasealedproposal,aformaladvertisement,and,inmanycases,proofofinsuranceandbonding.PurchasingadvertisesallformalsolicitationsintheOfficeCityNoticeorotherappropriatemedia.InformationregardingformalsolicitationscanbefoundonBidNet.Alternatively,vendorscanobtainformalsolicitationsfromthePurchasingofficeorcanrequestthatsolicitationsbemailedtothem.Purchasingawardsformalsolicitationstothelowestresponsive,responsible,andqualifiedbidder.

Other procurements.ThePurchasingdepartmentprocuresseveralothertypesofgoodsandservicesusingoneofthefollowingprocesses.

Individualpurchaseorder.IndividualpurchaseorderscanberequestedbyaCitydepartmentforanykindofsolicitation.IndividualpurchaseordersaretheprimarywayinwhichPurchasingprocuresgoodsandservicesonbehalfoftheCity.

Contracts.Purchasingusescontractsfortheprocurementofeitherone‐timeorrecurringservicesthatCitydepartmentsmightrequest.WhenPurchasingcreatesacontract,itisthenheldandmanagedbytheCitydepartmentthatrequestedtheassociatedservices.

Masterpurchaseorder.Purchasingusesmasterpurchaseorderstocontractwithvendorsforgoodsorservicesinconnectionwithanothergoodthathasalreadybeenpurchases(e.g.,installationofthealready‐purchasedgood).Masterpurchaseordersareconsideredopen‐endedandthusallowtheCitytopurchasefromasuccessfulvendoronanas‐neededbasisduringthecontract’seffectivedates.Masterpurchaseordersareonlyusedforpurchasesworth$50,000ormoreusingaformalsolicitationprocess.

Blanketpurchaseorder.PurchasingusesblanketpurchaseordersthatCitydepartmentscanuseonanas‐neededbasisforproductsthatarepartofaparticularfamilyofproducts.Aspartofthatprocess,Purchasingrequestsafirmpricefromavendorandthenissuesablanketpurchaseordercoveringtheamount,althoughthetotalamountmaynotbespent.

Procurementcards(p‐cards).SomeCitypersonnelhavep‐cards,whichareusedtopurchasecertaingoodsandservicesworthlessthan$2,000andthathavebeenidentifiedandapprovedbytheManagerofGeneralServices.Thosepurchasesaretypicallyonanon‐recurringbasisandusuallycannotbecoveredbyanexistingmasterpurchaseorder,blanketpurchaseorder,orcontract.1P‐cardpurchaseswerenotincludedaspartofdisparitystudyanalyses.

Cooperativepurchasing.UndertheCodeofOrdinanceSection20‐64.5,Purchasingcanauthorizetheprocurementofagoodorgeneralservicethatispartofanintergovernmentalagreement,shouldthatpurchasebeinthebestinterestoftheCity.

1Undercertaincircumstances,p‐cardscanbecomepartofamasterpurchaseorderthatcoversgoodsthattheCitydepartmentispurchasing.


B. Collection and Analysis of Contract Data and Procurement Data

BBCResearch&Consulting(BBC)collectedcontractingandvendordatafromtheCity’sAlfresco,B2Gnow,andPeopleSoftdatasystemstoserveasthebasisofkeydisparitystudyanalyses,includingtheutilization,availability,anddisparityanalyses.ThestudyteamcollectedthemostcomprehensivedatathatwasavailableonprimecontractsandsubcontractsthattheCityawardedbetweenJanuary1,2012andDecember31,2016.BBCsoughtdatathatincludedinformationaboutprimecontractorsandsubcontractors,regardlessoftherace/ethnicityandgenderoftheirownersortheirstatusesascertifiedminority‐ownedbusinessenterprises(MBEs)orwoman‐ownedbusinessenterprises(WBEs).Thestudyteamcollecteddataonconstruction;professionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteam’sanalysesincludedallcontractsandpaymentsworth$5,000ormore.2

Prime contract data collection.TheCityprovidedthestudyteamwithelectronicdataonconstruction;professionalservices;andgoodsandservicesprimecontractsthattheagencyawardedduringthestudyperiod.Asavailable,BBCcollectedthefollowinginformationabouteachrelevantprimecontract:

Contractorpurchaseordernumber;

Descriptionofwork;

Awarddate;

Awardamount(includingchangeordersandamendments);

Amountpaid‐to‐date;

WhetherMWBEorDisadvantagedBusinessEnterprisecontractgoalswereused;

Fundingsource(federalorlocalfunding);

Primecontractorname;and

Primecontractoridentificationnumber,suchasavendornumber.

TheCityalsoprovidedthestudyteamwithinformationaboutpaymentsthattheCitymadeduringthestudyperiodoncontractsthatwereawardedusingcontractgoals(i.e.,goalscontracts)andonallprocurements.TheCityadvisedthestudyteamonhowtointerprettheprovideddata,includinghowtoidentifyuniquebidopportunitiesandhowtoaggregaterelatedpaymentamounts.Whenpossible,thestudyteamaggregatedindividualpaymentsintolarger,relatedpurchases.Ininstanceswherepaymentinformationcouldnotbeaggregated,thestudyteamtreatedpaymentrecordsasindividualpurchases.

Subcontract data collection.TheCityprovidedthestudyteamwithelectronicdataonsubcontractsrelatedtogoalscontractsthatitawardedduringthestudyperiod.Togather

2Thestudyteamchose$5,000asitsanalysisthresholdbecausemanypurchasesworthlessthan$5,000representedarelativelysmallamountofthecontractingdollarsthattheCityspentduringthestudyperiod.Purchasesworth$5,000ormoreaccountedformorethan99percentofallCitycontractingdollarsthattheCityspentduringthestudyperiod.


comprehensivesubcontractdataoncontractsthattheCityawardedwithouttheuseofcontractgoals(i.e.,no‐goalscontracts),thestudyteamconductedsurveyswithprimecontractorstocollectinformationonthesubcontractsthatwereassociatedwiththecontractsonwhichtheyworkedduringthestudyperiod.BBCsentoutsurveystorequestsubcontractdataon325no‐goalscontractsthattheCityawardedduringthestudyperiod.Afterthefirstroundofsurveys,BBCworkedwiththeCitytocontacttheremainingunresponsiveprimecontractorswiththehighestvaluedcontracts.BBCcollectedthefollowinginformationabouteachrelevantsubcontractaspartofthesurveyprocess:

Associatedprimecontractnumber;

Amountawardedonthesubcontract;

Amountpaidonthesubcontract;

Descriptionofwork;

Subcontractorname;and

Subcontractorcontactinformation.

Thosecontractsaccountedforapproximately$858millioncontractdollarsduringthestudyperiod.Throughthesurveyeffort,BBCcollectedsubcontractdataassociatedwithmorethan$595million,or69percent,ofthosecontractdollars.

Contracts included in study analyses. Thestudyteamcollectedinformationon18,799relevantprimecontractelementsand2,991associatedsubcontractsthattheCityawardedduringthestudyperiodintheareasofconstruction;professionalservices;andgoodsandservices.Thosecontractsaccountedforapproximately$3.5billionofcontractingdollarsawardedbytheCityduringthestudyperiod.Figure4‐1presentsdollarsbyrelevantcontractingareafortheprimecontractandsubcontractelementsthatthestudyteamincludedinitsanalyses.ThestudyteamcombineditsanalysesforgoodsandservicescontractsbecausetheCityusessimilarprocurementprocessestoawardthosecontracts.

Figure 4‐1. Number of City contracts included in the study

Note:

Numbers rounded to nearest dollar and thus may not sum exactly to totals.

Source:

BBC Research & Consulting from City contract and payment data.

C. Collection of Vendor Data

TheCitymaintainsacomprehensivelistofallbusinessesthathavedonebusinessorexpressedinterestindoingbusinesswiththeCity.ThestudyteamcompiledvendordatathattheCityAttorney’sOfficeprovided.ThestudyteamcompiledthefollowinginformationonbusinessesthatparticipatedinrelevantCitycontractsduringthestudyperiod:

Businessname;

Contract Type

Construction 9,218 $2,233,136

Construction‐related professional services 4,480 $520,234

Goods and general services 8,092 $744,182

Total 21,790 $3,497,551

Number of

Contract

Elements

Dollars

(in thousands)


Physicaladdresses,emailaddresses,andphonenumbers;

Ownershipstatus(i.e.,whethereachbusinesswasminority‐ownedorwoman‐owned);

Ethnicityofownership(ifminority‐owned);

MWBEcertificationstatus;

Primarylinesofwork;

Businesssize;and

Yearofestablishment.

BBCreliedonavarietyofsourcesforthatinformation,including:

Citycontractandvendordata;

Citycertifiedfirmdirectory;

StateofColoradoUnifiedCertificationProgramdirectory;

SmallBusinessAdministrationcertificationandownershiplists,including8(a)HUBZoneandself‐certificationlists;

Dun&Bradstreet(D&B)businesslistingsandotherbusinessinformationsources;

Telephonesurveysthatthestudyteamconductedwithbusinessownersandmanagersaspartoftheutilizationandavailabilityanalyses;and

Businesswebsites.

D. Relevant Geographic Market Area

ThestudyteamusedtheCity’scontractingandvendordatatohelpdeterminetherelevantgeographicmarketarea—thegeographicalareainwhichtheagencyspendsthemajorityofitscontractingdollars—forthestudy.Thestudyteam’sanalysisshowedthat87percentofrelevantcontractingdollarsduringthestudyperiodwenttobusinesseswithlocationsintheseven‐countyDenverMetropolitanStatisticalArea(MSA),indicatingthattheDenverMSAshouldbeconsideredtherelevantgeographicmarketareaforthestudy.3BBC’sanalysesfocusedontheDenverMSA.

E. Relevant Types of Work

Foreachprimecontractandsubcontract,thestudyteamdeterminedthesubindustrythatbestcharacterizedthebusiness’sprimarylineofwork(e.g.,heavyconstruction).BBCidentifiedsubindustriesbasedonCitycontractdata;telephonesurveysthatBBCconductedwithprimecontractorsandsubcontractors;businesscertificationlists;D&Bbusinesslistings;andothersources.BBCdevelopedsubindustriesbasedinparton8‐digitD&Bindustryclassificationcodes.Figure4‐2presentsthedollarsthatthestudyteamexaminedinthevariousconstruction;professionalservices;andgoodsandservicessubindustriesthatBBCincludedinitsanalyses.

3TheDenverMSAincludesAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersoncountiesinColorado.


Figure 4‐2. City contract dollars by subindustry

Note:


Source:

BBC Research & Consulting from City contract data.

Industry

Construction

Building construction $541,639

Parking services $333,582

Highway and street construction $314,758

Bridge construction $141,087

Heavy construction $96,123

Wrecking, demolition, excavation, drilling $90,589

Electrical work $80,738

Concrete and related products $67,298

Plumbing and HVAC $56,885

Heavy construction equipment $54,581

Other construction services $51,594

Elevators and conveyors $46,347

Landscape services $39,753

Water, sewer, and utility lines $35,331

Other construction materials $34,821

Electrical equipment and supplies $32,671

Industrial equipment and machinery $23,734

Environmental cleaning $22,289

Trucking, hauling and storage $20,412

Traffic flagging and safety $19,434

Lawn, garden, and irrigation supplies $18,937

Landscape architecture $18,393

Fencing, guardrails and signs $17,057

Carpet and floors $15,663

Painting $14,757

Masonry, drywall and stonework $11,633

Roofing $10,814

Windows and doors $10,115

Structural metals $10,014

Street cleaning $2,088

Total construction $2,233,136

Professional services

Engineering $198,477

Business services and consulting $108,015

Architectural and design services $65,291

Advertising, marketing and public relations $47,715

Construction management $31,217

Environmental services and transportation planning $25,342

Human resources and job training services $17,753

Finance and accounting $16,172

Testing services $5,683

Medical testing, laboratories, and pharmaceutical services $2,953

Surveying and mapmaking $1,617

Total other professional services $520,234

Total

(in Thousands)


Figure 4‐2. City contract dollars by subindustry (continued)

Note:


Source:

BBC Research & Consulting from City contract data.

Thestudyteamcombinedrelatedsubindustriesthataccountedforrelativelysmallpercentagesoftotalcontractingdollarsintofour“other”subindustries:“otherconstructionservices,”“otherconstructionmaterials,”“otherservices,”and“othergoods.”Forexample,thecontractingdollarsthattheCityawardedtocontractorsfor“fireproofingbuildings”representedlessthan1percentofthetotalCitydollarsthatBBCexaminedinthestudy.BBCcombined“fireproofingbuildings”withotherconstructionservicessubindustriesthatalsoaccountedforrelativelysmallpercentagesoftotaldollars,andthatwererelativelydissimilartoothersubindustries,intothe“otherconstructionservices”subindustry.

TherewerealsocontractsthatwerecategorizedinvarioussubindustriesthatBBCdidnotincludeaspartofitsanalyses,becausetheyarenottypicallyanalyzedaspartofdisparitystudies.BBCdidnotincludecontractsinitsanalysesthat:

TheCityawardedtouniversities,governmentagencies,orothernonprofitorganizations($650millionofassociateddollars);

Wereclassifiedinsubindustriesthatreflectednationalmarkets(i.e.,subindustriesthataredominatedbylargenationalorinternationalbusinesses)orwereclassifiedinsubindustries

Industry

Goods and services

Computer and IT services $175,157

Cleaning and janitorial services $135,595

Automobiles $59,136

Communications equipment $47,173

Catering $43,652

Petroleum and petroleum products $41,692

Other services $40,031

Security guard services $39,497

Security systems $30,831

Vehicle parts and supplies $25,387

Other goods $18,124

Furniture $16,232

Food $15,425

Office equipment and supplies $14,996

Vehicle repair shops $11,754

Uniforms $9,889

Printing and copying $9,575

Towing services $5,101

Cleaning and janitorial supplies $4,249

Communication services $685

Total other services $744,182

GRAND TOTAL $3,497,551

Total

(in Thousands)


forwhichtheCityawardedthemajorityofcontractingdollarstobusinesseslocatedoutsideoftheDenverMSA($290millionofassociateddollars);4

Wereclassifiedinsubindustrieswhichoftenincludepropertypurchases,leases,orotherpass‐throughdollars(e.g.,realestateorlegalservices;$882millionofassociateddollars);

Representedutilities,broadcastandcommunicationsservices,andotherheavily‐regulatedindustries($306millionofassociateddollars);or

WereclassifiedinsubindustriesthatarenottypicallyincludedindisparitystudiesandaccountforsmallproportionsoftheCity’scontractingdollars($65millionofassociateddollars).5

F. Collection of Bid and Proposal Data

BBCconductedacasestudyanalysisofbidsandproposalsforasampleofcontractsthattheCityawardedduringthestudyperiod.TheCityprovideddocumentsrelatedtobid,proposal,andotherrelatedinformationtothestudyteamforthosecontracts.BBCsuccessfullycollectedandexaminedbidandproposalinformationfor51PublicWorkscontracts,84DENcontracts,and160goodsandservicescontracts.

G. Agency Review Process

TheCityreviewedBBC’scontractingandpaymentdataseveraltimesduringthestudyprocess.TheBBCstudyteammetwithCitystafftoreviewthedatacollectionprocess,informationthatthestudyteamgathered,andsummaryresults.Citystaffalsoreviewedcontractandvendorinformation.BBCincorporatedtheCity’sfeedbackinthefinalcontractandvendordatathatthestudyteamusedaspartofthedisparitystudy.

4Examplesofsuchindustriesincludebanking,insurance,transitbusesandlightrailvehicles,andsoftware.5Examplesofsuchindustriesincluderetailstores,farms,andmiscellaneousgoodspurchases.

CHAPTER 5.

Availability Analysis


CHAPTER 5. Availability Analysis

BBCResearch&Consulting(BBC)analyzedtheavailabilityofminority‐andwoman‐ownedbusinessesthatareready,willing,andabletoperformonCityandCountyofDenver(City)construction;professionalservices;andgoodsandservicesprimecontractsandsubcontracts.1Chapter5describestheavailabilityanalysisinfiveparts:

A. Purposeoftheavailabilityanalysis;

B. Potentiallyavailablebusinesses;

C. Availabilitydatabase;

D. Availabilitycalculations;and

E. Availabilityresults.

AppendixEprovidessupportinginformationrelatedtotheavailabilityanalysis.

A. Purpose of the Availability Analysis

BBCexaminedtheavailabilityofminority‐andwoman‐ownedbusinessesforCityprimecontractsandsubcontractstoinformitsimplementationoftheMinority‐andWomen‐ownedBusinessEnterprise,theEmergingBusinessEnterprise,theSmallBusinessEnterprise,andFederalDisadvantagedBusinessEnterprise(DBE)Program.Inaddition,BBCusedavailabilityanalysisresultsasinputsinthedisparityanalysis.Inthedisparityanalysis,BBCcomparedthepercentageofCitycontractdollarsthatwenttominority‐andwoman‐ownedbusinessesduringthestudyperiod(i.e.,participation,orutilization)tothepercentageofdollarsthatonemightexpectthosebusinessestoreceivebasedontheiravailabilityforspecifictypesandsizesofCityprimecontractsandsubcontracts.ThestudyperiodincludedcontractsthattheCityawardedbetweenJanuary1,2012andDecember31,2016.ComparisonsbetweenparticipationandavailabilityallowedBBCtodeterminewhetheranyminority‐orwoman‐ownedbusinessgroupswereunderutilizedduringthestudyperiodrelativetotheiravailabilityforCitywork(fordetails,seeChapter7).

B. Potentially Available Businesses

BBC’savailabilityanalysisfocusedonspecificareasofwork(i.e.,subindustries)relatedtotherelevanttypesofcontractsandprocurementsthattheCityawardedduringthestudyperiod.BBCbegantheavailabilityanalysisbyidentifyingthespecificsubindustriesinwhichtheCityspendsthemajorityofitscontractingdollars(fordetails,seeChapter4)aswellasthe



geographicareasinwhichthemajorityofthebusinesseswithwhichtheCityspendsthosecontractingdollarsarelocated(i.e.,therelevantgeographicmarketarea).2

BBCthenconductedextensivesurveystodeveloparepresentative,unbiased,andstatistically‐validdatabaseofpotentiallyavailablebusinesseslocatedintherelevantgeographicmarketareathatperformworkwithinrelevantsubindustries.Thatmethodofexaminingavailabilityisreferredtoasacustomcensusandhasbeenacceptedinfederalcourtasthepreferredmethodologyforconductingavailabilityanalyses.Theobjectiveoftheavailabilitysurveywasnottocollectinformationfromeachandeveryrelevantbusinessthatisoperatinginthelocalmarketplace,butrathertocollectinformationfromanunbiasedsubsetofthebusinesspopulationthatappropriatelyrepresentstheentirebusinesspopulationoperatinginthelocalmarketplace.ThatapproachallowedBBCtoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesinanaccurate,statistically‐validmanner.

Overview of availability surveys. ThestudyteamconductedtelephonesurveyswithbusinessownersandmanagerstoidentifylocalbusinessesthatarepotentiallyavailableforCityprimecontractsandsubcontracts.3BBCbeganthesurveyprocessbycompilingacomprehensiveandunbiasedphonebookofallbusinesses—regardlessofownership—thatperformworkinrelevantindustriesandhavealocationwithintherelevantgeographicmarketarea.BBCdevelopedthatphonebookbasedoninformationfromavarietyofdatasourcesincludingDun&Bradstreet(D&B)MarketplaceandtheCity’svendorregistrationlist.BBCcollectedinformationaboutallbusinessestablishmentslistedunder8‐digitworkspecializationcodes(asdevelopedbyD&B)thatweremostrelatedtothecontractsthattheCityawardedduringthestudyperiod.BBCobtainedlistingson7,320localbusinessesthatdoworkrelatedtothoseworkspecializations.Removingatotalof1,168duplicate,non‐working,orincorrectphonenumbersresultedinalistof6,152businesseswithwhichBBCattemptedavailabilitysurveys.

Availability survey information.BBCworkedwithCustomerResearchInternationaltoconducttelephonesurveyswiththeownersormanagersoftheidentifiedbusinessestablishments.Surveyquestionscoveredmanytopicsabouteachbusiness,including:

Statusasaprivatebusiness(asopposedtoapublicagencyornonprofitorganization);

Statusasasubsidiaryorbranchofanothercompany;

Primarylinesofwork;

InterestinperformingworkfortheCityandothergovernmentagencies;

Workasaprimecontractororsubcontractor;

Largestprimecontractorsubcontractbidonorperformedinthepreviousfiveyears;and

Race/ethnicityandgenderofownership.

2BBCidentifiedtherelevantgeographicmarketareaforthedisparitystudyasAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersonCountiesinColorado.

3Thestudyteamofferedbusinessrepresentativestheoptionofcompletingsurveysviafaxore‐mailiftheypreferrednottocompletesurveysviatelephone.


Potentially available businesses.BBCconsideredbusinessestobepotentiallyavailableforCityprimecontractsorsubcontractsiftheyreportedhavingalocationintherelevantgeographicmarketareaandreportedpossessingallofthefollowingcharacteristics:

Beingaprivatesectorbusiness(asopposedtoagovernmentorganizationnonprofitorganization);

HavingperformedworkrelevanttoCityconstruction;professionalservices;orgoodsandservicescontractingorprocurement;

Havingbidonorperformedconstruction;professionalservices;orgoodandservicesprimecontractsorsubcontractsineitherthepublicorprivatesectorintherelevantgeographicmarketareainthepastfiveyears;and

BeinginterestedinworkfortheCityorothergovernmentagencies.4

BBCalsoconsideredthefollowinginformationaboutbusinessestodetermineiftheywerepotentiallyavailableforspecificprimecontractsandsubcontractsthattheCityawards:

Theroleinwhichtheywork(i.e.,asaprimecontractor,subcontractor,orboth);and

Thelargestcontracttheybidonorperformedinthepastfiveyears.

C. Businesses in the Availability Database

Afterconductingavailabilitysurveyswiththousandsoflocalbusinesses,BBCdevelopedadatabaseofinformationaboutbusinessesthatarepotentiallyavailableforCityconstruction;professionalservices;andgoodsandservicescontractsandprocurements.InformationfromthedatabaseallowedBBCtoassessbusinessesthatareready,willing,andabletoperformworkfortheCity.Figure5‐1presentsthepercentageofbusinessesintheavailabilitydatabasethatwereminority‐orwoman‐owned.TheinformationinFigure5‐1reflectsasimpleheadcountofbusinesseswithnoanalysisoftheiravailabilityforspecificCitycontracts.Thus,itrepresentsonlyafirststeptowardanalyzingtheavailabilityofminority‐andwoman‐ownedbusinessesforCitywork.Thestudyteam’sanalysisincluded597businessesthatarepotentiallyavailableforspecificconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityawards.AsshowninFigure5‐1,ofthosebusinesses,29.6percentwereminority‐orwoman‐owned.

D. Availability Calculations

BBCanalyzedinformationfromtheavailabilitydatabasetodevelopdollar‐weightedestimatesoftheavailabilityofminority‐andwoman‐ownedbusinessesforCitywork.ThoseestimatesrepresentthepercentageofCitycontractingandprocurementdollarsthatminority‐andwoman‐ownedbusinesseswouldbeexpectedtoreceivebasedontheiravailabilityforspecifictypesandsizesofCityprimecontractsandsubcontracts.

4Thatinformationwasgatheredseparatelyforprimecontractandsubcontractwork.


Figure 5‐1. Percentage of businesses in the availability database that are minority‐ or woman‐owned

Note:


Source:


Steps to calculating availability.BBCusedabottomup,contract‐by‐contractmatchingapproachtocalculateavailability.OnlyaportionofthebusinessesintheavailabilitydatabasewasconsideredpotentiallyavailableforanygivenCityprimecontractorsubcontract.BBCfirstexaminedthecharacteristicsofeachspecificprimecontractorsubcontract(referredtogenerallyasacontractelement),includingtypeofworkandcontractsize.BBCthenidentifiedbusinessesintheavailabilitydatabasethatperformworkofthattype,inthatrole(i.e.,asaprimecontractororsubcontractor),andofthatsize.

BBCidentifiedthespecificcharacteristicsofeachprimecontractandsubcontractincludedaspartofthedisparitystudyandthentookthefollowingstepstocalculateavailabilityforeachcontractelement:

1. Foreachcontractelement,thestudyteamidentifiedbusinessesintheavailabilitydatabasethatreportedthatthey:

Areinterestedinperformingconstruction;professionalservices;orgoodsandservicesworkinthatparticularroleforthatspecifictypeofworkfortheCity;and

Havebidonorperformedworkofthatsizeinthepastfiveyears.

2. BBCthencountedthenumberofminority‐ownedbusinesses(separatelybyrace/ethnicity)andnon‐Hispanicwhitewoman‐ownedbusinessesamongthebusinessesthatmetthecriteriainStep1.

3. BBCtranslatedthenumericavailabilityofminority‐andwoman‐ownedbusinessesforthecontractelementintopercentageavailability.

BBCrepeatedthosestepsforeachcontractelementthatthestudyteamexaminedaspartofthedisparitystudy.BBCmultipliedthepercentageavailabilityforeachcontractelementbythedollarsassociatedwiththecontractelement,addedresultsacrossallcontractelements,anddividedbythetotaldollarsforallcontractelements.Theresultwasdollar‐weightedestimatesoftheavailabilityofminority‐andwoman‐ownedbusinesses,bothoverallandseparatelyforeachracial/ethnicandgendergroup.Figure5‐2providesanexampleofhowBBCcalculatedavailabilityforaspecificsubcontractassociatedwithaconstructionprimecontractthattheCityawardedduringthestudyperiod.

BBC’savailabilitycalculationsarebasedonprimecontractsandsubcontractsthattheCityawardedbetweenJanuary1,2012andDecember31,2016.AkeyassumptionoftheavailabilityanalysisisthatthecontractsandprocurementsthattheCityawardedduringthestudyperiodarerepresentativeofthecontractsandprocurementsthattheCitywillawardinthefuture.

Business group







% of

businesses


IfthetypesandsizesofthecontractsandprocurementsthattheCityawardsinthefuturediffersubstantiallyfromthosethattheyawardedinthepast,thentheCityshouldadjustavailabilitycalculationsaccordinglytoaccountforthosedifferences.

Improvements on a simple head count of businesses.BBCusedacustomcensusapproachtocalculatetheavailabilityofminority‐andwoman‐ownedbusinessesforCityworkratherthanusingasimpleheadcountapproach(e.g.,simplycalculatingthepercentageofalllocalbusinessesthatareminority‐orwoman‐owned).ThereareseveralimportantwaysinwhichBBC’scustomcensusapproachtomeasuringavailabilityismoreprecisethancompletingasimpleheadcount.

BBC’s approach accounts for type of work.Federalregulationssuggestcalculatingavailabilitybasedonbusinesses’abilitiestoperformspecifictypesofwork.BBCtooktypeofworkintoaccountbyexamining65differentsubindustriesrelatedtoconstruction;professionalservices;andgoodsandservicesaspartofestimatingavailabilityforCityprimecontractsandsubcontracts.

BBC’s approach accounts for contractor role.Thestudyteamcollectedinformationonwhetherbusinessesworkasprimecontractors,subcontractors,orboth.BusinessesthatreportedworkingasprimecontractorswereconsideredpotentiallyavailableforCityprimecontracts.BusinessesthatreportedworkingassubcontractorswereconsideredpotentiallyavailableforCitysubcontracts.BusinessesthatreportedworkingasbothprimecontractorsandsubcontractorswereconsideredpotentiallyavailableforbothCityprimecontractsandsubcontracts.

BBC’s approach accounts for the relative capacity of businesses.ToaccountforthecapacityofbusinessestoworkonCitycontracts,BBCconsideredthesize—intermsofdollarvalue—oftheprimecontractsandsubcontractsthatabusinessbidonorreceivedinthepreviousfiveyearswhendeterminingwhethertocountthatbusinessasavailableforparticularprimecontractsorsubcontracts.Foreachcontractelement,BBCconsideredwhetherbusinesseshadpreviouslybidonorreceivedatleastonecontractofanequivalentorgreaterdollarvalue.BBC’sapproachtoaccountingforcapacityisconsistentwithmanyrecent,keycourtdecisionsthathavefoundsuchmeasurestobeimportanttomeasuringavailability(e.g.,AssociatedGeneralContractorsofAmerica,SanDiegoChaptervs.CaliforniaDepartmentofTransportation,etal.,5WesternStates

5AGC,SanDiegoChapterv.CaliforniaDOT,2013WL1607239(9thCir.April16,2013).

Figure 5‐2. Example of an availability calculation for a City subcontract

On a contract that the City awarded in 2012, the prime

contractor awarded a subcontract worth $60,005 for

electrical work. To determine the overall availability of

minority‐ and woman‐owned businesses for that

subcontract, the study team identified businesses in the

availability database that:

a. Were in business in 2016;

b. Indicated that they performed electrical work;

c. Reported bidding on work of similar or greater size

in the past; and

d. Reported interest in working as a subcontractor on

City or other government agency projects.

The study team found 22 businesses in the availability

database that met those criteria. Of those businesses,

eight were minority‐ or woman‐owned businesses.

Thus, the availability of minority‐ and woman‐owned

businesses for the subcontract was 36 percent (i.e.,

8/22 X 100 = 36).


PavingCompanyv.WashingtonStateDOT,6RotheDevelopmentCorp.v.U.S.DepartmentofDefense,7andEngineeringContractorsAssociationofS.Fla.Inc.vs.MetroDadeCounty8).

BBC’s approach accounts for interest in relevant work.ThestudyteamcollectedinformationonwhetherbusinessesareinterestedinworkingonCityconstruction;professionalservices;andgoodsandserviceswork(inadditiontoconsideringseveralotherfactorsrelatedtoCityprimecontractsandsubcontracts,suchascontracttypeandsize).BusinesseshadtoindicatethattheyareinterestedinperformingsuchworkfortheCityinordertobeconsideredpotentiallyavailableforCitycontractsandprocurements.

BBC’s approach generates dollar‐weighted results.BBCexaminedavailabilityonacontract‐by‐contractbasisandthendollar‐weightedtheresultsfordifferentsetsofcontractelements.Thus,theresultsofrelativelylargecontractelementscontributedmoretooverallavailabilityestimatesthanthoseofrelativelysmallcontractelements.Thatapproachisconsistentwithrelevantcaselawandfederalregulations.

E. Availability Results

BBCestimatedtheavailabilityofminority‐andwoman‐ownedbusinessesforthe21,790construction;professionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityawardedbetweenJanuary1,2012andDecember31,2016.

Overall results.Figure5‐3presentsoveralldollar‐weightedavailabilityestimatesbyracial/ethnicandgendergroupforCitycontractsandprocurements.Overall,theavailabilityofminority‐andwoman‐ownedbusinessesfortheCity’scontractsandprocurementsis23.7percent.Non‐Hispanicwhitewoman‐ownedbusinesses(10.9%)andHispanicAmerican‐ownedbusinesses(6.2%)exhibitedthehighestavailabilitypercentagesamongallgroups.

Figure 5‐3. Overall availability estimates by racial/ethnic and gender group

Note:



Source:


Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.TheCity’suseofthosecontractgoalsisarace‐andgender‐consciousmeasure.ItisusefultoexamineavailabilityanalysisresultsseparatelyforcontractsthattheCityawardswiththeuseofcontractgoals(goalscontracts)andcontractsthat

6WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).7RotheDevelopmentCorp.v.U.S.DepartmentofDefense,545F.3d1023(Fed.Cir.2008).

8EngineeringContractorsAssociationofS.Fla.Inc.vs.MetroDadeCounty,943F.Supp.1546(S.D.Fla.1996).

Business group







Availability %


theCityawardswithouttheuseofgoals(no‐goalscontracts).Figure5‐4presentsavailabilityestimatesseparatelyforgoalsandno‐goalscontracts.AsshowninFigure5‐4,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherisapproximatelyequalacrossgoalscontracts(23.1%)andno‐goalscontracts(24.1%).

Figure 5‐4. Availability estimates by contract goal status

Note:



Source:


Contract role. Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesandthusoftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineavailabilityestimatesseparatelyforprimecontractsandsubcontracts.Figure5‐5presentsthoseresults.AsshowninFigure5‐5,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherissimilarforCityprimecontracts(23.6%)andCitysubcontracts(24.4%).

Figure 5‐5. Availability estimates by contract role

Note:



Source:


Denver international Airport (DEN) contracts. BBCanalyzedtheavailabilityofminority‐andwoman‐ownedbusinessesforbothFAA‐andstate‐fundedDENcontractsaswellasnon‐DENcontracts.Figure5‐6presentstheoverallavailabilityofminority‐andwoman‐ownedbusinessesforcontractsthatDENawardedduringthestudyperiod(includingbothprimecontractsandsubcontracts)comparedtothosebusinesses’availabilityforcontractsawardedbyotherCitydepartmentsandGeneralServices.AsshowninFigure5‐6,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherisslightlylowerforDENcontracts(20.9%)thannon‐DENcontracts(26.0%).

Business group







Goal Status

Goals

contracts

No‐goals

contracts

Business group







Contract Role

Prime



Figure 5‐6. Availability estimates by department

Note:



Source:


Industry.BBCexaminedavailabilityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.Theprojectteamcombinedresultsforgoodsandservicescontracts,becausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigure5‐7,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherishighestfortheCity’sprofessionalservicescontracts(40.4%)andlowestforconstructioncontracts(19.0%).

Figure 5‐7. Availability estimates by industry

Note:



Source:


Time period.BBCexaminedavailabilityanalysisresultsseparatelyforcontractsandprocurementsthattheCityawardedintheearlystudyperiod(i.e.,January1,2012–June30,2014)andthelatestudyperiod(i.e.,July1,2014–December31,2016)todeterminewhetherthetypesandsizesofcontractsthattheCityawardedacrossthestudyperiodchangedovertime,whichinturnwouldaffectavailability.AsshowninFigure5‐8,theavailabilityofminority‐andwoman‐ownedbusinessesconsideredtogetherissomewhatlowerintheearlystudyperiod(23.1%)thaninthelatestudyperiod(24.4%).

Figure 5‐8. Availability estimates by time period

Note:



Source:


Business group







Department

DEN Non‐DEN

Business group







Industry

Construction

Professional

services

Goods and

services

Business group







Time Period

Early Late

CHAPTER 6.

Utilization Analysis


CHAPTER 6. Utilization Analysis

Chapter6presentsinformationabouttheparticipationofminority‐andwoman‐ownedbusinessesinconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityandCountyofDenver(theCity)awardedbetweenJanuary1,2012andDecember31,2016.BBCResearch&Consulting(BBC)measuredtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingintermsofutilization—thepercentageofprimecontractandsubcontractdollarsthatminority‐andwoman‐ownedbusinessesreceivedonCityprimecontractsandsubcontractsduringthestudyperiod.1Forexample,if5percentofCityprimecontractandsubcontractdollarswenttonon‐Hispanicwhitewoman‐ownedbusinessesonaparticularsetofcontracts,utilizationofnon‐Hispanicwhitewoman‐ownedbusinessesforthatsetofcontractswouldbe5percent.BBCconsideredutilizationresultsontheirownandasinputsinthedisparityanalysis(fordetails,seeChapter7).

BBCmeasuredtheparticipationofallminority‐andwoman‐ownedbusinessesinCitycontractsregardlessofwhethertheywerecertifiedasminority‐ownedbusinessenterprises(MBEs),woman‐ownedbusinessenterprises(WBEs),orDisadvantagedBusinessEnterprises(DBEs).BBCalsomeasuredparticipationseparatelyforminority‐andwoman‐ownedbusinessesthatwereMWBE‐certified.

Overall Results

Figure6‐1presentsthepercentageofcontractingdollarsthatminority‐andwoman‐ownedbusinessesconsideredtogetherreceivedonconstruction;professionalservices;andgoodsandservicescontractsandprocurementsthattheCityawardedduringthestudyperiod(includingbothprimecontractsandsubcontracts).AsshowninFigure6‐1,overall,minority‐andwoman‐ownedbusinessesconsideredtogetherreceived14.8percentoftherelevantcontractingdollarsthattheCityawardedduringthestudyperiod.(Themajorityofthosecontractingdollars—10.1percent—wenttocertifiedMWBEs.)HispanicAmerican‐ownedbusinesses(6.3%)andnon‐Hispanicwhitewoman‐ownedbusinesses(5.3%)exhibitedhigherlevelsofparticipationinCitycontractsthanallothergroups.

Contract Goals

Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.TheCity’suseofthosecontractgoalsisarace‐andgender‐consciousmeasure.ItisusefultoexamineutilizationanalysisresultsseparatelyforcontractsthattheCityawardswiththeuseofcontractgoals(goalscontracts)andcontractsthattheCityawardswithouttheuseofgoals(no‐goalscontracts).Doingsoprovidesusefulinformationabout



outcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandtheefficacyofMWBEandDBEcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.

Figure 6‐1. Overall utilization results

Note:



Source:


Figure6‐2presentsutilizationresultsseparatelyforgoalscontractsandno‐goalscontracts.AsshowninFigure6‐2,minority‐andwoman‐ownedbusinessesconsideredtogethershowedhigherparticipationingoalscontracts(24.1%)thaninno‐goalcontracts(8.4%).Thoseresultsmightindicatetheeffectivenessofcontractgoalsinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractsandprocurements.Note,however,thatexaminingdisparityanalysisresultsprovidesabetterassessmentoftheefficacyofcontractgoals,becausethoseresultsalsotaketheavailabilityofminority‐andwoman‐ownedbusinessesforgoalsandno‐goalscontractsintoaccount.

Figure 6‐2. Utilization results by contract goal status

Note:



Source:


Contract Role

Manyminority‐andwoman‐ownedbusinessesaresmallbusinessesand,thus,oftenworkassubcontractors.Becauseofthattendency,itisusefultoexamineutilizationresultsseparatelyforprimecontractsandsubcontracts.Figure6‐3presentsthoseresults.AsshowninFigure6‐3,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwasmuchhigherintheCity’ssubcontracts(42.9%)thanintheCity’sprimecontracts(8.7%).ThevastmajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereassociatedwithprimecontracts.

Business group







Utilization %

Business group







Goal Status

Goals

contracts

No‐goals

contracts


Figure 6‐3. Utilization results by contract role

Note:



Source:


DEN Contracts

BBCalsoanalyzedtheparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheDenverInternationalAirport(DEN)awardedandcontractsthatotherCitydepartmentsawarded.Figure6‐4presentsthoseresults.AsshowninFigure6‐4,minority‐andwoman‐ownedbusinessesexhibitedsomewhatlowerlevelsofparticipationinDENcontracts(14.1%)whencomparedtoallotherCitycontracts(15.4%).

Figure 6‐4. Utilization results by department

Note:



Source:


Industry

BBCexaminedutilizationresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.Theprojectteamcombinedresultsforgoodsandservicescontracts,becausetheCityusessimilarprocurementprocessestoawardthosecontracts.AsshowninFigure6‐5,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwashighestintheCity’sprofessionalservicescontracts(19.4%)andlowestingoodsandservicescontracts(10.6%).ThemajorityofcontractingdollarsthattheCityawardedduringthestudyperiodwereinconstruction,inwhichtheparticipationofminority‐andwoman‐ownedbusinesseswas15.2percent.

Business group







Contract Role

Prime


Business group







Department

DEN Non‐DEN


Figure 6‐5. Utilization results by relevant industry

Note:



Source:


Time Period

BBCexaminedutilizationresultsseparatelyforcontractsandprocurementsthattheCityawardedintheearlystudyperiod(i.e.,January1,2012–June30,2014)andthelatestudyperiod(i.e.,July1,2014–December31,2016)todeterminewhethertheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractschangedovertime.AsshowninFigure6‐6,theparticipationofminority‐andwoman‐ownedbusinessesconsideredtogetherwassimilarbetweentheearly(12.8%)andlate(16.9%)studyperiods.

Figure 6‐6. Utilization results by time period

Note:



Source:


Concentration of Dollars

BBCanalyzedwhetherthedollarsthateachrelevantbusinessreceivedonCitycontractsduringthestudyperiodwerespreadacrossarelativelylargenumberofbusinessesorwereconcentratedwitharelativelysmallnumberofbusinesses.Thestudyteamassessedthatquestionbycalculating:

Thenumberofdifferentbusinesseswithineachrelevantgroupthatreceivedcontractingdollarsduringthestudyperiod;and

Thenumberofdifferentbusinesseswithineachrelevantgroupthataccountedfor75percentofthegroup’stotalcontractingdollarsduringthestudyperiod.

Figure6‐7presentsthoseresults.Overall,639differentminority‐andwoman‐ownedbusinessesparticipatedinCitycontractsduringthestudyperiod.86ofthosebusinesses,or13.5percentofallutilizedminority‐andwoman‐ownedbusinesses,accountedfor75percentofthetotalcontractingdollarsthatminority‐andwoman‐ownedbusinessesreceivedduringthestudyperiod.

Business group







Industry

Construction

Professional

services

Goods and

services

Business group







Time Period

Early Late


Figure 6‐7. Concentration of dollars that went to minority‐ and woman‐owned businesses

Note:

The sum of utilized businesses by group is not equal to total utilized minority‐ and woman‐owned businesses, because 32 minority‐owned businesses that received work during the study period were of unknown race/ethnicity.

Source:


Business group

Non‐Hispanic white woman‐owned 292 53 18.2%

Asian American‐owned 51 8 15.7%

Black American‐owned 60 5 8.3%

Hispanic American‐owned 188 23 12.2%

Native American‐owned 16 2 12.5%

Total Minority‐ and Woman‐owned 639 86 13.5%

Utilized

businesses

Number of

businesses

accounting for

75% of dollars

% of

businesses

accounting for

75% of dollars

CHAPTER 7.

Disparity Analysis


CHAPTER 7. Disparity Analysis

Thedisparityanalysiscomparedtheparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityandCountyofDenver(theCity)awardedbetweenJanuary1,2012andDecember31,2016(i.e.,thestudyperiod)towhatthosebusinessesmightbeexpectedtoreceivebasedontheiravailabilityforthatwork.Theanalysisfocusedonconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Chapter7presentsthedisparityanalysisinfourparts:

A. Overview;

B. DisparityAnalysisResults;

C. StatisticalSignificance;and

D. Bid/ProposalProcesses.

A. Overview

Aspartofthedisparityanalysis,BBCResearch&Consulting(BBC)comparedtheactualparticipationofminority‐andwoman‐ownedbusinessesinCityprimecontractsandsubcontractswiththepercentageofcontractdollarsthatthosebusinessesmightbeexpectedtoreceivebasedontheiravailabilityforthatwork.1BBCmadethosecomparisonsforeachrelevantracial/ethnicandgendergroup.BBCexpressedbothactualparticipationandavailabilityaspercentagesofthetotaldollarsassociatedwithaparticularsetofcontracts.(e.g.,5%participationcomparedwith4%availability).BBCthencalculatedadisparityindextohelpcompareparticipationandavailabilityresultsacrossrelevantracial/ethnicandgendergroupsanddifferentcontractsetsusingthefollowingformula:

Adisparityindexof100indicatesparitybetweenactualparticipation,orutilization,andavailability.Thatis,participationofminority‐andwoman‐ownedbusinesseswaslargelyinlinewithavailability.Adisparityindexoflessthan100indicatesadisparitybetweenparticipationandavailability.Thatis,minority‐andwoman‐ownedbusinesseswereunderutilizedrelativetotheiravailability.Finally,adisparityindexoflessthan80indicatesasubstantialdisparity


%participation

%availabilityx100


betweenparticipationandavailability.Thatis,minority‐andwoman‐ownedbusinessesweresubstantiallyunderutilizedrelativetotheiravailability.2

ThedisparityanalysisresultsthatBBCpresentsinChapter7summarizedetailedresultstablesthatarepresentedinAppendixF.EachtableinAppendixFpresentsdisparityanalysisresultsforadifferentsetofcontracts.Forexample,Figure7‐1,whichisidenticaltoFigureF‐2inAppendixF,presentsdisparityanalysisresultsforallCitycontractsthatBBCexaminedaspartofthestudy.AppendixFincludesanalogoustablesfordifferentsubsetsofcontractsincluding:

Construction;professionalservices;andgoodsandservices;

Primecontractsandsubcontracts;and

ContractsthattheCityawardedindifferentstudyperiodyears.

TheheadingofeachtableinAppendixFprovidesadescriptionofthesubsetofcontractsthatBBCanalyzedforthatparticulartable.

AreviewofFigure7‐1helpstointroducethecalculationsandformatofallofthedisparityanalysistablesinAppendixF.AsillustratedinFigure7‐1,thedisparityanalysistablespresentinformationabouteachrelevantracial/ethnicandgendergroup(aswellasaboutallbusinesses)inseparaterows:

“Allbusinesses”inrow(1)pertainstoinformationaboutallbusinessesregardlessoftherace/ethnicityandgenderoftheirowners.

Row(2)presentsresultsforallminority‐andwoman‐ownedbusinessesconsideredtogether,regardlessofwhethertheywerecertifiedasminority‐ownedbusinessenterprises(MBEs),woman‐ownedbusinessenterprises(WBEs),orDisadvantagedBusinessEnterprises(DBEs).

Row(3)presentsresultsforallnon‐Hispanicwhitewoman‐ownedbusinesses,regardlessofwhethertheywerecertifiedasWBEsorDBEs.

Row(4)presentsresultsforallminority‐ownedbusinesses,regardlessofwhethertheywerecertifiedasMBEsorDBEs.

Rows(5)through(9)presentresultsforbusinessesofeachindividualracial/ethnicgroup,regardlessofwhethertheywerecertifiedasMBEs.

2Manycourtshavedeemeddisparityindicesbelow80asbeingsubstantialandhaveacceptedsuchoutcomesasevidenceofadverseconditionsforminority‐andwoman‐ownedbusinesses(e.g.,seeRotheDevelopmentCorpv.U.S.DeptofDefense,545F.3d1023,1041;Eng’gContractorsAss’nofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3dat914,923(11thCircuit1997);andConcreteWorksofColo.,Inc.v.CityandCountyofDenver,36F.3d1513,1524(10thCir.1994).SeeAppendixBforadditionaldiscussionofthoseandothercases.


Figure 7‐1. Example of a disparity analysis table from Appendix F (same as Figure F‐2 in Appendix F)

Note: Numbers are rounded to the nearest thousand dollars or tenth of one percent. “woman‐owned” refers to non‐Hispanic white woman‐owned.

* Unknown minority‐owned businesses and unknown MBEs were allocated to minority and MBE subgroups proportional to the known total dollars of those groups. For example, if total dollars of Black American‐owned businesses (column b, row 5) accounted for 25 percent of total minority‐owned business dollars (column b, row 4), then 25 percent of column b, row 10 would be added to column b, row 5 and the sum would be shown in column c, row 5.


(1) All businesses 21,790 $3,497,551 $3,497,551

(2) Minority and woman‐owned businesses 4,543 $519,020 $519,020 14.8 23.7 ‐8.9 62.6

(3) Non‐Hispanic white woman‐owned 2,235 $184,110 $184,110 5.3 10.9 ‐5.6 48.4

(4) Minority‐owned 2,308 $334,911 $334,911 9.6 12.8 ‐3.3 74.5

(5) Asian American‐owned 397 $40,636 $42,054 1.2 3.2 ‐2.0 37.6

(6) Black American‐owned 234 $54,199 $56,089 1.6 3.3 ‐1.7 47.9

(7) Hispanic American‐owned 1,298 $211,314 $218,683 6.3 6.2 0.1 101.6

(8) Native American‐owned 87 $17,475 $18,084 0.5 0.1 0.4 200+

(9) Unknown minority‐owned 292 $11,287

(10) MWBE‐certified 2,572 $354,141 $354,141 10.1

(11) Non‐Hispanic white woman‐owned 1,028 $112,018 $112,018 3.2

(12) Minority‐owned MWBE 1,544 $242,123 $242,123 6.9

(13) Asian American‐owned MWBE 254 $16,522 $16,522 0.5

(14) Black American‐owned MWBE 185 $40,315 $40,341 1.2

(15) Hispanic American‐owned MWBE 1,038 $174,415 $174,528 5.0

(16) Native American‐owned MWBE 60 $10,714 $10,721 0.3

(17) Unknown minority‐owned MWBE 7 $156

(c)

total dollars

(a) (b)

(thousands)*

Estimated

Business Group

Number of contractelements

dollarsTotal

(thousands)

(e)(d) (g)

Disparityindex

(f)

Utilization ‐Availability

Availabilitypercentagepercentage

Utilization


Utilization results.Eachdisparityanalysistableincludesthesamecolumnsandrows:

Column(a)presentsthetotalnumberofprimecontractsandsubcontracts(i.e.,contractelements)thatBBCanalyzedaspartofthecontractset.Asshowninrow(1)ofcolumn(a)ofFigure7‐1,BBCanalyzed21,790contractelements.Thevaluepresentedincolumn(a)foreachindividualracial/ethnicandgendergrouprepresentsthenumberofcontractelementsinwhichbusinessesofthatparticulargroupparticipated(e.g.,asshowninrow(6)ofcolumn(a),BlackAmerican‐ownedbusinessesparticipatedin234primecontractsandsubcontracts).

Column(b)presentsthedollars(inthousands)thatwereassociatedwiththesetofcontractelements.Asshowninrow(1)ofcolumn(b)ofFigure7‐1,BBCexaminedapproximately$3.5billionfortheentiresetofcontractelements.Thedollartotalsincludebothprimecontractandsubcontractdollars.Thevaluepresentedincolumn(b)foreachindividualracial/ethnicandgendergrouprepresentsthedollarsthatthebusinessesofthatparticulargroupreceivedonthesetofcontractelements(e.g.,asshowninrow(6)ofcolumn(b),BlackAmerican‐ownedbusinessesreceivedapproximately$54million).

Column(c)presentsthedollars(inthousands)thatwereassociatedwiththesetofcontractelementsafteradjustingthosedollarsforbusinessesthatBBCidentifiedasminority‐ownedorMBEsbutforwhichspecificrace/ethnicityinformationwasnotavailable.Thedollartotalsincludebothprimecontractandsubcontractdollars.

Column(d)presentstheparticipationofeachracial/ethnicandgendergroupasapercentageoftotaldollarsassociatedwiththesetofcontractelements.BBCcalculatedeachpercentageincolumn(d)bydividingthedollarsgoingtoaparticulargroupincolumn(c)bythetotaldollarsassociatedwiththesetofcontractelementsshowninrow(1)ofcolumn(c),andthenexpressingtheresultasapercentage(e.g.,forBlackAmerican‐ownedbusinesses,thestudyteamdivided$56millionby$3.5billionandmultipliedby100foraresultof1.6%,asshowninrow(6)ofcolumn(d)).

ThebottomhalfofFigure7‐1presentsutilizationresultsforbusinessesthatwerecertifiedasMWBEs.

Availability results.Column(e)ofFigure7‐1presentstheavailabilityofeachrelevantracial/ethnicandgendergroupforallcontractelementsthatthestudyteamanalyzedaspartofthecontractset.Availabilityestimates,whicharerepresentedasapercentageofthetotalcontractingdollarsassociatedwiththesetofcontracts,serveasbenchmarksagainstwhichtocomparetheparticipationofspecificgroupsforspecificsetsofcontracts(e.g.,asshowninrow(6)ofcolumn(e),theavailabilityofBlackAmerican‐ownedbusinessesis3.3%).

Differences between participation and availability.Thenextstepinanalyzingwhethertherewasadisparitybetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesistosubtracttheparticipationpercentagefromtheavailabilitypercentage.Column(f)ofFigure7‐1presentsthepercentagepointdifferencebetweenparticipationandavailabilityforeachrelevantracial/ethnicandgendergroup.Forexample,aspresentedinrow(6)ofcolumn(f)ofFigure7‐1,theparticipationofBlackAmerican‐ownedbusinessesinCitycontractswas1.7percentagepointslessthantheiravailability.


Disparity indices.Itissometimesdifficulttointerpretabsolutepercentagedifferencesbetweenparticipationandavailability.Therefore,BBCalsocalculatedadisparityindexforeachrelevantracial/ethnicandgendergroup.Column(g)ofFigure7‐1presentsthedisparityindexforeachrelevantracial/ethnicandgendergroup.Forexample,asreportedinrow(6)ofcolumn(g),thedisparityindexforBlackAmerican‐ownedbusinesseswasapproximately48,indicatingthatBlackAmerican‐ownedbusinessesactuallyreceivedapproximately$0.48foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityforprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.

BBCappliedthefollowingruleswhendisparityindiceswereexceedinglylargeorcouldnotbecalculated,becausethestudyteamdidnotidentifyanybusinessesofaparticulargroupasavailableforaparticularcontractset:

WhenBBC’scalculationsshowedadisparityindexexceeding200,BBCreportedanindexof200+.Adisparityindexof200+meansthatparticipationwasmorethantwiceasmuchasavailabilityforaparticulargroupforaparticularsetofcontracts.

Whentherewasnoparticipationandnoavailabilityforaparticulargroupforaparticularsetofcontracts,BBCreportedadisparityindexof100,indicatingparity.

B. Disparity Analysis Results

BBCmeasureddisparitiesbetweentheparticipationandavailabilityofminority‐andwoman‐ownedbusinessesforvarioussetsofcontractsthattheCityawardedduringthestudyperiod.Thestudyteammeasureddisparitiesforminority‐andwoman‐ownedbusinessesconsideredtogetherandseparatelyforeachrelevantracial/ethnicandgendergroup.

Overall.Figure7‐2presentsdisparityindicesforallrelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thelinedownthecenterofthegraphshowsadisparityindexlevelof100,whichindicatesparitybetweenparticipationandavailability.Disparityindicesoflessthan100indicatedisparitiesbetweenparticipationandavailability(i.e.,underutilization).Forreference,alineisalsodrawnatadisparityindexlevelof80,becausesomecourtsuse80asthethresholdforwhatindicatesasubstantialdisparity.

AsshowninFigure7‐2,overall,theparticipationofminority‐andwoman‐ownedbusinessesincontractsthattheCityawardedduringthestudyperiodwassubstantiallylowerthanwhatonemightexpectbasedontheavailabilityofthosebusinessesforthatwork.Thedisparityindexof63indicatesthatminority‐andwoman‐ownedbusinessesreceivedapproximately$0.63foreverydollarthattheymightbeexpectedtoreceivebasedontheiravailabilityfortherelevantprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Disparityanalysisresultsbyindividualgroupindicatedthat:

Threegroupsexhibiteddisparityindicessubstantiallybelowparity:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof48),AsianAmerican‐ownedbusinesses(disparityindexof38),andBlackAmerican‐ownedbusinesses(disparityindexof48).

HispanicAmerican‐ownedbusinesses(disparityindexof102)andNativeAmerican‐ownedbusinesses(disparityindexof200+)didnotexhibitadisparity.


Figure 7‐2. Disparity indices by group

Note:



Source:


Contract goals.Duringthestudyperiod,theCityusedMWBEandDBEcontractgoalstoawardmanylocally‐fundedandfederally‐fundedcontracts,respectively,toencouragetheparticipationofminority‐andwoman‐ownedbusinesses.TheCity’suseofthosecontractgoalsisarace‐andgender‐consciousmeasure.ItisusefultoexaminedisparityanalysisresultsseparatelyforcontractsthattheCityawardswiththeuseofMWBEorDBEcontractgoals(goalscontracts)andcontractsthattheCityawardswithouttheuseofgoals(no‐goalscontracts).Assessingwhetheranydisparitiesexistforno‐goalcontractsprovidesusefulinformationaboutoutcomesforminority‐andwoman‐ownedbusinessesoncontractsthattheCityawardedinarace‐andgender‐neutralenvironmentandwhetherthereisevidencethatcertaingroupsfaceanydiscriminationorbarriersaspartoftheagency’scontracting.3,4,5

Figure7‐3presentsdisparityanalysisresultsseparatelyforgoalsandno‐goalscontracts.AsshowninFigure7‐3,whereasminority‐andwoman‐ownedbusinessesconsideredtogethershowedparityongoalscontracts(disparityindexof104),theyexhibitedasubstantialdisparityonno‐goalscontracts(disparityindexof35).Disparityanalysisresultsbyindividualgroupindicatedthat:

Non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof67)andAsianAmerican‐ownedbusinesses(disparityindexof59)exhibitedsubstantialdisparitiesongoalscontracts.BlackAmerican‐ownedbusinessalsoexhibitedadisparitythatwasclosetothethresholdofbeingconsideredsubstantial(disparityindexof82);and

AllgroupsexceptNativeAmerican‐ownedbusinesses(disparityindexof200+)exhibitedsubstantialdisparitiesonno‐goalscontracts.

3AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187,1192,1196(9thCir.2013). 4ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950,985,987‐88(10thCir.2003),cert.denied,540U.S.1027,124S.Ct.556(2003).5H.B.RoweCo.,Inc.v.W.LyndoTippett,NCDOT,etal.,615F.3d233,246(4thCir.2010).


Figure 7‐3. Disparity indices for goal and no‐goal contracts

Note:



Source:


Takentogether,theresultspresentedinFigure7‐3showthattheCity’suseofMWBEandDBEcontractgoalsissomewhateffectiveinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinitscontracts.Moreover,theresultsindicatethatwhentheCitydoesnotuserace‐andgender‐consciousmeasures,nearlyallrelevantbusinessgroupssufferfromsubstantialunderutilizationinCitycontractingandprocurement.

Contract role. Subcontractstendtobemuchsmallerinsizethanprimecontracts.Asaresult,subcontractsareoftenmoreaccessiblethanprimecontractstominority‐andwoman‐ownedbusinesses.Inaddition,theCityusedMWBEandDBEcontractgoalswhenawardingmanycontractsduringthestudyperiod,whichprimarilyaffectsubcontractopportunitiesforminority‐andwoman‐ownedbusinesses.Thus,itmightbereasonabletoexpectbetteroutcomesforminority‐andwoman‐ownedbusinessesonsubcontractsthanonprimecontracts.Figure7‐4presentsdisparityindicesforallrelevantgroupsseparatelyforprimecontractsandsubcontracts.AsshowninFigure7‐4,minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityforprimecontracts(disparityindexof37)butnotforsubcontracts(disparityindexof176).Resultsforindividualgroupsindicatedthat:

AllgroupsshowedsubstantialdisparitiesonprimecontractsexceptforNativeAmerican‐ownedbusinesses(disparityindexof200+).

Nogroupsexhibitedsubstantialdisparitiesonsubcontracts.


Figure 7‐4. Disparity indices for prime contracts and subcontracts

Note:



Source:


DEN contracts.BBCexamineddisparityanalysisresultsseparatelyforcontractsthattheDenverInternationalAirport(DEN)awardedandcontractsthatotherCityagenciesawarded.Figure7‐5presentsthoseresults.AsshowninFigure7‐5,minority‐andwoman‐ownedbusinessesconsideredtogetherexhibitedsubstantialdisparitiesforbothDENcontracts(disparityindexof68)andnon‐DENcontracts(disparityindexof59).Disparityanalysisresultsbyindividualgroupindicatedthat:

ThreeindividualgroupsshowedsubstantialdisparitiesforDENcontracts:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof29),AsianAmerican‐ownedbusinesses(disparityindexof50),andBlackAmerican‐ownedbusinesses(disparityindexof79).

Allindividualgroupsexhibitedsubstantialdisparitiesonnon‐DENcontracts,withtheexceptionofNativeAmerican‐ownedbusinesses(disparityindexof200+).


Figure 7‐5. Disparity indices for DEN and non‐DEN contracts

Note:



Source:


Industry.BBCexamineddisparityanalysisresultsseparatelyfortheCity’sconstruction;professionalservices;andgoodsandservicescontracts.Theprojectteamcombinedresultsforgoodsandservicescontracts,becausetheCityusessimilarprocurementprocessestoawardthosecontracts.Figure7‐6presentsdisparityindicesforallrelevantgroupsbycontractingarea.Disparityanalysesresultsdifferedbycontractingareaandgroup:

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedadisparityonconstructioncontracts(disparityindexof80).Threeindividualgroupsshowedsubstantialdisparities:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof45),AsianAmerican‐ownedbusinesses(disparityindexof36),andBlackAmerican‐ownedbusinesses(disparityindexof37).

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityonprofessionalservicescontracts(disparityindexof48).Allindividualgroupsshowedsubstantialdisparitiesonthosecontracts.

Minority‐andwoman‐ownedbusinessesconsideredtogethershowedasubstantialdisparityongoodsandservicescontracts(disparityindexof40).AllindividualgroupsshowedsubstantialdisparitiesexceptforNativeAmerican‐ownedbusinesses(disparityindexof105).


Figure 7‐6. Disparity analysis results by relevant industry

Note: Numbers rounded to nearest whole number.



Time period.BBCalsoexamineddisparityanalysisresultsseparatelyfortwoseparatetimeperiods:January1,2012throughJune30,2014(earlystudyperiod)andJuly1,2014throughDecember31,2016(latestudyperiod).ThatinformationmighthelptheCitydeterminewhetherthereweredifferentoutcomesforminority‐andwoman‐ownedbusinessesasthecountrymovedfurtherandfurtherfromtheeconomicdownturnthatbeganin2008.Figure7‐7presentsdisparityindicesforallrelevantracial/ethnicandgendergroupsseparatelyfortheearlyandlatestudyperiods.AsshowninFigure7‐7,minority‐andwoman‐ownedbusinessesshowedsubstantialdisparitiesforintheearlystudyperiod(disparityindexof56)andinthelatestudyperiod(disparityindexof69).Resultsforindividualgroupsindicatedthat:

Threegroupsexhibitedsubstantialdisparitiesintheearlystudyperiod:non‐Hispanicwhitewoman‐ownedbusinesses(disparityindexof39),AsianAmerican‐ownedbusinesses(disparityindexof22),andBlackAmerican‐ownedbusinesses(disparityindexof60).

Thosesamethreegroupsshowedsubstantialdisparitiesforlatestudyperiodcontracts.


Figure 7‐7. Disparity indices for early and late study period

Note:



Source:


C. Statistical Significance

Statisticalsignificancetestsallowresearcherstotestthedegreetowhichtheycanrejectrandomchanceasanexplanationforanyobservedquantitativedifferences.Inotherwords,astatisticallysignificantdifferenceisonethatonecanconsidertobereliableorreal.BBCusedananalysisthatreliesonrepeated,randomsimulationstoexaminethestatisticalsignificanceofdisparityanalysisresults.ThatapproachisreferredtoasaMonteCarloanalysis.Figure7‐8describeshowthestudyteamusedMonteCarlototestthestatisticalsignificanceofdisparityanalysisresults.

Results.BBCusedMonteCarloanalysistotestwhetherthedisparitiesthatthestudyteamobservedonallcontractsconsideredtogetherandno‐goalscontractswerestatisticallysignificant.BBCidentifiedsubstantialdisparitiesforminority‐ownedbusinessesandwoman‐ownedbusinessesconsideredtogetherandforcertainracial/ethnicandgendergroupsconsideredseparatelyonthosecontractsets.Examiningwhetherdisparitiesarestatisticallysignificantisparticularlyinstructiveforno‐goalscontractsandprimecontracts,becausetheyprovideinformationaboutoutcomesforminority‐ownedbusinessesandwoman‐ownedbusinessesintheabsenceoftheCity’suseofrace‐consciousandgender‐consciousmeasures.Figure7‐9presentsresultsfromtheMonteCarloanalysisastheyrelatetothestatisticalsignificanceofdisparitiesthatthestudyteamobservedforminority‐ownedandwoman‐ownedbusinessesconsideredtogetherandseparatelyforeachrelevantracial/ethnicandgendergrouponallcontractsconsideredtogetherandno‐goalscontracts.


Figure 7‐8. Monte Carlo Analysis

BBC used a Monte Carlo approach to randomly select businesses to win each individual contract element that the study team included in its analyses. For each contract element, BBC’s availability database provided information on individual businesses that are available for that contract element based on type of work, contractor role, and contract size. BBC assumed that each available business had an equal chance of winning the contract element, so the odds of a business from a certain group winning it were equal to the number of businesses from that group available for it divided by the total number of businesses available for it. The Monte Carlo simulation then randomly chose a business from the pool of available businesses to win the contract element.

The Monte Carlo simulation repeated the above process for all contract elements in a particular contract set. The output of a single Monte Carlo simulation for all contract elements in the set represented the simulated participation of minority‐ and woman‐owned businesses for that set of contract elements. The entire Monte Carlo simulation was then repeated 1 million times for each contract set. The combined output from all 1 million simulations represented a probability distribution of the overall participation of minority‐ and woman‐owned businesses if contracts were awarded randomly based only on the availability of relevant businesses working in the local marketplace.

The output of the Monte Carlo simulations represents the number of simulations out of 1 million that produced simulated participation that was equal or below the actual observed participation for each racial/ethnic and gender group and for each set of contracts. If that number was less than or equal to 25,000 (i.e., 2.5% of the total number of simulations), then BBC considered the corresponding disparity index to be statistically significant at the 95 percent confidence level. If that number was less than or equal to 50,000 (i.e., 5.0% of the total number of simulations), then BBC considered that disparity index to be statistically significant at the 90 percent confidence level.

Figure 7‐9. Monte Carlo simulation results for disparity analysis results


Contract set and business group

All contracts

Minority‐owned and woman‐owned 63 0 <0.1 %

Non‐Hispanic white woman‐owned 48 45 <0.1 %

Minority‐owned 75 0 <0.1 %

Asian American‐owned 38 0 <0.1 %

Black American‐owned 48 0 <0.1 %

Hispanic American‐owned 102 N/A N/A

Native American‐owned 200+ N/A N/A

No‐goals contracts

Minority‐owned and woman‐owned 35 0 <0.1 %

Non‐Hispanic white woman‐owned 33 45 <0.1 %

Minority‐owned 36 0 <0.1 %

Asian American‐owned 31 0 <0.1 %

Black American‐owned 36 0 <0.1 %

Hispanic American‐owned 35 0 <0.1 %

Native American‐owned 200+ N/A N/A

Probability of observed

disparity occurring due

to "chance"

Disparity

index

Number of simulation runs out

of one million that replicated

observed utilization


D. Bid/Proposal Processes

BBCcompletedacasestudyanalysistoassesswhethercharacteristicsoftheCity’sbidandproposalprocesseshelpexplainthedisparitiesthatthestudyteamobservedforprimecontracts.BBCanalyzedbidandproposalinformationforasampleofthecontractsthattheCityawardedduringthestudyperiod.

DEN.BBCexaminedbidinformationforasampleof84contractsthatDENawardedduringthestudyperiod.Intotal,DENreceived337bidsforthosecontracts.

Number of bids from minority‐ and woman‐owned businesses.Minority‐andwoman‐ownedbusinessessubmitted74ofthe337bids(22%)thatthestudyteamexamined:

Fifty‐fourbids(16%ofallbids)camefromminority‐ownedbusinesses(36differentbusinesses);and

Twentybids(6%ofallbids)camefromnon‐Hispanicwhitewoman‐ownedbusinesses(19differentbusinesses).

Success of bids.BBCexaminedthepercentageofbidsthatminority‐andwoman‐ownedbusinessessubmittedthatresultedinawards.AsshowninFigure7‐10,19percentofthebidsthatminority‐ownedbusinessessubmittedresultedincontractawardsand20percentofthebidsthatnon‐Hispanicwhitewoman‐ownedbusinessessubmittedresultedincontractawards.

Figure 7‐10. Percentage of bids on DEN contracts that resulted in contract awards

Note:

Based on analysis of 337 bids on 84 construction contracts.

Source:

BBC Research & Consulting from entity contracting data.

Department of Public Works (Public Works).BBCexaminedproposalinformationforasampleof51PublicWorkscontractsthattheCityawardedduringthestudyperiod.Intotal,PublicWorksreceived168proposalsforthosecontracts.

Number of proposals from minority‐ and woman‐owned businesses.Minority‐andwoman‐ownedbusinessessubmitted39ofthe168proposals(23%)thatthestudyteamexamined:

Thirty‐sixproposals(21%ofallproposals)camefromminority‐ownedbusinesses(11differentbusinesses);and

Threeproposals(2%ofallproposals)camefromanon‐Hispanicwhitewoman‐ownedbusiness(onebusiness).

Success of bids.BBCalsoexaminedthepercentageofproposalsthatminority‐andwoman‐ownedbusinessessubmittedthatresultedincontractawards.AsshowninFigure7‐11,31percentoftheproposalsthatminority‐ownedbusinessessubmittedresultedincontractawards,


Oftheproposalsthatnon‐Hispanicwhitewoman‐ownedbusinessessubmitted,33percentresultedincontractawards.

Figure 7‐11. Percentage of bids on Public Works contracts that resulted in contract awards

Note:

Based on analysis of 168 bids on 51 professional service contracts.

Source:


General Services.BBCexaminedbidinformationforasampleof160GeneralServicescontractsthattheCityawardedduringthestudyperiod.Intotal,theCityreceived828bidsforthosecontracts.

Number of bids from minority‐ and woman‐owned businesses.Minority‐andwoman‐ownedbusinessessubmitted168ofthe828bids(20%)thatthestudyteamexamined:

Eightbids(1%ofallbids)camefromminority‐ownedbusinesses(fourbusinesses);and

One‐hundred‐sixtybids(19%ofallbids)camefromnon‐Hispanicwhitewoman‐ownedbusinesses(fourteenbusinesses).

Success of bids.BBCalsoexaminedthepercentageofbidsthatminority‐andwoman‐ownedbusinessessubmittedthatresultedincontractawards.AsshowninFigure7‐12,63percentoftheproposalsthatminority‐ownedbusinessessubmittedresultedincontractawards.Oftheproposalsthatnon‐Hispanicwhitewoman‐ownedbusinessessubmitted,28percentresultedincontractawards.

Figure 7‐12. Percentage of bids on goods and other service contracts that resulted in contract awards

Note:

Based on analysis of 828 bids on 160 goods and other services contracts.

Source:


CHAPTER 8.

Program Measures


CHAPTER 8. Program Measures

TheCityandCountyofDenver(theCity)usesacombinationofrace‐andgender‐neutralandrace‐andgender‐consciousmeasurestoencouragetheparticipationofsmallbusinesses,minority‐ownedbusinesses,andwoman‐ownedbusinessesinitscontracting.1Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoencouragetheparticipationofallbusinesses—or,allsmallbusinesses—inanorganization’scontracting.Participationinsuchmeasuresisnotlimitedtominority‐andwoman‐ownedbusinesses.Incontrast,race‐andgender‐consciousmeasuresaremeasuresthataredesignedtospecificallyencouragetheparticipationofminority‐andwoman‐ownedbusinessesinanorganization’scontracting(e.g.,usingminority‐ownedbusinesssubcontractinggoalsonindividualcontracts).

Aspartofmeetingthenarrowtailoringrequirementofthestrictscrutinystandardofconstitutionalreview,organizationsthatimplementminority‐andwoman‐ownedbusinessprogramsmustmaximizetheuseofrace‐andgender‐neutralmeasuresintryingtoencouragetheparticipationofminority‐andwoman‐ownedbusinesses(fordetails,seeChapter2andAppendixB).Ifanagencycannotsufficientlyaddressbarriersthatminority‐andwoman‐ownedbusinessesfaceinitscontractingthroughtheuseofrace‐neutralandgender‐neutralmeasuresalone,thenitcanalsoconsiderusingrace‐andgender‐consciousmeasures.

BBCResearch&Consulting(BBC)reviewedmeasuresthattheCitycurrentlyusestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontracting.Inaddition,BBCreviewedrace‐andgender‐neutralmeasuresthatotherorganizationsintheregionuse.Thatinformationisinstructive,becauseitallowsanassessmentofthemeasuresthattheCityiscurrentlyusingandanassessmentofadditionalmeasuresthattheorganizationcouldconsiderusinginthefuture.BBCreviewstheCity’sprogrammeasuresinfourparts:

A. Programoverview;

B. Race‐andgender‐neutralmeasures;

C. Race‐andgender‐consciousmeasures;and

D. Otherorganizations’programmeasures.

A. Program Overview

TheCity’sOfficeofEconomicDevelopment(OED)DivisionofSmallBusinessOpportunities(DSBO)operatestheCity’sMinority‐andWomen‐OwnedBusinessEnterprise(MWBE),EmergingBusinessEnterprise(EBE),andSmallBusinessEnterprise(SBE)Programstoencouragetheparticipationofsmallbusinessesminority‐andwoman‐ownedbusinessesinCitycontracting.AspartoftheMWBEProgram,DSBOalsoestablishesaspirationalannualgoalsfor

1“Woman‐ownedbusinesses”referstonon‐Hispanicwhitewomanownedbusinesses.


theparticipationofthosebusinessesinconstruction;professionalservices;andgoodsandgeneralservicescontractsandusesacombinationofrace‐andgender‐neutralandrace‐andgender‐consciousmeasurestomeetthosegoalseachyear.TheCitycertifiesbusinessesasminority‐ownedbusinessenterprises(MBEs),woman‐ownedbusinessenterprises(WBEs),smallbusinessenterprises(SBEs),oremergingbusinessenterprises(EBEs),asappropriate,tohelpmeettheobjectivesoftheprogram.DSBO’sresponsibilitiesalsoinclude:

MonitoringtheparticipationofMBEs,WBEs,SBEs,andEBEsinCitycontracts;

ProvidingguidancerelatedtosettingaspirationalMBE,WBE,SBE,andEBEgoalsandcontract‐specificgoalstoallCitydepartments;

ProvidinginformationandassistancetoMBEs,WBEs,SBEs,EBEs,andotherbusinessesrelatingtocitycontractingpoliciesaswellasbidspecificationsandrequirements;

Receiving,reviewing,andactingoncomplaintsandsuggestionsconcerningvariousCitybusinessprograms;and

DevelopingtechnicalassistanceprogramstoassistMBEs,WBEs,SBEs,EBEs,andotherbusinessesrelatingtocontractingaswellasbusinessandprofessionaldevelopment.

B. Race‐ and Gender‐Neutral Measures

TheCityusesmyriadrace‐andgender‐neutralmeasuresaspartoftheMWBE,EBE,andSBEProgramstoencouragetheparticipationofsmallbusinesses—includingmanyminority‐andwoman‐ownedbusinesses—initscontracting.TheCityusesthefollowingtypesofrace‐andgender‐neutralmeasures:

SBEandEBEcertification;

Advocacyandoutreach;

Businessdevelopment;

Educationandtraining;and

Financialassistance.

SBE and EBE certification. DSBOcertifiessmallbusinessesasSBEsandEBEs.TheprimarydifferencebetweenSBEandEBEcertificationisthatEBEcertificationisreservedforsmallbusinesseswhoseannualrevenuesarelessthan$3million,whereasSBEcertificationisavailabletosmallbusinesseswhoseannualrevenuesareinlinewithSmallBusinessAdministrationrevenuethresholds,whichcanfarexceed$3milliondependingonindustry.Inadditiontorevenuerequirements,businessesmustpossessthefollowingcharacteristicstoqualifyforSBEandEBEcertification:

Businessesmustbeactivelyinbusinessforatleastsixmonths.

Themajorityofbusinessownersmusthavepersonalnetworthoflessthan$1.32million(excludingequityinprimaryresidenceandownershipinapplicantbusinesses).

Businessesmustperformworkinconstruction;professionalservices;orgoodsandservices.


BenefitsofSBEcertificationincludebusinessesbeinglistingintheCity’scertifiedvendordatabase;increasedvisibilityandnotificationofCitycontractingandsubcontractingopportunities;freenetworkingeventsforsmallbusinessowners;andpotentialaccesstoworkingcapitalloansfromtheCity.Inaddition,theCityhasestablishedtheDefinedSelectionPoolProgram,whichlimitscompetitiononcertainconstructionandgoodsandservicescontractstocertifiedSBEs.Similarly,theCitylimitscompetitiononcertainconstructionandprofessionalservicescontractstocertifiedEBEs.

Advocacy and outreach.TheCityparticipatesinvariousadvocacyandoutreacheffortsaspartoftheMWBE,EBE,andSBEPrograms.

Construction Empowerment Initiative (CEI). CEIwasestablishedin2006asanadvisorypanelconsistingofcommunityandbusinessmembers.ThepurposeofCEIistoworkwiththeCitytohelpensurethatconstructionanddesigncontractopportunitieswiththeCityaremadeavailabletolocalsmallbusinessesandminority‐andwoman‐ownedbusinesses.CEImeetswiththeCityonamonthlybasistoprovidepolicyandprocedurerecommendations.ThegroupisalsointegrallyinvolvedwiththedevelopmentandrefinementoftheCity’sMWBEOrdinance.

Newsletter to certified firms. DSBOpublishesamonthlynewsletterthatprovidesinformationrelatedtoDSBOactivities,Cityprojects,andupcomingoutreachevents.ThenewsletterisdisseminatedtoallMBE‐,WBE‐,SBE‐,andEBE‐certifiedbusinesses.

General Services Business Opportunity Fair. TheDepartmentofGeneralServicesorganizesandhostsanannualbusinessoutreachevent.BusinessescanlearnabouthowbesttoworkwithGeneralServices,includinghowtosubmitinvoices,howtomeetprevailingwagerequirements,andhowtofindorapplyforloansavailabletolocalsmallbusinesses.Animportantcomponentoftheeventisanopenquestion‐and‐answersessionduringwhichDenverbusinessescanaskquestionsofGeneralServices’staff.GeneralServiceshaspreviouslyinvitedotherCitydepartmentstoparticipateintheeventaswell.

Mega project outreach. DSBOpartnerswithlocalagenciesandotherCitydepartmentstoprovideoutreachrelatedtotheCity’smegaprojects.Attheoutreachevents,DSBOdiscussesanyMWBEgoalsforthecontract,DSBOrequirementsfortheproject,andcertificationprocesses.

Outreach event participation.DSBOandotherCitydepartments,includingGeneralServices,participateinoutreacheventswiththeColoradoDepartmentofTransportation,theRegionalTransportationDistrict–Denver,andtheDenverHealthandHospitalAuthority.Citystaffalsoregularlyattendmeetingssponsoredbylocalorganizationsrepresentingminority‐andwoman‐ownedbusinessesandshareinformationregardingcontractingopportunitieswiththeCity.Suchorganizationsinclude:

CEI;

TheHispanicContractorsofColorado;

TheOpportunityCouncil;

ConstructionBlackChamberofCommerce;

AsianChamberofCommerce;


WomenChamberofCommerce;

RockyMountainChamberofCommerce;and

TheBlackBusinessInitiative.

Department websites.OED’swebsiteprovidesinformationaboutcertificationprocesses;acertifiedfirmdirectory;complianceinformation;informationaboutcontractingopportunities;policiesandforms;businessresources;andinformationaboutupcomingeventsandnews.GeneralServices’websitelistscurrentandupcomingcontractingsolicitations.Anyupdatesoncontractingopportunitiesaree‐maileddirectlytothemorethan350businessesthathaveregisteredtoreceiveinformationfromtheCity.ThoseupdatesarealsosharedontheCity’sLinkedInpageandtheCity’swebsite.

Business development programs.AbenefitofMBE,WBE,SBE,andEBEcertificationisthatcertifiedbusinesseshaveaccesstotheCity’sbusinessdevelopmentopportunities.

Capacity building outreach. DSBOprovidesassistanceandresourcestosmallbusinessestohelpbuildtheircapacity.Onceamonth,businessescanattendafreecapacity‐buildingadvisoryeventthattheCityhosts.Businessescanaccessone‐on‐oneadvisorysessionsandworkshopsontheresourcesavailablefromvariouspublicandnon‐profitorganizations.Inadditiontotheadvisoryevents,DSBOhascreatedtheDefinedSelectionPoolProgramtooffersmallbusinessesprimecontractingopportunitieswiththeCity.

One‐on‐one business meetings.Businesseshavetheopportunitytomeetone‐on‐onewithrepresentativesfromGeneralServicessothatGeneralServicescanlearnmoreaboutindividualbusinesses,providetailoredadvicetobusinessesabouthowtheycanbemorecompetitiveonCitycontractingopportunities,andinvitebusinessestoaskquestionsaboutspecificcontractingopportunities.

Mentor‐Protégé Program.In2015,DSBOdevelopedaMentor‐ProtégéProgramtobuildeffectiveworkingrelationshipsbetweenleadersofmature,establishedbusinessesandemergingminority‐andwoman‐ownedbusinesses.Theobjectiveoftheprogramisforminority‐andwoman‐ownedbusinessestobenefitfromtheknowledge,experience,andsocialcapitalofmoreestablishedbusinessesandtobuildcapacityamongminority‐andwoman‐ownedbusinesseswithintheconstructionandprofessionalservicesindustries.MentorsprovidecoachingonwaysforprotégéstocompetemoresuccessfullyonCitycontracts,includingcoachingonpubliccontractapplicationsandcontractperformanceaswellasawidearrayofotherbusiness‐managementtopics,fromstrategicplanningtofinancialmanagementandmarketing.

Education and training.DSBOandotherCitydepartmentsprovidetrainingandeducationtobusinesseswhoareinterestedinbecomingcertifiedordoingworkwiththeCity.

Business certification training sessions.DSBOprovidesfree,two‐hourtrainingsessionseverymonthonhowbusinessescanbecomecertifiedasMBEs,WBEs,SBEs,andEBEs.Thetrainingsessionsincludeanoverviewofdifferentcertificationprograms,theCEIOrdinance,andawalk‐throughoftheUnifiedCertificationProcess(UCP)Application.


5 Steps for Doing Business with the City.GeneralServiceshasdevelopedthe5StepsforDoingBusinesswiththeCitytrainingtoeducatebusinessesonhowtheCityprocuresconstructionservices;professionalservices;andgoodsandservices.Thetwo‐hourtrainingisofferedmonthlyattheCity’sofficesandotherlocationsaroundDenver.

Financial assistance.OED'sBusinessDevelopmentteamhascreatedtheRevolvingLoanfund,whichoffersgapfinancingforestablishedbusinessesthatrelocateorexpandintocertainindustrialorcommercialbusinessareaswithinDenver.Theprogramworksbylendingupto25percentofprojectcostsandencouragingbankstoprovidethebulkoftheremainingfinancing.TheprogramalsoassistsbusinessesthatrelocatetoDenverwithpermitting.

C. Race‐ and Gender‐Conscious Measures

TheCitycurrentlyusesSBE,MBE,WBE,andDisadvantagedBusinessEnterprise(DBE)contractgoalstoawardmanyofitscontracts.2Contractinggoalsforeachcontractareestablishedaccordingtocontractsize;worktypesinvolved;potentialsubcontractingopportunities;theavailabilityofSBEs,MBEs,andWBEsforthecontract;andSBE,MBE,andWBEparticipationonsimilarprojectsthattheCityhasawardedinthepast.Primecontractorscanmeetcontractinggoalsbyeitherself‐performingtheworkiftheyarecertifiedasSBEs,MBEs,orWBEsorbymakingsubcontractingcommitmentswithcertifiedSBE,MBE,orWBEsubcontractorsatthetimeofbid.IftheprimecontractorcannotsuccessfullymakesubcontractingcommitmentswithcertifiedSBEs,MBEs,orWBEs,thentheymustdocumentsufficientGoodFaithEfforts(GFEs)towardachievingtheestablishedcontractinggoals.DSBOthenreviewsGFEdocumentationtodetermineiftheprimecontractor’seffortsweresufficient.

Toadviseongoal‐settingforspecificcontracts,theCityhasestablishedagoalcommitteecomprisingindividualswhoareengagedinthelocalconstruction;reconstructionandremodeling;andarchitecturalandengineeringindustries.TheOEDDirectormayusethegoalcommittee’sadviceongoal‐settingaswellasotherrelevantinformation.

D. Other Organizations’ Program Measures

Inadditiontotherace‐andgender‐neutralmeasuresthattheCitycurrentlyuses,thereareanumberofrace‐andgender‐neutralprogrammeasuresthatotherorganizationsinDenverusetoencouragetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracts.Figure8‐1providesexamplesofthosemeasures.

2SBEcontractgoalsarenotconsideredtoberace‐orgender‐consciousmeasures.


Figure 8‐1. Examples of race‐ and gender‐neutral program measures that other organizations in Denver use

Type Program

The Denver Minority Business Development Agency facilitates greater access to the goods and

services of minority‐owned businesses for diverse corporate and government organizations,

fostering the development of lasting and mutually beneficial business relationships. Core business

services include global business development, access to capital, access to contracts, access to

markets, and strategic business consulting.

The Minority Business Office Colorado is located within the Colorado Office of Economic

Development and International Trade and dedicated to advancing the efforts of Colorado's minority‐

and woman‐owned businesses. The office features an established network of public, private, and

government resources that can be leveraged by businesses of all types and sizes. It also provides

information and counseling on certifications available for minority‐ and woman‐owned businesses.

Asian Chamber of Commerce ‐ Colorado (ACC) is a membership organization whose mission is to

provide economic development and business opportunities for its members. The ACC partners with

community organizations and non‐profits to help promote and cross‐resource programs and

initiatives; connects with member business units to help support their diversity and inclusion

efforts; represents its community and region with local and state government; participates in

delegations to help foster international trade; and provides networking, marketing, and

promotional opportunities for its members.

The Colorado Unified Certification Program was established to facilitate statewide DBE certification

and eliminate the need for DBE applicants to obtain certification from multiple agencies.

Black Business Initiative is an economic revitalization program for the Black community and by the

Black community with a mission to grow Black owned businesses through education, mentorship,

investment, community, and need.

The vision of the Colorado Black Chamber of Commerce (CBCC) is to serve the needs of Black

American‐owned businesses and provide economic opportunity and support to them and the

communities they serve. The CBCC's mission is to support the initiatives of Black American business

owners and foster an enterprise that focuses on success and viability. CBCC provides access to

education and training that keeps Black American business owners in step with the ever‐changing

requirements of Colorado’s economic playing field.

The Hispanic Contractors of Colorado's mission is helping small, diverse contractors learn how to do

business with public organizations and large corporations.

The Hispanic Chamber of Commerce of Metro Denver is a membership driven organization that

comprises small‐business owners, corporate representatives, community leaders, and association

members representing various professions. The chamber supports the development and growth of

member businesses through initiatives that encourage and promote business and economic

development. In addition, it is a strong advocate of legislation affecting small businesses. The

chamber also provides access to valuable information, business leaders, procurement

opportunities, and education training. Not only does the chamber give small businesses viability in

the business community, it gives them a voice, unity and strength.

Mi Casa Women's Business Center is a women's business center partially funded by the United

States Small Business Administration and is a member of the Association of Women's Business

Centers. The center offers entrepreneurial training, individual business counseling, technology

training, and networking opportunities to help aspiring entrepreneurs and emerging businesses

achieve their goals.

The Denver Water Supplier Diversity Program seeks to provide small businesses and businesses

owned by minorities and women an opportunity to work for Denver Water as prime contractors,

subcontractors, and suppliers. It includes an outreach database to help Denver Water staff identify

small, minority‐ and woman‐owned businesses that are available for Denver Water work.

The Denver Public Schools Office of Business Diversity is a program to help promote diversity in

construction and related contracting for various bond‐funded capital improvement projects.

Advocacy and

Outreach


Figure 8‐1. (continued) Examples of race‐ and gender‐neutral program measures that other organizations in Denver use

Type Program

Spanning long‐term financial planning, the Small Business Administration's CDC/504 Programs

provide a platform for the development of the community as a whole. The loans sanctioned under

the program provides small businesses with fixed‐rate financing, which are then used to acquire

assets which are mainly aimed at modernization, such as commercial mortgages and street‐

improvement utilities.

The SBA Microloan Program provides small, short‐term loans that can be used for:

• Purchasing supplies or inventory

• Purchasing machinery

• Purchase of furniture

The Microloan fund cannot be used for the purchase of real estate or for paying off existing debts.

The maximum Microloan amount is $50,000.

Businesses with special requirements (such as those in exports or operating in rural areas) are

covered under the SBA 7(a) Loan Programs. The program is considered to be the most flexible

choice and also the most suitable for emerging businesses. The different 7(a) loan programs are:

• Special Purpose Loans, which offer loans to businesses which have been affected by NAFTA to

assist Employee Stock Ownership plans and other initiatives.

• Export Loan Programs, which offer loans to further expand export activities.

• Rural Business Loans, which are aimed at providing a simpler and more streamlined process to

acquire loans for businesses operating in the rural areas.

The Colorado Microfinance Alliance is a consortium of microfinance practitioners, donors,

educators, students, and professionals that facilitates learning opportunities for the public,

microfinance practitioners, and their clients. The website offers information about the Alliance's

partner organizations; a central calendar of microfinance‐related activities in Colorado; and

collaborative tools designed for networking and practical use.

The Denver Capital Matrix is a resource directory of funding sources for Denver small businesses

and entrepreneurs. The matrix identifies funding sources to include traditional bank lending,

venture capital firms, private equity firms, angel investors, mezzanine sources, and others that have

funded Colorado businesses and provides contact information and categorizes the investment focus

of each listed organization.

Colorado Lending Source is a free membership‐based organization made up of lenders, small

businesses, community organizations, and government groups.

The Community Economic Development Company of Colorado is a SBA‐certified non‐profit which

provides loans under the 504 program. Loans are provided below market rates, have long‐term

financing, and a low down payment on office, commercial, and industrial assets located in Colorado.

The Colorado Enterprise Fund is a non‐profit lending source which specializes in loans for small

businesses and startups unable to secure traditional bank financing.

The Rocky Mountain Microfinance Institute creates economic and social mobility through

entrepreneurship support. It has a Business Builder loan program to provide microloans to

entrepreneurs in need of financing to launch or expand their businesses.

The Colorado Housing and Finance Authority (CHFA) Business Lending Program's Community

Development team partners with lenders and economic developers to provide small businesses

with the financing needed for future growth. It offers the following programs:

• Loan programs to help businesses finance owner‐occupied commercial real estate acquisition,

renovations, and equipment purchases.

• Tax exempt bonds to help manufacturing businesses and nonprofits take advantage of low

interest financing available for real estate.

• Cash Collateral Support program to acquire additional collateral to secure financing and connect

with lenders actively serving small business customers.

• New markets tax credits to encourage private investment in underserved communities.

Capital,

Bonding, and

Insurance



Type Program

The Metro Denver Urban Economic Development Corporation (EDC) is an affiliate of the Denver

Metro Chamber of Commerce whose mission is to enhance the regional economy through the

expansion and retention of primary jobs and capital investment. The EDC provides extensive

services to help site selectors and companies with location, expansion, and market decisions. The

EDC has a property database for business site selection; provides proprietary market research and

analysis; and assists with advocacy, access, and community involvement.

The CDOT Emerging Small Business Program provides specific small business programs authorized

by the Colorado legislature to promote competition for CDOT construction, professional service,

and research contracts. The Connect2DOT Program is a partnership between CDOT and the Colorado Small Business

Development Center Network designed to help small businesses in the transportation industry

become more competitive and successful in bidding and contracting with CDOT and other local

transportation agencies. The program offers free consulting and business training as well as online

resources and events tailored to construction contractors and professional design, architecture, and

engineering businesses.

The Colorado Small Business Development Center (SBDC) Network is dedicated to helping existing

and new businesses grow and prosper in Colorado by providing free and confidential consulting and

no‐ or low‐cost training programs. The SBDC combines information and resources from federal,

state, and local governments with those of the education system and private sector to meet the

specialized and complex needs of the small business community.

The Colorado Procurement Technical Assistance Center (PTAC) helps small businesses grow with

federal, state, and local government contracts. The core of the procurement assistance program is

counseling and education, with support in the following areas:

• Determining Suitability for Government Contracting

• Securing Necessary Registrations

• Identifying Bid Opportunities

• Teaming or Joint Venture Arrangements

• SDB, 8(a), HUBzone, CDOT and other certifications

• Proposal Techniques and Review

• Reviewing Contract Terms & Conditions

• Government Contract Performance Issues

• Networking & Business Development

• Preparing for Audit

The SBA ‐ Colorado District Office has small business loan and assistance programs; special outreach

efforts; and initiatives to aid and inform small businesses. Services include:

• Financial assistance for businesses through guaranteed loans made by area lenders

• Free counseling, advice, and information on starting, better operating, or expanding small

businesses through Counselors to America’s Small Business.

• Business training and counseling through the SBDC

• Assistance to socially and economically disadvantaged businesses through the 8(a) Business

Development Program

• Advice to women business owners

• Special loan programs for businesses involved in international trade

Rocky Mountain E‐Purchasing System (BidNet) is where all participating local government

purchasing departments invite interested vendors to register for exclusive access to RFPs and

information on bids and awards. Registered vendors benefit from more bid information in a central

location, less paperwork, and an easier method of doing business with local governments.

SCORE Denver is a non‐profit resource partner of the SBA that offers one‐on‐one counseling; cost

effective seminars and workshops; and for existing businesses, business "checkups." SCORE

Denver's mentors will customize one‐on‐one confidential mentoring for anyone planning to start a

business and to those already in business who are looking to improve their performance. SCORE's

workshops include a broad range of topics for small business owners and aspiring entrepreneurs.

SCORE also offers a free resource library which features a wide variety of documents and templates

to assist in starting or growing a business.

Technical

Assistance



Type Program

Mentor‐

Protégé

The Colorado Department of Transportation's (CDOT's) Emerging Small Business Mentor‐Protégé

program provides opportunities for emerging small businesses to hone their business skills by

working closely with established businesses in highway construction and professional services.

CDOT does not match mentors and protégés. Businesses are responsible for identifying and forming

a team and applying to CDOT for formal approval.

Approved mentor‐protégé teams must identify the goals of their relationships and create a plan to

achieve the identified goals. Mentor‐protégé teams will be responsible for managing and tracking

progress against the plan by providing quarterly update surveys to CDOT via Survey Monkey. As

described in the 'Incentives' page linked below, mentor‐protégé teams may receive various benefits

and incentives for participating in the program.

A maximum of six teams are selected each year for the program. A mentor‐protégé team will be

monitored for one calendar year but may continue longer.

CHAPTER 9.

Program Implementation


CHAPTER 9. Program Implementation

TheCityandCountyofDenver(theCity)operatestheMinority‐andWomen‐ownedBusinessEnterprise(MWBE),EmergingBusinessEnterprise(EBE),andSmallBusinessEnterprise(SBE)Programstoencouragetheparticipationofsmallbusinessesandminority‐andwoman‐ownedbusinessesinitslocally‐fundedcontractsandimplementstheFederalDisadvantagedBusinessEnterprise(DBE)Programtoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinFederalAviationAdministration(FAA)‐fundedcontractsthattheDenverInternationalAirport(DEN)awards.The2018CityofDenverDisparityStudyprovidesinformationthattheCityshouldconsiderinrefiningitsimplementationofbothprograms.

Aspirational MWBE and DBE Goals

TheCityestablishesaspirationalannualgoalsfortheparticipationofcertifiedminority‐ownedbusinessenterprises(MBEs)andwoman‐ownedbusinessenterprises(WBEs)aspartoftheMWBEProgramandfortheparticipationofcertifiedDBEsaspartofitsimplementationoftheFederalDBEProgram.TheCityusesmyriadrace‐andgender‐neutralmeasuresaswellasrace‐andgender‐consciousmeasurestoencouragetheparticipationofminority‐andwoman‐ownedbusinessesinitscontractsinanefforttomeetthosegoals.Resultsfromthedisparitystudy—particularlytheavailabilityanalysisandanalysesofmarketplaceconditions—canbehelpfultotheCityinsettingitsnextaspirationalMWBEandDBEgoals.

Aspirational MWBE goals.TheCitysetsaspirationalannualMWBEgoalsseparatelyforitslocally‐fundedconstruction;professionalservices;andgoodsandservicescontractsandprocurements.Currently,theCityhassetthosegoalsat24percentforconstruction,33percentforprofessionalservices,and8percentforgoodsandservices.InformationfromtheavailabilityanalysisprovidedinformationthattheCitycanuseasabasisforitsaspirationalMWBEgoals.Forthepurposesofaspirationalgoal‐setting,BBCResearch&Consulting(BBC)calculatedtheavailabilityofpotentialMWBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyMWBE‐certifiedorappearthattheycouldbeMWBE‐certifiedbasedonrevenuerequirementssetforthintheCity’sMWBEProgram—forlocally‐fundedprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.

Figure9‐1presentstheavailabilityofpotentialMWBEsforthelocally‐fundedconstruction;professionalservices;andgoodsandgeneralservicesprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.AsshowninFigure9‐1,potentialMWBEsmightbeexpectedtoreceive20.5percentoftheCity’slocally‐fundedcontractingdollarsbasedontheiravailabilityforthatwork.TheavailabilityofpotentialMWBEsis16.5percentforlocally‐fundedconstructioncontracts;39.5percentforlocally‐fundedprofessionalservicescontracts;and19.8percentforlocally‐fundedgoodsandgeneralservicescontracts.TheCityshouldconsiderthatinformationasitsetsitsnextaspirationalMWBEgoalsforitslocally‐fundedcontracts.


Figure 9‐1. Availability of potential MWBEs for locally‐funded contracts

Note: Numbers rounded to nearest tenth of 1 percent and thus may not sum exactly to totals.

Total availability represents a dollar‐weighted aggregation of the availability percentages associated with each relevant industry based on the actual locally‐funded dollars that the City spent in each industry during the study period.

For details, see Figures F‐19, F‐20, F‐21, and F‐22 in Appendix F.

Source: BBC Research & Consulting availability analysis.

Overall DBE goal.TheCityalsosetsanoverallannualDBEgoalfortheFAA‐fundedcontractsthatDENawards.Currently,theCityhassetthatgoalat14.04percent.ForthepurposesofhelpingtheCitydetermineabasisforitsoverallDBEgoal,BBCcalculatedtheavailabilityofpotentialDBEs—minority‐andwoman‐ownedbusinessesthatarecurrentlyDBE‐certifiedorappearthattheycouldbeDBE‐certifiedbasedonrevenuerequirementssetforthin49CodeofFederalRegulationsPart26.65—forFAA‐fundedprimecontractsandsubcontractsthatDENawardedduringthestudyperiod.AsshowninFigure9‐2,thatanalysisindicatedthatpotentialDBEsmightbeexpectedtoreceived16.2percentoftheCity’sFAA‐fundedprimecontractandsubcontractdollarsbasedontheiravailabilityforthatwork.TheCityshouldconsiderthatinformationasitsetsitsnextoverallDBEgoalsforDEN’sFAA‐fundedcontracts.

Figure 9‐2. Availability of potential DBEs for FAA‐funded contracts

Note:



Source:


Goal adjustments. Insettingaspirationalannualgoals,organizationsoftenexamineavailableevidencetodeterminewhetheranadjustmenttoavailabilityisnecessarytoaccountforpastparticipationofminority‐andwomanownedbusinessesintheircontracting;currentconditionsinthelocalmarketplaceforminorities,women,minority‐ownedbusinesses,andwoman‐ownedbusinesses;andotherrelevantfactors.TheFederalDBEProgram—whichorganizationsoftenuseasamodeltosetandadjusttheiraspirationalannualgoals—outlinesseveralfactorsthatorganizationsmightconsiderwhenassessingwhethertoadjusttheirgoals:

1. Volumeofworkminority‐andwoman‐ownedbusinesseshaveperformedinrecentyears;

2. Informationrelatedtoemployment,self‐employment,education,training,andunions;

Business group

Asian American‐owned 1.5 % 2.9 % 8.0 % 3.2 %

Black American‐owned 1.8 % 11.2 % 2.2 % 3.2 %

Hispanic American‐owned 3.2 % 9.9 % 1.9 % 3.8 %

Native American‐owned 0.2 % 0.1 % 0.1 % 0.1 %

Non‐Hispanic white woman‐owned 9.8 % 15.5 % 7.6 % 10.1 %

Total Minority‐ and Woman‐owned 16.5 % 39.5 % 19.8 % 20.5 %

Industry

Construction

Professional

services Total

Goods and

general services

Business group






Total DBEs 16.2 %

Total


3. Informationrelatedtofinancing,bonding,andinsurance;and

4. Otherrelevantdata.1

BBCcompletedananalysisofeachoftheabovefactors.MuchoftheinformationthatBBCexaminedwasnoteasilyquantifiablebutisstillrelevanttotheCityasitdetermineswhethertoadjustitsaspirationalMWBEandDBEgoals.

1. Volume of work minority‐ and woman‐owned businesses have performed in recent years.TheUnitedStatesDepartmentofTransportation’s(USDOT’s)“TipsforGoal‐Setting”suggeststhatorganizationsshouldexaminedataonpastparticipationofcertifiedminority‐andwoman‐ownedbusinessesintheircontractsinrecentyears.USDOTfurthersuggeststhatorganizationsshouldchoosethemedianlevelofannualminority‐andwoman‐ownedbusinessparticipationforthoseyearsasthemeasureofpastparticipation:

Yourgoalsettingprocesswillbemoreaccurateifyouusethemedian(insteadoftheaverageormean)ofyourpastparticipationtomakeyouradjustmentbecausetheprocessofdeterminingthemedianexcludesalloutlier(abnormallyhighorabnormallylow)pastparticipationpercentages.2

IftheCityweretouseanapproachsimilartotheonethatUSDOToutlinesin“TipsforGoalsSetting,”itmightconsidertakingtheaverageofeachofitsaspirationalannualgoalswiththemedianpastparticipationforeachcorrespondingindustryandgoaltypetoadjustitsgoals.

2. Information related to employment, self‐employment, education, training, and unions.Chapter3summarizesinformationaboutconditionsinthelocalcontractingindustryforminorities,women,andminority‐andwoman‐ownedbusinesses.AdditionalinformationaboutquantitativeandqualitativeanalysesofconditionsinthelocalmarketplacearepresentedinAppendicesCandD.BBC’sanalysesindicatethattherearebarriersthatcertainminoritygroupsandwomenfacerelatedtohumancapital,financialcapital,andbusinessownershipintheDenvermarketplace.Suchbarriersmaydecreasetheavailabilityofminority‐andwoman‐ownedbusinessestoobtainandperformthecontractsthattheCityawards.TheCityshouldconsiderthatinformationcarefullyindeterminingwhetheranyadjustmentstoitsaspirationalMWBEandDBEgoalsarewarranted.

3. Information related to financing, bonding, and insurance. BBC’sanalysisofaccesstofinancing,bonding,andinsurancealsorevealedquantitativeandqualitativeevidencethatminorities,women,andminority‐andwoman‐ownedbusinessesinDenverdonothavethesameaccesstothosebusinessinputsasnon‐Hispanicwhitemenandbusinessesownedbynon‐Hispanicwhitemen(fordetails,seeChapter3andAppendicesCandD).Anybarrierstoobtainingfinancing,bonding,andinsurancemightlimitopportunitiesforminoritiesandwomentosuccessfullyformandoperatebusinessesinthelocalmarketplace.SuchbarrierswouldalsoplacethosebusinessesatadisadvantageincompetingforCityprimecontractsandsubcontracts.

149CFRSection26.45.

2SectionIII(A)(5)(c)inUSDOT’s“TipsforGoal‐SettingintheFederalDisadvantagedEnterprise(DBE)Program.”http://www.osdbu.dot.gov/DBEProgram/tips.cfm.


Thus,theCityshouldalsoconsiderinformationaboutfinancing,bonding,andinsuranceindeterminingwhethertomakeanyadjustmentstoitsaspirationalMWBEandDBEgoals.

4. Other factors.TheFederalDBEProgramsuggeststhatorganizationsalsoexamine“otherfactors”whendeterminingwhethertoadjusttheiraspirationalannualgoals.Forexample,thereisquantitativeevidencethatcertaingroupsofminority‐andwoman‐ownedbusinessesarelesssuccessfulthanbusinessesownedbynon‐Hispanicwhitemenandfacegreaterbarriersinthemarketplace,evenafteraccountingforrace‐andgender‐neutralfactors.Chapter3summarizesthatevidenceandAppendixCpresentscorrespondingquantitativeanalyses.Thereisalsoqualitativeevidenceofbarrierstothesuccessofminority‐andwoman‐ownedbusinesses,aspresentedinAppendixD.Someofthatinformationsuggeststhatdiscriminationonthebasisofrace/ethnicityandgenderadverselyaffectsminority‐andwoman‐ownedbusinessesinthelocalcontractingindustry.

Other Program Considerations

BBCprovidesvariousconsiderationsthattheCityshouldmakebasedondisparitystudyresultsandthestudyteam’sreviewoftheCity’scontractingpracticesandprogrammeasures.Inmakingthoseconsiderations,theCityshouldassesswhetheradditionalresources,changesininternalpolicy,orchangesinlawmayberequired.

Networking and outreach. TheCityhostsandparticipatesinmanynetworkingandoutreacheventsthatincludeinformationaboutmarketing,MWBEandDBEcertificationprocesses,doingbusinesswiththeCity,andavailablebidopportunities.ManybusinessesthatthestudyteaminterviewedaspartofthedisparitystudycomplimentedtheCityonitsoutreacheffortsthroughoutthelocalmarketplace(fordetails,seeAppendixD).TheCityshouldconsidercontinuingthoseeffortsbutmightalsoconsiderbroadeningitseffortstoincludemorepartnershipswithlocaltradeorganizationsandotherpublicorganizationsthathaveinitiativesinplacetoencourageminority‐andwoman‐ownedbusinessdevelopment,includingtheDenverMinorityBusinessDevelopmentAgency,theMinorityBusinessOfficewiththeStateofColorado,theBlackBusinessInitiative,theColoradoBlackChamberofCommerce,theHispanicContractorsofColorado,theAsianChamberofCommerce–Colorado,DenverWater,andDenverPublicSchools.TheCitymightalsoconsidercreatingaconsortiumoflocalorganizationsthatwouldjointlyhostquarterlyoutreachandnetworkingeventsaswellastrainingsessionsforbusinessesseekingpublicsectorcontracts.Inaddition,theCityshouldconsiderwaysthatitcanbetterleveragetechnologytonetworkmoreeffectivelywithbusinessesthroughouttheregion.TheCitycouldconsidermakinguseofonlineprocurementfairs,webinars,conferencecalls,andothertoolstoprovideoutreachandtechnicalassistance.

Data collection.TheCitymaintainscomprehensivedataontheprimecontractsandprocurementsthatitawardsandmaintainsthosedatainawell‐organizedandintuitivemanner.However,theCityonlymaintainsdataonthosesubcontractsthatareassociatedwithprimecontractsthatitawardsusingMWBEorDBEcontractgoals(i.e.,goalscontracts).TheCityshouldconsidercollectingcomprehensivedataonallsubcontracts,regardlessofwhethertheyareperformedbyminority‐andwoman‐ownedbusinessesandregardlessofwhethertheyareassociatedwithgoalscontracts.CollectingdataonallsubcontractswillhelpensurethattheCity


monitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.Collectingthefollowingdataonallsubcontractswouldbeappropriate:

Subcontractorname,address,phonenumber,andemailaddress;

Typeofassociatedwork;

Subcontractawardamount;and

Subcontractpaidamount.

TheCityshouldconsidercollectingthosedataaspartofbidsbutalsorequiringprimecontractorstosubmitdataonsubcontractsaspartoftheinvoicingprocessforallcontracts.TheCityshouldtrainrelevantdepartmentstafftocollectandentersubcontractdataaccuratelyandconsistently.

Monitoring minority‐ and woman‐owned business participation. TheCityonlymonitorsminority‐andwoman‐ownedbusinessparticipationongoalscontracts,whichresultsinaskewedrepresentationoftheparticipationofminority‐andwoman‐ownedbusinessesinCitycontractingoverall.Disparitystudyresultsindicatethat,duringthestudyperiod,theparticipationofminority‐andwoman‐ownedbusinesseswasmuchlowerincontractsthattheCityawardedwithouttheuseofMWBEorDBEcontractgoals(i.e.,nogoalscontracts)thaningoalscontracts,despitetheavailabilityofminority‐andwoman‐ownedbusinessesbeingverysimilarforbothcontractsets.ThatresultunderscorestheimportancefortheCitytomonitortheparticipationofminority‐andwoman‐ownedbusinessesinallcontracts,regardlessofwhethertheyuseanytypeofcontractgoalstoawardthem.DoingsowillhelpensurethattheCitymonitorstheparticipationofminority‐andwoman‐ownedbusinessesasaccuratelyaspossible.

Growth monitoring.Alongwithworkingtoimproveitscontractingandvendordatasystems,theCitymightalsoconsidercollectingdataontheimpactthattheMWBEandDBEProgramshaveonthegrowthofminority‐andwoman‐ownedbusinessesovertime.DoingsowouldrequiretheCitytocollectbaselineinformationoncertifiedMWBEsandDBEs—suchasrevenue,numberoflocations,numberofemployees,andemployeedemographics—andthencontinuetocollectthatinformationfromeachbusinessonanannualbasis.SuchmetricswouldallowtheCitytoassesswhethertheprogramishelpingminority‐andwoman‐ownedbusinessesgrowandalsohelprefinethemeasuresthattheCityusesaspartoftheMWBEandDBEPrograms.

Prime contract opportunities.Disparityanalysisresultsindicatedsubstantialdisparitiesformostracial/ethnicandgendergroupsontheprimecontractsthattheCityawardedduringthestudyperiod.TheCityhasestablishedaDefinedSelectionPoolProgram,whichlimitscompetitiononcertainconstructionandgoodsandservicesprimecontractstocertifiedSBEsorEBEs.TheCityshouldconsidercontinuingandevenexpandingtheuseoftheprogramtofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses

Subcontract opportunities.Overall,minority‐andwoman‐ownedbusinessesdidnotshowdisparitiesonthesubcontractsthattheCityawardedduringthestudyperiod.However,subcontractingaccountedforarelativelysmallpercentageofthetotalcontractingdollarsthattheCityawardedduringthestudyperiod.Toincreasethenumberofsubcontractopportunities,


theCitycouldconsiderimplementingaprogramthatrequiresprimecontractorstosubcontractacertainamountofprojectworkaspartoftheirbidsandproposals,regardlessoftherace/ethnicityorgenderofsubcontractorowners.Forspecifictypesofcontractswheresubcontractingorpartnershipopportunitiesmightexist,theCitycouldsetaminimumpercentageofworktobesubcontracted.Primecontractorswouldthenhavetomeetorexceedthisthresholdinorderfortheirbidstobeconsideredresponsive.IftheCityweretoimplementsuchaprogram,itshouldincludeflexibilityprovisionssuchasagoodfaitheffortsprocess.

Contract goals.TheCityusesMWBEandDBEcontractgoalsonmanyofthecontractsthatitawards.PrimecontractorscanmeetthosegoalsbyeithermakingsubcontractingcommitmentswithcertifiedMWBEorDBEsubcontractorsatthetimeofbidorbysubmittingwaiversshowingthattheymadereasonablegoodfaitheffortstofulfillthegoalsbutcouldnotdoso.Disparityanalysisresultsshowedthatoutcomesforminority‐andwoman‐ownedbusinesseswerebetterongoalscontractsthannogoalscontractsduringthestudyperiod,indicatingthattheuseofcontractgoalsisaneffectivemeasureinencouragingtheparticipationofminority‐andwoman‐ownedbusinessesinCitycontracts,particularlyforHispanicAmerican‐ownedbusinesses.TheCityshouldconsidercontinuingitsuseofMWBEandDBEcontractgoalsinthefuture.TheCitywillneedtoensurethattheuseofthosegoalsisnarrowlytailoredandconsistentwithotherrelevantlegalstandards(fordetails,seeChapter2andAppendixB).ItisalsoimportantfortheCitytocontinuetotreatcontractgoalsasonlyonetacticamongmanytoencourageminority‐andwoman‐ownedbusinessparticipationinitscontractingandtonottreattheuseofsuchgoalsasasubstituteforothermeasuresthatmighthelpbuildthecapacityofminority‐andwoman‐ownedbusinessesforCitywork,suchastechnicalassistanceprograms,mentor‐protégéprograms,andfinancialassistance.

MWBE and DBE certification.Aspartofin‐depthinterviewsandpublicmeetings,someminority‐andwoman‐ownedbusinessescharacterizedtheCity’sMWBEandDBEcertificationprocessesasdifficultandcumbersome.TheCityshouldconsidermeasurestosimplifyandstreamlinetheprocess—particularlyforrecertification—tomakeiteasierforminority‐andwoman‐ownedbusinessestobecomecertifiedandfullyparticipateintheMWBEProgramandtheFederalDBEProgram.TheCityshouldalsoconsiderworkingwiththeColoradoDepartmentofTransportation(CDOT)toexamineanycollaborationopportunitiestorefineDBEcertificationprocesses.

Unbundling large contracts.Ingeneral,minority‐andwoman‐ownedbusinessesexhibitedreducedavailabilityforrelativelylargecontractsthattheCityawardedduringthestudyperiod.Inaddition,aspartofin‐depthinterviewsandpublicforums,severalminority‐andwoman‐ownedbusinessesreportedthatthesizeofgovernmentcontractsoftenservesasabarriertotheirsuccess(fordetails,seeAppendixD).Tofurtherencouragetheparticipationofsmallbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,theCityshouldconsidermakingeffortstounbundlerelativelylargeprimecontractsandevensubcontractsintoseveralsmallercontracts.Forexample,theCityofCharlotte,NorthCarolinaencouragesprimecontractorstounbundlesubcontractingopportunitiesintosmallercontractpiecesthataremorefeasibleforsmallbusinessesandminority‐andwoman‐ownedbusinessestoworkonandacceptssuchattemptsasgoodfaithefforts.Doingsowouldresultinthatworkbeingmoreaccessibletosmallbusinesses,whichinturnmightincreaseopportunitiesforminority‐and


woman‐ownedbusinessesandresultingreaterminority‐andwoman‐ownedbusinessparticipation.

Prompt payment.Aspartofin‐depthinterviews,severalbusinesses,includingmanyminority‐andwoman‐ownedbusinesses,reporteddifficultieswithreceivingpaymentinatimelymanneronCitycontracts,bothwhentheyworkasprimecontractorsandassubcontractors(fordetails,seeAppendixD).Manybusinessesalsocommentedthathavingcapitalonhandiscrucialtosmallbusinesssuccess.TheCityshouldconsiderreinforcingitspromptpaymentpolicieswithitsprocurementstaffandprimecontractorsandcouldalsoconsiderautomatingpaymentsdirectlytosubcontractors.Doingsomighthelpensurethatbothprimecontractorsandsubcontractorsreceivepaymentinatimelymanner.Itmayalsohelpensurethatminority‐andwoman‐ownedbusinesseshaveenoughoperatingcapitaltoremainsuccessful.

Diversity language in bid and proposal documents.SomeintervieweesandpublicmeetingparticipantsindicatedthattheCitydoesnotdoenoughtoencourageprimecontractorstomakegenuineeffortstopartnerwithminority‐andwoman‐ownedbusinessesaspartofCitycontracting.OnestepthattheCitycouldconsidertakingtoemphasizetheimportanceofdiversityinitscontractingistodescribeitsdiversityobjectivesandtheeffortsthatitexpectsprimecontractorstomaketopartnerwithminority‐andwoman‐ownedbusinessesaspartofallofitsbidandproposaldocuments.DoingsowillhelpmakeitcleartoprimecontractorsthatcontractingdiversityisaprioritytotheCityandwillalsohelpensurethatprimecontractorsgobeyondperfunctoryeffortstoworkwithminority‐andwoman‐ownedbusinesses.

APPENDIX A.

Definitions of Terms

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX A, PAGE 1

APPENDIX A. Definitions of Terms

AppendixAdefinestermsthatareusefultounderstandingtheCityofDenverDisparityStudyreport.Thefollowingdefinitionsareonlyrelevantinthecontextofthisreport.

49 Code of Federal Regulations (CFR) Part 26

49CFRPart26arethefederalregulationsthatsetforththeFederalDisadvantagedBusinessEnterpriseProgram.Theobjectivesof49CFRPart26areto:

EnsurenondiscriminationintheawardandadministrationofUnitedStatesDepartmentofTransportation‐assistedcontracts;

CreatealevelplayingfieldonwhichDisadvantagedBusinessEnterprisescancompetefairlyforUnitedStatesDepartmentofTransportation‐assistedcontracts;

EnsurethattheFederalDisadvantagedBusinessEnterpriseProgramisnarrowlytailoredinaccordancewithapplicablelaw;

EnsurethatonlybusinessesthatfullymeeteligibilitystandardsarepermittedtoparticipateasDisadvantagedBusinessEnterprises;

HelpremovebarrierstotheparticipationofDisadvantagedBusinessEnterprisesinUnitedStatesDepartmentofTransportation‐assistedcontracts;

PromotetheuseofDisadvantagedBusinessEnterprisesinalltypesoffederally‐assistedcontractsandprocurements;

AssistinthedevelopmentofbusinessessothattheycancompeteoutsideoftheFederalDisadvantagedBusinessEnterpriseProgram;and

ProvideappropriateflexibilitytoagenciesimplementingtheFederalDisadvantagedBusinessEnterpriseProgram.

Anecdotal Information

Anecdotalinformationincludespersonalqualitativeaccountsandperceptionsofspecificincidents—includinganyincidentsofdiscrimination—sharedbyindividualintervieweesorparticipants.

Availability Analysis

Anavailabilityanalysisassessesthepercentageofdollarsthatonemightexpectaspecificgroupofbusinessestoreceiveoncontractsorprocurementsthataparticularorganizationawards.TheavailabilityanalysisinthisreportisbasedonthematchbetweenvariouscharacteristicsofpotentiallyavailablebusinessesandofprimecontractsandsubcontractsthattheCityofDenverawardedduringthestudyperiod.


Business

Abusinessisafor‐profitenterpriseincludingallofitsestablishmentsorlocationsandincludingsoleproprietorships,corporations,professionalcorporations,limitedliabilitycompanies,limitedpartnerships,limitedliabilitypartnerships,oranyotherpartnershipsregardlessofwhethertheywereformedunderthelawsoftheStateofColorado.

Business Listing

Abusinesslistingisarecordinadatabaseofbusinessinformation.Arecordisconsideredalistinguntilthestudyteamdeterminesthatthelistingactuallyrepresentsabusinessestablishmentwithaworkingphonenumber.

Business Establishment

Abusinessestablishmentisaplaceofbusinesswithanaddressandaworkingphonenumber.Asinglebusiness,orfirm,canhavemanybusinessestablishments,orlocations.

City and County of Denver (The City)

Denver,ColoradoisoneofthelargestcitiesintheUnitedStateswitharegionalpopulationofnearly3millionpeople.TheCityandCountyofDenverprovidesmyriadservicestotheresidentswholiveandworkintheregion.Toprovidethoseservices,theCitytypicallyspendsnearly$1billioneachyearincontractdollarstoprocurevariousgoodsandservicesinconstruction;professionalservices;andgoodsandservices.

Compelling Governmental Interest

Aspartofthestrictscrutinystandardofconstitutionalreview,agovernmentorganizationmustdemonstrateacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationinordertoimplementrace‐orgender‐consciousmeasuresaspartofaminority‐orwoman‐ownedbusinessprogram.Anorganizationthatusessuchmeasureshastheinitialburdenofshowingevidenceofdiscrimination—includingstatisticalandanecdotalevidence—thatsupportstheiruse.Theorganizationmustassesssuchdiscriminationwithinitsownrelevantgeographicmarketarea.

Consultant

Aconsultantisabusinessthatperformsprofessionalservicescontracts.

Contract

Acontractisalegallybindingrelationshipbetweenthesellerofgoodsorservicesandabuyer.Thestudyteamoftenusesthetermcontractsynonymouslywithprocurement.

Contract Element

Acontractelementiseitheraprimecontractorsubcontract.

Contractor

Acontractorisabusinessthatperformsconstructioncontracts.


Control

Controlmeansexercisingmanagementandexecutiveauthorityofabusiness.

Custom Census Availability Analysis

Acustomcensusavailabilityanalysisisoneinwhichresearchersattemptsurveyswithpotentiallyavailablebusinessesworkinginthelocalmarketplacetocollectinformationaboutkeybusinesscharacteristics.Researchersthentakesurveyinformationaboutpotentiallyavailablebusinessesandmatchthemtothecharacteristicsofprimecontractsandsubcontractsthatanorganizationactuallyawardedduringthestudyperiodtoassessthepercentageofdollarsthatonemightexpectaspecificgroupofbusinessestoreceiveoncontractsorprocurementsthattheorganizationawards.Acustomcensusavailabilityanalysisisacceptedintheindustryasthepreferredmethodforconductingavailabilityanalyses,becauseittakesseveraldifferentfactorsintoaccount,includingbusinesses’primarylinesofworkandtheircapacitytoperformonanorganization’scontracts.

Denver International Airport (DEN)

DENisoneofthenation’sbusiestinternationalairports.Itoffersnonstopservicetonearly200destinationsthroughoutNorthAmerica,LatinAmerica,Europe,andAsia.TheCity’sDepartmentofAviationownsandoperatesDEN.

Disadvantaged Business Enterprise (DBE)

ADBEisabusinessthatisownedandcontrolledbyoneormoreindividualswhoaresociallyandeconomicallydisadvantagedaccordingtotheguidelinesintheFederalDBEProgram(49CFRPart26)andthatiscertifiedassuchthroughtheCity’sDivisionofSmallBusinessOpportunityortheColoradoDepartmentofTransportation.ThefollowinggroupsarepresumedtobesociallyandeconomicallydisadvantagedaccordingtotheFederalDBEProgram:

AsianPacificAmericans;

BlackAmericans;

HispanicAmericans;

NativeAmericans;

SubcontinentAsianAmericans;and

Womenofanyraceorethnicity.

Adeterminationofeconomicdisadvantagealsoincludesassessingbusiness’grossrevenuesandbusinessowners’personalnetworth.Someminority‐andwoman‐ownedbusinessesdonotqualifyasDBEsbecauseofgrossrevenueornetworthrequirements.Businessesownedbynon‐HispanicwhitemencanalsobecertifiedasDBEsifthosebusinessesmeettherequirementsin49CFRPart26.

Division of Small Business Opportunity (DSBO)

DSBOisadivisionoftheCitythatisresponsibleforimplementingvariousprogramsandmeasuresdesignedtoencouragetheparticipationofsmallbusinessesaswellasminority‐and


woman‐ownedbusinessesinCitycontractingandprocurement,includingimplementingtheMinorityandWoman‐ownedBusinessEnterpriseProgram,theEmergingBusinessEnterpriseProgram,theSmallBusinessEnterpriseProgram,andtheFederalDisadvantagedBusinessEnterpriseProgram.

Disparity

Adisparityisadifferenceorgapbetweenanactualoutcomeandsomebenchmark.Inthisreport,thetermdisparityreferstoadifferencebetweentheparticipationofaspecificgroupofbusinessesinCitycontractingandtheavailabilityofthatgroupforCitywork.

Disparity Analysis

AdisparityanalysisexamineswhetherthereareanydifferencesbetweentheparticipationofaspecificgroupofbusinessesinCitycontractingandtheavailabilityofthatgroupforCitywork.

Disparity Index

AdisparityindexiscomputedbydividingtheactualparticipationofaspecificgroupofbusinessesinCitycontractingbytheavailabilityofthatgroupforCityworkandmultiplyingtheresultby100.Smallerdisparityindicesindicatelargerdisparities.

Dun & Bradstreet (D&B)

D&Bistheleadingglobalprovideroflistsofbusinessestablishmentsandotherbusinessinformationforspecificindustrieswithinspecificgeographicalareas(fordetails,seewww.dnb.com).

Federal Aviation Administration (FAA)

TheFAAisanagencyoftheUnitedStatesDepartmentofTransportationthatservesasthenationalaviationauthorityoftheUnitedStates.TheFAAhasauthoritytoregulateandoverseeallaspectsofcivilaviationintheUnitedStates.DENisarecipientofFAAfunds.

Federal DBE Program

TheFederalDBEProgramwasestablishedbytheUnitedStatesDepartmentofTransportationafterenactmentoftheTransportationEquityActforthe21stCentury(TEA‐21)asamendedin1998.RegulationsfortheFederalDBEProgramaresetforthin49CFRPart26.

Firm

Seebusiness.

Industry

Anindustryisabroadclassificationforbusinessesprovidingrelatedgoodsorservices(e.g.,constructionorprofessionalservices).

Local Marketplace

Seerelevantgeographicmarketarea.


Locally‐funded Contract

Alocally‐fundedcontractisanycontractorprojectthatiswhollyfundedwithlocal,non‐federalfunds—thatis,theydonotincludeUnitedStatesDepartmentofTransportationoranyotherfederalfunds.

Majority‐owned Business

Amajority‐ownedbusinessisafor‐profitbusinessthatisatleast51percentownedandcontrolledbynon‐Hispanicwhitemen.

Minority

Aminorityisanindividualwhoidentifieswithoneoftheracial/ethnicgroupsspecifiedbytheCity’sMinority‐andWoman‐ownedBusinessEnterpriseProgram:

AsianAmericans;

BlackAmericans;

HispanicAmericans;and

NativeAmericans.

Minority‐ and Woman‐owned Business Enterprise (MWBE) Program

TheCity’sMWBEProgramisdesignedtopreventrace‐orgender‐baseddiscriminationagainstminority‐andwoman‐ownedbusinessesandencouragetheirparticipationinCitycontractsandprocurements.Aspartoftheprogram,theCitysetsaspirationalannualgoalsfortheparticipationofminority‐andwoman‐ownedbusinessesinitscontractsandprocurementsandreliesonavarietyofmeasuresinanefforttomeetthosegoals.

Minority‐owned Business

Aminority‐ownedbusinessisabusinesswithatleast51percentownershipandcontrolbyindividualswhoidentifythemselveswithoneoftheracial/ethnicgroupsspecifiedbytheCity’sMWBEProgram.Abusinessdoesnothavetobecertifiedasaminority‐ownedbusinessenterprisetobeconsideredaminority‐ownedbusinessinthisstudy.(Thestudyteamconsideredbusinessesownedbyminoritywomenasminority‐ownedbusinesses.)

Minority‐owned Business Enterprise (MBE)

AnMBEisaminority‐ownedbusinessthathasbeencertifiedassuchbyDSBO.

Narrow Tailoring

Aspartofthestrictscrutinystandardofconstitutionalreview,agovernmentorganizationmustdemonstratethatitsuseofrace‐andgender‐consciousmeasuresisnarrowlytailored.Thereareanumberoffactorsthatacourtconsiderswhendeterminingwhethertheuseofsuchmeasuresisnarrowlytailored,including:

a) Thenecessityofsuchmeasuresandtheefficacyofalternative,race‐andgender‐neutralmeasures;


b) Thedegreetowhichtheuseofsuchmeasuresislimitedtothosegroupsthatactuallysufferdiscriminationinthelocalmarketplace;

c) Thedegreetowhichtheuseofsuchmeasuresisflexibleandlimitedinduration,includingtheavailabilityofwaiversandsunsetprovisions;

d) Therelationshipofanynumericalgoalstotherelevantbusinessmarketplace;and

e) Theimpactofsuchmeasuresontherightsofthirdparties.1

Participation

Seeutilization.

Prime Consultant

Aprimeconsultantisaprofessionalservicesbusinessthatperformsprofessionalservicesprimecontractsdirectlyforendusers,suchastheCity.

Prime Contract

Aprimecontractisacontractbetweenaprimecontractor,orprimeconsultant,andanenduser,suchastheCity.

Prime Contractor

Aprimecontractorisaconstructionbusinessthatperformsprimecontractsdirectlyforendusers,suchastheCity.

Project

Aprojectreferstoaconstruction;professionalservices;goodsorservicesendeavorthattheCitybidoutduringthestudyperiod.Aprojectcouldincludeoneormoreprimecontractsandcorrespondingsubcontracts.

Race‐ and Gender‐conscious Measures

Race‐andgender‐consciousmeasuresarecontractingmeasuresthatarespecificallydesignedtoincreasetheparticipationofminority‐andwoman‐ownedbusinessesingovernmentcontracting.Businessesownedbymembersofcertainracial/ethnicgroupsmightbeeligibleforsuchmeasuresbutothersmightnot.Similarly,businessesownedbywomenmightbeeligiblebutbusinessesownedbymenmightnot.Theuseofcontractgoalsisoneexampleofarace‐andgender‐consciousmeasure.

Race‐ and Gender‐neutral Measures

Race‐andgender‐neutralmeasuresaremeasuresthataredesignedtoremovepotentialbarriersforallbusinessesattemptingtodoworkwithanorganizationormeasuresthataredesignedtoremovepotentialbarriersforsmalloremergingbusinesses,regardlessoftherace/ethnicityor

1See,e.g.,AGC,SDCv.Caltrans,713F.3dat1198‐1199;Rothe,545F.3dat1036;WesternStatesPaving,407F3dat993‐995;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;Eng’gContractorsAss’n,122F.3dat927(internalquotationsandcitationsomitted).


genderoftheowners.Race‐andgender‐neutralmeasuresmayincludeassistanceinovercomingbondingandfinancingobstacles;simplifyingbiddingprocedures;providingtechnicalassistance;establishingprogramstoassiststart‐ups;andothermethodsopentoallbusinesses,regardlessoftherace/ethnicityorgenderoftheowners.

Rational Basis

Governmentorganizationsthatimplementcontractingprogramsthatrelyonlyonrace‐andgender‐neutralmeasurestoencouragetheparticipationofsmallbusinesses,regardlessoftherace/ethnicityorgenderofbusinessowners,mustshowarationalbasisfortheirprograms.Showingarationalbasisrequiresorganizationstodemonstratethattheircontractingprogramsarerationallyrelatedtoalegitimategovernmentinterest.Itisthelowestthresholdforevaluatingthelegalityofgovernmentcontractingprograms.Whencourtsreviewprogramsbasedonarationalbasis,onlythemostegregiousviolationsleadtoprogramsbeingdeemedunconstitutional.

Relevant Geographic Market Area

TherelevantgeographicmarketareaisthegeographicareainwhichthebusinessestowhichtheCityawardsmostofitscontractingdollarsarelocated.Therelevantgeographicmarketareaisalsoreferredtoasthelocalmarketplace.Caselawrelatedtominority‐andwoman‐ownedbusinessprogramsaswellasdisparitystudiesrequiresdisparitystudyanalysestofocusontherelevantgeographicmarketarea.TherelevantgeographicmarketareaforthedisparitystudyisAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersonCountiesinColorado.

Statistically Significant Difference

Astatisticallysignificantdifferencereferstoaquantitativedifferenceforwhichthereisa0.95or0.90probabilitythatchancecanbecorrectlyrejectedasanexplanationforthedifference(meaningthatthereisa0.05or0.10probability,respectively,thatchanceinthesamplingprocesscouldcorrectlyaccountforthedifference).

Strict Scrutiny

Strictscrutinyisthelegalstandardthatagovernmentorganization’suseofrace‐andgender‐consciousmeasuresmustmeetinorderforittobeconsideredconstitutional.Strictscrutinyrepresentsthehighestthresholdforevaluatingthelegalityofrace‐andgender‐consciousmeasuresshortofprohibitingthemaltogether.Underthestrictscrutinystandard,anorganizationmust:

a) Haveacompellinggovernmentalinterestinremedyingpastidentifieddiscriminationoritspresenteffects;and

b) Establishthattheuseofanysuchmeasuresisnarrowlytailoredtoachievethegoalofremedyingtheidentifieddiscrimination.

Anorganization’suseofrace‐andgender‐consciousmeasuresmustmeetboththecompellinggovernmentalinterestandthenarrowtailoringcomponentsofthestrictscrutinystandardforittobeconsideredconstitutional.


Study Period

Thestudyperiodisthetimeperiodonwhichthestudyteamfocusedfortheutilization,availability,anddisparityanalyses.TheCityhadtohaveawardedacontractduringthestudyperiodforthecontracttobeincludedinthestudyteam’sanalyses.ThestudyperiodforthedisparitystudywasJanuary1,2012throughDecember31,2016.

Subconsultant

Asubconsultantisaprofessionalservicesbusinessthatperformsservicesforprimeconsultantsaspartoflargerprofessionalservicescontracts.

Subcontract

Asubcontractisacontractbetweenaprimecontractororprimeconsultantandanotherbusinesssellinggoodsorservicestotheprimecontractororprimeconsultantaspartofalargercontract.

Subcontractor

Asubcontractorisabusinessthatperformsservicesforprimecontractorsaspartoflargercontracts.

Subindustry

Asubindustryisaspecificclassificationforbusinessesprovidingrelatedgoodsorserviceswithinaparticularindustry(e.g.,water,sewer,andutilitylinesisasubindustryofconstruction).

United States Departments of Transportation (USDOT)

USDOTisafederalcabinetdepartmentoftheUnitedStatesgovernmentthatoverseesfederalhighway,air,railroad,maritime,andothertransportationadministrationfunctions.FAAisaUSDOTagency.

Utilization

Utilizationreferstothepercentageoftotalcontractingdollarsthatwereassociatedwithaparticularsetofcontractsthatwenttoaspecificgroupofbusinesses.

Vendor

AvendorisabusinessthatsellsgoodseithertoaprimecontractororprimeconsultantortoanendusersuchastheCity.

Woman‐owned Business

Awoman‐ownedbusinessisabusinesswithatleast51percentownershipandcontrolbynon‐Hispanicwhitewomen.Abusinessdoesnothavetobecertifiedasawoman‐ownedbusinessenterprisetobeconsideredawoman‐ownedbusiness.(Thestudyteamconsideredbusinessesownedbyminoritywomenasminority‐ownedbusinesses.)


Woman‐owned Business Enterprise (WBE)

AWBEisawoman‐ownedbusinessthathasbeencertifiedassuchbyDSBO.

APPENDIX B.

Legal Framework and Analysis

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX B, PAGE i

Table of Contents TABLEOFCONTENTS.........................................................................................................................................................................................I

APPENDIXB.LEGALFRAMEWORKANDANALYSIS............................................................................................................................1

EXECUTIVESUMMARY.....................................................................................................................................................................................1

A.Introduction...............................................................................................................................................................................................1

B.U.S.SupremeCourtCases.....................................................................................................................................................................3

1.CityofRichmondv.J.A.CrosonCo.,488U.S.469(1989)...................................................................................................3

2.AdarandConstructors,Inc.v.Pena(“AdarandI”),515U.S.200(1995).....................................................................5

C.TheLegalFrameworkAppliedtoStateandLocalGovernmentMBE/WBE/DBEProgramsandtheFederalDBEandACDBEPrograms......................................................................................................................................................5

1.Strictscrutinyanalysis.....................................................................................................................................................................5

2.Intermediatescrutinyanalysis..................................................................................................................................................28

3.Rationalbasisanalysis...................................................................................................................................................................30

4.Pendingcases(atthetimeofthisreport).............................................................................................................................33

SUMMARIESOFRECENTDECISIONS......................................................................................................................................................36

D.RecentDecisionsInvolvingStateorLocalGovernmentMBE/WBE/DBEProgramsintheTenthCircuitCourtofAppeals..........................................................................................................................................................................36

1.ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003),cert.denied,540U.S.1027,124S.Ct.556(2003)(Scalia,JusticewithwhomtheChiefJusticeRehnquist,joined,dissentingfromthedenialofcertiorari)..............................................................................................36

2.AdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000)cert.grantedthendismissedasimprovidentlygrantedsubnom.AdarandConstructors,Inc.v.Mineta,532U.S.941,534U.S.103(2001).............................................................................................................................................................................48

3.ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,36F.3d1513(10thCir.1994)....................57

4.KlaverConstruction,Inc.v.KansasDOT,211F.Supp.2d1296(D.Kan.2002).....................................................67

5.KornhassConstruction,Inc.v.StateofOklahoma,DepartmentofCentralServices,140F.Supp.2d1232(W.D.OK.2001)...................................................................................................................................................68

E.RecentDecisionsInvolvingStateorLocalGovernmentMBE/WBE/DBEProgramsinOtherJurisdictions.................................................................................................................................................................................................73

RecentDecisionsinFederalCircuitCourtsofAppeal...........................................................................................................73

1.H.B.RoweCo.,Inc.v.W.LyndoTippett,NCDOT,etal.,615F.3d233(4thCir.2010).......................................73

2.Jana‐RockConstruction,Inc.v.NewYorkStateDept.ofEconomicDevelopment,438F.3d195(2dCir.2006).........................................................................................................................................................................................84

3.RapidTestProds.,Inc.v.DurhamSch.Servs.,Inc.,460F.3d859(7thCir.2006)..................................................85

4.Virdiv.DeKalbCountySchoolDistrict,135Fed.Appx.262,2005WL138942(11thCir.2005)(unpublishedopinion).......................................................................................................................................................................86

5.InreCityofMemphis,293F.3d345(6thCir.2002)........................................................................................................88

6.BuildersAss’nofGreaterChicagov.CountyofCook,Chicago,256F.3d642(7thCir.2001).........................88

7.AssociatedGen.Contractorsv.Drabik,214F.3d730(6thCir.2000),affirmingCaseNo.C2‐98‐943,998WL812241(S.D.Ohio1998)........................................................................................................................................90

8.W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999)...........................................94

9.MontereyMechanicalv.Wilson,125F.3d702(9thCir.1997).....................................................................................97

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX B, PAGE ii

10.Eng’gContractorsAss’nofS.Floridav.Metro.DadeCounty,122F.3d895(11thCir.1997)......................98

11.AssociatedGen.ContractorsofCalifornia,Inc.v.CoalitionforEcon.Equity(“AGCC”),950F.2d1401(9thCir.1991).........................................................................................................................................................................109

12.CoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991)..................................................................112

RecentDistrictCourtDecisions...................................................................................................................................................116

13.KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016)...............................116

14.H.B.RoweCorp.,Inc.v.W.LyndoTippett,NorthCarolinaDOT,etal.,589F.Supp.2d587(E.D.N.C.2008),affirmedinpart,reversedinpart,andremanded,615F.3d233(4thCir.2010).................123

15.Thomasv.CityofSaintPaul,526F.Supp.2d959(D.Minn2007),affirmed,321Fed.Appx.541,2009WL777932(8thCir.March26,2009)(unpublishedopinion),cert.denied,130S.Ct.408(2009).....................................................................................................................................................................................................128

16.ThompsonBuildingWreckingCo.v.Augusta,Georgia,No.1:07CV019,2007WL926153(S.D.Ga.Mar.14,2007)(Slip.Op.).........................................................................................................................................................130

17.HershellGillConsultingEngineers,Inc.v.Miami‐DadeCounty,333F.Supp.2d1305(S.D.Fla.2004)......................................................................................................................................................................................................132

18.FloridaA.G.C.Council,Inc.v.StateofFlorida,303F.Supp.2d1307(N.D.Fla.2004)...................................137

19.TheBuildersAss’nofGreaterChicagov.TheCityofChicago,298F.Supp.2d725(N.D.Ill.2003)......................................................................................................................................................................................................138

20.AssociatedUtilityContractorsofMaryland,Inc.v.MayorandCityCouncilofBaltimore,218F.Supp.2d749(D.Md.2002)............................................................................................................................................................139

21.AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimoreandMarylandMinorityContractorsAssociation,Inc.,83F.Supp.2d613(D.Md.2000)...................................140

22.Websterv.FultonCounty,51F.Supp.2d1354(N.D.Ga.1999),affirmedpercuriam218F.3d1267(11thCir.2000)......................................................................................................................................................................147

23.AssociatedGen.Contractorsv.Drabik,50F.Supp.2d741(S.D.Ohio1999)....................................................150

24.Phillips&Jordan,Inc.v.Watts,13F.Supp.2d1308(N.D.Fla.1998)...................................................................153

F.RecentDecisionsInvolvingtheFederalDBEProgramanditsImplementationbyStateandLocalGovernments............................................................................................................................................................................................153

RecentDecisionsinFederalCircuitCourtsofAppeal........................................................................................................154

1.MountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.,2017WL2179120(9thCir.May16,2017),Memorandumopinion,(NotforPublication)UnitedStatesCourtofAppealsfortheNinthCircuit,May16,2017,DocketNos.14‐26097and15‐35003,dismissinginpart,reversinginpartandremandingtheU.S.DistrictCourtdecisionat2014WL6686734(D.Mont.Nov.26,2014)........................................................................................................................................................................154

2.MidwestFenceCorporationv.U.S.DepartmentofTransportation,IllinoisDepartmentofTransportation,IllinoisStateTollHighwayAuthority,840F.3d932,2016WL6543514(7thCir.2016),cert.denied,2017WL497345(2017).......................................................................................................................160

3.DunnetBayConstructionCompanyv.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.2015),cert.denied,DunnetBayConstructionCo.v.Blankenhorn,RandallS.,etal.,2016WL193809(Oct.3,2016)...........................................................................................................................................170

4.AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187(9thCir.2013)........................................................................................................175

5.Braunsteinv.ArizonaDOT,683F.3d1177(9thCir.2012)........................................................................................182

6.NorthernContracting,Inc.v.Illinois,473F.3d715(7thCir.2007).........................................................................183

7.WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).......................................................................................................................................................................186

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX B, PAGE iii

8.SherbrookeTurf,Inc.v.MinnesotaDOT,andGrossSeedCompanyv.NebraskaDepartmentofRoads,345F.3d964(8thCir.2003),cert.denied,541U.S.1041(2004)...................................................................190

RecentDistrictCourtDecisions...................................................................................................................................................194

9.MidwestFenceCorporationv.UnitedStatesDOTandFederalHighwayAdministration,theIllinoisDOT,theIllinoisStateTollHighwayAuthority,etal.,84F.Supp.3d705,2015WL1396376(N.D.Ill,2015),affirmed,840F.3d932(7thCir.2016)..................................................................................194

10.GeyerSignal,Inc.v.Minnesota,DOT,2014WL1309092(D.Minn.March31,2014)..................................204

11.DunnetBayConstructionCompanyv.GaryHannig,initsofficialcapacityasSecretaryofTransportationfortheIllinoisDOTandtheIllinoisDOT,2014WL552213(C.D.Ill.2014),affirmed,DunnetBayConstructionCo.v.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.2015)..................................................................................................................................................................212

12.M.K.WeedenConstructionv.StateofMontana,MontanaDepartmentofTransportation,etal.,2013WL4774517(D.Mont.)(September4,2013)...........................................................................................................217

13.AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,U.S.D.C.,E.D.Cal.CivilActionNo.S‐09‐1622,SlipOpinion(E.D.Cal.April20,2011),appealdismissedbasedonstanding,onothergroundsNinthCircuitheldCaltrans’DBEProgramconstitutional,AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187(9thCir.2013).....................................................220

14.GeodCorporationv.NewJerseyTransitCorporation,etal.,746F.Supp.2d642,2010WL4193051(D.N.J.October19,2010)..........................................................................................................................................222

15.GeodCorporationv.NewJerseyTransitCorporation,etseq.678F.Supp.2d276,2009WL2595607(D.N.J.August20,2009)..............................................................................................................................................227

16.SouthFloridaChapteroftheAssociatedGeneralContractorsv.BrowardCounty,Florida,544F.Supp.2d1336(S.D.Fla.2008).................................................................................................................................................231

17.WesternStatesPavingCo.v.WashingtonDOT,USDOT&FHWA,2006WL1734163(W.D.Wash.June23,2006)(unpublishedopinion)........................................................................................................................233

18.NorthernContracting,Inc.v.Illinois,2005WL2230195(N.D.Ill.,2005),affirmed,473F.3d715(7thCir.2007).............................................................................................................................................................................234

19.NorthernContracting,Inc.v.StateofIllinois,IllinoisDOT,andUSDOT,2004WL422704(N.D.Ill.March3,2004).............................................................................................................................................................................240

20.SherbrookeTurf,Inc.v.MinnesotaDOT,2001WL1502841,No.00‐CV‐1026(D.Minn.2001)(unpublishedopinion),affirmed345F.3d964(8thCir.2003).......................................................................................242

21.GrossSeedCo.v.NebraskaDepartmentofRoads,CivilActionFileNo.4:00CV3073(D.Neb.May6,2002),affirmed345F.3d964(8thCir.2003)..........................................................................................................243

G.RecentDecisionsandAuthoritiesInvolvingFederalProcurementThatMayImpactDBEandMBE/WBEPrograms............................................................................................................................................................................244

1.RotheDevelopment,Inc.v.U.S.Dept.ofDefense,U.S.SmallBusinessAdministration,etal.,836F3d57,2016WL4719049(D.C.Cir.2016),cert.denied,2017WL1375832(2017),affirmingonothergrounds,RotheDevelopment,Inc.v.U.S.Dept.ofDefense,U.S.SmallBusinessAdministration,etal.,107F.Supp.3d183(D.D.C.2015).................................................................................................244

2.RotheDevelopmentCorp.v.U.S.Dept.ofDefense,etal.,545F.3d1023(Fed.Cir.2008).............................247

3.RotheDevelopment,Inc.v.U.S.Dept.ofDefenseandSmallBusinessAdministration,107F.Supp.3d183,2015WL3536271(D.D.C.2015),affirmedonothergrounds,836F.3d57,2016WL4719049(D.C.Cir.2016)................................................................................................................................................................256

4.DynaLanticCorp.v.UnitedStatesDept.ofDefense,etal.,885F.Supp.2d237,2012WL3356813(D.D.C.,2012),appealsvoluntarilydismissed,UnitedStatesCourtofAppeals,DistrictofColumbia,DocketNumbers12‐5329and12‐5330(2014)...................................................................................................................261

5.DynaLanticCorp.v.UnitedStatesDept.ofDefense,etal.,503F.Supp.2d262(D.D.C.2007).....................269

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX B, PAGE 1

APPENDIX B. Legal Framework and Analysis

EXECUTIVE SUMMARY

A. Introduction

Inthisappendix,Holland&KnightLLPanalyzesrecentcasesinvolvinglocalandstategovernmentminorityandwomen‐ownedanddisadvantaged‐ownedbusinessenterprise(“MBE/WBE/DBE”)programs.Theappendixalsoreviewsrecentcases,whichareinstructivetothestudyandMBE/WBE/DBEprograms,regardingtheFederalDisadvantagedBusinessEnterprise(“FederalDBE”)Program1andtheFederalAirportConcessionsDisadvantagedBusinessEnterprise(FederalACDBE)Program,2andtheimplementationoftheFederalDBEandACDBEProgramsbylocalandstategovernments.TheFederalDBEProgramrecentlywascontinuedandreauthorizedbytheFixingAmerica’sSurfaceTransportationAct(FASTAct)3.TheappendixprovidesasummaryofthelegalframeworkforthedisparitystudyasapplicabletotheCityandCountyofDenver.

AppendixBbeginswithareviewofthelandmarkUnitedStatesSupremeCourtdecisioninCityofRichmondv.J.A.Croson.4Crosonsetsforththestrictscrutinyconstitutionalanalysisapplicableinthelegalframeworkforconductingadisparitystudy.ThissectionalsonotestheUnitedStatesSupremeCourtdecisioninAdarandConstructors,Inc.v.Pena,5(“AdarandI”),whichappliedthestrictscrutinyanalysissetforthinCrosontofederalprogramsthatprovidefederalassistancetoarecipientoffederalfunds.TheSupremeCourt’sdecisionsinAdarandIandCroson,andsubsequentcasesandauthoritiesprovidethebasisforthelegalanalysisinconnectionwiththestudy.

Thelegalframeworkanalyzesandreviewssignificantrecentcourtdecisionsthathavefollowed,interpreted,andappliedCrosonandAdarandItothepresentandthatareapplicabletothisdisparitystudy,MBE/WBE/DBEPrograms,theFederalDBEProgram,theFederalACDBEProgram,andthestrictscrutinyanalysis.ThisanalysisreviewstheTenthCircuitCourtofAppealsdecisionsinAdarandConstructors,Inc.v.Slater(“AdarandVII”),6ConcreteWorksof

149CFRPart26(ParticipationbyDisadvantagedBusinessEnterprisesinDepartmentofTransportationFinancialAssistancePrograms(“FederalDBEProgram”).SeetheTransportationEquityActforthe21stCentury(TEA‐21)asamendedandreauthorized(“MAP‐21,”“SAFETEA”and“SAFETEA‐LU”),andtheUnitedStatesDepartmentofTransportation(“USDOT”or“DOT”)regulationspromulgatedtoimplementTEA‐21theFederalregulationsknownasMovingAheadforProgressinthe21stCenturyAct(“MAP‐21”),PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.;precededbyPubL.109‐59,TitleI,§1101(b),August10,2005,119Stat.1156;precededbyPubL.105‐178,TitleI,§1101(b),June9,1998,112Stat.107.

249CFRPart23(ParticipationofDisadvantagedBusinessEnterprisesinAirportConcessions).

3Pub.L.114‐94,H.R.22,§1101(b),December4,2015,129Stat.1312.

4CityofRichmondv.J.A.Croson,488U.S.469(1989).

5AdarandConstructors,Inc.v.Pena,515U.S.200(1995).

6AdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000)(“AdarandVII”).


Colorado,Inc.v.CityandCountyofDenver7regardingMBE/WBE/DBEprograms,theFederalDBEProgram,andlocalandstategovernmentrecipientsoffederalfundsintheirimplementationoftheFederalDBEProgram.TheanalysisalsoreviewsrecentcourtdecisionsthatinvolvedchallengestoMBE/WBE/DBEprogramsinotherjuridictionsinSectionEbelow,whichareinformativetothestudy.

Inaddition,theanalysisreviewsinSectionFbelowotherrecentfederalcasesthathaveconsideredthevalidityoftheFederalDBEProgramanditsimplementationbyastateorlocalgovernmentagencyorarecipientoffederalfunds,including:DunnetBayConstructionCo.v.IllinoisDOT,8AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation(“Caltrans”),etal.,9WesternStatesPavingCo.v.WashingtonStateDOT,10MountainWestHoldingCo.v.Montana,MontanaDOT,etal.,11M.K.WeedenConstructionv.Montana,MontanaDOT,etal.,12NorthernContracting,Inc.v.IllinoisDOT,13SherbrookeTurf,Inc.v.MinnDOTandGrossSeedv.NebraskaDepartmentofRoads,14MidwestFenceCorp.v.U.S.DOT,FHWA,IllinoisDOT,IllinoisStateTollHighwayAuthority,etal.,15GeyerSignal,Inc.v.MinnesotaDOT,16GeodCorporationv.NewJerseyTransitCorporation,17andSouthFloridaChapteroftheA.G.C.v.BrowardCounty,Florida.18

Theanalysesoftheseandotherrecentcasessummarizedbelow,includingtheTenthCircuitdecisionsinAdarandConstructors,Inc.v.SlaterandConcreteWorksofColoradov.CityandCountyofDenver,areinstructivetothedisparitystudybecausetheyarethemostrecentandsignificantdecisionsbycourtssettingforththelegalframeworkappliedtoMBE/WBE/DBEPrograms,theFederalDBEandACDBEProgramsandtheirimplementationbylocalandstategovernmentsreceivingU.S.DOTfunds,disparitystudies,andconstruingthevalidityofgovernmentprogramsinvolvingMBE/WBE/DBEs/ACDBEs.Theyalsoareapplicableintermsofthepreparationofa

7ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003),cert.denied,540U.S.1027,124S.Ct.556(2003)(Scalia,JusticewithwhomtheChiefJusticeRehnquist,joined,dissentingfromthedenialofcertiorari;ConcreteWorksofColorado,Inc.v.CityandCountyofDenver,36F.3d1513(10thCir.1994).

8DunnetBayConstructionCo.v.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560(7thCir.,2015),cert.denied,137S.Ct.31,2016WL193809,(October3,2016),DocketNo.15‐906;DunnetBayConstructionCo.v.IllinoisDOT,etal.2014WL552213(C.D.Ill.2014),affirmedbyDunnetBay,2015WL4934560(7thCir.,2015).

9AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,713F.3d1187,(9thCir.2013);U.S.D.,C.,E.D.Cal,CivilActionNo.S‐09‐1622,SlipOpinionTranscript(E.D.Cal.April20,2011),appealdismissedbasedonstanding,onothergroundsNinthCircuitheldCaltrans’DBEProgramconstitutional,AssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.v.CaliforniaDepartmentofTransportation,etal.,F.3d1187,(9thCir.2013).

10WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).

11MountainWestHoldingCo.,Inc.v.Montana,2017WL2179120(9thCir.May16,2017),Memorandum,(NotforPublication)U.S.CourtofAppealsfortheNinthCircuit,May16,2017,DocketNos.14‐26097and15‐35003,dismissinginpart,reversinginpartandremandingtheU.S.DistrictCourtdecisionat2014WL6686734(D.Mont.2014).

12M.K.WeedenConstructionv.StateofMontana,MontanaDOT,2013WL4774517(D.Mont.2013).

13NorthernContracting,Inc.v.IllinoisDOT,473F.3d715(7thCir.2007).

14SherbrookeTurf,Inc.v.Minn.DOTandGrossSeedv.NebraskaDepartmentofRoads,345F.3d964(8thCir.2003),cert.denied,

541U.S.1041(2004).

15MidwestFenceCorp.v.U.S.DOT,FHWA,IllinoisDOT,IllinoisStateTollHighwayAuthority,etal.,840F.3d932,2016WL6543514(7thCir.2016).MidwestFencefiledaPetitionforaWritofCertiorariwiththeU.S.SupremeCourt,see2017WL511931(Feb.2,2017),whichwasdenied,2017WL497345(June26,2017)..

16GeyerSignal,Inc.v.MinnesotaDOT,2014W.L.1309092(D.Minn.2014).

17GeodCorporationv.NewJerseyTransitCorporation,766F.Supp.2d642(D.N.J.2010).

18SouthFloridaChapteroftheA.G.C.v.BrowardCounty,Florida,544F.Supp.2d1336(S.D.Fla.2008).


DBEProgramandACDBEProgrambyDenversubmittedincompliancewiththefederalDBEandACDBEregulations.

AlthoughthesecasesdidnotinvolvespecificchallengestotheFederalACDBEProgram,theyareapplicableandinstructivetothestudyinconnectionwiththeimplementationoftheFederalACDBEProgrambyrecipientsofU.S.DOTfundsgovernedby49CFRPart23(“ParticipationofDisadvantagedBusinessEnterpriseinAirportConcessions”).TheFederalDBEProgramandtheFederalACDBEProgramaresimilarinmanyrespectsandtheACDBEPrograminitsregulationslocatedat49CFRPart23expresslyincorporatesmanyofthefederalregulationslocatedin49CFRPart26.

B. U.S. Supreme Court Cases

1. City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)

InCroson,theU.S.SupremeCourtstruckdowntheCityofRichmond’s“set‐aside”programasunconstitutionalbecauseitdidnotsatisfythestrictscrutinyanalysisappliedto“race‐based”governmentalprograms.19J.A.CrosonCo.(“Croson”)challengedtheCityofRichmond’sminoritycontractingpreferenceplan,whichrequiredprimecontractorstosubcontractatleast30percentofthedollaramountofcontractstooneormoreMinorityBusinessEnterprises(“MBE”).Inenactingtheplan,theCitycitedpastdiscriminationandanintenttoincreaseminoritybusinessparticipationinconstructionprojectsasmotivatingfactors.

TheSupremeCourtheldtheCityofRichmond’s“set‐aside”actionplanviolatedtheEqualProtectionClauseoftheFourteenthAmendment.TheCourtappliedthe“strictscrutiny”standard,generallyapplicabletoanyrace‐basedclassification,whichrequiresagovernmentalentitytohavea“compellinggovernmentalinterest”inremedyingpastidentifieddiscriminationandthatanyprogramadoptedbyalocalorstategovernmentmustbe“narrowlytailored”toachievethegoalofremedyingtheidentifieddiscrimination.

TheCourtdeterminedthattheplanneitherserveda“compellinggovernmentalinterest”noroffereda“narrowlytailored”remedytopastdiscrimination.TheCourtfoundno“compellinggovernmentalinterest”becausetheCityhadnotprovided“astrongbasisinevidenceforitsconclusionthat[race‐based]remedialactionwasnecessary.”20TheCourtheldtheCitypresentednodirectevidenceofanyracediscriminationonitspartinawardingconstructioncontractsoranyevidencethattheCity’sprimecontractorshaddiscriminatedagainstminority‐ownedsubcontractors.21TheCourtalsofoundtherewereonlygeneralizedallegationsofsocietalandindustrydiscriminationcoupledwithpositivelegislativemotives.TheCourtconcludedthatthiswasinsufficientevidencetodemonstrateacompellinginterestinawardingpubliccontractsonthebasisofrace.

Similarly,theCourtheldtheCityfailedtodemonstratethattheplanwas“narrowlytailored”forseveralreasons,includingbecausetheredidnotappeartohavebeenanyconsiderationofrace‐

19488U.S.469(1989).

20488U.S.at500,510.

21488U.S.at480,505.


neutralmeanstoincreaseminoritybusinessparticipationincitycontracting,andbecauseoftheoverinclusivenessofcertainminoritiesinthe“preference”program(forexample,Aleuts)withoutanyevidencetheysuffereddiscriminationinRichmond.22

TheCourtstatedthatrelianceonthedisparitybetweenthenumberofprimecontractsawardedtominorityfirmsandtheminoritypopulationoftheCityofRichmondwasmisplaced.Thereisnodoubt,theCourtheld,that“[w]heregrossstatisticaldisparitiescanbeshown,theyaloneinapropercasemayconstituteprimafacieproofofapatternorpracticeofdiscrimination”underTitleVII.,23.Butitisequallyclearthat“[w]henspecialqualificationsarerequiredtofillparticularjobs,comparisonstothegeneralpopulation(ratherthantothesmallergroupofindividualswhopossessthenecessaryqualifications)mayhavelittleprobativevalue.”24

TheCourtconcludedthatwherespecialqualificationsarenecessary,therelevantstatisticalpoolforpurposesofdemonstratingdiscriminatoryexclusionmustbethenumberofminoritiesqualifiedtoundertaketheparticulartask.TheCourtnotedthat“thecitydoesnotevenknowhowmanyMBE’sintherelevantmarketarequalifiedtoundertakeprimeorsubcontractingworkinpublicconstructionprojects.”25“Nordoesthecityknowwhatpercentageoftotalcityconstructiondollarsminorityfirmsnowreceiveassubcontractorsonprimecontractsletbythecity.”26

TheSupremeCourtstatedthatitdidnotintenditsdecisiontoprecludeastateorlocalgovernmentfrom“takingactiontorectifytheeffectsofidentifieddiscriminationwithinitsjurisdiction.”27TheCourtheldthat“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”28

TheCourtsaid:“IftheCityofRichmondhadevidencebeforeitthatnonminoritycontractorsweresystematicallyexcludingminoritybusinessesfromsubcontractingopportunitiesitcouldtakeactiontoendthediscriminatoryexclusion.”29“Undersuchcircumstances,thecitycouldacttodismantletheclosedbusinesssystembytakingappropriatemeasuresagainstthosewhodiscriminateonthebasisofraceorotherillegitimatecriteria.”“Intheextremecase,someformofnarrowlytailoredracialpreferencemightbenecessarytobreakdownpatternsofdeliberateexclusion.”30

22488U.S.at507‐510.

23488U.S.at501,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307–308,97S.Ct.2736,2741.

24488U.S.at501quotingHazelwood,433U.S.at308,n.13,97S.Ct.,at2742,n.13.

25488U.S.at502.

26Id.

27488U.S.at509.

28Id.

29488U.S.at509.

30Id.


TheCourtfurtherfound“iftheCitycouldshowthatithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry,wethinkitclearthattheCitycouldtakeaffirmativestepstodismantlesuchasystem.Itisbeyonddisputethatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxcontributionsofallcitizens,donotservetofinancetheevilofprivateprejudice.”31

2. Adarand Constructors, Inc. v. Pena (“Adarand I”), 515 U.S. 200 (1995)

InAdarandI,theU.S.SupremeCourtextendedtheholdinginCrosonandruledthatallfederalgovernmentprogramsthatuseracialorethniccriteriaasfactorsinprocurementdecisionsmustpassatestofstrictscrutinyinordertosurviveconstitutionalmuster.

ThecasesinterpretingCrosonandAdarandIarethemostrecentandsignificantdecisionsbyfederalcourtssettingforththelegalframeworkfordisparitystudiesaswellasthepredicatetosatisfytheconstitutionalstrictscrutinystandardofreview,whichappliestotheimplementationoftheFederalDBEProgramandACDBEProgrambyrecipientsoffederalfunds.

C. The Legal Framework Applied to State and Local Government MBE/WBE/DBE Programs and the Federal DBE and ACDBE Programs

ThefollowingprovidesananalysisforthelegalframeworkfocusingonrecentkeycasesregardingstateandlocalMBE/WBE/DBEprograms,andtheirimplicationsforadisparitystudy.Therecentdecisionsinvolvingtheseprograms,theFederalDBEProgram,anditsimplementationbystateandlocalprograms,areinstructivebecausetheyconcernthestrictscrutinyanalysis,thelegalframeworkinthisarea,challengestothevalidityofMBE/WBE/DBEprograms,andananalysisofdisparitystudies,andimplementationoftheFederalDBEandACDBEProgramsbylocalgovernmentrecipientsoffederalfinancialassistance(U.S.DOTfunds)basedon49CFRPart26and49CFRPart23.

1. Strict scrutiny analysis

Arace‐andethnicity‐basedprogramimplementedbyastateorlocalgovernmentissubjecttothestrictscrutinyconstitutionalanalysis.32Thestrictscrutinyanalysisiscomprisedoftwoprongs:

Theprogrammustserveanestablishedcompellinggovernmentalinterest;and

31488U.S.at492.

32Croson,448U.S.at492‐493;AdarandConstructors,Inc.v.Pena(AdarandI),515U.S.200,227(1995);see,e.g.,Fisherv.UniversityofTexas,133S.Ct.2411(2013);MidwestFencev.IllinoisDOT,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3d1187,1195‐1200(9thCir.2013);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);NorthernContracting,473F.3dat721;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat969;AdarandVII,228F.3dat1176(10thCir.2000);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d990(3d.Cir.1993).


Theprogrammustbenarrowlytailoredtoachievethatcompellinggovernmentinterest.33

a. The Compelling Governmental Interest Requirement

Thefirstprongofthestrictscrutinyanalysisrequiresagovernmentalentitytohavea“compellinggovernmentalinterest”inremedyingpastidentifieddiscriminationinordertoimplementarace‐andethnicity‐basedprogram.34Stateandlocalgovernmentscannotrelyonnationalstatisticsofdiscriminationinanindustrytodrawconclusionsabouttheprevailingmarketconditionsintheirownregions.35Rather,stateandlocalgovernmentsmustmeasurediscriminationintheirstateorlocalmarket.However,thatisnotnecessarilyconfinedbythejurisdiction’sboundaries.36

ItisinstructivetoreviewthetypeofevidenceutilizedbyCongressandconsideredbythecourtstosupporttheFederalDBEProgram,anditsimplementationbylocalandstategovernmentsandagencies,whichissimilartoevidenceconsideredbycasesrulingonthevalidityofMBE/WBE/DBEprograms.ThefederalcourtsfoundCongress“spentdecadescompilingevidenceofracediscriminationingovernmenthighwaycontracting,ofbarrierstotheformationofminority‐ownedconstructionbusinesses,andofbarrierstoentry.”37Theevidencefoundtosatisfythecompellingintereststandardincludednumerouscongressionalinvestigationsandhearings,andoutsidestudiesofstatisticalandanecdotalevidence(e.g.,disparitystudies).38TheevidentiarybasisonwhichCongressreliedtosupportitsfindingofdiscriminationincludes:

Barriers to minority business formation. Congressfoundthatdiscriminationbyprimecontractors,unions,andlendershaswoefullyimpededtheformationofqualifiedminoritybusinessenterprisesinthesubcontractingmarketnationwide,notingtheexistenceof“goodol’boy”networks,fromwhichminorityfirmshavetraditionallybeenexcluded,andtherace‐baseddenialofaccesstocapital,whichaffectstheformationofminoritysubcontractingenterprise.39

Barriers to competition for existing minority enterprises.Congressfoundevidenceshowingsystematicexclusionanddiscriminationbyprimecontractors,privatesectorcustomers,businessnetworks,suppliers,andbondingcompaniesprecludingminority

33AdarandI,515U.S.200,227(1995);MidwestFencev.IllinoisDOT,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3d1187,1195‐1200(9thCir.2013);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);NorthernContracting,473F.3dat721;WesternStatesPaving,407F.3dat991(9thCir.2005);SherbrookeTurf,345F.3dat969;AdarandVII,228F.3dat1176(10thCir.2000);AssociatedGen.ContractorsofOhio,Inc.v.Drabik(“DrabikII”),214F.3d730(6thCir.2000);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);Eng’gContractorsAss’nofSouthFlorida,Inc.v.Metro.DadeCounty,122F.3d895(11thCir.1997);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d990(3d.Cir.1993).

34Id.

35Id.;see,e.g.,ConcreteWorks,Inc.v.CityandCountyofDenver(“ConcreteWorksI”),36F.3d1513,1520(10thCir.1994).

36See,e.g.,ConcreteWorksI,36F.3dat1520.

37SherbrookeTurf,345F.3dat970,(citingAdarandVII,228F.3dat1167–76(10thCir.2000);WesternStatesPaving,407F.3dat992‐93.

38See,e.g.,AdarandVII,228F.3dat1167–76(10thCir.2000);seealsoWesternStatesPaving,407F.3dat992(Congress“explicitlyreliedupon”theDepartmentofJusticestudythat“documentedthediscriminatoryhurdlesthatminoritiesmustovercometosecurefederallyfundedcontracts”);GeyerSignal,Inc.,2014WL1309092.

39AdarandVII,228F.3d.at1168‐70(10thCir.2000);WesternStatesPaving,407F.3dat992;seeGeyerSignal,Inc.,2014WL1309092;DynaLantic,885F.Supp.2d237.


enterprisesfromopportunitiestobid.Whenminorityfirmsarepermittedtobidonsubcontracts,primecontractorsoftenresistworkingwiththem.Congressfoundevidenceofthesameprimecontractorusingaminoritybusinessenterpriseonagovernmentcontractnotusingthatminoritybusinessenterpriseonaprivatecontract,despitebeingsatisfiedwiththatsubcontractor’swork.Congressfoundthatinformal,raciallyexclusionarybusinessnetworksdominatethesubcontractingconstructionindustry.40

Local disparity studies. Congressfoundthatlocalstudiesthroughoutthecountrytendtoshowadisparitybetweenutilizationandavailabilityofminority‐ownedfirms,raisinganinferenceofdiscrimination.41

Results of removing affirmative action programs. Congressfoundevidencethatwhenrace‐consciouspubliccontractingprogramsarestruckdownordiscontinued,minoritybusinessparticipationintherelevantmarketdropssharplyorevendisappears,whichcourtshavefoundstronglysupportsthegovernment’sclaimthattherearesignificantbarrierstominoritycompetition,raisingthespecterofdiscrimination.42

FAST Act and MAP‐21.InDecember2015andinJuly2012,CongresspassedtheFASTActandMAP‐21,respectively(seeabove),whichmade“Findings”that“discriminationandrelatedbarrierscontinuetoposesignificantobstaclesforminority‐andwomen‐ownedbusinessesseekingtodobusinessinfederally‐assistedsurfacetransportationmarkets,”andthatthecontinuingbarriers“meritthecontinuation”oftheFederalDBEProgram.43CongressalsofoundinboththeFASTActandMAP‐21thatitreceivedandreviewedtestimonyanddocumentationofraceandgenderdiscriminationwhich“provideastrongbasisthatthereisacompellingneedforthecontinuationofthe”FederalDBEProgram.44

The Federal DBE Program (and ACDBE Program). AftertheAdaranddecision,theU.S.DepartmentofJusticein1996conductedastudyofevidenceontheissueofdiscriminationingovernmentconstructionprocurementcontracts,whichCongressrelieduponasdocumentingacompellinggovernmentalinteresttohaveafederalprogramtoremedytheeffectsofcurrentandpastdiscriminationinthetransportationcontractingindustryforfederally‐fundedcontracts.45Subsequently,in1998,CongresspassedtheTransportationEquityActforthe21stCentury(“TEA‐21”),whichauthorizedtheUnitedStatesDepartmentofTransportationtoexpendfundsforfederalhighwayprogramsfor1998‐2003.Pub.L.105‐178,TitleI,§1101(b),112Stat.107,113(1998).TheUSDOTpromulgatednewregulationsin1999containedat49CFRPart26toestablishthecurrentFederalDBEProgram.TheTEA‐21wassubsequentlyextendedin2003,2005and2012.ThereauthorizationofTEA‐21in2005wasforafive‐yearperiodfrom2005to2009.Pub.L.109‐59,TitleI,§1101(b),August10,2005,119Stat.1153‐57(“SAFETEA”).InJuly

40AdarandVII,at1170‐72(10thCir.2000);seeDynaLantic,885F.Supp.2d237.

41Id.at1172‐74(10thCir.2000);seeDynaLantic,885F.Supp.2d237;GeyerSignal,Inc.,2014WL1309092.

42AdarandVII,228F.3dat1174‐75(10thCir.2000);see,H.B.Rowe,615F.3d233,247‐258(4thCir.2010);SherbrookeTurf,345F.3dat973‐4.

43PubL.114‐94,H.R.22,§1101(b),December4,2015,129Stat1312;PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.

44Id.at§1101(b)(1).

45Appendix‐TheCompellingInterestforAffirmativeActioninFederalProcurement,61Fed.Reg.26,050,26,051‐63&nn.1‐136(May23,1996)(hereinafter“TheCompellingInterest”);seeAdarandVII,228F.3dat1167‐1176,citingTheCompellingInterest.


2012,CongresspassedtheMovingAheadforProgressinthe21stCenturyAct(“MAP‐21”).46InDecember2015,CongresspassedtheFixingAmerica’sSurfaceTransportationAct(“FASTAct”).47

TheFederalDBEProgramasamendedchangedcertainrequirementsforfederalaidrecipientsandaccordinglychangedhowrecipientsoffederalfundsimplementedtheFederalDBEProgramforfederally‐assistedcontracts.Thefederalgovernmentdeterminedthatthereisacompellinggovernmentalinterestforrace‐andgender‐basedprogramsatthenationallevel,andthattheprogramisnarrowlytailoredbecauseofthefederalregulations,includingtheflexibilityinimplementationprovidedtoindividualfederalaidrecipientsbytheregulations.Stateandlocalgovernmentsarenotrequiredtoimplementrace‐andgender‐basedmeasureswheretheyarenotnecessarytoachieveDBEgoalsandthosegoalsmaybeachievedbyrace‐andgender‐neutralmeasures.48

TheFederalDBEandACDBEProgramsestablishedresponsibilityforimplementingtheDBEandACDBEProgramstostateandlocalgovernmentrecipientsoffederalfunds.ArecipientoffederalfinancialassistancemustsetanannualDBEand/orACDBEgoalsspecifictoconditionsintherelevantmarketplace.Eventhoughanoverallannual10percentaspirationalgoalappliesatthefederallevel,itdoesnotaffectthegoalsestablishedbyindividualstateorlocalgovernmentalrecipients.TheFederalDBEandACDBEProgramsoutlinecertainstepsastateorlocalgovernmentrecipientcanfollowinestablishingagoal,andUSDOTconsidersandmustapprovethegoalandtherecipient’sDBEandACDBEprograms.TheimplementationoftheFederalDBEandACDBEProgramsaresubstantiallyinthehandsofthestateorlocalgovernmentrecipientandissetforthindetailinthefederalregulations,including49CFRPart26andsection26.45,and49CFR§§23.41‐51.

Providedin49CFR§26.45and49CFR§§23.41‐51areinstructionsastohowrecipientsoffederalfundsshouldsettheoverallgoalsfortheirDBEprograms.Insummary,therecipientestablishesabasefigureforrelativeavailabilityofDBEs.49Thisisaccomplishedbydeterminingtherelativenumberofready,willing,andableDBEsandACDBEsintherecipient’smarket.50Second,therecipientmustdetermineanappropriateadjustment,ifany,tothebasefiguretoarriveattheoverallgoal.51Therearemanytypesofevidenceconsideredwhendeterminingifanadjustmentisappropriate,accordingto49CFR§26.45(d)and49CFR§23.51(d).Theseinclude,amongothertypes,thecurrentcapacityofDBEsandACDBEstoperformworkontherecipient’scontractsasmeasuredbythevolumeofworkDBEsandACDBEshaveperformedinrecentyears.Ifavailable,recipientsconsiderevidencefromrelatedfieldsthataffecttheopportunitiesforDBEsandACDBEstoform,grow,andcompete,suchasstatisticaldisparitiesbetweentheabilityofDBEsandACDBEstoobtainfinancing,bonding,andinsurance,aswellasdataonemployment,

46PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.

47Pub.L.114‐94,H.R.22,§1101(b),December4,2015,129Stat.1312.

4849CFR§26.51;see49CFR§23.25.

4949CFR§26.45(a),(b),(c);49CFR§23.51(a),(b),(c).

50Id.

51Id.at§26.45(d);Id.at§23.51(d).


education,andtraining.52Thisprocess,basedonthefederalregulations,aimstoestablishagoalthatreflectsadeterminationofthelevelofDBEandACDBEparticipationonewouldexpectabsenttheeffectsofdiscrimination.53

Further,theFederalDBEandACDBEProgramsrequirestateandlocalgovernmentrecipientsoffederalfundstoassesshowmuchoftheDBEandACDBEgoalscanbemetthroughrace‐andgender‐neutraleffortsandwhatpercentage,ifany,shouldbemetthroughrace‐andgender‐basedefforts.54Astateorlocalgovernmentrecipientisresponsibleforseriouslyconsideringanddeterminingrace‐andgender‐neutralmeasuresthatcanbeimplemented.55

FederalaidrecipientsaretocertifyDBEsandACDBEsaccordingtotheirrace/gender,size,networthandotherfactorsrelatedtodefininganeconomicallyandsociallydisadvantagedbusinessasoutlinedin49CFR§§26.61‐26.73.56

Fixing America's Surface Transportation Act'' or the ``FAST Act'' (December 4, 2015).OnDecember3,2015,theFixingAmerica'sSurfaceTransportationAct''orthe``FASTAct''waspassedbyCongress,anditwassignedbythePresidentonDecember4,2015,asthenewfive‐yearsurfacetransportationauthorizationlaw.TheFASTActcontinuestheFederalDBEProgramandmakesthefollowing“Findings”inSection1101(b)oftheAct:

SEC. 1101. AUTHORIZATION OF APPROPRIATIONS.

(b)DisadvantagedBusinessEnterprises‐

(1)FINDINGS‐Congressfindsthat—

(A)whilesignificantprogresshasoccurredduetotheestablishmentofthedisadvantagedbusinessenterpriseprogram,discriminationandrelatedbarrierscontinuetoposesignificantobstaclesforminority‐andwomen‐ownedbusinessesseekingtodobusinessinfederallyassistedsurfacetransportationmarketsacrosstheUnitedStates;

(B)thecontinuingbarriersdescribedinsubparagraph(A)meritthecontinuationofthedisadvantagedbusinessenterpriseprogram;

(C)Congresshasreceivedandreviewedtestimonyanddocumentationofraceandgenderdiscriminationfromnumeroussources,includingcongressionalhearingsandroundtables,scientificreports,reportsissuedbypublicandprivateagencies,newsstories,reportsofdiscriminationbyorganizationsandindividuals,anddiscriminationlawsuits,whichshowthatrace‐andgender‐neutraleffortsaloneareinsufficienttoaddresstheproblem;

52Id.

5349CFR§26.45(b)‐(d);49CFR§23.51.

5449CFR§26.51;49CFR§23.51(a).

5549CFR§26.51(b);49CFR§23.25.

5649CFR§§26.61‐26.73;49CFR§§23.31‐23.39.


(D)thetestimonyanddocumentationdescribedinsubparagraph(C)demonstratethatdiscriminationacrosstheUnitedStatesposesabarriertofullandfairparticipationinsurfacetransportation‐relatedbusinessesofwomenbusinessownersandminoritybusinessownersandhasimpactedfirmdevelopmentandmanyaspectsofsurfacetransportation‐relatedbusinessinthepublicandprivatemarkets;and

(E)thetestimonyanddocumentationdescribedinsubparagraph(C)provideastrongbasisthatthereisacompellingneedforthecontinuationofthedisadvantagedbusinessenterpriseprogramtoaddressraceandgenderdiscriminationinsurfacetransportation‐relatedbusiness.

Therefore,CongressintheFASTActpassedonDecember3,2015,foundbasedontestimony,evidenceanddocumentationupdatedsinceMAP‐21wasadoptedin2012asfollows:(1)discriminationandrelatedbarrierscontinuetoposesignificantobstaclesforminority‐andwomen‐ownedbusinessesseekingtodobusinessinfederallyassistedsurfacetransportationmarketsacrosstheUnitedStates;(2)thecontinuingbarriersdescribedin§1101(b),subparagraph(A)abovemeritthecontinuationofthedisadvantagedbusinessenterpriseprogram;and(3)thereisacompellingneedforthecontinuationofthedisadvantagedbusinessenterpriseprogramtoaddressraceandgenderdiscriminationinsurfacetransportation‐relatedbusiness.57

MAP‐21 (July 2012).Inthe2012MovingAheadforProgressinthe21stCenturyAct(MAP‐21),Congressprovided“Findings”that“discriminationandrelatedbarriers”“meritthecontinuationofthe”FederalDBEProgram.58InMAP‐21,Congressspecificallyfoundasfollows:

“(A) while significant progress has occurred due to the establishment of thedisadvantagedbusiness enterpriseprogram,discrimination and relatedbarrierscontinuetoposesignificantobstaclesforminority‐andwomen‐ownedbusinessesseekingtodobusinessinfederally‐assistedsurfacetransportationmarketsacrosstheUnitedStates;

(B)thecontinuingbarriersdescribedinsubparagraph(A)meritthecontinuationofthedisadvantagedbusinessenterpriseprogram;

(C)Congresshasreceivedandreviewedtestimonyanddocumentationofraceandgenderdiscrimination fromnumeroussources, includingcongressionalhearingsandroundtables,scientificreports,reportsissuedbypublicandprivateagencies,news stories, reports of discrimination by organizations and individuals, anddiscrimination lawsuits,which show that race‐ and gender‐neutral efforts aloneareinsufficienttoaddresstheproblem;

(D)thetestimonyanddocumentationdescribedinsubparagraph(C)demonstratethat discrimination across the United States poses a barrier to full and fairparticipation in surface transportation‐related businesses of women businessowners andminority business owners and has impacted firmdevelopment and

57PubL.114‐94,H.R.22,§1101(b),December4,2015,129Stat1312.



manyaspectsofsurfacetransportation‐relatedbusinessinthepublicandprivatemarkets;and

(E) the testimony and documentation described in subparagraph (C) provide astrong basis that there is a compelling need for the continuation of thedisadvantaged business enterprise program to address race and genderdiscriminationinsurfacetransportation‐relatedbusiness.”59

Thus,CongressinMAP‐21determinedbasedontestimonyanddocumentationofraceandgenderdiscriminationthattherewas“acompellingneedforthecontinuationofthe”FederalDBEProgram.60

USDOT Final Rule, 76 Fed. Reg. 5083 (January 28, 2011). TheUnitedStatesDepartmentofTransportationpromulgatedaFinalRuleonJanuary28,2011,effectiveFebruary28,2011,76Fed.Reg.5083(January28,2011)(“2011FinalRule”)amendingtheFederalDBEProgramat49CFRPart26.

TheDepartmentstatedinthe2011FinalRulewithregardtodisparitystudiesandincalculatinggoals,thatitagrees“itisreasonable,incalculatinggoalsandindoingdisparitystudies,toconsiderpotentialDBEs(e.g.,firmsapparentlyownedandcontrolledbyminoritiesorwomenthathavenotbeencertifiedundertheDBEprogram)aswellascertifiedDBEs.ThisisconsistentwithgoodpracticeinthefieldaswellaswithDOTguidance.”61

TheUnitedStatesDOTinthe2011FinalRulestatedthattherewasacontinuingcompellingneedfortheDBEprogram.62TheDOTconcludedthat,ascourtdecisionshavenoted,theDOT’sDBEregulationsandthestatutesauthorizingthem,“aresupportedbyacompellingneedtoaddressdiscriminationanditseffects.”63TheDOTsaidthatthe“basisfortheprogramhasbeenestablishedbyCongressandappliesonanationwidebasis…”,notedthatboththeHouseandSenateFederalAviationAdministration(“FAA”)ReauthorizationBillscontainedfindingsreaffirmingthecompellingneedfortheprogram,andreferencedadditionalinformationpresentedtotheHouseofRepresentativesinaMarch26,2009hearingbeforetheTransportationandInfrastructureCommittee,andaDepartmentofJusticedocumententitled“TheCompellingInterestforRace‐andGender‐ConsciousFederalContractingPrograms:ADecadeLaterAnUpdatetotheMay23,1996ReviewofBarriersforMinority‐andWomen‐OwnedBusinesses.”64Thisinformation,theDOTstated,“confirmsthecontinuingcompellingneedforrace‐andgender‐consciousprogramssuchastheDOTDBEprogram.”65

Burden of proof.Underthestrictscrutinyanalysis,andtotheextentastateorlocalgovernmentalentityhasimplementedarace‐andgender‐consciousprogram,thegovernmental


60Id.

6176F.R.at5092.

6276F.R.at5095.

6376F.R.at5095.

64Id.

65Id.


entityhastheinitialburdenofshowingastrongbasisinevidence(includingstatisticalandanecdotalevidence)tosupportitsremedialaction.66Ifthegovernmentmakesitsinitialshowing,theburdenshiftstothechallengertorebutthatshowing.67Thechallengerbearstheultimateburdenofshowingthatthegovernmentalentity’sevidence“didnotsupportaninferenceofpriordiscrimination.”68

Inapplyingthestrictscrutinyanalysis,thecourtsholdthattheburdenisonthegovernmenttoshowbothacompellinginterestandnarrowtailoring.69Itiswellestablishedthat“remedyingtheeffectsofpastorpresentracialdiscrimination”isacompellinginterest.70Inaddition,thegovernmentmustalsodemonstrate“astrongbasisinevidenceforitsconclusionthatremedialaction[is]necessary.”71

SincethedecisionbytheSupremeCourtinCroson,“numerouscourtshaverecognizedthatdisparitystudiesprovideprobativeevidenceofdiscrimination.”72“Aninferenceofdiscriminationmaybemadewithempiricalevidencethatdemonstrates‘asignificantstatisticaldisparitybetweenanumberofqualifiedminoritycontractors…andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.’”73Anecdotal

66SeeAGC,SDCv.Caltrans,713F.3rdat1195;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242,247‐258(4thCir.2010);RotheDevelopmentCorp.v.DepartmentofDefense,545F.3d1023,1036(Fed.Cir.2008);N.Contracting,Inc.Illinois,473F.3dat715,721(7thCir.2007)(FederalDBEProgram);WesternStatesPavingCo.v.WashingtonStateDOT,407F.3d983,990‐991(9thCir.2005)(FederalDBEProgram);SherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964,969(8thCir.2003)(FederalDBEProgram);AdarandConstructorsInc.v.Slater(“AdarandVII”),228F.3d1147,1166(10thCir.2000)(FederalDBEProgram);Eng’gContractorsAss’n,122F.3dat916;MontereyMechanicalCo.v.Wilson,125F.3d702,713(9thCir.1997);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);GeyerSignal,Inc.,2014WL1309092;DynaLantic,885F.Supp.2d237,2012WL3356813;HershellGillConsultingEngineers,Inc.v.MiamiDadeCounty,333F.Supp.2d1305,1316(S.D.Fla.2004).

67AdarandVII,228F.3dat1166;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);Eng’gContractorsAss’n,122F.3dat916;GeyerSignal,Inc.,2014WL1309092.

68See,e.g.,AdarandVII,228F.3dat1166;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);Eng’gContractorsAss’n,122F.3dat916;seealsoSherbrookeTurf,345F.3dat971;N.Contracting,473F.3dat721;GeyerSignal,Inc.,2014WL1309092.

69Id.;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);WesternStatesPaving,407F.3dat990;SeealsoMajeskev.CityofChicago,218F.3d816,820(7thCir.2000);GeyerSignal,Inc.,2014WL1309092.

70Shawv.V.Hunt,517U.S.899,909(1996);CityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1989);see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).

71Croson,488U.S.at500;see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242;SherbrookeTurf,345F.3dat971‐972;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993);GeyerSignal,Inc.,2014WL1309092.

72MidwestFence,2015W.L.1396376at*7(N.D.Ill.2015),affirmed,840F.3d932,2016WL6543514(7thCir.2016);see,e.g.,MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3rdat1195‐1200;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,241‐242(4thCir.2010);ConcreteWorksofColo.Inc.v.CityandCountyofDenver,36F.3d1513,1522(10thCir.1994),GeyerSignal,2014WL1309092(D.Minn,2014);seealso,ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).

73Seee.g.,H.B.Rowev.NCDOT,615F.3d233,241‐242(4thCir.2010);MidwestFence,2015W.L.1396376at*7,quotingConcreteWorks;36F.3d1513,1522(quotingCroson,488U.S.at509),affirmed,840F.3d932,2016WL6543514(7thCir.2016);seealso,SherbrookeTurf,345F.3d233,241‐242(8thCir.2003);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).


evidencemaybeusedincombinationwithstatisticalevidencetoestablishacompellinggovernmentalinterest.74

Inadditiontoproviding“hardproof”tosupportitscompellinginterest,thegovernmentmustalsoshowthatthechallengedprogramisnarrowlytailored.75Oncethegovernmentalentityhasshownacceptableproofofacompellinginterestandremedyingpastdiscriminationandillustratedthatitsplanisnarrowlytailoredtoachievethisgoal,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplanisunconstitutional.76Therefore,notwithstandingtheburdenofinitialproductionrestswiththegovernment,theultimateburdenremainswiththepartychallengingtheapplicationofaDBEorMBE/WBEProgramtodemonstratetheunconstitutionalityofanaffirmative‐actiontypeprogram.77

Tosuccessfullyrebutthegovernment’sevidence,thecourtshold,includingtheTenthCircuitCourtofAppealsinConcreteWorksv.CityandCountyofDenver,andAdarandConstructorsv.Slater,thatachallengermustintroduce“credible,particularizedevidence”ofitsownthatrebutsthegovernment’sshowingofastrongbasisinevidenceforthenecessityofremedialaction.78ThisrebuttalcanbeaccomplishedbyprovidinganeutralexplanationforthedisparitybetweenMBE/WBE/DBEutilizationandavailability,showingthatthegovernment’sdataisflawed,demonstratingthattheobserveddisparitiesarestatisticallyinsignificant,orpresentingcontrastingstatisticaldata.79Conjectureandunsupportedcriticismsofthegovernment’smethodologyareinsufficient.80Thecourts,includingintheTenthCircuitinConcreteWorks,have

74Croson,488U.S.at509;see,e.g.,AGC,SDCv.Caltrans,713R.3dat1196;H.B.Rowev.NCDOT,615F.3d233,241‐242(4thCir.2010);MidwestFence,84F.Supp.3d705,2015WL1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).

75AdarandConstructors,Inc.v.Pena,(“AdarandIII”),515U.S.200at235(1995);see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);Majeskev.CityofChicago,218F.3dat820;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1005‐1007(3d.Cir.1993).

76Majeske,218F.3dat820;see,e.g.Wygantv.JacksonBd.OfEduc.,476U.S.267,277‐78;MidwestFence,840F.3d932,952‐954(7thCir.2016);MidwestFence,2015WL1396376*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);GeyerSignal,Inc.,2014WL1309092;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598;603;(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1002‐1007(3d.Cir.1993).

77Id.;AdarandVII,228F.3dat1166(10thCir.2000).

78See,e.g.,H.B.Rowev.NCDOT,615F.3d233,at241‐242(4thCir.2010);ConcreteWorks,321F.3d950,959(quotingAdarandConstructors,Inc.vs.Slater,228F.3d1147,1175(10thCir.2000));ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);MidwestFence,84F.Supp.3d705,2015W.L.1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092.

79See,e.g.,H.B.Rowev.NCDOT,615F.3d233,at241‐242(4thCir.2010);ConcreteWorks,321F.3d950,959(quotingAdarandConstructors,Inc.vs.Slater,228F.3d1147,1175(10thCir.2000));ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPII”),91F.3d586,596‐598;603;(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia(“CAEPI”),6F.3d996,1002‐1007(3d.Cir.1993);MidwestFence,84F.Supp.3d705,2015W.L.1396376at*7,affirmed,840F.3d932,2016WL6543514(7thCir.2016);seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092;see,generally,EngineeringContractors,122F.3dat916;CoralConstruction,Co.v.KingCounty,941F.2d910,921(9thCir.1991).

80Id.;H.B.Rowe,615F.3dat242;seealso,MidwestFence,840F.3d932,952‐954(7thCir.2016);SherbrookeTurf,345F.3dat971‐974;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016);GeyerSignal,2014WL1309092.


heldthatmerespeculationthegovernment’sevidenceisinsufficientormethodologicallyflaweddoesnotsufficetorebutagovernment’sshowing.81

Thecourtshavenotedthat“thereisno‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”82TheTenthCircuitandothercourtsholdthatastateneednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary.83Instead,theSupremeCourtstatedthatagovernmentmaymeetitsburdenbyrelyingon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.84Ithasbeenfurtherheldbythecourtsthatthestatisticalevidencebe“corroboratedbysignificantanecdotalevidenceofracialdiscrimination”orbolsteredbyanecdotalevidencesupportinganinferenceofdiscrimination.85

Thecourts,includingtheTenthCircuitinConcreteWorksandAdarandVII,havestatedthestrictscrutinystandardisapplicabletojustifyarace‐consciousmeasure,andthatitisasubstantialburdenbutnotautomatically“fatalinfact.”86Insoacting,agovernmentalentitymustdemonstrateithadacompellinginterestin“remedyingtheeffectsofpastorpresentracialdiscrimination.”87

Thus,theTenthCircuitholdsthattojustifyarace‐consciousmeasure,agovernmentmustidentifythatdiscrimination,publicorprivate,withsomespecificity,andmusthaveastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.88ThecourtinConcreteWorksfoundthatitwasnotrequiredtoattempttocrafta‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark,

81H.B.Rowe,615F.3dat242;seeMidwestFence,840F.3d932,952‐954(7thCir.2016);ConcreteWorks,321F.3dat991;seealso,SherbrookeTurf,345F.3dat971‐974;GeyerSignal,Inc.,2014WL1309092;KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

82H.B.Rowe,615F.3dat241,quotingRotheDev.Corp.v.Dep’tofDef.,545F.3d1023,1049(Fed.Cir.2008)(quotingW.H.ScottConstr.Co.v.CityofJackson,199F.3d206,218n.11(5thCir.1999));W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);see,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).

83H.B.RoweCo.,615F.3dat241;see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);ConcreteWorks,321F.3dat958(10thCir.2003);,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).

84Croson,488U.S.509,see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);H.B.Rowe,615F.3dat241;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993).

85H.B.Rowe,615F.3dat241,quotingMarylandTroopersAssociation,Inc.v.Evans,993F.2d1072,1077(4thCir.1993);see,e.g.,MidwestFence,840F.3d932,952‐954(7thCir.2016);AGC,SanDiegov.Caltrans,713F.3dat1196;seealso,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐598,603(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d996,1002‐1007(3dCir.1993);KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

86See,e.g.,ConcreteWorksofColoradov.CityandCountyofDenver,321F.3dat957‐959(10thCir.2003);AdarandVII,228F.3d1147(10thCir.2000);see,e.g.,H.B.Rowe,615F.3dat241;615F.3d233at241.

87See,e.g.,ConcreteWorksofColoradov.CityandCountyofDenver,321F.3dat957‐959(10thCir.2003);AdarandVII,228F.3d1147(10thCir.2000);see,e.g.,H.B.Rowe;quotingShawv.Hunt,517U.S.899,909(1996).

88See,e.g.,ConcreteWorksofColoradov.CityandCountyofDenver,321F.3dat957‐959(10thCir.2003);AdarandVII,228F.3d1147(10thCir.2000);H.B.Rowe;615F.3d233at241quoting,Croson,488U.S.at504andWygantv.JacksonBoardofEducation,476U.S.267,277(1986)(pluralityopinion);see,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993).


andothercourtshavestatedthesufficiencyoftheState’sevidenceofdiscrimination“mustbeevaluatedonacase‐by‐casebasis.”89

TheTenthCircuitCourtofAppealsinConcreteWorksappliedstrictscrutinytorace‐basedmeasuresandintermediatescrutinytothegender‐basedmeasures.90TheCourtofAppealsalsocitedRichmondv.J.A.CrosonCo.,forthepropositionthatagovernmentalentity“canuseitsspendingpowerstoremedyprivatediscrimination,ifitidentifiesthatdiscriminationwiththeparticularityrequiredbytheFourteenthAmendment.”91Because“anefforttoalleviatetheeffectsofsocietaldiscriminationisnotacompellinginterest,”theCourtofAppealsheldthatDenvercoulddemonstratethatitsinterestiscompellingonlyifit(1)identifiedthepastorpresentdiscrimination“withsomespecificity,”and(2)demonstratedthata“strongbasisinevidence”supportsitsconclusionthatremedialactionisnecessary.92

TheTenthCircuitheldthatDenvercouldmeetitsburdenwithoutconclusivelyprovingtheexistenceofpastorpresentracialdiscrimination.93Rather,Denvercouldrelyon“empiricalevidencethatdemonstrates‘asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractors…andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.’”94(pluralityopinion).Furthermore,theCourtofAppealsstatedthatDenvercouldrelyonstatisticalevidencegatheredfromthesix‐countyDenverMetropolitanStatisticalArea(MSA)andcouldsupplementthestatisticalevidencewithanecdotalevidenceofpublicandprivatediscrimination.95

TheTenthCircuitinConcreteWorksheldthatDenvercouldestablishitscompellinginterestbypresentingevidenceofitsowndirectparticipationinracialdiscriminationoritspassiveparticipationinprivatediscrimination.96TheCourtofAppealssaidthatonceDenvermetitsburden,ConcreteWorksCompany(“CWC”)hadtointroduce“credible,particularizedevidencetorebut[Denver’s]initialshowingoftheexistenceofacompellinginterest,whichcouldconsistofaneutralexplanationforthestatisticaldisparities.”97(internalcitationsandquotationsomitted).TheCourtofAppealsfoundthatCWCcouldalsorebutDenver’sstatisticalevidence“by(1)showingthatthestatisticsareflawed;(2)demonstratingthatthedisparitiesshownbythestatisticsarenotsignificantoractionable;or(3)presentingcontrastingstatisticaldata.”98TheCourtofAppealsheldthattheburdenofproofatalltimesremainedwithCWCtodemonstratetheunconstitutionalityoftheordinances.99

89ConcreteWorksofColoradov.CityandCountyofDenver,36F.3d1513,1522(10thCir.1994);H.B.Rowe,615F.3dat241.(internalquotationmarksomitted).

90ConcreteWorks,321F.3d950,at957‐58,959(10thCir.2003).

91488U.S.469,492(1989)(pluralityopinion).

92ConcreteWorks,321F.3d950,at958,quotingShawv.Hunt,517U.S.899,909‐10(1996).

93Id.

94Id.,quotingCroson,488U.S.at509

95Id.

96Id.

97Id.

98ConcreteWorks,321F.3d950,958(10thCir.2003)(internalcitationsandquotationsomitted).

99Id.at960.


TheTenthCircuitfoundthatthedistrictcourtincorrectlybelievedDenverwasrequiredtoprovetheexistenceofdiscrimination.InsteadofconsideringwhetherDenverhaddemonstratedstrongevidencefromwhichaninferenceofpastorpresentdiscriminationcouldbedrawn,thedistrictcourtanalyzedwhetherDenver’sevidenceshowedthatthereispervasivediscrimination.100TheTenthCircuit,quotingits1994decisioninConcreteWorksII,statedthat“theFourteenthAmendmentdoesnotrequireacourttomakeanultimatefindingofdiscriminationbeforeamunicipalitymaytakeaffirmativestepstoeradicatediscrimination.”101

Denver’sinitialburdenwastodemonstratethatstrongevidenceofdiscriminationsupporteditsconclusionthatremedialmeasureswerenecessary.Strongevidenceisthat“approachingaprimafaciecaseofaconstitutionalorstatutoryviolation,”notirrefutableordefinitiveproofofdiscrimination.102TheburdenofproofatalltimesremainedwiththecontractorplaintifftoprovebyapreponderanceoftheevidencethatDenver’s“evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.”103

Statistical evidence.Statisticalevidenceofdiscriminationisaprimarymethodusedtodeterminewhetherornotastrongbasisinevidenceexiststodevelop,adoptandsupportaremedialprogram(i.e.,toproveacompellinggovernmentalinterest),orinthecaseofarecipientcomplyingwiththeFederalDBEProgram,toprovenarrowtailoringofprogramimplementationatthestaterecipientlevel.104“Wheregrossstatisticaldisparitiescanbeshown,theyaloneinapropercasemayconstituteprimafacieproofofapatternorpracticeofdiscrimination.”105

Oneformofstatisticalevidenceisthecomparisonofagovernment’sutilizationofMBE/WBEscomparedtotherelativeavailabilityofqualified,willingandableMBE/WBEs.106Thefederalcourtshaveheldthatasignificantstatisticaldisparitybetweentheutilizationandavailabilityof

100Id.at970.

101Id.at970,quotingConcreteWorksII,36F.3d1513,1522(10thCir.1994).

102Id.at97,quotingCroson,488U.S.at500.

103Id.,quotingAdarandVII,228F.3dat1176.

104See,e.g.,Croson,488U.S.at509;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1195‐1196;N.Contracting,473F.3dat718‐19,723‐24;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat973‐974;AdarandVII,228F.3dat1166;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993);seealso,ConcreteWorks,321F.3d950,959(10thCir.2003);KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016);GeyerSignal,2014WL1309092.

105Croson,488U.S.at501,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307‐08(1977);seeMidwestFence,840F.3d932,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1196‐1197;N.Contracting,473F.3dat718‐19,723‐24;WesternStatesPaving,407F.3dat991;SherbrookeTurf,345F.3dat973‐974;AdarandVII,228F.3dat1166;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999).

106Croson,448U.S.at509;seeMidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowev.NCDOT,615F.3d233,241‐244(4thCir.2010);Rothe,545F.3dat1041‐1042;ConcreteWorksofColo.,Inc.v.CityandCountyofDenver(“ConcreteWorksII”),321F.3d950,959(10thCir.2003);DrabikII,214F.3d730,734‐736;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3dCir.1993);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).


minority‐andwomen‐ownedfirmsmayraiseaninferenceofdiscriminatoryexclusion.107However,asmallstatisticaldisparity,standingalone,maybeinsufficienttoestablishdiscrimination.108

Otherconsiderationsregardingstatisticalevidenceinclude:

Availability analysis.Adisparityindexrequiresanavailabilityanalysis.MBE/WBEandDBE/ACDBEavailabilitymeasurestherelativenumberofMBE/WBEs/DBEsandACDBEsamongallfirmsready,willingandabletoperformacertaintypeofworkwithinaparticulargeographicmarketarea.109Thereisauthoritythatmeasuresofavailabilitymaybeapproachedwithdifferentlevelsofspecificityandthepracticalityofvariousapproachesmustbeconsidered,110“Ananalysisisnotdevoidofprobativevaluesimplybecauseitmaytheoreticallybepossibletoadoptamorerefinedapproach.”111

Utilization analysis.Courtshaveacceptedmeasuringutilizationbasedontheproportionofanagency’scontractdollarsgoingtoMBE/WBEsandDBEs.112

Disparity index.Animportantcomponentofstatisticalevidenceisthe“disparityindex.”113Adisparityindexisdefinedastheratioofthepercentutilizationtothepercentavailabilitytimes100.Adisparityindexbelow80hasbeenacceptedasevidenceofadverseimpact.Thishasbeenreferredtoas“TheRuleofThumb”or“The80percentRule.”114

107See,e.g.,Croson,488U.S.at509;MidwestFence,840F.3d932,935,948‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowev.NCDOT,615F.3d233,241‐244(4thCir.2010);Rothe,545F.3dat1041;ConcreteWorksII,321F.3dat970;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,596‐605(3dCir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,999,1002,1005‐1008(3d.Cir.1993);seealsoWesternStatesPaving,407F.3dat1001;KossmanContracting,2016WL1104363(S.D.Tex.2016).

108WesternStatesPaving,407F.3dat1001.

109See,e.g.,Croson,448U.S.at509;49CFR§26.35;AGC,SDCv.Caltrans,713F.3dat1191‐1197;Rothe,545F.3dat1041‐1042;N.Contracting,473F.3dat718,722‐23;WesternStatesPaving,407F.3dat995;W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,602‐603(3d.Cir.1996);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

110ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia(“CAEPII”),91F.3d586,603(3dCir.1996);see,e.g.,AGC,SDCv.Caltrans,713F.3dat1197,quotingCroson,488U.S.at706(“degreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

111ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia(“CAEPII”),91F.3d586,603(3dCir.1996);see,e.g.,AGC,SDCv.Caltrans,713F.3dat1197,quotingCroson,488U.S.at706(“degreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206,217‐218(5thCir.1999);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

112SeeMidwestFence,840F.3d932,949‐953(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1191‐1197;H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);ConcreteWorks,321F.3dat958,963‐968,971‐972(10thCir.2003);Eng’gContractorsAss’n,122F.3dat912;N.Contracting,473F.3dat717‐720;SherbrookeTurf,345F.3dat973.

113MidwestFence,840F.3d932,949‐953(7thCir.2016);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);ConcreteWorks,321F.3dat958,963‐968,971‐972(10thCir.2003);Eng’gContractorsAss’n,122F.3dat914;W.H.ScottConstr.Co.v.CityofJackson,199F.3d206,218(5thCir.1999);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,602‐603(3d.Cir.1996);ContractorsAss’nofEasternPennsylvania,Inc.v.CityofPhiladelphia,6F.3d990at1005(3rdCir.1993).

114See,e.g.,Ricciv.DeStefano,557U.S.557,129S.Ct.2658,2678(2009);MidwestFence,840F.3d932,950(7thCir.2016);H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);AGC,SDCv.Caltrans,713F.3dat1191;Rothe,545F.3dat1041;Eng’gContractorsAss’n,122F.3dat914,923;ConcreteWorksI,36F.3dat1524.


Two standard deviation test.Thestandarddeviationfiguredescribestheprobabilitythatthemeasureddisparityistheresultofmerechance.Somecourtshaveheldthatastatisticaldisparitycorrespondingtoastandarddeviationoflessthantwoisnotconsideredstatisticallysignificant.115

Intermsofstatisticalevidence,thecourts,includingtheTenthCircuit,haveheldthatastate“neednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidence”,butratheritmayrelyon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.116.

TheTenthCircuitinConcreteWorksnotedtheSupremeCourthasstatedthattheinferenceofdiscriminatoryexclusioncanarisefromstatisticaldisparities.117Accordingly,itconcludedthatDenvercouldmeetitsburdenthroughtheintroductionofstatisticalandanecdotalevidence.TotheextentthedistrictcourtrequiredDenvertointroduceadditionalevidencetoshowdiscriminatorymotiveorintentonthepartofprivateconstructionfirms,thedistrictcourterred.Denver,accordingtotheCourt,wasundernoburdentoidentifyanyspecificpracticeorpolicythatresultedindiscrimination.NeitherwasDenverrequiredtodemonstratethatthepurposeofanysuchpracticeorpolicywastodisadvantagewomenorminorities.118

ThecourtfoundDenver’sstatisticalandanecdotalevidencerelevantbecauseitidentifiesdiscriminationinthelocalconstructionindustry,notsimplydiscriminationinsociety.ThecourtheldthegenesisoftheidentifieddiscriminationisirrelevantandthedistrictcourterredwhenitdiscountedDenver’sevidenceonthatbasis.119

Marketplace discrimination and data. TheTenthCircuitinConcreteWorksheldthedistrictcourterroneouslyrejectedtheevidenceDenverpresentedonmarketplacediscrimination.120Thecourtrejectedthedistrictcourt’s“erroneous”legalconclusionthatamunicipalitymayonlyremedyitsowndiscrimination.Thecourtstatedthisconclusioniscontrarytotheholdingsinits1994decisioninConcreteWorksIIandthepluralityopinioninCroson.121Thecourthelditpreviouslyrecognizedinthiscasethat“amunicipalityhasacompellinginterestintakingaffirmativestepstoremedybothpublicandprivatediscriminationspecificallyidentifiedinits

115See,e.g.,H.B.Rowe,v.NCDOT,615F.3d233,241‐244(4thCir.2010);Eng’gContractorsAss’n,122F.3dat914,917,923.TheEleventhCircuitfoundthatadisparitygreaterthantwoorthreestandarddeviationshasbeenheldtobestatisticallysignificantandmaycreateapresumptionofdiscriminatoryconduct;Peightalv.MetropolitanEng’gContractorsAss’n,26F.3d1545,1556(11thCir.1994).TheSeventhCircuitCourtofAppealsinKadasv.MCISystemhouseCorp.,255F.3d359(7thCir.2001),raisedquestionsastotheuseofthestandarddeviationtestaloneasacontrollingfactorindeterminingtheadmissibilityofstatisticalevidencetoshowdiscrimination.Rather,theCourtconcludeditisforthejudgetosay,onthebasisofthestatisticalevidence,whetheraparticularsignificancelevel,inthecontextofaparticularstudyinaparticularcase,istoolowtomakethestudyworththeconsiderationofjudgeorjury.255F.3dat363.

116See,e.g.,H.B.Rowe,615F.3d233at241,citingCroson,488U.S.at509(pluralityopinion),andcitingConcreteWorks,321F.3dat958;ConcreteWorks,321F.3dat958,963‐968,971‐972(10thCir.2003);ConcreteWorks,36F.3dat1529(10thCir.1994).

117ConcreteWorks,321F.3d950,citingCroson,488U.S.at503.

118Id.at972.

119Id.

120Id.at973.

121Id.


area.”122InConcreteWorksII,thecourtstatedthat“wedonotreadCrosonasrequiringthemunicipalitytoidentifyanexactlinkagebetweenitsawardofpubliccontractsandprivatediscrimination.”123

ThecourtstatedthatDenvercouldmeetitsburdenofdemonstratingitscompellinginterestwithevidenceofprivatediscriminationinthelocalconstructionindustrycoupledwithevidencethatithasbecomeapassiveparticipantinthatdiscrimination.124Thus,Denverwasnotrequiredtodemonstratethatitis“guiltyofprohibiteddiscrimination”tomeetitsinitialburden.125

Additionally,thecourthadpreviouslyconcludedthatDenver’sstatisticalstudies,whichcomparedutilizationofMBE/WBEstoavailability,supportedtheinferencethat“localprimecontractors”areengagedinracialandgenderdiscrimination.126Thus,thecourtheldDenver’sdisparitystudiesshouldnothavebeendiscountedbecausetheyfailedtospecificallyidentifythoseindividualsorfirmsresponsibleforthediscrimination.127

Thecourtheldthedistrictcourt,interalia,erroneouslyconcludedthatthedisparitystudiesuponwhichDenverreliedweresignificantlyflawedbecausetheymeasureddiscriminationintheoverallDenverMSAconstructionindustry,notdiscriminationbytheCityitself.128Thecourtfoundthatthedistrictcourt’sconclusionwasdirectlycontrarytotheholdinginAdarandVIIthatevidenceofbothpublicandprivatediscriminationintheconstructionindustryisrelevant.129

InAdarandVII,theTenthCircuitnoteditconcludedthatevidenceofmarketplacediscriminationcanbeusedtosupportacompellinginterestinremedyingpastorpresentdiscriminationthroughtheuseofaffirmativeactionlegislation.130(“[W]emayconsiderpublicandprivatediscriminationnotonlyinthespecificareaofgovernmentprocurementcontractsbutalsointheconstructionindustrygenerally;thusanyfindingsCongresshasmadeastotheentireconstructionindustryarerelevant.”131.Further,thecourtpointedoutthatitearlierrejectedtheargumentCWCreassertedthatmarketplacedataareirrelevant,andremandedthecasetothedistrictcourttodeterminewhetherDenvercouldlinkitspublicspendingto“theDenverMSAevidenceofindustry‐widediscrimination.”132Thecourtstatedthatevidenceexplaining“theDenvergovernment’sroleincontributingtotheunderutilizationofMBEsandWBEsintheprivate

122Id.,quotingConcreteWorksII,36F.3dat1529(emphasisadded).

123ConcreteWorks,321F.3d950,973(10thCir.2003),quotingConcreteWorksII,36F.3dat1529(10thCir.1994).

124Id.at973.

125Id.

126Id.at974,quotingConcreteWorksII,36F.3dat1529.

127Id.

128Id.at974.

129Id.,citingAdarandVII,228F.3dat1166‐67.

130ConcreteWorks,321F.3dat976,citingAdarandVII,228F.3dat1166‐67.

131Id.(emphasisadded).

132Id.,quotingConcreteWorksII,36F.3dat1529.


constructionmarketintheDenverMSA”wasrelevanttoDenver’sburdenofproducingstrongevidence.133

Consistentwiththecourt’smandateinConcreteWorksII,Denverattemptedtoshowattrialthatit“indirectlycontributedtoprivatediscriminationbyawardingpubliccontractstofirmsthatinturndiscriminatedagainstMBEand/orWBEsubcontractorsinotherprivateportionsoftheirbusiness.”134TheTenthCircuitruledthattheCitycandemonstratethatitisa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”bycompilingevidenceofmarketplacediscriminationandthenlinkingitsspendingpracticestotheprivatediscrimination.135

ThecourtinConcreteWorksrejectedtheargumentthatthelendingdiscriminationstudiesandbusinessformationstudiespresentedbyDenverwereirrelevant.InAdarandVII,theTenthCircuitconcludedthatevidenceofdiscriminatorybarrierstotheformationofbusinessesbyminoritiesandwomenandfaircompetitionbetweenMBE/WBEsandmajority‐ownedconstructionfirmsshowsa“stronglink”betweenagovernment’s“disbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.”136

ThecourtfoundthatevidencethatprivatediscriminationresultedinbarrierstobusinessformationisrelevantbecauseitdemonstratesthatMBE/WBEsareprecludedattheoutsetfromcompetingforpublicconstructioncontracts.ThecourtalsofoundthatevidenceofbarrierstofaircompetitionisrelevantbecauseitagaindemonstratesthatexistingMBE/WBEsareprecludedfromcompetingforpubliccontracts.Thus,likethestudiesmeasuringdisparitiesintheutilizationofMBE/WBEsintheDenverMSAconstructionindustry,studiesshowingthatdiscriminatorybarrierstobusinessformationexistintheDenverconstructionindustryarerelevanttotheCity’sshowingthatitindirectlyparticipatesinindustrydiscrimination.137

InConcreteWorks,DenverpresentedevidenceoflendingdiscriminationtosupportitspositionthatMBE/WBEsintheDenverMSAconstructionindustryfacediscriminatorybarrierstobusinessformation.Denverintroducedadisparitystudy.Thestudyultimatelyconcludedthat“despitethefactthatloanapplicantsofthreedifferentracial/ethnicbackgroundsinthissamplewerenotappreciablydifferentasbusinesspeople,theywereultimatelytreateddifferentlybythelendersonthecrucialissueofloanapprovalordenial.”138InAdarandVII,thecourtconcludedthatthisstudy,amongotherevidence,“stronglysupport[ed]aninitialshowingofdiscriminationinlending.”139

TheTenthCircuitinConcreteWorksconcludedthatdiscriminatorymotivecanbeinferredfromtheresultsshownindisparitystudies.ThecourtnotedthatinAdarandVIIittook“judicialnotice

133Id.,quotingConcreteWorksII,36F.3dat1530(emphasisadded).

134Id.

135ConcreteWorks,321F.3dat976,quotingCroson,488U.S.at492.

136Id.at977,quotingAdarandVII,228F.3dat1167‐68.

137Id.at977.

138Id.at977‐78.

139Id.at978,quoting,AdarandVII,228F.3dat1170,n.13.


oftheobviouscausalconnectionbetweenaccesstocapitalandabilitytoimplementpublicworksconstructionprojects.”140

DenveralsointroducedevidenceofdiscriminatorybarrierstocompetitionfacedbyMBE/WBEsintheformofbusinessformationstudies.Thecourtheldthatthedistrictcourt’sconclusionthatthebusinessformationstudiescouldnotbeusedtojustifytheordinancesconflictswithitsholdinginAdarandVII.“[T]heexistenceofevidenceindicatingthatthenumberof[MBEs]wouldbesignificantly(butunquantifiably)higherbutforsuchbarriersisneverthelessrelevanttotheassessmentofwhetheradisparityissufficientlysignificanttogiverisetoaninferenceofdiscriminatoryexclusion.141

Insum,theTenthCircuitheldthedistrictcourterredwhenitrefusedtoconsiderorgivesufficientweighttothelendingdiscriminationstudy,thebusinessformationstudies,andthestudiesmeasuringmarketplacediscrimination.ThatevidencewaslegallyrelevanttotheCity’sburdenofdemonstratingastrongbasisinevidencetosupportitsconclusionthatremediallegislationwasnecessary.142

Anecdotal evidence.Anecdotalevidenceincludespersonalaccountsofincidents,includingofdiscrimination,toldfromthewitness’perspective.Anecdotalevidenceofdiscrimination,standingalone,generallyisinsufficienttoshowasystematicpatternofdiscrimination.143Butpersonalaccountsofactualdiscriminationmaycomplementempiricalevidenceandplayanimportantroleinbolsteringstatisticalevidence.144Ithasbeenheldthatanecdotalevidenceofalocalorstategovernment’sinstitutionalpracticesthatexacerbatediscriminatorymarketconditionsareoftenparticularlyprobative.145

Examplesofanecdotalevidencemayinclude:

TestimonyofMBE/WBEorDBEownersregardingwhethertheyfacedifficultiesorbarriers;

DescriptionsofinstancesinwhichMBE/WBEorDBEownersbelievetheyweretreatedunfairlyorwerediscriminatedagainstbasedontheirrace,ethnicity,orgenderorbelievetheyweretreatedfairlywithoutregardtorace,ethnicity,orgender;

Statementsregardingwhetherfirmssolicit,orfailtosolicit,bidsorpricequotesfromMBE/WBEsorDBEsonnon‐goalprojects;and

140Id.at978,quotingAdarandVII,228F.3dat1170.

141Id.at979,quotingAdarandVII,228F.3dat1174.

142Id.at979‐80.

143See,e.g.,AGC,SDCv.Caltrans,713F.3dat1192,1196‐1198;Eng’gContractorsAss’n,122F.3dat924‐25;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,1002‐1003(3d.Cir.1993);CoralConstr.Co.v.KingCounty,941F.2d910,919(9thCir.1991);O’DonnelConstr.Co.v.DistrictofColumbia,963F.2d420,427(D.C.Cir.1992).

144See,e.g.,MidwestFence,840F.3d932,953(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1192,1196‐1198;H.B.Rowe,615F.3d233,248‐249;ConcreteWorks,321F.3d950,989‐990(10thCir.2003);Eng’gContractorsAss’n,122F.3dat925‐26;ConcreteWorks,36F.3dat1520(10thCir.1994);ContractorsAss’n,6F.3dat1003;CoralConstr.Co.v.KingCounty,941F.2d910,919(9thCir.1991);seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(S.D.Tex.2016).

145ConcreteWorksI,36F.3dat1520.


Statementsregardingwhetherthereareinstancesofdiscriminationinbiddingonspecificcontractsandinthefinancingandinsurancemarkets.146

Courtshaveacceptedandrecognizethatanecdotalevidenceisthewitness’narrativeofincidentstoldfromhisorherperspective,includingthewitness’thoughts,feelings,andperceptions,andthusanecdotalevidenceneednotbeverified.147

Theanecdotalevidence,accordingtotheTenthCircuit,presentedinConcreteWorksincludedseveralincidentsinvolving“profoundlydisturbing”behavioronthepartoflenders,majority‐ownedfirms,andindividualemployees.148Thecourtfoundthattheanecdotaltestimonyrevealedbehaviorthatwasnotmerelysophomoricorinsensitive,butwhichresultedinrealeconomicorphysicalharm.WhileConcreteWorks(“CWC”)alsoarguedthatallneworsmallcontractorshavedifficultyobtainingcreditandthattreatmentthewitnessescharacterizedasdiscriminatoryisexperiencedbyallcontractors,Denver’switnessestestifiedthattheybelievedtheincidentstheyexperiencedweremotivatedbyraceorgenderdiscrimination.Thecourtfoundtheysupportedthosebeliefswithtestimonythatmajority‐ownedfirmswerenotsubjecttothesamerequirementsimposedonthem.149

TheTenthCircuitheldtherewasnomerittoCWC’sargumentthatthewitnesses’accountsmustbeverifiedtoprovidesupportforDenver’sburden.Thecourtstatedthatanecdotalevidenceisnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.150

AfterconsideringDenver’sanecdotalevidence,thedistrictcourtinConcreteWorksfoundthattheevidence“showsthatrace,ethnicityandgenderaffecttheconstructionindustryandthosewhoworkinit”andthattheegregiousmistreatmentofminorityandwomenemployees“haddirectfinancialconsequences”onconstructionfirms.151Basedonthedistrictcourt’sfindingsregardingDenver’sanecdotalevidenceanditsreviewoftherecord,theTenthCircuitconcludedthattheanecdotalevidenceprovidedpersuasive,unrebuttedsupportforDenver’sinitialburden.152

146See,e.g.,AGC,SDCv.Caltrans,713F.3dat1197;H.B.Rowe,615F.3d233,241‐242;249‐251;NorthernContracting,2005WL2230195,at13‐15(N.D.Ill.2005),affirmed,473F.3d715(7thCir.2007);e.g.,ConcreteWorks,321F.3dat989;AdarandVII,228F.3dat1166‐76.Foradditionalexamplesofanecdotalevidence,seeEng’gContractorsAss’n,122F.3dat924;ConcreteWorks,36F.3dat1520;ConeCorp.v.HillsboroughCounty,908F.2d908,915(11thCir.1990);DynaLantic,885F.Supp.2d237;FloridaA.G.C.Council,Inc.v.StateofFlorida,303F.Supp.2d1307,1325(N.D.Fla.2004).

147See,e.g.,AGC,SDCv.Caltrans,713F.3dat1197;H.B.Rowe,615F.3d233,241‐242,248‐249;ConcreteWorksII,321F.3dat989;Eng’gContractorsAss’n,122F.3dat924‐26;ConeCorp.,908F.2dat915;NorthernContracting,Inc.v.Illinois,2005WL2230195at*21,N.32(N.D.Ill.Sept.8,2005),aff’d473F.3d715(7thCir.2007).

148ConcreteWorks,321F.3dat989.

149Id.

150Id.

151Id.at989,quotingConcreteWorksIII,86F.Supp.2dat1074,1073.

152Id.at989‐90,citingInt’lBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977)(concludingthatanecdotalevidencepresentedinapatternorpractivediscriminationcasewaspersuasivebecauseit“broughtthecold[statistics]convincinglytolife”).


b. The Narrow Tailoring Requirement.

Thesecondprongofthestrictscrutinyanalysisrequiresthatarace‐orethnicity‐basedprogramorlegislationimplementedtoremedypastidentifieddiscriminationintherelevantmarketbe“narrowlytailored”toreachthatobjective.

Thenarrowtailoringrequirementhasseveralcomponentsandthecourts,includingtheTenthCircuitCourtofAppeals,analyzeseveralcriteriaorfactorsindeterminingwhetheraprogramorlegislationsatisfiesthisrequirementincluding:

Thenecessityforthereliefandtheefficacyofalternativerace‐,ethnicity‐,andgender‐neutralremedies;

Theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions;

Therelationshipofnumericalgoalstotherelevantlabormarket;and

Theimpactofarace‐,ethnicity‐,orgender‐consciousremedyontherightsofthirdparties.153

TosatisfythenarrowlytailoredprongofthestrictscrutinyanalysisinthecontextoftheFederalDBEProgram,whichisinstructivetothestudy,thefederalcourtsthathaveevaluatedstateandlocalDBEProgramsandtheirimplementationoftheFederalDBEProgram,heldthefollowingfactorsarepertinent:

Evidenceofdiscriminationoritseffectsinthestatetransportationcontractingindustry;

Flexibilityanddurationofarace‐orethnicity‐consciousremedy;

RelationshipofanynumericalDBEgoalstotherelevantmarket;

Effectivenessofalternativerace‐andethnicity‐neutralremedies;

Impactofarace‐orethnicity‐consciousremedyonthirdparties;and

Applicationofanyrace‐orethnicity‐consciousprogramtoonlythoseminoritygroupswhohaveactuallysuffereddiscrimination.154

TheEleventhCircuitdescribedthe“theessenceofthe‘narrowlytailored’inquiry[as]thenotionthatexplicitlyracialpreferences…mustonlybea‘lastresort’option.”155Courtshavefoundthat“[w]hilenarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutral

153See,e.g.,MidwestFence,840F.3d932,942,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,252‐255;Rothe,545F.3dat1036;WesternStatesPaving,407F3dat993‐995;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181(10thCir.2000);W.H.ScottConstr.Co.v.CityofJackson,Mississippi,199F.3d206(5thCir.1999);Eng’gContractorsAss’n,122F.3dat927(internalquotationsandcitationsomitted);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3d586,605‐610(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3d990,1008‐1009(3d.Cir.1993);seealso,GeyerSignal,Inc.,2014WL1309092.

154See,e.g.,MidwestFence,840F.3d932,942,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,243‐245,252‐255;WesternStatesPaving,407F.3dat998;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;KornhassConstruction,Inc.v.StateofOklahoma,DepartmentofCentralServices,140F.Supp.2dat1247‐1248;seealsoGeyerSignal,Inc.,2014WL1309092.

155Eng’gContractorsAss’n,122F.3dat926(internalcitationsomitted);seealsoVirdiv.DeKalbCountySchoolDistrict,135Fed.Appx.262,264,2005WL138942(11thCir.2005)(unpublishedopinion);Websterv.FultonCounty,51F.Supp.2d1354,1380(N.D.Ga.1999),aff’dpercuriam218F.3d1267(11thCir.2000).


alternative,itdoesrequireserious,goodfaithconsiderationofwhethersuchalternativescouldservethegovernmentalinterestatstake.”156

Similarly,theSixthCircuitCourtofAppealsinAssociatedGen.Contractorsv.Drabik(“DrabikII”),stated:“Adarandteachesthatacourtcalledupontoaddressthequestionofnarrowtailoringmustask,“forexample,whethertherewas‘anyconsiderationoftheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipation’ingovernmentcontracting…orwhethertheprogramwasappropriatelylimitedsuchthatit‘willnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.’”157

TheSupremeCourtinParentsInvolvedinCommunitySchoolsv.SeattleSchoolDistrict158alsofoundthatrace‐andethnicity‐basedmeasuresshouldbeemployedasalastresort.Themajorityopinionstated:“Narrowtailoringrequires‘serious,goodfaithconsiderationofworkablerace‐neutralalternatives,’andyetinSeattleseveralalternativeassignmentplans—manyofwhichwouldnothaveusedexpressracialclassifications—wererejectedwithlittleornoconsideration.”159TheCourtfoundthattheDistrictfailedtoshowitseriouslyconsideredrace‐neutralmeasures.

The“narrowlytailored”analysisisinstructiveintermsofdevelopinganypotentiallegislationorprogramsthatinvolveMBE/WBE/DBEsorinconnectionwithdeterminingappropriateremedialmeasurestoachievelegislativeobjectives.

Implementation of the Federal DBE Program: Narrow tailoring.ThesecondprongofthestrictscrutinyanalysisrequirestheimplementationoftheFederalDBEProgrambyrecipientsoffederalfundsbe“narrowlytailored”toremedyidentifieddiscriminationintheparticularrecipient’scontractingandprocurementmarket.160Thenarrowtailoringrequirementhasseveralcomponents.

InWesternStatesPaving,theNinthCircuitheldtherecipientoffederalfundsmusthaveindependentevidenceofdiscriminationwithintherecipient’sowntransportationcontractingandprocurementmarketplaceinordertodeterminewhetherornotthereistheneedforrace‐,ethnicity‐,orgender‐consciousremedialaction.161Thus,theNinthCircuitheldinWesternStatesPavingthatmerecompliancewiththeFederalDBEProgramdoesnotsatisfystrictscrutiny.162

156SeeGrutterv.Bollinger,539U.S.306,339(2003);Richmondv.J.A.CrosonCo.,488U.S.469,509‐10(1989);H.B.Rowe,615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;seealsoAdarandI,515U.S.at237‐38.

157AssociatedGen.ContractorsofOhio,Inc.v.Drabik(“DrabikII”),214F.3d730,738(6thCir.2000).

158551U.S.701,734‐37,127S.Ct.2738,2760‐61(2007).

159551U.S.701,734‐37,127S.Ct.at2760‐61;seealsoFisherv.UniversityofTexas,133S.Ct.2411(2013);Grutterv.Bollinger,539U.S.305(2003).

160WesternStatesPaving,407F3dat995‐998;SherbrookeTurf,345F.3dat970‐71;see,e.g.,MidwestFence,840F.3d932,949‐953.

161WesternStatesPaving,407F.3dat997‐98,1002‐03;seeAGC,SDCv.Caltrans,713F.3dat1197‐1199.

162Id.at995‐1003.TheSeventhCircuitCourtofAppealsinNorthernContractingstatedinafootnotethatthecourtinWesternStatesPaving“misread”thedecisioninMilwaukeeCountyPavers.473F.3dat722,n.5.


InWesternStatesPaving,andinAGC,SDCv.Caltrans,theCourtfoundthatevenwhereevidenceofdiscriminationispresentinarecipient’smarket,anarrowlytailoredprogrammustapplyonlytothoseminoritygroupswhohaveactuallysuffereddiscrimination.Thus,underarace‐orethnicity‐consciousprogram,foreachoftheminoritygroupstobeincludedinanyrace‐orethnicity‐consciouselementsinarecipient’simplementationoftheFederalDBEProgram,theremustbeevidencethattheminoritygroupsuffereddiscriminationwithintherecipient’smarketplace.163

InNorthernContractingdecision(2007)theSeventhCircuitCourtofAppealsciteditsearlierprecedentinMilwaukeeCountyPaversv.Fieldertohold“thatastateisinsulatedfrom[anarrowtailoring]constitutionalattack,absentashowingthatthestateexceededitsfederalauthority.IDOT[IllinoisDOT]hereisactingasaninstrumentoffederalpolicyandNorthernContracting(NCI)cannotcollaterallyattackthefederalregulationsthroughachallengetoIDOT’sprogram.”164TheSeventhCircuitCourtofAppealsdistinguishedboththeNinthCircuitCourtofAppealsdecisioninWesternStatesPavingandtheEighthCircuitCourtofAppealsdecisioninSherbrookeTurf,relatingtoanas‐appliednarrowtailoringanalysis.

TheSeventhCircuitCourtofAppealsheldthatthestateDOT’s[IllinoisDOT]applicationofafederallymandatedprogramislimitedtothequestionofwhetherthestateexceededitsgrantoffederalauthorityundertheFederalDBEProgram.165TheSeventhCircuitCourtofAppealsanalyzedIDOT’scompliancewiththefederalregulationsregardingcalculationoftheavailabilityofDBEs,adjustmentofitsgoalbasedonlocalmarketconditionsanditsuseofrace‐neutralmethodssetforthinthefederalregulations.166ThecourtheldNCIfailedtodemonstratethatIDOTdidnotsatisfycompliancewiththefederalregulations(49CFRPart26).167Accordingly,theSeventhCircuitCourtofAppealsaffirmedthedistrictcourt’sdecisionupholdingthevalidityofIDOT’sDBEprogram.168

Therecent2015and2016SeventhCircuitCourtofAppealsdecisionsinDunnetBayConstructionCompanyv.Borggren,IllinoisDOT,etalandMidwestFenceCorp.v.U.S.DOT,FederalHighwayAdministration,IllinoisDOTfollowedtherulinginNorthernContractingthatastateDOTimplementingtheFederalDBEProgramisinsulatedfromaconstitutionalchallengeabsentashowingthatthestateexceededitsfederalauthority.169ThecourtheldtheIllinoisDOTDBEProgramimplementingtheFederalDBEProgramwasvalid,findingtherewasnotsufficientevidencetoshowtheIllinoisDOTexceededitsauthorityunderthefederalregulations.170ThecourtfoundDunnetBayhadnotestablishedsufficientevidencethatIDOT’simplementationof

163407F.3dat996‐1000;SeeAGC,SDCv.Caltrans,713F.3dat1197‐1199.

164473F.3dat722.

165Id.at722.

166Id.at723‐24.

167Id.

168Id.;See,e.g.,MidwestFence,840F.3d932(7thCir.2016);MidwestFence,84F.Supp.3d705,2015WL1396376(N.D.Ill.2015),affirmed,840F.3d932(7thCir.2016);GeodCorp.v.NewJerseyTransitCorp.,etal.,746F.Supp2d642(D.N.J.2010);SouthFloridaChapteroftheA.G.C.v.BrowardCounty,Florida,544F.Supp.2d1336(S.D.Fla.2008).

169MidwestFence,840F.3d932(7thCir.2016);DunnetBayConstructionCompanyv.Borggren,IllinoisDOT,etal.,799F.3d676,2015WL4934560at**18‐22(7thCir.2015).

170DunnetBay,799F.3d676,2015WL4934560at**18‐22.


theFederalDBEProgramconstitutedunlawfuldiscrimination.171Inaddition,thecourtinMidwestFenceupheldtheconstitutionalityoftheFederalDBEProgram,andupheldtheIllinoisDOTDBEProgramandIllinoisStateTollwayHighwayAuthorityDBEProgramthatdidnotinvolvefederalfundsundertheFederalDBEProgram.172

TosatisfythenarrowlytailoredprongofthestrictscrutinyanalysisinthecontextoftheFederalDBEProgram,whichisinstructivetothestudy,thefederalcourtsthathaveevaluatedstateandlocalDBEProgramsandtheirimplementationoftheFederalDBEProgram,heldthefollowingfactorsarepertinent:

Evidenceofdiscriminationoritseffectsinthestatetransportationcontractingindustry;

Flexibilityanddurationofarace‐orethnicity‐consciousremedy;

RelationshipofanynumericalDBEgoalstotherelevantmarket;

Effectivenessofalternativerace‐andethnicity‐neutralremedies;

Impactofarace‐orethnicity‐consciousremedyonthirdparties;and

Applicationofanyrace‐orethnicity‐consciousprogramtoonlythoseminoritygroupswhohaveactuallysuffereddiscrimination.173

Race‐, ethnicity‐, and gender‐neutral measures.Totheextenta“strongbasisinevidence”existsconcerningdiscriminationinalocalorstategovernment’srelevantcontractingandprocurementmarket,thecourtsanalyzeseveralcriteriaorfactorstodeterminewhetherastate’simplementationofarace‐orethnicity‐consciousprogramisnecessaryandthusnarrowlytailoredtoachieveremedyingidentifieddiscrimination.Oneofthekeyfactorsdiscussedaboveisconsiderationofrace‐,ethnicity‐andgender‐neutralmeasures.

Thecourtsrequirethatalocalorstategovernmentseriouslyconsiderrace‐,ethnicity‐andgender‐neutraleffortstoremedyidentifieddiscrimination.174Andthecourtshaveheldunconstitutionalthoserace‐andethnicity‐consciousprogramsimplementedwithoutconsiderationofrace‐andethnicity‐neutralalternativestoincreaseminoritybusinessparticipationinstateandlocalcontracting.175

171Id.

172840F.3d932(7thCir.2016).

173See,e.g.,MidwestFence,840F.3d932,942,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,243‐245,252‐255;WesternStatesPaving,407F.3dat998;SherbrookeTurf,345F.3dat971;AdarandVII,228F.3dat1181;KornhassConstruction,Inc.v.StateofOklahoma,DepartmentofCentralServices,140F.Supp.2dat1247‐1248;seealsoGeyerSignal,Inc.,2014WL1309092.

174See,e.g.,MidwestFence,840F.3d932,937‐938,953‐954(7thCir.2016);AGC,SDCv.Caltrans,713F.3dat1199;H.B.Rowe,615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;AdarandVII,228F.3dat1179(10thCir.2000);Eng’gContractorsAss’n,122F.3dat927;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(CAEPII),91F.3dat608‐609(3d.Cir.1996);ContractorsAss’n(CAEPI),6F.3dat1008‐1009(3d.Cir.1993);CoralConstr.,941F.2dat923.

175See,Croson,488U.S.at507;DrabikI,214F.3dat738(citationsandinternalquotationsomitted);seealso,Eng’gContractorsAss’n,122F.3dat927;Virdi,135Fed.Appx.At268;ContractorsAss’nofE.Pa.v.CityofPhiladelphia(CAEPII),91F.3dat608‐609(3d.Cir.1996);ContractorsAss’n(CAEPI),6F.3dat1008‐1009(3d.Cir.1993).


TheCourtinCrosonfollowedbydecisionsfromfederalcourtsofappealfoundthatlocalandstategovernmentshaveattheirdisposala“wholearrayofrace‐neutraldevicestoincreasetheaccessibilityofcitycontractingopportunitiestosmallentrepreneursofallraces.”176

Examplesofrace‐,ethnicity‐,andgender‐neutralalternativesinclude,butarenotlimitedto,thefollowing:

Providingassistanceinovercomingbondingandfinancingobstacles;

Relaxationofbondingrequirements;

Providingtechnical,managerialandfinancialassistance;

Establishingprogramstoassiststart‐upfirms;

Simplificationofbiddingprocedures;

Trainingandfinancialaidforalldisadvantagedentrepreneurs;

Non‐discriminationprovisionsincontractsandinstatelaw;

Mentor‐protégéprogramsandmentoring;

Effortstoaddresspromptpaymentstosmallerbusinesses;

Smallcontractsolicitationstomakecontractsmoreaccessibletosmallerbusinesses;

Expansionofadvertisementofbusinessopportunities;

Outreachprogramsandefforts;

“Howtodobusiness”seminars;

Sponsoringnetworkingsessionsthroughoutthestateacquaintsmallfirmswithlargefirms;

CreationanddistributionofMBE/WBEandDBEdirectories;and

Streamliningandimprovingtheaccessibilityofcontractstoincreasesmallbusinessparticipation.177

Thecourtshaveheldthatwhilethenarrowtailoringanalysisdoesnotrequireagovernmentalentitytoexhausteverypossiblerace‐,ethnicity‐,andgender‐neutralalternative,itdoes“requireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.178

Additional factors considered under narrow tailoring.Inadditiontotherequiredconsiderationofthenecessityforthereliefandtheefficacyofalternativeremedies(race‐andethnicity‐neutral

176Croson,488U.S.at509‐510.

177See,e.g.,Croson,488U.S.at509‐510;H.B.Rowe,615F.3d233,252‐255;N.Contracting,473F.3dat724;AdarandVII,228F.3d1179(10thCir.2000);49CFR§26.51(b);seealso,Eng’gContractorsAss’n,122F.3dat927‐29;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat608‐609(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).

178ParentsInvolvedinCommunitySchoolsv.SeattleSchoolDistrict,551U.S.701,732‐47,127S.Ct2738,2760‐61(2007);AGC,SDCv.Caltrans,713F.3dat1199,citingGrutterv.Bollinger,539U.S.306,339(2003);H.B.Rowe,615F.3d233,252‐255;WesternStatesPaving,407F.3dat993;SherbrookeTurf,345F.3dat972;Eng’gContractorsAss’n,122F.3dat927.


efforts),thecourtsrequireevaluationofadditionalfactorsaslistedabove.179Forexample,tobeconsiderednarrowlytailored,courtshaveheldthataMBE/WBE‐orDBE‐typeprogramshouldinclude:(1)built‐inflexibility;180(2)goodfaitheffortsprovisions;181(3)waiverprovisions;182(4)arationalbasisforgoals;183(5)graduationprovisions;184(6)remediesonlyforgroupsforwhichtherewerefindingsofdiscrimination;185(7)sunsetprovisions;186and(8)limitationinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.187

2. Intermediate scrutiny analysis

CertainFederalCourtsofAppeal,includingtheTenthCircuitCourtofAppeals,applyintermediatescrutinytogender‐consciousprograms.188TheTenthCircuithasapplied“intermediatescrutiny”toclassificationsbasedongender.189Restrictionssubjecttointermediatescrutinyarepermissiblesolongastheyaresubstantiallyrelatedtoserveanimportantgovernmentalinterest.190

179SeeMidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,252‐255;SherbrookeTurf,345F.3dat971‐972;Eng’gContractorsAss’n,122F.3dat927;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat608‐609(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).

180MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;SherbrookeTurf,345F.3dat971‐972;CAEPI,6F.3dat1009;AssociatedGen.ContractorsofCa.,Inc.v.CoalitionforEconomicEquality(“AGCofCa.”),950F.2d1401,1417(9thCir.1991);CoralConstr.Co.v.KingCounty,941F.2d910,923(9thCir.1991);ConeCorp.v.HillsboroughCounty,908F.2d908,917(11thCir.1990).

181MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;SherbrookeTurf,345F.3dat971‐972;CAEPI,6F.3dat1019;ConeCorp.,908F.2dat917.

182MidwestFence,840F.3d932,937‐939,947‐954(7thCir.2016);H.B.Rowe,615F.3d233,253;AGCofCa.,950F.2dat1417;ConeCorp.,908F.2dat917;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat606‐608(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).

183Id.;SherbrookeTurf,345F.3dat971‐973;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat606‐608(3d.Cir.1996);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1008‐1009(3d.Cir.1993).

184Id.

185See,e.g.,AGC,SDCv.Caltrans,713F.3dat1198‐1199;H.B.Rowe,615F.3d233,253‐255;WesternStatesPaving,407F.3dat998;AGCofCa.,950F.2dat1417;ContractorsAss’nofE.Pa.v.CityofPhiladelphia,91F.3dat593‐594,605‐609(3d.Cir.1996);ContractorsAss’n(CAEPI),6F.3dat1009,1012(3d.Cir.1993);KossmanContractingCo.,Inc.,v.CityofHouston,2016WL1104363(W.D.Tex.2016);SherbrookeTurf,2001WL150284(unpublishedopinion),aff’d345F.3d964.

186See,e.g.,H.B.Rowe,615F.3d233,254;SherbrookeTurf,345F.3dat971‐972;Peightal,26F.3dat1559;.seealso,KossmanContractingCo.,Inc.v.CityofHouston,2016WL1104363(W.D.Tex.2016).

187CoralConstr.,941F.2dat925.

188ConcreteWorks,321F.3d950,960(10thCir.2003);ConcreteWorks,36F.3d1513,1519(10thCir.1994);see,e.g.,H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);Seegenerally,AGC,SDCv.Caltrans,713F.3dat1195;WesternStatesPaving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);seealsoU.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”);GeyerSignal,2014WL1309092.

189ConcreteWorks,321F.3d950,960(10thCir.2003);ConcreteWorks,36F.3d1513,1519(10thCir.1994);see,e.g.,H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);see,ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);Cunninghamv.Beavers,858F.2d269,273(5thCir.1988),cert.denied,489U.S.1067(1989)(citingCraigv.Boren,429U.S.190(1976),andLalliv.Lalli,439U.S.259(1978)).

190ConcreteWorks,321F.3d950,960(10thCir.2003);ConcreteWorks,36F.3d1513,1519(10thCir.1994);see,e.g.,H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);see,Serv.Emp.Int’lUnion,Local5v.CityofHous.,595F.3d588,596(5thCir.2010);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993).


Thecourtshaveinterpretedthisintermediatescrutinystandardtorequirethatgender‐basedclassificationsbe:

1. Supportedbyboth“sufficientprobative”evidenceor“exceedinglypersuasivejustification”insupportofthestatedrationalefortheprogram;and

2. Substantiallyrelatedtotheachievementofthatunderlyingobjective.191

Underthetraditionalintermediatescrutinystandard,thecourtreviewsagender‐consciousprogrambyanalyzingwhetherthestateactorhasestablishedasufficientfactualpredicatefortheclaimthatfemale‐ownedbusinesseshavesuffereddiscrimination,andwhetherthegender‐consciousremedyisanappropriateresponsetosuchdiscrimination.Thisstandardrequiresthestateactortopresent“sufficientprobative”evidenceinsupportofitsstatedrationalefortheprogram.192

Intermediatescrutiny,asinterpretedbyfederalcircuitcourtsofappeal,requiresadirect,substantialrelationshipbetweentheobjectiveofthegenderpreferenceandthemeanschosentoaccomplishtheobjective.193Themeasureofevidencerequiredtosatisfyintermediatescrutinyislessthanthatnecessarytosatisfystrictscrutiny.Unlikestrictscrutiny,ithasbeenheldthattheintermediatescrutinystandarddoesnotrequireashowingofgovernmentinvolvement,activeorpassive,inthediscriminationitseekstoremedy.194

TheTenthCircuitinConcreteWorks,statedwithregardevidenceastowoman‐ownedbusinessenterprisesasfollows:

“We do not have the benefit of relevant authority with which to compareDenver’sdisparity indices forWBEs. SeeContractorsAss’n,6F.3dat1009–11(reviewingcaselawandnotingthat“itisunclearwhetherstatisticalevidenceaswellasanecdotalevidenceisrequiredtoestablishthediscriminationnecessaryto satisfy intermediate scrutiny, and if so, how much statistical evidence isnecessary”). Nevertheless, Denver’s data indicates significant WBEunderutilization such that the Ordinance’s gender classification arises from“reasonedanalysisratherthanthroughthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”MississippiUniv.ofWomen,458U.S.at726,102

191ConcreteWorks,321F.3d950,960(10thCir.2003);ConcreteWorks,36F.3d1513,1519(10thCir.1994);see,e.g.,AGC,SDCv.Caltrans,713F.3dat1195;H.B.RoweCo.,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);WesternStatesPaving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);ContractorsAss’nofE.Pa.v.CityofPhiladelphia,6F.3dat1009‐1011(3dCir.1993);AssociatedUtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp.2d613,619‐620(2000);seealsoU.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”).

192Id.TheSeventhCircuitCourtofAppeals,however,inBuildersAss’nofGreaterChicagov.CountyofCook,Chicago,didnotholdthereisadifferentlevelofscrutinyforgenderdiscriminationorgenderbasedprograms.256F.3d642,644‐45(7thCir.2001).TheCourtinBuildersAss’nrejectedthedistinctionappliedbytheEleventhCircuitinEngineeringContractors.

193See,e.g.,AGC,SDCv.Caltrans,713F.3dat1195;H.B.Rowe,Inc.v.NCDOT,615F.3d233,242(4thCir.2010);WesternStatesPaving,407F.3dat990n.6;CoralConstr.Co.,941F.2dat931‐932(9thCir.1991);Equal.Found.v.CityofCincinnati,128F.3d289(6thCir.1997);Eng’gContractorsAss’n,122F.3dat905,908,910;EnsleyBranchN.A.A.C.P.v.Seibels,31F.3d1548(11thCir.1994);Assoc.UtilityContractorsofMaryland,Inc.v.TheMayorandCityCouncilofBaltimore,etal.,83F.Supp2d613,619‐620(2000);see,also,U.S.v.Virginia,518U.S.515,532andn.6(1996)(“exceedinglypersuasivejustification.”)

194CoralConstr.Co.,941F.2dat931‐932;seeEng’gContractorsAss’n,122F.3dat910.


S.Ct. at3337(strikingdown,under the intermediate scrutiny standard, a statestatute that excluded males from enrolling in a state‐supported professionalnursingschool).”

TheFourthCircuitciteswithapprovaltheguidancefromtheEleventhCircuitthathasheld“[w]henagender‐consciousaffirmativeactionprogramrestsonsufficientevidentiaryfoundation,thegovernmentisnotrequiredtoimplementtheprogramonlyasalastresort….Additionally,underintermediatescrutiny,agender‐consciousprogramneednotcloselytieitsnumericalgoalstotheproportionofqualifiedwomeninthemarket.”195

TheSupremeCourthasstatedthatanaffirmativeactionprogramsurvivesintermediatescrutinyiftheproponentcanshowitwas“aproductofanalysisratherthanastereotypedreactionbasedonhabit.”196TheThirdCircuitfoundthisstandardrequiredtheCityofPhiladelphiatopresentprobativeevidenceinsupportofitsstatedrationaleforthegenderpreference,discriminationagainstwomen‐ownedcontractors.197TheCourtinContractorsAss’nofE.Pa.(CAEPI)heldtheCityhadnotproducedenoughevidenceofdiscrimination,notingthatinitsbrief,theCityreliedonstatisticsintheCityCouncilFinanceCommitteeReportandoneaffidavitfromawomanengagedinthecateringbusiness,buttheCourtfoundthisevidenceonlyreflectedtheparticipationofwomeninCitycontractinggenerally,ratherthanintheconstructionindustry,whichwastheonlycognizableissueinthatcase.198

TheThirdCircuitinCAEPIheldtheevidenceofferedbytheCityofPhiladelphiaregardingwomen‐ownedconstructionbusinesseswasinsufficienttocreateanissueoffact.ThestudyinCAEPIcontainednodisparityindexforwomen‐ownedconstructionbusinessesinCitycontracting,suchasthatpresentedforminority‐ownedbusinesses.199Giventheabsenceofprobativestatisticalevidence,theCity,accordingtotheCourt,mustrelysolelyonanecdotalevidencetoestablishgenderdiscriminationnecessarytosupporttheOrdinance.200Buttherecordcontainedonlyonethree‐pageaffidavitalleginggenderdiscriminationintheconstructionindustry.201Theonlyothertestimonyonthissubject,theCourtfoundinCAEPI,consistedofasingle,conclusorysentenceofonewitnesswhoappearedataCityCouncilhearing.202ThisevidencetheCourtheldwasnotenoughtocreateatriableissueoffactregardinggenderdiscriminationundertheintermediatescrutinystandard.

3. Rational basis analysis

Whereachallengetotheconstitutionalityofastatuteoraregulationdoesnotinvolveafundamentalrightorasuspectclass,theappropriatelevelofscrutinytoapplyistherational

195615F.3d233,242;122F.3dat929(internalcitationsomitted).

196ContractorsAss’nofE.Pa.(CAEPI),6F.3dat1010(3d.Cir.1993).




200Id.

201Id.

202Id.


basisstandard.203WhenapplyingrationalbasisreviewundertheEqualProtectionClauseoftheFourteenthAmendmentoftheUnitedStatesConstitution,acourtisrequiredtoinquirewhetherthechallengedclassificationhasalegitimatepurposeandwhetheritwasreasonableforthelegislaturetobelievethatuseofthechallengedclassificationwouldpromotethatpurpose.204

ThecourtsinColoradoandtheTenthCircuitCourtofAppealsinapplyingtherationalbasistestgenerallyfindthatachallengedlawisupheld“aslongastherecouldbesomerationalbasisforenacting[it],”thatis,that“thelawinquestionisrationallyrelatedtoalegitimategovernmentpurpose.”205Solongasagovernmentlegislaturehadareasonablebasisforadoptingtheclassificationthelawwillpassconstitutionalmuster.206

Undertherationalbasistest,“astatutoryclassificationispresumedconstitutionalanddoesnotviolateequalprotectionunlessitisprovenbeyondareasonabledoubtthattheclassificationdoesnotbeararationalrelationshiptoalegitimatelegislativepurpose.”207“[T]heburdenisonclaimant,asthechallengingparty,toprovethestatuteisunconstitutionalbeyondareasonabledoubt.”208

Inapplyingrationalbasisreview,“wedonotdecidewhetherthelegislaturehaschosenthebestroutetoaccomplishitsobjectives.”209Instead,“[o]urinquiryislimitedtowhethertheschemeasconstitutedfurthersalegitimatestatepurposeinarationalmanner.”210

“[T]heburdenisontheoneattackingthelegislativearrangementtonegativeeveryconceivablebasiswhichmightsupportit,whetherornotthebasishasafoundationintherecord.”211Moreover,“courtsarecompelledunderrational‐basisreviewtoacceptalegislature’sgeneralizationsevenwhenthereisanimperfectfitbetweenmeansandends.Aclassification

203Price‐Cornelisonv.Brooks,524F.3d1103,1110(10thCir.1996);Whitev.Colorado,157F.3d1226,(10thCir.1998);ColoradoInsuranceGuarantyAssociationv.SunstateEquipment,LLC,405P.2d320,328‐329,331‐332(Colo.App.2016);Sanchezv.IndustrialClaimAppealsOfficeofColorado,411P.2d245,252(Colo.App.2017);see,e.g.,Hellerv.Doe,509U.S.312,320(1993);Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012);Cunninghamv.Beavers858F.2d269,273(5thCir.1988);seealsoLundeenv.CanadianPac.R.Co.,532F.3d682,689(8thCir.2008)(statingthatfederalcourtsreviewlegislationregulatingeconomicandbusinessaffairsundera‘highlydeferentialrationalbasis’standardofreview.”);H.B.Rowe,Inc.v.NCDOT,615F.3d233at254.

204See,Price‐Cornelisonv.Brooks,524F.3d1103,1110(10thCir.1996);Whitev.Colorado,157F.3d1226,(10thCir.1998);see,e.g.,Hellerv.Doe,509U.S.312,320(1993);Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012);Cunninghamv.Beavers,858F.2d269,273(5thCir.1988).

205See,Price‐Cornelisonv.Brooks,524F.3d1103,1110(10thCir.1996);Whitev.Colorado,157F.3d1226,(10thCir.1998);see,e.g.,Kadrmasv.DickinsonPublicSchools,487U.S.450,457‐58(1998);Zerbav.DillonCompanies,Inc.,292P.3d1051,1055(Colo.2012);seealsoCityofCleburnev.CleburneLivingCtr.,Inc.,473U.S.432,440,(1985)(citationsomitted);Hellerv.Doe,509U.S.312,318‐321(1993)(Underrationalbasisstandard,alegislativeclassificationisaccordedastrongpresumptionofvalidity).

206Id.,Zerbav.DillonCompanies,Inc.,292P.3d1051,1055(Colo.2012);Wilkinsv.Gaddy,734F.3d344,347(4thCir.2013),(citingFCCv.BeachCommc'ns,Inc.,508U.S.307,315(1993));

207Sanchezv.IndustrialClaimAppealsOffice,411P.3d245(2017),quoting,PaceMembershipWarehousev.Axelson,938P.2d504,506(Colo.1997).

208Sanchezv.IndustrialClaimAppealsOffice,411P.3d245(2017),quoting,Pepperv.Indus.ClaimAppealsOffice,131P.3d1137,1139(Colo.App.2005),aff’donothergroundssubnom.CityofFlorencev.Pepper,145P.3d654(Colo.2006).

209Sanchezv.IndustrialClaimAppealsOffice,411P.3d245(2017)quoting,Deanv.People,2016CO,¶13,366P.3d593.

210Id.

211UnitedStatesv.Timms,664F.3d436,448‐49(4thCir.2012),cert.denied,133S.Ct.189(2012)(citingHellerv.Doe,509U.S.312,320‐21(1993))(quotationmarksandcitationomitted);Grayv.CommonwealthofVirginia,274Va.at308‐9,645S.E.2dat460.


doesnotfailrational‐basisreviewbecauseitisnotmadewithmathematicalnicetyorbecauseinpracticeitresultsinsomeinequality”.212

Underarationalbasisreviewstandard,alegislativeclassificationwillbeupheld“ifthereisarationalrelationshipbetweenthedisparityoftreatmentandsomelegitimategovernmentalpurpose.”213Becausealllegislationclassifiesitsobjects,differentialtreatmentisjustifiedby“anyreasonablyconceivablestateoffacts.”214

Afederalcourtdecision,whichisinstructivetothestudy,involvedachallengetoandtheapplicationofasmallbusinessgoalinapre‐bidprocessforafederalprocurement.FirstlineTransportationSecurity,Inc.v.UnitedStates,isinstructiveandanalogoustosomeoftheissuesinasmallbusinessprogram.Thecaseisinformativeastotheuse,estimationanddeterminationofgoals(smallbusinessgoals,includingveteranpreferencegoals)inaprocurementundertheFederalAcquisitionRegulations(“FAR”)215.

Firstlineinvolvedasolicitationthatestablishedasmallbusinesssubcontractinggoalrequirement.InFirstline,theTransportationSecurityAdministration(“TSA”)issuedasolicitationforsecurityscreeningservicesattheKansasCityAirport.Thesolicitationstatedthatthe:“GovernmentanticipatesanoverallSmallBusinessgoalof40percent,”andthat“[w]ithinthatgoal,thegovernmentanticipatesfurthersmallbusinessgoalsof:Small,Disadvantagedbusiness[:]14.5%;WomanOwned[:]5percent:HUBZone[:]3percent;ServiceDisabled,VeteranOwned[:]3percent.”216

ThecourtappliedtherationalbasistestinconstruingthechallengetotheestablishmentbytheTSAofa40percentsmallbusinessparticipationgoalasunlawfulandirrational.217Thecourtstatedit“cannotsaythattheagency’sapproachisclearlyunlawful,orthattheapproachlacksarationalbasis.”218

Thecourtfoundthat“anagencymayrationallyestablishaspirationalsmallbusinesssubcontractinggoalsforprospectiveofferors….”Consequently,thecourtheldonerationalmethodbywhichtheGovernmentmayattempttomaximizesmallbusinessparticipation(includingveteranpreferencegoals)istoestablisharoughsubcontractinggoalforagivencontract,andthenallowpotentialcontractorstocompeteindesigninginnovatewaystostructureandmaximizesmallbusinesssubcontractingwithintheirproposals.219Thecourt,inanexerciseofjudicialrestraint,foundthe“40percentgoalisarationalexpressionoftheGovernment’spolicyofaffordingsmallbusinessconcerns…themaximumpracticable

212Hellerv.Doe,509U.S.312,321(1993).

213Hellerv.Doe,509U.S.312,320(1993);see,e.g.,Hettingav.UnitedStates,677F.3d471,478(D.C.Cir2012).

214Id.;see,Grayv.CommonwealthofVirginia,274Va.at308,645S.E.2dat459.

2152012WL5939228(Fed.Cl.2012).

216Id.

217Id.

218Id.

219Id.


opportunitytoparticipateassubcontractors….”220

4. Pending cases (at the time of this report)

Therearenosignificantpendingcasesonappealatthetimeofthisreportthatmaypotentiallydirectlyimpactandbeinstructivetothestudy.Themostrecentcase,citedbelow,wassettledandvoluntarilydismissedinMarch2018byorderofthedistrictcourtandstipulatedtobytheparties,afterremandfromtheNinthCircuitCourtofAppeals.

Mountain West Holding Co., Inc. v. Montana, 2017 WL 2179120 (9th Cir. May 16, 2017),

Memorandum Opinion (Not For Publication), U.S. Court of Appeals for the Ninth Circuit, May 16,

2017, Docket Nos. 14‐26097 and 15‐35003, dismissing in part, reversing in part and remanding

the U.S. District Court decision at 2014 WL 6686734 (D. Mont. 2014).PetitionforPanelRehearingandRehearingEnBancfiledwiththeU.S.CourtofAppealsfortheNinthCircuitbyMontanaDOT,May30,2017,deniedonJune27,2017.ThecaseonremandwasvoluntarilydismissedbystipulationofthepartiesafterthepartiesenteredintoaSettlementAgreement(February23,2018).ThecasewasordereddismissedbythedistrictcourtonMarch14,2018afterthepartiesperformedtheSettlementAgreement.(SeeSectionFbelow.)

UnitedStatesv.Taylor,232F.Supp.3d741(W.D.Penn.2017).ItisinstructivetothestudytonotetherecentdecisionbythefederalDistrictCourtfortheWesternDistrictofPennsylvaniainUnitedStatesv.Taylor,232F.Supp.3d741(W.D.Penn.2017).ThecourtupheldtheIndictmentbytheUnitedStatesagainstDefendantTaylorwhohadbeenindictedonmultiplecountsarisingoutofaschemetodefraudtheUnitedStatesDepartmentofTransportation’sDisadvantagedBusinessEnterpriseProgram(“FederalDBEProgram”).UnitedStatesv.Taylor,232F.Supp.3d741,743(W.D.Penn.2017).ThecourtindenyingthemotiontodismisstheIndictmentupheldthefederalDBEregulationsinissueagainstachallengetotheFederalDBEProgram.

ThecourtrejectedachallengetotheauthorityoftheU.S.DOTtopromulgatethefederalDBEregulationsclaimingtheU.S.DOTexceededitsauthority.232F.Supp.at757.ThecourtfoundthatthelegislativehistoryandexecutiverulemakingwithrespecttotherelevantstatutoryprovisionsandregulationsweresufficienttodemonstratethatthefederalDBEregulationsweremadeunderthebroadgrantofrightsauthorizedbyCongressionalstatutes.Id.at757,citing,49U.S.C.Section322,23U.S.C.Section304,and23U.S.C.Section315.

Inaddition,thecourtinTaylor,pointedoutthattheFederalDBEProgramhasbeenupheldinvariouscontexts,“evensurvivingstrictscrutiny,”withmultiplecourtsholdingthattheDBEProgramisnarrowlytailoredtofurthercompellinggovernmentalinterests.Id.at757,citing,MidwestFenceCorp.,840F.3dat942(citingWesternStatesPavingCo.v.WashingtonStateDep’tofTransportation,407F.3d983,993(9thCir.2005);SherbrookeTurf,Inc.v.MinnesotaDep’tofTransportation,345F.3d964,973(8thCir.2003);AdarandConstructors,Inc.v.Slater,228F.3d1147,1155(10thCir.2000)).

AfterthecourtdeniedDefendantTaylor’smotiontodismisstheIndictment,theDefendantsubsequentlypleadedguilty.RecentlyonMarch13,2018,thecourtissuedthefinalJudgment

220Id.


sentencingtheDefendant,andorderedrestitutionandafine.ThecasealsowasterminatedonMarch13,2018.

RotheDevelopment,Inc.v.U.S.D.O.D.andS.B.A.,2016WL4719049(D.C.Cir.2016).Also,itisinstructivetothestudytopointouttherecentdecisioninRotheDevelopment,Inc.v.U.S.DepartmentofDefenseandSmallBusinessAdministration,2016WL4719049(D.C.Cir.Sept.9,2016),affirmingonothergrounds,RotheDevelopment,Inc.v.UnitedStatesDepartmentofDefense,U.S.SmallBusinessAdministration,etal,107F.Supp.3d183,2015WL3536271(D.D.C.,2015),certiorarideniedin2017.

RothefiledthisactionagainsttheU.S.DepartmentofDefenseandtheU.S.SmallBusinessAdministrationchallengingtheconstitutionalityoftheSection8(a)Programonitsface.TheRothecaseisnearlyidenticaltothechallengebroughtinDynaLanticCorp.v.U.S.DepartmentofDefense,885F.Supp.2d237(D.D.C.2012).DynaLantic’scourtrejectedtheplaintiff’sfacialattackandheldtheSection8(a)Programfaciallyconstitutional.

PlaintiffRothereliesonsubstantiallythesamerecordevidenceandnearlyidenticallegalargumentsasinDynaLanticandurgedthecourttostrikedowntherace‐consciousprovisionsofSection8(a)ontheirface.ThedistrictcourtinRotheagreedwiththecourt’sfindings,holdingsandreasoninginDynaLantic,andthusconcludedthatSection8(a)isconstitutionalonitsface.

Thedistrictcourtconcludedthatplaintiff’sfacialconstitutionalchallengetotheSection8(a)Programfailed,thatthegovernmentdemonstratedacompellinginterestfortheracialclassification,theneedforremedialactionissupportedbystrongandunrebuttedevidence,andtheSection8(a)programisnarrowlytailored.

RotheappealedthedecisiontotheUnitedStatesCourtofAppealsfortheDistrictofColumbiaCircuit.Themajorityofthethreejudgepanelaffirmedthedistrictcourt’sdecision,butonothergrounds.221

TheCourtofAppealsinRothefoundthatthechallengewasonlytotheSection8(a)statute,nottheimplementingregulations,andthusheldtheSection8(a)statutewasrace‐neutral.222Therefore,thecourtheldtherationalbasistestappliedandnotstrictscrutiny.223Thecourtaffirmedthegrantofsummaryjudgmenttothegovernmentdefendantsapplyingtherationalbasisstandard,andupheldthevalidityofSection8(a)basedonthelimitedchallengebyRothetothestatuteandnottheregulations.

TheCourtofAppealsheldthatSection8(a)oftheSmallBusinessActdoesnotwarrantstrictscrutinybecauseitdoesnotonitsfaceclassifyindividualsbyrace.224Section8(a),theCourtsaid,unliketheimplementingregulations,usesfaciallyrace‐neutraltermsofeligibilitytoidentify

2212016WL4719049(September9,2016).

2222016WL4719049,at*1‐2.

223Id.

2242016WL4719049at**1‐2.


individualvictimsofdiscrimination,prejudice,orbias,withoutpresumingthatmembersofcertainracial,ethnic,orculturalgroupsqualifyassuch.225SeeSectionGbelow.

RothefiledaPetitionforRehearingandRehearingEnBanctothefullCourtofAppeals.ThecourtdeniedthePetition.RothethenfiledaPetitionforaWritofCertioraritotheU.S.SupremeCourt,whichwasdeniedonOctober16,2017.2017WL1375832.

Ongoing review.TheaboverepresentsasummaryofthelegalframeworkpertinenttothestudyandimplementationofDBE/MBE/WBE,orrace‐,ethnicity‐,orgender‐neutralprograms,theFederalDBEProgram,theFederalACDBEProgram,andtheimplementationoftheFederalDBEandACDBEProgramsbystateDOTsandlocalgovernmentrecipientsoffederalfunds.Becausethisisadynamicareaofthelaw,theframeworkissubjecttoongoingreviewasthelawcontinuestoevolve.Thefollowingprovidesmoredetailedsummariesofkeyrecentdecisions.

225Id.


SUMMARIES OF RECENT DECISIONS

D. Recent Decisions Involving State or Local Government MBE/WBE/DBE Programs in the Tenth Circuit Court of Appeals

1. Concrete Works of Colorado, Inc. v. City and County of Denver, 321 F.3d 950 (10th Cir. 2003), cert. denied, 540 U.S. 1027, 124 S. Ct. 556 (2003) (Scalia, Justice with whom the Chief Justice Rehnquist, joined, dissenting from the denial of certiorari)

ThiscaseisinstructivetothedisparitystudybecauseitisarecentdecisionthatupheldthevalidityofalocalgovernmentMBE/WBEprogram.ItissignificanttonotethattheTenthCircuitdidnotapplythenarrowlytailoredtestandthusdidnotruleonanapplicationofthenarrowlytailoredtest,insteadfindingthattheplaintiffhadwaivedthatchallengeinoneoftheearlierdecisionsinthecase.ThiscasealsoisoneoftheonlycasestohavefoundprivatesectormarketplacediscriminationasabasistoupholdanMBE/WBE‐typeprogram.

InConcreteWorkstheUnitedStatesCourtofAppealsfortheTenthCircuitheldthattheCityandCountyofDenverhadacompellinginterestinlimitingracediscriminationintheconstructionindustry,thattheCityhadanimportantgovernmentalinterestinremedyinggenderdiscriminationintheconstructionindustry,andfoundthattheCityandCountyofDenverhadestablishedacompellinggovernmentalinteresttohavearace‐andgender‐basedprogram.InConcreteWorks,theCourtofAppealsdidnotaddresstheissueofwhethertheMWBEOrdinancewasnarrowlytailoredbecauseitheldthedistrictcourtwasbarredunderthelawofthecasedoctrinefromconsideringthatissuesinceitwasnotraisedonappealbytheplaintiffconstructioncompaniesaftertheyhadlostthatissueonsummaryjudgmentinanearlierdecision.Therefore,theCourtofAppealsdidnotreachadecisionastonarrowlytailoringorconsiderthatissueinthecase.

Case history.Plaintiff,ConcreteWorksofColorado,Inc.(“CWC”)challengedtheconstitutionalityofan“affirmativeaction”ordinanceenactedbytheCityandCountyofDenver(hereinafterthe“City”or“Denver”).321F.3d950,954(10thCir.2003).TheordinanceestablishedparticipationgoalsforracialminoritiesandwomenoncertainCityconstructionandprofessionaldesignprojects.Id.

TheCityenactedanOrdinanceNo.513(“1990Ordinance”)containingannualgoalsforMBE/WBEutilizationonallcompetitivelybidprojects.Id.at956.Aprimecontractorcouldalsosatisfythe1990Ordinancerequirementsbyusing“goodfaithefforts.”Id.In1996,theCityreplacedthe1990OrdinancewithOrdinanceNo.304(the“1996Ordinance”).Thedistrictcourtstatedthatthe1996Ordinancedifferedfromthe1990OrdinancebyexpandingthedefinitionofcoveredcontractstoincludesomeprivatelyfinancedcontractsonCity‐ownedland;addedupdatedinformationandfindingstothestatementoffactualsupportforcontinuingtheprogram;refinedtherequirementsforMBE/WBEcertificationandgraduation;mandatedtheuseofMBEsandWBEsonchangeorders;andexpandedsanctionsforimproperbehaviorbyMBEs,WBEsormajority‐ownedcontractorsinfailingtoperformtheaffirmativeactioncommitmentsmadeonCityprojects.Id.at956‐57.


The1996Ordinancewasamendedin1998byOrdinanceNo.948(the“1998Ordinance”).The1998OrdinancereducedannualpercentagegoalsandprohibitedanMBEoraWBE,actingasabidder,fromcountingself‐performedworktowardprojectgoals.Id.at957.

CWCfiledsuitchallengingtheconstitutionalityofthe1990Ordinance.Id.Thedistrictcourtconductedabenchtrialontheconstitutionalityofthethreeordinances.Id.ThedistrictcourtruledinfavorofCWCandconcludedthattheordinancesviolatedtheFourteenthAmendment.Id.TheCitythenappealedtotheTenthCircuitCourtofAppeals.Id.TheCourtofAppealsreversedandremanded.Id.at954.

TheCourtofAppealsappliedstrictscrutinytorace‐basedmeasuresandintermediatescrutinytothegender‐basedmeasures.Id.at957‐58,959.TheCourtofAppealsalsocitedRichmondv.J.A.CrosonCo.,forthepropositionthatagovernmentalentity“canuseitsspendingpowerstoremedyprivatediscrimination,ifitidentifiesthatdiscriminationwiththeparticularityrequiredbytheFourteenthAmendment.”488U.S.469,492(1989)(pluralityopinion).Because“anefforttoalleviatetheeffectsofsocietaldiscriminationisnotacompellinginterest,”theCourtofAppealsheldthatDenvercoulddemonstratethatitsinterestiscompellingonlyifit(1)identifiedthepastorpresentdiscrimination“withsomespecificity,”and(2)demonstratedthata“strongbasisinevidence”supportsitsconclusionthatremedialactionisnecessary.Id.at958,quotingShawv.Hunt,517U.S.899,909‐10(1996).

ThecourtheldthatDenvercouldmeetitsburdenwithoutconclusivelyprovingtheexistenceofpastorpresentracialdiscrimination.Id.Rather,Denvercouldrelyon“empiricalevidencethatdemonstrates‘asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractors…andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.’”Id.,quotingCroson,488U.S.at509(pluralityopinion).Furthermore,theCourtofAppealsheldthatDenvercouldrelyonstatisticalevidencegatheredfromthesix‐countyDenverMetropolitanStatisticalArea(MSA)andcouldsupplementthestatisticalevidencewithanecdotalevidenceofpublicandprivatediscrimination.Id.

TheCourtofAppealsheldthatDenvercouldestablishitscompellinginterestbypresentingevidenceofitsowndirectparticipationinracialdiscriminationoritspassiveparticipationinprivatediscrimination.Id.TheCourtofAppealsheldthatonceDenvermetitsburden,CWChadtointroduce“credible,particularizedevidencetorebut[Denver’s]initialshowingoftheexistenceofacompellinginterest,whichcouldconsistofaneutralexplanationforthestatisticaldisparities.”Id.(internalcitationsandquotationsomitted).TheCourtofAppealsheldthatCWCcouldalsorebutDenver’sstatisticalevidence“by(1)showingthatthestatisticsareflawed;(2)demonstratingthatthedisparitiesshownbythestatisticsarenotsignificantoractionable;or(3)presentingcontrastingstatisticaldata.”Id.(internalcitationsandquotationsomitted).TheCourtofAppealsheldthattheburdenofproofatalltimesremainedwithCWCtodemonstratetheunconstitutionalityoftheordinances.Id.at960.

TheCourtofAppealsheldthattomeetitsburdenofdemonstratinganimportantgovernmentalinterestpertheintermediatescrutinyanalysis,Denvermustshowthatthegender‐basedmeasuresintheordinanceswerebasedon“reasonedanalysisratherthanthroughthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.,quotingMiss.Univ.forWomenv.Hogan,458U.S.718,726(1982).


The studies.Denverpresentedhistorical,statisticalandanecdotalevidenceinsupportofitsMBE/WBEprograms.DenvercommissionedanumberofstudiestoassessitsMBE/WBEprograms.Id.at962.TheconsultingfirmhiredbyDenverutilizeddisparityindicesinpart.Id.at962.The1990StudyalsoexaminedMBEandWBEutilizationintheoverallDenverMSAconstructionmarket,bothpublicandprivate.Id.at963.

TheconsultingfirmalsointerviewedrepresentativesofMBEs,WBEs,majority‐ownedconstructionfirms,andgovernmentofficials.Id.Basedonthisinformation,the1990Studyconcludedthat,despiteDenver’seffortstoincreaseMBEandWBEparticipationinDenverPublicWorksprojects,someDenveremployeesandprivatecontractorsengagedinconductdesignedtocircumventthegoalsprogram.Id.Afterreviewingthestatisticalandanecdotalevidencecontainedinthe1990Study,theCityCouncilenactedthe1990Ordinance.Id.

AftertheTenthCircuitdecidedConcreteWorksII,Denvercommissionedanotherstudy(the“1995Study”).Id.at963.Using1987CensusBureaudata,the1995StudyagainexaminedutilizationofMBEsandWBEsintheconstructionandprofessionaldesignindustrieswithintheDenverMSA.Id.The1995StudyconcludedthatMBEsandWBEsweremorelikelytobeone‐personorfamily‐runbusinesses.TheStudyconcludedthatHispanic‐ownedfirmswerelesslikelytohavepaidemployeesthanwhite‐ownedfirmsbutthatAsian/NativeAmerican‐ownedfirmsweremorelikelytohavepaidemployeesthanwhite‐orotherminority‐ownedfirms.Todeterminewhetherthesefactorsexplainedoverallmarketdisparities,the1995StudyusedtheCensusdatatocalculatedisparityindicesforallfirmsintheDenverMSAconstructionindustryandseparatelycalculateddisparityindicesforfirmswithpaidemployeesandfirmswithnopaidemployees.Id.at964.

TheCensusBureauinformationwasalsousedtoexamineaveragerevenuesperemployeeforDenverMSAconstructionfirmswithpaidemployees.Hispanic‐,Asian‐,NativeAmerican‐,andwomen‐ownedfirmswithpaidemployeesallreportedlowerrevenuesperemployeethanmajority‐ownedfirms.The1995Studyalsoused1990Censusdatatocalculateratesofself‐employmentwithintheDenverMSAconstructionindustry.TheStudyconcludedthatthedisparitiesintheratesofself‐employmentforblacks,Hispanics,andwomenpersistedevenaftercontrollingforeducationandlengthofworkexperience.The1995StudycontrolledforthesevariablesandreportedthatblacksandHispanicsworkingintheDenverMSAconstructionindustrywerelessthanhalfaslikelytoowntheirownbusinessesaswerewhitesofcomparableeducationandexperience.Id.

Inlate1994andearly1995,atelephonesurveyofconstructionfirmsdoingbusinessintheDenverMSAwasconducted.Id.at965.Basedoninformationobtainedfromthesurvey,theconsultantcalculatedpercentageutilizationandpercentageavailabilityofMBEsandWBEs.Percentageutilizationwascalculatedfromrevenueinformationprovidedbytherespondingfirms.PercentageavailabilitywascalculatedbasedonthenumberofMBEsandWBEsthatrespondedtothesurveyquestionregardingrevenues.Usingtheseutilizationandavailabilitypercentages,the1995Studyshoweddisparityindicesof64forMBEsand70forWBEsintheconstructionindustry.Intheprofessionaldesignindustry,disparityindiceswere67forMBEsand69forWBEs.The1995Studyconcludedthatthedisparityindicesobtainedfromthetelephonesurveydataweremoreaccuratethanthoseobtainedfromthe1987Censusdatabecausethedataobtainedfromthetelephonesurveyweremorerecent,hadanarrowerfocus,


andincludeddataonCcorporations.Additionally,itwaspossibletocalculatedisparityindicesforprofessionaldesignfirmsfromthesurveydata.Id.

In1997,theCityconductedanotherstudytoestimatetheavailabilityofMBEsandWBEsandtoexamine,interalia,whetherraceandgenderdiscriminationlimitedtheparticipationofMBEsandWBEsinconstructionprojectsofthetypetypicallyundertakenbytheCity(the“1997Study”).Id.at966.The1997StudyusedgeographicandspecializationinformationtocalculateMBE/WBEavailability.Availabilitywasdefinedas“theratioofMBE/WBEfirmstothetotalnumberoffirmsinthefour‐digitSICcodesandgeographicmarketarearelevanttotheCity’scontracts.”Id.

The1997StudycomparedMBE/WBEavailabilityandutilizationintheColoradoconstructionindustry.Id.ThestatewidemarketwasusedbecausenecessaryinformationwasunavailablefortheDenverMSA.Id.at967.Additionally,datacollectedin1987bytheCensusBureauwasusedbecausemorecurrentdatawasunavailable.TheStudycalculateddisparityindicesforthestatewideconstructionmarketinColoradoasfollows:41forAfricanAmericanfirms,40forHispanicfirms,14forAsianandotherminorities,and74forwomen‐ownedfirms.Id.

The1997StudyalsocontainedananalysisofwhetherAfricanAmericans,Hispanics,orAsianAmericansworkingintheconstructionindustryarelesslikelytobeself‐employedthansimilarlysituatedwhites.Id.UsingdatafromthePublicUseMicrodataSamples(“PUMS”)ofthe1990CensusofPopulationandHousing,theStudyusedasampleofindividualsworkingintheconstructionindustry.TheStudyconcludedthatinbothColoradoandtheDenverMSA,AfricanAmericans,Hispanics,andNativeAmericansworkingintheconstructionindustryhadlowerself‐employmentratesthanwhites.AsianAmericanshadhigherself‐employmentratesthanwhites.

UsingtheavailabilityfigurescalculatedearlierintheStudy,theStudythencomparedtheactualavailabilityofMBE/WBEsintheDenverMSAwiththepotentialavailabilityofMBE/WBEsiftheyformedbusinessesatthesamerateaswhiteswiththesamecharacteristics.Id.Finally,theStudyexaminedwhetherself‐employedminoritiesandwomenintheconstructionindustryhavelowerearningsthanwhitemaleswithsimilarcharacteristics.Id.at968.Usinglinearregressionanalysis,theStudycomparedbusinessownerswithsimilaryearsofeducation,ofsimilarage,doingbusinessinthesamegeographicarea,andhavingothersimilardemographiccharacteristics.Evenaftercontrollingforseveralfactors,theresultsshowedthatself‐employedAfricanAmericans,Hispanics,NativeAmericans,andwomenhadlowerearningsthanwhitemales.Id.

The1997StudyalsoconductedamailsurveyofbothMBE/WBEsandnon‐MBE/WBEstoobtaininformationontheirexperiencesintheconstructionindustry.OftheMBE/WBEswhoresponded,35percentindicatedthattheyhadexperiencedatleastoneincidentofdisparatetreatmentwithinthelastfiveyearswhileengagedinbusinessactivities.Thesurveyalsoposedthefollowingquestion:“Howoftendoprimecontractorswhouseyourfirmasasubcontractoronpublicsectorprojectswith[MBE/WBE]goalsorrequirements…alsouseyourfirmonpublicsectororprivatesectorprojectswithout[MBE/WBE]goalsorrequirements?”Fifty‐eightpercentofminoritiesand41percentofwhitewomenwhorespondedtothisquestionindicatedtheywere“seldomornever”usedonnon‐goalsprojects.Id.


MBE/WBEswerealsoaskedwhetherthefollowingaspectsofprocurementmadeitmoredifficultorimpossibletoobtainconstructioncontracts:(1)bondingrequirements,(2)insurancerequirements,(3)largeprojectsize,(4)costofcompletingproposals,(5)obtainingworkingcapital,(6)lengthofnotificationforbiddeadlines,(7)prequalificationrequirements,and(8)previousdealingswithanagency.Thisquestionwasalsoaskedofnon‐MBE/WBEsinaseparatesurvey.Withoneexception,MBE/WBEsconsideredeachaspectofprocurementmoreproblematicthannon‐MBE/WBEs.Todeterminewhetherafirm’ssizeorexperienceexplainedthedifferentresponses,aregressionanalysiswasconductedthatcontrolledforageofthefirm,numberofemployees,andlevelofrevenues.Theresultsagainshowedthatwiththesame,singleexception,MBE/WBEshadmoredifficultiesthannon‐MBE/WBEswiththesamecharacteristics.Id.at968‐69.

Afterthe1997Studywascompleted,theCityenactedthe1998Ordinance.The1998Ordinancereducedtheannualgoalsto10percentforbothMBEsandWBEsandeliminatedaprovisionwhichpreviouslyallowedMBE/WBEstocounttheirownworktowardprojectgoals.Id.at969.

Theanecdotalevidenceincludedthetestimonyoftheseniorvice‐presidentofalarge,majority‐ownedconstructionfirmwhostatedthatwhenheworkedinDenver,hereceivedcrediblecomplaintsfromminorityandwomen‐ownedconstructionfirmsthattheyweresubjecttodifferentworkrulesthanmajority‐ownedfirms.Id.HealsotestifiedthathefrequentlyobservedgraffiticontainingracialorgenderepithetswrittenonjobsitesintheDenvermetropolitanarea.Further,hestatedthathebelieved,basedonhispersonalexperiences,thatmanymajority‐ownedfirmsrefusedtohireminority‐orwomen‐ownedsubcontractorsbecausetheybelievedthosefirmswerenotcompetent.Id.

SeveralMBE/WBEwitnessestestifiedthattheyexperienceddifficultyprequalifyingforprivatesectorprojectsandprojectswiththeCityandothergovernmentalentitiesinColorado.Oneindividualtestifiedthathercompanywasrequiredtoprequalifyforaprivatesectorprojectwhilenosimilarrequirementwasimposedonmajority‐ownedfirms.Severalotherstestifiedthattheyattemptedtoprequalifyforprojectsbuttheirapplicationsweredeniedeventhoughtheymettheprequalificationrequirements.Id.

OtherMBE/WBEstestifiedthattheirbidswererejectedevenwhentheywerethelowestbidder;thattheybelievedtheywerepaidmoreslowlythanmajority‐ownedfirmsonbothCityprojectsandprivatesectorprojects;thattheywerechargedmoreforsuppliesandmaterials;thattheywererequiredtodoadditionalworknotpartofthesubcontractingarrangement;andthattheyfounditdifficulttojoinunionsandtradeassociations.Id.TherewastestimonydetailingthedifficultiesMBE/WBEsexperiencedinobtaininglinesofcredit.OneWBEtestifiedthatshewasgivenafalseexplanationofwhyherloanwasdeclined;anothertestifiedthatthelendinginstitutionrequiredtheco‐signatureofherhusbandeventhoughherhusband,whoalsoownedaconstructionfirm,wasnotrequiredtoobtainherco‐signature;athirdtestifiedthatthebankrequiredherfathertobeinvolvedinthelendingnegotiations.Id.

Thecourtalsopointedoutanecdotaltestimonyinvolvingrecitationsofracially‐andgender‐motivatedharassmentexperiencedbyMBE/WBEsatworksites.Therewastestimonythatminorityandfemaleemployeesworkingonconstructionprojectswerephysicallyassaultedand


fondled,spatuponwithchewingtobacco,andpeltedwithtwo‐inchboltsthrownbymalesfromaheightof80feet.Id.at969‐70.

The legal framework applied by the court.TheCourtheldthatthedistrictcourtincorrectlybelievedDenverwasrequiredtoprovetheexistenceofdiscrimination.InsteadofconsideringwhetherDenverhaddemonstratedstrongevidencefromwhichaninferenceofpastorpresentdiscriminationcouldbedrawn,thedistrictcourtanalyzedwhetherDenver’sevidenceshowedthatthereispervasivediscrimination.Id.at970.Thecourt,quotingConcreteWorksII,statedthat“theFourteenthAmendmentdoesnotrequireacourttomakeanultimatefindingofdiscriminationbeforeamunicipalitymaytakeaffirmativestepstoeradicatediscrimination.”Id.at970,quotingConcreteWorksII,36F.3d1513,1522(10thCir.1994).Denver’sinitialburdenwastodemonstratethatstrongevidenceofdiscriminationsupporteditsconclusionthatremedialmeasureswerenecessary.Strongevidenceisthat“approachingaprimafaciecaseofaconstitutionalorstatutoryviolation,”notirrefutableordefinitiveproofofdiscrimination.Id.at97,quotingCroson,488U.S.at500.TheburdenofproofatalltimesremainedwiththecontractorplaintifftoprovebyapreponderanceoftheevidencethatDenver’s“evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.”Id.,quotingAdarandVII,228F.3dat1176.

Denver,theCourtheld,didintroduceevidenceofdiscriminationagainsteachgroupincludedintheordinances.Id.at971.Thus,Denver’sevidencedidnotsufferfromtheproblemdiscussedbythecourtinCroson.TheCourtheldthedistrictcourterroneouslyconcludedthatDenvermustdemonstratethattheprivatefirmsdirectlyengagedinanydiscriminationinwhichDenverpassivelyparticipatesdosointentionally,withthepurposeofdisadvantagingminoritiesandwomen.TheCrosonmajorityconcludedthata“citywouldhaveacompellinginterestinpreventingitstaxdollarsfromassisting[localtrade]organizationsinmaintainingaraciallysegregatedconstructionmarket.”Id.at971,quotingCroson,488U.S.503.Thus,theCourtheldDenver’sburdenwastointroduceevidencewhichraisedtheinferenceofdiscriminatoryexclusioninthelocalconstructionindustryandlinkeditsspendingtothatdiscrimination.Id.

TheCourtnotedtheSupremeCourthasstatedthattheinferenceofdiscriminatoryexclusioncanarisefromstatisticaldisparities.Id.,citingCroson,488U.S.at503.Accordingly,itconcludedthatDenvercouldmeetitsburdenthroughtheintroductionofstatisticalandanecdotalevidence.TotheextentthedistrictcourtrequiredDenvertointroduceadditionalevidencetoshowdiscriminatorymotiveorintentonthepartofprivateconstructionfirms,thedistrictcourterred.Denver,accordingtotheCourt,wasundernoburdentoidentifyanyspecificpracticeorpolicythatresultedindiscrimination.NeitherwasDenverrequiredtodemonstratethatthepurposeofanysuchpracticeorpolicywastodisadvantagewomenorminorities.Id.at972.

ThecourtfoundDenver’sstatisticalandanecdotalevidencerelevantbecauseitidentifiesdiscriminationinthelocalconstructionindustry,notsimplydiscriminationinsociety.ThecourtheldthegenesisoftheidentifieddiscriminationisirrelevantandthedistrictcourterredwhenitdiscountedDenver’sevidenceonthatbasis.Id.

ThecourtheldthedistrictcourterroneouslyrejectedtheevidenceDenverpresentedonmarketplacediscrimination.Id.at973.Thecourtrejectedthedistrictcourt’serroneouslegalconclusionthatamunicipalitymayonlyremedyitsowndiscrimination.Thecourtstatedthis


conclusioniscontrarytotheholdingsinConcreteWorksIIandthepluralityopinioninCroson.Id.Thecourthelditpreviouslyrecognizedinthiscasethat“amunicipalityhasacompellinginterestintakingaffirmativestepstoremedybothpublicandprivatediscriminationspecificallyidentifiedinitsarea.”Id.,quotingConcreteWorksII,36F.3dat1529(emphasisadded).InConcreteWorksII,thecourtstatedthat“wedonotreadCrosonasrequiringthemunicipalitytoidentifyanexactlinkagebetweenitsawardofpubliccontractsandprivatediscrimination.”Id.,quotingConcreteWorksII,36F.3dat1529.

ThecourtstatedthatDenvercouldmeetitsburdenofdemonstratingitscompellinginterestwithevidenceofprivatediscriminationinthelocalconstructionindustrycoupledwithevidencethatithasbecomeapassiveparticipantinthatdiscrimination.Id.at973.Thus,Denverwasnotrequiredtodemonstratethatitis“guiltyofprohibiteddiscrimination”tomeetitsinitialburden.Id.

Additionally,thecourthadpreviouslyconcludedthatDenver’sstatisticalstudies,whichcomparedutilizationofMBE/WBEstoavailability,supportedtheinferencethat“localprimecontractors”areengagedinracialandgenderdiscrimination.Id.at974,quotingConcreteWorksII,36F.3dat1529.Thus,thecourtheldDenver’sdisparitystudiesshouldnothavebeendiscountedbecausetheyfailedtospecificallyidentifythoseindividualsorfirmsresponsibleforthediscrimination.Id.

The Court’s rejection of CWC’s arguments and the district court findings.

Use of marketplace data.Thecourtheldthedistrictcourt,interalia,erroneouslyconcludedthatthedisparitystudiesuponwhichDenverreliedweresignificantlyflawedbecausetheymeasureddiscriminationintheoverallDenverMSAconstructionindustry,notdiscriminationbytheCityitself.Id.at974.Thecourtfoundthatthedistrictcourt’sconclusionwasdirectlycontrarytotheholdinginAdarandVIIthatevidenceofbothpublicandprivatediscriminationintheconstructionindustryisrelevant.Id.,citingAdarandVII,228F.3dat1166‐67).

ThecourtheldtheconclusionreachedbythemajorityinCrosonthatmarketplacedataarerelevantinequalprotectionchallengestoaffirmativeactionprogramswasconsistentwiththeapproachlatertakenbythecourtinShawv.Hunt.Id.at975.InShaw,amajorityofthecourtreliedonthemajorityopinioninCrosonforthebroadpropositionthatagovernmentalentity’s“interestinremedyingtheeffectsofpastorpresentracialdiscriminationmayinthepropercasejustifyagovernment’suseofracialdistinctions.”Id.,quotingShaw,517U.S.at909.TheShawcourtdidnotadoptanyrequirementthatonlydiscriminationbythegovernmentalentity,eitherdirectlyorbyutilizingfirmsengagedindiscriminationonprojectsfundedbytheentity,wasremediable.Thecourt,however,didsetouttwoconditionsthatmustbemetforthegovernmentalentitytoshowacompellinginterest.“First,thediscriminationmustbeidentifieddiscrimination.”Id.at976,quotingShaw,517U.S.at910.TheCitycansatisfythisconditionbyidentifyingthediscrimination,“‘publicorprivate,withsomespecificity.’“Id.at976,citingShaw,517U.S.at910,quotingCroson,488U.S.at504(emphasisadded).Thegovernmentalentitymustalsohavea“strongbasisinevidencetoconcludethatremedialactionwasnecessary.”Id.Thus,thecourtconcludedShawspecificallystatedthatevidenceofeitherpublicorprivatediscriminationcouldbeusedtosatisfythemunicipality’sburdenofproducingstrongevidence.Id.at976.


InAdarandVII,thecourtnoteditconcludedthatevidenceofmarketplacediscriminationcanbeusedtosupportacompellinginterestinremedyingpastorpresentdiscriminationthroughtheuseofaffirmativeactionlegislation.Id.,citingAdarandVII,228F.3dat1166‐67(“[W]emayconsiderpublicandprivatediscriminationnotonlyinthespecificareaofgovernmentprocurementcontractsbutalsointheconstructionindustrygenerally;thusanyfindingsCongresshasmadeastotheentireconstructionindustryarerelevant.”(emphasisadded)).Further,thecourtpointedoutinthiscaseitearlierrejectedtheargumentCWCreassertedherethatmarketplacedataareirrelevantandremandedthecasetothedistrictcourttodeterminewhetherDenvercouldlinkitspublicspendingto“theDenverMSAevidenceofindustry‐widediscrimination.”Id.,quotingConcreteWorksII,36F.3dat1529.Thecourtstatedthatevidenceexplaining“theDenvergovernment’sroleincontributingtotheunderutilizationofMBEsandWBEsintheprivateconstructionmarketintheDenverMSA”wasrelevanttoDenver’sburdenofproducingstrongevidence.Id.,quotingConcreteWorksII,36F.3dat1530(emphasisadded).

Consistentwiththecourt’smandateinConcreteWorksII,theCityattemptedtoshowattrialthatit“indirectlycontributedtoprivatediscriminationbyawardingpubliccontractstofirmsthatinturndiscriminatedagainstMBEand/orWBEsubcontractorsinotherprivateportionsoftheirbusiness.”Id.TheCitycandemonstratethatitisa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”bycompilingevidenceofmarketplacediscriminationandthenlinkingitsspendingpracticestotheprivatediscrimination.Id.,quotingCroson,488U.S.at492.

ThecourtrejectedCWC’sargumentthatthelendingdiscriminationstudiesandbusinessformationstudiespresentedbyDenverwereirrelevant.InAdarandVII,thecourtconcludedthatevidenceofdiscriminatorybarrierstotheformationofbusinessesbyminoritiesandwomenandfaircompetitionbetweenMBE/WBEsandmajority‐ownedconstructionfirmsshowsa“stronglink”betweenagovernment’s“disbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.”Id.at977,quotingAdarandVII,228F.3dat1167‐68.ThecourtfoundthatevidencethatprivatediscriminationresultedinbarrierstobusinessformationisrelevantbecauseitdemonstratesthatMBE/WBEsareprecludedattheoutsetfromcompetingforpublicconstructioncontracts.ThecourtalsofoundthatevidenceofbarrierstofaircompetitionisrelevantbecauseitagaindemonstratesthatexistingMBE/WBEsareprecludedfromcompetingforpubliccontracts.Thus,likethestudiesmeasuringdisparitiesintheutilizationofMBE/WBEsintheDenverMSAconstructionindustry,studiesshowingthatdiscriminatorybarrierstobusinessformationexistintheDenverconstructionindustryarerelevanttotheCity’sshowingthatitindirectlyparticipatesinindustrydiscrimination.Id.at977.

TheCitypresentedevidenceoflendingdiscriminationtosupportitspositionthatMBE/WBEsintheDenverMSAconstructionindustryfacediscriminatorybarrierstobusinessformation.Denverintroducedadisparitystudypreparedin1996andsponsoredbytheDenverCommunityReinvestmentAlliance,ColoradoCapitalInitiatives,andtheCity.TheStudyultimatelyconcludedthat“despitethefactthatloanapplicantsofthreedifferentracial/ethnicbackgroundsinthissamplewerenotappreciablydifferentasbusinesspeople,theywereultimatelytreateddifferentlybythelendersonthecrucialissueofloanapprovalordenial.”Id.at977‐78.InAdarandVII,thecourtconcludedthatthisstudy,amongotherevidence,“stronglysupport[ed]aninitialshowingofdiscriminationinlending.”Id.at978,quoting,AdarandVII,228F.3dat1170,n.13(“Lendingdiscriminationaloneofcoursedoesnotjustifyactionintheconstructionmarket.


However,thepersistenceofsuchdiscrimination…supportstheassertionthattheformation,aswellasutilization,ofminority‐ownedconstructionenterpriseshasbeenimpeded.”).TheCityalsointroducedanecdotalevidenceoflendingdiscriminationintheDenverconstructionindustry.

CWCdidnotpresentanyevidencethatunderminedthereliabilityofthelendingdiscriminationevidencebutsimplyrepeatedtheargument,foreclosedbycircuitprecedent,thatitisirrelevant.Thecourtrejectedthedistrictcourtcriticismoftheevidencebecauseitfailedtodeterminewhetherthediscriminationresultedfromdiscriminatoryattitudesorfromtheneutralapplicationofbankingregulations.Thecourtconcludedthatdiscriminatorymotivecanbeinferredfromtheresultsshownindisparitystudies.Thecourtheldthedistrictcourt’scriticismdidnotunderminethestudy’sreliabilityasanindicatorthattheCityispassivelyparticipatinginmarketplacediscrimination.ThecourtnotedthatinAdarandVIIittook“judicialnoticeoftheobviouscausalconnectionbetweenaccesstocapitalandabilitytoimplementpublicworksconstructionprojects.”Id.at978,quotingAdarandVII,228F.3dat1170.

DenveralsointroducedevidenceofdiscriminatorybarrierstocompetitionfacedbyMBE/WBEsintheformofbusinessformationstudies.The1990Studyandthe1995StudybothshowedthatallminoritygroupsintheDenverMSAformedtheirownconstructionfirmsatrateslowerthanthetotalpopulationbutthatwomenformedconstructionfirmsathigherrates.The1997Studyexaminedself‐employmentratesandcontrolledforgender,maritalstatus,education,availabilityofcapital,andpersonal/familyvariables.Asdiscussed,supra,theStudyconcludedthatAfricanAmericans,Hispanics,andNativeAmericansworkingintheconstructionindustryhavelowerratesofself‐employmentthansimilarlysituatedwhites.AsianAmericanshadhigherrates.The1997Studyalsoconcludedthatminorityandfemalebusinessownersintheconstructionindustry,withtheexceptionofAsianAmericanowners,havelowerearningsthanwhitemaleowners.Thisconclusionwasreachedaftercontrollingforeducation,age,maritalstatus,anddisabilities.Id.at978.

Thecourtheldthatthedistrictcourt’sconclusionthatthebusinessformationstudiescouldnotbeusedtojustifytheordinancesconflictswithitsholdinginAdarandVII.“[T]heexistenceofevidenceindicatingthatthenumberof[MBEs]wouldbesignificantly(butunquantifiably)higherbutforsuchbarriersisneverthelessrelevanttotheassessmentofwhetheradisparityissufficientlysignificanttogiverisetoaninferenceofdiscriminatoryexclusion.”Id.at979,quotingAdarandVII,228F.3dat1174.

Insum,thecourtheldthedistrictcourterredwhenitrefusedtoconsiderorgivesufficientweighttothelendingdiscriminationstudy,thebusinessformationstudies,andthestudiesmeasuringmarketplacediscrimination.ThatevidencewaslegallyrelevanttotheCity’sburdenofdemonstratingastrongbasisinevidencetosupportitsconclusionthatremediallegislationwasnecessary.Id.at979‐80.

Variables. CWCchallengedDenver’sdisparitystudiesasunreliablebecausethedisparitiesshowninthestudiesmaybeattributabletofirmsizeandexperienceratherthandiscrimination.Denvercountered,however,thatafirm’ssizehaslittleeffectonitsqualificationsoritsabilitytoprovideconstructionservicesandthatMBE/WBEs,likeallconstructionfirms,canperformmostserviceseitherbyhiringadditionalemployeesorbyemployingsubcontractors.CWCresponded


thatelasticityitselfisrelativetosizeandexperience;MBE/WBEsarelesscapableofexpandingbecausetheyaresmallerandlessexperienced.Id.at980.

ThecourtconcludedthatevenifitassumedthatMBE/WBEsarelessabletoexpandbecauseoftheirsmallersizeandmorelimitedexperience,CWCdidnotrespondtoDenver’sargumentandtheevidenceitpresentedshowingthatexperienceandsizearenotrace‐andgender‐neutralvariablesandthatMBE/WBEconstructionfirmsaregenerallysmallerandlessexperiencedbecauseofindustrydiscrimination.Id.at981.Thelendingdiscriminationandbusinessformationstudies,accordingtothecourt,bothstronglysupportedDenver’sargumentthatMBE/WBEsaresmallerandlessexperiencedbecauseofmarketplaceandindustrydiscrimination.Inaddition,Denver’sexperttestifiedthatdiscriminationbybanksorbondingcompanieswouldreduceafirm’srevenueandthenumberofemployeesitcouldhire.Id.

DenveralsoargueditsStudiescontrolledforsizeandthe1995Studycontrolledforexperience.Itassertedthatthe1990StudymeasuredrevenuesperemployeeforconstructionforMBE/WBEsandconcludedthattheresultingdisparities,“suggest[]thatevenamongfirmsofthesameemploymentsize,industryutilizationofMBEsandWBEswaslowerthanthatofnon‐minoritymale‐ownedfirms.”Id.at982.Similarly,the1995Studycontrolledforsize,calculating,interalia,disparityindicesforfirmswithnopaidemployeeswhichpresumablyarethesamesize.

Basedontheuncontrovertedevidencepresentedattrial,thecourtconcludedthatthedistrictcourtdidnotgivesufficientweighttoDenver’sdisparitystudiesbecauseofitserroneousconclusionthatthestudiesfailedtoadequatelycontrolforsizeandexperience.ThecourtheldthatDenverispermittedtomakeassumptionsaboutcapacityandqualificationofMBE/WBEstoperformconstructionservicesifitcansupportthoseassumptions.ThecourtfoundtheassumptionsmadeinthiscasewereconsistentwiththeevidencepresentedattrialandsupportedtheCity’spositionthatafirm’ssizedoesnotaffectitsqualifications,willingness,orabilitytoperformconstructionservicesandthatthesmallersizeandlesserexperienceofMBE/WBEsare,themselves,theresultofindustrydiscrimination.Further,thecourtpointedoutCWCdidnotconductitsowndisparitystudyusingmarketplacedataandthusdidnotdemonstratethatthedisparitiesshowninDenver’sstudieswoulddecreaseordisappearifthestudiescontrolledforsizeandexperiencetoCWC’ssatisfaction.Consequently,thecourtheldCWC’srebuttalevidencewasinsufficienttomeetitsburdenofdiscreditingDenver’sdisparitystudiesontheissueofsizeandexperience.Id.at982.

Specialization. ThedistrictcourtalsofaultedDenver’sdisparitystudiesbecausetheydidnotcontrolforfirmspecialization.Thecourtnotedthedistrictcourt’scriticismwouldbeappropriateonlyiftherewasevidencethatMBE/WBEsaremorelikelytospecializeincertainconstructionfields.Id.at982.

ThecourtfoundtherewasnoidentifiedevidenceshowingthatcertainconstructionspecializationsrequireskillslesslikelytobepossessedbyMBE/WBEs.ThecourtfoundrelevantthetestimonyoftheCity’sexpert,thatthedatahereviewedshowedthatMBEswererepresented“widelyacrossthedifferent[construction]specializations.”Id.at982‐83.TherewasnocontrarytestimonythataggregationbiascausedthedisparitiesshowninDenver’sstudies.Id.at983.


ThecourtheldthatCWCfailedtodemonstratethatthedisparitiesshowninDenver’sstudiesareeliminatedwhenthereiscontrolforfirmspecialization.Incontrast,oneoftheDenverstudies,whichcontrolledforSIC‐codesubspecialtyandstillshoweddisparities,providedsupportforDenver’sargumentthatfirmspecializationdoesnotexplainthedisparities.Id.at983.

Thecourtpointedoutthatdisparitystudiesmaymakeassumptionsaboutavailabilityaslongasthesameassumptionscanbemadeforallfirms.Id.at983.

Utilization of MBE/WBEs on City projects. CWCarguedthatDenvercouldnotdemonstrateacompellinginterestbecauseitoverutilizedMBE/WBEsonCityconstructionprojects.Thisargument,accordingtothecourt,wasanextensionofCWC’sargumentthatDenvercouldjustifytheordinancesonlybypresentingevidenceofdiscriminationbytheCityitselforbycontractorswhileworkingonCityprojects.BecausethecourtconcludedthatDenvercouldsatisfyitsburdenbyshowingthatitisanindirectparticipantinindustrydiscrimination,CWC’sargumentrelatingtotheutilizationofMBE/WBEsonCityprojectsgoesonlytotheweightofDenver’sevidence.Id.at984.

Consistentwiththecourt’smandateinConcreteWorksII,attrialDenversoughttodemonstratethattheutilizationdatafromprojectssubjecttothegoalsprogramweretaintedbytheprogramand“reflect[ed]theintendedremedialeffectonMBEandWBEutilization.”Id.at984,quotingConcreteWorksII,36F.3dat1526.Denverarguedthatthenon‐goalsdatawerethebetterindicatorofpastdiscriminationinpubliccontractingthanthedataonallCityconstructionprojects.Id.at984‐85.ThecourtconcludedthatDenverpresentedampleevidencetosupporttheconclusionthattheevidenceshowingMBE/WBEutilizationonCityprojectsnotsubjecttotheordinancesorthegoalsprogramsisthebetterindicatorofdiscriminationinCitycontracting.Id.at985.

ThecourtrejectedCWC’sargumentthatthemarketplacedatawereirrelevantbutagreedthatthenon‐goalsdatawerealsorelevanttoDenver’sburden.ThecourtnotedthatDenverdidnotrelyheavilyonthenon‐goalsdataattrialbutfocusedprimarilyonthemarketplacestudiestosupportitsburden.Id.at985.

Insum,thecourtheldDenverdemonstratedthattheutilizationofMBE/WBEsonCityprojectshadbeenaffectedbytheaffirmativeactionprogramsthathadbeeninplaceinoneformoranothersince1977.Thus,thenon‐goalsdatawerethebetterindicatorofdiscriminationinpubliccontracting.Thecourtconcludedthat,onbalance,thenon‐goalsdataprovidedsomesupportforDenver’spositionthatracialandgenderdiscriminationexistedinpubliccontractingbeforetheenactmentoftheordinances.Id.at987‐88.

Anecdotal evidence. Theanecdotalevidence,accordingtothecourt,includedseveralincidentsinvolvingprofoundlydisturbingbehavioronthepartoflenders,majority‐ownedfirms,andindividualemployees.Id.at989.Thecourtfoundthattheanecdotaltestimonyrevealedbehaviorthatwasnotmerelysophomoricorinsensitive,butwhichresultedinrealeconomicorphysicalharm.WhileCWCalsoarguedthatallneworsmallcontractorshavedifficultyobtainingcreditandthattreatmentthewitnessescharacterizedasdiscriminatoryisexperiencedbyallcontractors,Denver’switnessesspecificallytestifiedthattheybelievedtheincidentstheyexperiencedweremotivatedbyraceorgenderdiscrimination.Thecourtfoundtheysupported


thosebeliefswithtestimonythatmajority‐ownedfirmswerenotsubjecttothesamerequirementsimposedonthem.Id.

ThecourtheldtherewasnomerittoCWC’sargumentthatthewitnesses’accountsmustbeverifiedtoprovidesupportforDenver’sburden.Thecourtstatedthatanecdotalevidenceisnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.Id.

AfterconsideringDenver’sanecdotalevidence,thedistrictcourtfoundthattheevidence“showsthatrace,ethnicityandgenderaffecttheconstructionindustryandthosewhoworkinit”andthattheegregiousmistreatmentofminorityandwomenemployees“haddirectfinancialconsequences”onconstructionfirms.Id.at989,quotingConcreteWorksIII,86F.Supp.2dat1074,1073.Basedonthedistrictcourt’sfindingsregardingDenver’sanecdotalevidenceanditsreviewoftherecord,thecourtconcludedthattheanecdotalevidenceprovidedpersuasive,unrebuttedsupportforDenver’sinitialburden.Id.at989‐90,citingInt’lBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977)(concludingthatanecdotalevidencepresentedinapatternorpracticediscriminationcasewaspersuasivebecauseit“broughtthecold[statistics]convincinglytolife”).

Summary. ThecourtheqldtherecordcontainedextensiveevidencesupportingDenver’spositionthatithadastrongbasisinevidenceforconcludingthatthe1990Ordinanceandthe1998OrdinancewerenecessarytoremediatediscriminationagainstbothMBEsandWBEs.Id.at990.TheinformationavailabletoDenveranduponwhichtheordinanceswerepredicated,accordingtothecourt,indicatedthatdiscriminationwaspersistentinthelocalconstructionindustryandthatDenverwas,atleast,anindirectparticipantinthatdiscrimination.

TorebutDenver’sevidence,thecourtstatedCWCwasrequiredto“establishthatDenver’sevidencedidnotconstitutestrongevidenceofsuchdiscrimination.”Id.at991,quotingConcreteWorksII,36F.3dat1523.CWCcouldnotmeetitsburdenofproofthroughconjectureandunsupportedcriticismsofDenver’sevidence.Rather,itmustpresent“credible,particularizedevidence.”Id.,quotingAdarandVII,228F.3dat1175.ThecourtheldthatCWCdidnotmeetitsburden.CWChypothesizedthatthedisparitiesshowninthestudiesonwhichDenverreliescouldbeexplainedbyanynumberoffactorsotherthanracialdiscrimination.However,thecourtfounditdidnotconductitsownmarketplacedisparitystudycontrollingforthedisputedvariablesandpresentednootherevidencefromwhichthecourtcouldconcludethatsuchvariablesexplainthedisparities.Id.at991‐92.

Narrow tailoring. HavingconcludedthatDenverdemonstratedacompellinginterestintherace‐basedmeasuresandanimportantgovernmentalinterestinthegender‐basedmeasures,thecourthelditmustexaminewhethertheordinanceswerenarrowlytailoredtoservethecompellinginterestandaresubstantiallyrelatedtotheachievementoftheimportantgovernmentalinterest.Id.at992.

ThecourtstatedithadpreviouslyconcludedinitsearlierdecisionsthatDenver’sprogramwasnarrowlytailored.CWCappealedthegrantofsummaryjudgmentandthatappealculminatedinthedecisioninConcreteWorksII.Thecourtreversedthegrantofsummaryjudgmentonthecompelling‐interestissueandconcludedthatCWChadwaivedanychallengetothenarrow


tailoringconclusionreachedbythedistrictcourt.BecausethecourtfoundConcreteWorksdidnotchallengethedistrictcourt’sconclusionwithrespecttothesecondprongofCroson’sstrictscrutinystandard—i.e.,thattheOrdinanceisnarrowlytailoredtoremedypastandpresentdiscrimination—thecourthelditneednotaddressthisissue.Id.at992,citingConcreteWorksII,36F.3dat1531,n.24.

Thecourtconcludedthatthedistrictcourtlackedauthoritytoaddressthenarrowtailoringissueonremandbecausenoneoftheexceptionstothelawofthecasedoctrineareapplicable.Thedistrictcourt’searlierdeterminationthatDenver’saffirmative‐actionmeasureswerenarrowlytailoredislawofthecaseandbindingontheparties.

2. Adarand Constructors, Inc. v. Slater, 228 F.3d 1147 (10th Cir. 2000) cert. granted then dismissed as improvidently granted sub nom. Adarand Constructors, Inc. v. Mineta, 532 U.S. 941, 534 U.S. 103 (2001)

ThisistheAdaranddecisionbytheUnitedStatesCourtofAppealsfortheTenthCircuit,whichwasonremandfromtheearlierSupremeCourtdecisionapplyingthestrictscrutinyanalysistoanyconstitutionalchallengetotheFederalDBEProgram.SeeAdarandConstructors,Inc.v.Pena,515U.S.200(1995).ThedecisionoftheTenthCircuitinthiscasewasconsideredbytheUnitedStatesSupremeCourt,afterthatcourtgrantedcertioraritoconsidercertainissuesraisedonappeal.TheSupremeCourtsubsequentlydismissedthewritofcertiorari“asimprovidentlygranted”withoutreachingthemeritsofthecase.ThecourtdidnotdecidetheconstitutionalityoftheFederalDBEProgramasitappliestostateDOTsorlocalgovernments.

TheSupremeCourtheldthattheTenthCircuithadnotconsideredtheissuebeforetheSupremeCourtoncertiorari,namelywhetherarace‐basedprogramapplicabletodirectfederalcontractingisconstitutional.ThisissueisdistinguishedfromtheissueoftheconstitutionalityoftheUSDOTDBEProgramasitpertainstoprocurementoffederalfundsforhighwayprojectsletbystates,andtheimplementationoftheFederalDBEProgrambystateDOTs.Therefore,theSupremeCourthelditwouldnotreachthemeritsofachallengetofederallawsrelatingtodirectfederalprocurement.

TurningtotheTenthCircuitdecisioninAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000),theTenthCircuitupheldingeneralthefacialconstitutionalityoftheFederalDBEProgram.Thecourtfoundthatthefederalgovernmenthadacompellinginterestinnotperpetuatingtheeffectsofracialdiscriminationinitsowndistributionoffederalfundsandinremediatingtheeffectsofpastdiscriminationingovernmentcontracting,andthattheevidencesupportedtheexistenceofpastandpresentdiscriminationsufficienttojustifytheFederalDBEProgram.ThecourtalsoheldthattheFederalDBEProgramis“narrowlytailored,”andthereforeupheldtheconstitutionalityoftheFederalDBEProgram.

FollowingtheSupremeCourt’svacationoftheTenthCircuit’sdismissalonmootnessgrounds,thecourtaddressedthemeritsofthisappeal,namely,thefederalgovernment’schallengetothedistrictcourt’sgrantofsummaryjudgmenttoplaintiff‐appelleeAdarandConstructors,Inc.Insodoing,thecourtresolvedtheconstitutionalityoftheuseinfederalsubcontractingprocurementoftheSubcontractorCompensationClause(“SCC”),whichemploysrace‐consciouspresumptionsdesignedtofavorminorityenterprisesandother“disadvantagedbusinessenterprises”(“DBEs”).


Thecourt’sevaluationoftheSCCprogramutilizesthe“strictscrutiny”standardofconstitutionalreviewenunciatedbytheSupremeCourtinanearlierdecisioninthiscase.Idat1155.

ThecourtaddressedtheconstitutionalityoftherelevantstatutoryprovisionsasappliedintheSCCprogram,aswellastheirfacialconstitutionality.Id.at1160.ItwasthejudgmentofthecourtthattheSCCprogramandtheDBEcertificationprogramsascurrentlystructured,thoughnotastheywerestructuredin1997whenthedistrictcourtlastrenderedjudgment,passedconstitutionalmuster:Thecourtheldtheywerenarrowlytailoredtoserveacompellinggovernmentalinterest.Id.

“CompellingInterest”inrace–consciousmeasuresdefined.Thecourtstatedthattheremaybeacompellinginterestthatsupportstheenactmentofrace‐consciousmeasures.JusticeO’Connorexplicitlystates:“Theunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”AdarandIII,515U.S.at237;seealsoShawv.Hunt,517U.S.899,909,(1996)(statingthat“remedyingtheeffectsofpastorpresentracialdiscriminationmayinthepropercasejustifyagovernment’suseofracialdistinctions”(citingCroson,488U.S.at498–506)).InterpretingCroson,thecourtrecognizedthat“theFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthepublicentityfromactingasa‘“passiveparticipant”inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry’byallowingtaxdollars‘tofinancetheevilofprivateprejudice.’“ConcreteWorksofColo.,Inc.v.City&CountyofDenver,36F.3d1513,1519(10thCir.1994)(quotingCroson,488U.S.at492,109S.Ct.706).Id.at1164.

ThegovernmentidentifiedthecompellinginterestatstakeintheuseofracialpresumptionsintheSCCprogramas“remedyingtheeffectsofracialdiscriminationandopeningupfederalcontractingopportunitiestomembersofpreviouslyexcludedminoritygroups.”Id.

Evidencerequiredtoshowcompellinginterest.Whilethegovernment’sarticulatedinterestwascompellingasatheoreticalmatter,thecourtdeterminedwhethertheactualevidenceprofferedbythegovernmentsupportedtheexistenceofpastandpresentdiscriminationinthepublicly‐fundedhighwayconstructionsubcontractingmarket.Id.at1166.

The“benchmarkforjudgingtheadequacyofthegovernment’sfactualpredicateforaffirmativeactionlegislation[i]swhetherthereexistsa‘strongbasisinevidencefor[thegovernment’s]conclusionthatremedialactionwasnecessary.’“ConcreteWorks,36F.3dat1521(quotingCroson,488U.S.at500,(quoting(plurality)))(emphasisinConcreteWorks).Bothstatisticalandanecdotalevidenceareappropriateinthestrictscrutinycalculus,althoughanecdotalevidencebyitselfisnot.Id.at1166,citingConcreteWorks,36F.3dat1520–21.

Afterthegovernment’sinitialshowing,theburdenshiftedtoAdarandtorebutthatshowing:“Notwithstandingtheburdenofinitialproductionthatrests”withthegovernment,“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.(quotingWygant,476U.S.at277–78,(plurality)).“[T]henonminority[challengers]...continuetobeartheultimateburdenofpersuadingthecourtthat[thegovernmententity’s]evidencedidnotsupportaninferenceof


priordiscriminationandthusaremedialpurpose.”Id.at1166,quoting,ConcreteWorks,at1522–23.

Inaddressingthequestionofwhatevidenceofdiscriminationsupportsacompellinginterestinprovidingaremedy,thecourtconsideredbothdirectandcircumstantialevidence,includingpost‐enactmentevidenceintroducedbydefendantsaswellastheevidenceinthelegislativehistoryitself.Id.at1166,citing,ConcreteWorks,36F.3dat1521,1529n.23(consideringpost‐enactmentevidence).Thecourtstateditmayconsiderpublicandprivatediscriminationnotonlyinthespecificareaofgovernmentprocurementcontractsbutalsointheconstructionindustrygenerally;thus,anyfindingsCongresshasmadeastotheentireconstructionindustryarerelevant.Idat1166‐67citing,ConcreteWorks,at1523,1529,andCroson,488U.S.at492(Op.ofO’Connor,J.).

Evidenceinthepresentcase.Therecanbenodoubt,thecourtfound,thatCongressrepeatedlyhasconsideredtheissueofdiscriminationingovernmentconstructionprocurementcontracts,findingthatracialdiscriminationanditscontinuingeffectshavedistortedthemarketforpubliccontracts—especiallyconstructioncontracts—necessitatingarace‐consciousremedy.Id.at1167,citing,Appendix—TheCompellingInterestforAffirmativeActioninFederalProcurement,61Fed.Reg.26,050,26,051–52&nn.12–21(1996)(“TheCompellingInterest“)(citingapproximatelythirtycongressionalhearingssince1980concerningminority‐ownedbusinesses).But,thecourtsaid,thequestionisnotmerelywhetherthegovernmenthasconsideredevidence,butratherthenatureandextentoftheevidenceithasconsidered.Id.

InConcreteWorks,thecourtnotedthat:

NeitherCrosonnoritsprogenyclearlystatewhetherprivatediscriminationthatis innoway fundedwithpublic taxdollarscan,by itself,provide therequisitestrongbasis inevidencenecessary to justifyamunicipality’saffirmativeactionprogram.Aplurality inCroson simplysuggested that remedialmeasures couldbe justified upon a municipality’s showing that “it had essentially become a‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry.”Croson,488U.S.at492,109S.Ct.706.Althoughwedo not read Croson as requiring the municipality to identify an exact linkagebetweenitsawardofpubliccontractsandprivatediscrimination,suchevidencewould at least enhance the municipality’s factual predicate for a race‐ andgender‐consciousprogram.

Id.at1167,quoting,ConcreteWorks,36F.3dat1529.

UnlikeConcreteWorks,theevidencepresentedbythegovernmentinthepresentcasedemonstratedtheexistenceoftwokindsofdiscriminatorybarrierstominoritysubcontractingenterprises,bothofwhichshowastronglinkbetweenracialdisparitiesinthefederalgovernment’sdisbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.Id.at1168.Thefirstdiscriminatorybarriersaretotheformationofqualifiedminoritysubcontractingenterprisesduetoprivatediscrimination,precludingfromtheoutsetcompetitionforpublicconstructioncontractsbyminorityenterprises.Theseconddiscriminatorybarriersaretofaircompetitionbetweenminorityandnon‐minoritysubcontractingenterprises,againduetoprivatediscrimination,precluding


existingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.Thegovernmentalsopresentedfurtherevidenceintheformoflocaldisparitystudiesofminoritysubcontractingandstudiesoflocalsubcontractingmarketsaftertheremovalofaffirmativeactionprograms.Id.at1168.

a. Barriers to minority business formation in construction subcontracting.Astothefirstkindofbarrier,thegovernment’sevidenceconsistedofnumerouscongressionalinvestigationsandhearingsaswellasoutsidestudiesofstatisticalandanecdotalevidence—citedanddiscussedinTheCompellingInterest,61Fed.Reg.26,054–58—anddemonstratedthatdiscriminationbyprimecontractors,unions,andlendershaswoefullyimpededtheformationofqualifiedminoritybusinessenterprisesinthesubcontractingmarketnationwide.Id.at1168.Theevidencedemonstratedthatprimecontractorsintheconstructionindustryoftenrefusetoemployminoritysubcontractorsdueto“oldboy”networks—basedonafamilialhistoryofparticipationinthesubcontractingmarket—fromwhichminorityfirmshavetraditionallybeenexcluded.Id.

Also,thecourtfound,subcontractors’unionsplacedbeforeminorityfirmsaplethoraofbarrierstomembership,therebyeffectivelyblockingthemfromparticipationinasubcontractingmarketinwhichunionmembershipisanimportantconditionforsuccess.Id.at1169.Thecourtstatedthatthegovernment’sevidencewasparticularlystrikingintheareaoftherace‐baseddenialofaccesstocapital,withoutwhichtheformationofminoritysubcontractingenterprisesisstymied.Id.at1169.

b. Barriers to competition by existing minority enterprises.Withregardtobarriersfacedbyexistingminorityenterprises,thegovernmentpresentedevidencetendingtoshowthatdiscriminationbyprimecontractors,privatesectorcustomers,businessnetworks,suppliers,andbondingcompaniesfostersadecidedlyunevenplayingfieldforminoritysubcontractingenterprisesseekingtocompeteintheareaoffederalconstructionsubcontracts.Id.at1170.ThecourtsaiditwasclearthatCongressdevotedconsiderableenergytoinvestigatingandconsideringthissystematicexclusionofexistingminorityenterprisesfromopportunitiestobidonconstructionprojectsresultingfromtheinsularityandsometimesoutrightracismofnon‐minorityfirmsintheconstructionindustry.Id.at1171.

Thegovernment’sevidence,thecourtfound,stronglysupportedthethesisthatinformal,raciallyexclusionarybusinessnetworksdominatethesubcontractingconstructionindustry,shuttingoutcompetitionfromminorityfirms.Id.Minoritysubcontractingenterprisesintheconstructionindustry,thecourtpointedout,foundthemselvesunabletocompetewithnon‐minorityfirmsonanequalplayingfieldduetoracialdiscriminationbybondingcompanies,withoutwhomthoseminorityenterprisescannotobtainsubcontractingopportunities.Thegovernmentpresentedevidencethatbondingisanessentialrequirementofparticipationinfederalsubcontractingprocurement.Id.Finally,thegovernmentpresentedevidenceofdiscriminationbysuppliers,theresultofwhichwasthatnonminoritysubcontractorsreceivedspecialpricesanddiscountsfromsuppliersnotavailabletominoritysubcontractors,drivingup“anticipatedcosts,andthereforethebid,forminority‐ownedbusinesses.”Id.at1172.

ContrarytoAdarand’scontentions,onthebasisoftheforegoingsurveyofevidenceregardingminoritybusinessformationandcompetitioninthesubcontractingindustry,thecourtfoundthegovernment’sevidenceastothekindsofobstaclesminoritysubcontractingbusinessesface


constitutedastrongbasisfortheconclusionthatthoseobstaclesarenot“thesameproblemsfacedbyanynewbusiness,regardlessoftheraceoftheowners.”Id.at1172.

c. Local disparity studies.ThecourtnotedthatfollowingtheSupremeCourt’sdecisioninCroson,numerousstateandlocalgovernmentsundertookstatisticalstudiestoassessthedisparity,ifany,betweenavailabilityandutilizationofminority‐ownedbusinessesingovernmentcontracting.Id.at1172.Thegovernment’sreviewofthosestudiesrevealedthatalthoughsuchdisparitywasleastglaringinthecategoryofconstructionsubcontracting,eveninthatarea“minorityfirmsstillreceiveonly87centsforeverydollartheywouldbeexpectedtoreceive”basedontheiravailability.TheCompellingInterest,61Fed.Reg.at26,062.Id.Inthatregard,theCrosonmajoritystatedthat“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythe[government]orthe[government’s]primecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”Id.quoting,488U.S.at509(Op.ofO’Connor,J.)(citationsomitted).

Thecourtsaidthatitwasmindfulthat“wherespecialqualificationsarenecessary,therelevantstatisticalpoolforpurposesofdemonstratingdiscriminatoryexclusionmustbethenumberofminoritiesqualifiedtoundertaketheparticulartask.”Id.at1172,quoting,Crosonat501–02.Butthecourtfoundthathere,itwasunawareofsuch“specialqualifications”asidefromthegeneralqualificationsnecessarytooperateaconstructionsubcontractingbusiness.Id.Ataminimum,thedisparityindicatedthattherehadbeenunder‐utilizationoftheexistingpoolofminoritysubcontractors;andthereisnoevidenceeitherintherecordonappealorinthelegislativehistorybeforethecourtthatthoseminoritysubcontractorswhohavebeenutilizedhaveperformedinadequatelyorotherwisedemonstratedalackofnecessaryqualifications.Id.at1173.

ThecourtfoundthedisparitybetweenminorityDBEavailabilityandmarketutilizationinthesubcontractingindustryraisedaninferencethatthevariousdiscriminatoryfactorsthegovernmentciteshavecreatedthatdisparity.Id.at1173.InConcreteWorks,thecourtstatedthat“[w]eagreewiththeothercircuitswhichhaveinterpretedCrosonimpliedlytopermitamunicipalitytorely...ongeneraldatareflectingthenumberofMBEsandWBEsinthemarketplacetodefeatthechallenger’ssummaryjudgmentmotion,”andthecourtheresaiditdidnotseeanydifferentstandardinthecaseofananalogoussuitagainstthefederalgovernment.Id.at1173,citing,ConcreteWorks,36F.3dat1528.Althoughthegovernment’saggregatefigureofa13%disparitybetweenminorityenterpriseavailabilityandutilizationwasnotoverwhelmingevidence,thecourtstateditwassignificant.Id.

Itwasmademoresignificantbytheevidenceshowingthatdiscriminatoryfactorsdiscouragebothenterpriseformationofminoritybusinessesandutilizationofexistingminorityenterprisesinpubliccontracting.Id.at1173.Thecourtsaidthatitwouldbe“sheerspeculation”toevenattempttoattachaparticularfiguretothehypotheticalnumberofminorityenterprisesthatwouldexistwithoutdiscriminatorybarrierstominorityDBEformation.Id.at1173,quoting,Croson,488U.S.at499.However,theexistenceofevidenceindicatingthatthenumberofminorityDBEswouldbesignificantly(butunquantifiably)higherbutforsuchbarriers,thecourtfoundwasneverthelessrelevanttotheassessmentofwhetheradisparitywassufficientlysignificanttogiverisetoaninferenceofdiscriminatoryexclusion.Id.at1174.


d. Results of removing affirmative action programs.Thecourttooknoticeofanadditionalsourceofevidenceofthelinkbetweencompellinginterestandremedy.Therewasampleevidencethatwhenrace‐consciouspubliccontractingprogramsarestruckdownordiscontinued,minoritybusinessparticipationintherelevantmarketdropssharplyorevendisappears.Id.at1174.Althoughthatevidencestandingalonethecourtfoundwasnotdispositive,itstronglysupportedthegovernment’sclaimthattherearesignificantbarrierstominoritycompetitioninthepublicsubcontractingmarket,raisingthespecterofracialdiscrimination.Id.“Wherethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”Id.at1174,quoting,Croson,488U.S.at509(Op.ofO’Connor,J.)(citationsomitted).

Insum,onthebasisoftheforegoingbodyofevidence,thecourtconcludedthatthegovernmenthadmetitsinitialburdenofpresentinga“strongbasisinevidence”sufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.Id.at1175,citing,Croson,488U.S.at500(quotingWygant,476U.S.at277).

Adarand’s rebuttal failed to meet their burden.Adarand,thecourtfoundutterlyfailedtomeettheir“ultimateburden”ofintroducingcredible,particularizedevidencetorebutthegovernment’sinitialshowingoftheexistenceofacompellinginterestinremedyingthenationwideeffectsofpastandpresentdiscriminationinthefederalconstructionprocurementsubcontractingmarket.Id.at1175.ThecourtrejectedAdarand’scharacterizationofvariouscongressionalreportsandfindingsasconclusoryanditshighlygeneralcriticismofthemethodologyofnumerous“disparitystudies”citedbythegovernmentanditsamicicuriaeassupplementalevidenceofdiscrimination.Id.Theevidencecitedbythegovernmentanditsamicicuriaeandexaminedbythecourtonlyreinforcedtheconclusionthat“racialdiscriminationanditseffectscontinuetoimpairtheabilityofminority‐ownedbusinessestocompeteinthenation’scontractingmarkets.”Id.

Thegovernment’sevidencepermittedafindingthatasamatteroflawCongresshadtherequisitestrongbasisinevidencetotakeactiontoremedyracialdiscriminationanditslingeringeffectsintheconstructionindustry.Id.at1175.Thisevidencedemonstratedthatboththerace‐basedbarrierstoentryandtheongoingrace‐basedimpedimentstosuccessfacedbyminoritysubcontractingenterprises—bothdiscussedabove—werecausedeitherbycontinuingdiscriminationorthelingeringeffectsofpastdiscriminationontherelevantmarket.Id.at1176.Congresswasnotlimitedtosimplyproscribingfederaldiscriminationagainstminoritycontractors,asithadalreadydone.ThecourtheldthattheConstitutiondoesnotobligateCongresstostandidlybyandcontinuetopourmoneyintoanindustrysoshapedbytheeffectsofdiscriminationthattheprofitstobederivedfromcongressionalappropriationsaccrueexclusivelytothebeneficiaries,howeverpersonallyinnocent,oftheeffectsofracialprejudice.Id.at1176.

ThecourtalsorejectedAdarand’scontentionthatCongressmustmakespecificfindingsregardingdiscriminationagainsteverysinglesub‐categoryofindividualswithinthebroadracialandethniccategoriesdesignatedbystatuteandaddressedbytherelevantlegislativefindings.Id.at1176.IfCongresshadvalidevidence,forexamplethatAsian–Americanindividualsaresubject


todiscriminationbecauseoftheirstatusasAsian–Americans,thecourtnoteditmakesnosensetorequiresub‐findingsthatsubcategoriesofthatclassexperienceparticularizeddiscriminationbecauseoftheirstatusas,forexample,AmericansfromBhutan.Id.“Race”thecourtsaidisoftenaclassificationofdubiousvalidity—scientifically,legally,andmorally.Thecourtdidnotimpartexcesslegitimacytoracialclassificationsbytakingnoticeoftheharshfactthatracialdiscriminationcommonlyoccursalongthelinesofthebroadcategoriesidentified:“BlackAmericans,HispanicAmericans,NativeAmericans,AsianPacificAmericans,andotherminorities.”Id.at1176,note18,citing,15U.S.C.§637(d)(3)(C).

Thecourtstatedthatitwasnotsuggestingthattheevidencecitedbythegovernmentwasunrebuttable.Id.at1176.Rather,thecourtindicateditwaspointingoutthatunderprecedentitisforAdarandtorebutthatevidence,andithasnotdonesototheextentrequiredtoraiseagenuineissueofmaterialfactastowhetherthegovernmenthasmetitsevidentiaryburden.Id.Thecourtreiteratedthat“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.at1522(quotingWygant,476U.S.at277–78,106S.Ct.1842(plurality)).“[T]henonminority[challengers]...continuetobeartheultimateburdenofpersuadingthecourtthat[thegovernmententity’s]evidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.”Id.(quotingWygant,476U.S.at293,106S.Ct.1842(O’Connor,J.,concurring)).BecauseAdarandhadfailedutterlytomeetitsburden,thecourtheldthegovernment’sinitialshowingstands.Id.

Insum,guidedbyConcreteWorks,thecourtconcludedthattheevidencecitedbythegovernmentanditsamici,particularlythatcontainedinTheCompellingInterest,61Fed.Reg.26,050,morethansatisfiedthegovernment’sburdenofproductionregardingthecompellinginterestforarace‐consciousremedy.Id.at1176.Congresshadacompellinginterestineradicatingtheeconomicrootsofracialdiscriminationinhighwaytransportationprogramsfundedbyfederalmonies.Id.Thecourtthereforeaffirmedthedistrictcourt’sfindingofacompellinginterest.Id.

Narrow Tailoring.ThecourtstateditwasguidedinitsinquirybytheSupremeCourtcasesthathaveappliedthenarrow‐tailoringanalysistogovernmentaffirmativeactionprograms.Id.at1177.Inapplyingstrictscrutinytoacourt‐orderedprogramremedyingthefailuretopromoteblackpoliceofficers,apluralityoftheCourtstatedthat

[i]ndeterminingwhetherrace‐conscious remediesareappropriate,we look toseveral factors, including the necessity for the relief and the efficacy ofalternative remedies; the flexibility and duration of the relief, including theavailabilityofwaiverprovisions; therelationshipof thenumericalgoals to therelevantlabormarket;andtheimpactofthereliefontherightsofthirdparties.

Id.at1177,quoting,Paradise,480U.S.at171(1986)(pluralityop.ofBrennan,J.)(citationsomitted).

Regardingflexibility,“theavailabilityofwaiver”isofparticularimportance.Id.Asfornumericalproportionality,Crosonadmonishedthecourtstobewareofthecompletelyunrealisticassumptionthatminoritieswillchooseaparticulartradeinlockstepproportiontotheirrepresentationinthelocalpopulation.”Id.,quoting,Croson,488U.S.at507(quotingSheetMetal


Workers’,478U.S.at494(O’Connor,J.,concurringinpartanddissentinginpart)).Inthatcontext,a“rigidnumericalquota,”thecourtnotedparticularlydisservesthecauseofnarrowtailoring.Id.at1177,citing,Croson,508,Asforburdensimposedonthirdparties,thecourtpointedtoapluralityoftheCourtinWygantthatstated:

AspartofthisNation’sdedicationtoeradicatingracialdiscrimination,innocentpersonsmaybecalledupontobearsomeof theburdenof theremedy.“Wheneffectuatinga limitedandproperly tailoredremedytocure theeffectsofpriordiscrimination, such a ‘sharing of the burden’ by innocent parties is notimpermissible.”476U.S.at280–81(Op.ofPowell,J.)(quotingFullilove,448U.S.at484(plurality))(furtherquotationsandfootnoteomitted).Weareguidedbythatbenchmark.

Id.at1177.

JusticeO’Connor’smajorityopinioninCrosonaddedafurtherfactortothecourt’sanalysis:under–orover‐inclusivenessoftheDBEclassification.Id.at1177.InCroson,theSupremeCourtstruckdownanaffirmativeactionprogramasinsufficientlynarrowlytailoredinpartbecause“thereisnoinquiryintowhetherornottheparticularMBEseekingaracialpreferencehassufferedfromtheeffectsofpastdiscrimination....[T]heinterestinavoidingthebureaucraticeffortnecessarytotailorremedialrelieftothosewhotrulyhavesufferedfromtheeffectsofpriordiscriminationcannotjustifyarigidlinedrawnonthebasisofasuspectclassification.”Id.,quoting,Croson,488U.S.at508(citationomitted).Thus,thecourtsaiditmustbeespeciallycarefultoinquireintowhethertherehasbeenanefforttoidentifyworthyparticipantsinDBEprogramsorwhethertheprogramsinquestionpaintwithtoobroad—ortoonarrow—abrush.Id.

ThecourtstatedmorespecificguidancewasfoundinAdarandIII,whereinremandingforstrictscrutiny,theSupremeCourtidentifiedtwoquestionsapparentlyofparticularimportanceintheinstantcase:(1)“[c]onsiderationoftheuseofrace‐neutralmeans;”and(2)“whethertheprogram[is]appropriatelylimited[soas]nottolastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.”Id.at1177,quoting,AdarandIII,515U.S.at237–38(internalquotationsandcitationsomitted).ThccourtthusengagedinathoroughanalysisofthefederalprograminlightofAdarandIII’sspecificquestionsonremand,andtheforegoingnarrow‐tailoringfactors:(1)theavailabilityofrace‐neutralalternativeremedies;(2)limitsonthedurationoftheSCCandDBEcertificationprograms;(3)flexibility;(4)numericalproportionality;(5)theburdenonthirdparties;and(6)over–orunder‐inclusiveness.Id.at1178.

ItissignificanttonotethatthecourtindeterminingtheFederalDBEProgramis“narrowlytailored”focusedonthefederalregulations,49CFRPart26,andinparticular§26.1(a),(b),and(f).Thecourtpointedoutthatthefederalregulationsinstructrecipientsasfollows:

[y]oumustmeetthemaximumfeasibleportionofyouroverallgoalbyusingrace‐neutralmeansof facilitatingDBEparticipation,49CFR§26.51(a)(2000);seealso49 CFR § 26.51(f)(2000) (if a recipient can meet its overall goal through race‐neutralmeans, itmust implement its programwithout the use of race‐consciouscontractingmeasures),andenumeratealistofrace‐neutralmeasures,see49CFR§


26.51(b)(2000). The current regulations also outline several race‐neutral meansavailable to program recipients including assistance in overcoming bonding andfinancingobstacles,providingtechnicalassistance,establishingprogramstoassiststart‐upfirms,andothermethods.See49CFR§26.51(b).Wethereforearedealinghere with revisions that emphasize the continuing need to employ non‐race‐consciousmethodsevenastheneedforrace‐consciousremediesisrecognized.

Idat1178‐1179.

InconsideringwhethertheFederalDBEProgramisnarrowlytailored,thecourtalsoaddressedtheargumentmadebythecontractorthattheprogramisover‐andunder‐inclusiveforseveralreasons,includingthatCongressdidnotinquireintodiscriminationagainsteachparticularminorityracialorethnicgroup.Thecourtheldthatinsofarasthescopeofinquirysuggestedwasaparticularstate’sconstructionindustryalone,thiswouldbeatoddswithitsholdingregardingthecompellinginterestinCongress’spowertoenactnationwidelegislation.Id.at1185‐1186.

Thecourtstatedthatbecauseofthe“unreliabilityofracialandethniccategoriesandthefactthatdiscriminationcommonlyoccursbasedonmuchbroaderracialclassifications,”extrapolatingfindingsofdiscriminationagainstthevariousethnicgroups“ismoreaquestionofnomenclaturethanofnarrowtailoring.”Id.Thecourtfoundthatthe“Constitutiondoesnoterectabarriertothegovernment’sefforttocombatdiscriminationbasedonbroadracialclassificationsthatmightpreventitfromenumeratingparticularethnicoriginsfallingwithinsuchclassifications.”Id.

Holding.MindfuloftheSupremeCourt’smandatetoexerciseparticularcareinexamininggovernmentalracialclassifications,thecourtconcludedthatthe1996SCCwasinsufficientlynarrowlytailoredasappliedinthiscase,andwasthusunconstitutionalunderAdarandIII‘sstrictstandardofscrutiny.Nonetheless,afterexaminingthecurrent(post1996)SCCandDBEcertificationprograms,thecourtheldthatthe1996defectshavebeenremedied,andthecurrentfederalDBEprogramsnowmettherequirementsofnarrowtailoring.Id.at1178.

Finally,theTenthCircuitdidnotspecificallyaddressachallengetothelettingoffederally‐fundedconstructioncontractsbystatedepartmentsoftransportation.ThecourtpointedoutthatplaintiffAdarand“concededthatitschallengeintheinstantcaseisto‘thefederalprogram,implementedbyfederalofficials,’andnottothelettingoffederally‐fundedconstructioncontractsbystateagencies.”228F.3dat1187.ThecourtheldthatitdidnothavebeforeitasufficientrecordtoenableittoevaluatetheseparatequestionofColoradoDOT’simplementationofrace‐consciouspolicies.Id.at1187‐1188.Therefore,thecourtdidnotaddresstheconstitutionalityofanasappliedattackontheimplementationofthefederalprogrambytheColoradoDOTorotherlocalorstategovernmentsimplementingtheFederalDBEProgram.

Thecourtthusreversedthedistrictcourtandremandedthecase.


3. Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d 1513 (10th Cir. 1994)

ThecourtconsideredwhethertheCityandCountyofDenver’srace‐andgender‐consciouspubliccontractawardprogramcompliedwiththeFourteenthAmendment’sguaranteeofequalprotectionofthelaws.Plaintiff‐AppellantConcreteWorksofColorado,Inc.(“ConcreteWorks”)appealedthedistrictcourt’ssummaryjudgmentorderupholdingtheconstitutionalityofDenver’spubliccontractprogram.ThecourtconcludedthatgenuineissuesofmaterialfactexistwithregardtotheevidentiarysupportthatDenverpresentstodemonstratethatitsprogramsatisfiestherequirementsofCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989).Accordingly,thecourtreversedandremanded.36F.3d1513(10thCir.1994).

Background.In,1990,theDenverCityCouncilenactedOrdinance(“Ordinance”)toenablecertifiedracialminoritybusinessenterprises(“MBEs”)1andwomen‐ownedbusinessenterprises(“WBEs”)toparticipateinpublicworksprojects“toanextentapproximatingthelevelof[their]availabilityandcapacity.”Id.at1515.ThisOrdinancewasthemostrecentinaseriesofprovisionsthattheDenverCityCouncilhasadoptedsince1983toremedyperceivedraceandgenderdiscriminationinthedistributionofpublicandprivateconstructioncontracts.Id.at1516.

In1992,ConcreteWorks,anonminorityandmale‐ownedconstructionfirm,filedthisEqualProtectionClausechallengetotheOrdinance.Id.ConcreteWorksallegedthattheOrdinancecausedittolosethreeconstructioncontractsforfailuretocomplywitheitherthestatedMBEandWBEparticipationgoalsorthegood‐faithrequirements.RatherthanpursuingadministrativeorstatecourtreviewoftheOCC’sfindings,ConcreteWorksinitiatedthisaction,seekingapermanentinjunctionagainstenforcementoftheOrdinanceanddamagesforlostcontracts.Id.

In1993,andafterextensivediscovery,thedistrictcourtgrantedDenver’ssummaryjudgmentmotion.ConcreteWorks,Inc.v.CityandCountyofDenver,823F.Supp.821(D.Colo.1993).ThecourtconcludedthatConcreteWorkshadstandingtobringthisclaim.Id.Withrespecttothemerits,thecourtheldthatDenver’sprogramsatisfiedthestrictscrutinystandardembracedbyamajorityoftheSupremeCourtinCrosonbecauseitwasnarrowlytailoredtoachieveacompellinggovernmentinterest.Id.

Standing.Attheoutset,theTenthCircuitonappealconsideredDenver’scontentionthatConcreteWorksfailstosatisfyitsburdenofestablishingstandingtochallengetheOrdinance’sconstitutionality.Id.at1518.ThecourtconcludedthatConcreteWorksdemonstrated“injuryinfact”becauseitsubmittedbidsonthreeprojectsandtheOrdinancepreventeditfromcompetingonanequalbasiswithminorityandwomen‐ownedprimecontractors.Id.

Specifically,theunequalnatureofthebiddingprocessliedintheOrdinance’srequirementthatanonminorityprimecontractormustmeetMBEandWBEparticipationgoalsbyenteringintojointventureswithMBEsandWBEsorhiringthemassubcontractors(orsatisfyingtheten‐stepgoodfaithrequirement).Id.Incontrast,minorityandwomen‐ownedprimecontractorscouldusetheirownworktosatisfyMBEandWBEparticipationgoals.Id.Thus,theextrarequirements,


thecourtfoundimposedcostsandburdensonnonminorityfirmsthatprecludedthemfromcompetingwithMBEsandWBEsonanequalbasis.Id.at1519.

Inadditiontodemonstrating“injuryinfact,”ConcreteWorks,thecourtheld,alsosatisfiedthetworemainingelementstoestablishstanding:(1)acausalrelationshipbetweentheinjuryandthechallengedconduct;and(2)alikelihoodthattheinjurywillberedressedbyafavorableruling.Thus,thecourtconcludedthatConcreteWorkshadstandingtochallengetheconstitutionalityofDenver’srace‐andgender‐consciouscontractprogram.Id.

Equal Protection Clause Standards.Thecourtdeterminedtheappropriatestandardofequalprotectionreviewbyexaminingthenatureoftheclassificationsembodiedinthestatute.ThecourtappliedstrictscrutinytotheOrdinance’srace‐basedpreferencescheme,andthusinquiredwhetherthestatutewasnarrowlytailoredtoachieveacompellinggovernmentinterest.Id.Gender‐basedclassifications,incontrast,thecourtconcludedareevaluatedundertheintermediatescrutinyrubric,whichprovidesthatthelawmustbesubstantiallyrelatedtoanimportantgovernmentobjective.Id.

Permissible Evidence and Burdens of Proof.InCroson,apluralityoftheCourtconcludedthatstateandlocalgovernmentshaveacompellinginterestinremedyingidentifiedpastandpresentdiscriminationwithintheirborders.Id.citing,Croson,488U.S.at492,509,ThepluralityexplainedthattheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthepublicentityfromactingasa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”byallowingtaxdollars“tofinancetheevilofprivateprejudice.”Id.citing,Crosonat492.

A.GeographicScopeoftheData.ConcreteWorkscontendedthatCrosonprecludedthecourtfromconsideringempiricalevidenceofdiscriminationinthesix‐countyDenverMetropolitanStatisticalArea(MSA).Instead,itarguedCrosonwouldallowDenveronlytousedatadescribingdiscriminationwithintheCityandCountyofDenver.Id.at1520.

ThecourtstatedthatamajorityinCrosonobservedthatbecausediscriminationvariesacrossmarketareas,stateandlocalgovernmentscannotrelyonnationalstatisticsofdiscriminationintheconstructionindustrytodrawconclusionsaboutprevailingmarketconditionsintheirownregions.Id.at1520,citingCrosonat504.Therelevantareainwhichtomeasurediscrimination,then,isthelocalconstructionmarket,butthatisnotnecessarilyconfinedbyjurisdictionalboundaries.Id.

ThecourtsaidthatCrosonsupporteditsconsiderationofdatafromtheDenverMSAbecausethisdatawassufficientlygeographicallytargetedtotherelevantmarketarea.Id.Therecordrevealedthatover80percentofDenverDepartmentofPublicWorks(“DPW”)constructionanddesigncontractswereawardedtofirmslocatedwithintheDenverMSA.Id.at1520.Toconfinethepermissibledatatoagovernmentalbody’sstrictgeographicalboundaries,thecourtfound,wouldignoretheeconomicrealitythatcontractsareoftenawardedtofirmssituatedinadjacentareas.Id.


Thecourtsaidthatitisimportantthatthepertinentdatacloselyrelatetothejurisdictionalareaofthemunicipalitywhoseprogramisscrutinized,buthereDenver’scontractingactivity,insofarasconstructionworkwasconcerned,wascloselyrelatedtotheDenverMSA.Id.at1520.Therefore,thecourtheldthatdatafromtheDenverMSAwasadequatelyparticularizedforstrictscrutinypurposes.Id.

B. Anecdotal Evidence.ConcreteWorksarguedthatthedistrictcourtcommittedreversibleerrorbyconsideringsuchnon‐empiricalevidenceofdiscriminationastestimonyfromminorityandwomen‐ownedfirmsdeliveredduringpublichearings,affidavitsfromMBEsandWBEs,summariesoftelephoneinterviewsthatDenverofficialsconductedwithMBEsandWBEs,andreportsgeneratedduringOfficeofAffirmativeActioncomplianceinvestigations.Id.

Thecourtstatedthatselectiveanecdotalevidenceaboutminoritycontractors’experiences,withoutmore,wouldnotprovideastrongbasisinevidencetodemonstratepublicorprivatediscriminationinDenver’sconstructionindustrysufficienttopassconstitutionalmusterunderCroson.Id.at1520.

Personalaccountsofactualdiscriminationortheeffectsofdiscriminatorypracticesmay,accordingtothecourt,however,vividlycomplementempiricalevidence.Id.Thecourtconcludedthatanecdotalevidenceofamunicipality’sinstitutionalpracticesthatexacerbatediscriminatorymarketconditionsareoftenparticularlyprobative.Id.Therefore,thegovernmentmayincludeanecdotalevidenceinitsevidentiarymosaicofpastorpresentdiscrimination.Id.

ThecourtpointedoutthatinthecontextofemploymentdiscriminationsuitsarisingunderTitleVIIoftheCivilRightsActof1964,theSupremeCourthasstatedthatanecdotalevidencemaybring“coldnumbersconvincinglytolife.”Id.at1520,quoting,InternationalBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977).Infact,thecourtfound,themajorityinCrosonimpliedlyendorsedtheinclusionofpersonalaccountsofdiscrimination.Id.at1521.Thecourtthusdeemedanecdotalevidenceofpublicandprivateraceandgenderdiscriminationappropriatesupplementaryevidenceinthestrictscrutinycalculus.Id.

C. Post–Enactment Evidence.ConcreteWorksarguedthatthecourtshouldconsideronlyevidenceofdiscriminationthatexistedpriortoDenver’senactmentoftheOrdinance.Id.InCroson,thecourtnotedthattheSupremeCourtunderscoredthatamunicipality“mustidentify[the]discrimination...withsomespecificitybefore[it]mayuserace‐consciousrelief.”Id.at1521,quoting,Croson,488U.S.at504(emphasisadded).Absentanypre‐enactmentevidenceofdiscrimination,thecourtsaidamunicipalitywouldbeunabletosatisfyCroson.Id.

However,thecourtdidnotreadCroson’sevidentiaryrequirementasforeclosingtheconsiderationofpost‐enactmentevidence.Id.at1521.Post‐enactmentevidence,ifcarefullyscrutinizedforitsaccuracy,thecourtfoundwouldoftenprovequiteusefulinevaluatingtheremedialeffectsorshortcomingsoftherace‐consciousprogram.Id.This,thecourtnotedwasespeciallytrueinthiscase,whereDenverfirstimplementedalimitedaffirmativeactionprogramin1983andhassincemodifiedandexpandeditsscope.Id.

Thecourtheldthestrongweightofauthorityendorsestheadmissibilityofpost‐enactmentevidencetodeterminewhetheranaffirmativeactioncontractprogramcomplieswithCroson.Id.


at1521.Thecourtagreedthatpost‐enactmentevidencemayproveusefulforacourt’sdeterminationofwhetheranordinance’sdeviationfromthenormofequaltreatmentisnecessary.Id.Thus,evidenceofdiscriminationexistingsubsequenttoenactmentofthe1990Ordinance,thecourtconcludedwasproperlybeforeit.Id.

D. Burdens of Production and Proof.ThecourtstatedthattheSupremeCourtinCrosonstruckdowntheCityofRichmond’sminorityset‐asideprogrambecausetheCityfailedtoprovideanadequateevidentiaryshowingofpastorpresentdiscrimination.Id.at1521,citing,Croson,488U.S.at498–506.ThecourtpointedoutthatbecausetheFourteenthAmendmentonlytoleratesrace‐consciousprogramsthatnarrowlyseektoremedyidentifieddiscrimination,theSupremeCourtinCrosonexplainedthatstateandlocalgovernments“mustidentifythatdiscrimination...withsomespecificitybeforetheymayuserace‐consciousrelief.”Id.,citingCroson,at504.ThecourtsaidthattheSupremeCourt’sbenchmarkforjudgingtheadequacyofthegovernment’sfactualpredicateforaffirmativeactionlegislationwaswhetherthereexistsa“strongbasisinevidencefor[thegovernment’s]conclusionthatremedialactionwasnecessary.”Id.,quoting,Croson,at500.

AlthoughCrosonplacestheburdenofproductiononthemunicipalitytodemonstratea“strongbasisinevidence”thatitsrace‐andgender‐consciouscontractprogramaimstoremedyspecificallyidentifiedpastorpresentdiscrimination,thecourtheldtheFourteenthAmendmentdoesnotrequireacourttomakeanultimatejudicialfindingofdiscriminationbeforeamunicipalitymaytakeaffirmativestepstoeradicatediscrimination.Id.at1521,citing,Wygant,476U.S.at292(O’Connor,J.,concurringinpartandconcurringinthejudgment).Anaffirmativeactionresponsetodiscriminationissustainableagainstanequalprotectionchallengesolongasitispredicateduponstrongevidenceofdiscrimination.Id.at1522,citing,Croson,488U.S.at504.

Aninferenceofdiscrimination,thecourtfound,maybemadewithempiricalevidencethatdemonstrates“asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractors...andthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.”Id.at1522,quoting,Crosonat509(plurality).ThecourtconcludedthatitdidnotreadCrosontorequireanattempttocraftaprecisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson“strongbasisinevidence”benchmark.Id.That,thecourtstated,mustbeevaluatedonacase‐by‐casebasis.Id.

Thecourtsaidthattheadequacyofamunicipality’sshowingofdiscriminationmustbeevaluatedinthecontextofthebreadthoftheremedialprogramadvancedbythemunicipality.Id.at1522,citing,Crosonat498.Ultimately,whetherastrongbasisinevidenceofpastorpresentdiscriminationexists,therebyestablishingacompellinginterestforthemunicipalitytoenactarace‐consciousordinance,thecourtfoundisaquestionoflaw.Id.Underlyingthatlegalconclusion,however,thecourtnotedarefactualdeterminationsabouttheaccuracyandvalidityofamunicipality’sevidentiarysupportforitsprogram.Id.

Notwithstandingtheburdenofinitialproductionthatrestswiththemunicipality,“[t]heultimateburden[ofproof]remainswith[thechallengingparty]todemonstratetheunconstitutionalityofanaffirmative‐actionprogram.”Id.at1522,quoting,Wygant,476U.S.at277–78(plurality).Thus,thecourtstatedthatonceDenverpresentedadequatestatisticalevidenceofpreciselydefined


discriminationintheDenverareaconstructionmarket,itbecameincumbentuponConcreteWorkseithertoestablishthatDenver’sevidencedidnotconstitutestrongevidenceofsuchdiscriminationorthattheremedialstatutewasnotnarrowlydrawn.Id.at1523.AbsentsuchashowingbyConcreteWorks,thecourtsaid,summaryjudgmentupholdingDenver’sOrdinancewouldbeappropriate.Id.

E. Evidentiary Predicate Underlying Denver’s Ordinance.TheevidenceofdiscriminationthatDenverpresentstodemonstrateacompellinggovernmentinterestinenactingtheOrdinanceconsistedofthreecategories:(1)evidenceofdiscriminationincitycontractingfromthemid–1970sto1990;(2)dataaboutMBEandWBEutilizationintheoverallDenverMSAconstructionmarketbetween1977and1992;and(3)anecdotalevidencethatincludedpersonalaccountsbyMBEsandWBEswhohaveexperiencedbothpublicandprivatediscriminationandtestimonyfromcityofficialswhodescribeinstitutionalgovernmentalpracticesthatperpetuatepublicdiscrimination.Id.at1523.

1. Discrimination in the Award of Public Contracts.ThecourtconsideredtheevidencethatDenverpresentedtodemonstrateunderutilizationofMBEsandWBEsintheawardofcitycontractsfromthemid1970sto1990.ThecourtfoundthatDenverofferedpersuasivepiecesofevidencethat,consideredintheabstract,couldgiverisetoaninferenceofrace‐andgender‐basedpublicdiscriminationonisolatedpublicworksprojects.Id.at1523.However,thecourtalsofoundtherecordshowedthatMBEandWBEutilizationonpubliccontractsasawholeduringthisperiodwasstrongincomparisontothetotalnumberofMBEsandWBEswithinthelocalconstructionindustry.Id.at1524.Denverofferedarebuttaltothismoregeneralevidence,butthecourtstateditwasclearthattheweighttobegivenbothtothegeneralevidenceandtothespecificevidencerelatingtoindividualcontractspresentedgenuinedisputesofmaterialfacts.

Thecourtthenengagedinananalysisofthefactualrecordandanidentificationofthegenuinematerialissuesoffactarisingfromtheparties’competingevidence.

(a) Federal Agency Reports of Discrimination in Denver.DenversubmittedfederalagencyreportsofdiscriminationinDenverpubliccontractawards.Id.at1524.Therecordcontainedasummaryofa1978studybytheUnitedStatesGeneralAccountingOffice(“GAO”),whichshowedthatbetween1975and1977minoritybusinessesweresignificantlyunderrepresentedintheperformanceofDenverpubliccontractsthatwerefinancedinwholeorinpartbyfederalgrants.Id.

ConcreteWorksarguedthatamaterialfactissuearoseaboutthevalidityofthisevidencebecause“the1978GAOReportwasnothingmorethanalistingoftheproblemsfacedbyallsmallfirms,firststartingoutinbusiness.”Id.at1524.Thecourtpointedout,however,ConcreteWorksignoredtheGAOReport’sempiricaldata,whichquantifiedtheactualdisparitybetweentheutilizationofminoritycontractorsandtheirrepresentationinthelocalconstructionindustry.Id.Inaddition,thecourtnotedthattheGAOReportreflectedthefindingsofanobjectivethirdparty.Id.Becausethisdataremaineduncontested,notwithstandingConcreteWorks’conclusoryallegationstothecontrary,thecourtfoundthe1978GAOReportprovidedevidencetosupportDenver’sshowingofdiscrimination.Id.


AddedtotheGAOfindingswasa1979letterfromtheUnitedStatesDepartmentofTransportation(“USDOT”)totheMayoroftheCityofDenver,describingtheUSDOTOfficeofCivilRights’studyofDenver’sdiscriminatorycontractingpracticesatStapletonInternationalAirport.Id.at1524.USDOTthreatenedtowithholdadditionalfederalfundingforStapletonbecauseDenverhad“deniedminoritycontractorsthebenefitsof,excludedthemfrom,orotherwisediscriminatedagainstthemconcerningcontractingopportunitiesatStapleton,”inviolationofTitleVIoftheCivilRightsActof1964andotherfederallaws.Id.

ThecourtdiscussedthefollowingdataasreflectedofthelowlevelofMBEandWBEutilizationonStapletoncontractspriortoDenver’sadoptionofanMBEandWBEgoalsprogramatStapletonin1981:fortheyears1977to1980,respectively,MBEutilizationwas0percent,3.8percent,.7percent,and2.1percent;dataonWBEutilizationwasunknownfortheyears1977to1979,anditwas.05percentfor1980.Id.at1524.

ThecourtstatedthatlikeitsunconvincingattempttodiscredittheGAOReport,ConcreteWorkspresentednoevidencetochallengethevalidityofUSDOT’sallegations.Id.ConcreteWorks,thecourtsaid,failedtointroduceevidencerefutingthesubstanceofUSDOT’sinformation,attackingitsmethodology,orchallengingthelowutilizationfiguresforMBEsatStapletonbefore1981.Id.at1525.Thus,accordingtothecourt,ConcreteWorksfailedtocreateagenuineissueoffactabouttheconclusionsintheUSDOT’sreport.Id.Insum,thecourtfoundthefederalagencyreportsofdiscriminationinDenver’scontractawardssupportedDenver’scontentionthatraceandgenderdiscriminationexistedpriortotheenactmentofthechallengedOrdinance.Id.

(b) Denver’s Reports of Discrimination.Denverpointedtoevidenceofpublicdiscriminationpriorto1983,theyearthatthefirstDenverordinancewasenacted.Id.at1525.A1979DPW“MajorBondProjectsFinalReport,”whichreviewedMBEandWBEutilizationonprojectsfundedbythe1972and1974bondreferendaandthe1975and1976revenuebonds,thecourtsaid,showedstrongevidenceofunderutilizationofMBEsandWBEs.Id.BasedonthisReport’sdescriptionoftheapproximately$85millionincontractawards,therewas0percentMBEandWBEutilizationforprofessionaldesignandconstructionmanagementprojects,andlessthan1percentutilizationforconstruction.Id.TheReportconcludedthatifMBEsandWBEshadbeenutilizedinthesameproportionasfoundintheconstructionindustry,5percentofthecontractdollarswouldhavebeenawardedtoMBEsandWBEs.Id.

Tounderminethisdata,ConcreteWorksallegedthattheDPWReportcontained“noinformationaboutthenumberofminorityorwomenownedfirmsthatwereused”onthesebondprojects.Id.at1525.However,thecourtconcludedtheReport’sdescriptionofMBEandWBEutilizationintermsofcontractdollarsprovidedamoreaccuratedepictionoftotalutilizationthanwouldthemerenumberofMBEandWBEfirmsparticipatingintheseprojects.Id.Thus,thecourtsaidthislineofattackbyConcreteWorkswasunavailing.Id.

ConcreteWorksalsoadvancedexperttestimonythatDenver’sdatademonstratedstrongMBEandWBEutilizationonthetotalDPWcontractsawardedbetween1978and1982.Id.Denverrespondedbypointingoutthatbecausefederalandcityaffirmativeactionprogramswereinplacefromthemid–1970stothepresent,thisoverallDPWdatareflectedtheintendedremedialeffectonMBEandWBEutilizationoftheseprograms.Id.at1526.BasedonitscontentionthattheoverallDPWdatawastherefore“tainted”anddistortedbythesepre‐existingaffirmative


actiongoalsprograms,Denveraskedthecourttofocusinsteadonthedatageneratedfromspecificpubliccontractprogramsthatwere,foronereasonoranother,insulatedfromfederalandlocalaffirmativeactiongoalsprograms,i.e.“non‐goalspublicprojects.”Id.

Giventhatthesamelocalconstructionindustryperformedbothgoalsandnon‐goalspubliccontracts,Denverarguedthatdatageneratedonnon‐goalspublicprojectsofferedacontrolgroupwithwhichthecourtcouldcompareMBEandWBEutilizationonpubliccontractsgovernedbyagoalsprogramandthoseinsulatedfromsuchgoalrequirements.Id.DenverarguedthattheutilizationofMBEsandWBEsonnon‐goalsprojectswasthebettertestofwhethertherehadbeendiscriminationhistoricallyinDenvercontractingpractices.Id.at1526.

DGS data.Thefirstsetofdatafromnon‐goalspublicprojectsthatDenveridentifiedwereMBEandWBEdisparityindicesonDenverDepartmentofGeneralServices(“DGS”)contracts,whichrepresentedone‐thirdofallcityconstructionfundingandwhich,priortotheenactmentofthe1990Ordinance,werenotsubjecttothegoalsprograminstitutedintheearlierordinancesforDPWcontracts.Id.at1526.TheDGSdata,thecourtfound,revealedextremelylowMBEandWBEutilization.Id.ForMBEs,theDGSdatashoweda.14disparityindexin1989anda.19disparityindexin1990—evidencethecourtstatedwasofsignificantunderutilization.Id.ForWBEs,thedisparityindexwas.47in1989and1.36in1990—thelatter,thecourtsaidshowedgreaterthanfullparticipationandtheformerdemonstratingunderutilization.Id.

ThecourtnotedthatitdidnothavethebenefitofrelevantauthoritywithwhichtocompareDenver’sdisparityindicesforWBEs.Nevertheless,thecourtconcludedDenver’sdataindicatedsignificantWBEunderutilizationsuchthattheOrdinance’sgenderclassificationarosefrom“reasonedanalysisratherthanthroughthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.at1526,n.19,quoting,MississippiUniv.ofWomen,458U.S.at726.

DPW data.ThesecondsetofdatapresentedbyDenver,thecourtsaid,reflecteddistinctMBEandWBEunderutilizationonnon‐goalspublicprojectsconsistingofseparateDPWprojectsonwhichnogoalsprogramwasimposed.Id.at1527.ConcreteWorks,accordingtothecourt,attemptedtotrivializethesignificanceofthisdatabycontendingthattheprojects,indollarterms,reflectedasmallfractionofthetotalDenverMSAconstructionmarket.Id.But,thecourtnotedthatConcreteWorksmissedthepointbecausethedatawasnotintendedtoreflectconditionsintheoverallmarket.Id.Insteadthedatadealtsolelywiththeutilizationlevelsforcity‐fundedprojectsonwhichnoMBEandWBEgoalswereimposed.Id.Thecourtfoundthatitwasparticularlytellingthatthedisparityindexsignificantlydeterioratedonprojectsforwhichthecitydidnotestablishminorityandgenderparticipationgoals.Id.InsofarasConcreteWorksdidnotattackthedataonanyothergrounds,thecourtconsidereditwaspersuasiveevidenceofunderlyingdiscriminationintheDenverconstructionmarket.Id.

Empirical data.ThethirdevidentiaryitemsupportingDenver’scontentionthatpublicdiscriminationexistedpriortoenactmentofthechallengedOrdinancewasempiricaldatafrom1989,generatedafterDenvermodifieditsrace‐andgender‐consciousprogram.Id.at1527.InthewakeofCroson,DenveramendeditsprogrambyeliminatingtheminimumannualgoalsprogramforMBEandWBEparticipationandbyrequiringMBEsandWBEstodemonstratethattheyhadsufferedfrompastdiscrimination.Id.


Thismodification,thecourtsaid,resultedinanoticeabledeclineintheshareofDPWconstructiondollarsawardedtoMBEs.Id.From1985to1988(priortothe1989modificationofDenver’sprogram),DPWconstructiondollarsawardedtoMBEsrangedfrom17tonearly20percentoftotaldollars.Id.However,thecourtnotedthefiguredroppedto10.4percentin1989,aftertheprogrammodificationstookeffect.Id.at1527.LiketheDGSandnon‐goalsDPWprojects,this1989data,thecourtconcluded,furthersupportedtheinferencethatMBEandWBEutilizationsignificantlydeclinedafterdeletionofagoalsprogramorrelaxationoftheminimumMBEandWBEutilizationgoalrequirements.Id.

Nonetheless,thecourtstateditmustconsiderDenver’sempiricalsupportforitscontentionthatpublicdiscriminationexistedpriortotheenactmentoftheOrdinanceinthecontextoftheoverallDPWdata,whichshowedconsistentlystrongMBEandWBEutilizationfrom1978tothepresent.Id.at1528.ThecourtnotedthatalthoughDenver’sargumentmayprovepersuasiveattrialthatthenon‐goalsprojectswerethemostreliableindiciaofdiscrimination,therecordonsummaryjudgmentcontainedtwosetsofdata,onethatgaverisetoaninferenceofdiscriminationandtheotherthatunderminedsuchaninference.Id.Thisdiscrepancy,thecourtfound,highlightedwhysummaryjudgmentwasinappropriateonthisrecord.Id.

Availability data.ThecourtconcludedthatuncertaintyaboutthecapacityofMBEsandWBEsinthelocalmarkettocompetefor,andperform,thepublicprojectsforwhichtherewasunderutilizationofMBEsandWBEsfurtherhighlightedwhytherecordwasnotripeforsummaryjudgment.Id.at1528.AlthoughDenver’sdatausedasitsbaselinethepercentageoffirmsinthelocalconstructionmarketthatwereMBEsandWBEs,ConcreteWorksarguedthatamoreaccurateindicatorwouldconsiderthecapacityoflocalMBEsandWBEstoundertakethework.Id.ThecourtsaidthatuncertaintyaboutthecapacityofMBEsandWBEsinthelocalmarkettocompetefor,andperform,thepublicprojectsforwhichtherewasunderutilizationofMBEsandWBEsfurtherhighlightedwhytherecordwasnotripeforsummaryjudgment.Id.

ThecourtagreedwiththeothercircuitswhichhadatthattimeinterpretedCrosonimpliedlytopermitamunicipalitytorely,asdidDenver,ongeneraldatareflectingthenumberofMBEsandWBEsinthemarketplacetodefeatthechallenger’ssummaryjudgmentmotionorrequestforapreliminaryinjunction.Id.at1527citing,ContractorsAss’n,6F.3dat1005(comparingMBEparticipationincitycontractswiththe“percentageof[MBE]availabilityorcompositioninthe‘population’ofPhiladelphiaareaconstructionfirms”);AssociatedGen.Contractors,950F.2dat1414(relyingonavailabilitydatatoconcludethatcitypresented“detailedfindingsofpriordiscrimination”);ConeCorp.,908F.2dat916(statisticaldisparitybetween“thetotalpercentageofminoritiesinvolvedinconstructionandtheworkgoingtominorities”showsthat“theracialclassificationintheCountyplan[was]necessary”).

But,thecourtfoundConcreteWorkshadidentifiedalegitimatefactualdisputeabouttheaccuracyofDenver’sdataandquestionedwhetherDenver’srelianceonthepercentageofMBEsandWBEsavailableinthemarketplaceoverstated“theabilityofMBEsorWBEstoconductbusinessrelativetotheindustryasawholebecauseM/WBEstendtobesmallerandlessexperiencedthannonminority‐ownedfirms.”Id.at1528.Inotherwords,thecourtsaid,adisparityindexcalculatedonthebasisoftheabsolutenumberofMBEsinthelocalmarketmayshowgreaterunderutilizationthandoesdatathattakesintoconsiderationthesizeofMBEsandWBEs.Id.


ThecourtstatedthatitwasnotimplyingthatavailabilitywasnotanappropriatebarometertocalculateMBEandWBEutilization,nordiditcastaspersionsondatathatsimplyusedrawnumbersofMBEsandWBEscomparedtonumbersoftotalfirmsinthemarket.Id.Thecourtconcluded,however,oncecredibleinformationaboutthesizeorcapacityofthefirmswasintroducedintherecord,itbecameafactorthatthecourtshouldconsider.Id.

Denverpresentedseveralresponses.Id.at1528.Itarguedthataconstructionfirm’sprecise“capacity”atagivenmomentintimebeliedquantificationduetotheindustry’shighlyelasticnature.Id.DPWcontractsrepresentedlessthan4percentoftotalMBErevenuesandlessthan2percentofWBErevenuesin1989,therebythecourtsaid,stronglyimpliedthatMBEandWBEparticipationinDPWcontractsdidnotrenderthesefirmsincapableofconcurrentlyundertakingadditionalwork.Id.at1529.DenverpresentedevidencethatmostMBEsandWBEshadneverparticipatedincitycontracts,“althoughalmostallfirmscontactedindicatedthattheywereinterestedinCitywork.”Id.OfthoseMBEsandWBEswhohavereceivedworkfromDPW,availabledatashowedthatlessthan10percentoftheirtotalrevenueswerefromDPWcontracts.Id.

Thecourtheldallofthebackandforthargumentshighlightedthatthereweregenuineandmaterialfactualdisputesintherecord,andthatsuchdisputesabouttheaccuracyofDenver’sdatashouldnotberesolvedatsummaryjudgment.Id.at1529.

(c) Evidence of Private Discrimination in the Denver MSA.Inrecognitionthatamunicipalityhasacompellinginterestintakingaffirmativestepstoremedybothpublicandprivatediscriminationspecificallyidentifiedinitsarea,thecourtalsoconsidereddataaboutconditionsintheoverallDenverMSAconstructionindustrybetween1977and1992.Id.at1529.ThecourtstatedthatgivenDPWandDGSconstructioncontractsrepresentedapproximately2percentofallconstructionintheDenverMSA,DenverMSAindustrydatasharpenedthepictureoflocalmarketconditionsforMBEsandWBEs.Id.

AccordingtoDenver’sexpertaffidavits,theMBEdisparityindexintheDenverMSAwas.44in1977,.26in1982,and.43in1990.Id.ThecorrespondingWBEdisparityindiceswere.46in1977,.30in1982,and.42in1989.Id.Thispre‐enactmentevidenceoftheoverallDenverMSAconstructionmarket—i.e.combinedpublicandprivatesectorutilizationofMBEsandWBEs—thecourtfoundgaverisetoaninferencethatlocalprimecontractorsdiscriminatedonthebasisofraceandgender.Id.

Thecourtpointedoutthatratherthanofferinganyevidenceinrebuttal,ConcreteWorksmerelystatedthatthisempiricalevidencedidnotprovethattheDenvergovernmentitselfdiscriminatedagainstMBEsandWBEs.Id.at1529.ConcreteWorksaskedthecourttodefinetheappropriatemarketaslimitedtocontractswiththeCityandCountyofDenver.Id.But,thecourtsaidthatsucharequestignoredthelessonofCrosonthatamunicipalitymaydesignprogramstopreventtaxdollarsfrom“financ[ing]theevilofprivateprejudice.”Id.,quoting,Croson,488U.S.at492.

ThecourtfoundthatwhattheDenverMSAdatadidnotindicate,however,waswhethertherewasanylinkagebetweenDenver’sawardofpubliccontractsandtheDenverMSAevidenceofindustry‐widediscrimination.Id.at1529.ThecourtsaiditcouldnottellwhetherDenver


indirectlycontributedtoprivatediscriminationbyawardingpubliccontractstofirmsthatinturndiscriminatedagainstMBEand/orWBEsubcontractorsinotherprivateportionsoftheirbusinessorwhethertheprivatediscriminationwaspracticedbyfirmswhodidnotreceiveanypubliccontracts.Id.

NeitherCrosonnoritsprogeny,thecourtpointedout,clearlystatedwhetherprivatediscriminationthatwasinnowayfundedwithpublictaxdollarscould,byitself,providetherequisitestrongbasisinevidencenecessarytojustifyamunicipality’saffirmativeactionprogram.Id.ThecourtsaidapluralityinCrosonsuggestedthatremedialmeasurescouldbejustifieduponamunicipality’sshowingthat“ithadessentiallybecomea‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry.”Id.at1529,quoting,Croson,488U.S.at492.

ThecourtconcludedthatCrosondidnotrequirethemunicipalitytoidentifyanexactlinkagebetweenitsawardofpubliccontractsandprivatediscrimination,butsuchevidencewouldatleastenhancethemunicipality’sfactualpredicateforarace‐andgender‐consciousprogram.Id.at1529.TherecordbeforethecourtdidnotexplaintheDenvergovernment’sroleincontributingtotheunderutilizationofMBEsandWBEsintheprivateconstructionmarketintheDenverMSA,andthecourtstatedthatthismaybeafruitfulissuetoexploreattrial.Id.at1530.

(d). Anecdotal Evidence.Therecord,accordingtothecourt,containednumerouspersonalaccountsbyMBEsandWBEs,aswellasprimecontractorsandcityofficials,describingdiscriminatorypracticesintheDenverconstructionindustry.Id.at1530.Suchanecdotalevidencewascollectedduringpublichearingsin1983and1988,interviews,thesubmissionofaffidavits,andcasestudiesperformedbyaconsultingfirmthatDenveremployedtoinvestigatepublicandprivatemarketconditionsin1990,priortotheenactmentofthe1990Ordinance.Id.

Thccourtindicatedagainthatanecdotalevidenceaboutminority‐andwomen‐ownedcontractors’experiencescouldbolsterempiricaldatathatgaverisetoaninferenceofdiscrimination.Id.at1530.Whileafactfinder,thecourtstated,shouldaccordlessweighttopersonalaccountsofdiscriminationthatreflectisolatedincidents,anecdotalevidenceofamunicipality’sinstitutionalpracticescarrymoreweightduetothesystemicimpactthatsuchinstitutionalpracticeshaveonmarketconditions.Id.

ThecourtnotedthatinadditiontotheindividualaccountsofdiscriminationthatMBEsandWBEshadencounteredintheDenverMSA,Cityaffirmativeactionofficialsexplainedthatchangeordersofferedaconvenientmeansofskirtingprojectgoalsbypermittingwhatwouldotherwisebeanewconstructionproject(andthussubjecttotheMBEandWBEparticipationrequirements)tobecharacterizedasanextensionofanexistingprojectandthuswithinDGS’sbailiwick.Id.at1530.Anassistantcityattorney,thecourtsaid,alsorevealedthatprojectshavebeenlabelled“remodeling,”asopposedto“reconstruction,”becausetheformerfallwithinDGS,andthuswerenotsubjecttoMBEandWBEgoalspriortotheenactmentofthe1990Ordinance.Id.at1530.ThecourtconcludedovertheobjectofConcreteWorksthatthisanecdotalevidencecouldbeconsideredinconjunctionwithDenver’sstatisticalanalysis.Id.

2. Summary.ThecourtsummarizeditsrulingbyindicatingDenverhadcompiledsubstantialevidencetosupportitscontentionthattheOrdinancewasenactedtoremedypastrace‐and


gender‐baseddiscrimination.Id.at1530.ThecourtfoundincontrasttothepredicatefactsonwhichRichmondunsuccessfullyreliedinCroson,thatDenver’sevidenceofdiscriminationbothintheawardofpubliccontractsandwithintheoverallDenverMSAwasparticularizedandgeographicallytargeted.Id.ThecourtemphasizedthatDenverneednotnegateallevidenceofnon‐discrimination,norwasitDenver’sburdentoprovejudiciallythatdiscriminationdidexist.Id.Rather,thecourtheld,Denverneedonlycomeforwardwitha“strongbasisinevidence”thatitsOrdinancewasanarrowly‐tailoredresponsetospecificallyidentifieddiscrimination.Id.Then,thecourtsaiditbecameConcreteWorks’burdentoshowthattherewasnosuchstrongbasisinevidencetosupportDenver’saffirmativeactionlegislation.Id.

ThecourtalsostatedthatConcreteWorkshadspecificallyidentifiedpotentialflawsinDenver’sdataandhadputforthevidencethatDenver’sdatafailedtosupportaninferenceofeitherpublicorprivatediscrimination.Id.at1530.WithrespecttoDenver’sevidenceofpublicdiscrimination,forexample,thecourtfoundoverallDPWdatademonstratedstrongMBEandWBEutilization,yetdataforisolatedDPWprojectsandDGScontractawardssuggestedtothecontrary.Id.Thepartiesofferedconflictingrationalesforthisdisparatedata,andthecourtconcludedtherecorddidnotprovideaclearexplanation.Id.Inaddition,thecourtsaidthatConcreteWorkspresentedalegitimatecontentionthatDenver’sdisparityindicesfailedtoconsidertherelativelysmallsizeofMBEsandWBEs,whichthecourtnotedfurtherimpededitsabilitytodrawconclusionsfromtheexistingrecord.Id.at1531.

Significantly,thecourtpointedoutthatbecauseConcreteWorksdidnotchallengethedistrictcourt’sconclusionwithrespecttothesecondprongofCroson’sstrictscrutinystandard—i.e.thattheOrdinancewasnarrowlytailoredtoremedypastandpresentdiscrimination—thecourtneednotanddidnotaddressthisissue.Id.at1531.

Onremand,thecourtstatedthepartiesshouldbepermittedtodevelopafactualrecordtosupporttheircompetinginterpretationsoftheempiricaldata.Id.at1531.Accordingly,thecourtreversedthedistrictcourtrulinggrantingsummaryjudgmentandremandedthecaseforfurtherproceedings.SeeConcreteWorksofColoradov.CityandCountyofDenver,321F.3d950(10thCir.2003).

4. Klaver Construction, Inc. v. Kansas DOT, 211 F. Supp.2d 1296 (D. Kan. 2002)

ThisisanothercasethatinvolvedachallengetotheUSDOTRegulationsthatimplementTEA‐21(49CFRPart26),inwhichtheplaintiffcontractorsoughttoenjointheKansasDepartmentofTransportation(“DOT”)fromenforcingitsDBEProgramonthegroundsthatitviolatestheEqualProtectionClauseundertheFourteenthAmendment.Thiscaseinvolvesadirectconstitutionalchallengetoracialandgenderpreferencesinfederally‐fundedstatehighwaycontracts.ThiscaseconcernedtheconstitutionalityoftheKansasDOT’simplementationoftheFederalDBEProgram,andtheconstitutionalityofthegender‐basedpoliciesofthefederalgovernmentandtherace‐andgender‐basedpoliciesoftheKansasDOT.Thecourtgrantedthefederalandstatedefendants’(USDOTandKansasDOT)MotionstoDismissbasedonlackofstanding.ThecourtheldthecontractorcouldnotshowthespecificaspectsoftheDBEProgramthatitcontendsareunconstitutionalhavecauseditsallegedinjuries.


5. Kornhass Construction, Inc. v. State of Oklahoma, Department of Central Services, 140 F.Supp.2d 1232 (W.D. OK. 2001)

Plaintiffs,non‐minoritycontractors,broughtthisactionagainsttheStateofOklahomachallengingminoritybidpreferenceprovisionsintheOklahomaMinorityBusinessEnterpriseAssistanceAct(“MBEAct”).TheOklahomaMBEActestablishedabidpreferenceprogrambywhichcertifiedminoritybusinessenterprisesaregivenfavorabletreatmentoncompetitivebidssubmittedtothestate.140F.Supp.2dat1235–36.UndertheMBEAct,thebidsofnon‐minoritycontractorswereraisedby5percent,placingthematacompetitivedisadvantageaccordingtothedistrictcourt.Id.at1235–1236.

Thenamedplaintiffsbidonstatecontractsinwhichtheirbidswereincreasedby5percentastheywerenon‐minoritybusinessenterprises.Althoughtheplaintiffsactuallysubmittedthelowestdollarbids,oncethe5percentfactorwasapplied,minoritybiddersbecamethesuccessfulbiddersoncertaincontracts.140F.Supp.at1237.

IndeterminingtheconstitutionalityorvalidityoftheOklahomaMBEAct,thedistrictcourtwasguidedinitsanalysisbytheTenthCircuitCourtofAppealsdecisioninAdarandConstructors,Inc.v.Slater,288F.3d1147(10thCir.2000).ThedistrictcourtpointedoutthatinAdarandVII,theTenthCircuitfoundcompellingevidenceofbarrierstobothminoritybusinessformationandexistingminoritybusinesses.Id.at1238.Insum,thedistrictcourtnotedthattheTenthCircuitconcludedthattheGovernmenthadmetitsburdenofpresentingastrongbasisinevidencesufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.140F.Supp.2dat1239,citingAdarandVII,228F.3d1147,1174.

Compelling state interest. Thedistrictcourt,followingAdarandVII,appliedthestrictscrutinyanalysis,arisingoutoftheFourteenthAmendment’sEqualProtectionClause,inwhicharace‐basedaffirmativeactionprogramwithstandsstrictscrutinyonlyifitisnarrowlytailoredtoserveacompellinggovernmentalinterest.Id.at1239.ThedistrictcourtpointedoutthatitisclearfromSupremeCourtprecedent,theremaybeacompellinginterestsufficienttojustifyrace‐consciousaffirmativeactionmeasures.Id.TheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitselfandtopreventthegovernmentalentityfrombecominga“passiveparticipant”inasystemofracialexclusionpracticedbyprivatebusinesses.Id.at1240.Therefore,thedistrictcourtconcludedthatboththefederalandstategovernmentshaveacompellinginterestassuringthatpublicdollarsdonotservetofinancetheevilofprivateprejudice.Id.

Thedistrictcourtstatedthata“merestatisticaldisparityintheproportionofcontractsawardedtoaparticulargroup,standingalone,doesnotdemonstratetheevilofprivateorpublicracialprejudice.”Id.Rather,thecourtheldthatthe“benchmarkforjudgingtheadequacyofastate’sfactualpredicateforaffirmativeactionlegislationiswhetherthereexistsastrongbasisintheevidenceofthestate’sconclusionthatremedialactionwasnecessary.”Id.ThedistrictcourtfoundthattheSupremeCourtmadeitclearthatthestatebearstheburdenofdemonstratingastrongbasisinevidenceforitsconclusionthatremedialactionwasnecessarybyprovingeitherthatthestateitselfdiscriminatedinthepastorwas“apassiveparticipant”inprivateindustry’sdiscriminatorypractices.Id.at1240,citingtoAssociatedGeneralContractorsofOhio,Inc.v.


Drabik,214F.3d730,735(6thCir.2000)andCityofRichmondv.J.A.CrosonCompany,488U.S.469at486‐492(1989).

Withthisbackground,theStateofOklahomastatedthatitscompellingstateinterest“istopromotetheeconomyoftheStateandtoensurethatminoritybusinessenterprisesaregivenanopportunitytocompeteforstatecontracts.”Id.at1240.Thus,thedistrictcourtfoundtheStateadmittedthattheMBEAct’sbidpreference“isnotbasedonpastdiscrimination,”rather,itisbasedonadesireto“encourag[e]economicdevelopmentofminoritybusinessenterpriseswhichinturnwillbenefittheStateofOklahomaasawhole.”Id.InlightofAdarandVII,andprevailingSupremeCourtcaselaw,thedistrictcourtfoundthatthisarticulatedinterestisnot“compelling”intheabsenceofevidenceofpastorpresentracialdiscrimination.Id.

ThedistrictcourtconsideredtestimonypresentedbyIntervenorswhoparticipatedinthecaseforthedefendantsandassertedthattheOklahomalegislatureconductedaninterimstudypriortoadoptionoftheMBEAct,duringwhichtestimonyandevidencewerepresentedtomembersoftheOklahomaLegislativeBlackCaucusandotherparticipatinglegislators.Thestudywasconductedmorethan14yearspriortothecaseandtheIntervenorsdidnotactuallyofferanyoftheevidencetothecourtinthiscase.TheIntervenorssubmittedanaffidavitfromthewitnesswhoservesastheTitleVICoordinatorfortheOklahomaDepartmentofTransportation.Thecourtfoundthattheaffidavitfromthewitnessaverredingeneraltermsthatminoritybusinesseswerediscriminatedagainstintheawardingofstatecontracts.ThedistrictcourtfoundthattheIntervenorshavenotproduced—orindeedevendescribed—theevidenceofdiscrimination.Id.at1241.Thedistrictcourtfoundthatitcannotbediscernedfromthedocumentswhichminoritybusinesseswerethevictimsofdiscrimination,orwhichracialorethnicgroupsweretargetedbysuchallegeddiscrimination.Id.

ThecourtalsofoundthattheIntervenors’evidencedidnotindicatewhatdiscriminatoryactsorpracticesallegedlyoccurred,orwhentheyoccurred.Id.ThedistrictcourtstatedthattheIntervenorsdidnotidentify“asinglequalified,minority‐ownedbidderwhowasexcludedfromastatecontract.”Id.Thedistrictcourt,thus,heldthatbroadallegationsof“systematic”exclusionofminoritybusinesseswerenotsufficienttoconstituteacompellinggovernmentalinterestinremedyingpastorcurrentdiscrimination.Id.at1242.Thedistrictcourtstatedthatthiswasparticularlytrueinlightofthe“State’sadmissionherethattheState’sgovernmentalinterestwasnotinremedyingpastdiscriminationinthestatecompetitivebiddingprocess,butin‘encouragingeconomicdevelopmentofminoritybusinessenterpriseswhichinturnwillbenefittheStateofOklahomaasawhole.’”Id.at1242.

ThecourtfoundthattheStatedefendantsfailedtoproduceanyadmissibleevidenceofasingle,specificdiscriminatoryact,oranysubstantialevidenceshowingapatternofdeliberateexclusionfromstatecontractsofminority‐ownedbusinesses.Id.at1241‐1242,footnote11.

ThedistrictcourtalsonotedthattheSixthCircuitCourtofAppealsinDrabikrejectedOhio’sstatisticalevidenceofunderutilizationofminoritycontractorsbecausetheevidencedidnotreporttheactualuseofminorityfirms;rather,theyreportedonlytheuseofthoseminorityfirmsthathadgonetothetroubleofbeingcertifiedandlistedbythestate.Id.at1242,footnote12.Thedistrictcourtstatedthat,asinDrabik,theevidencepresentedinsupportoftheOklahomaMBEActfailedtoaccountforthepossibilitythatsomeminoritycontractorsmightnotregisterwith


thestate,andthestatisticsdidnotaccountforanycontractsawardedtobusinesseswithminorityownershipoflessthan51percent,orforcontractsperformedinlargepartbyminority‐ownedsubcontractorswheretheprimecontractorwasnotacertifiedminority‐ownedbusiness.Id.

ThedistrictcourtfoundthattheMBEAct’sminoritybiddingpreferencewasnotpredicateduponafindingofdiscriminationinanyparticularindustryorregionofthestate,ordiscriminationagainstanyparticularracialorethnicgroup.Thecourtstatedthattherewasnoevidenceofferedofactualdiscrimination,pastorpresent,againstthespecificracialandethnicgroupstowhomthepreferencewasextended,otherthananattempttoshowahistoryofdiscriminationagainstAfricanAmericans.Id.at1242.

Narrow tailoring. ThedistrictcourtfoundthateveniftheState’sgoalscouldnotbeconsidered“compelling,”theStatedidnotshowthattheMBEActwasnarrowlytailoredtoservethosegoals.ThecourtpointedoutthattheTenthCircuitinAdarandVIIidentifiedsixfactorsthecourtmustconsiderindeterminingwhethertheMBEAct’sminoritypreferenceprovisionsweresufficientlynarrowlytailoredtosatisfyequalprotection:(1)theavailabilityofrace‐neutralalternativeremedies;(2)limitsonthedurationofthechallengedpreferenceprovisions;(3)flexibilityofthepreferenceprovisions;(4)numericalproportionality;(5)theburdenonthirdparties;and(6)over‐orunder‐inclusiveness.Id.at1242‐1243.

First,intermsofrace‐neutralalternativeremedies,thecourtfoundthattheevidenceofferedshowed,atmost,thatnominaleffortsweremadetoassistminority‐ownedbusinessespriortotheadoptionoftheMBEAct’sracialpreferenceprogram.Id.at1243.ThecourtconsideredevidenceregardingtheMinorityAssistanceProgram,butfoundthattobeprimarilyinformationalservicesonly,andwasnotdesignedtoactuallyassistminoritiesorotherdisadvantagedcontractorstoobtaincontractswiththeStateofOklahoma.Id.at1243.Incontrasttothis“informational”program,thecourtnotedtheTenthCircuitinAdarandVIIfavorablyconsideredthefederalgovernment’suseofraciallyneutralalternativesaimedatdisadvantagedbusinesses,includingassistancewithobtainingprojectbonds,assistancewithsecuringcapitalfinancing,technicalassistance,andotherprogramsdesignedtoassiststart‐upbusinesses.Id.at1243citingAdarandVII,228F.3dat1178‐1179.

ThedistrictcourtfoundthatitdoesnotappearfromtheevidencethatOklahoma’sMinorityAssistanceProgramprovidedthetypeofrace‐neutralreliefrequiredbytheTenthCircuitinAdarandVII,intheSupremeCourtintheCrosondecision,nordoesitappearthattheProgramwasraciallyneutral.Id.at1243.ThecourtfoundthattheStateofOklahomadidnotshowanymeaningfulformofassistancetonewordisadvantagedbusinessespriortotheadoptionoftheMBEAct,andthus,thecourtfoundthatthestatedefendantshadnotshownthatOklahomaconsideredrace‐neutralalternativemeanstoachievethestate’sgoalpriortoadoptionoftheminoritybidpreferenceprovisions.Id.at1243.

Inafootnote,thedistrictcourtpointedoutthattheTenthCircuithasrecognizedraciallyneutralprogramsdesignedtoassistallneworfinanciallydisadvantagedbusinessesinobtaininggovernmentcontractstendtobenefitminority‐ownedbusinesses,andcanhelpalleviatetheeffectsofpastandpresent‐daydiscrimination.Id.at1243,footnote15citingAdarandVII.


Thecourtconsideredtheevidenceofferedofpost‐enactmenteffortsbytheStatetoincreaseminorityparticipationinStatecontracting.Thecourtfoundthatmostoftheseeffortsweredirectedtowardencouragingtheparticipationofcertifiedminoritybusinessenterprises,“andarethusnotraciallyneutral.ThisevidencefailstodemonstratethattheStateemployedrace‐neutralalternativemeasurespriortoorafteradoptingtheMinorityBusinessEnterpriseAssistanceAct.”Id.at1244.Someoftheeffortsthecourtfoundweredirectedtowardencouragingtheparticipationofcertifiedminoritybusinessenterprisesandthusnotraciallyneutral,includedmailingvendorregistrationformstominorityvendors,telephoningandmailingletterstominorityvendors,providingassistancetovendorsincompletingregistrationforms,assuringthevendorsreceivedbidinformation,preparingaminoritybusinessdirectoryanddistributingittoallstateagencies,periodicallymailingconstructionprojectinformationtominorityvendors,andprovidingcommodityinformationtominorityvendorsuponrequest.Id.at1244,footnote16.

Intermsofdurationallimitsandflexibility,thecourtfoundthatthe“goal”of10percentofthestate’scontractsbeingawardedtocertifiedminoritybusinessenterpriseshadneverbeenreached,orevenapproached,duringthethirteenyearssincetheMBEActwasimplemented.Id.at1244.Thecourtfoundthedefendantsofferednoevidencethatthebidpreferencewaslikelytoendatanytimeintheforeseeablefuture,orthatitisotherwiselimitedinitsduration.Id.UnlikethefederalprogramsatissueinAdarandVII,thecourtstatedtheOklahomaMBEActhasnoinherenttimelimit,andnoprovisionfordisadvantagedminority‐ownedbusinessesto“graduate”frompreferenceeligibility.Id.ThecourtfoundtheMBEActwasnotlimitedtothoseminority‐ownedbusinesseswhichareshowntobeeconomicallydisadvantaged.Id.

ThecourtstatedthattheMBEActmadenoattempttoaddressorremedyanyactual,demonstratedpastorpresentracialdiscrimination,andtheMBEAct’sdurationwasnottiedinanywaytotheeradicationofsuchdiscrimination.Id.Instead,thecourtfoundtheMBEActrestsonthe“questionableassumptionthat10percentofallstatecontractdollarsshouldbeawardedtocertifiedminority‐ownedandoperatedbusinesses,withoutanyshowingthatthisassumptionisreasonable.”Id.at1244.

BythetermsoftheMBEAct,theminoritypreferenceprovisionswouldcontinueinplaceforfiveyearsafterthegoalof10percentminorityparticipationwasreached,andthusthedistrictcourtconcludedthattheMBEAct’sminoritypreferenceprovisionslackedreasonabledurationallimits.Id.at1245.

Withregardtothefactorof“numericalproportionality”betweentheMBEAct’saspirationalgoalandthenumberofexistingavailableminority‐ownedbusinesses,thecourtfoundtheMBEAct’s10percentgoalwasnotbasedupondemonstrableevidenceoftheavailabilityofminoritycontractorswhowereeitherqualifiedtobidorwhowereready,willingandabletobecomequalifiedtobidonstatecontracts.Id.at1246–1247.ThecourtpointedoutthattheMBEActmadenoattempttodistinguishbetweenthefourminorityracialgroups,sothatcontractsawardedtomembersofallofthepreferredraceswereaggregatedindeterminingwhetherthe10percentaspirationalgoalhadbeenreached.Id.at1246.Inaddition,thecourtfoundtheMBEActaggregatedallstatecontractsforgoodsandservices,sothatminorityparticipationwasdeterminedbythetotalnumberofdollarsspentonstatecontracts.Id.


ThecourtstatedthatinAdarandVII,theTenthCircuitrejectedthecontentionthattheaspirationalgoalswererequiredtocorrespondtoanactualfindingastothenumberofexistingminority‐ownedbusinesses.Id.at1246.ThecourtnotedthatthegovernmentsubmittedevidenceinAdarandVII,thattheeffectsofpastdiscriminationhadexcludedminoritiesfromenteringtheconstructionindustry,andthatthenumberofavailableminoritysubcontractorsreflectedthatdiscrimination.Id.Inlightofthisevidence,thedistrictcourtsaidtheTenthCircuitheldthattheexistingpercentageofminority‐ownedbusinessesis“notnecessarilyanabsolutecap”onthepercentagethataremedialprogrammightlegitimatelyseektoachieve.Id.at1246,citingAdarandVII,228F.3dat1181.

UnlikeAdarandVII,thecourtfoundthattheOklahomaStatedefendantsdidnotoffer“substantialevidence”thattheminoritiesgivenpreferentialtreatmentundertheMBEActwereprevented,throughpastdiscrimination,fromenteringanyparticularindustry,orthatthenumberofavailableminoritysubcontractorsinthatindustryreflectsthatdiscrimination.140F.Supp.2dat1246.ThecourtconcludedthattheOklahomaStatedefendantsdidnotofferanyevidenceofthenumberofminority‐ownedbusinessesdoingbusinessinanyofthemanyindustriescoveredbytheMBEAct.Id.at1246–1247.

Withregardtotheimpactonthirdpartiesfactor,thecourtpointedouttheTenthCircuitinAdarandVIIstatedthemerepossibilitythatinnocentpartieswillsharetheburdenofaremedialprogramisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at1247.ThedistrictcourtfoundtheMBEAct’sbidpreferenceprovisionspreventednon‐minoritybusinessesfromcompetingonanequalbasiswithcertifiedminoritybusinessenterprises,andthatinsomeinstancesplaintiffshadbeenrequiredtolowertheirintendedbidsbecausetheyknewminorityfirmswerebidding.Id.Thecourtpointedoutthatthe5percentpreferenceisapplicabletoallcontractsawardedunderthestate’sCentralPurchasingActwithnotimelimitation.Id.

Intermsofthe“under‐andover‐inclusiveness”factor,thecourtobservedthattheMBEActextendeditsbiddingpreferencetoseveralracialminoritygroupswithoutregardtowhethereachofthosegroupshadsufferedfromtheeffectsofpastorpresentracialdiscrimination.Id.at1247.ThedistrictcourtreiteratedtheOklahomaStatedefendantsdidnotofferanyevidenceatallthattheminorityracialgroupsidentifiedintheActhadactuallysufferedfromdiscrimination.Id.

Second,thedistrictcourtfoundtheMBEAct’sbiddingpreferenceextendstoallcontractsforgoodsandservicesawardedundertheState’sCentralPurchasingAct,withoutregardtowhethermembersofthepreferredminoritygroupshadbeenthevictimsofpastorpresentdiscriminationwithinthatparticularindustryortrade.Id.

Third,thedistrictcourtnotedthepreferenceextendstoallbusinessescertifiedasminority‐ownedandcontrolled,withoutregardtowhetheraparticularbusinessiseconomicallyorsociallydisadvantaged,orhassufferedfromtheeffectsofpastorpresentdiscrimination.Id.Thecourtthusfoundthatthefactorofover‐inclusivenessweighsagainstafindingthattheMBEActwasnarrowlytailored.Id.


ThedistrictcourtinconclusionfoundthattheOklahomaMBEActviolatedtheConstitution’sFifthAmendmentguaranteeofequalprotectionandgrantedtheplaintiffs’MotionforSummaryJudgment.

E. Recent Decisions Involving State or Local Government MBE/WBE/DBE Programs in Other Jurisdictions

Recent Decisions in Federal Circuit Courts of Appeal

1. H. B. Rowe Co., Inc. v. W. Lyndo Tippett, NCDOT, et al., 615 F.3d 233 (4th Cir. 2010)

TheStateofNorthCarolinaenactedstatutorylegislationthatrequiredprimecontractorstoengageingoodfaitheffortstosatisfyparticipationgoalsforminorityandwomensubcontractorsonstate‐fundedprojects.(SeefactsasdetailedinthedecisionoftheUnitedStatesDistrictCourtfortheEasternDistrictofNorthCarolinadiscussedbelow.).Theplaintiff,aprimecontractor,broughtthisactionafterbeingdeniedacontractbecauseofitsfailuretodemonstrategoodfaitheffortstomeettheparticipationgoalssetonaparticularcontractthatitwasseekinganawardtoperformworkwiththeNorthCarolinaDepartmentofTransportation(“NCDOT”).PlaintiffassertedthattheparticipationgoalsviolatedtheEqualProtectionClauseandsoughtinjunctivereliefandmoneydamages.

Afterabenchtrial,thedistrictcourtheldthechallengedstatutoryschemeconstitutionalbothonitsfaceandasapplied,andtheplaintiffprimecontractorappealed.615F.3d233at236.TheCourtofAppealsheldthattheStatedidnotmeetitsburdenofproofinallrespectstoupholdthevalidityofthestatelegislation.But,theCourtagreedwiththedistrictcourtthattheStateproducedastrongbasisinevidencejustifyingthestatutoryschemeonitsface,andasappliedtoAfricanAmericanandNativeAmericansubcontractors,andthattheStatedemonstratedthatthelegislativeschemeisnarrowlytailoredtoserveitscompellinginterestinremedyingdiscriminationagainsttheseracialgroups.TheCourtthusaffirmedthedecisionofthedistrictcourtinpart,reverseditinpartandremandedforfurtherproceedingsconsistentwiththeopinion.Id.

TheCourtfoundthattheNorthCarolinastatutoryscheme“largelymirroredthefederalDisadvantagedBusinessEnterprise(“DBE”)program,withwhicheverystatemustcomplyinawardinghighwayconstructioncontractsthatutilizefederalfunds.”615F.3d233at236.TheCourtalsonotedthatfederalcourtsofappeal“haveuniformlyupheldtheFederalDBEProgramagainstequal‐protectionchallenges.”Id.,atfootnote1,citing,AdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000).

In2004,theStateretainedaconsultanttoprepareandissueathirdstudyofsubcontractorsemployedinNorthCarolina’shighwayconstructionindustry.Thestudy,accordingtotheCourt,marshaledevidencetoconcludethatdisparitiesintheutilizationofminoritysubcontractorspersisted.615F.3d233at238.TheCourtpointedoutthatinresponsetothestudy,theNorthCarolinaGeneralAssemblysubstantiallyamendedstatelegislationsection136‐28.4andthenewlawwentintoeffectin2006.Thenewstatutemodifiedthepreviousstatutoryscheme,accordingtotheCourtinfiveimportantrespects.Id.


First,theamendedstatuteexpresslyconditionsimplementationofanyparticipationgoalsonthefindingsofthe2004study.Second,theamendedstatuteeliminatesthe5and10percentannualgoalsthatweresetinthepredecessorstatute.615F.3d233at238‐239.Instead,asamended,thestatuterequirestheNCDOTto“establishannualaspirationalgoals,notmandatorygoals,…fortheoverallparticipationincontractsbydisadvantagedminority‐ownedandwomen‐ownedbusinesses…[that]shallnotbeappliedrigidlyonspecificcontractsorprojects.”Id.at239,quoting,N.C.Gen.Stat.§136‐28.4(b)(2010).ThestatutefurthermandatesthattheNCDOTset“contract‐specificgoalsorproject‐specificgoals…foreachdisadvantagedminority‐ownedandwomen‐ownedbusinesscategorythathasdemonstratedsignificantdisparityincontractutilization”basedonavailability,asdeterminedbythestudy.Id.

Third,theamendedstatutenarrowedthedefinitionof“minority”toencompassonlythosegroupsthathavesuffereddiscrimination.Id.at239.Theamendedstatutereplacedalistofdefinedminoritiestoanycertaingroupsbydefining“minority”as“onlythoseracialorethnicityclassificationsidentifiedby[thestudy]…thathavebeensubjectedtodiscriminationintherelevantmarketplaceandthathavebeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.”Id.at239quotingsection136‐28.4(c)(2)(2010).

Fourth,theamendedstatuterequiredtheNCDOTtoreevaluatetheProgramovertimeandrespondtochangingconditions.615F.3d233at239.Accordingly,theNCDOTmustconductastudysimilartothe2004studyatleasteveryfiveyears.Id.§136‐28.4(b).Finally,theamendedstatutecontainedasunsetprovisionwhichwassettoexpireonAugust31,2009,buttheGeneralAssemblysubsequentlyextendedthesunsetprovisiontoAugust31,2010.Id.Section136‐28.4(e)(2010).

TheCourtalsonotedthatthestatuterequiredonlygoodfaitheffortsbytheprimecontractorstoutilizesubcontractors,andthatthegoodfaithrequirement,theCourtfound,provedpermissiveinpractice:primecontractorssatisfiedtherequirementin98.5percentofcases,failingtodosoinonly13of878attempts.615F.3d233at239.

Strict scrutiny.TheCourtstatedthestrictscrutinystandardwasapplicabletojustifyarace‐consciousmeasure,andthatitisasubstantialburdenbutnotautomatically“fatalinfact.”615F.3d233at241.TheCourtpointedoutthat“[t]heunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”Id.at241quotingAlexanderv.Estepp,95F.3d312,315(4thCir.1996).Insoacting,agovernmentalentitymustdemonstrateithadacompellinginterestin“remedyingtheeffectsofpastorpresentracialdiscrimination.”Id.,quotingShawv.Hunt,517U.S.899,909(1996).

Thus,theCourtfoundthattojustifyarace‐consciousmeasure,astatemustidentifythatdiscrimination,publicorprivate,withsomespecificity,andmusthaveastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.615F.3d233at241quoting,Croson,488U.S.at504andWygantv.JacksonBoardofEducation,476U.S.267,277(1986)(pluralityopinion).

TheCourtsignificantlynotedthat:“Thereisno‘precisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”615F.3d233at241,quotingRotheDev.Corp.v.DepartmentofDefense,545F.3d1023,1049(Fed.Cir.


2008).TheCourtstatedthatthesufficiencyoftheState’sevidenceofdiscrimination“mustbeevaluatedonacase‐by‐casebasis.”Id.at241.(internalquotationmarksomitted).

TheCourtheldthatastate“neednotconclusivelyprovetheexistenceofpastorpresentracialdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary.615F.3d233at241,citingConcreteWorks,321F.3dat958.“Instead,astatemaymeetitsburdenbyrelyingon“asignificantstatisticaldisparity”betweentheavailabilityofqualified,willing,andableminoritysubcontractorsandtheutilizationofsuchsubcontractorsbythegovernmentalentityoritsprimecontractors.Id.at241,citingCroson,488U.S.at509(pluralityopinion).TheCourtstatedthatwe“furtherrequirethatsuchevidencebe‘corroboratedbysignificantanecdotalevidenceofracialdiscrimination.’”Id.at241,quotingMarylandTroopersAssociation,Inc.v.Evans,993F.2d1072,1077(4thCir.1993).

TheCourtpointedoutthatthosechallengingrace‐basedremedialmeasuresmust“introducecredible,particularizedevidencetorebut”thestate’sshowingofastrongbasisinevidenceforthenecessityforremedialaction.Id.at241‐242,citingConcreteWorks,321F.3dat959.Challengersmayofferaneutralexplanationforthestate’sevidence,presentcontrastingstatisticaldata,ordemonstratethattheevidenceisflawed,insignificant,ornotactionable.Id.at242(citationsomitted).However,theCourtstated“thatmerespeculationthatthestate’sevidenceisinsufficientormethodologicallyflaweddoesnotsufficetorebutastate’sshowing.Id.at242,citingConcreteWorks,321F.3dat991.

TheCourtheldthattosatisfystrictscrutiny,thestate’sstatutoryschememustalsobe“narrowlytailored”toservethestate’scompellinginterestinnotfinancingprivatediscriminationwithpublicfunds.615F.3d233at242,citingAlexander,95F.3dat315(citingAdarand,515U.S.at227).

Intermediate scrutiny.TheCourtheldthatcourtsapply“intermediatescrutiny”tostatutesthatclassifyonthebasisofgender.Id.at242.TheCourtfoundthatadefenderofastatutethatclassifiesonthebasisofgendermeetsthisintermediatescrutinyburden“byshowingatleastthattheclassificationservesimportantgovernmentalobjectivesandthatthediscriminatorymeansemployedaresubstantiallyrelatedtotheachievementofthoseobjectives.”Id.,quotingMississippiUniversityforWomenv.Hogan,458U.S.718,724(1982).TheCourtnotedthatintermediatescrutinyrequireslessofashowingthandoes“themostexacting”strictscrutinystandardofreview.Id.at242.TheCourtfoundthatits“sistercircuits”provideguidanceinformulatingagoverningevidentiarystandardforintermediatescrutiny.Thesecourtsagreethatsuchameasure“canrestsafelyonsomethinglessthanthe‘strongbasisinevidence’requiredtobeartheweightofarace‐orethnicity‐consciousprogram.”Id.at242,quotingEngineeringContractors,122F.3dat909(othercitationsomitted).

Indefiningwhatconstitutes“somethingless”thana‘strongbasisinevidence,’thecourts,…alsoagreethatthepartydefendingthestatutemust‘present[]sufficientprobativeevidenceinsupportofitsstatedrationaleforenactingagenderpreference,i.e.,…theevidence[mustbe]sufficienttoshowthatthepreferencerestsonevidence‐informedanalysisratherthanonstereotypicalgeneralizations.”615F.3d233at242quotingEngineeringContractors,122F.3dat910andConcreteWorks,321F.3dat959.Thegender‐basedmeasuresmustbebasedon


“reasonedanalysisratherthanonthemechanicalapplicationoftraditional,ofteninaccurate,assumptions.”Id.at242quotingHogan,458U.S.at726.

Plaintiff’s burden.TheCourtfoundthatwhenaplaintiffallegesthatastatuteviolatestheEqualProtectionClauseasappliedand,onitsface,theplaintiffbearsaheavyburden.Initsfacialchallenge,theCourtheldthataplaintiff“hasaveryheavyburdentocarry,andmustshowthat[astatutoryscheme]cannotoperateconstitutionallyunderanycircumstance.”Id.at243,quotingWestVirginiav.U.S.DepartmentofHealth&HumanServices,289F.3d281,292(4thCir.2002).

Statistical evidence.TheCourtexaminedtheState’sstatisticalevidenceofdiscriminationinpublic‐sectorsubcontracting,includingitsdisparityevidenceandregressionanalysis.TheCourtnotedthatthestatisticalanalysisanalyzedthedifferenceordisparitybetweentheamountofsubcontractingdollarsminority‐andwomen‐ownedbusinessesactuallywoninamarketandtheamountofsubcontractingdollarstheywouldbeexpectedtowingiventheirpresenceinthatmarket.615F.3d233at243.TheCourtfoundthatthestudygroundeditsanalysisinthe“disparityindex,”whichmeasurestheparticipationofagivenracial,ethnic,orgendergroupengagedinsubcontracting.Id.Incalculatingadisparityindex,thestudydividedthepercentageoftotalsubcontractingdollarsthataparticulargroupwonbythepercentthatgrouprepresentsintheavailablelaborpool,andmultipliedtheresultby100.Id.Theclosertheresultingindexisto100,thegreaterthatgroup’sparticipation.Id.

TheCourtheldthatafterCroson,anumberofoursistercircuitshaverecognizedtheutilityofthedisparityindexindeterminingstatisticaldisparitiesintheutilizationofminority‐andwomen‐ownedbusinesses.Id.at243‐244(Citationstomultiplefederalcircuitcourtdecisionsomitted.)TheCourtalsofoundthatgenerally“courtsconsideradisparityindexlowerthan80asanindicationofdiscrimination.”Id.at244.Accordingly,thestudyconsideredonlyadisparityindexlowerthan80aswarrantingfurtherinvestigation.Id.

TheCourtpointedoutthataftercalculatingthedisparityindexforeachrelevantracialorgendergroup,theconsultanttestedforthestatisticalsignificanceoftheresultsbyconductingstandarddeviationanalysisthroughtheuseoft‐tests.TheCourtnotedthatstandarddeviationanalysis“describestheprobabilitythatthemeasureddisparityistheresultofmerechance.”615F.3d233at244,quotingEng’gContractors,122F.3dat914.Theconsultantconsideredthefindingoftwostandarddeviationstodemonstrate“with95percentcertaintythatdisparity,asrepresentedbyeitheroverutilizationorunderutilization,isactuallypresent.”Id.,citingEng’gContractors,122F.3dat914.

ThestudyanalyzedtheparticipationofminorityandwomensubcontractorsinconstructioncontractsawardedandmanagedfromthecentralNCDOTofficeinRaleigh,NorthCarolina.615F.3d233at244.Todetermineutilizationofminorityandwomensubcontractors,theconsultantdevelopedamasterlistofcontractsmainlyfromState‐maintainedelectronicdatabasesandhardcopyfiles;thenselectedfromthatlistastatisticallyvalidsampleofcontracts,andcalculatedthepercentageofsubcontractingdollarsawardedtominority‐andwomen‐ownedbusinessesduringthe5‐yearperiodendinginJune2003.(Thestudywaspublishedin2004).Id.at244.

TheCourtfoundthattheuseofdataforcentrally‐awardedcontractswassufficientforitsanalysis.Itwasnotedthatdatafromconstructioncontractsawardedandmanagedfromthe


NCDOTdivisionsacrossthestateandfrompreconstructioncontracts,whichinvolveworkfromengineeringfirmsandarchitecturalfirmsonthedesignofhighways,wasincompleteandnotaccurate.615F.3d233at244,n.6.Thesedatawerenotrelieduponinformingtheopinionsrelatingtothestudy.Id.at244,n.6.

Toestimateavailability,whichtheCourtdefinedasthepercentageofaparticulargroupintherelevantmarketarea,theconsultantcreatedavendorlistcomprising:(1)subcontractorsapprovedbythedepartmenttoperformsubcontractworkonstate‐fundedprojects,(2)subcontractorsthatperformedsuchworkduringthestudyperiod,and(3)contractorsqualifiedtoperformprimeconstructionworkonstate‐fundedcontracts.615F.3d233at244.TheCourtnotedthatprimeconstructionworkonstate‐fundedcontractswasincludedbasedonthetestimonybytheconsultantthatprimecontractorsarequalifiedtoperformsubcontractingworkandoftendoperformsuchwork.Id.at245.TheCourtalsonotedthattheconsultantsubmitteditsmasterlisttotheNCDOTforverification.Id.at245.

Basedontheutilizationandavailabilityfigures,thestudypreparedthedisparityanalysiscomparingtheutilizationbasedonthepercentageofsubcontractingdollarsoverthefive‐yearperiod,determiningtheavailabilityinnumbersoffirmsandtheirpercentageofthelaborpool,adisparityindexwhichisthepercentageofutilizationindollarsdividedbythepercentageofavailabilitymultipliedby100,andaTValue.615F.3d233at245.

TheCourtconcludedthatthefiguresdemonstratedprimecontractorsunderutilizedalloftheminoritysubcontractorclassificationsonstate‐fundedconstructioncontractsduringthestudyperiod.615F.3d233245.Thedisparityindexforeachgroupwaslessthan80and,thus,theCourtfoundwarrantedfurtherinvestigation.Id.Thet‐testresults,however,demonstratedmarkedunderutilizationonlyofAfricanAmericanandNativeAmericansubcontractors.Id.ForAfricanAmericansthet‐valuefelloutsideoftwostandarddeviationsfromthemeanand,therefore,wasstatisticallysignificantata95percentconfidencelevel.Id.TheCourtfoundtherewasatleasta95percentprobabilitythatprimecontractors’underutilizationofAfricanAmericansubcontractorswasnottheresultofmerechance.Id.

ForNativeAmericansubcontractors,thet‐valueof1.41wassignificantataconfidencelevelofapproximately85percent.615F.3d233at245.Thet‐valuesforHispanicAmericanandAsianAmericansubcontractors,demonstratedsignificanceataconfidencelevelofapproximately60percent.Thedisparityindexforwomensubcontractorsfoundthattheywereoverutilizedduringthestudyperiod.Theoverutilizationwasstatisticallysignificantata95percentconfidencelevel.Id.

Tocorroboratethedisparitystudy,theconsultantconductedaregressionanalysisstudyingtheinfluenceofcertaincompanyandbusinesscharacteristics–withaparticularfocusonownerraceandgender–onafirm’sgrossrevenues.615F.3d233at246.TheconsultantobtainedthedatafromatelephonesurveyoffirmsthatconductedorattemptedtoconductbusinesswiththeNCDOT.Thesurveypoolconsistedofarandomsampleofsuchfirms.Id.

Theconsultantusedthefirms’grossrevenuesasthedependentvariableintheregressionanalysistotesttheeffectofothervariables,includingcompanyageandnumberoffull‐timeemployees,andtheowners’yearsofexperience,levelofeducation,race,ethnicity,andgender.


615F.3d233at246.Theanalysisrevealedthatminorityandwomenownershipuniversallyhadanegativeeffectonrevenue,andAfricanAmericanownershipofafirmhadthelargestnegativeeffectonthatfirm’sgrossrevenueofalltheindependentvariablesincludedintheregressionmodel.Id.ThesefindingsledtotheconclusionthatforAfricanAmericansthedisparityinfirmrevenuewasnotduetocapacity‐relatedormanagerialcharacteristicsalone.Id.

TheCourtrejectedtheargumentsbytheplaintiffsattackingtheavailabilityestimates.TheCourtrejectedtheplaintiff’sexpert,Dr.GeorgeLaNoue,whotestifiedthatbidderdata–reflectingthenumberofsubcontractorsthatactuallybidonDepartmentsubcontracts–estimatesavailabilitybetterthan“vendordata.”615F.3d233at246.Dr.LaNoueconceded,however,thattheStatedoesnotcompilebidderdataandthatbidderdataactuallyreflectsskewedavailabilityinthecontextofagoalsprogramthaturgesprimecontractorstosolicitbidsfromminorityandwomensubcontractors.Id.TheCourtfoundthattheplaintiff’sexpertdidnotdemonstratethatthevendordatausedinthestudywasunreliable,orthatthebidderdatawouldhaveyieldedlesssupportfortheconclusionsreached.Insum,theCourtheldthattheplaintiffschallengetotheavailabilityestimatefailedbecauseitcouldnotdemonstratethatthe2004study’savailabilityestimatewasinadequate.Id.at246.TheCourtcitedConcreteWorks,321F.3dat991forthepropositionthatachallengercannotmeetitsburdenofproofthroughconjectureandunsupportedcriticismsofthestate’sevidence,”andthattheplaintiffRowepresentednoviablealternativefordeterminingavailability.Id.at246‐247,citingConcreteWorks,321F.3d991andSherbrookeTurf,Inc.v.Minn.DepartmentofTransportation,345F.3d964,973(8thCir.2003).

TheCourtalsorejectedtheplaintiff’sargumentthatminoritysubcontractorsparticipatedonstate‐fundedprojectsatalevelconsistentwiththeiravailabilityintherelevantlaborpool,basedonthestate’sresponsethatevidenceastothenumberofminoritysubcontractorsworkingwithstate‐fundedprojectsdoesnoteffectivelyrebuttheevidenceofdiscriminationintermsofsubcontractingdollars.615F.3d233at247.TheStatepointedtoevidenceindicatingthatprimecontractorsusedminoritybusinessesforlow‐valueworkinordertocomplywiththegoals,andthatAfricanAmericanownershiphadasignificantnegativeimpactonfirmrevenueunrelatedtofirmcapacityorexperience.Id.TheCourtconcludedplaintiffdidnotofferanycontraryevidence.Id.

TheCourtfoundthattheStatebolstereditspositionbypresentingevidencethatminoritysubcontractorshavethecapacitytoperformhigher‐valuework.615F.3d233at247.Thestudyconcluded,basedonasampleofsubcontractsandreportsofannualfirmrevenue,thatexclusionofminoritysubcontractorsfromcontractsunder$500,000wasnotafunctionofcapacity.Id.at247.Further,theStateshowedthatover90percentoftheNCDOT’ssubcontractswerevaluedat$500,000orless,andthatcapacityconstraintsdonotoperatewiththesameforceonsubcontractsastheymayonprimecontractsbecausesubcontractstendtoberelativelysmall.Id.at247.TheCourtpointedoutthattheCourtinRotheII,545F.3dat1042‐45,faulteddisparityanalysesoftotalconstructiondollars,includingprimecontracts,forfailingtoaccountfortherelativecapacityoffirmsinthatcase.Id.at247.

TheCourtpointedoutthatinadditiontothestatisticalevidence,theStatealsopresentedevidencedemonstratingthatfrom1991to1993,duringtheProgram’ssuspension,primecontractorsawardedsubstantiallyfewersubcontractingdollarstominorityandwomensubcontractorsonstate‐fundedprojects.TheCourtrejectedtheplaintiff’sargumentthat


evidenceofadeclineinutilizationdoesnotraiseaninferenceofdiscrimination.615F.3d233at247‐248.TheCourtheldthattheverysignificantdeclineinutilizationofminorityandwomen‐subcontractors–nearly38percent–“surelyprovidesabasisforafactfindertoinferthatdiscriminationplayedsomeroleinprimecontractors’reducedutilizationofthesegroupsduringthesuspension.”Id.at248,citingAdarandv.Slater,228F.3dat1174(findingthatevidenceofdecliningminorityutilizationafteraprogramhasbeendiscontinued“stronglysupportsthegovernment’sclaimthattherearesignificantbarrierstominoritycompetitioninthepublicsubcontractingmarket,raisingthespecterofracialdiscrimination.”)TheCourtfoundsuchaninferenceisparticularlycompellingforminority‐ownedbusinessesbecause,evenduringthestudyperiod,primecontractorscontinuetounderutilizethemonstate‐fundedroadprojects.Id.at248.

Anecdotal evidence.TheStateadditionallyreliedonthreesourcesofanecdotalevidencecontainedinthestudy:atelephonesurvey,personalinterviews,andfocusgroups.TheCourtfoundtheanecdotalevidenceshowedaninformal“goodoldboy”networkofwhitecontractorsthatdiscriminatedagainstminoritysubcontractors.615F.3d233at248.TheCourtnotedthatthree‐quartersofAfricanAmericanrespondentstothetelephonesurveyagreedthataninformalnetworkofprimeandsubcontractorsexistedintheState,asdidthemajorityofotherminorities,thatmorethanhalfofAfricanAmericanrespondentsbelievedthenetworkexcludedtheircompaniesfrombiddingorawardingacontractasdidmanyoftheotherminorities.Id.at248.TheCourtfoundthatnearlyhalfofnonminoritymalerespondentscorroboratedtheexistenceofaninformalnetwork,however,only17percentofthembelievedthatthenetworkexcludedtheircompaniesfrombiddingorwinningcontracts.Id.

AnecdotalevidencealsoshowedalargemajorityofAfricanAmericanrespondentsreportedthatdoublestandardsinqualificationsandperformancemadeitmoredifficultforthemtowinbidsandcontracts,thatprimecontractorsviewminorityfirmsasbeinglesscompetentthannonminorityfirms,andthatnonminorityfirmschangetheirbidswhennotrequiredtohireminorityfirms.615F.3d233at248.Inaddition,theanecdotalevidenceshowedAfricanAmericanandNativeAmericanrespondentsbelievedthatprimecontractorssometimesdroppedminoritysubcontractorsafterwinningcontracts.Id.at248.TheCourtfoundthatinterviewandfocus‐groupresponsesechoedandunderscoredthesereports.Id.

Theanecdotalevidenceindicatedthatprimecontractorsalreadyknowwhotheywilluseonthecontractbeforetheysolicitbids:thatthe“goodoldboynetwork”affectsbusinessbecauseprimecontractorsjustpickupthephoneandcalltheirbuddies,whichexcludesothersfromthatmarketcompletely;thatprimecontractorsprefertouseotherlessqualifiedminority‐ownedfirmstoavoidsubcontractingwithAfricanAmerican‐ownedfirms;andthatprimecontractorsusetheirpreferredsubcontractorregardlessofthebidprice.615F.3d233at248‐249.Severalminoritysubcontractorsreportedthatprimecontractorsdonottreatminorityfirmsfairly,pointingtoinstancesinwhichprimecontractorssolicitedquotesthedaybeforebidsweredue,didnotrespondtobidsfromminoritysubcontractors,refusedtonegotiatepriceswiththem,orgaveminoritysubcontractorsinsufficientinformationregardingtheproject.Id.at249.

TheCourtrejectedtheplaintiffs’contentionthattheanecdotaldatawasflawedbecausethestudydidnotverifytheanecdotaldataandthattheconsultantoversampledminoritysubcontractorsincollectingthedata.TheCourtstatedthattheplaintiffsofferednorationaleas


towhyafactfindercouldnotrelyontheState’s“unverified”anecdotaldata,andpointedoutthatafactfindercouldverywellconcludethatanecdotalevidenceneednot‐andindeedcannot‐beverifiedbecauseit“isnothingmorethanawitness’narrativeofanincidenttoldfromthewitness’perspectiveandincludingthewitness’perceptions.”615F.3d233at249,quotingConcreteWorks,321F.3dat989.

TheCourtheldthatanecdotalevidencesimplysupplementsstatisticalevidenceofdiscrimination.Id.at249.TheCourtrejectedplaintiffs’argumentthatthestudyoversampledrepresentativesfromminoritygroups,andfoundthatsurveyingmorenon‐minoritymenwouldnothaveadvancedtheinquiry.Id.at249.Itwasnotedthatthesamplesoftheminoritygroupswererandomlyselected.Id.TheCourtfoundthestatehadcompellinganecdotalevidencethatminoritysubcontractorsfacerace‐basedobstaclestosuccessfulbidding.Id.at249.

Strong basis in evidence that the minority participation goals were necessary to remedy

discrimination.TheCourtheldthattheStatepresenteda“strongbasisinevidence”foritsconclusionthatminorityparticipationgoalswerenecessarytoremedydiscriminationagainstAfricanAmericanandNativeAmericansubcontractors.”615F.3d233at250.Therefore,theCourtheldthattheStatesatisfiedthestrictscrutinytest.TheCourtfoundthattheState’sdatademonstratedthatprimecontractorsgrosslyunderutilizedAfricanAmericanandNativeAmericansubcontractorsinpublicsectorsubcontractingduringthestudy.Id.at250.TheCourtnotedthatthesefindingshaveparticularresonancebecausesince1983,NorthCarolinahasencouragedminorityparticipationinstate‐fundedhighwayprojects,andyetAfricanAmericanandNativeAmericansubcontractorscontinuetobeunderutilizedonsuchprojects.Id.at250.

Inaddition,theCourtfoundthedisparityindexinthestudydemonstratedstatisticallysignificantunderutilizationofAfricanAmericansubcontractorsata95percentconfidencelevel,andofNativeAmericansubcontractorsataconfidencelevelofapproximately85percent.615F.3d233at250.TheCourtconcludedtheStatebolsteredthedisparityevidencewithregressionanalysisdemonstratingthatAfricanAmericanownershipcorrelatedwithasignificant,negativeimpactonfirmrevenue,anddemonstratedtherewasadramaticdeclineintheutilizationofminoritysubcontractorsduringthesuspensionoftheprograminthe1990s.Id.

Thus,theCourtheldtheState’sevidenceshowingagrossstatisticaldisparitybetweentheavailabilityofqualifiedAmericanandNativeAmericansubcontractorsandtheamountofsubcontractingdollarstheywinonpublicsectorcontractsestablishedthenecessarystatisticalfoundationforupholdingtheminorityparticipationgoalswithrespecttothesegroups.615F.3d233at250.TheCourtthenfoundthattheState’sanecdotalevidenceofdiscriminationagainstthesetwogroupssufficientlysupplementedtheState’sstatisticalshowing.Id.Thesurveyinthestudyexposedaninformal,raciallyexclusivenetworkthatsystemicallydisadvantagedminoritysubcontractors.Id.at251.TheCourtheldthattheStatecouldconcludewithgoodreasonthatsuchnetworksexertachronicandperniciousinfluenceonthemarketplacethatcallsforremedialaction.Id.TheCourtfoundtheanecdotalevidenceindicatedthatracialdiscriminationisacriticalfactorunderlyingthegrossstatisticaldisparitiespresentedinthestudy.Id.at251.Thus,theCourtheldthattheStatepresentedsubstantialstatisticalevidenceofgrossdisparity,corroboratedby“disturbing”anecdotalevidence.


TheCourtheldincircumstanceslikethese,theSupremeCourthasmadeitabundantlyclearastatecanremedyapubliccontractingsystemthatwithholdsopportunitiesfromminoritygroupsbecauseoftheirrace.615F.3d233at251‐252.

Narrowly tailored.TheCourtthenaddressedwhethertheNorthCarolinastatutoryschemewasnarrowlytailoredtoachievetheState’scompellinginterestinremedyingdiscriminationagainstAfricanAmericanandNativeAmericansubcontractorsinpublic‐sectorsubcontracting.Thefollowingfactorswereconsideredindeterminingwhetherthestatutoryschemewasnarrowlytailored.

Neutral measures.TheCourtheldthatnarrowlytailoringrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives,”butastateneednot“exhaust[]…everyconceivablerace‐neutralalternative.”615F.3d233at252quotingGrutterv.Bollinger,539U.S.306,339(2003).TheCourtfoundthatthestudydetailsnumerousalternativerace‐neutralmeasuresaimedatenhancingthedevelopmentandcompetitivenessofsmallorotherwisedisadvantagedbusinessesinNorthCarolina.Id.at252.TheCourtpointedoutvariousrace‐neutralalternativesandmeasures,includingaSmallBusinessEnterpriseProgram;waivinginstitutionalbarriersofbondingandlicensingrequirementsoncertainsmallbusinesscontractsof$500,000orless;andtheDepartmentcontractsforsupportservicestoassistdisadvantagedbusinessenterpriseswithbookkeepingandaccounting,taxes,marketing,bidding,negotiation,andotheraspectsofentrepreneurialdevelopment.Id.at252.

TheCourtfoundthatplaintiffidentifiednoviablerace‐neutralalternativesthatNorthCarolinahadfailedtoconsiderandadopt.TheCourtalsofoundthattheStatehadundertakenmostoftherace‐neutralalternativesidentifiedbyUSDOTinitsregulationsgoverningtheFederalDBEProgram.615F.3d233at252,citing49CFR§26.51(b).TheCourtconcludedthattheStategaveseriousgoodfaithconsiderationtorace‐neutralalternativespriortoadoptingthestatutoryscheme.Id.

TheCourtconcludedthatdespitetheserace‐neutralefforts,thestudydemonstrateddisparitiescontinuetoexistintheutilizationofAfricanAmericanandNativeAmericansubcontractorsinstate‐fundedhighwayconstructionsubcontracting,andthatthese“persistentdisparitiesindicatethenecessityofarace‐consciousremedy.”615F.3d233at252.

Duration.TheCourtagreedwiththedistrictcourtthattheprogramwasnarrowlytailoredinthatitsetaspecificexpirationdateandrequiredanewdisparitystudyeveryfiveyears.615F.3d233at253.TheCourtfoundthattheprogram’sinherenttimelimitandprovisionsrequiringregularreevaluationensureitiscarefullydesignedtoendureonlyuntilthediscriminatoryimpacthasbeeneliminated.Id.at253,citingAdarandConstructorsv.Slater,228F.3dat1179(quotingUnitedStatesv.Paradise,480U.S.149,178(1987)).

Program’s goals related to percentage of minority subcontractors.TheCourtconcludedthattheStatehaddemonstratedthattheProgram’sparticipationgoalsarerelatedtothepercentageofminoritysubcontractorsintherelevantmarketsintheState.615F.3d233at253.TheCourtfoundthattheNCDOThadtakenconcretestepstoensurethatthesegoalsaccuratelyreflecttheavailabilityofminority‐ownedbusinessesonaproject‐by‐projectbasis.Id.


Flexibility.TheCourtheldthattheProgramwasflexibleandthussatisfiedthisindicatorofnarrowtailoring.615F.3d233at253.TheProgramcontemplatedawaiverofproject‐specificgoalswhenprimecontractorsmakegoodfaitheffortstomeetthosegoals,andthatthegoodfaitheffortsessentiallyrequireonlythattheprimecontractorsolicitandconsiderbidsfromminorities.Id.TheStatedoesnotrequireorexpecttheprimecontractortoacceptanybidfromanunqualifiedbidder,oranybidthatisnotthelowestbid.Id.TheCourtfoundtherewasalenientstandardandflexibilityofthe“goodfaith”requirement,andnotedtheevidenceshowedonly13of878goodfaithsubmissionsfailedtodemonstrategoodfaithefforts.Id.

Burden on non‐MWBE/DBEs.TheCourtrejectedthetwoargumentspresentedbyplaintiffthattheProgramcreatedoneroussolicitationandfollow‐uprequirements,findingthattherewasnoneedforadditionalemployeesdedicatedtothetaskofrunningthesolicitationprogramtoobtainMBE/WBEs,andthattherewasnoevidencetosupporttheclaimthatplaintiffwasrequiredtosubcontractmillionsofdollarsofworkthatitcouldperformitselfforlessmoney.615F.3d233at254.TheStateofferedevidencefromthestudythatprimecontractorsneednotsubmitsubcontractworkthattheycanself‐perform.Id.

Overinclusive.TheCourtfoundbyitsowntermsthestatutoryschemeisnotoverinclusivebecauseitlimitedrelieftoonlythoseracialorethnicityclassificationsthathavebeensubjectedtodiscriminationintherelevantmarketplaceandthathadbeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.615F.3d233at254.TheCourtconcludedthatintailoringtheremedythisway,thelegislaturedidnotrandomlyincluderacialgroupsthatmayneverhavesufferedfromdiscriminationintheconstructionindustry,butrather,contemplatedparticipationgoalsonlyforthosegroupsshowntohavesuffereddiscrimination.Id.

Insum,theCourtheldthatthestatutoryschemeisnarrowlytailoredtoachievetheState’scompellinginterestinremedyingdiscriminationinpublic‐sectorsubcontractingagainstAfricanAmericanandNativeAmericansubcontractors.Id.at254.

Women‐owned businesses overutilized.Thestudy’spublic‐sectordisparityanalysisdemonstratedthatwomen‐ownedbusinesseswonfarmorethantheirexpectedshareofsubcontractingdollarsduringthestudyperiod.615F.3d233at254.Inotherwords,theCourtconcludedthatprimecontractorssubstantiallyoverutilizedwomensubcontractorsonpublicroadconstructionprojects.Id.TheCourtfoundthepublic‐sectorevidencedidnotevincethe“exceedinglypersuasivejustification”theSupremeCourtrequires.Id.at255.

TheCourtnotedthattheStatereliedheavilyonprivate‐sectordatafromthestudyattemptingtodemonstratethatprimecontractorssignificantlyunderutilizedwomensubcontractorsinthegeneralconstructionindustrystatewideandintheAsheville,NorthCarolinaarea.615F.3d233at255.However,becausethestudydidnotprovideat‐testanalysisontheprivate‐sectordisparityfigurestocalculatestatisticalsignificance,theCourtcouldnotdeterminewhetherthisprivateunderutilizationwas“theresultofmerechance.”Id.at255.TheCourtfoundtroublingthe“evidentiarygap”thattherewasnoevidenceindicatingtheextenttowhichwomen‐ownedbusinessescompetingonpublic‐sectorroadprojectsviedforprivate‐sectorsubcontractsinthegeneralconstructionindustry.Id.at255.TheCourtalsofoundthattheStatedidnotpresentanyanecdotalevidenceindicatingthatwomensubcontractorssuccessfullybiddingonStatecontractsfacedprivate‐sectordiscrimination.Id.Inaddition,theCourtfoundmissingany


evidenceprimecontractorsthatdiscriminateagainstwomensubcontractorsintheprivatesectorneverthelesswinpublic‐sectorcontracts.Id.

TheCourtpointedoutthatitdidnotsuggestthattheproponentofagender‐consciousprogram“mustalwaystieprivatediscriminationtopublicaction.”615F.3d233at255,n.11.But,theCourtheldwhere,ashere,thereexistedsubstantialprobativeevidenceofoverutilizationintherelevantpublicsector,astatemustpresentsomethingmorethangeneralizedprivate‐sectordataunsupportedbycompellinganecdotalevidencetojustifyagender‐consciousprogram.Id.at255,n.11.

Moreover,theCourtfoundthestatefailedtoestablishtheamountofoverlapbetweengeneralconstructionandroadconstructionsubcontracting.615F.3d233at256.TheCourtsaidthatthedearthofevidenceastothecorrelationbetweenpublicroadconstructionsubcontractingandprivategeneralconstructionsubcontractingseverelylimitstheprivatedata’sprobativevalueinthiscase.Id.

Thus,theCourtheldthattheStatecouldnotovercomethestrongevidenceofoverutilizationinthepublicsectorintermsofgenderparticipationgoals,andthattheprofferedprivate‐sectordatafailedtoestablishdiscriminationintheparticularfieldinquestion.615F.3d233at256.Further,theanecdotalevidence,theCourtconcluded,indicatedthatmostwomensubcontractorsdonotexperiencediscrimination.Id.Thus,theCourtheldthattheStatefailedtopresentsufficientevidencetosupporttheProgram’scurrentinclusionofwomensubcontractorsinsettingparticipationgoals.Id.

Holding.TheCourtheldthatthestatelegislaturehadcraftedlegislationthatwithstoodtheconstitutionalscrutiny.615F.3d233at257.TheCourtconcludedthatinlightofthestatutoryscheme’sflexibilityandresponsivenesstotherealitiesofthemarketplace,andgiventheState’sstrongevidenceofdiscriminationagainAfricanAmericanandNativeAmericansubcontractorsinpublic‐sectorsubcontracting,theState’sapplicationofthestatutetothesegroupsisconstitutional.Id.at257.However,theCourtalsoheldthatbecausetheStatefailedtojustifyitsapplicationofthestatutoryschemetowomen,AsianAmerican,andHispanicAmericansubcontractors,theCourtfoundthoseapplicationswerenotconstitutional.

Therefore,theCourtaffirmedthejudgmentofthedistrictcourtwithregardtothefacialvalidityofthestatute,andwithregardtoitsapplicationtoAfricanAmericanandNativeAmericansubcontractors.615F.3d233at258.TheCourtreversedthedistrictcourt’sjudgmentinsofarasitupheldtheconstitutionalityofthestatelegislatureasappliedtowomen,AsianAmericanandHispanicAmericansubcontractors.Id.TheCourtthusremandedthecasetothedistrictcourttofashionanappropriateremedyconsistentwiththeopinion.Id.

Concurring opinions.ItshouldbepointedoutthatthereweretwoconcurringopinionsbythethreeJudgepanel:onejudgeconcurredinthejudgment,andtheotherjudgeconcurredfullyinthemajorityopinionandthejudgment.


2. Jana‐Rock Construction, Inc. v. New York State Dept. of Economic Development, 438 F.3d 195 (2d Cir. 2006)

ThisrecentcaseisinstructiveinconnectionwiththedeterminationofthegroupsthatmaybeincludedinaMBE/WBE‐typeprogram,andthestandardofanalysisutilizedtoevaluatealocalgovernment’snon‐inclusionofcertaingroups.Inthiscase,theSecondCircuitCourtofAppealsheldracialclassificationsthatarechallengedas“under‐inclusive”(i.e.,thosethatexcludepersonsfromaparticularracialclassification)aresubjecttoa“rationalbasis”review,notstrictscrutiny.

PlaintiffLuiere,a70percentshareholderofJana‐RockConstruction,Inc.(“JanaRock”)andthe“sonofaSpanishmotherwhoseparentswereborninSpain,”challengedtheconstitutionalityoftheStateofNewYork’sdefinitionof“Hispanic”underitslocalminority‐ownedbusinessprogram.438F.3d195,199‐200(2dCir.2006).UndertheUSDOTregulations,49CFR§26.5,“HispanicAmericans”aredefinedas“personsofMexican,PuertoRican,Cuban,Dominican,CentralorSouthAmerican,orotherSpanishorPortuguesecultureororigin,regardlessofrace.”Id.at201.Uponproperapplication,Jana‐RockwascertifiedbytheNewYorkDepartmentofTransportationasaDisadvantagedBusinessEnterprise(“DBE”)underthefederalregulations.Id.

However,unlikethefederalregulations,theStateofNewYork’slocalminority‐ownedbusinessprogramincludedinitsdefinitionofminorities“HispanicpersonsofMexican,PuertoRican,Dominican,Cuban,CentralorSouthAmericanofeitherIndianorHispanicorigin,regardlessofrace.”Thedefinitiondidnotincludeallpersonsfrom,ordescendantsofpersonsfrom,SpainorPortugal.Id.Accordingly,Jana‐RockwasdeniedMBEcertificationunderthelocalprogram;Jana‐RockfiledsuitallegingaviolationoftheEqualProtectionClause.Id.at202‐03.Theplaintiffconcededthattheoverallminority‐ownedbusinessprogramsatisfiedtherequisitestrictscrutiny,butarguedthatthedefinitionof“Hispanic”wasfatallyunder‐inclusive.Id.at205.

TheSecondCircuitfoundthatthenarrow‐tailoringprongofthestrictscrutinyanalysis“allowsNewYorktoidentifywhichgroupsitispreparedtoproveareinneedofaffirmativeactionwithoutdemonstratingthatnoothergroupsmeritconsiderationfortheprogram.”Id.at206.Thecourtfoundthatevaluatingunder‐inclusivenessasanelementofthestrictscrutinyanalysiswasatoddswiththeUnitedStatesSupremeCourtdecisioninCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989)whichrequiredthataffirmativeactionprogramsbenobroaderthannecessary.Id.at207‐08.Thecourtsimilarlyrejectedtheargumentthatthestateshouldmirrorthefederaldefinitionof“Hispanic,”findingthatCongresshasmoreleewaythanthestatestomakebroaderclassificationsbecauseCongressismakingsuchclassificationsonthenationallevel.Id.at209.

Thecourtopined—withoutdeciding—thatitmaybeimpermissibleforNewYorktosimplyadoptthe“federalUSDOTdefinitionofHispanicwithoutatleastmakinganindependentassessmentofdiscriminationagainstHispanicsofSpanishOrigininNewYork.”Id.Additionally,findingthattheplaintifffailedtopointtoanydiscriminatorypurposebyNewYorkinfailingtoincludepersonsofSpanishorPortuguesedescent,thecourtdeterminedthattherationalbasisanalysiswasappropriate.Id.at213.


Thecourtheldthattheplaintifffailedtherationalbasistestforthreereasons:(1)becauseitwasnotirrationalnordiditdisplayanimustoexcludepersonsofSpanishandPortuguesedescentfromthedefinitionofHispanic;(2)becausethefacttheplaintiffcoulddemonstrateevidenceofdiscriminationthathepersonallyhadsuffereddidnotrenderNewYork’sdecisiontoexcludepersonsofSpanishandPortuguesedescentirrational;and(3)becausethefactNewYorkmayhavereliedonCensusdataincludingasmallpercentageofHispanicsofSpanishdescentdidnotmeanthatitwasirrationaltoconcludethatHispanicsofLatinAmericanoriginwereingreaterneedofremediallegislation.Id.at213‐14.Thus,theSecondCircuitaffirmedtheconclusionthatNewYorkhadarationalbasisforitsdefinitiontonotincludepersonsofSpanishandPortuguesedescent,andthusaffirmedthedistrictcourtdecisionupholdingtheconstitutionalityofthechallengeddefinition.

3. Rapid Test Prods., Inc. v. Durham Sch. Servs., Inc., 460 F.3d 859 (7th Cir. 2006)

InRapidTestProducts,Inc.v.DurhamSchoolServicesInc.,theSeventhCircuitCourtofAppealsheldthat42U.S.C.§1981(thefederalanti‐discriminationlaw)didnotprovidean“entitlement”indisadvantagedbusinessestoreceivecontractssubjecttosetasideprograms;rather,§1981providedaremedyforindividualswhoweresubjecttodiscrimination.

DurhamSchoolServices,Inc.(“Durham”),aprimecontractor,submittedabidforandwonacontractwithanIllinoisschooldistrict.Thecontractwassubjecttoaset‐asideprogramreservingsomeofthesubcontractsfordisadvantagedbusinessenterprises(arace‐andgender‐consciousprogram).Priortobidding,DurhamnegotiatedwithRapidTestProducts,Inc.(“RapidTest”),madeonepaymenttoRapidTestasanadvance,andincludedRapidTestinitsfinalbid.RapidTestbelievedithadreceivedthesubcontract.However,aftertheschooldistrictawardedthecontracttoDurham,DurhamgavethesubcontracttooneofRapidTest’scompetitor’s,abusinessownedbyanAsianmale.Theschooldistrictagreedtothesubstitution.RapidTestbroughtsuitagainstDurhamunder42U.S.C.§1981allegingthatDurhamdiscriminatedagainstitbecauseRapid’sownerwasablackwoman.

ThedistrictcourtgrantedsummaryjudgmentinfavorofDurhamholdingtheparties’dealinghadbeentooindefinitetocreateacontract.Onappeal,theSeventhCircuitCourtofAppealsstatedthat“§1981establishesaruleagainstdiscriminationincontractinganddoesnotcreateanyentitlementtobethebeneficiaryofacontractreservedforfirmsownedbyspecifiedracial,sexual,ethnic,orreligiousgroups.Argumentsthataparticularset‐asideprogramisalawfulremedyforpriordiscriminationmayormaynotprevailifapotentialsubcontractorclaimstohavebeenexcluded,butitistovictimsofdiscriminationratherthanfrustratedbeneficiariesthat§1981assignstherighttolitigate.”

ThecourtheldthatifraceorsexdiscriminationisthereasonwhyDurhamdidnotawardthesubcontracttoRapidTest,then§1981providesrelief.Havingfailedtoaddressthisissue,theSeventhCircuitCourtofAppealsremandedthecasetothedistrictcourttodeterminewhetherRapidTesthadevidencetobackupitsclaimthatraceandsexdiscrimination,ratherthananondiscriminatoryreasonsuchasinabilitytoperformtheservicesDurhamwanted,accountedforDurham’sdecisiontohireRapidTest’scompetitor.


4. Virdi v. DeKalb County School District, 135 Fed. Appx. 262, 2005 WL 138942 (11th Cir. 2005) (unpublished opinion)

Althoughitisanunpublishedopinion,Virdiv.DeKalbCountySchoolDistrictisarecentEleventhCircuitdecisionreviewingachallengetoalocalgovernmentMBE/WBE‐typeprogram,whichisinstructivetothedisparitystudy.InVirdi,theEleventhCircuitstruckdownaMBE/WBEgoalprogramthatthecourtheldcontainedracialclassifications.ThecourtbaseditsrulingprimarilyonthefailureoftheDeKalbCountySchoolDistrict(the“District”)toseriouslyconsiderandimplementarace‐neutralprogramandtotheinfinitedurationoftheprogram.

PlaintiffVirdi,anAsianAmericanarchitectofIndiandescent,filedsuitagainsttheDistrict,membersoftheDeKalbCountyBoardofEducation(bothindividuallyandintheirofficialcapacities)(the“Board”)andtheSuperintendent(bothindividuallyandinhisofficialcapacity)(collectively“defendants”)pursuantto42U.S.C.§§1981and1983andtheFourteenthAmendmentallegingthattheydiscriminatedagainsthimonthebasisofracewhenawardingarchitecturalcontracts.135Fed.Appx.262,264(11thCir.2005).Virdialsoallegedtheschooldistrict’sMinorityVendorInvolvementProgramwasfaciallyunconstitutional.Id.

Thedistrictcourtinitiallygrantedthedefendants’MotionsforSummaryJudgmentonallofVirdi’sclaimsandtheEleventhCircuitCourtofAppealsreversedinpart,vacatedinpart,andremanded.Id.Onremand,thedistrictcourtgrantedthedefendants’MotionforPartialSummaryJudgmentonthefacialchallenge,andthengrantedthedefendants’motionforajudgmentasamatteroflawontheremainingclaimsatthecloseofVirdi’scase.Id.

In1989,theBoardappointedtheTillmanCommittee(the“Committee”)tostudyparticipationoffemale‐andminority‐ownedbusinesseswiththeDistrict.Id.TheCommitteemetwithvariousDistrictdepartmentsandanumberofminoritycontractorswhoclaimedtheyhadunsuccessfullyattemptedtosolicitbusinesswiththeDistrict.Id.Basedupona“generalfeeling”thatminoritieswereunder‐represented,theCommitteeissuedtheTillmanReport(the“Report”)stating“theCommittee’simpressionthat‘[m]inoritiesha[d]notparticipatedinschoolboardpurchasesandcontractinginaratioreflectingtheminoritymake‐upofthecommunity.”Id.TheReportcontainednospecificevidenceofpastdiscriminationnoranyfactualfindingsofdiscrimination.Id.

TheReportrecommendedthattheDistrict:(1)Advertisebidsandpurchasingopportunitiesinnewspaperstargetingminorities,(2)conductperiodicseminarstoeducateminoritiesondoingbusinesswiththeDistrict,(3)notifyorganizationsrepresentingminorityfirmsregardingbiddingandpurchasingopportunities,and(4)publisha“howto”booklettobemadeavailabletoanybusinessinterestedindoingbusinesswiththeDistrict.

Id.TheReportalsorecommendedthattheDistrictadoptannual,aspirationalparticipationgoalsforwomen‐andminority‐ownedbusinesses.Id.TheReportcontainedstatementsindicatingtheselectionprocessshouldremainneutralandrecommendedthattheBoardadoptanon‐discriminationstatement.Id.

In1991,theBoardadoptedtheReportandimplementedseveraloftherecommendations,includingadvertisingintheAJC,conductingseminars,andpublishingthe“howto”booklet.Id.


TheBoardalsoimplementedtheMinorityVendorInvolvementProgram(the“MVP”)whichadoptedtheparticipationgoalssetforthintheReport.Id.at265.

TheBoarddelegatedtheresponsibilityofselectingarchitectstotheSuperintendent.Id.VirdisentalettertotheDistrictinOctober1991expressinginterestinobtainingarchitecturalcontracts.Id.VirdisentthelettertotheDistrictManagerandsentfollow‐upliterature;here‐contactedtheDistrictManagerin1992and1993.Id.InAugust1994,VirdisentaletterandaqualificationspackagetoaprojectmanageremployedbyHeeryInternational.Id.Inafollow‐upconversation,theprojectmanagerallegedlytoldVirdithathisfirmwasnotselectednotbaseduponhisqualifications,butbecausethe“Districtwasonlylookingfor‘black‐ownedfirms.’”Id.VirdisentalettertotheprojectmanagerrequestingconfirmationofhisstatementinwritingandtheprojectmanagerforwardedthelettertotheDistrict.Id.

AfteraseriesofmeetingswithDistrictofficials,in1997,VirdimetwiththenewlyhiredExecutiveDirector.Id.at266.UponrequestoftheExecutiveDirector,Virdire‐submittedhisqualificationsbutwasinformedthathewouldbeconsideredonlyforfutureprojects(PhaseIIISPLOSTprojects).Id.VirdithenfiledsuitbeforeanyPhaseIIISPLOSTprojectswereawarded.Id.

TheEleventhCircuitconsideredwhethertheMVPwasfaciallyunconstitutionalandwhetherthedefendantsintentionallydiscriminatedagainstVirdionthebasisofhisrace.Thecourtheldthatstrictscrutinyappliestoallracialclassificationsandisnotlimitedtomerelyset‐asidesormandatoryquotas;therefore,theMVPwassubjecttostrictscrutinybecauseitcontainedracialclassifications.Id.at267.Thecourtfirstquestionedwhethertheidentifiedgovernmentinterestwascompelling.Id.at268.However,thecourtdeclinedtoreachthatissuebecauseitfoundtherace‐basedparticipationgoalswerenotnarrowlytailoredtoachievingtheidentifiedgovernmentinterest.Id.

ThecourtheldtheMVPwasnotnarrowlytailoredfortworeasons.Id.First,becausenoevidenceexistedthattheDistrictconsideredrace‐neutralalternativesto“avoidunwittingdiscrimination.”Thecourtfoundthat“[w]hilenarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,itdoesrequireserious,goodfaithconsiderationofwhethersuchalternativescouldservethegovernmentalinterestatstake.”Id.,citingGrutterv.Bollinger,539U.S.306,339(2003),andRichmondv.J.A.CrosonCo.,488U.S.469,509‐10(1989).ThecourtfoundthatDistrictcouldhaveengagedinanynumberofequallyeffectiverace‐neutralalternatives,includingusingitsoutreachprocedureandtrackingtheparticipationandsuccessofminority‐ownedbusinessascomparedtonon‐minority‐ownedbusinesses.Id.at268,n.8.Accordingly,thecourtheldtheMVPwasnotnarrowlytailored.Id.at268.

Second,thecourtheldthattheunlimiteddurationoftheMVP’sracialgoalsnegatedafindingofnarrowtailoring.Id.“[R]aceconscious…policiesmustbelimitedintime.”Id.,citingGrutter,539U.S.at342,andWalkerv.CityofMesquite,TX,169F.3d973,982(5thCir.1999).Thecourtheldthatbecausethegovernmentinterestcouldhavebeenachievedutilizingrace‐neutralmeasures,andbecausetheracialgoalswerenottemporallylimited,theMVPcouldnotwithstandstrictscrutinyandwasunconstitutionalonitsface.Id.at268.

WithrespecttoVirdi’sclaimsofintentionaldiscrimination,thecourtheldthatalthoughtheMVPwasfaciallyunconstitutional,noevidenceexistedthattheMVPoritsunconstitutionalitycaused


Virditoloseacontractthathewouldhaveotherwisereceived.Id.Thus,becauseVirdifailedtoestablishacausalconnectionbetweentheunconstitutionalaspectoftheMVPandhisowninjuries,thecourtaffirmedthedistrictcourt’sgrantofjudgmentonthatissue.Id.at269.Similarly,thecourtfoundthatVirdipresentedinsufficientevidencetosustainhisclaimsagainsttheSuperintendentforintentionaldiscrimination.Id.

Thecourtreversedthedistrictcourt’sorderpertainingtothefacialconstitutionalityoftheMVP’sracialgoals,andaffirmedthedistrictcourt’sordergrantingdefendants’motionontheissueofintentionaldiscriminationagainstVirdi.Id.at270.

5. In re City of Memphis, 293 F.3d 345 (6th Cir. 2002)

Thiscaseisinstructivetothedisparitystudybasedonitsholdingthatalocalorstategovernmentmaybeprohibitedfromutilizingpost‐enactmentevidenceinsupportofaMBE/WBE‐typeprogram.293F.3dat350‐351.TheUnitedStatesCourtofAppealsfortheSixthCircuitheldthatpre‐enactmentevidencewasrequiredtojustifytheCityofMemphis’MBE/WBEProgram.Id.TheSixthCircuitheldthatagovernmentmusthavehadsufficientevidentiaryjustificationforaraciallyconsciousstatuteinadvanceofitspassage.

ThedistrictcourthadruledthattheCitycouldnotintroduceapost‐enactmentstudyasevidenceofacompellinginteresttojustifyitsMBE/WBEProgram.Id.at350‐351.TheSixthCircuitdeniedtheCity’sapplicationforaninterlocutoryappealonthedistrictcourt’sorderandrefusedtogranttheCity’srequesttoappealthisissue.Id.at350‐351.

TheCityarguedthatasubstantialgroundfordifferenceofopinionexistedinthefederalcourtsofappeal.293F.3dat350.Thecourtstatedsomecircuitspermitpost‐enactmentevidencetosupplmentpre‐enactmentevidence.Id.Thisissue,accordingtotheCourt,appearstohavebeenresolvedintheSixthCircuit.Id.TheCourtnotedtheSixthCircuitdecisioninAGCv.Drabik,214F.3d730(6thCir.2000),whichheldthatunderCrosonaStatemusthavesufficientevidentiaryjustificationforaracially‐consciousstatuteinadvanceofitsenactment,andthatgovernmentalentitiesmustidentifythatdiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief.Memphis,293F.3dat350‐351,citingDrabik,214F.3dat738.

TheCourtinMemphissaidthatalthoughDrabikdidnotdirectlyaddresstheadmissibilityofpost‐enactmentevidence,itheldagovernmentalentitymusthavepre‐enactmentevidencesufficienttojustifyaracially‐consciousstatute.293R.3dat351.ThecourtconcludedDrabikindicatestheSixthCircuitwouldnotfavorusingpost‐enactmentevidencetomakethatshowing.Id.at351.UnderDrabik,theCourtinMemphisheldtheCitymustpresentpre‐enactmentevidencetoshowacompellingstateinterest.Id.at351.

6. Builders Ass’n of Greater Chicago v. County of Cook, Chicago, 256 F.3d 642 (7th Cir. 2001)

ThiscaseisinstructivetothedisparitystudybecauseofitsanalysisoftheCookCountyMBE/WBEprogramandtheevidenceusedtosupportthatprogram.Thedecisionemphasizestheneedforanyrace‐consciousprogramtobebaseduponcredibleevidenceofdiscrimination


bythelocalgovernmentagainstMBE/WBEsandtobenarrowlytailoredtoremedyonlythatidentifieddiscrimination.

InBuildersAss’nofGreaterChicagov.CountyofCook,Chicago,256F.3d642(7thCir.2001)theUnitedStatesCourtofAppealsfortheSeventhCircuitheldtheCookCounty,ChicagoMBE/WBEProgramwasunconstitutional.Thecourtconcludedtherewasinsufficientevidenceofacompellinginterest.ThecourtheldtherewasnocredibleevidencethatCookCountyintheawardofconstructioncontactsdiscriminatedagainstanyofthegroups“favored”bytheProgram.ThecourtalsofoundthattheProgramwasnot“narrowlytailored”toremedythewrongsoughttoberedressed,inpartbecauseitwasover‐inclusiveinthedefinitionofminorities.ThecourtnotedthelistofminoritiesincludedgroupsthathavenotbeensubjecttodiscriminationbyCookCounty.

Thecourtconsideredasanunresolvedissuewhetheradifferent,andspecificallyamorepermissive,standardthanstrictscrutinyisapplicabletopreferentialtreatmentonthebasisofsex,ratherthanraceorethnicity.256F.3dat644.ThecourtnotedthattheUnitedStatesSupremeCourtinUnitedStatesv.Virginia(“VMI”),518U.S.515,532andn.6(1996),heldracialdiscriminationtoastricterstandardthansexdiscrimination,althoughthecourtinCookCountystatedthedifferencebetweentheapplicablestandardshasbecome“vanishinglysmall.”Id.ThecourtpointedoutthattheSupremeCourtsaidintheVMIcase,that“partieswhoseektodefendgender‐basedgovernmentactionmustdemonstratean‘exceedinglypersuasive’justificationforthataction…”and,realistically,thelawcanasknomoreofrace‐basedremedieseither.”256F.3dat644,quotinginpartVMI,518U.S.at533.ThecourtindicatedthattheEleventhCircuitCourtofAppealsintheEngineeringContractAssociationofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3d895,910(11thCir.1997)decisioncreatedthe“paradoxthatapublicagencycanprovidestrongerremediesforsexdiscriminationthanforracediscrimination;itisdifficulttoseewhatsensethatmakes.”256F.3dat644.But,sinceCookCountydidnotargueforadifferentstandardfortheminorityandwomen’s“setasideprograms,”thewomen’sprogramthecourtdeterminedmustclearthesame“hurdles”astheminorityprogram.”256F.3dat644‐645.

Thecourtfoundthatsincetheordinancerequiresprimecontractorsonpublicprojectstoreserveasubstantialportionofthesubcontractsforminoritycontractors,whichisinapplicabletoprivateprojects,itis“tobeexpectedthattherewouldbemoresolicitingofthesecontractorsonpublicthanonprivateprojects.”Id.Therefore,thecourtdidnotfindpersuasivethattherewasdiscriminationbasedonthisdifferencealone.256F.3dat645.ThecourtpointedouttheCounty“concededthat[it]hadnospecificevidenceofpre‐enactmentdiscriminationtosupporttheordinance.”256F.3dat645quotingthedistrictcourtdecision,123F.Supp.2dat1093.Thecourtheldthata“publicagencymusthaveastrongevidentiarybasisforthinkingadiscriminatoryremedyappropriatebeforeitadoptstheremedy.”256F.3dat645(emphasisinoriginal).

Thecourtstatedthatminorityenterprisesintheconstructionindustry“tendtobesubcontractors,moreover,becauseasthedistrictcourtfoundnotclearlyerroneously,123F.Supp.2dat1115,theytendtobenewandthereforesmallandrelativelyuntested—factorsnotshowntobeattributabletodiscriminationbytheCounty.”256F.3dat645.ThecourtheldthattherewasnobasisforattributingtotheCountyanydiscriminationthatprimecontractorsmay


haveengagedin.Id.Thecourtnotedthat“[i]fprimecontractorsonCountyprojectswerediscriminatingagainstminoritiesandthiswasknowntotheCounty,whosefundingofthecontractsthusknowinglyperpetuatedthediscrimination,theCountymightbedeemedsufficientlycomplicit…tobeentitledtotakeremedialaction.”Id.But,thecourtfound“ofthatthereisnoevidenceeither.”Id.

ThecourtstatedthatiftheCountyhadbeencomplicitindiscriminationbyprimecontractors,itfound“puzzling”totrytoremedythatdiscriminationbyrequiringdiscriminationinfavorofminoritystockholders,asdistinctfromemployees.256F.3dat646.ThecourtheldthateveniftherecordmadeacaseforremedialactionofthegeneralsortfoundintheMWBEordinancebytheCounty,itwould“flunktheconstitutionaltest”bynotbeingcarefullydesignedtoachievetheostensibleremedialaimandnomore.256F.3dat646.ThecourtheldthatastateandlocalgovernmentthathasdiscriminatedjustagainstblacksmaynotbywayofremedydiscriminateinfavorofblacksandAsianAmericansandwomen.Id.Nor,thecourtstated,mayitdiscriminatemorethanisnecessarytocuretheeffectsoftheearlierdiscrimination.Id.“Normayitcontinuetheremedyinforceindefinitely,withnoefforttodeterminewhether,theremedialpurposeattained,continuedenforcementoftheremedywouldbeagratuitousdiscriminationagainstnonminoritypersons.”Id.Thecourt,therefore,heldthattheordinancewasnot“narrowlytailored”tothewrongthatitseekstocorrect.Id.

ThecourtthusfoundthattheCountybothfailedtoestablishthepremiseforaracialremedy,andalsothattheremedygoesfurtherthanisnecessarytoeliminatetheevilagainstwhichitisdirected.256F.3dat647.Thecourtheldthatthelistof“favoredminorities”includedgroupsthathaveneverbeensubjecttosignificantdiscriminationbyCookCounty.Id.Thecourtfounditunreasonableto“presume”discriminationagainstcertaingroupsmerelyonthebasisofhavinganancestorwhohadbeenborninaparticularcountry.Id.Therefore,thecourtheldtheordinancewasoverinclusive.

ThecourtfoundthattheCountydidnotmakeanyefforttoshowthat,wereitnotforahistoryofdiscrimination,minoritieswouldhave30percent,andwomen10percent,ofCountyconstructioncontracts.256F.3dat647.ThecourtalsorejectedthepropositionadvancedbytheCountyinthiscase—”thatacomparisonofthefractionofminoritysubcontractorsonpublicandprivateprojectsestablisheddiscriminationagainstminoritiesbyprimecontractorsonthelattertypeofproject.”256F.3dat647‐648.

7. Associated Gen. Contractors v. Drabik, 214 F.3d 730 (6th Cir. 2000), affirming Case No. C2‐98‐943, 998 WL 812241 (S.D. Ohio 1998)

ThiscaseisinstructivetothedisparitystudybasedontheanalysisappliedinfindingtheevidenceinsufficienttojustifyanMBE/WBEprogram,andtheapplicationofthenarrowlytailoredtest.TheSixthCircuitCourtofAppealsenjoinedtheenforcementofthestateMBEprogram,andinsodoingreversedstatecourtprecedentfindingtheprogramconstitutional.Thiscaseaffirmedadistrictcourtdecisionenjoiningtheawardofa“set‐aside”contractbasedontheStateofOhio’sMBEprogramwiththeawardofconstructioncontracts.

Thecourtheld,amongotherthings,thatthemereexistenceofsocietaldiscriminationwasinsufficienttosupportaracialclassification.Thecourtfoundthattheeconomicdatawere


insufficientandtoooutdated.ThecourtconcludedtheStatecouldnotestablishacompellinggovernmentalinterestandthatthestatutewasnotnarrowlytailored.Thecourtsaidthestatutefailedthenarrowtailoringtest,includingbecausetherewasnoevidencethattheStatehadconsideredrace‐neutralremedies.

ThiscaseinvolvesasuitbytheAssociatedGeneralContractorsofOhioandAssociatedGeneralContractorsofNorthwestOhio,representingOhiobuildingcontractorstostoptheawardofaconstructioncontractfortheToledoCorrectionalFacilitytoaminority‐ownedbusiness(“MBE”),inabiddingprocessfromwhichnon‐minority‐ownedfirmswerestatutorilyexcludedfromparticipatingunderOhio’sstateMinorityBusinessEnterpriseAct.214F.3dat733.

AGCofOhioandAGCofNorthwestOhio(Plaintiffs‐Appellees)claimedtheOhioMinorityBusinessEnterpriseAct(“MBEA”)wasunconstitutionalinviolationoftheEqualProtectionClauseoftheFourteenthAmendment.Thedistrictcourtagreed,andpermanentlyenjoinedthestatefromawardinganyconstructioncontractsundertheMBEA.Drabik,DirectoroftheOhioDepartmentofAdministrativeServicesandothersappealedthedistrictcourt’sOrder.Id.at733.TheSixthCircuitCourtofAppealsaffirmedtheOrderofthedistrictcourt,holdingunconstitutionaltheMBEAandenjoiningthestatefromawardinganyconstructioncontractsunderthatstatute.Id.

OhiopassedtheMBEAin1980.Id.at733.Thislegislation“setaside”5%,byvalue,ofallstateconstructionprojectsforbiddingbycertifiedMBEsexclusively.Id.PursuanttotheMBEA,thestatedecidedtosetaside,forMBEsonly,biddingforconstructionoftheToledoCorrectionalFacility’sAdministrationBuilding.Non‐MBEswereexcludedonracialgroundsfrombiddingonthataspectoftheprojectandrestrictedintheirparticipationassubcontractors.Id.

TheCourtnoteditruledin1983thattheMBEAwasconstitutional,seeOhioContractorsAss’nv.Keip,713F.2d167(6thCir.1983).Id.Subsequently,theUnitedStatesSupremeCourtintwolandmarkdecisionsappliedthecriteriaofstrictscrutinyunderwhichsuch“raciallypreferentialset‐asides”weretobeevaluated.Id.(seeCityofRichmondv.J.A.CrosonCo.(1989)andAdarandConstructors,Inc.v.Pena(1995),citationomitted.)TheCourtnotedthatthedecisioninKeipwasamorerelaxedtreatmentaccordedtoequalprotectionchallengestostatecontractingdisputespriortoCroson.Id.at733‐734.

Strict scrutiny.TheCourtfounditisclearagovernmenthasacompellinginterestinassuringthatpublicdollarsdonotservetofinancetheevilofprivateprejudice.Id.at734‐735,citingCroson,488U.S.at492.But,theCourtstated“statisticaldisparityintheproportionofcontractsawardedtoaparticulargroup,standingalonedoesnotdemonstratesuchanevil.”Id.at735.

TheCourtsaidthereisnoquestionthatremedyingtheeffectsofpastdiscriminationconstitutesacompellinggovernmentalinterest.Id.at735.TheCourtstatedtomakethisshowing,astatecannotrelyonmerespeculation,orlegislativepronouncements,ofpastdiscrimination,butrather,theSupremeCourthasheldthestatebearstheburdenofdemonstratingastrongbasisinevidenceforitsconclusionthatremedialactionwasnecessarybyprovingeitherthatthestateitselfdiscriminatedinthepastorwasapassiveparticipantinprivateindustry’sdiscriminatorypractices.Id.at735,quotingCroson,488U.S.at486‐92.


Thus,theCourtconcludedthatthelinchpinoftheCrosonanalysisisitsmandatingofstrictscrutiny,therequirementthataprogrambenarrowlytailoredtoachieveacompellinggovernmentinterest,butaboveallitsholdingthatgovernmentsmustidentifydiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief;explicitfindingsofaconstitutionalorstatutoryviolationmustbemade.Id.at735,quotingCroson,488U.S.at497.

Statistical evidence: compelling interest.TheCourtpointedoutthatproponentsof“raciallydiscriminatorysystems”suchastheMBEAhavesoughttogeneratethenecessaryevidencebyavarietyofmeans,however,sucheffortshavegenerallyfocusedon“mereunderrepresentation”byshowingalesserpercentageofcontractsawardedtoaparticulargroupthanthatgroup’spercentageinthegeneralpopulation.Id.at735.“Rawstatisticaldisparity”ofthissortispartoftheevidenceofferedbyOhiointhiscase,accordingtotheCourt.Id.at736.TheCourtstatedhowever,“suchevidenceofmerestatisticaldisparitieshasbeenfirmlyrejectedasinsufficientbytheSupremeCourt,particularlyinacontextsuchascontracting,wherespecialqualificationsaresorelevant.”Id.

TheCourtsaidthatalthoughOhio’smost“compelling”statisticalevidenceinthiscasecomparedthepercentageofcontractsawardedtominoritiestothepercentageofminority‐ownedbusinessesinOhio,whichtheCourtnotedprovidedstrongerstatisticsthanthestatisticsinCroson,itwasstillinsufficient.Id.at736.TheCourtfoundtheproblemwithOhio’sstatisticalcomparisonwasthatthepercentageofminority‐ownedbusinessesinOhio“didnottakeintoaccounthowmanyofthosebusinesseswereconstructioncompaniesofanysort,letalonehowmanywerequalified,willing,andabletoperformstateconstructioncontracts.”Id.

TheCourtheldthestatisticalevidencethattheOhiolegislaturehadbeforeitwhentheMBEAwasenactedconsistedofdatathatwasdeficient.Id.at736.TheCourtsaidthatmuchofthedatawasseverelylimitedinscope(ODOTcontracts)orwasirrelevanttothiscase(ODOTpurchasingcontracts).Id.TheCourtagainnotedthedatadidnotdistinguishminorityconstructioncontractorsfromminoritybusinessesgenerally,andtherefore“madenoattempttoidentifyminorityconstructioncontractingfirmsthatareready,willing,andabletoperformstateconstructioncontractsofanyparticularsize.”Id.TheCourtalsopointedouttheprogramwasnotnarrowlytailored,becausethestateconcededtheAGCshowedthattheStatehadnotperformedarecentstudy.Id.

TheCourtalsoconcludedthatevenstatisticalcomparisonsthatmightbeapparentlymorepertinent,suchaswiththepercentageofallfirmsqualified,insomeminimalsense,toperformtheworkinquestion,wouldalsofailtosatisfytheCourt’scriteria.Id.at736.“IfMBEscomprise10%ofthetotalnumberofcontractingfirmsinthestate,butonlyget3%ofthedollarvalueofcertaincontracts,thatdoesnotaloneshowdiscrimination,orevendisparity.Itdoesnotaccountfortherelativesizeofthefirms,eitherintermsoftheirabilitytodoparticularworkorintermsofthenumberoftaskstheyhavetheresourcestocomplete.”Id.at736.

TheCourtstatedtheonlycasesfoundtopresentthenecessary“compellinginterest”sufficienttojustifyanarrowlytailoredrace‐basedremedy,arethosethatexpose“pervasive,systematic,andobstinatediscriminatoryconduct.…”Id.at737,quotingAdarand,515U.S.at237.TheCourtsaidthatOhiohadmadenosuchshowinginthiscase.


Narrow tailoring.AsecondandseparatehurdlefortheMBEA,theCourtheld,isitsfailureofnarrowtailoring.TheCourtnotedtheSupremeCourtinAdarandtaughtthatacourtcalledupontoaddressthequestionofnarrowtailoringmustask,“forexample,whethertherewas‘anyconsiderationoftheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipation’ingovernmentcontracting….”Id.at737,quotingCroson,488U.S.at507.TheCourtstatedanarrowly‐tailoredset‐asideprogrammustbeappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminateandmustbelinkedtoidentifieddiscrimination.Id.at737.TheCourtsaidthattheprogrammustalsonotsufferfrom“overinclusiveness.”Id.at737,quotingCroson,515U.S.at506.

TheCourtfoundtheMBEAsufferedfromdefectsbothofoverandunder‐inclusiveness.Id.at737.BylumpingtogetherthegroupsofBlacks,NativeAmericans,HispanicsandOrientals,theMBEAmaywellprovidepreferencewhere·therehasbeennodiscrimination,andmaynotproviderelieftogroupswherediscriminationmighthavebeenproven.Id.at737.Thus,theCourtsaid,theMBEAwassatisfiedifcontractorsofThaiorigin,whomightneverhavebeenseeninOhiountilrecently,receive10%ofstatecontracts,whileAfrican‐Americansreceivenone.Id.

Inaddition,theCourtfoundthatOhio’sownunderutilizationstatisticssufferfromafatalconceptualflaw:theydonotreporttheactualuseofminorityfirms;theyonlyreporttheuseofminorityfirmswhohavegonetothetroubleofbeingcertifiedandlistedamongthestate’s1,180MBEs.Id.at737.TheCourtsaidtherewasnoexaminationofwhethercontractsarebeingawardedtominorityfirmswhohaveneversoughtsuchpreferencetotakeadvantageofthespecialminorityprogram,forwhateverreason,andwhohavebeenawardedcontractsinopenbidding.Id.

TheCourtpointedoutthedistrictcourttooknoteoftheoutdatedcharacterofanyevidencethatmighthavebeenmarshaledinsupportoftheMBEA,andaddedthatevenifsuchdatahadbeensufficienttojustifythestatutetwentyyearsago,itwouldnotsufficetocontinuetojustifyitforever.Id.at737‐738.TheMBEA,theCourtnoted,hasremainedineffectfortwentyyearsandhasnosetexpiration.Id.at738.TheCourtreiteratedarace‐basedpreferenceprogrammustbeappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitisdesignedtoeliminate.Id.at737.

Finally,theCourtmentionedthatoneofthefactorsCrosonidentifiedasindicativeofnarrowtailoringiswhethernon‐race‐basedmeanswereconsideredasalternativestothegoal.Id.at738.TheCourtconcludedthehistoricalrecordcontainednoevidencethattheOhiolegislaturegaveanyconsiderationtothe·useofrace‐neutralmeanstoincreaseminorityparticipationinstatecontractingbeforeresortingtorace‐basedquotas.Id.at738.

Thedistrictcourthadfoundthatthesupplementationofthestate’sexistingdatawhichmightbeofferedgivenacontinuanceofthecasewouldnotsufficientlyenhancetherelevanceoftheevidencetojustifydelayinthedistrictcourt’shearing.Id.at738.TheCourtstatedthatunderCroson,thestatemusthavehadsufficientevidentiaryjustificationforaracially‐consciousstatuteinadvanceofitspassage.Id.TheCourtsaidthatCrosonrequiredgovernmentalentitiesmustidentifythatdiscriminationwithsomespecificitybeforetheymayuserace‐consciousrelief.Id.at738.


TheCourtalsoreferencedthedistrictcourtfindingthatthestatehadbeenlaxinmaintainingthetypeofstatisticsthatwouldbenecessarytoundergirditsaffirmativeactionprogram,andthatthepropermaintenanceofcurrentstatisticsisrelevanttotherequisitenarrowtailoringofsuchaprogram.Id.at738‐739.But,theCourtnotedthestatedoesnotknowhowmanyminority‐ownedbusinessesarenotcertifiedasMBEs,andhowmanyofthemhavebeensuccessfulinobtainingstatecontracts.Id.at739.

ThecourtwasmindfulofthefactitwasstrikingdownanentireclassofprogramsbydeclaringtheStateofOhioMBEstatuteinquestionunconstitutional,andnotedthatitsdecisionwas“notreconcilable”withtheOhioSupremeCourt’sdecisioninRitchieProduce,707N.E.2d871(Ohio1999)(upholdingtheOhioStateMBEProgram).

8. W.H. Scott Constr. Co. v. City of Jackson, Mississippi, 199 F.3d 206 (5th Cir. 1999)

Anon‐minoritygeneralcontractorbroughtthisactionagainsttheCityofJacksonandCityofficialsassertingthataCitypolicyanditsminoritybusinessenterpriseprogramforparticipationandconstructioncontractsviolatedtheEqualProtectionClauseoftheU.S.Constitution.

City of Jackson MBE Program.In1985theCityofJacksonadoptedaMBEProgram,whichinitiallyhadagoalof5percentofallcitycontracts.199F.3dat208.Id.The5percentgoalwasnotbasedonanyobjectivedata.Id.at209.Instead,itwasa“guess”thatwasadoptedbytheCity.Id.Thegoalwaslaterincreasedto15percentbecauseitwasfoundthat10percentofbusinessesinMississippiwereminority‐owned.Id.

AftertheMBEProgram’sadoption,theCity’sDepartmentofPublicWorksincludedaSpecialNoticetobiddersaspartofitsspecificationsforallCityconstructionprojects.Id.TheSpecialNoticeencouragedprimeconstructioncontractorstoincludeintheirbid15percentparticipationbysubcontractorscertifiedasDisadvantagedBusinessEnterprises(DBEs)and5percentparticipationbythosecertifiedasWBEs.Id.

TheSpecialNoticedefinedaDBEasasmallbusinessconcernthatisownedandcontrolledbysociallyandeconomicallydisadvantagedindividuals,whichhadthesamemeaningasunderSection8(d)oftheSmallBusinessActandsubcontractingregulationspromulgatedpursuanttothatAct.Id.ThecourtfoundthatSection8(d)oftheSBAstatesthatprimecontractorsaretopresumethatsociallyandeconomicallydisadvantagedindividualsincludecertainracialandethnicgroupsoranyotherindividualfoundtobedisadvantagedbytheSBA.Id.

In1991,theMississippilegislaturepassedabillthatwouldallowcitiestosetaside20percentofprocurementforminoritybusiness.Id.at209‐210.TheCityofJacksonCityCouncilvotedtoimplementtheset‐aside,contingentontheCity’sadoptionofadisparitystudy.Id.at210.TheCityconductedadisparitystudyin1994andconcludedthatthetotalunderutilizationofAfrican‐AmericanandAsian‐American‐ownedfirmswasstatisticallysignificant.Id.ThestudyrecommendedthattheCityimplementarangeofMBEgoalsfrom10‐15percent.Id.TheCity,however,wasnotsatisfiedwiththestudy,accordingtothecourt,andchosenottoadoptitsconclusions.Id.Instead,theCityretainedits15percentMBEgoalanddidnotadoptthedisparitystudy.Id.


W.H. Scott did not meet DBE goal.In1997theCityadvertisedfortheconstructionofaprojectandtheW.H.ScottConstructionCompany,Inc.(Scott)wasthelowestbidder.Id.Scottobtained11.5percentWBEparticipation,butitreportedthatthebidsfromDBEsubcontractorshadnotbeenlowbidsand,therefore,itsDBE‐participationpercentagewouldbeonly1percent.Id.

AlthoughScottdidnotachievetheDBEgoalandsubsequentlywouldnotconsidersuggestionsforincreasingitsminorityparticipation,theDepartmentofPublicWorksandtheMayor,aswellastheCity’sFinancialLegalDepartments,approvedScott’sbidanditwasplacedontheagendatobeapprovedbytheCityCouncil.Id.TheCityCouncilvotedagainsttheScottbidwithoutcomment.ScottallegedthatitwastoldtheCityrejecteditsbidbecauseitdidnotachievetheDBEgoal,buttheCityallegedthatitwasrejectedbecauseitexceededthebudgetfortheproject.Id.

TheCitysubsequentlycombinedtheprojectwithanotherrenovationprojectandawardedthatcombinedprojecttoadifferentconstructioncompany.Id.at210‐211.Scottmaintainedtherejectionofhisbidwasraciallymotivatedandfiledthissuit.Id.at211.

District court decision.ThedistrictcourtgrantedScott’smotionforsummaryjudgmentagreeingwithScottthattherelevantPolicyincludednotjusttheSpecialNotice,butthatitalsoincludedtheMBEProgramandPolicydocumentregardingMBEparticipation.Id.at211.ThedistrictcourtfoundthattheMBEPolicywasunconstitutionalbecauseitlackedrequisitefindingstojustifythe15%minority‐participationgoalandsurvivestrictscrutinybasedonthe1989decisionintheCityofRichmond,v.J.A.CrosonCo.Id.Thedistrictcourtstruckdownminority‐participationgoalsfortheCity’sconstructioncontractsonly.Id.at211.ThedistrictcourtfoundthatScott’sbidwasrejectedbecauseScottlackedsufficientminorityparticipation,notbecauseitexceededtheCity’sbudget.Id.Inaddition,thedistrictcourtawardedScottlostprofits.Id.

Standing. TheFifthCircuitdeterminedthatinequalprotectioncaseschallengingaffirmativeactionpolicies,“injuryinfact”forpurposesofestablishingstandingisdefinedastheinabilitytocompeteonanequalfootinginthebiddingprocess.Id.at213.ThecourtstatedthatScottneednotprovethatitlostcontractsbecauseofthePolicy,butonlyprovethattheSpecialNoticeforcesittocompeteonanunequalbasis.Id.Thequestion,therefore,thecourtsaidiswhethertheSpecialNoticeimposesanobligationthatisbornunequallybyDBEcontractorsandnon‐DBEcontractors.Id.at213.

Thecourtfoundthatifanon‐DBEcontractorisunabletoprocure15percentDBEparticipation,itmuststillsatisfytheCitythatadequategoodfaitheffortshavebeenmadetomeetthecontractgoalorriskterminationofitscontracts,andthatsucheffortsincludeengaginginadvertising,directsolicitationandfollow‐up,assistanceinattainingbondingorinsurancerequiredbythecontractor.Id.at214.ThecourtconcludedthatalthoughthelanguagedoesnotexpresslyauthorizeaDBEcontractortosatisfyDBE‐participationgoalsbykeepingtherequisitepercentageofworkforitself,itwouldbenonsensicaltointerpretitasprecludingaDBEcontractorfromdoingso.Id.at215.

IfaDBEcontractorperformed15percentofthecontractdollaramount,accordingtothecourt,itcouldsatisfytheparticipationgoalandavoidbothalossofprofitstosubcontractorsandthetimeandexpenseofcomplyingwiththegoodfaithrequirements.Id.at215.Thecourtsaidthat


non‐DBEcontractorsdonothavethisoption,andthus,Scottandothernon‐DBEcontractorsareatacompetitivedisadvantagewithDBEcontractors.Id.

Thecourt,therefore,foundScotthadsatisfiedstandingtobringthelawsuit.

Constitutional strict scrutiny analysis and guidance in determining types of evidence to justify

a remedial MBE program.ThecourtfirstrejectedtheCity’scontentionthattheSpecialNoticeshouldnotbesubjecttostrictscrutinybecauseitestablishesgoalsratherthanmandatequotasforDBEparticipation.Id.at215‐217.Thecourtstatedthedistinctionbetweengoalsorquotasisimmaterialbecausethesetechniquesinduceanemployertohirewithaneyetowardmeetinganumericaltarget,andassuch,theywillresultinindividualsbeinggrantedapreferencebecauseoftheirrace.Id.at215.ThecourtalsorejectedtheCity’sargumentthattheDBEclassificationcreatedapreferencebasedon“disadvantage,”notrace.Id.at215‐216.ThecourtfoundthattheSpecialNoticereliedonSection8(d)andSection8(a)oftheSmallBusinessAct,whichprovideexplicitlyforarace‐basedpresumptionofsocialdisadvantage,andthusrequiresstrictscrutiny.Id.at216‐217.

ThecourtdiscussedtheCityofRichmondv.CrosoncaseasprovidingguidanceindeterminingwhattypesofevidencewouldjustifytheenactmentofanMBE‐typeprogram.Id.at217‐218.ThecourtnotedtheSupremeCourtstressedthatagovernmentalentitymustestablishafactualpredicate,tyingitsset‐asidepercentagetoidentifiedinjuriesintheparticularlocalindustry.Id.at217.ThecourtpointedoutgiventheSupremeCourtinCroson’semphasisonstatisticalevidence,othercourtsconsideringequalprotectionchallengestominority‐participationprogramshavelookedtodisparityindices,ortocomputationsofdisparitypercentages,indeterminingwhetherCroson’sevidentiaryburdenissatisfied.Id.at218.Thecourtfoundthatdisparitystudiesareprobativeevidencefordiscriminationbecausetheyensurethatthe“relevantstatisticalpool,”ofqualifiedminoritycontractorsisbeingconsidered.Id.at218.

ThecourtinafootnotestatedthatitdidnotattempttocraftaprecisemathematicalformulatoassessthequantumofevidencethatrisestotheCroson“strongbasisinevidence”benchmark.Id.at218,n.11.Thesufficiencyofamunicipality’sfindingsofdiscriminationinalocalindustrymustbeevaluatedonacase‐by‐casebasis.Id.

TheCityarguedthatitwaserrorforthedistrictcourttoignoreitsstatisticalevidencesupportingtheuseofracialpresumptionsinitsDBE‐participationgoals,andhighlightedthedisparitystudyitcommissionedinresponsetoCroson.Id.at218.Thecourtstated,however,thatwhateverprobitythestudy’sfindingsmighthavehadontheanalysisisirrelevanttothecase,becausetheCityrefusedtoadoptthestudywhenitwasissuedin1995.Id.Inaddition,thecourtsaidthestudywasrestrictedtothelettingofprimecontractsbytheCityundertheCity’sProgram,anddidnotincludeananalysisoftheavailabilityandutilizationofqualifiedminoritysubcontractors,therelevantstatisticalpool,intheCity’sconstructionprojects.Id.at218.

ThecourtnotedthathadtheCityadoptedparticularizedfindingsofdiscriminationwithinitsvariousagencies,andsetparticipationgoalsforeachaccordingly,theoutcomeofthedecisionmighthavebeendifferent.Id.at219.AbsentsuchevidenceintheCity’sconstructionindustry,however,thecourtconcludedtheCitylackedthefactualpredicatesrequiredundertheEqualProtectionClausetosupporttheCity’s15%DBE‐participationgoal.Id.Thus,thecourtheldthe


CityfailedtoestablishacompellinginterestjustifyingtheMBEprogramortheSpecialNotice,andbecausetheCityfailedastrictscrutinyanalysisonthisground,thecourtdeclinedtoaddresswhethertheprogramwasnarrowlytailored.

Lost profits and damages.ScottsoughtdamagesfromtheCityunder42U.S.C.§1983,includinglostprofits.Id.at219.Thecourt,affirmingthedistrictcourt,concludedthatinlightoftheentirerecordtheCityCouncilrejectedScott’slowbidbecauseScottfailedtomeettheSpecialNotice’sDBE‐participationgoal,notbecauseScott’sbidexceededtheCity’sbudget.Id.at220.Thecourt,therefore,affirmedtheawardoflostprofitstoScott.

9. Monterey Mechanical v. Wilson, 125 F.3d 702 (9th Cir. 1997)

ThiscaseisinstructiveinthattheNinthCircuitanalyzedandheldinvalidtheenforcementofaMBE/WBE‐typeprogram.Althoughtheprogramatissueutilizedtheterm“goals”asopposedto“quotas,”theNinthCircuitrejectedsuchadistinction,holding“[t]herelevantquestionisnotwhetherastatuterequirestheuseofsuchmeasures,butwhetheritauthorizesorencouragesthem.”Thecasealsoisinstructivebecauseitfoundtheuseof“goals”andtheapplicationof“goodfaithefforts”inconnectionwithachievinggoalstotriggerstrictscrutiny.

MontereyMechanicalCo.(the“plaintiff”)submittedthelowbidforaconstructionprojectfortheCaliforniaPolytechnicStateUniversity(the“University”).125F.3d702,704(9thCir.1994).TheUniversityrejectedtheplaintiff’sbidbecausetheplaintifffailedtocomplywithastatestatuterequiringprimecontractorsonsuchconstructionprojectstosubcontract23percentoftheworktoMBE/WBEsor,alternatively,demonstrategoodfaithoutreachefforts.Id.Theplaintiffconductedgoodfaithoutreacheffortsbutfailedtoprovidetherequisitedocumentation;theawardeeprimecontractordidnotsubcontractanyportionoftheworktoMBE/WBEsbutdidincludedocumentationofgoodfaithoutreachefforts.Id.

Importantly,theUniversitydidnotconductadisparitystudy,andinsteadarguedthatbecause“the‘goalrequirements’ofthescheme‘[did]notinvolveracialorgenderquotas,set‐asidesorpreferences,’”theUniversitydidnotneedadisparitystudy.Id.at705.TheplaintiffprotestedthecontractawardandsuedtheUniversity’strustees,andanumberofotherindividuals(collectivelythe“defendants”)allegingthestatelawwasviolativeoftheEqualProtectionClause.Id.Thedistrictcourtdeniedtheplaintiff’smotionforaninterlocutoryinjunctionandtheplaintiffappealedtotheNinthCircuitCourtofAppeals.Id.

Thedefendantsfirstarguedthatthestatutewasconstitutionalbecauseittreatedallgeneralcontractorsalike,byrequiringalltocomplywiththeMBE/WBEparticipationgoals.Id.at708.Thecourtheld,however,thataminorityorwomenbusinessenterprisecouldsatisfytheparticipationgoalsbyallocatingtherequisitepercentageofworktoitself.Id.at709.Thecourtheldthatcontrarytothedistrictcourt’sfinding,suchadifferencewasnotdeminimis.Id.

Thedefendantsalsoarguedthatthestatutewasnotsubjecttostrictscrutinybecausethestatutedidnotimposerigidquotas,butratheronlyrequiredgoodfaithoutreachefforts.Id.at710.Thecourtrejectedtheargumentfindingthatalthoughthestatutepermittedawardstobidderswhodidnotmeetthepercentagegoals,“theyarerigidinrequiringpreciselydescribedandmonitoredeffortstoattainthosegoals.”Id.Thecourtciteditsownearlierprecedenttoholdthat


“theprovisionsarenotimmunizedfromscrutinybecausetheypurporttoestablishgoalsratherthanquotas…[T]herelevantquestionisnotwhetherastatuterequirestheuseofsuchmeasures,butwhetheritauthorizesorencouragesthem.”Id.at710‐11(internalcitationsandquotationsomitted).ThecourtfoundthatthestatuteencouragedsetasidesandcitedConcreteWorksofColoradov.Denver,36F.3d1512(10thCir.1994),asanalogoussupportfortheproposition.Id.at711.

Thecourtfoundthatthestatutetreatedcontractorsdifferentlybasedupontheirrace,ethnicityandgender,andalthough“wordedintermsofgoalsandgoodfaith,thestatuteimposesmandatoryrequirementswithconcreteness.”Id.Thecourtalsonotedthatthestatutemayimposeadditionalcomplianceexpensesuponnon‐MBE/WBEfirmswhoarerequiredtomakegoodfaithoutreachefforts(e.g.,advertising)toMBE/WBEfirms.Id.at712.

Thecourtthenconductedstrictscrutiny(race),andanintermediatescrutiny(gender)analyses.Id.at712‐13.ThecourtfoundtheUniversitypresented“noevidence”tojustifytherace‐andgender‐basedclassificationsandthusdidnotconsideradditionalissuesofproof.Id.at713.Thecourtfoundthatthestatutewasnotnarrowlytailoredbecausethedefinitionof“minority”wasoverbroad(e.g.,inclusionofAleuts).Id.at714,citingWygantv.JacksonBoardofEducation,476U.S.267,284,n.13(1986)andCityofRichmondv.J.A.Croson,Co.,488U.S.469,505‐06(1989).Thecourtfound“[a]broadprogramthatsweepsinallminoritieswitharemedythatisinnowayrelatedtopastharmscannotsurviveconstitutionalscrutiny.”Id.at714,citingHopwoodv.StateofTexas,78F.3d932,951(5thCir.1996).ThecourtheldthatthestatuteviolatedtheEqualProtectionClause.

10. Eng’g Contractors Ass’n of S. Florida v. Metro. Dade County, 122 F.3d 895 (11th Cir. 1997)

EngineeringContractorsAssociationofSouthFloridav.MetropolitanEngineeringContractorsAssociationisaparamountcaseintheEleventhCircuitandisinstructivetothedisparitystudy.ThisdecisionhasbeencitedandappliedbythecourtsinvariouscircuitsthathaveaddressedMBE/WBE‐typeprogramsorlegislationinvolvinglocalgovernmentcontractingandprocurement.

InEngineeringContractorsAssociation,sixtradeorganizations(the“plaintiffs”)filedsuitinthedistrictcourtfortheSouthernDistrictofFlorida,challengingthreeaffirmativeactionprogramsadministeredbyEngineeringContractorsAssociation,Florida,(the“County”)asviolativeoftheEqualProtectionClause.122F.3d895,900(11thCir.1997).ThethreeaffirmativeactionprogramschallengedweretheBlackBusinessEnterpriseprogram(“BBE”),theHispanicBusinessEnterpriseprogram(“HBE”),andtheWomanBusinessEnterpriseprogram,(“WBE”),(collectively“MWBE”programs).Id.TheplaintiffschallengedtheapplicationoftheprogramtoCountyconstructioncontracts.Id.

Forcertainclassesofconstructioncontractsvaluedover$25,000,theCountysetparticipationgoalsof15percentforBBEs,19percentforHBEs,and11percentforWBEs.Id.at901.TheCountyestablishedfive“contractmeasures”toreachtheparticipationgoals:(1)setasides,(2)subcontractorgoals,(3)projectgoals,(4)bidpreferences,and(5)selectionfactors.Onceacontractwasidentifiedascoveredbyaparticipationgoal,areviewcommitteewoulddetermine


whetheracontractmeasureshouldbeutilized.Id.TheCountyCommissionwouldmakethefinaldeterminationanditsdecisionwasappealabletotheCountyManager.Id.TheCountyreviewedtheefficacyoftheMWBEprogramsannually,andreevaluatedthecontinuingviabilityoftheMWBEprogramseveryfiveyears.Id.

Inabenchtrial,thedistrictcourtappliedstrictscrutinytotheBBEandHBEprogramsandheldthattheCountylackedtherequisite“strongbasisinevidence”tosupporttherace‐andethnicity‐consciousmeasures.Id.at902.ThedistrictcourtappliedintermediatescrutinytotheWBEprogramandfoundthatthe“Countyhadpresentedinsufficientprobativeevidencetosupportitsstatedrationaleforimplementingagenderpreference.”Id.Therefore,theCountyhadfailedtodemonstratea“compellinginterest”necessarytosupporttheBBEandHBEprograms,andfailedtodemonstratean“importantinterest”necessarytosupporttheWBEprogram.Id.ThedistrictcourtassumedtheexistenceofasufficientevidentiarybasistosupporttheexistenceoftheMWBEprogramsbutheldtheBBEandHBEprogramswerenotnarrowlytailoredtotheintereststheypurportedtoserve;thedistrictcourtheldtheWBEprogramwasnotsubstantiallyrelatedtoanimportantgovernmentinterest.Id.ThedistrictcourtenteredafinaljudgmentenjoiningtheCountyfromcontinuingtooperatetheMWBEprogramsandtheCountyappealed.TheEleventhCircuitCourtofAppealsaffirmed.Id.at900,903.

Onappeal,theEleventhCircuitconsideredfourmajorissues:

1. Whethertheplaintiffshadstanding.[TheEleventhCircuitansweredthisintheaffirmativeandthatportionoftheopinionisomittedfromthissummary];

2. WhetherthedistrictcourterredinfindingtheCountylackeda“strongbasisinevidence”tojustifytheexistenceoftheBBEandHBEprograms;

3. WhetherthedistrictcourterredinfindingtheCountylackeda“sufficientprobativebasisinevidence”tojustifytheexistenceoftheWBEprogram;and

4. WhethertheMWBEprogramswerenarrowlytailoredtotheintereststheywerepurportedtoserve.

Id.at903.

TheEleventhCircuitheldthattheBBEandHBEprogramsweresubjecttothestrictscrutinystandardenunciatedbytheU.S.SupremeCourtinCityofRichmondv.J.A.CrosonCo.,488U.S.469(1989).Id.at906.Underthisstandard,“anaffirmativeactionprogrammustbebasedupona‘compellinggovernmentinterest’andmustbe‘narrowlytailored’toachievethatinterest.”Id.TheEleventhCircuitfurthernoted:

“Inpractice,theinterestthatisallegedinsupportofracialpreferencesisalmostalways the same—remedyingpast orpresentdiscrimination.That interest iswidelyacceptedascompelling.Asaresult,thetruetestofanaffirmativeactionprogram isusuallynot thenatureof the government’s interest, but rather theadequacyoftheevidenceofdiscriminationofferedtoshowthatinterest.”

Id.(internalcitationsomitted).


Therefore,strictscrutinyrequiresafindingofa“‘strongbasisinevidence’tosupporttheconclusionthatremedialactionisnecessary.”Id.,citingCroson,488U.S.at500).Therequisite“‘strongbasisinevidence’cannotreston‘anamorphousclaimofsocietaldiscrimination,onsimplelegislativeassurancesofgoodintention,oroncongressionalfindingsofdiscriminationinthenationaleconomy.’”Id.at907,citingEnsleyBranch,NAACPv.Seibels,31F.3d1548,1565(11thCir.1994)(citingandapplyingCroson)).However,theEleventhCircuitfoundthatagovernmentalentitycan“justifyaffirmativeactionbydemonstrating‘grossstatisticaldisparities’betweentheproportionofminoritieshired…andtheproportionofminoritieswillingandabletodothework…Anecdotalevidencemayalsobeusedtodocumentdiscrimination,especiallyifbuttressedbyrelevantstatisticalevidence.”Id.(internalcitationsomitted).

Notwithstandingthe“exceedinglypersuasivejustification”languageutilizedbytheSupremeCourtinUnitedStatesv.Virginia,116S.Ct.2264(1996)(evaluatinggender‐basedgovernmentaction),theEleventhCircuitheldthattheWBEprogramwassubjecttotraditionalintermediatescrutiny.Id.at908.Underthisstandard,thegovernmentmustprovide“sufficientprobativeevidence”ofdiscrimination,whichisalesserstandardthanthe“strongbasisinevidence”understrictscrutiny.Id.at910.

TheCountyprovidedtwotypesofevidenceinsupportoftheMWBEprograms:(1)statisticalevidence,and(2)non‐statistical“anecdotal”evidence.Id.at911.Asaninitialmatter,theEleventhCircuitfoundthatinsupportoftheBBEprogram,theCountypermissiblyreliedonsubstantially“post‐enactment”evidence(i.e.,evidencebasedondatarelatedtoyearsfollowingtheinitialenactmentoftheBBEprogram).Id.However,“suchevidencecarrieswithitthehazardthattheprogramatissuemayitselfbemaskingdiscriminationthatmightotherwisebeoccurringintherelevantmarket.”Id.at912.Adistrictcourtshouldnot“speculateaboutwhatthedatamighthaveshownhadtheBBEprogramneverbeenenacted.”Id.

The statistical evidence.TheCountypresentedfivebasiccategoriesofstatisticalevidence:(1)Countycontractingstatistics;(2)Countysubcontractingstatistics;(3)marketplacedatastatistics;(4)TheWainwrightStudy;and(5)TheBrimmerStudy.Id.Insummary,theEleventhCircuitheldthattheCounty’sstatisticalevidence(describedmorefullybelow)wassubjecttomorethanoneinterpretation.Id.at924.Thedistrictcourtfoundthattheevidencewas“insufficienttoformtherequisitestrongbasisinevidenceforimplementingaracialorethnicpreference,andthatitwasinsufficientlyprobativetosupporttheCounty’sstatedrationaleforimposingagenderpreference.”Id.Thedistrictcourt’sviewoftheevidencewasapermissibleone.Id.

County contracting statistics.TheCountypresentedastudycomparingthreefactorsforCountynon‐procurementconstructioncontractsovertwotimeperiods(1981‐1991and1993):(1)thepercentageofbiddersthatwereMWBEfirms;(2)thepercentageofawardeesthatwereMWBEfirms;and(3)theproportionofCountycontractdollarsthathadbeenawardedtoMWBEfirms.Id.at912.

TheEleventhCircuitfoundthatnotably,fortheBBEandHBEstatistics,generallytherewereno“consistentlynegativedisparitiesbetweenthebidderandawardeepercentages.Infact,by1993,theBBEandHBEbiddersarebeingawardedmorethantheirproportionate‘share’…whenthe


bidderpercentagesareusedasthebaseline.”Id.at913.FortheWBEstatistics,thebidder/awardeestatisticswere“decidedlymixed”asacrosstherangeofCountyconstructioncontracts.Id.

TheCountythenrefinedthosestatisticsbyaddinginthetotalpercentageofannualCountyconstructiondollarsawardedtoMBE/WBEs,bycalculating“disparityindices”foreachprogramandclassificationofconstructioncontract.TheEleventhCircuitexplained:

“[A]disparity index compares theamountof contract awardsa groupactuallygot to the amount we would have expected it to get based on that group’sbidding activity and awardee success rate.More specifically, a disparity indexmeasurestheparticipationofagroupinCountycontractingdollarsbydividingthat group’s contract dollar percentage by the related bidder or awardeepercentage,andmultiplyingthatnumberby100percent.”

Id.at914.“Theutilityofdisparityindicesorsimilarmeasures…hasbeenrecognizedbyanumberoffederalcircuitcourts.”Id.

TheEleventhCircuitfoundthat“[i]ngeneral…disparityindicesof80percentorgreater,whichareclosetofullparticipation,arenotconsideredindicationsofdiscrimination.”Id.TheEleventhCircuitnotedthat“theEEOC’sdisparateimpactguidelinesusethe80percenttestastheboundarylinefordeterminingaprimafaciecaseofdiscrimination.”Id.,citing29CFR§1607.4D.Inaddition,nocircuitthathas“explicitlyendorsedtheuseofdisparityindices[has]indicatedthatanindexof80percentorgreatermightbeprobativeofdiscrimination.”Id.,citingConcreteWorksv.City&CountyofDenver,36F.3d1513,1524(10thCir.1994)(creditingdisparityindicesrangingfrom0%to3.8%);ContractorsAss’nv.CityofPhiladelphia,6F.3d990(3dCir.1993)(creditingdisparityindexof4%).

Aftercalculationofthedisparityindices,theCountyappliedastandarddeviationanalysistotestthestatisticalsignificanceoftheresults.Id.at914.“Thestandarddeviationfiguredescribestheprobabilitythatthemeasureddisparityistheresultofmerechance.”Id.TheEleventhCircuithadpreviouslyrecognized“[s]ocialscientistsconsiderafindingoftwostandarddeviationssignificant,meaningthereisaboutonechancein20thattheexplanationforthedeviationcouldberandomandthedeviationmustbeaccountedforbysomefactorotherthanchance.”Id.

ThestatisticspresentedbytheCountyindicated“statisticallysignificantunderutilizationofBBEsinCountyconstructioncontracting.”Id.at916.Theresultswere“lessdramatic”forHBEsandmixedasbetweenfavorableandunfavorableforWBEs.Id.

TheEleventhCircuitthenexplainedtheburdenofproof:

“[O]nce the proponent of affirmative action introduces its statistical proof asevidenceofitsremedialpurpose,therebysupplyingthe[district]courtwiththemeans for determining that [it] had a firm basis for concluding that remedialactionwasappropriate, it is incumbentuponthe[plaintiff]toprovetheircase;theycontinuetobeartheultimateburdenofpersuadingthe[district]courtthatthe[defendant’s]evidencedidnotsupportaninferenceofpriordiscrimination


and thus a remedial purpose, or that the plan instituted on the basis of thisevidencewasnotsufficiently‘narrowlytailored.”

Id.(internalcitationsomitted).

TheEleventhCircuitnotedthataplaintiffhasatleastthreemethodstorebuttheinferenceofdiscriminationwitha“neutralexplanation”by:“(1)showingthatthestatisticsareflawed;(2)demonstratingthatthedisparitiesshownbythestatisticsarenotsignificantoractionable;or(3)presentingcontrastingstatisticaldata.”Id.(internalquotationsandcitationsomitted).TheEleventhCircuitheldthattheplaintiffsproduced“sufficientevidencetoestablishaneutralexplanationforthedisparities.”Id.

Theplaintiffsallegedthatthedisparitieswere“betterexplainedbyfirmsizethanbydiscrimination…[because]minorityandfemale‐ownedfirmstendtobesmaller,andthatitstandstoreasonsmallerfirmswillwinsmallercontracts.”Id.at916‐17.TheplaintiffsproducedCensusdataindicating,onaverage,minority‐andfemale‐ownedconstructionfirmsinEngineeringContractorsAssociationweresmallerthannon‐MBE/WBEfirms.Id.at917.TheEleventhCircuitfoundthattheplaintiff’sexplanationofthedisparitieswasa“plausibleone,inlightoftheuncontrovertedevidencethatMBE/WBEconstructionfirmstendtobesubstantiallysmallerthannon‐MBE/WBEfirms.”Id.

Additionally,theEleventhCircuitnotedthattheCounty’sownexpertadmittedthat“firmsizeplaysasignificantroleindeterminingwhichfirmswincontracts.”Id.Theexpertstated:

Thesizeofthefirmhasgottobeamajordeterminantbecauseofcoursesomefirmsaregoingtobelarger,aregoingtobebetterprepared,aregoingtobeinagreaternaturalcapacitytobeabletoworkonsomeofthecontractswhileotherssimplybyvirtueoftheirsmallsizesimplywouldnotbeabletodoit.Id.

TheEleventhCircuitthensummarized:

Because they are bigger, bigger firms have a bigger chance to win biggercontracts. It follows that, all other factors being equal and in a perfectlynondiscriminatory market, one would expect the bigger (on average) non‐MWBEfirmstogetadisproportionatelyhigherpercentageoftotalconstructiondollarsawardedthanthesmallerMWBEfirms.Id.

Inanticipationofsuchanargument,theCountyconductedaregressionanalysistocontrolforfirmsize.Id.Aregressionanalysisis“astatisticalprocedurefordeterminingtherelationshipbetweenadependentandindependentvariable,e.g.,thedollarvalueofacontractawardandfirmsize.”Id.(internalcitationsomitted).Thepurposeoftheregressionanalysisis“todeterminewhethertherelationshipbetweenthetwovariablesisstatisticallymeaningful.”Id.

TheCounty’sregressionanalysissoughttoidentifydisparitiesthatcouldnotbeexplainedbyfirmsize,andtheoreticallyinsteadbasedonanotherfactor,suchasdiscrimination.Id.TheCountyconductedtworegressionanalysesusingtwodifferentproxiesforfirmsize:(1)totalawardedvalueofallcontractsbidon;and(2)largestsinglecontractawarded.Id.Theregression


analysesaccountedformostofthenegativedisparitiesregardingMBE/WBEparticipationinCountyconstructioncontracts(i.e.,mostoftheunfavorabledisparitiesbecamestatisticallyinsignificant,correspondingtostandarddeviationvalueslessthantwo).Id.

Basedonanevaluationoftheregressionanalysis,thedistrictcourtheldthatthedemonstrateddisparitieswereattributabletofirmsizeasopposedtodiscrimination.Id.at918.Thedistrictcourtconcludedthatthefewunexplaineddisparitiesthatremainedafterregressingforfirmsizewereinsufficienttoprovidetherequisite“strongbasisinevidence”ofdiscriminationofBBEsandHBEs.Id.TheEleventhCircuitheldthatthisdecisionwasnotclearlyerroneous.Id.

WithrespecttotheBBEstatistics,theregressionanalysisexplainedallbutonenegativedisparity,foronetypeofconstructioncontractbetween1989‐1991.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisdidnotconstitutea“strongbasisinevidence”ofdiscrimination.Id.

WithrespecttotheHBEstatistics,oneoftheregressionmethodsfailedtoexplaintheunfavorabledisparityforonetypeofcontractbetween1989‐1991,andbothregressionmethodsfailedtoexplaintheunfavorabledisparityforanothertypeofcontractduringthatsametimeperiod.Id.However,by1993,bothregressionmethodsaccountedforalloftheunfavorabledisparities,andoneofthedisparitiesforonetypeofcontractwasactuallyfavorableforHBEs.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisdidnotconstitutea“strongbasisinevidence”ofdiscrimination.Id.

Finally,withrespecttotheWBEstatistics,theregressionanalysisexplainedallbutonenegativedisparity,foronetypeofconstructioncontractinthe1993period.Id.Theregressionanalysisexplainedalloftheothernegativedisparities,andinthe1993period,adisparityforonetypeofcontractwasactuallyfavorabletoWBEs.Id.TheEleventhCircuitheldthedistrictcourtpermissiblyfoundthatthisevidencewasnot“sufficientlyprobativeofdiscrimination.”Id.

TheCountyarguedthatthedistrictcourterroneouslyreliedonthedisaggregateddata(i.e.,brokendownbycontracttype)asopposedtotheconsolidatedstatistics.Id.at919.ThedistrictcourtdeclinedtoassigndispositiveweighttotheaggregateddatafortheBBEstatisticsfor1989‐1991because(1)theaggregateddatafor1993didnotshownegativedisparitieswhenregressedforfirmsize,(2)theBBEdisaggregateddataleftonlyoneunexplainednegativedisparityforonetypeofcontractfor1989‐1991whenregressedforfirmsize,and(3)“theCounty’sownexperttestifiedastotheutilityofexaminingthedisaggregateddata‘insofarastheyreflectdifferentkindsofwork,differentbiddingpractices,perhapsavarietyofotherfactorsthatcouldmakethemheterogeneouswithoneanother.”Id.

Additionally,thedistrictcourtnoted,andtheEleventhCircuitfoundthat“theaggregationofdisparitystatisticsfornonheterogenousdatapopulationscangiverisetoastatisticalphenomenonknownas‘Simpson’sParadox,’whichleadstoillusorydisparitiesinimproperlyaggregateddatathatdisappearwhenthedataaredisaggregated.”Id.at919,n.4(internalcitationsomitted).“Underthosecircumstances,”theEleventhCircuitheldthatthedistrictcourtdidnoterrinassigninglessweighttotheaggregateddata,infindingtheaggregateddataforBBEsfor1989‐1991didnotprovidea“strongbasisinevidence”ofdiscrimination,orinfinding


thatthedisaggregateddataformedaninsufficientbasisofsupportforanyoftheMBE/WBEprogramsgiventheapplicableconstitutionalrequirements.Id.at919.

County subcontracting statistics. TheCountyperformedasubcontractingstudytomeasureMBE/WBEparticipationintheCounty’ssubcontractingbusinesses.ForeachMBE/WBEcategory(BBE,HBE,andWBE),“thestudycomparedtheproportionofthedesignatedgroupthatfiledasubcontractor’sreleaseoflienonaCountyconstructionprojectbetween1991and1994withtheproportionofsalesandreceiptdollarsthatthesamegroupreceivedduringthesametimeperiod.”Id.

Thedistrictcourtfoundthestatisticalevidenceinsufficienttosupporttheuseofrace‐andethnicity‐consciousmeasures,notingproblemswithsomeofthedatameasures.Id.at920.

Mostnotably, thedenominatorused in the calculationof theMWBE sales andreceiptspercentagesisbaseduponthetotalsalesandreceiptsfromallsourcesforthefirmfilingasubcontractor’sreleaseoflienwiththeCounty.Thatmeans,forinstance,thatifanationwidenon‐MWBEcompanyperforming99percentofitsbusinessoutsideofDadeCountyfiledasinglesubcontractor’sreleaseoflienwiththeCountyduringtherelevanttimeframe,allof itssalesandreceiptsforthat time frame would be counted in the denominator against which MWBEsalesandreceiptsarecompared.Asthedistrictcourtpointedout, that isnotareasonablewaytomeasureDadeCountysubcontractingparticipation.

Id.TheCounty’sargumentthatastrongmajority(72%)ofthesubcontractorswerelocatedinDadeCountydidnotrenderthedistrictcourt’sdecisiontofailtocreditthestudyerroneous.Id.

Marketplace data statistics. TheCountyconductedanotherstatisticalstudy“toseewhatthedifferencesareinthemarketplaceandwhattherelationshipsareinthemarketplace.”Id.Thestudywasbasedonasampleof568contractors,fromapoolof10,462firms,thathadfileda“certificateofcompetency”withDadeCountyasofJanuary1995.Id.Theselectedfirmsparticipatedinatelephonesurveyinquiringabouttherace,ethnicity,andgenderofthefirm’sowner,andaskedforinformationonthefirm’stotalsalesandreceiptsfromallsources.Id.TheCounty’sexpertthenstudiedthedatatodetermine“whethermeaningfulrelationshipsexistedbetween(1)therace,ethnicity,andgenderofthesurveyedfirmowners,and(2)thereportedsalesandreceiptsofthatfirm.Id.Theexpert’shypothesiswasthatunfavorabledisparitiesmaybeattributabletomarketplacediscrimination.Theexpertperformedaregressionanalysisusingthenumberofemployeesasaproxyforsize.Id.

TheEleventhCircuitfirstnotedthatthestatisticalpoolusedbytheCountywassubstantiallylargerthantheactualnumberoffirms,willing,able,andqualifiedtodotheworkasthestatisticalpoolrepresentedallthosefirmsmerelylicensedasaconstructioncontractor.Id.Althoughthisfactordidnotrenderthestudymeaningless,thedistrictcourtwasentitledtoconsiderthatinevaluatingtheweightofthestudy.Id.at921.TheEleventhCircuitquotedtheSupremeCourtforthefollowingproposition:“[w]henspecialqualificationsarerequiredtofillparticularjobs,comparisonstothegeneralpopulation(ratherthantothesmallergroupofindividualswhopossessthenecessaryqualifications)mayhavelittleprobativevalue.”Id.,


quotingCroson,488U.S.at501,quotingHazelwoodSch.Dist.v.UnitedStates,433U.S.299,308n.13(1977).

TheEleventhCircuitfoundthatafterregressingforfirmsize,neithertheBBEnorWBEdatashowedstatisticallysignificantunfavorabledisparities.Id.Althoughthemarketplacedatadidrevealunfavorabledisparitiesevenafteraregressionanalysis,thedistrictcourtwasnotrequiredtoassignthosedisparitiescontrollingweight,especiallyinlightofthedissimilarresultsoftheCountyContractingStatistics,discussedsupra.Id.

The Wainwright Study. TheCountyalsointroducedastatisticalanalysispreparedbyJonWainwright,analyzing“thepersonalandfinancialcharacteristicsofself‐employedpersonsworkingfull‐timeintheDadeCountyconstructionindustry,basedondatafromthe1990PublicUseMicrodataSampledatabase”(derivedfromthedecennialcensus).Id.Thestudy“(1)comparedconstructionbusinessownershipratesofMBE/WBEstothoseofnon‐MBE/WBEs,and(2)analyzeddisparitiesinpersonalincomebetweenMBE/WBEandnon‐MBE/WBEbusinessowners.”Id.“Thestudyconcludedthatblacks,Hispanics,andwomenarelesslikelytoownconstructionbusinessesthansimilarlysituatedwhitemales,andMBE/WBEsthatdoentertheconstructionbusinessearnlessmoneythansimilarlysituatedwhitemales.”Id.

Withrespecttothefirstconclusion,Wainwrightcontrolledfor“humancapital”variables(education,yearsoflabormarketexperience,maritalstatus,andEnglishproficiency)and“financialcapital”variables(interestanddividendincome,andhomeownership).Id.Theanalysisindicatedthatblacks,Hispanicsandwomenentertheconstructionbusinessatlowerratesthanwouldbeexpected,oncenumerosity,andidentifiedhumanandfinancialcapitalarecontrolledfor.Id.Thedisparitiesforblacksandwomen(butnotHispanics)weresubstantialandstatisticallysignificant.Id.at922.Theunderlyingtheoryofthisbusinessownershipcomponentofthestudyisthatanysignificantdisparitiesremainingaftercontrolofvariablesareduetotheongoingeffectsofpastandpresentdiscrimination.Id.

TheEleventhCircuitheld,inlightofCroson,thedistrictcourtneednothaveacceptedthistheory.Id.TheEleventhCircuitquotedCroson,inwhichtheSupremeCourtrespondedtoasimilarargumentadvancedbytheplaintiffsinthatcase:“Therearenumerousexplanationsforthisdearthofminorityparticipation,includingpastsocietaldiscriminationineducationandeconomicopportunitiesaswellasbothblackandwhitecareerandentrepreneurialchoices.Blacksmaybedisproportionatelyattractedtoindustriesotherthanconstruction.”Id.,quotingCroson,488U.S.at503.FollowingtheSupremeCourtinCroson,theEleventhCircuitheld“thedisproportionateattractionofaminoritygrouptonon‐constructionindustriesdoesnotmeanthatdiscriminationintheconstructionindustryisthereason.”Id.,quotingCroson,488U.S.at503.Additionally,thedistrictcourthadevidencethatbetween1982and1987,therewasasubstantialgrowthrateofMBE/WBEfirmsasopposedtonon‐MBE/WBEfirms,whichwouldfurthernegatethepropositionthattheconstructionindustrywasdiscriminatingagainstminority‐andwomen‐ownedfirms.Id.at922.

WithrespecttothepersonalincomecomponentoftheWainwrightstudy,afterregressionanalyseswereconducted,onlytheBBEstatisticsindicatedastatisticallysignificantdisparityratio.Id.at923.However,theEleventhCircuitheldthedistrictcourtwasnotrequiredtoassignthedisparitycontrollingweightbecausethestudydidnotregressforfirmsize,andinlightofthe


conflictingstatisticalevidenceintheCountyContractingStatisticsandMarketplaceDataStatistics,discussedsupra,whichdidregressforfirmsize.Id.

The Brimmer Study. ThefinalstudypresentedbytheCountywasconductedunderthesupervisionofDr.AndrewF.Brimmerandconcernedonlyblack‐ownedfirms.Id.Thekeycomponentofthestudywasananalysisofthebusinessreceiptsofblack‐ownedconstructionfirmsfortheyearsof1977,1982and1987,basedontheCensusBureau’sSurveyofMinority‐andWomen‐OwnedBusinesses,producedeveryfiveyears.Id.Thestudysoughttodeterminetheexistenceofdisparitiesbetweensalesandreceiptsofblack‐ownedfirmsinDadeCountycomparedtothesalesandreceiptsofallconstructionfirmsinDadeCounty.Id.

Thestudyindicatedsubstantialdisparitiesin1977and1987butnot1982.Id.TheCountyallegedthattheabsenceofdisparityin1982wasduetosubstantialrace‐consciousmeasuresforamajorconstructioncontract(Metrorailproject),andnotduetoalackofdiscriminationintheindustry.Id.However,thestudymadenoattempttofilterfortheMetrorailprojectand“complete[ly]fail[ed]”toaccountforfirmsize.Id.Accordingly,theEleventhCircuitfoundthedistrictcourtpermissiblydiscountedtheresultsoftheBrimmerstudy.Id.at924.

Anecdotal evidence. Inaddition,theCountypresentedasubstantialamountofanecdotalevidenceofperceiveddiscriminationagainstBBEs,asmallamountofsimilaranecdotalevidencepertainingtoWBEs,andnoanecdotalevidencepertainingtoHBEs.Id.TheCountypresentedthreebasicformsofanecdotalevidence:“(1)thetestimonyoftwoCountyemployeesresponsibleforadministeringtheMBE/WBEprograms;(2)thetestimony,primarilybyaffidavit,oftwenty‐threeMBE/WBEcontractorsandsubcontractors;and(3)asurveyofblack‐ownedconstructionfirms.”Id.

TheCountyemployeestestifiedthatthedecentralizedstructureoftheCountyconstructioncontractingsystemaffordsgreatdiscretiontoCountyemployees,whichinturncreatestheopportunityfordiscriminationtoinfectthesystem.Id.Theyalsotestifiedtospecificincidentsofdiscrimination,forexample,thatMBE/WBEscomplainedofreceivinglengthierpunchliststhantheirnon‐MBE/WBEcounterparts.Id.TheyalsotestifiedthatMBE/WBEsencounterdifficultiesinobtainingbondingandfinancing.Id.

TheMBE/WBEcontractorsandsubcontractorstestifiedtonumerousincidentsofperceiveddiscriminationintheDadeCountyconstructionmarket,including:

Situationsinwhichaprojectforemanwouldrefusetodealdirectlywithablackor female firm owner, instead preferring to deal with a white employee;instances in which an MWBE owner knew itself to be the low bidder on asubcontractingproject,butwasnotawarded the job; instances inwhicha lowbid by an MWBE was “shopped” to solicit even lower bids from non‐MWBEfirms; instances in which anMWBE owner received an invitation to bid on asubcontract within a day of the bid due date, together with a “letter ofunavailability”fortheMWBEownertosigninordertoobtainawaiverfromtheCounty;and instances inwhichanMWBEsubcontractorwashiredbyaprimecontractor, but subsequently was replaced with a non‐MWBE subcontractorwithindaysofstartingworkontheproject.


Id.at924‐25.

Finally,theCountysubmittedastudypreparedbyDr.JoeE.Feagin,comprisedofinterviewsof78certifiedblack‐ownedconstructionfirms.Id.at925.Theintervieweesreportedsimilarinstancesofperceiveddiscrimination,including:“difficultyinsecuringbondingandfinancing;slowpaymentbygeneralcontractors;unfairperformanceevaluationsthatweretaintedbyracialstereotypes;difficultyinobtaininginformationfromtheCountyoncontractingprocesses;andhigherpricesonequipmentandsuppliesthanwerebeingchargedtonon‐MBE/WBEfirms.”Id.

TheEleventhCircuitfoundthatnumerousblack‐andsomefemale‐ownedconstructionfirmsinDadeCountyperceivedthattheywerethevictimsofdiscriminationandtwoCountyemployeesalsobelievedthatdiscriminationcouldtainttheCounty’sconstructioncontractingprocess.Id.However,suchanecdotalevidenceishelpful“onlywhenit[is]combinedwithandreinforcedbysufficientlyprobativestatisticalevidence.”Id.InherpluralityopinioninCroson,JusticeO’Connorfoundthat“evidenceofapatternofindividualdiscriminatoryactscan,ifsupportedbyappropriatestatisticalproof,lendsupporttoalocalgovernment’sdeterminationthatbroaderremedialreliefisjustified.”Id.,quotingCroson,488U.S.at509(emphasisaddedbytheEleventhCircuit).Accordingly,theEleventhCircuitheldthat“anecdotalevidencecanplayanimportantroleinbolsteringstatisticalevidence,butthatonlyintherarecasewillanecdotalevidencesufficestandingalone.”Id.at925.TheEleventhCircuitalsocitedtoopinionsfromtheThird,NinthandTenthCircuitsassupportingthesameproposition.Id.at926.TheEleventhCircuitaffirmedthedecisionofthedistrictcourtenjoiningthecontinuedoperationoftheMBE/WBEprogramsbecausetheydidnotrestona“constitutionallysufficientevidentiaryfoundation.”Id.

AlthoughtheEleventhCircuitdeterminedthattheMBE/WBEprogramdidnotsurviveconstitutionalmusterduetotheabsenceofasufficientevidentiaryfoundation,theEleventhCircuitproceededwiththesecondprongofthestrictscrutinyanalysisofdeterminingwhethertheMBE/WBEprogramswerenarrowlytailored(BBEandHBEprograms)orsubstantiallyrelated(WBEprogram)tothelegitimategovernmentinteresttheypurportedtoserve,i.e.,“remedyingtheeffectsofpresentandpastdiscriminationagainstblacks,Hispanics,andwomenintheDadeCountyconstructionmarket.”Id.

Narrow tailoring. “Theessenceofthe‘narrowlytailored’inquiryisthenotionthatexplicitlyracialpreferences…mustonlybea‘lastresort’option.”Id.,quotingHayesv.NorthSideLawEnforcementOfficersAss’n,10F.3d207,217(4thCir.1993)andcitingCroson,488U.S.at519(Kennedy,J.,concurringinpartandconcurringinthejudgment)(“[T]hestrictscrutinystandard…forbidstheuseofevennarrowlydrawnracialclassificationsexceptasalastresort.”).

TheEleventhCircuithasidentifiedfourfactorstoevaluatewhetherarace‐orethnicity‐consciousaffirmativeactionprogramisnarrowlytailored:(1)“thenecessityforthereliefandtheefficacyofalternativeremedies;(2)theflexibilityanddurationoftherelief;(3)therelationshipofnumericalgoalstotherelevantlabormarket;and(4)theimpactofthereliefontherightsofinnocentthirdparties.”Id.at927,citingEnsleyBranch,31F.3dat1569.Thefourfactorsprovide“ausefulanalyticalstructure.”Id.at927.TheEleventhCircuitfocusedonlyonthefirstfactorinthepresentcase“becausethatiswheretheCounty’sMBE/WBEprogramsaremostproblematic.”Id.


TheEleventhCircuit

flatlyreject[ed]theCounty’sassertionthat‘givenastrongbasisinevidenceofarace‐basedproblem, a race‐based remedy isnecessary.’That is simplynot thelaw. Ifarace‐neutralremedy issufficient tocurearace‐basedproblem, thenarace‐conscious remedy can never be narrowly tailored to that problem.” Id.,citingCroson,488U.S.at507(holdingthataffirmativeactionprogramwasnotnarrowlytailoredwhere“theredoesnotappeartohavebeenanyconsiderationof theuseofrace‐neutralmeans to increaseminoritybusinessparticipation incity contracting”) … Supreme Court decisions teach that a race‐consciousremedy is not merely one of many equally acceptable medications thegovernmentmayusetotreatarace‐basedproblem.Instead,itisthestrongestofmedicines, with many potential side effects, and must be reserved for thoseseverecasesthatarehighlyresistanttoconventionaltreatment.

Id.at927.

TheEleventhCircuitheldthattheCounty“clearlyfailedtogiveseriousandgoodfaithconsiderationtotheuseofrace‐andethnicity‐neutralmeasures.”Id.Rather,thedeterminationofthenecessitytoestablishtheMWBEprogramswasbaseduponaconclusorylegislativestatementastoitsnecessity,whichinturnwasbaseduponan“equallyconclusoryanalysis”intheBrimmerstudy,andareportthattheSBAonlywasabletodirect5percentofSBAfinancingtoblack‐ownedbusinessesbetween1968‐1980.Id.

TheCountyadmitted,andtheEleventhCircuitconcluded,thattheCountyfailedtogiveanyconsiderationtoanyalternativetotheHBEaffirmativeactionprogram.Id.at928.Moreover,theEleventhCircuitfoundthatthetestimonyoftheCounty’sownwitnessesindicatedtheviabilityofrace‐andethnicity‐neutralmeasurestoremedymanyoftheproblemsfacingblack‐andHispanic‐ownedconstructionfirms.Id.TheCountyemployeesidentifiedproblems,virtuallyallofwhichwererelatedtotheCounty’sownprocessesandprocedures,including:“thedecentralizedCountycontractingsystem,whichaffordsahighlevelofdiscretiontoCountyemployees;thecomplexityofCountycontractspecifications;difficultyinobtainingbonding;difficultyinobtainingfinancing;unnecessarybidrestrictions;inefficientpaymentprocedures;andinsufficientorinefficientexchangeofinformation.”Id.TheEleventhCircuitfoundthattheproblemsfacingMBE/WBEcontractorswere“institutionalbarriers”toentryfacingeverynewentrantintotheconstructionmarket,andwereperhapsaffectingtheMBE/WBEcontractorsdisproportionatelyduetothe“institutionalyouth”ofblack‐andHispanic‐ownedconstructionfirms.Id.“Itfollowsthatthosefirmsshouldbehelpedthemostbydismantlingthosebarriers,somethingtheCountycoulddoatleastinsubstantialpart.”Id.

TheEleventhCircuitnotedthattherace‐andethnicity‐neutraloptionsavailabletotheCountymirroredthoseavailableandcitedbyJusticeO’ConnorinCroson:

[T]hecityhasatitsdisposalawholearrayofrace‐neutralmeasurestoincreasethe accessibility of city contracting opportunities to small entrepreneurs of allraces.Simplificationofbiddingprocedures,relaxationofbondingrequirements,and training and financial aid for disadvantaged entrepreneurs of all races


would open the public contractingmarket to all thosewho have suffered theeffects of past societal discrimination and neglect … The city may also act toprohibitdiscrimination in theprovisionofcreditorbondingby localsuppliersandbanks.

Id.,quotingCroson,488U.S.at509‐10.TheEleventhCircuitfoundthatexceptforsome“half‐heartedprograms”consistingof“limitedtechnicalandfinancialaidthatmightbenefitBBEsandHBEs,”theCountyhadnot“seriouslyconsidered”ortriedmostoftherace‐andethnicity‐neutralalternativesavailable.Id.at928.“Mostnotably…theCountyhasnottakenanyactionwhatsoevertoferretoutandrespondtoinstancesofdiscriminationifandwhentheyhaveoccurredintheCounty’sowncontractingprocess.”Id.

TheEleventhCircuitfoundthattheCountyhadtakennostepsto“inform,educate,discipline,orpenalize”discriminatorymisconductbyitsownemployees.Id.at929.NorhadtheCountypassedanylocalordinancesexpresslyprohibitingdiscriminationbylocalcontractors,subcontractors,suppliers,bankers,orinsurers.Id.“Insteadofturningtorace‐andethnicity‐consciousremediesasalastresort,theCountyhasturnedtothemasafirstresort.”Accordingly,theEleventhCircuitheldthateveniftheBBEandHBEprogramsweresupportedbytherequisiteevidentiaryfoundation,theyviolatedtheEqualProtectionClausebecausetheywerenotnarrowlytailored.Id.

Substantial relationship. TheEleventhCircuitheldthatduetotherelaxed“substantialrelationship”standardforgender‐consciousprograms,iftheWBEprogramresteduponasufficientevidentiaryfoundation,itcouldpassthesubstantialrelationshiprequirement.Id.However,becauseitdidnotrestuponasufficientevidentiaryfoundation,theWBEprogramcouldnotpassconstitutionalmuster.Id.

Foralloftheforegoingreasons,theEleventhCircuitaffirmedthedecisionofthedistrictcourtdeclaringtheMBE/WBEprogramsunconstitutionalandenjoiningtheircontinuedoperation.

11. Associated Gen. Contractors of California, Inc. v. Coalition for Econ. Equity (“AGCC”), 950 F.2d 1401 (9th Cir. 1991)

InAssociatedGen.ContractorsofCalifornia,Inc.v.CoalitionforEcon.Equity(“AGCC”),theNinthCircuitCourtofAppealsdeniedplaintiffsrequestforpreliminaryinjunctiontoenjoinenforcementofthecity’sbidpreferenceprogram.950F.2d1401(9thCir.1991).Althoughanoldercase,AGCCisinstructiveastotheanalysisconductedbytheNinthCircuit.Thecourtdiscussedtheutilizationofstatisticalevidenceandanecdotalevidenceinthecontextofthestrictscrutinyanalysis.Id.at1413‐18.

TheCityofSanFranciscoadoptedanordinancein1989providingbidpreferencestoprimecontractorswhoweremembersofgroupsfounddisadvantagedbypreviousbiddingpractices,andspecificallyprovideda5percentbidpreferenceforLBEs,WBEsandMBEs.950F.2dat1405.LocalMBEsandWBEswereeligiblefora10percenttotalbidpreference,representingthecumulativetotalofthefivepercentpreferencegivenLocalBusinessEnterprises(“LBEs”)andthe5percentpreferencegivenMBEsandWBEs.Id.Theordinancedefined“MBE”asaneconomicallydisadvantagedbusinessthatwasownedandcontrolledbyoneormoreminoritypersons,which


weredefinedtoincludeAsian,blacksandLatinos.“WBE”wasdefinedasaneconomicallydisadvantagedbusinessthatwasownedandcontrolledbyoneormorewomen.Economicallydisadvantagedwasdefinedasabusinesswithaveragegrossannualreceiptsthatdidnotexceed$14million.Id.

TheMotionforPreliminaryInjunctionchallengedtheconstitutionalityoftheMBEprovisionsofthe1989OrdinanceinsofarasitpertainedtoPublicWorksconstructioncontracts.Id.at1405.ThedistrictcourtdeniedtheMotionforPreliminaryInjunctionontheAGCC’sconstitutionalclaimonthegroundthatAGCCfailedtodemonstratealikelihoodofsuccessonthemerits.Id.at1412.

TheNinthCircuitCourtofAppealsappliedthestrictscrutinyanalysisfollowingthedecisionoftheU.S.SupremeCourtinCityofRichmondv.Croson.ThecourtstatedthataccordingtotheU.S.SupremeCourtinCroson,amunicipalityhasacompellinginterestinginredressing,notonlydiscriminationcommittedbythemunicipalityitself,butalsodiscriminationcommittedbyprivatepartieswithinthemunicipalities’legislativejurisdiction,solongasthemunicipalityinsomewayperpetuatedthediscriminationtoberemediedbytheprogram.Id.at1412‐13,citingCrosonat488U.S.at491‐92,537‐38.Tosatisfythisrequirement,“thegovernmentalactorneednotbeanactiveperpetratorofsuchdiscrimination;passiveparticipationwillsatisfythissub‐partofstrictscrutinyreview.”Id.at1413,quotingCoralConstructionCompanyv.KingCounty,941F.2d910at916(9thCir.1991).Inaddition,the[m]ereinfusionoftaxdollarsintoadiscriminatoryindustrymaybesufficientgovernmentalinvolvementtosatisfythisprong.”Id.at1413quotingCoralConstruction,941F.2dat916.

ThecourtpointedoutthattheCityhadmadedetailedfindingsofpriordiscriminationinconstructionandbuildingwithinitsborders,hadtestimonytakenatmorethantenpublichearingsandreceivednumerouswrittensubmissionsfromthepublicaspartofitsanecdotalevidence.Id.at1414.TheCityDepartmentscontinuedtodiscriminateagainstMBEsandWBEsandcontinuedtooperateunderthe“oldboynetwork”inawardingcontracts,therebydisadvantagingMBEsandWBEs.Id.And,theCityfoundthatlargestatisticaldisparitiesexistedbetweenthepercentageofcontractsawardedtoMBEsandthepercentageofavailableMBEs.950F.2dat1414.ThecourtstatedtheCityalsofound“discriminationintheprivatesectoragainstMBEsandWBEsthatismanifestedinandexacerbatedbytheCity’sprocurementpractices.”Id.at1414.

TheNinthCircuitfoundthestudycommissionedbytheCityindicatedtheexistenceoflargedisparitiesbetweentheawardofcitycontractstoavailablenon‐minoritybusinessesandtoMBEs.Id.at1414.UsingtheCityandCountyofSanFranciscoasthe“relevantmarket,”thestudycomparedthenumberofavailableMBEprimeconstructioncontractorsinSanFranciscowiththeamountofcontractdollarsawardedbytheCitytoSanFrancisco‐basedMBEsforaparticularyear.Id.at1414.ThestudyfoundthatavailableMBEsreceivedfarfewercitycontractsinproportiontotheirnumbersthantheiravailablenon‐minoritycounterparts.Id.Specifically,thestudyfoundthatwithrespecttoprimeconstructioncontracting,disparitiesbetweenthenumberofavailablelocalAsian‐,black‐andHispanic‐ownedfirmsandthenumberofcontractsawardedtosuchfirmswerestatisticallysignificantandsupportedaninferenceofdiscrimination.Id.Forexample,inprimecontractingforconstruction,althoughMBEavailabilitywasdeterminedtobeat49.5percent,MBEdollarparticipationwasonly11.1percent.Id.TheNinthCircuitstatedthan


initsdecisioninCoralConstruction,itemphasizedthatsuchstatisticaldisparitiesare“aninvaluabletoolanddemonstratingthediscriminationnecessarytoestablishacompellinginterest.Id.at1414,citingtoCoralConstruction,941F.2dat918andCroson,488U.S.at509.

Thecourtnotedthattherecorddocumentsavastnumberofindividualaccountsofdiscrimination,whichbring“thecoldnumbersconvincinglytolife.Id.at1414,quotingCoralConstruction,941F.2dat919.TheseaccountsincludenumerousreportsofMBEsbeingdeniedcontractsdespitebeingthelowbidder,MBEsbeingtoldtheywerenotqualifiedalthoughtheywerelaterfoundqualifiedwhenevaluatedbyoutsideparties,MBEsbeingrefusedworkevenaftertheywereawardedcontractsaslowbidder,andMBEsbeingharassedbycitypersonneltodiscouragethemfrombiddingoncitycontracts.Idat1415.TheCitypointedtonumerousindividualaccountsofdiscrimination,thatan“oldboynetwork”stillexists,andthatracialdiscriminationisstillprevalentwithintheSanFranciscoconstructionindustry.Id.Thecourtfoundthatsucha“combinationofconvincinganecdotalandstatisticalevidenceispotent.”Id.at1415quotingCoralConstruction,941F.2dat919.

Thecourtalsostatedthatthe1989OrdinanceappliesonlytoresidentMBEs.TheCity,therefore,accordingtothecourt,appropriatelyconfineditsstudytothecitylimitsinordertofocusonthosewhomthepreferenceschemetargeted.Id.at1415.ThecourtnotedthatthestatisticsrelieduponbytheCitytodemonstratediscriminationinitscontractingprocessesconsideredonlyMBEslocatedwithintheCityofSanFrancisco.Id.

ThecourtpointedouttheCity’sfindingswerebasedupondozensofspecificinstancesofdiscriminationthatarelaidoutwithparticularityintherecord,aswellasthesignificantstatisticaldisparitiesintheawardofcontracts.ThecourtnotedthattheCitymustsimplydemonstratetheexistenceofpastdiscriminationwithspecificity,butthereisnorequirementthatthelegislativefindingsspecificallydetaileachandeveryincidencethatthelegislativebodyhasrelieduponinsupportofthisdecisionthataffirmativeactionisnecessary.Id.at1416.

Initsanalysisofthe“narrowlytailored”requirement,thecourtfocusedonthreecharacteristicsidentifiedbythedecisioninCrosonasindicativeofnarrowtailoring.First,anMBEprogramshouldbeinstitutedeitherafter,orinconjunctionwith,race‐neutralmeansofincreasingminoritybusinessparticipationinpubliccontracting.Id.at1416.Second,theplanshouldavoidtheuseof“rigidnumericalquotas.”Id.AccordingtotheSupremeCourt,systemsthatpermitwaiverinappropriatecasesandthereforerequiresomeindividualizedconsiderationoftheapplicantsposealesserdangerofoffendingtheConstitution.Id.Mechanismsthatintroduceflexibilityintothesystemalsopreventtheimpositionofadisproportionateburdenonafewindividuals.Id.Third,“anMBEprogrammustbelimitedinitseffectivescopetotheboundariesoftheenactingjurisdiction.Id.at1416quotingCoralConstruction,941F.2dat922.

ThecourtfoundthattherecordshowedtheCityconsidered,butrejectedasnotviable,specificrace‐neutralalternativesincludingafundtoassistnewlyestablishedMBEsinmeetingbondingrequirements.Thecourtstatedthat“whilestrictscrutinyrequiresserious,goodfaithconsiderationofrace‐neutralalternatives,strictscrutinydoesnotrequireexhaustionofeverypossiblesuchalternative…howeverirrational,costly,unreasonable,andunlikelytosucceedsuchalternativemaybe.”Id.at1417quotingCoralConstruction,941F.2dat923.ThecourtfoundtheCitytenyearsbeforehadattemptedtoeradicatediscriminationincitycontracting


throughpassageofarace‐neutralordinancethatprohibitedcitycontractorsfromdiscriminatingagainsttheiremployeesonthebasisofraceandrequiredcontractorstotakestepstointegratetheirworkforce;andthattheCitymadeandcontinuestomakeeffortstoenforcetheanti‐discriminationordinance.Id.at1417.Thecourtstatedinclusionofsuchrace‐neutralmeasuresisonefactorsuggestingthatanMBEplanisnarrowlytailored.Id.at1417.

ThecourtalsofoundthattheOrdinancepossessedtherequisiteflexibility.Ratherthanarigidquotasystem,theCityadoptedamoremodestsystemaccordingtothecourt,thatofbidpreferences.Id.at1417.Thecourtpointedoutthattherewerenogoals,quotas,orset‐asidesandmoreover,theplanremediesonlyspecificallyidentifieddiscrimination:theCityprovidespreferencesonlytothoseminoritygroupsfoundtohavepreviouslyreceivedalowerpercentageofspecifictypesofcontractsthantheiravailabilitytoperformsuchworkwouldsuggest.Id.at1417.

ThecourtrejectedtheargumentofAGCCthattopassconstitutionalmusteranyremedymustprovideredressonlytospecificindividualswhohavebeenidentifiedasvictimsofdiscrimination.Id.at1417,n.12.TheNinthCircuitagreedwiththedistrictcourtthataniron‐cladrequirementlimitinganyremedytoindividualspersonallyproventohavesufferedpriordiscriminationwouldrenderanyrace‐consciousremedy“superfluous,”andwouldthwarttheSupremeCourt’sdirectiveinCrosonthatrace‐consciousremediesmaybepermittedinsomecircumstances.Id.at1417,n.12.Thecourtalsofoundthattheburdensofthebidpreferencesonthosenotentitledtothemappear“relativelylightandwelldistributed.”Id.at1417.ThecourtstatedthattheOrdinancewas“limitedinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.Id.at1418,quotingCoralConstruction,941F.2dat925.ThecourtfoundthatSanFranciscohadcarefullylimitedtheordinancetobenefitonlythoseMBEslocatedwithintheCity’sborders.Id.1418.

12. Coral Construction Co. v. King County, 941 F.2d 910 (9th Cir. 1991)

InCoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991),theNinthCircuitexaminedtheconstitutionalityofKingCounty,Washington’sminorityandwomenbusinessset‐asideprograminlightofthestandardsetforthinCityofRichmondv.J.A.CrosonCo.ThecourtheldthatalthoughtheCountypresentedampleanecdotalevidenceofdisparatetreatmentofMBEcontractorsandsubcontractors,thetotalabsenceofpre‐programenactmentstatisticalevidencewasproblematictothecompellinggovernmentinterestcomponentofthestrictscrutinyanalysis.Thecourtremandedtothedistrictcourtforadeterminationofwhetherthepost‐programenactmentstudiesconstitutedasufficientcompellinggovernmentinterest.Perthenarrowtailoringprongofthestrictscrutinytest,thecourtfoundthatalthoughtheprogramincludedrace‐neutralalternativemeasuresandwasflexible(i.e.,includedawaiverprovision),theoverbreadthoftheprogramtoincludeMBEsoutsideofKingCountywasfataltothenarrowtailoringanalysis.

Thecourtalsoremandedontheissueofwhethertheplaintiffswereentitledtodamagesunder42U.S.C.§§1981and1983,andinparticulartodeterminewhetherevidenceofcausationexisted.WithrespecttotheWBEprogram,thecourtheldtheplaintiffhadstandingtochallengetheprogram,andapplyingtheintermediatescrutinyanalysis,heldtheWBEprogramsurvivedthefacialchallenge.


InfindingtheabsenceofanystatisticaldatainsupportoftheCounty’sMBEProgram,thecourtmadeitclearthatstatisticalanalyseshaveservedandwillcontinuetoserveanimportantroleincasesinwhichtheexistenceofdiscriminationisadisputedissue.941F.2dat918.Thecourtnotedthatithasrepeatedlyapprovedtheuseofstatisticalprooftoestablishaprimafaciecaseofdiscrimination.Id.ThecourtpointedoutthattheU.S.SupremeCourtinCrosonheldthatwhere“grossstatisticaldisparitiescanbeshown,theyalonemayinapropercaseconstituteprimafacieproofofapatternorpracticeofdiscrimination.”Id.at918,quotingHazelwoodSchoolDist.v.UnitedStates,433U.S.299,307‐08,andCroson,488U.S.at501.

Thecourtpointsoutthatstatisticalevidencemaynotfullyaccountforthecomplexfactorsandmotivationsguidingemploymentdecisions,manyofwhichmaybeentirelyrace‐neutral.Id.at919.Thecourtnotedthattherecordcontainedaplethoraofanecdotalevidence,butthatanecdotalevidence,standingalone,suffersthesameflawsasstatisticalevidence.Id.at919.Whileanecdotalevidencemaysufficetoproveindividualclaimsofdiscrimination,rarely,accordingtothecourt,ifever,cansuchevidenceshowasystemicpatternofdiscriminationnecessaryfortheadoptionofanaffirmativeactionplan.Id.

Nonetheless,thecourtheldthatthecombinationofconvincinganecdotalandstatisticalevidenceispotent.Id.at919.Thecourtpointedoutthatindividualswhotestifiedabouttheirpersonalexperiencesbroughtthecoldnumbersofstatistics“convincinglytolife.”Id.at919,quotingInternationalBrotherhoodofTeamstersv.UnitedStates,431U.S.324,339(1977).ThecourtalsopointedoutthattheEleventhCircuitCourtofAppeals,inpassinguponaminoritysetasideprogramsimilartotheoneinKingCounty,concludedthatthetestimonyregardingcomplaintsofdiscriminationcombinedwiththegrossstatisticaldisparitiesuncoveredbytheCountystudiesprovidedmorethanenoughevidenceonthequestionofpriordiscriminationandneedforracialclassificationtojustifythedenialofaMotionforSummaryJudgment.Id.at919,citingConeCorp.v.HillsboroughCounty,908F.2d908,916(11thCir.1990).

ThecourtfoundthattheMBEProgramoftheCountycouldnotstandwithoutaproperstatisticalfoundation.Id.at919.Thecourtaddressedwhetherpost‐enactmentstudiesdonebytheCountyofastatisticalfoundationcouldbeconsideredbythecourtinconnectionwithdeterminingthevalidityoftheCountyMBEProgram.Thecourtheldthatamunicipalitymusthavesomeconcreteevidenceofdiscriminationinaparticularindustrybeforeitmayadoptaremedialprogram.Id.at920.However,thecourtsaidthisrequirementofsomeevidencedoesnotmeanthataprogramwillbeautomaticallystruckdowniftheevidencebeforethemunicipalityatthetimeofenactmentdoesnotcompletelyfulfillbothprongsofthestrictscrutinytest.Id.Rather,thecourtheld,thefactualpredicatefortheprogramshouldbeevaluatedbaseduponallevidencepresentedtothedistrictcourt,whethersuchevidencewasadducedbeforeorafterenactmentoftheMBEProgram.Id.Therefore,thecourtadoptedarulethatamunicipalityshouldhavebeforeitsomeevidenceofdiscriminationbeforeadoptingarace‐consciousprogram,whileallowingpost‐adoptionevidencetobeconsideredinpassingontheconstitutionalityoftheprogram.Id.

Thecourt,therefore,remandedthecasetothedistrictcourtfordeterminationofwhethertheconsultantstudiesthatwereperformedaftertheenactmentoftheMBEProgramcouldprovideanadequatefactualjustificationtoestablisha“propellinggovernmentinterest”forKingCounty’sadoptingtheMBEProgram.Id.at922.


ThecourtalsofoundthatCrosondoesnotrequireashowingofactivediscriminationbytheenactingagency,andthatpassiveparticipation,suchastheinfusionoftaxdollarsintoadiscriminatoryindustry,suffices.Id.at922,citingCroson,488U.S.at492.ThecourtpointedoutthattheSupremeCourtinCrosonconcludedthatiftheCityhadevidencebeforeit,thatnon‐minoritycontractorsweresystematicallyexcludingminoritybusinessesfromsubcontractingopportunities,itcouldtakeactiontoendthediscriminatoryexclusion.Id.at922.Thecourtpointsoutthatiftherecordultimatelysupportedafindingofsystemicdiscrimination,theCountyadequatelylimiteditsprogramtothosebusinessesthatreceivetaxdollars,andtheprogramimposedobligationsupononlythosebusinesseswhichvoluntarilysoughtKingCountytaxdollarsbycontractingwiththeCounty.Id.

Thecourtaddressedseveralfactorsintermsofthenarrowlytailoredanalysis,andfoundthatfirst,anMBEprogramshouldbeinstitutedeitherafter,orinconjunctionwith,race‐neutralmeansofincreasingminoritybusinessparticipationandpubliccontracting.Id.at922,citingCroson,488U.S.at507.Thesecondcharacteristicofthenarrowly‐tailoredprogram,accordingtothecourt,istheuseofminorityutilizationgoalsonacase‐by‐casebasis,ratherthanuponasystemofrigidnumericalquotas.Id.Finally,thecourtstatedthatanMBEprogrammustbelimitedinitseffectivescopetotheboundariesoftheenactingjurisdiction.Id.

Amongthevariousnarrowlytailoredrequirements,thecourtheldconsiderationofrace‐neutralalternativesisamongthemostimportant.Id.at922.Nevertheless,thecourtstatedthatwhilestrictscrutinyrequiresserious,goodfaithconsiderationofrace‐neutralalternatives,strictscrutinydoesnotrequireexhaustionofeverypossiblesuchalternative.Id.at923.Thecourtnotedthatitdoesnotintendagovernmententityexhausteveryalternative,howeverirrational,costly,unreasonable,andunlikelytosucceedsuchalternativemightbe.Id.Thus,thecourtrequiredonlythatastateexhaustsrace‐neutralmeasuresthatthestateisauthorizedtoenact,andthathaveareasonablepossibilityofbeingeffective.Id.ThecourtnotedinthiscasetheCountyconsideredalternatives,butdeterminedthattheywerenotavailableasamatteroflaw.Id.TheCountycannotberequiredtoengageinconductthatmaybeillegal,norcanitbecompelledtoexpendprecioustaxdollarsonprojectswherepotentialforsuccessismarginalatbest.Id.

ThecourtnotedthatKingCountyhadadoptedsomerace‐neutralmeasuresinconjunctionwiththeMBEProgram,forexample,hostingoneortwotrainingsessionsforsmallbusinesses,coveringsuchtopicsasdoingbusinesswiththegovernment,smallbusinessmanagement,andaccountingtechniques.Id.at923.Inaddition,theCountyprovidedinformationonassessingSmallBusinessAssistancePrograms.Id.ThecourtfoundthatKingCountyfulfilleditsburdenofconsideringrace‐neutralalternativeprograms.Id.

Asecondindicatorofaprogram’snarrowlytailoringisprogramflexibility.Id.at924.Thecourtfoundthatanimportantmeansofachievingsuchflexibilityisthroughuseofcase‐by‐caseutilizationgoals,ratherthanrigidnumericalquotasorgoals.Id.at924.ThecourtpointedoutthatKingCountyuseda“percentagepreference”method,whichisnotaquota,andwhilethepreferenceislockedatfivepercent,suchafixedpreferenceisnotundulyrigidinlightofthewaiverprovisions.ThecourtfoundthatavalidMBEProgramshouldincludeawaiversystemthataccountsforboththeavailabilityofqualifiedMBEsandwhetherthequalifiedMBEshavesufferedfromtheeffectsofpastdiscriminationbytheCountyorprimecontractors.Id.at924.


ThecourtfoundthatKingCounty’sprogramprovidedwaiversinbothinstances,includingwhereneitherminoritynorawoman’sbusinessisavailabletoprovideneededgoodsorservicesandwhereavailableminorityand/orwomen’sbusinesseshavegivenpricequotesthatareunreasonablyhigh.Id.

ThecourtalsopointedoutotherattributesofthenarrowlytailoredandflexibleMBEprogram,includingabidderthatdoesnotmeetplannedgoals,maynonethelessbeawardedthecontractbydemonstratingagoodfaithefforttocomply.Id.TheactualpercentagesofrequiredMBEparticipationaredeterminedonacase‐by‐casebasis.Levelsofparticipationmaybereducediftheprescribedlevelsarenotfeasible,ifqualifiedMBEsareunavailable,orifMBEpricequotesarenotcompetitive.Id.

ThecourtconcludedthatanMBEprogrammustalsobelimitedinitsgeographicalscopetotheboundariesoftheenactingjurisdiction.Id.at925.HerethecourtheldthatKingCounty’sMBEprogramfailsthisthirdportionof“narrowlytailored”requirement.Thecourtfoundthedefinitionof“minoritybusiness”includedintheProgramindicatedthataminority‐ownedbusinessmayqualifyforpreferentialtreatmentifthebusinesshasbeendiscriminatedagainstintheparticulargeographicalareasinwhichitoperates.Thecourtheldthisdefinitionasoverlybroad.Id.at925.ThecourtheldthattheCountyshouldaskthequestionwhetherabusinesshasbeendiscriminatedagainstinKingCounty.Id.Thisdetermination,accordingtothecourt,isnotaninsurmountableburdenfortheCounty,astheruledoesnotrequirefindingspecificinstancesofdiscriminatoryexclusionforeachMBE.Id.Rather,iftheCountysuccessfullyprovesmalignantdiscriminationwithintheKingCountybusinesscommunity,anMBEwouldbepresumptivelyeligibleforreliefifithadpreviouslysoughttodobusinessintheCounty.Id.

Inotherwords,ifsystemicdiscriminationintheCountyisshown,thenitisfairtopresumethatanMBEwasvictimizedbythediscrimination.Id.at925.ForthepresumptiontoattachtotheMBE,however,itmustbeestablishedthattheMBEis,orattemptedtobecome,anactiveparticipantintheCounty’sbusinesscommunity.Id.BecauseKingCounty’sprogrampermittedMBEparticipationevenbyMBEsthathavenopriorcontactwithKingCounty,theprogramwasoverbroadtothatextent.Id.Therefore,thecourtreversedthegrantofsummaryjudgmenttoKingCountyontheMBEprogramonthebasisthatitwasgeographicallyoverbroad.

Thecourtconsideredthegender‐specificaspectoftheMBEprogram.Thecourtdeterminedthedegreeofjudicialscrutinyaffordedgender‐consciousprogramswasintermediatescrutiny,ratherthanstrictscrutiny.Id.at930.Underintermediatescrutiny,gender‐basedclassificationmustserveanimportantgovernmentalobjective,andtheremustbeadirect,substantialrelationshipbetweentheobjectiveandthemeanschosentoaccomplishtheobjective.Id.at931.

Inthiscase,thecourtconcluded,thatKingCounty’sWBEpreferencesurvivedafacialchallenge.Id.at932.ThecourtfoundthatKingCountyhadalegitimateandimportantinterestinremedyingthemanydisadvantagesthatconfrontwomenbusinessownersandthatthemeanschosenintheprogramweresubstantiallyrelatedtotheobjective.Id.ThecourtfoundtherecordadequatelyindicateddiscriminationagainstwomenintheKingCountyconstructionindustry,notingtheanecdotalevidenceincludinganaffidavitofthepresidentofaconsultingengineeringfirm.Id.at933.Therefore,thecourtupheldtheWBEportionoftheMBEprogramandaffirmedthedistrictcourt’sgrantofsummaryjudgmenttoKingCountyfortheWBEprogram.


Recent District Court Decisions

13. Kossman Contracting Co., Inc. v. City of Houston, 2016 WL 1104363 (S.D. Tex. 2016).

PlaintiffKossmanisacompanyengagedinthebusinessofprovidingerosioncontrolservicesandismajorityownedbyawhitemale.2016WL1104363at*1.KossmanbroughtthisactionasanequalprotectionchallengetotheCityofHouston’sMinorityandWomenOwnedBusinessEnterprise(“MWBE”)program.Id.TheMWBEprogramthatischallengedhasbeenineffectsince2013andsetsa34percentMWBEgoalforconstructionprojects.Id.Houstonsetthisgoalbasedonadisparitystudyissuedin2012.Id.Thestudyanalyzedthestatusofminority‐ownedandwomen‐ownedbusinessenterprisesinthegeographicandproductmarketsofHouston’sconstructioncontracts.Id.

KossmanallegesthattheMWBEprogramisunconstitutionalonthegroundthatitdeniesnon‐MWBEsequalprotectionofthelaw,andassertsthatithaslostbusinessasaresultoftheMWBEprogrambecauseprimecontractorsareunwillingtosubcontractworktoanon‐MWBEfirmlikeKossman.Id.at*1.Kossmanfiledamotionforsummaryjudgment;HoustonfiledamotiontoexcludethetestimonyofKossman’sexpert;andHoustonfiledamotionforsummaryjudgment.Id.

ThedistrictcourtreferredthesemotionstotheMagistrateJudge.TheMagistrateJudge,onFebruary17,2016,issueditsMemorandum&RecommendationtothedistrictcourtinwhichitfoundthatHouston’smotiontoexcludeKossman’sexpertshouldbegrantedbecausetheexpertarticulatednomethodandhadnotraininginstatisticsoreconomicsthatwouldallowhimtocommentonthevalidityofthedisparitystudy.Id.at*1TheMagistrateJudgealsofoundthattheMWBEprogramwasconstitutionalunderstrictscrutiny,exceptwithrespecttotheinclusionofNative‐American‐ownedbusinesses.Id.TheMagistrateJudgefoundtherewasinsufficientevidencetoestablishaneedforremedialactionforbusinessesownedbyNativeAmericans,butfoundtherewassufficientevidencetojustifyremedialactionandinclusionofotherracialandethnicminoritiesandwomen‐ownedbusinesses.Id.

AftertheMagistrateJudgeissueditsMemorandum&Recommendation,Kossmanfiledobjections,whichthedistrictcourtsubsequentlyinitsorderadoptingMemorandum&Recommendation,decidedonMarch22,2016,affirmedandadoptedtheMemorandum&RecommendationofthemagistratejudgeandoverruledtheobjectionsbyKossman.Id.at*2.

District court order adopting Memorandum & Recommendation of Magistrate Judge.

Dun & Bradstreet underlying data properly withheld and Kossman’s proposed expert properly

excluded.ThedistrictcourtfirstrejectedKossman’sobjectionthattheCityofHoustonimproperlywithheldtheDun&Bradstreetdatathatwasutilizedinthedisparitystudy.Thisrulingwasinconnectionwiththedistrictcourt’saffirmingthedecisionoftheMagistrateJudgegrantingthemotionofHoustontoexcludethetestimonyofKossman’sproposedexpert.KossmanhadconcededthattheMagistrateJudgecorrectlydeterminedthatKossman’sproposedexpertarticulatednomethodandreliedonuntestedhypotheses.Id.at*2.Kossmanalsoacknowledgedthattheexpertwasunabletoproducedatatoconfrontthedisparitystudy.Id.


KossmanhadallegedthatHoustonwithheldtheunderlyingdatafromDun&Bradstreet.ThecourtfoundthatunderthecontractualagreementbetweenHoustonanditsconsultant,theconsultantforHoustonhadalicensingagreementwithDun&BradstreetthatprohibiteditfromprovidingtheDun&Bradstreetdatatoanythird‐party.Id.at*2.Inaddition,thecourtagreedwithHoustonthatKossmanwouldnotbeabletoofferadmissibleanalysisoftheDun&Bradstreetdata,evenifithadaccesstothedata.Id.AstheMagistrateJudgepointedout,thecourtfoundKossman’sexperthadnotraininginstatisticsoreconomics,andthuswouldnotbequalifiedtointerprettheDun&Bradstreetdataorchallengethedisparitystudy’smethods.Id.Therefore,thecourtaffirmedthegrantofHouston’smotiontoexcludeKossman’sexpert.

Dun & Bradstreet data is reliable and accepted by courts; bidding data rejected as problematic.ThecourtrejectedKossman’sargumentthatthedisparitystudywasbasedoninsufficient,unverifiedinformationfurnishedbyothers,andrejectedKossman’sargumentthatbiddingdataisasuperiormeasureofdeterminingavailability.Id.at*3.

Thedistrictcourtheldthatbecausethedisparitystudyconsultantdidnotcollectthedata,butinsteadutilizeddatathatDun&Bradstreethadcollected,theconsultantcouldnotguaranteetheinformationitreliedonincreatingthestudyandrecommendations.Id.at*3.Theconsultant’srolewastoanalyzethatdataandmakerecommendationsbasedonthatanalysis,andithadnoreasontodoubttheauthenticityoraccuracyoftheDun&Bradstreetdata,norhadKossmanpresentedanyevidencethatwouldcallthatdataintoquestion.Id.AsHoustonpointedout,Dun&Bradstreetdataisextremelyreliable,isfrequentlyusedindisparitystudies,andhasbeenconsistentlyacceptedbycourtsthroughoutthecountry.Id.

KossmanpresentednoevidenceindicatingthatbiddingdataisacomparablymoreaccurateindicatorofavailabilitythantheDun&Bradstreetdata,butratherKossmanreliedonpureargument.Id.at*3.ThecourtagreedwiththeMagistrateJudgethatbiddingdataisinherentlyproblematicbecauseitreflectsonlythosefirmsactuallysolicitedforbids.Id.Therefore,thecourtfoundthebiddingdatawouldfailtoidentifythosefirmsthatwerenotsolicitedforbidsduetodiscrimination.Id.

The anecdotal evidence is valid and reliable.ThedistrictcourtrejectedKossman’sargumentthatthestudyimproperlyreliedonanecdotalevidence,inthattheevidencewasunreliableandunverified.Id.at*3.Thedistrictcourtheldthatanecdotalevidenceisavalidsupplementtothestatisticalstudy.Id.TheMWBEprogramissupportedbybothstatisticalandanecdotalevidence,andanecdotalevidenceprovidesavaluablenarrativeperspectivethatstatisticsalonecannotprovide.Id.

ThedistrictcourtalsofoundthatHoustonwasnotrequiredtoindependentlyverifytheanecdotes.Id.at*3.Kossman,thedistrictcourtconcluded,couldhavepresentedcontraryevidence,butitdidnot.Id.Thedistrictcourtcitedothercourtsforthepropositionthatthecombinationofanecdotalandstatisticalevidenceispotent,andthatanecdotalevidenceisnothingmorethanawitness’snarrativeofanincidenttoldfromthewitness’sperspectiveandincludingthewitness’sperceptions.Id.Also,thecourtheldthecitywasnotrequiredtopresentcorroboratingevidence,andtheplaintiffwasfreetopresentitsownwitnesstoeitherrefutetheincidentdescribedbythecity’switnessesortorelatetheirownperceptionsondiscriminationintheconstructionindustry.Id.


The data relied upon by the study was not stale.ThecourtrejectedKossman’sargumentthatthestudyreliedondatathatistoooldandnolongerrelevant.Id.at*4.Thecourtfoundthatthedatawasnotstaleandthatthestudyusedthemostcurrentavailabledataatthetimeofthestudy,includingCensusBureaudata(2006‐2008)andFederalReservedata(1993,1998and2003),andthestudyperformedregressionanalysesonthedata.Id.

Moreover,KossmanpresentednoevidencetosuggestthatHouston’sconsultantcouldhaveaccessedmorerecentdataorthattheconsultantwouldhavereacheddifferentconclusionswithmorerecentdata.Id.

The Houston MWBE program is narrowly tailored.ThedistrictcourtagreedwiththeMagistrateJudgethatthestudyprovidedsubstantialevidencethatHoustonengagedinrace‐neutralalternatives,whichwereinsufficienttoeliminatedisparities,andthatdespiterace‐neutralalternativesinplaceinHouston,adversedisparitiesforMWBEswereconsistentlyobserved.Id.at*4.Therefore,thecourtfoundtherewasstrongevidencethataremedialprogramwasnecessarytoaddressdiscriminationagainstMWBEs.Id.Moreover,Houstonwasnotrequiredtoexhausteverypossiblerace‐neutralalternativebeforeinstitutingtheMWBEprogram.Id.

ThedistrictcourtalsofoundthattheMWBEprogramdidnotplaceanundueburdenonKossmanorsimilarlysituatedcompanies.Id.at*4.UndertheMWBEprogram,aprimecontractormaysubstituteasmallbusinessenterpriselikeKossmanforanMWBEonaraceandgender‐neutralbasisforuptofourpercentofthevalueofacontract.Id.KossmandidnotpresentevidencethatheeverbidonmorethanfourpercentofaHoustoncontract.Id.Inaddition,thecourtstatedthefacttheMWBEprogramplacedsomeburdenonKossmanisinsufficienttosupporttheconclusionthattheprogramisnotnearlytailored.Id.ThecourtconcurredwiththeMagistrateJudge’sobservationthattheproportionalsharingofopportunitiesis,atthecore,thepointofaremedialprogram.Id.ThedistrictcourtagreedwiththeMagistrateJudge’sconclusionthattheMWBEprogramisnearlytailored.

Native‐American‐owned businesses.ThestudyfoundthatNative‐American‐ownedbusinesseswereutilizedatahigherrateinHouston’sconstructioncontractsthanwouldbeanticipatedbasedontheirrateofavailabilityintherelevantmarketarea.Id.at*4.ThecourtnotedthisfindingwouldtendtonegatethepresenceofdiscriminationagainstNativeAmericansinHouston’sconstructionindustry.Id.

ThisHoustondisparitystudyconsultantstatedthatthehighutilizationrateforNativeAmericansstemslargelyfromtheworkoftwoNative‐American‐ownedfirms.Id.TheHoustonconsultantsuggestedthatwithoutthesetwofirms,theutilizationrateforNativeAmericanswoulddeclinesignificantly,yieldingastatisticallysignificantdisparityratio.Id.

TheMagistrateJudge,accordingtothedistrictcourt,correctlyheldandfoundthattherewasinsufficientevidencetosupportincludingNativeAmericansintheMWBEprogram.Id.ThecourtapprovedandadoptedtheMagistrateJudgeexplanationthattheopinionofthedisparitystudyconsultantthatasignificantstatisticaldisparitywouldexistiftwoofthecontractingNative‐American‐ownedbusinessesweredisregarded,isnotevidenceoftheneedforremedialaction.Id.at*5.Thedistrictcourtfoundnoequal‐protectionsignificancetothefactthemajorityofcontractslettoNative‐American‐ownedbusinessesweretoonlytwofirms.Id.Therefore,the


utilizationgoalforbusinessesownedbyNativeAmericansisnotsupportedbyastrongevidentiarybasis.Id.at*5.

ThedistrictcourtagreedwiththeMagistrateJudge’srecommendationthatthedistrictcourtgrantsummaryjudgmentinfavorofKossmanwithrespecttotheutilizationgoalforNative‐American‐ownedbusiness.Id.ThecourtfoundtherewaslimitedsignificancetotheHoustonconsultant’sopinionthatutilizationofNative‐American‐ownedbusinesseswoulddroptostatisticallysignificantlevelsiftwoNative‐American‐ownedbusinesseswereignored.Id.at*5.

ThecourtstatedthesituationpresentedbytheHoustondisparitystudyconsultantofa“hypotheticalnon‐existence”ofthesefirmsisnotevidenceandcannotsatisfystrictscrutiny.Id.at*5.Therefore,thedistrictcourtadoptedtheMagistrateJudge’srecommendationwithrespecttoexcludingtheutilizationgoalforNative‐American‐ownedbusinesses.Id.ThecourtnotedthatapreferenceforNative‐American‐ownedbusinessescouldbecomeconstitutionallyvalidinthefutureifthereweresufficientevidenceofdiscriminationagainstNative‐American‐ownedbusinessesinHouston’sconstructioncontracts.Id.at*5.

Conclusion.ThedistrictcourtheldthattheMemorandum&RecommendationoftheMagistrateJudgeisadoptedinfull;Houston’smotiontoexcludetheKossman’sproposedexpertwitnessisgranted;Kossman’smotionforsummaryjudgmentisgrantedwithrespecttoexcludingtheutilizationgoalforNative‐American‐ownedbusinessesanddeniedinallotherrespects;Houston’smotionforsummaryjudgmentisdeniedwithrespecttoincludingtheutilizationgoalforNative‐American‐ownedbusinessesandgrantedinallotherrespectsastotheMWBEprogramforotherminoritiesandwomen‐ownedfirms.Id.at*5.

Memorandum and Recommendation by Magistrate Judge, dated February 17, 2016, S.D.

Texas, Civil Action No. H‐14‐1203.

Kossman’s proposed expert excluded and not admissible.Kossmaninitsmotionforsummaryjudgmentsolelyreliedonthetestimonyofitsproposedexpert,andsubmittednootherevidenceinsupportofitsmotion.TheMagistrateJudge(hereinafter“MJ”)grantedHouston’smotiontoexcludetestimonyofKossman’sproposedexpert,whichthedistrictcourtadoptedandapproved,formultiplereasons.TheMJfoundthathisexperiencedoesnotincludedesigningorconductingstatisticalstudies,andhehasnoeducationortraininginstatisticsoreconomics.See,MJ,MemorandumandRecommendation(“M&R”)byMJ,datedFebruary17,2016,at31,S.D.Texas,CivilActionNo.H‐14‐1203.TheMJfoundhewasnotqualifiedtocollect,organizeorinterpretnumericaldata,hasnoexperienceextrapolatinggeneralconclusionsaboutasubsetofthepopulationbysamplingit,hasdemonstratednoknowledgeofsamplingmethodsorunderstandingofthemathematicalconceptsusedintheinterpretationofrawdata,andthus,isnotqualifiedtochallengethemethodsandcalculationsofthedisparitystudy.Id.

TheMJfoundthattheproposedexpertreportisonlyatheoreticalattackonthestudywithnobasisandobjectiveevidence,suchasdatarortestimonyofconstructionfirmsintherelativemarketareathatsupporthisassumptionsregardingavailableMWBEsorcomparativestudiesthatcontrolthefactorsaboutwhichhecomplained.Id.at31.TheMJstatedthattheproposedexpertisnotaneconomistandthusisnotqualifiedtochallengethedisparitystudyexplanationofitseconomicconsiderations.Id.at31.Theproposedexpertfailedtoprovideeconometricsupportfortheuseofbidderdata,whichhearguedwasthebettersourcefordetermining


availability,citednopersonalexperiencefortheuseofbidderdata,andprovidednoproofthatwouldmoreaccuratelyreflectavailabilityofMWBEsabsentdiscriminatoryinfluence.Id.Moreover,heacknowledgedthatnobidderdatahadbeencollectedfortheyearscoveredbythestudy.Id.

Thecourtfoundthattheproposedexpertarticulatednomethodatalltodoadisparitystudy,butmerelyprovideduntestedhypotheses.Id.at33.Theproposedexpert’scriticismsofthestudy,accordingtotheMJ,werenotfoundedincitedprofessionalsocialscienceoreconometricstandards.Id.at33.TheMJconcludesthattheproposedexpertisnotqualifiedtooffertheopinionscontainedinhisreport,andthathisreportisnotrelevant,notreliable,and,therefore,notadmissible.Id.at34.

Relevant geographic market area.TheMJfoundthemarketareaofthedisparityanalysiswasgeographicallyconfinedtoareacodesinwhichthemajorityofthepubliccontractingconstructionfirmswerelocated.Id.at3‐4,51.Therelevantmarketarea,theMJsaid,wasweightedbyindustry,andthereforethestudylimitedtherelevantmarketareabygeographyandindustrybasedonHouston’spastyears’recordsfrompriorconstructioncontracts.Id.at3‐4,51.

Availability of MWBEs.TheMJconcludeddisparitystudiesthatcomparedtheavailabilityofMWBEsintherelevantmarketwiththeirutilizationinlocalpubliccontractinghavebeenwidelyrecognizedasstrongevidencetofindacompellinginterestbyagovernmentalentityformakingsurethatitspublicdollarsdonotfinanceracialdiscrimination.Id.at52‐53.Here,thestudydefinedthemarketareabyreviewingpastcontractinformation,anddefinedtherelevantmarketaccordingtotwocriticalfactors,geographyandindustry.Id.at3‐4,53.Thoseparameters,weightedbydollarsattributabletoeachindustry,wereusedtoidentifyforcomparisonMWBEsthatwereavailableandMWBEsthathadbeenutilizedinHouston’sconstructioncontractingoverthelastfiveandone‐halfyears.Id.at4‐6,53.Thestudyadjustedforownerlabormarketexperienceandeducationalattainmentinadditiontogeographiclocationandindustryaffiliation.Id.at6,53.

Kossmanproducednoevidencethattheavailabilityestimatewasinadequate.Id.at53.Plaintiff’scriticismsoftheavailabilityanalysis,includingforcapacity,thecourtstatedwasnotsupportedbyanycontraryevidenceorexpertopinion.Id.at53‐54.TheMJrejectedPlaintiff’sproposedexpert’ssuggestionthatanalysisofbidderdataisabetterwaytoidentifyMWBEs.Id.at54.TheMJnotedthatKossman’sproposedexpertpresentednocomparativeevidencebasedonbidderdata,andtheMJfoundthatbidderdatamayproduceavailabilitystatisticsthatareskewedbyactiveandpassivediscriminationinthemarket.Id.

Inadditiontobeingunderinclusiveduetodiscrimination,theMJsaidbidderdatamaybeoverinclusiveduetoinaccurateself‐evaluationbyfirmsofferingbidsdespitetheinabilitytofulfillthecontract.Id.at54.Itispossiblethatunqualifiedfirmswouldbeincludedintheavailabilityfiguresimplybecausetheybidonaparticularproject.Id.TheMJconcludedthatthelawdoesnotrequireanindividualizedapproachthatmeasureswhetherMWBEsarequalifiedonacontract‐by‐contractbasis.Id.at55.


Disparity analysis.ThestudyindicatedsignificantstatisticaladversedisparitiesastobusinessesownedbyAfricanAmericansandAsians,whichtheMJfoundprovidedaprimafaciecaseofastrongbasisinevidencethatjustifiedtheProgram’sutilizationgoalsforbusinessesownedbyAfricanAmericans,Asian‐PacificAmericans,andsubcontinentAsianAmericans.Id.at55.

ThedisparityanalysisdidnotreflectsignificantstatisticaldisparitiesastobusinessesownedbyHispanicAmericans,NativeAmericansornon‐minoritywomen.Id.at55‐56.TheMJfound,however,theevidenceofsignificantstatisticaladversedisparityintheutilizationofHispanic‐ownedbusinessesintheunremediated,privatesectormetHouston’sprimafacieburdenofproducingastrongevidentiarybasisforthecontinuedinclusionofbusinessesownedbyHispanicAmericans.Id.at56.TheMJsaidthedifferencebetweentheprivatesectorandHouston’sconstructioncontractingwasespeciallynotablebecausetheutilizationofHispanic‐ownedbusinessesbyHoustonhasbenefittedfromHouston’sremedialprogramformanyyears.Id.Withoutaremedialprogram,theMJstatedtheevidencesuggests,andnoevidencecontradicts,afindingthatutilizationwouldfallbacktoprivatesectorlevels.Id.

WithregardtobusinessesownedbyNativeAmericans,thestudyindicatedtheywereutilizedtoahigherpercentagethantheiravailabilityintherelevantmarketarea.Id.at56.AlthoughtheconsultantforHoustonsuggestedthatasignificantstatisticaldisparitywouldexistiftwoofthecontractingNative‐American‐ownedbusinessesweredisregarded,theMJfoundthatopinionisnotevidenceoftheneedforremedialaction.Id.at56.TheMJconcludedtherewasno‐equalprotectionsignificancetothefactthemajorityofcontractslettoNative‐American‐ownedbusinessesweretoonlytwofirms,whichwasindicatedbyHouston’sconsultant.Id.

Theutilizationofwomen‐ownedbusinesses(WBEs)declinedby50percentwhentheynolongerbenefittedfromremedialgoals.Id.at57.BecauseWBEswereeliminatedduringtheperiodstudied,thesignificanceofstatisticaldisparity,accordingtotheMJ,isnotreflectedinthenumbersfortheperiodasawhole.Id.at57.TheMJsaidduringthetimeWBEswerenotpartoftheprogram,thestatisticaldisparitybetweenavailabilityandutilizationwassignificant.Id.TheprecipitousdeclineintheutilizationofWBEsafterWBEswereeliminatedandthesignificantstatisticaldisparitywhenWBEsdidnotbenefitfrompreferentialtreatment,theMJfound,providedastrongbasisinevidenceforthenecessityofremedialaction.Id.at57.Kossman,theMJpointedout,offerednoevidenceofagender‐neutralreasonforthedecline.Id.

TheMJrejectedPlaintiff’sargumentthatprimecontractorandsubcontractordatashouldnothavebeencombined.Id.at57.TheMJsaidthatprimecontractorandsubcontractordataisnotrequiredtobeevaluatedseparately,butthattheevidenceshouldcontainreliablesubcontractordatatoindicatediscriminationbyprimecontractors.Id.at58.Here,thestudyidentifiedtheMWBEsthatcontractedwithHoustonbyindustryandthoseavailableintherelevantmarketbyindustry.Id.at58.Thedata,accordingtotheMJ,wasspecificandcomplete,andseparatelyconsideringprimecontractorsandsubcontractorsisnotonlyunnecessarybutmaybemisleading.Id.Theanecdotalevidenceindicatedthatconstructionfirmshadserved,ondifferentcontracts,inbothroles.Id.

TheMJstatedthelawrequiresthatthetargeteddiscriminationbeidentifiedwithparticularity,notthateveryinstanceofexplicitorimplicitdiscriminationbeexposed.Id.at58.Thestudy,theMJfound,definedtherelevantmarketatasufficientlevelofparticularitytoproduceevidenceof


pastdiscriminationinHouston’sawardingofconstructioncontractsandtoreachconstitutionallysoundresults.Id.

Anecdotal evidence.Kossmancriticizedtheanecdotalevidencewithwhichastudysupplementeditsstatisticalanalysisasnothavingbeenverifiedandinvestigated.Id.at58‐59.TheMJsaidthatKossmancouldhavepresenteditsownevidence,butdidnot.Id.at59.Kossmanpresentednocontrarybodyofanecdotalevidenceandpointedtonothingthatcalledintoquestionthespecificresultsofthemarketsurveysandfocusgroupsdoneinthestudy.Id.Thecourtrejectedanyrequirementthattheanecdotalevidencebeverifiedandinvestigated.Id.at59.

Regression analyses.Kossmanchallengedtheregressionanalysesdoneinthestudyofbusinessformation,earningsandcapitalmarkets.Id.at59.Kossmancriticizedtheregressionanalysesforfailingtopreciselypointtowheretheidentifieddiscriminationwasoccurring.Id.TheMJfoundthatthefocusonidentifyingwherediscriminationisoccurringmissesthepoint,asregressionanalysesisnotintendedtopointtospecificsourcesofdiscrimination,buttoeliminatefactorsotherthandiscriminationthatmightexplaindisparities.Id.at59‐60.Discrimination,theMJsaid,isnotrevealedthroughevidenceofexplicitdiscrimination,butisrevealedthroughunexplainabledisparity.Id.at60.

TheMJnotedthatdatausedintheregressionanalyseswerethemostcurrentavailabledataatthetime,andforthemostpartdatadatedfromwithinacoupleofyearsorlessofthestartofthestudyperiod.Id.at60.Again,theMJstated,Kossmanproducednoevidencethatthedataonwhichtheregressionanalyseswerebasedwereinvalid.Id.

Narrow Tailoring factors.TheMJfoundthattheHoustonMWBEprogramsatisfiedthenarrowtailoringprongofastrictscrutinyanalysis.TheMJsaidthatthe2013MWBEprogramcontainedavarietyofrace‐neutralremedies,includingmanyeducationalopportunities,butthattheevidenceoftheirefficacyorlackthereofisfoundinthedisparityanalyses.Id.at60‐61.TheMJconcludedthatwhiletherace‐neutralremediesmayhaveapositiveeffect,theyhavenoteliminatedthediscrimination.Id.at61.TheMJfoundHouston’srace‐neutralprogrammingsufficienttosatisfytherequirementsofnarrowtailoring.Id.

Astothefactorsofflexibilityanddurationofthe2013Program,theMJalsostatedtheseaspectssatisfynarrowtailoring.Id.at61.The2013Programemploysgoalsasopposedtoquotas,setsgoalsonacontract‐by‐contractbasis,allowssubstitutionofsmallbusinessenterprisesforMWBEsforuptofourpercentofthecontract,includesaprocessforallowinggood‐faithwaivers,andbuildsindueprocessforsuspensionsofcontractorswhofailtomakegood‐faitheffortstomeetcontractgoalsorMWSBEsthatfailtomakegood‐faitheffortstomeetallparticipationrequirements.Id.at61.Houstoncommittedtoreviewthe2013Programatleasteveryfiveyears,whichtheMJfoundtobeareasonablybriefdurationperiod.Id.

TheMJconcludedthatthe34percentannualgoalisproportionaltotheavailabilityofMWBEshistoricallysufferingdiscrimination.Id.at61.Finally,theMJfoundthattheeffectofthe2013Programonthirdpartiesisnotsogreatastoimposeanunconstitutionalburdenonnon‐minorities.Id.at62.Theburdenonnon‐minoritySBEs,suchasKossman,islessenedbythe4percentsubstitutionprovision.Id.at62.TheMJnotedanotherdistrictcourt’sopinionthatthe


merepossibilitythatinnocentpartieswillsharetheburdenofaremedialprogramisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at62.

Holding.TheMJheldthatHoustonestablishedaprimafaciecaseofcompellinginterestandnarrowtailoringforallaspectsoftheMWBEprogram,exceptgoalsforNative‐American‐ownedbusinesses.Id.at62.TheMJalsoheldthatPlaintifffailedtoproduceanyevidence,muchlessthegreaterweightofevidence,thatwouldcallintoquestiontheconstitutionalityofthe2013MWBEprogram.Id.at62.

14. H. B. Rowe Corp., Inc. v. W. Lyndo Tippett, North Carolina DOT, et al., 589 F. Supp.2d 587 (E.D.N.C. 2008), affirmed in part, reversed in part, and remanded, 615 F.3d 233 (4th Cir. 2010)

InH.B.RoweCompanyv.Tippett,NorthCarolinaDepartmentofTransportation,etal.(“Rowe”),theUnitedStatesDistrictCourtfortheEasternDistrictofNorthCarolina,WesternDivision,heardachallengetotheStateofNorthCarolinaMBEandWBEProgram,whichisaStateofNorthCarolina“affirmativeaction”programadministeredbytheNCDOT.TheNCDOTMWBEProgramchallengedinRoweinvolvesprojectsfundedsolelybytheStateofNorthCarolinaandnotfundedbytheUSDOT.589F.Supp.2d587.

Background. Inthiscaseplaintiff,afamily‐ownedroadconstructionbusiness,bidonaNCDOTinitiatedstate‐fundedproject.NCDOTrejectedplaintiff’sbidinfavorofthenextlowbidthathadproposedhigherminorityparticipationontheprojectaspartofitsbid.AccordingtoNCDOT,plaintiff’sbidwasrejectedbecauseofplaintiff’sfailuretodemonstrate“goodfaithefforts”toobtainpre‐designatedlevelsofminorityparticipationontheproject.

Asaprimecontractor,plaintiffRowewasobligatedundertheMWBEProgramtoeitherobtainparticipationofspecifiedlevelsofMBEandWBEparticipationassubcontractors,ortodemonstrategoodfaitheffortstodoso.Forthisparticularproject,NCDOThadsetMBEandWBEsubcontractorparticipationgoalsof10percentand5percent,respectively.Plaintiff’sbidincluded6.6percentWBEparticipation,butnoMBEparticipation.Thebidwasrejectedafterareviewofplaintiff’sgoodfaitheffortstoobtainMBEparticipation.Thenextlowestbiddersubmittedabidincluding3.3percentMBEparticipationand9.3percentWBEparticipation,andalthoughnotobtainingaspecifiedlevelofMBEparticipation,itwasdeterminedtohavemadegoodfaitheffortstodoso.(OrderoftheDistrictCourt,datedMarch29,2007).

NCDOT’sMWBEProgram“largelymirrors”theFederalDBEProgram,whichNCDOTisrequiredtocomplywithinawardingconstructioncontractsthatutilizeFederalfunds.(589F.Supp.2d587;OrderoftheDistrictCourt,datedSeptember28,2007).LiketheFederalDBEProgram,underNCDOT’sMWBEProgram,thegoalsforminorityandfemaleparticipationareaspirationalratherthanmandatory.Id.AnindividualtargetforMBEparticipationwassetforeachproject.Id.

Historically,NCDOThadengagedinseveraldisparitystudies.Themostrecentstudywasdonein2004.Id.The2004study,whichfollowedthestudyin1998,concludedthatdisparitiesinutilizationofMBEspersistandthatabasisremainsforcontinuationoftheMWBEProgram.Thenewstatuteasrevisedwasapprovedin2006,whichmodifiedthepreviousMBEstatutebyeliminatingthe10percentand5percentgoalsandestablishingafixedexpirationdateof2009.


Plaintifffileditscomplaintinthiscasein2003againsttheNCDOTandindividualsassociatedwiththeNCDOT,includingtheSecretaryofNCDOT,W.LyndoTippett.Initscomplaint,plaintiffallegedthattheMWBEstatuteforNCDOTwasunconstitutionalonitsfaceandasapplied.589F.Supp.2d587.

March 29, 2007 Order of the District Court. Themattercamebeforethedistrictcourtinitiallyonseveralmotions,includingthedefendants’MotiontoDismissorforPartialSummaryJudgment,defendants’MotiontoDismisstheClaimforMootnessandplaintiff’sMotionforSummaryJudgment.ThecourtinitsOctober2007Ordergrantedinpartanddeniedinpartdefendants’MotiontoDismissorforpartialsummaryjudgment;denieddefendants’MotiontoDismisstheClaimforMootness;anddismissedwithoutprejudiceplaintiff’sMotionforSummaryJudgment.

ThecourtheldtheEleventhAmendmenttotheUnitedStatesConstitutionbarsplaintifffromobtaininganyreliefagainstdefendantNCDOT,andfromobtainingaretrospectivedamagesawardagainstanyoftheindividualdefendantsintheirofficialcapacities.Thecourtruledthatplaintiff’sclaimsforreliefagainsttheNCDOTwerebarredbytheEleventhAmendment,andtheNCDOTwasdismissedfromthecaseasadefendant.Plaintiff’sclaimsforinterest,actualdamages,compensatorydamagesandpunitivedamagesagainsttheindividualdefendantssuedintheirofficialcapacitiesalsowasheldbarredbytheEleventhAmendmentandweredismissed.But,thecourtheldthatplaintiffwasentitledtosueforaninjunctiontopreventstateofficersfromviolatingafederallaw,andundertheExParteYoungexception,plaintiff’sclaimfordeclaratoryandinjunctivereliefwaspermittedtogoforwardasagainsttheindividualdefendantswhowereactinginanofficialcapacitywiththeNCDOT.Thecourtalsoheldthattheindividualdefendantswereentitledtoqualifiedimmunity,andthereforedismissedplaintiff’sclaimformoneydamagesagainsttheindividualdefendantsintheirindividualcapacities.OrderoftheDistrictCourt,datedMarch29,2007.

DefendantsarguedthattherecentamendmenttotheMWBEstatuterenderedplaintiff’sclaimfordeclaratoryinjunctivereliefmoot.ThenewMWBEstatuteadoptedin2006,accordingtothecourt,doesawaywithmanyoftheallegedshortcomingsarguedbytheplaintiffinthislawsuit.Thecourtfoundtheamendedstatutehasasunsetdatein2009;specificaspirationalparticipationgoalsbywomenandminoritiesareeliminated;defines“minority”asincludingonlythoseracialgroupswhichdisparitystudiesidentifyassubjecttounderutilizationinstateroadconstructioncontracts;explicitlyreferencesthefindingsofthe2004DisparityStudyandrequiressimilarstudiestobeconductedatleastonceeveryfiveyears;anddirectsNCDOTtoenactregulationstargetingdiscriminationidentifiedinthe2004andfuturestudies.

Thecourtheld,however,thatthe2004DisparityStudyandamendedMWBEstatutedonotremedytheprimaryproblemwhichtheplaintiffcomplainedof:theuseofremedialrace‐andgender‐basedpreferencesallegedlywithoutvalidevidenceofpastracialandgenderdiscrimination.Inthatsense,thecourtheldtheamendedMWBEstatutecontinuedtopresentalivecaseorcontroversy,andaccordinglydeniedthedefendants’MotiontoDismissClaimforMootnessastoplaintiff’ssuitforprospectiveinjunctiverelief.OrderoftheDistrictCourt,datedMarch29,2007.


ThecourtalsoheldthatsincetherehadbeennoanalysisoftheMWBEstatuteapartfromthebriefsregardingmootness,plaintiff’spendingMotionforSummaryJudgmentwasdismissedwithoutprejudice.OrderoftheDistrictCourt,datedMarch29,2007.

September 28, 2007 Order of the District Court. OnSeptember28,2007,thedistrictcourtissuedaneworderinwhichitdeniedboththeplaintiff’sandthedefendants’MotionsforSummaryJudgment.Plaintiffclaimedthatthe2004DisparityStudyisthesolebasisoftheMWBEstatute,thatthestudyisflawed,andthereforeitdoesnotsatisfythefirstprongofstrictscrutinyreview.Plaintiffalsoarguedthatthe2004studytendstoprovenon‐discriminationinthecaseofwomen;andfinallytheMWBEProgramfailsthesecondprongofstrictscrutinyreviewinthatitisnotnarrowlytailored.

Thecourtfoundsummaryjudgmentwasinappropriateforeitherpartyandthattherearegenuineissuesofmaterialfactfortrial.Thefirstandforemostissueofmaterialfact,accordingtothecourt,wastheadequacyofthe2004DisparityStudyasusedtojustifytheMWBEProgram.Therefore,becausethecourtfoundtherewasagenuineissueofmaterialfactregardingthe2004Study,summaryjudgmentwasdeniedonthisissue.

ThecourtalsoheldtherewasconfusionastothebasisoftheMWBEProgram,andwhetheritwasbasedsolelyonthe2004Studyoralsoonthe1993and1998DisparityStudies.Therefore,thecourtheldagenuineissueofmaterialfactexistedonthisissueanddeniedsummaryjudgment.OrderoftheDistrictCourt,datedSeptember28,2007.

December 9, 2008 Order of the District Court (589 F.Supp.2d 587). ThedistrictcourtonDecember9,2008,afterabenchtrial,issuedanOrderthatfoundasafactandconcludedasamatteroflawthatplaintifffailedtosatisfyitsburdenofproofthattheNorthCarolinaMinorityandWomen’sBusinessEnterpriseprogram,enactedbythestatelegislaturetoaffecttheawardingofcontractsandsubcontractsinstatehighwayconstruction,violatedtheUnitedStatesConstitution.

Plaintiff,initscomplaintfiledagainsttheNCDOTallegedthatN.C.Gen.St.§136‐28.4isunconstitutionalonitsfaceandasapplied,andthattheNCDOTwhileadministeringtheMWBEprogramviolatedplaintiff’srightsunderthefederallawandtheUnitedStatesConstitution.PlaintiffrequestedadeclaratoryjudgmentthattheMWBEprogramisinvalidandsoughtactualandpunitivedamages.

Asaprimecontractor,plaintiffwasobligatedundertheMWBEprogramtoeitherobtainparticipationofspecifiedlevelsofMBEandWBEsubcontractors,ortodemonstratethatgoodfaitheffortsweremadetodoso.Followingareviewofplaintiff’sgoodfaitheffortstoobtainminorityparticipationontheparticularcontractthatwasthesubjectofplaintiff’sbid,thebidwasrejected.Plaintiff’sbidwasrejectedinfavorofthenextlowestbid,whichhadproposedhigherminorityparticipationontheprojectaspartofitsbid.AccordingtoNCDOT,plaintiff’sbidwasrejectedbecauseofplaintiff’sfailuretodemonstrategoodfaitheffortstoobtainpre‐designatedlevelsofminorityparticipationontheproject.589F.Supp.2d587.

North Carolina’s MWBE program. TheMWBEprogramwasimplementedfollowingamendmentstoN.C.Gen.Stat.§136‐28.4.Pursuanttothedirectivesofthestatute,theNCDOTpromulgated


regulationsgoverningadministrationoftheMWBEprogram.SeeN.C.Admin.Codetit.19A,§2D.1101,etseq.TheregulationshadbeenamendedseveraltimesandprovidethatNCDOTshallensurethatMBEsandWBEshavethemaximumopportunitytoparticipateintheperformanceofcontractsfinancedwithnon‐federalfunds.N.C.Admin.CodeTit.19A§2D.1101.

NorthCarolina’sMWBEprogram,whichaffectedonlyhighwaybidsandcontractsfundedsolelywithstatemoney,accordingtothedistrictcourt,largelymirroredtheFederalDBEProgramwhichNCDOTisrequiredtocomplywithinawardingconstructioncontractsthatutilizefederalfunds.589F.Supp.2d587.LiketheFederalDBEProgram,underNorthCarolina’sMWBEprogram,thetargetsforminorityandfemaleparticipationwereaspirationalratherthanmandatory,andindividualtargetsfordisadvantagedbusinessparticipationweresetforeachindividualproject.N.C.Admin.Codetit.19A§2D.1108.IndeterminingwhatlevelofMBEandWBEparticipationwasappropriateforeachproject,NCDOTwouldtakeintoaccount“theapproximatedollarvalueofthecontract,thegeographicallocationoftheproposedwork,anumberoftheeligiblefundsinthegeographicalarea,andtheanticipatedvalueoftheitemsofworktobeincludedinthecontract.”Id.NCDOTwouldalsoconsider“theannualgoalsmandatedbyCongressandtheNorthCarolinaGeneralAssembly.”Id.

AfirmcouldbecertifiedasaMBEorWBEbyshowingNCDOTthatitis“ownercontrolledbyoneormoresociallyandeconomicallydisadvantagedindividuals.”NCAdmin.Codetit.1980,§2D.1102.

ThedistrictcourtstatedtheMWBEprogramdidnotdirectlydiscriminateinfavorofminorityandwomencontractors,butrather“encouragedprimecontractorstofavorMBEsandWBEsinsubcontractingbeforesubmittingbidstoNCDOT.”589F.Supp.2d587.Indeterminingwhetherthelowestbidderis“responsible,”NCDOTwouldconsiderwhetherthebidderobtainedthelevelofcertifiedMBEandWBEparticipationpreviouslyspecifiedintheNCDOTprojectproposal.Ifnot,NCDOTwouldconsiderwhetherthebiddermadegoodfaitheffortstosolicitMBEandWBEparticipation.N.C.Admin.Codetit.19A§2D.1108.

ThereweremultiplestudiesproducedandpresentedtotheNorthCarolinaGeneralAssemblyintheyears1993,1998and2004.The1998and2004studiesconcludedthatdisparitiesintheutilizationofminorityandwomencontractorspersist,andthatthereremainsabasisforcontinuationoftheMWBEprogram.TheMWBEprogramasamendedafterthe2004studyincludesprovisionsthateliminatedthe10percentand5percentgoalsandinsteadreplacedthemwithcontract‐specificparticipationgoalscreatedbyNCDOT;establishedasunsetprovisionthathasthestatuteexpiringonAugust31,2009;andprovidesrelianceonadisparitystudyproducedin2004.

TheMWBEprogram,asitstoodatthetimeofthisdecision,providesthatNCDOT“dictatestoprimecontractorstheexpressgoalofMBEandWBEsubcontractorstobeusedonagivenproject.However,insteadofthestatehiringtheMBEandWBEsubcontractorsitself,theNCDOTmakestheprimecontractorsolelyresponsibleforvettingandhiringthesesubcontractors.Ifaprimecontractorfailstohirethegoalamount,itmustsubmiteffortsof‘goodfaith’attemptstodoso.”589F.Supp.2d587.


Compelling interest. ThedistrictcourtheldthatNCDOTestablishedacompellinggovernmentalinteresttohavetheMWBEprogram.ThecourtnotedthattheUnitedStatesSupremeCourtinCrosonmadeclearthatastatelegislaturehasacompellinginterestineradicatingandremedyingprivatediscriminationintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts.589F.Supp.2d587,citingCroson,488U.S.at492.ThedistrictcourtfoundthattheNorthCarolinaLegislatureestablisheditrelieduponastrongbasisofevidenceinconcludingthatpriorracediscriminationinNorthCarolina’sroadconstructionindustryexistedsoastorequireremedialaction.

Thecourtheldthatthe2004DisparityStudydemonstratedtheexistenceofpreviousdiscriminationinthespecificindustryandlocalityatissue.Thecourtstatedthatdisparityratiosprovidedforinthe2004DisparityStudyhighlightedtheunderutilizationofMBEsbyprimecontractorsbiddingonstatefundedhighwayprojects.Inaddition,thecourtfoundthatevidencerelieduponbythelegislaturedemonstratedadramaticdeclineintheutilizationofMBEsduringtheprogram’ssuspensionin1991.ThecourtalsofoundthatanecdotalsupportrelieduponbythelegislatureconfirmedandreinforcedthegeneraldatademonstratingtheunderutilizationofMBEs.ThecourtheldthattheNCDOTestablishedthat,“baseduponaclearandstronginferenceraisedbythisStudy,theyconcludedminoritycontractorssufferfromthelingeringeffectsofracialdiscrimination.”589F.Supp.2d587.

WithregardtoWBEs,thecourtappliedadifferentstandardofreview.ThecourtheldthelegislativeschemeasitrelatestoMWBEsmustserveanimportantgovernmentalinterestandmustbesubstantiallyrelatedtotheachievementofthoseobjectives.ThecourtfoundthatNCDOTestablishedanimportantgovernmentalinterest.The2004DisparityStudyprovidedthattheaveragecontractsawardedWBEsaresignificantlysmallerthanthoseawardednon‐WBEs.ThecourtheldthatNCDOTestablishedbaseduponaclearandstronginferenceraisedbytheStudy,womencontractorssufferfrompastgenderdiscriminationintheroadconstructionindustry.

Narrowly tailored. ThedistrictcourtnotedthattheFourthCircuitofAppealslistsanumberoffactorstoconsiderinanalyzingastatutefornarrowtailoring:(1)thenecessityofthepolicyandtheefficacyofalternativeraceneutralpolicies;(2)theplanneddurationofthepolicy;(3)therelationshipbetweenthenumericalgoalandthepercentageofminoritygroupmembersintherelevantpopulation;(4)theflexibilityofthepolicy,includingtheprovisionofwaiversifthegoalcannotbemet;and(5)theburdenofthepolicyoninnocentthirdparties.589F.Supp.2d587,quotingBelkv.Charlotte‐MecklenburgBoardofEducation,269F.3d305,344(4thCir.2001).

ThedistrictcourtheldthatthelegislativeschemeinN.C.Gen.Stat.§136‐28.4isnarrowlytailoredtoremedyprivatediscriminationofminoritiesandwomenintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts.Thedistrictcourt’sanalysisfocusedonnarrowlytailoringfactors(2)and(4)above,namelythedurationofthepolicyandtheflexibilityofthepolicy.Withrespecttotheformer,thecourtheldthelegislativeschemeprovidestheprogrambereviewedatleasteveryfiveyearstorevisittheissueofutilizationofMWBEsintheroadconstructionindustry.N.C.Gen.Stat.§136‐28.4(b).Further,thelegislativeschemeincludesasunsetprovisionsothattheprogramwillexpireonAugust31,2009,unlessrenewedbyanactofthelegislature.Id.at§136‐28.4(e).Thecourtheldtheseprovisionsensuredthelegislativeschemelastnolongerthannecessary.


ThecourtalsofoundthatthelegislativeschemeenactedbytheNorthCarolinalegislatureprovidesflexibilityinsofarastheparticipationgoalsforagivencontractordeterminedonaprojectbyprojectbasis.§136‐28.4(b)(1).Additionally,thecourtfoundthelegislativeschemeinquestionisnotoverbroadbecausethestatuteappliesonlyto“thoseracialorethnicityclassificationsidentifiedbyastudyconductedinaccordancewiththissectionthathadbeensubjectedtodiscriminationinarelevantmarketplaceandthathadbeenadverselyaffectedintheirabilitytoobtaincontractswiththeDepartment.”§136‐28.4(c)(2).Thecourtfoundthatplaintifffailedtoprovideanyevidencethatindicatesminoritiesfromnon‐relevantracialgroupshadbeenawardedcontractsasaresultofthestatute.

Thecourtheldthatthelegislativeschemeisnarrowlytailoredtoremedyprivatediscriminationofminoritiesandwomenintheprivatesubcontractinginherentinthelettingofroadconstructioncontracts,andthereforefoundthat§136‐28.4isconstitutional.

ThedecisionofthedistrictcourtwasappealedtotheUnitedStatesCourtofAppealsfortheFourthCircuit,whichaffirmedinpartandreversedinpartthedecisionofthedistrictcourt.See615F3d233(4thCir.2010),discussedabove.

15. Thomas v. City of Saint Paul, 526 F. Supp.2d 959 (D. Minn 2007), affirmed, 321 Fed. Appx. 541, 2009 WL 777932 (8th Cir. March 26, 2009) (unpublished opinion), cert. denied, 130 S.Ct. 408 (2009)

InThomasv.CityofSaintPaul,theplaintiffsareAfricanAmericanbusinessownerswhobroughtthislawsuitclaimingthattheCityofSaintPaul,Minnesotadiscriminatedagainsttheminawardingpublicly‐fundedcontracts.TheCitymovedforsummaryjudgment,whichtheUnitedStatesDistrictCourtgrantedandissuedanorderdismissingtheplaintiff’slawsuitinDecember2007.

ThebackgroundofthecaseinvolvestheadoptionbytheCityofSaintPaulofaVendorOutreachProgram(“VOP”)thatwasdesignedtoassistminorityandothersmallbusinessownersincompetingforCitycontracts.PlaintiffswereVOP‐certifiedminoritybusinessowners.PlaintiffscontendedthattheCityengagedinraciallydiscriminatoryillegalconductinawardingCitycontractsforpublicly‐fundedprojects.PlaintiffThomasclaimedthattheCitydeniedhimopportunitiestoworkonprojectsbecauseofhisracearguingthattheCityfailedtoinvitehimtobidoncertainprojects,theCityfailedtoawardhimcontractsandthefactindependentdevelopershadnotcontractedwithhiscompany.526F.Supp.2dat962.TheCitycontendedthatThomaswasprovidedopportunitiestobidfortheCity’swork.

PlaintiffBrianConoverownedatruckingfirm,andheclaimedthatnoneofhisbidsasasubcontractoron22differentprojectstovariousindependentdeveloperswereaccepted.526F.Supp.2dat962.Thecourtfoundthatafteryearsofdiscovery,plaintiffConoverofferednoadmissibleevidencetosupporthisclaim,hadnotidentifiedthesubcontractorswhosebidswereaccepted,anddidnotofferanycomparisonshowingtheacceptedbidandthebidhesubmitted.Id.PlaintiffConoveralsocomplainedthathereceivedbiddinginvitationsonlyafewdaysbeforeabidwasdue,whichdidnotallowhimadequatetimetoprepareacompetitivebid.Id.Thecourtfound,however,hefailedtoidentifyanyparticularprojectforwhichhehadonlyasingledayofbid,anddidnotidentifyanysimilarlysituatedpersonofanyracewhowasaffordedalonger


periodoftimeinwhichtosubmitabid.Id.at963.PlaintiffNewellclaimedhesubmittednumerousbidsontheCity’sprojectsallofwhichwererejected.Id.Thecourtfound,however,thatheprovidednospecificsaboutwhyhedidnotreceivethework.Id.

The VOP. UndertheVOP,theCitysetsannualbenchmarksorlevelsofparticipationforthetargetedminoritiesgroups.Id.at963.TheVOPprohibitsquotasandimposesvarious“goodfaith”requirementsonprimecontractorswhobidforCityprojects.Id.at964.Inparticular,theVOPrequiresthatwhenaprimecontractorrejectsabidfromaVOP‐certifiedbusiness,thecontractormustgivetheCityitsbasisfortherejection,andevidencethattherejectionwasjustified.Id.TheVOPfurtherimposesobligationsontheCitywithrespecttovendorcontracts.Id.ThecourtfoundtheCitymustseekwherepossibleandlawfultoawardaportionofvendorcontractstoVOP‐certifiedbusinesses.Id.TheCitycontractmanagermustsolicitthesebidsbyphone,advertisementinalocalnewspaperorothermeans.Whereapplicable,thecontractmanagermayassistinterestedVOPparticipantsinobtainingbonds,linesofcreditorinsurancerequiredtoperformunderthecontract.Id.TheVOPordinanceprovidesthatwhenthecontractmanagerengagesinoneormorepossibleoutreachefforts,heorsheisincompliancewiththeordinance.Id.

Analysis and Order of the Court. ThedistrictcourtfoundthattheCityisentitledtosummaryjudgmentbecauseplaintiffslackstandingtobringtheseclaimsandthatnogenuineissueofmaterialfactremains.Id.at965.ThecourtheldthattheplaintiffshadnostandingtochallengetheVOPbecausetheyfailedtoshowtheyweredeprivedofanopportunitytocompete,orthattheirinabilitytoobtainanycontractresultedfromanactofdiscrimination.Id.Thecourtfoundtheyfailedtoshowanyinstanceinwhichtheirracewasadeterminantinthedenialofanycontract.Id.at966.Asaresult,thecourtheldplaintiffsfailedtodemonstratetheCityengagedindiscriminatoryconductorpolicywhichpreventedplaintiffsfromcompeting.Id.at965‐966.

Thecourtheldthatintheabsenceofanyshowingofintentionaldiscriminationbasedonrace,themerefacttheCitydidnotawardanycontractstoplaintiffsdoesnotfurnishthatcausalnexusnecessarytoestablishstanding.Id.at966.ThecourtheldthelawdoesnotrequiretheCitytovoluntarilyadopt“aggressiverace‐basedaffirmativeactionprograms”inordertoawardspecificgroupspublicly‐fundedcontracts.Id.at966.ThecourtfoundthatplaintiffshadfailedtoshowaviolationoftheVOPordinance,oranyillegalpolicyoractiononthepartoftheCity.Id.

Thecourtstatedthattheplaintiffsmustidentifyadiscriminatorypolicyineffect.Id.at966.Thecourtnoted,forexample,evenassumingtheCityfailedtogiveplaintiffsmorethanoneday’snoticetoenterabid,suchafailureisnot,perse,illegal.Id.Thecourtfoundtheplaintiffsofferednoevidencethatanyoneelseofanyotherracereceivedanearliernotice,orthathewasgiventhisallegedlytardynoticeasaresultofhisrace.Id.

ThecourtconcludedthatevenifplaintiffsmaynothavebeenhiredasasubcontractortoworkforprimecontractorsreceivingCitycontracts,thesewereindependentdevelopersandtheCityisnotrequiredtodefendtheallegedbadactsofothers.Id.Therefore,thecourtheldplaintiffshadnostandingtochallengetheVOP.Id.at966.

Plaintiff’s claims. Thecourtfoundthatevenassumingplaintiffspossessedstanding,theyfailedtoestablishfactswhichdemonstratedaneedforatrial,primarilybecauseeachtheoryof


recoveryisviableonlyiftheCity“intentionally”treatedplaintiffsunfavorablybecauseoftheirrace.Id.at967.Thecourtheldtoestablishaprimafacieviolationoftheequalprotectionclause,theremustbestateaction.Id.Plaintiffsmustofferfactsandevidencethatconstituteproofof“raciallydiscriminatoryintentorpurpose.”Id.at967.Here,thecourtfoundthatplaintifffailedtoallegeanysingleinstanceshowingtheCity“intentionally”rejectedVOPbidsbasedontheirrace.Id.

Thecourtalsofoundthatplaintiffsofferednoevidenceofaspecifictimewhenanyoneofthemsubmittedthelowestbidforacontractorasubcontract,orshowedanycasewheretheirbidswererejectedonthebasisofrace.Id.Thecourtheldtheallegedfailuretoplaceminoritycontractorsinapreferredposition,withoutmore,isinsufficienttosupportafindingthattheCityfailedtotreatthemequallybasedupontheirrace.Id.

TheCityrejectedtheplaintiff’sclaimsofdiscriminationbecausetheplaintiffsdidnotestablishbyevidencethattheCity“intentionally”rejectedtheirbidduetoraceorthattheCity“intentionally”discriminatedagainsttheseplaintiffs.Id.at967‐968.ThecourtheldthattheplaintiffsdidnotestablishasingleinstanceshowingtheCitydeprivedthemoftheirrights,andtheplaintiffsdidnotproduceevidenceofa“discriminatorymotive.”Id.at968.ThecourtconcludedthatplaintiffshadfailedtoshowthattheCity’sactionswere“raciallymotivated.”Id.

TheEighthCircuitCourtofAppealsaffirmedtherulingofthedistrictcourt.Thomasv.CityofSaintPaul,2009WL777932(8thCir.2009)(unpublishedopinion).TheEighthCircuitaffirmedbasedonthedecisionofthedistrictcourtandfindingnoreversibleerror.

16. Thompson Building Wrecking Co. v. Augusta, Georgia, No. 1:07CV019, 2007 WL 926153 (S.D. Ga. Mar. 14, 2007)(Slip. Op.)

ThiscaseconsideredthevalidityoftheCityofAugusta’slocalminorityDBEprogram.ThedistrictcourtenjoinedtheCityfromfavoringanycontractbidonthebasisofracialclassificationandbaseditsdecisionprincipallyupontheoutdatedandinsufficientdataprofferedbytheCityinsupportofitsprogram.2007WL926153at*9‐10.

TheCityofAugustaenactedalocalDBEprogrambasedupontheresultsofadisparitystudycompletedin1994.Thedisparitystudyexaminedthedisparityinsocioeconomicstatusamongraces,comparedblack‐ownedbusinessesinAugustawiththoseinotherregionsandthoseownedbyotherracialgroups,examined“Georgia’sracisthistory”incontractingandprocurement,andexaminedcertaindatarelatedtoAugusta’scontractingandprocurement.Id.at*1‐4.TheplaintiffcontractorsandsubcontractorschallengedtheconstitutionalityoftheDBEprogramandsoughttoextendatemporaryinjunctionenjoiningtheCity’simplementationofracialpreferencesinpublicbiddingandprocurement.

TheCitydefendedtheDBEprogramarguingthatitdidnotutilizeracialclassificationsbecauseitonlyrequiredvendorstomakea“goodfaitheffort”toensureDBEparticipation.Id.at*6.Thecourtrejectedthisargumentnotingthatbidderswererequiredtosubmita“ProposedDBEParticipation”formandthatbidscontainingDBEparticipationweretreatedmorefavorablythanthosebidswithoutDBEparticipation.Thecourtstated:“Becauseaperson’sbusinesscanqualify


forthefavorabletreatmentbasedonthatperson’srace,whileasimilarlysituatedpersonofanotherracewouldnotqualify,theprogramcontainsaracialclassification.”Id.

ThecourtnotedthattheDBEprogramharmedsubcontractorsintwoways:first,becauseprimecontractorswilldiscriminatebetweenDBEandnon‐DBEsubcontractorsandabidwithaDBEsubcontractorwouldbetreatedmorefavorably;andsecond,becausetheCitywouldfavorabidcontainingDBEparticipationoveranequalorevensuperiorbidcontainingnoDBEparticipation.Id.

ThecourtappliedthestrictscrutinystandardsetforthinCrosonandEngineeringContractorsAssociationtodeterminewhethertheCityhadacompellinginterestforitsprogramandwhethertheprogramwasnarrowlytailoredtothatend.ThecourtnotedthatpursuanttoCroson,theCitywouldhaveacompellinginterestinassuringthattaxdollarswouldnotperpetuateprivateprejudice.But,thecourtfound(citingtoCroson),thatastateorlocalgovernmentmustidentifythatdiscrimination,“publicorprivate,withsomespecificitybeforetheymayuserace‐consciousrelief.”ThecourtcitedtheEleventhCircuit’spositionthat“‘grossstatisticaldisparities’betweentheproportionofminoritieshiredbythepublicemployerandtheproportionofminoritieswillingandabletowork”mayjustifyanaffirmativeactionprogram.Id.at*7.Thecourtalsostatedthatanecdotalevidenceisrelevanttotheanalysis.

ThecourtdeterminedthatwhiletheCity’sdisparitystudyshowedsomestatisticaldisparitiesbuttressedbyanecdotalevidence,thestudysufferedfrommultipleissues.Id.at*7‐8.Specifically,thecourtfoundthatthoseportionsofthestudyexaminingdiscriminationoutsidetheareaofsubcontracting(e.g.,socioeconomicstatusofracialgroupsintheAugustaarea)wereirrelevantforpurposesofshowingacompellinginterest.Thecourtalsocitedthefailureofthestudytodifferentiatebetweendifferentminorityracesaswellastheimproperaggregationofrace‐andgender‐baseddiscriminationreferredtoasSimpson’sParadox.

ThecourtassumedforpurposesofitsanalysisthattheCitycouldshowacompellinginterestbutconcludedthattheprogramwasnotnarrowlytailoredandthuscouldnotsatisfystrictscrutiny.Thecourtfoundthatitneedlooknofurtherbeyondthefactofthethirteen‐yeardurationoftheprogramabsentfurtherinvestigation,andtheabsenceofasunsetorexpirationprovision,toconcludethattheDBEprogramwasnotnarrowlytailored.Id.at*8.Notingthataffirmativeactionispermittedonlysparingly,thecourtfound:“[i]twouldbeimpossibleforAugustatoarguethat,13yearsafterlaststudyingtheissue,racialdiscriminationissorampantintheAugustacontractingindustrythattheCitymustaffirmativelyacttoavoidbeingcomplicit.”Id.Thecourtheldinconclusion,thattheplaintiffswere“substantiallylikelytosucceedinprovingthat,whentheCityrequestsbidswithminorityparticipationandinfactfavorsbidswithsuch,theplaintiffswillsufferracialdiscriminationinviolationoftheEqualProtectionClause.”Id.at*9.

InasubsequentOrderdatedSeptember5,2007,thecourtdeniedtheCity’smotiontocontinueplaintiff’sMotionforSummaryJudgment,deniedtheCity’sRule12(b)(6)motiontodismiss,andstayedtheactionfor30dayspendingmediationbetweentheparties.Importantly,inthisOrder,thecourtreiteratedthatthefemale‐andlocally‐ownedbusinesscomponentsoftheprogram(challengedinplaintiff’sMotionforSummaryJudgment)wouldbesubjecttointermediatescrutinyandrationalbasisscrutiny,respectively.Thecourtalsoreiterateditsrejectionofthe


City’schallengetotheplaintiffs’standing.ThecourtnotedthatunderAdarand,preventingacontractorfromcompetingonanequalfootingsatisfiestheparticularizedinjuryprongofstanding.AndshowingthatthecontractorwillsometimeinthefuturebidonaCitycontract“thatoffersfinancialincentivestoaprimecontractorforhiringdisadvantagedsubcontractors”satisfiesthesecondrequirementthattheparticularizedinjurybeactualorimminent.Accordingly,thecourtconcludedthattheplaintiffshavestandingtopursuethisaction.

17. Hershell Gill Consulting Engineers, Inc. v. Miami‐Dade County, 333 F. Supp.2d 1305 (S.D. Fla. 2004)

ThedecisioninHershellGillConsultingEngineers,Inc.v.Miami‐DadeCounty,issignificanttothedisparitystudybecauseitappliedandfollowedtheEngineeringContractorsAssociationdecisioninthecontextofcontractingandprocurementforgoodsandservices(includingarchitectandengineerservices).Manyoftheothercasesfocusedonconstruction,andthusHershellGillisinstructiveastotheanalysisrelatingtoarchitectandengineeringservices.ThedecisioninHershellGillalsoinvolvedadistrictcourtintheEleventhCircuitimposingcompensatoryandpunitivedamagesuponindividualCountyCommissionersduetothedistrictcourt’sfindingoftheirwillfulfailuretoabrogateanunconstitutionalMBE/WBEProgram.Inaddition,thecaseisnoteworthybecausethedistrictcourtrefusedtofollowthe2003TenthCircuitCourtofAppealsdecisioninConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321.3d950(10thCir.2003).Seediscussion,infra.

SixyearsafterthedecisioninEngineeringContractorsAssociation,twowhitemale‐ownedengineeringfirms(the“plaintiffs”)broughtsuitagainstEngineeringContractorsAssociation(the“County”),theformerCountyManager,andvariouscurrentCountyCommissioners(the“Commissioners”)intheirofficialandpersonalcapacities(collectivelythe“defendants”),seekingtoenjointhesame“participationgoals”inthesameMWBEprogramdeemedtoviolatetheFourteenthAmendmentintheearliercase.333F.Supp.1305,1310(S.D.Fla.2004).AftertheEleventhCircuit’sdecisioninEngineeringContractorsAssociationstrikingdowntheMWBEprogramsasappliedtoconstructioncontracts,theCountyenactedaCommunitySmallBusinessEnterprise(“CSBE”)programforconstructioncontracts,“butcontinuedtoapplyracial,ethnic,andgendercriteriatoitspurchasesofgoodsandservicesinotherareas,includingitsprocurementofA&Eservices.”Id.at1311.

TheplaintiffsbroughtsuitchallengingtheBlackBusinessEnterprise(BBE)program,theHispanicBusinessEnterprise(HBE)program,andtheWomenBusinessEnterprise(WBE)program(collectively“MBE/WBE”).Id.TheMBE/WBEprogramsappliedtoA&Econtractsinexcessof$25,000.Id.at1312.TheCountyestablishedfive“contractmeasures”toreachtheparticipationgoals:(1)setasides,(2)subcontractorgoals,(3)projectgoals,(4)bidpreferences,and(5)selectionfactors.Id.Onceacontractwasidentifiedascoveredbyaparticipationgoal,areviewcommitteewoulddeterminewhetheracontractmeasureshouldbeutilized.Id.TheCountywasrequiredtoreviewtheefficacyoftheMBE/WBEprogramsannually,andreevaluatedthecontinuingviabilityoftheMBE/WBEprogramseveryfiveyears.Id.at1313.However,thedistrictcourtfound“theparticipationgoalsforthethreeMBE/WBEprogramschallenged…remainedunchangedsince1994.”Id.


In1998,counselforplaintiffscontactedtheCountyCommissionersrequestingthediscontinuationofcontractmeasuresonA&Econtracts.Id.at1314.UponrequestoftheCommissioners,thecountymanagerthenmadetworeports(anoriginalandafollow‐up)measuringparityintermsofdollarsawardedanddollarspaidintheareasofA&Eforblacks,Hispanics,andwomen,andconcludedbothtimesthatthe“Countyhasreachedparityforblack,Hispanic,andWomen‐ownedfirmsintheareasof[A&E]services.”Thefinalreportfurtherstated“Basedonalltheanalysesthathavebeenperformed,theCountydoesnothaveabasisfortheestablishmentofparticipationgoalswhichwouldallowstafftoapplycontractmeasures.”Id.at1315.ThedistrictcourtalsofoundthattheCommissionerswereinformedthat“therewasevenlessevidencetosupport[theMBE/WBE]programsasappliedtoarchitectsandengineersthentherewasincontractconstruction.”Id.Nonetheless,theCommissionersvotedtocontinuetheMBE/WBEparticipationgoalsattheirpreviouslevels.Id.

InMayof2000(18monthsafterthelawsuitwasfiled),theCountycommissionedDr.ManuelJ.Carvajal,aneconometrician,tostudyarchitectsandengineersinthecounty.Hisfinalreporthadfourparts:

(1)dataidentificationandcollectionofmethodologyfordisplayingtheresearchresults;(2)presentationanddiscussionoftablespertainingtoarchitecture,civilengineering,structuralengineering,andawardsofcontractsinthoseareas;(3)analysisofthestructureandempiricalestimatesofvarioussetsofregressionequations,thecalculationofcorrespondingindices,andanassessmentoftheirimportance;and(4)aconclusionthatthereisdiscriminationagainstwomenandHispanics—butnotagainstblacks—inthefieldsofarchitectureandengineering.

Id.ThedistrictcourtissuedapreliminaryinjunctionenjoiningtheuseoftheMBE/WBEprogramsforA&Econtracts,pendingtheUnitedStatesSupremeCourtdecisionsinGratzv.Bollinger,539U.S.244(2003)andGrutterv.Bollinger,539U.S.306(2003).Id.at1316.

ThecourtconsideredwhethertheMBE/WBEprogramswereviolativeofTitleVIIoftheCivilRightsAct,andwhethertheCountyandtheCountyCommissionerswereliableforcompensatoryandpunitivedamages.

ThedistrictcourtfoundthattheSupremeCourtdecisionsinGratzandGrutterdidnotaltertheconstitutionalanalysisassetforthinAdarandandCroson.Id.at1317.Accordingly,therace‐andethnicity‐basedclassificationsweresubjecttostrictscrutiny,meaningtheCountymustpresent“astrongbasisofevidence”indicatingtheMBE/WBEprogramwasnecessaryandthatitwasnarrowlytailoredtoitspurportedpurpose.Id.at1316.Thegender‐basedclassificationsweresubjecttointermediatescrutiny,requiringtheCountytoshowthe“gender‐basedclassificationservesanimportantgovernmentalobjective,andthatitissubstantiallyrelatedtotheachievementofthatobjective.”Id.at1317(internalcitationsomitted).Thecourtfoundthattheproponentofagender‐basedaffirmativeactionprogrammustpresent“sufficientprobativeevidence”ofdiscrimination.Id.(internalcitationsomitted).Thecourtfoundthatundertheintermediatescrutinyanalysis,theCountymust(1)demonstratepastdiscriminationagainstwomenbutnotnecessarilyatthehandsoftheCounty,and(2)thatthegender‐consciousaffirmativeactionprogramneednotbeusedonlyasa“lastresort.”Id.


TheCountypresentedbothstatisticalandanecdotalevidence.Id.at1318.ThestatisticalevidenceconsistedofDr.Carvajal’sreport,mostofwhichconsistedof“post‐enactment”evidence.Id.Dr.Carvajal’sanalysissoughttodiscovertheexistenceofracial,ethnicandgenderdisparitiesintheA&Eindustry,andthentodeterminewhetheranysuchdisparitiescouldbeattributedtodiscrimination.Id.Thestudyusedfourdatasets:threeweredesignedtoestablishthemarketplaceavailabilityoffirms(architecture,structuralengineering,andcivilengineering),andthefourthfocusedonawardsissuedbytheCounty.Id.Dr.Carvajalusedthephonebook,alistcompiledbyinfoUSA,andalistoffirmsregisteredfortechnicalcertificationwiththeCounty’sDepartmentofPublicWorkstocompilealistofthe“universe”offirmscompetinginthemarket.Id.Forthearchitecturalfirmsonly,healsousedalistoffirmsthathadbeenissuedanarchitectureprofessionallicense.Id.

Dr.Carvajalthenconductedaphonesurveyoftheidentifiedfirms.Basedonhisdata,Dr.CarvajalconcludedthatdisparitiesexistedbetweenthepercentageofA&Efirmsownedbyblacks,Hispanics,andwomen,andthepercentageofannualbusinesstheyreceived.Id.Dr.Carvajalconductedregressionanalyses“inordertodeterminetheeffectafirmowner’sgenderorracehadoncertaindependentvariables.”Id.Dr.Carvajalusedthefirm’sannualvolumeofbusinessasadependentvariableanddeterminedthedisparitiesweredueineachcasetothefirm’sgenderand/orethnicclassification.Id.at1320.Healsoperformedvariantstotheequationsincluding:(1)usingcertificationratherthansurveydatafortheexperience/capacityindicators,(2)withtheoutliersdeleted,(3)withpublicly‐ownedfirmsdeleted,(4)withthedummyvariablesreversed,and(5)usingonlycurrentlycertifiedfirms.”Id.Dr.Carvajal’sresultsremainedsubstantiallyunchanged.Id.

Basedonhisanalysisofthemarketplacedata,Dr.Carvajalconcludedthatthe“grossstatisticaldisparities”intheannualbusinessvolumeforHispanic‐andwomen‐ownedfirmscouldbeattributedtodiscrimination;he“didnotfindsufficientevidenceofdiscriminationagainstblacks.”Id.

ThecourtheldthatDr.Carvajal’sstudyconstitutedneithera“strongbasisinevidence”ofdiscriminationnecessarytojustifyrace‐andethnicity‐consciousmeasures,nordiditconstitute“sufficientprobativeevidence”necessarytojustifythegender‐consciousmeasures.Id.ThecourtmadeaninitialfindingthatnodisparityexistedtoindicateunderutilizationofMBE/WBEsintheawardofA&EcontractsbytheCounty,norwasthereunderutilizationofMBE/WBEsinthecontractstheywereawarded.Id.Thecourtfoundthatananalysisoftheawarddataindicated,“[i]fanything,thedataindicatesanoverutilizationofminority‐ownedfirmsbytheCountyinrelationtotheirnumbersinthemarketplace.”Id.

Withrespecttothemarketplacedata,theCountyconcededthattherewasinsufficientevidenceofdiscriminationagainstblackstosupporttheBBEprogram.Id.at1321.WithrespecttothemarketplacedataforHispanicsandwomen,thecourtfoundit“unreliableandinaccurate”forthreereasons:(1)thedatafailedtoproperlymeasurethegeographicmarket,(2)thedatafailedtoproperlymeasuretheproductmarket,and(3)themarketplacesurveywasunreliable.Id.at1321‐25.

ThecourtruledthatitwouldnotfollowtheTenthCircuitdecisionofConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003),astheburdenofproofenunciated


bytheTenthCircuitconflictswiththatoftheEleventhCircuit,andthe“TenthCircuit’sdecisionisflawedforthereasonsarticulatedbyJusticeScaliainhisdissentfromthedenialofcertiorari.”Id.at1325(internalcitationsomitted).

ThedefendantintervenorspresentedanecdotalevidencepertainingonlytodiscriminationagainstwomenintheCounty’sA&Eindustry.Id.TheanecdotalevidenceconsistedofthetestimonyofthreeA&Eprofessionalwomen,“nearlyall”ofwhichwasrelatedtodiscriminationintheawardofCountycontracts.Id.at1326.However,thedistrictcourtfoundthattheanecdotalevidencecontradictedDr.Carvajal’sstudyindicatingthatnodisparityexistedwithrespecttotheawardofCountyA&Econtracts.Id.

ThecourtquotedtheEleventhCircuitinEngineeringContractorsAssociationfortheproposition“thatonlyintherarecasewillanecdotalevidencesufficestandingalone.”Id.(internalcitationsomitted).Thecourtheldthat“[t]hisisnotoneofthoserarecases.”Thedistrictcourtconcludedthatthestatisticalevidencewas“unreliableandfail[ed]toestablishtheexistenceofdiscrimination,”andtheanecdotalevidencewasinsufficientasitdidnotevenreachthelevelofanecdotalevidenceinEngineeringContractorsAssociationwheretheCountyemployeesthemselvestestified.Id.

ThecourtmadeaninitialfindingthatanumberofminoritygroupsprovidedpreferentialtreatmentwereinfactmajoritiesintheCountyintermsofpopulation,votingcapacity,andrepresentationontheCountyCommission.Id.at1326‐1329.Forpurposesonlyofconductingthestrictscrutinyanalysis,thecourtthenassumedthatDr.Carvajal’sreportdemonstrateddiscriminationagainstHispanics(notetheCountyhadconcededithadinsufficientevidenceofdiscriminationagainstblacks)andsoughttodeterminewhethertheHBEprogramwasnarrowlytailoredtoremedyingthatdiscrimination.Id.at1330.However,thecourtfoundthatbecausethestudyfailedto“identifywhoisengaginginthediscrimination,whatformthediscriminationmighttake,atwhatstageintheprocessitistakingplace,orhowthediscriminationisaccomplished…itisvirtuallyimpossibletonarrowlytailoranyremedy,andtheHBEprogramfailsonthisfactalone.”Id.

ThecourtfoundthatevenaftertheCountyManagersinformedtheCommissionersthattheCountyhadreachedparityintheA&Eindustry,theCommissionersdeclinedtoenactaCSBEordinance,arace‐neutralmeasureutilizedintheconstructionindustryafterEngineeringContractorsAssociation.Id.Instead,theCommissionersvotedtocontinuetheHBEprogram.Id.ThecourtheldthattheCounty’sfailuretoevenexploreaprogramsimilartotheCSBEordinanceindicatedthattheHBEprogramwasnotnarrowlytailored.Id.at1331.

ThecourtalsofoundthattheCountyenactedabroadanti‐discriminationordinanceimposingharshpenaltiesforaviolationthereof.Id.However,“notasinglewitnessattrialknewofanyinstanceofacomplaintbeingbroughtunderthisordinanceconcerningtheA&Eindustry,”leadingthecourttoconcludethattheordinancewaseithernotbeingenforced,ornodiscriminationexisted.Id.Undereitherscenario,theHBEprogramcouldnotbenarrowlytailored.Id.

ThecourtfoundthewaiverprovisionsintheHBEprograminflexibleinpractice.Id.Additionally,thecourtfoundtheCountyhadfailedtocomplywiththeprovisionsintheHBEprogram


requiringadjustmentofparticipationgoalsbasedonannualstudies,becausetheCountyhadnotinfactconductedannualstudiesforseveralyears.Id.Thecourtfoundthiseven“moreproblematic”becausetheHBEprogramdidnothaveabuilt‐indurationallimit,andthusblatantlyviolatedSupremeCourtjurisprudencerequiringthatracialandethnicpreferences“mustbelimitedintime.”Id.at1332,citingGrutter,123S.Ct.at2346.Fortheforegoingreasons,thecourtconcludedtheHBEprogramwasnotnarrowlytailored.Id.at1332.

WithrespecttotheWBEprogram,thecourtfoundthat“thefailureoftheCountytoidentifywhoisdiscriminatingandwhereintheprocessthediscriminationistakingplaceindicates(thoughnotconclusively)thattheWBEprogramisnotsubstantiallyrelatedtoeliminatingthatdiscrimination.”Id.at1333.Thecourtfoundthattheexistenceoftheanti‐discriminationordinance,therefusaltoenactasmallbusinessenterpriseordinance,andtheinflexibilityinsettingtheparticipationgoalsrenderedtheWBEprogramunabletosatisfythesubstantialrelationshiptest.Id.

ThecourtheldthattheCountywasliableforanycompensatorydamages.Id.at1333‐34.ThecourtheldthattheCommissionershadabsoluteimmunityfortheirlegislativeactions;however,theywerenotentitledtoqualifiedimmunityfortheiractionsinvotingtoapplytherace‐,ethnicity‐,andgender‐consciousmeasuresoftheMBE/WBEprogramsiftheiractionsviolated“clearlyestablishedstatutoryorconstitutionalrightsofwhichareasonablepersonwouldhaveknown…Accordingly,thequestioniswhetherthestateofthelawatthetimetheCommissionersvotedtoapply[race‐,ethnicity‐,andgender‐consciousmeasures]gavethem‘fairwarning’thattheiractionswereunconstitutional.“Id.at1335‐36(internalcitationsomitted).

ThecourtheldthattheCommissionerswerenotentitledtoqualifiedimmunitybecausethey“hadbeforethematleastthreecasesthatgavethemfairwarningthattheirapplicationoftheMBE/WBEprograms…wereunconstitutional:Croson,Adarandand[EngineeringContractorsAssociation].”Id.at1137.ThecourtfoundthattheCommissionersvotedtoapplythecontractmeasuresaftertheSupremeCourtdecidedbothCrosonandAdarand.Id.Moreover,theEleventhCircuithadalreadystruckdowntheconstructionprovisionsofthesameMBE/WBEprograms.Id.Thus,thecaselawwas“clearlyestablished”andgavetheCommissionersfairwarningthattheMBE/WBEprogramswereunconstitutional.Id.

ThecourtalsofoundtheCommissionershadspecificinformationfromtheCountyManagerandotherinternalstudiesindicatingtheproblemswiththeMBE/WBEprogramsandindicatingthatparityhadbeenachieved.Id.at1338.Additionally,theCommissionersdidnotconducttheannualstudiesmandatedbytheMBE/WBEordinanceitself.Id.Foralltheforegoingreasons,thecourtheldtheCommissionersweresubjecttoindividualliabilityforanycompensatoryandpunitivedamages.

ThedistrictcourtenjoinedtheCounty,theCommissioners,andtheCountyManagerfromusing,orrequiringtheuseof,gender,racial,orethniccriteriaindeciding(1)whetheraresponsetoanRFPsubmittedforA&Eworkisresponsive,(2)whethersucharesponsewillbeconsidered,and(3)whetheracontractwillbeawardedtoaconsultantsubmittingsucharesponse.Thecourtawardedtheplaintiffs$100eachinnominaldamagesandreasonableattorneys’feesandcosts,forwhichitheldtheCountyandtheCommissionersjointlyandseverallyliable.


18. Florida A.G.C. Council, Inc. v. State of Florida, 303 F. Supp.2d 1307 (N.D. Fla. 2004)

ThiscaseisinstructivetothedisparitystudyastothemannerinwhichdistrictcourtswithintheEleventhCircuitareinterpretingandapplyingEngineeringContractorsAssociation.Itisalsoinstructiveintermsofthetypeoflegislationtobeconsideredbythelocalandstategovernmentsastowhatthecourtsconsidertobea“race‐conscious”programand/orlegislation,aswellastothesignificanceoftheimplementationofthelegislationtotheanalysis.

Theplaintiffs,A.G.C.Council,Inc.andtheSouthFloridaChapteroftheAssociatedGeneralContractorsbroughtthiscasechallengingtheconstitutionalityofcertainprovisionsofaFloridastatute(Section287.09451,etseq.).TheplaintiffscontendedthatthestatuteviolatedtheEqualProtectionClauseoftheFourteenthAmendmentbyinstitutingrace‐andgender‐conscious“preferences”inordertoincreasethenumericrepresentationof“MBEs”incertainindustries.

Accordingtothecourt,theFloridaStatuteenactedrace‐consciousandgender‐consciousremedialprogramstoensureminorityparticipationinstatecontractsforthepurchaseofcommoditiesandinconstructioncontracts.TheStatecreatedtheOfficeofSupplierDiversity(“OSD”)toassistMBEstobecomesuppliersofcommodities,servicesandconstructiontothestategovernment.TheOSDhadcertainresponsibilities,includingadoptingrulesmeanttoassesswhetherstateagencieshavemadegoodfaitheffortstosolicitbusinessfromMBEs,andtomonitorwhethercontractorshavemadegoodfaitheffortstocomplywiththeobjectiveofgreateroverallMBEparticipation.

Thestatuteenumeratedmeasuresthatcontractorsshouldundertake,suchasminority‐centeredrecruitmentinadvertisingasameansofadvancingthestatute’spurpose.ThestatuteprovidedthateachStateagencyis“encouraged”tospend21percentofthemoniesactuallyexpendedforconstructioncontracts,25percentofthemoniesactuallyexpendedforarchitecturalandengineeringcontracts,24percentofthemoniesactuallyexpendedforcommoditiesand50.5percentofthemoniesactuallyexpendedforcontractualservicesduringthefiscalyearforthepurposeofenteringintocontractswithcertifiedMBEs.ThestatutealsoprovidedthatstateagenciesareallowedtoallocatecertainpercentagesforblackAmericans,HispanicAmericansandforAmericanwomen,andthegoalsarebrokendownbyconstructioncontracts,architecturalandengineeringcontracts,commoditiesandcontractualservices.

TheStatetookthepositionthatthespendinggoalswere“precatory.”Thecourtfoundthattheplaintiffshadstandingtomaintaintheactionandtopursueprospectiverelief.Thecourtheldthatthestatutewasunconstitutionalbasedonthefindingthatthespendinggoalswerenotnarrowlytailoredtoachieveagovernmentalinterest.Thecourtdidnotspecificallyaddresswhetherthearticulatedreasonsforthegoalscontainedinthestatutehadsufficientevidence,butinsteadfoundthatthearticulatedreasonwould,“iftrue,”constituteacompellinggovernmentalinterestnecessitatingrace‐consciousremedies.Ratherthanexploretheevidence,thecourtfocusedonthenarrowlytailoredrequirementandheldthatitwasnotsatisfiedbytheState.

ThecourtfoundthattherewasnoevidenceintherecordthattheStatecontemplatedrace‐neutralmeanstoaccomplishtheobjectivessetforthinSection287.09451etseq.,suchas


“‘simplificationofbiddingprocedures,relaxationofbondingrequirements,trainingorfinancialaidfordisadvantagedentrepreneursofallraces[which]wouldopenthepubliccontractingmarkettoallthosewhohavesufferedtheeffectsofpastdiscrimination.’”FloridaA.G.C.Council,303F.Supp.2dat1315,quotingEng’gContractorsAss’n,122F.3dat928,quotingCroson,488U.S.at509‐10.

ThecourtnotedthatdefendantsdidnotseemtodisagreewiththereportissuedbytheStateofFloridaSenatethatconcludedtherewaslittleevidencetosupportthespendinggoalsoutlinedinthestatute.Rather,theStateofFloridaarguedthatthestatuteis“permissive.”Thecourt,however,heldthat“thereisnodistinctionbetweenastatutethatisprecatoryversusonethatiscompulsorywhenthechallengedstatute‘inducesanemployertohirewithaneyetowardmeeting…[a]numericaltarget.’FloridaA.G.C.Council,303F.Supp.2dat1316.

ThecourtfoundthattheStateappliespressuretoStateagenciestomeetthelegislativeobjectivesofthestatuteextendingbeyondsimpleoutreachefforts.TheStateagencies,accordingtothecourt,wererequiredtocoordinatetheirMBEprocurementactivitieswiththeOSD,whichincludesadoptingaMBEutilizationplan.IftheStateagencydeviatedfromtheutilizationplanintwoconsecutiveandthreeoutoffivetotalfiscalyears,thentheOSDcouldreviewanyandallsolicitationsandcontractawardsoftheagencyasdeemednecessaryuntilsuchtimeastheagencymetitsutilizationplan.Thecourtheldthatbasedonthesefactors,althoughallegedtobe“permissive,”thestatutetextuallywasnot.

Therefore,thecourtfoundthatthestatutewasnotnarrowlytailoredtoserveacompellinggovernmentalinterest,andconsequentlyviolatedtheEqualProtectionClauseoftheFourteenthAmendment.

19. The Builders Ass’n of Greater Chicago v. The City of Chicago, 298 F. Supp.2d 725 (N.D. Ill. 2003)

Thiscaseisinstructivebecauseofthecourt’sfocusandanalysisonwhethertheCityofChicago’sMBE/WBEprogramwasnarrowlytailored.Thebasisofthecourt’sholdingthattheprogramwasnotnarrowlytailoredisinstructiveforanyprogramconsideredbecauseofthereasonsprovidedastowhytheprogramdidnotpassmuster.

Theplaintiff,theBuildersAssociationofGreaterChicago,broughtthissuitchallengingtheconstitutionalityoftheCityofChicago’sconstructionMinority‐andWomen‐OwnedBusiness(“MWBE”)Program.ThecourtheldthattheCityofChicago’sMWBEprogramwasunconstitutionalbecauseitdidnotsatisfytherequirementthatitbenarrowlytailoredtoachieveacompellinggovernmentalinterest.Thecourtheldthatitwasnotnarrowlytailoredforseveralreasons,includingbecausetherewasno“meaningfulindividualizedreview”ofMBE/WBEs;ithadnoterminationdatenordidithaveanymeansfordeterminingatermination;the“graduation”revenueamountforfirmstograduateoutoftheprogramwasveryhigh,$27,500,000,andinfactveryfewfirmsgraduated;therewasnonetworththreshold;and,waiverswererarelyornevergrantedonconstructioncontracts.ThecourtfoundthattheCityprogramwasa“rigidnumericalquota,”notrelatedtothenumberofavailable,willingandablefirms.Formulisticpercentages,thecourtheld,couldnotsurvivethestrictscrutiny.


Thecourtheldthatthegoalsplandidnotaddressissuesraisedastodiscriminationregardingmarketaccessandcredit.Thecourtfoundthatagoalsprogramdoesnotdirectlyimpactprimecontractor’sselectionofsubcontractorsonnon‐goalsprivateprojects.Thecourtfoundthataset‐asideorgoalsprogramdoesnotdirectlyimpactdifficultiesinaccessingcredit,anddoesnotaddressdiscriminatoryloandenialsorhigherinterestrates.ThecourtfoundtheCityhasnotsoughttoattackdiscriminationbyprimesdirectly,“butitcould.”298F.2d725.“TomonitorpossiblediscriminatoryconductitcouldmaintainitscertificationlistandrequirethosecontractingwiththeCitytoconsiderunsolicitedbids,tomaintainbiddingrecords,andtojustifyrejectionofanycertifiedfirmsubmittingthelowestbid.ItcouldalsorequirefirmsseekingCityworktopostprivatejobsaboveacertainminimumonawebsiteorotherwiseprovidepublicnotice…”Id.

Thecourtconcludedthatotherrace‐neutralmeanswereavailabletoimpactcredit,highinterestrates,andotherpotentialmarketplacediscrimination.Thecourtpointedtorace‐neutralmeansincludinglinkeddeposits,withtheCitybankingatinstitutionsmakingloanstostartupandsmallerfirms.Otherrace‐neutralprogramsreferencedincludedquickpayandcontractdownsizing;restrictingself‐performancebyprimecontractors;adirectloanprogram;waiverofbondsoncontractsunder$100,000;abankparticipationloanprogram;a2percentlocalbusinesspreference;outreachprogramsandtechnicalassistanceandworkshops;andseminarspresentedtonewconstructionfirms.

Thecourtheldthatraceandethnicitydomatter,butthatracialandethnicclassificationsarehighlysuspect,canbeusedonlyasalastresort,andcannotbemadebysomemechanicalformulation.Therefore,thecourtconcludedtheCity’sMWBEProgramcouldnotstandinitspresentguise.Thecourtheldthatthepresentprogramwasnotnarrowlytailoredtoremedypastdiscriminationandthediscriminationdemonstratedtonowexist.

Thecourtenteredaninjunction,butdelayedtheeffectivedateforsixmonthsfromthedateofitsOrder,December29,2003.ThecourtheldthattheCityhada“compellinginterestinnothavingitsconstructionprojectsslipbacktonearmonopolydominationbywhitemalefirms.”Thecourtruledabriefcontinuationoftheprogramforsixmonthswasappropriate“astheCityrethinksthemanytoolsofredressithasavailable.”Subsequently,thecourtdeclaredunconstitutionaltheCity’sMWBEProgramwithrespecttoconstructioncontractsandpermanentlyenjoinedtheCityfromenforcingtheProgram.2004WL757697(N.D.Ill2004).

20. Associated Utility Contractors of Maryland, Inc. v. Mayor and City Council of Baltimore, 218 F. Supp.2d 749 (D. Md. 2002)

ThiscaseisinstructivebecausethecourtfoundtheExecutiveOrderoftheMayoroftheCityofBaltimorewasprecatoryinnature(creatingnolegalobligationorduty)andcontainednoenforcementmechanismorpenaltiesfornoncomplianceandimposednosubstantialrestrictions;theExecutiveOrderannouncedgoalsthatwerefoundtobeaspirationalonly.

TheAssociatedUtilityContractorsofMaryland,Inc.(“AUC”)suedtheCityofBaltimorechallengingitsordinanceprovidingforminorityandwomen‐ownedbusinessenterprise(“MWBE”)participationincitycontracts.Previously,anearlierCityofBaltimoreMWBEprogramwasdeclaredunconstitutional.AssociatedUtilityContractorsofMaryland,Inc.v.MayorandCity


CouncilofBaltimore,83F.Supp.2d613(D.Md.2000).TheCityadoptedanewordinancethatprovidedfortheestablishmentofMWBEparticipationgoalsonacontract‐by‐contractbasis,andmadeseveralotherchangesfromthepreviousMWBEprogramdeclaredunconstitutionalintheearliercase.

Inaddition,theMayoroftheCityofBaltimoreissuedanExecutiveOrderthatannouncedagoalofawarding35percentofallCitycontractingdollarstoMBE/WBEs.Thecourtfoundthisgoalof35percentparticipationwasaspirationalonlyandtheExecutiveOrdercontainednoenforcementmechanismorpenaltiesfornoncompliance.TheExecutiveOrderalsospecifiedmany“noncoercive”outreachmeasurestobetakenbytheCityagenciesrelatingtoincreasingparticipationofMBE/WBEs.Thesemeasureswerefoundtobemerelyaspirationalandnoenforcementmechanismwasprovided.

ThecourtaddressedinthiscaseonlyamotiontodismissfiledbytheCityofBaltimorearguingthattheAssociatedUtilityContractorshadnostanding.ThecourtdeniedthemotiontodismissholdingthattheassociationhadstandingtochallengethenewMBE/WBEordinance,althoughthecourtnotedthatithadsignificantissueswiththeAUChavingrepresentationalstandingbecauseofthenatureoftheMBE/WBEplanandthefacttheAUCdidnothaveanyofitsindividualmembersnamedinthesuit.ThecourtalsoheldthattheAUCwasentitledtobringanasappliedchallengetotheExecutiveOrderoftheMayor,butrejectedithavingstandingtobringafacialchallengebasedonafindingthatitimposesnorequirement,createsnosanctions,anddoesnotinflictaninjuryuponanymemberoftheAUCinanyconcreteway.Therefore,theExecutiveOrderdidnotcreatea“caseorcontroversy”inconnectionwithafacialattack.ThecourtfoundthewordingoftheExecutiveOrdertobeprecatoryandimposingnosubstantiverestrictions.

AfterthisdecisiontheCityofBaltimoreandtheAUCenteredintoasettlementagreementandadismissalwithprejudiceofthecase.AnorderwasissuedbythecourtonOctober22,2003dismissingthecasewithprejudice.

21. Associated Utility Contractors of Maryland, Inc. v. The Mayor and City Council of Baltimore and Maryland Minority Contractors Association, Inc., 83 F. Supp.2d 613 (D. Md. 2000)

PlaintiffAssociatedUtilityContractorsofMaryland,Inc.(“AUC”)filedthisactiontochallengethecontinuedimplementationoftheaffirmativeactionprogramcreatedbyBaltimoreCityOrdinance(“theOrdinance”).83F.Supp.2d613(D.Md.2000)

TheOrdinancewasenactedin1990andauthorizedtheCitytoestablishannuallynumericalset‐asidegoalsapplicabletoawiderangeofpubliccontracts,includingconstructionsubcontracts.Id.

AUCfiledamotionforsummaryjudgment,whichtheCityandinterveningdefendantMarylandMinorityContractorsAssociation,Inc.(“MMCA”)opposed.Id.at614.In1999,thecourtissuedanordergrantinginpartanddenyinginpartthemotionforsummaryjudgment(“theDecemberinjunction”).Id.Specifically,astoconstructioncontractsenteredintobytheCity,thecourtenjoinedenforcementoftheOrdinance(and,consequently,continuedimplementationofthe


affirmativeactionprogramitauthorized)inrespecttotheCity’s1999numericalset‐asidegoalsforMinority‐andWomen–OwnedBusinessEnterprises(“MWBEs”),whichhadbeenestablishedat20%and3%,respectively.Id.Thecourtdeniedthemotionforsummaryjudgmentastotheplaintiff’sfacialattackontheconstitutionalityoftheOrdinance,concludingthatthereexisted“adisputeofmaterialfactastowhethertheenactmentoftheOrdinancewasadequatelysupportedbyafactualrecordofunlawfuldiscriminationproperlyremediablethroughrace‐andgender‐basedaffirmativeaction.”Id.

TheCityappealedtheentryoftheDecemberinjunctiontotheUnitedStatesCourtofAppealsfortheFourthCircuit.Inaddition,theCityfiledamotionforstayoftheinjunction.Id.Insupportofthemotionforstay,theCitycontendedthatAUClackedorganizationalstandingtochallengetheOrdinance.Thecourtheldtheplaintiffsatisfiedtherequirementsfororganizationalstandingastotheset‐asidegoalsestablishedbytheCityfor1999.Id.

TheCityalsocontendedthatthecourterredinfailingtoforebearfromtheadjudicationofthiscaseandofthemotionforsummaryjudgmentuntilafterithadcompletedanallegeddisparitystudywhich,itcontended,wouldestablishajustificationfortheset‐asidegoalsestablishedfor1999.Id.Thecourtsaidthisargument,whichthecourtrejected,restedonthenotionthatagovernmentalentitymightpermissiblyadoptanaffirmativeactionplanincludingset‐asidegoalsandwaituntilsuchaplanischallengedincourtbeforeundertakingthenecessarystudiesuponwhichtheconstitutionalityoftheplandepends.Id.

Therefore,becausetheCityofferednocontemporaneousjustificationforthe1999set‐asidegoalsitadoptedontheauthorityoftheOrdinance,thecourtissuedaninjunctioninits1999decisionanddeclinedtostayitseffectiveness.Id.SincetheinjunctionawardedcompleterelieftotheAUC,andanyefforttoadjudicatetheissueofwhethertheCitywouldadoptrevisedset‐asidegoalsontheauthorityoftheOrdinancewaswhollyspeculativeundertaking,thecourtdismissedthecasewithoutprejudice.Id.

Facts and Procedural History.In1986,theCityCouncilenactedinOrdinance790thefirstcity‐wideaffirmativeactionset‐asidegoals,whichrequired,interalia,thatforallCitycontracts,20%ofthevalueofsubcontractsbeawardedtoMinority–OwnedBusinessEnterprises(“MBEs”)and3%toWomen–OwnedBusinessEnterprises(“WBEs”).Id.at615.AspermittedunderthencontrollingSupremeCourtprecedent,thecourtsaidOrdinance790wasjustifiedbyafindingthatgeneralsocietaldiscriminationhaddisadvantagedMWBEs.Apparently,nodisparitystatisticswereofferedtojustifyOrdinance790.Id.

AftertheSupremeCourtannounceditsdecisioninCityofRichmondv.J.A.Croson,488U.S.469(1989),theCityconvenedaTaskForcetostudytheconstitutionalityofOrdinance790.Id.TheTaskForceheldhearingsandissuedaPublicCommentDraftReportonNovember1,1989.Id.Itheldadditionalhearings,reviewedpubliccommentsandissueditsfinalreportonApril11,1990,recommendingseveralamendmentstoOrdinance790.Id.TheCityCouncilconductedhearings,andinJune1990,enactedOrdinance610,thelawunderattackinthiscase.Id.

InenactingOrdinance610,theCityCouncilfoundthatitwasjustifiedasanappropriateremedyof“[p]astdiscriminationintheCity’scontractingprocessbyprimecontractorsagainstminorityandwomen’sbusinessenterprises....”Id.TheCityCouncilalsofoundthat“[m]inorityand


women’sbusinessenterprises...havehaddifficultiesinobtainingfinancing,bonding,creditandinsurance;”that“[t]heCityofBaltimorehascreatedanumberofdifferentassistanceprogramstohelpsmallbusinesseswiththeseproblems...[butthatt]heseassistanceprogramshavenotbeeneffectiveineitherremedyingtheeffectsofpastdiscrimination...orinpreventingongoingdiscrimination.”Id.

TheoperativesectionofOrdinance610relevanttothiscasemandatedaprocedurebywhichset‐asidegoalsweretobeestablishedeachyearforminorityandwomenownedbusinessparticipationinCitycontracts.Id.TheOrdinanceitselfdidnotestablishanygoals,butdirectedtheMayortoconsultwiththeChiefofEqualOpportunityComplianceand“contractauthorities”andtoannuallyspecifygoalsforeachseparatecategoryofcontracting“suchaspublicworks,professionalservices,concessionandpurchasingcontracts,aswellasanyothercategoriesthattheMayordeemsappropriate.”Id.

In1990,uponitsenactmentoftheOrdinance,theCityestablishedacross‐the‐boardset‐asidegoalsof20%MBEand3%WBEforallCitycontractswithnovariationbymarket.Id.ThecourtfoundtheCitysimplyreadoptedthe20%MBEand3%WBEsubcontractorparticipationgoalsfromthepriorlaw,Ordinance790,whichtheOrdinancehadspecificallyrepealed.Id.at616.Thesesameset‐asidegoals,thecourtsaid,wereadoptedwithoutchangeandwithoutfactualsupportineachsucceedingyearsince1990.Id.

Noannualstudyeverwasundertakentosupporttheimplementationoftheaffirmativeactionprogramgenerallyortosupporttheestablishmentofanyannualgoals,thecourtconcluded,andtheCitydidnotcollectthedatawhichcouldhavepermittedsuchfindings.Id.Nodisparitystudyexistedorwasundertakenuntilthecommencementofthislawsuit.Id.Thus,thecourtheldtheCityhadnoreliablerecordoftheavailabilityofMWBEsforeachcategoryofcontracting,andthusnowayofdeterminingwhetherits20%and3%goalswererationallyrelatedtoextantdiscrimination(orthecontinuingeffectsthereof)inthelettingofpublicconstructioncontracts.Id.

AUC has associational standing.AUCestablishedthatithadassociationalstandingtochallengetheset‐asidegoalsadoptedbytheCityin1999.Id.Specifically,AUCsufficientlyestablishedthatitsmemberswere“readyandable”tobidforCitypublicworkscontracts.Id.Nomore,thecourtnoted,wasrequired.Id.

ThecourtfoundthatAUC’smembersweredisadvantagedbythegoalsinthebiddingprocess,andthisalonewasacognizableinjury.Id.Forthepurposesofanequalprotectionchallengetoaffirmativeactionset‐asidegoals,thecourtstatedtheSupremeCourthasheldthatthe“‘injuryinfact’istheinabilitytocompeteonanequalfootinginthebiddingprocess...”Id.at617,quotingNortheasternFloridaChapter,508U.S.at666,andcitingAdarandConstructors,Inc.v.Pena,515U.S.200,211(1995).

TheSupremeCourtinNortheasternFloridaChapterheldthatindividualstandingisestablishedtochallengeaset‐asideprogramwhenapartydemonstrates“thatitisableandreadytobidoncontractsandthatadiscriminatorypolicypreventsitfromdoingsoonanequalbasis.”Id.at616quoting,Northeastern,508U.S.at666.TheSupremeCourtfurtherheldthatonceapartyshowsitis“readyandable”tobidinthiscontext,thepartywillhavesufficientlyshownthattheset‐


asidegoalsare“the‘cause’ofitsinjuryandthatajudicialdecreedirectingthecitytodiscontinueitsprogramwould‘redress’theinjury,”thussatisfyingtheremainingrequirementsforindividualstanding.Id.quotingNortheastern,at666&n.5.

ThecourtfoundtherewasampleevidencethatAUCmemberswere“readyandable”tobidonCitypublicworkscontractsbasedonseveraldocumentsintherecord,andthatmembersofAUCwouldhaveindividualstandingintheirownrighttochallengetheconstitutionalityoftheCity’sset‐asidegoalsapplicabletoconstructioncontracting,satisfyingtheassociationalstandingtest.Id.at617‐18.ThecourtheldAUChadassociationalstandingtochallengetheconstitutionalityofthepublicworkscontractsset‐asideprovisionsestablishedin1999.Id.at618.

Strict scrutiny analysis.AUCcomplainedthatsincetheirinitialpromulgationin1990,theCity’sset‐asidegoalsrequiredAUCmembersto“selectorrejectcertainsubcontractorsbasedupontherace,ethnicity,orgenderofsuchsubcontractors”inordertobidsuccessfullyonCitypublicworkscontractsforworkexceeding$25,000(“Citypublicworkscontracts”).Id.at618.AUCclaimed,therefore,thattheCity’sset‐asidegoalsviolatedtheFourteenthAmendment’sguaranteeofequalprotectionbecausetheyrequiredprimecontractorstoengageindiscriminationwhichthegovernmentitselfcannotperpetrate.Id.

Thecourtstatedthatgovernmentclassificationsbaseduponraceandethnicityarereviewedunderstrictscrutiny,citingtheSupremeCourtinAdarand,515U.S.at227;andthatthosebasedupongenderarereviewedunderthelessstringentintermediatescrutiny.Id.at618,citingUnitedStatesv.Virginia,518U.S.515,531(1996).Id.“[A]llracialclassifications,imposedbywhateverfederal,state,orlocalgovernmentalactor,mustbeanalyzedbyareviewingcourtunderstrictscrutiny.”Id.at619,quotingAdarand,515U.S.at227.Thegovernmentclassificationmustbenarrowlytailoredtoachieveacompellinggovernmentinterest.Id.citingCroson,488U.S.at493–95.ThecourtthennotedthattheFourthCircuithasexplained:

Therationaleforthisstringentstandardofreviewisplain.Ofallthecriteriabywhichmenandwomencanbe judged, themostpernicious is thatof race.Theinjusticeof judginghumanbeingsbythecolorof theirskin issoapparent thatracial classifications cannot be rationalized by the casual invocation of benignremedial aims.... While the inequities and indignities visited by pastdiscrimination are undeniable, the use of race as a reparational device risksperpetuatingtheveryrace‐consciousnesssucharemedypurportstoovercome.

Id.at619,quotingMarylandTroopersAss’n,Inc.v.Evans,993F.2d1072,1076(4thCir.1993)(citationomitted).

ThecourtalsopointedoutthatinCroson,apluralityoftheSupremeCourtconcludedthatstateandlocalgovernmentshaveacompellinginterestinremedyingidentifiedpastandpresentracediscriminationwithintheirborders.Id.at619,citingCroson,488U.S.at492.ThepluralityoftheSupremeCourt,accordingtothecourt,explainedthattheFourteenthAmendmentpermitsrace‐consciousprogramsthatseekbothtoeradicatediscriminationbythegovernmentalentityitself,andtopreventthepublicentityfromactingasa“‘passiveparticipant’inasystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry”byallowingtaxdollars“tofinancetheevilofprivateprejudice.”Id.at619,quotingCroson,488U.S.at492.Thus,thecourt


foundCrosonmakesclearthattheCityhasacompellinginterestineradicatingandremedyingprivatediscriminationintheprivatesubcontractinginherentinthelettingofCityconstructioncontracts.Id.

TheFourthCircuit,thecourtstated,hasinterpretedCrosontoimposea“twostepanalysisforevaluatingarace‐consciousremedy.”Id.at619citingMarylandTroopersAss’n,993F.2dat1076.“First,the[government]musthavea‘strongbasisinevidenceforitsconclusionthatremedialaction[is]necessary....’‘Absentsearchingjudicialinquiryintothejustificationforsuchrace‐basedmeasures,thereissimplynowayofdeterminingwhatclassificationsare...infactmotivatedbyillegitimatenotionsofracialinferiorityorsimpleracialpolitics.’”Id.at619,quotingMarylandTroopersAss’n,993F.2dat1076(citingCroson).

ThesecondstepintheCrosonanalysis,accordingtothecourt,istodeterminewhetherthegovernmenthasadoptedprogramsthat“‘narrowlytailor’anypreferencesbasedonracetomeettheirremedialgoal.”Id.at619.ThecourtfoundthattheFourthCircuitsummarizedSupremeCourtjurisprudenceon“narrowtailoring”asfollows:

Thepreferencesmayremain ineffectonlyso longasnecessary toremedy thediscriminationatwhichtheyareaimed;theymaynottakeonalifeoftheirown.The numerical goals must be waivable if qualified minority applications arescarce,andsuchgoalsmustbearareasonablerelationtominoritypercentagesintherelevantqualifiedlaborpool,notinthepopulationasawhole.Finally,thepreferencesmaynotsupplantrace‐neutralalternativesforremedyingthesamediscrimination.

Id.at620,quotingMarylandTroopersAss’n,993F.2dat1076–77(citationsomitted).

Intermediate scrutiny analysis.Thecourtstatedtheintermediatescrutinyanalysisforgender‐baseddiscriminationasfollows:“Partieswhoseektodefendgender‐basedgovernmentactionmustdemonstratean‘exceedinglypersuasivejustification’forthataction.”Id.at620,quotingVirginia,518U.S.at531,116.Thisburdenisa“demanding[one]anditrestsentirelyontheState.”Id.at620quotingVirginia,518U.S.at533.

Althoughgenderisnot“aproscribedclassification,”inthewayraceorethnicityis,thecourtsnevertheless“carefullyinspect[]officialactionthatclosesadoorordeniesopportunity”onthebasisofgender.Id.at620,quotingVirginia,518U.S.at532‐533.Atbottom,thecourtconcluded,agovernmentwishingtodiscriminateonthebasisofgendermustdemonstratethatitsdoingsoserves“importantgovernmentalobjectivesandthatthediscriminatorymeansemployedaresubstantiallyrelatedtotheachievementofthoseobjectives.”Id.at620,quotingVirginia,518U.S.at533(citationsandquotationsomitted).

Aswiththestandardsforrace‐basedmeasures,thecourtfoundnoformulaexistsbywhichtodeterminewhatevidencewilljustifyeverydifferenttypeofgender‐consciousmeasure.Id.at620.However,astheThirdCircuithasexplained,“[l]ogically,acitymustbeabletorelyonlessevidenceinenactingagenderpreferencethanaracialpreferencebecauseapplyingCroson’sevidentiarystandardtoagenderpreferencewouldevisceratethedifferencebetweenstrictandintermediatescrutiny.”Id.at620,quotingContractorsAss’n,6F.3dat1010.


ThecourtpointedoutthattheSupremeCourthasstatedanaffirmativeactionprogramsurvivesintermediatescrutinyiftheproponentcanshowitwas“aproductofanalysisratherthanastereotypedreactionbasedonhabit.”Id.at620,quotingMetroBroadcasting,Inc.v.F.C.C.,497U.S.547,582–83(1990)(internalquotationsomitted).TheThirdCircuit,thecourtsaid,determinedthat“thisstandardrequirestheCitytopresentprobativeevidenceinsupportofitsstatedrationaleforthe[10%genderset‐aside]preference,discriminationagainstwomen‐ownedcontractors.”Id.at620,quotingContractorsAss’n,6F.3dat1010.

Preenactment versus postenactment evidence.InevaluatingthefirststepoftheCrosontest,whethertheCityhada“strongbasisinevidenceforitsconclusionthat[race‐conscious]remedialactionwasnecessary,”thecourtheldthatitmustlimititsinquirytoevidencewhichtheCityactuallyconsideredbeforeenactingthenumericalgoals.Id.at620.ThecourtfoundtheSupremeCourthasestablishedthestandardthatpreenactmentevidencemustprovidethe“strongbasisinevidence”thatrace‐basedremedialactionisnecessary.Id.at620‐621.

ThecourtnotedtheSupremeCourtinWygant,thepluralityopinion,joinedbyfourjusticesincludingJusticeO’Connor,heldthatastateentity“mustensurethat,beforeitembarksonanaffirmative‐actionprogram,ithasconvincingevidencethatremedialactioniswarranted.Thatis,itmusthavesufficientevidencetojustifytheconclusionthattherehasbeenpriordiscrimination.”Id.at621,quotingWygant,476U.S.at277.

Thecourtstatedthatbecauseofthiscontrollingprecedent,itwascompelledtoanalyzetheevidencebeforetheCitywhenitadoptedthe1999set‐asidegoalsspecifyingthe20%MBEparticipationinCityconstructionsubcontracts,andforanalogousreasons,the3%WBEpreferencemustalsobejustifiedbypreenactmentevidence.Id.at621.

ThecourtsaidtheFourthCircuithasnotruledontheissuewhetheraffirmativeactionmeasuresmustbejustifiedbyastrongbasisinpreenactmentevidence.ThecourtfoundthatintheFourthCircuitdecisionsinvalidatingstateaffirmativeactionpoliciesinPodbereskyv.Kirwan,38F.3d147(4thCir.1994),andMarylandTroopersAss’n,Inc.v.Evans,993F.2d1072(4thCir.1993),thecourtapparentlyreliedwithoutcommentuponpostenactmentevidencewhenevaluatingthepoliciesforCroson“strongbasisinevidence.”Id.at621,n.6,citingPodberesky,38F.3dat154(referringtopostenactmentsurveysofAfrican–AmericanstudentsatCollegeParkcampus);MarylandTroopers,993F.2dat1078(evaluatingstatisticsaboutthepercentageofblacktroopersin1991whendecidingwhethertherewasastatisticaldisparitygreatenoughtojustifytheaffirmativeactionmeasuresina1990consentdecree).Thecourtconcluded,however,thisissuewasapparentlynotraisedinthesecases,andbothweredecidedbeforethe1996SupremeCourtdecisioninShawv.Hunt,517U.S.899,whichclarifiedthattheWygantpluralitydecisionwascontrollingauthorityonthisissue.Id.at621,n.6.

Thecourtnotedthatthreecourtshadheld,priortoShaw,thatpostenactmentevidencemaybereliedupontosatisfytheCroson“strongbasisinevidence”requirement.ConcreteWorksofColorado,Inc.v.Denver,36F.3d1513(10thCir.1994),cert.denied,514U.S.1004,115S.Ct.1315,131L.Ed.2d196(1995);Harrison&BurrowesBridgeConstructors,Inc.v.Cuomo,981F.2d50,60(2dCir.1992);CoralConstructionCo.v.KingCounty,941F.2d910(9thCir.1991).Id.Inaddition,theEleventhCircuitheldin1997that“postenactmentevidenceisadmissibletodeterminewhetheranaffirmativeactionprogram”satisfiesCroson.EngineeringContractorsAss’nofSouth


Florida,Inc.v.MetropolitanDadeCounty,122F.3d895,911–12(11thCir.1997),cert.denied,523U.S.1004(1998).BecausethecourtbelievedthatShawandWygantprovidedcontrollingauthorityontheroleofpostenactmentevidenceinthe“strongbasisinevidence”inquiry,itdidnotfindthesecasespersuasive.Id.at621.

City did not satisfy strict or intermediate scrutiny: no disparity study was completed or

preenactment evidence established.Inthiscase.thecourtfoundthattheCityconsiderednoevidencein1999beforepromulgatingtheconstructionsubcontractingset‐asidegoalsof20%forMBEsand3%forWBEs.Id.at621.BasedontheabsenceofanyrecordofwhatevidencetheCityconsideredpriortopromulgatingtheset‐asidegoalsfor1999,thecourtheldtherewasnodisputeofmaterialfactforeclosingsummaryjudgmentinfavorofplaintiff.Id.Thecourtthusfoundthatthe20%preferenceisnotsupportedbya“strongbasisinevidence”showinganeedforarace‐consciousremedialplanin1999;noristhe3%preferenceshowntobe“substantiallyrelatedtoachievement”oftheimportantobjectiveofremedyinggenderdiscriminationin1999,intheconstructionindustryinBaltimore.Id.

ThecourtrejectedtheCity’sassertionsthroughoutthecasethatthecourtshouldupholdtheset‐asidegoalsbaseduponstatistics,whichtheCitywasintheprocessofgatheringinadisparitystudyithadcommissioned.Id.at622.ThecourtsaidtheCitydidnotprovideanylegalsupportforthepropositionthatagovernmentalentitymightpermissiblyadoptanaffirmativeactionplanincludingset‐asidegoalsandwaituntilsuchaplanischallengedincourtbeforeundertakingthenecessarystudiesuponwhichtheconstitutionalityoftheplandepends.Id.Theinprocessstudywasnotcompleteasofthedateofthisdecisionbythecourt.Id.ThecourtthusstatedthestudycouldnothaveproduceddatauponwhichtheCityactuallyreliedinestablishingtheset‐asidegoalsfor1999.Id.

Thecourtnotedthatifthedatathestudyproducedwerereliableandcomplete,theCitycouldhavethestatisticalbasisuponwhichtomakethefindingsOrdinance610required,andwhichcouldsatisfytheconstitutionallyrequiredstandardsforthepromulgationandimplementationofnarrowlytailoredset‐asiderace‐andgenderconsciousgoals.Id.at622.Nonetheless,astherecordstoodwhenthecourtenteredtheDecember1999injunctionandasitstoodasofthedateofthedecision,therewerenodatainevidenceshowingadisparity,letaloneagrossdisparity,betweenMWBEavailabilityandutilizationinthesubcontractingconstructionmarketinBaltimoreCity.Id.TheCitypossessednosuchevidencewhenitestablishedthe1999set‐asidegoalschallengedinthecase.Id.

Apercentageset‐asidemeasure,liketheMWBEgoalsatissue,thecourtheldcouldonlybejustifiedbyreferencetotheoverallavailabilityofminority‐andwomen‐ownedbusinessesintherelevantmarkets.Id.Intheabsenceofsuchfigures,the20%MBEand3%WBEsetasidefigureswerearbitraryandunenforceableinlightofcontrollingSupremeCourtandFourthCircuitauthority.Id.

Holding.ThecourtheldthatforthesereasonsitenteredtheinjunctionagainsttheCityonDecember1999anditremainedfullyineffect.Id.at622.Accordingly,theCity’smotionforstayoftheinjunctionorderwasdeniedandtheactionwasdismissedwithoutprejudice.Id.at622.


ThecourtheldunconstitutionaltheCityofBaltimore’s“affirmativeaction”program,whichhadconstructionsubcontracting“set‐aside”goalsof20percentforMBEsand3percentforWBEs.ThecourtheldtherewasnodataorstatisticalevidencesubmittedbytheCitypriortoenactmentoftheOrdinance.TherewasnoevidenceshowingadisparitybetweenMBE/WBEavailabilityandutilizationinthesubcontractingconstructionmarketinBaltimore.ThecourtenjoinedtheCityOrdinance.

22. Webster v. Fulton County, 51 F. Supp.2d 1354 (N.D. Ga. 1999), affirmed per curiam 218 F.3d 1267 (11th Cir. 2000)

Thiscaseisinstructiveasitisanotherinstanceinwhichacourthasconsidered,analyzed,andruleduponarace‐,ethnicity‐andgender‐consciousprogram,holdingthelocalgovernmentMBE/WBE‐typeprogramfailedtosatisfythestrictscrutinyconstitutionalstandard.ThecasealsoisinstructiveinitsapplicationoftheEngineeringContractorsAssociationcase,includingtoadisparityanalysis,theburdensofproofonthelocalgovernment,andthenarrowlytailoredprongofthestrictscrutinytest.

Inthiscase,plaintiffWebsterbroughtanactionchallengingtheconstitutionalityofFultonCounty’s(the“County”)minorityandfemalebusinessenterpriseprogram(“M/FBE”)program.51F.Supp.2d1354,1357(N.D.Ga.1999).[ThedistrictcourtfirstsetforththeprovisionsoftheM/FBEprogramandconductedastandinganalysisat51F.Supp.2dat1356‐62].

Thecourt,citingEngineeringContractorsAssociationofS.Florida,Inc.v.Metro.EngineeringContractorsAssociation,122F.3d895(11thCir.1997),heldthat“[e]xplicitracialpreferencesmaynotbeusedexceptasa‘lastresort.’”Id.at1362‐63.ThecourtthensetforththestrictscrutinystandardforevaluatingracialandethnicpreferencesandthefourfactorsenunciatedinEngineeringContractorsAssociation,andtheintermediatescrutinystandardforevaluatinggenderpreferences.Id.at1363.ThecourtfoundthatunderEngineeringContractorsAssociation,thegovernmentcouldutilizebothpost‐enactmentandpre‐enactmentevidencetomeetitsburdenofa“strongbasisinevidence”forstrictscrutiny,and“sufficientprobativeevidence”forintermediatescrutiny.Id.

Thecourtfoundthatthedefendantbearstheinitialburdenofsatisfyingtheaforementionedevidentiarystandard,andtheultimateburdenofproofremainswiththechallengingpartytodemonstratetheunconstitutionalityoftheM/FBEprogram.Id.at1364.Thecourtfoundthattheplaintiffhasatleastthreemethods“torebuttheinferenceofdiscriminationwithaneutralexplanation:(1)demonstratethatthestatisticsareflawed;(2)demonstratethatthedisparitiesshownbythestatisticsarenotsignificant;or(3)presentconflictingstatisticaldata.”Id.,citingEng’gContractorsAss’n,122F.3dat916.

[ThedistrictcourtthensetforththeEngineeringContractorsAssociationopinionindetail.]

ThecourtfirstnotedthattheEleventhCircuithasrecognizedthatdisparityindicesgreaterthan80percentaregenerallynotconsideredindicationsofdiscrimination.Id.at1368,citingEng’gContractorsAssoc.,122F.3dat914.ThecourtthenconsideredtheCounty’spre‐1994disparitystudy(the“Brimmer‐MarshallStudy”)andfoundthatitfailedtoestablishastrongbasisinevidencenecessarytosupporttheM/FBEprogram.Id.at1368.


First,thecourtfoundthatthestudyrestedontheinaccurateassumptionthatastatisticalshowingofunderutilizationofminoritiesinthemarketplaceasawholewassufficientevidenceofdiscrimination.Id.at1369.ThecourtcitedCityofRichmondv.J.A.CrosonCo.,488U.S.496(1989)forthepropositionthatdiscriminationmustbefocusedoncontractingbytheentitythatisconsideringthepreferenceprogram.Id.BecausetheBrimmer‐MarshallStudycontainednostatisticalevidenceofdiscriminationbytheCountyintheawardofcontracts,thecourtfoundtheCountymustshowthatitwasa“passiveparticipant”indiscriminationbytheprivatesector.Id.ThecourtfoundthattheCountycouldtakeremedialactionifithadevidencethatprimecontractorsweresystematicallyexcludingminority‐ownedbusinessesfromsubcontractingopportunities,orifithadevidencethatitsspendingpracticesare“exacerbatingapatternofpriordiscriminationthatcanbeidentifiedwithspecificity.”Id.However,thecourtfoundthattheBrimmer‐MarshallStudycontainednosuchdata.Id.

Second,theBrimmer‐Marshallstudycontainednoregressionanalysistoaccountforrelevantvariables,suchasfirmsize.Id.at1369‐70.Attrial,Dr.Marshallsubmittedafollow‐uptotheearlierdisparitystudy.However,thecourtfoundthestudyhadthesameflawinthatitdidnotcontainaregressionanalysis.Id.ThecourtthusconcludedthattheCountyfailedtopresenta“strongbasisinevidence”ofdiscriminationtojustifytheCounty’sracialandethnicpreferences.Id.

ThecourtnextconsideredtheCounty’spost‐1994disparitystudy.Id.at1371.Thestudyfirstsoughttodeterminetheavailabilityandutilizationofminority‐andfemale‐ownedfirms.Id.Thecourtexplained:

Two methods may be used to calculate availability: (1) bid analysis; or (2)bidder analysis. In a bid analysis, the analyst counts the number of bidssubmittedbyminorityorfemalefirmsoveraperiodoftimeanddividesitbythetotal number of bids submitted in the same period. In a bidder analysis, theanalyst counts the number of minority or female firms submitting bids anddivides it by the total number of firmswhich submitted bids during the sameperiod.

Id.ThecourtfoundthattheinformationprovidedinthestudywasinsufficienttoestablishafirmbasisinevidencetosupporttheM/FBEprogram.Id.at1371‐72.Thecourtalsofounditsignificanttoconductaregressionanalysistoshowwhetherthedisparitieswereeitherduetodiscriminationorotherneutralgrounds.Id.at1375‐76.

TheplaintiffandtheCountysubmittedstatisticalstudiesofdatacollectedbetween1994and1997.Id.at1376.ThecourtfoundthatthedatawerepotentiallyskewedduetotheoperationoftheM/FBEprogram.Id.Additionally,thecourtfoundthattheCounty’sstandarddeviationanalysisyieldednon‐statisticallysignificantresults(notingtheEleventhCircuithasstatedthatscientistsconsiderafindingoftwostandarddeviationssignificant).Id.(internalcitationsomitted).

ThecourtconsideredtheCounty’sanecdotalevidence,andquotedEngineeringContractorsAssociationforthepropositionthat“[a]necdotalevidencecanplayanimportantroleinbolsteringstatisticalevidence,butthatonlyintherarecasewillanecdotalevidencesuffice


standingalone.”Id.,quotingEng’gContractorsAss’n,122F.3dat907.TheBrimmer‐MarshallStudycontainedanecdotalevidence.Id.at1379.Additionally,theCountyheldhearingsbutafterreviewingthetaperecordingsofthehearings,thecourtconcludedthatonlytwoindividualstestifiedtodiscriminationbytheCounty;oneofthemcomplainedthattheCountyusedtheM/FBEprogramtoonlybenefitAfricanAmericans.Id.Thecourtfoundthemostcommoncomplaintsconcernedbarriersinbonding,financing,andinsuranceandslowpaymentbyprimecontractors.Id.ThecourtconcludedthattheanecdotalevidencewasinsufficientinandofitselftoestablishafirmbasisfortheM/FBEprogram.Id.

ThecourtalsoappliedanarrowtailoringanalysisoftheM/FBEprogram.“TheEleventhCircuithasmadeitclearthattheessenceofthisinquiryiswhetherracialpreferenceswereadoptedonlyasa‘lastresort.’”Id.at1380,citingEng’gContractorsAssoc.,122F.3dat926.ThecourtcitedtheEleventhCircuit’sfour‐parttestandconcludedthattheCounty’sM/FBEprogramfailedonseveralgrounds.First,thecourtfoundthatarace‐basedproblemdoesnotnecessarilyrequirearace‐basedsolution.“Ifarace‐neutralremedyissufficienttocurearace‐basedproblem,thenarace‐consciousremedycanneverbenarrowlytailoredtothatproblem.”Id.,quotingEng’gContractorsAss’n,122F.3dat927.ThecourtfoundthattherewasnoevidenceofdiscriminationbytheCounty.Id.at1380.

ThecourtfoundthateventhoughamajorityoftheCommissionersontheCountyBoardwereAfricanAmerican,theCountyhadcontinuedtheprogramfordecades.Id.ThecourtheldthattheCountyhadnotseriouslyconsideredrace‐neutralmeasures:

ThereisnoevidenceintherecordthatanyCommissionerhasofferedaresolutionduringthisperiodsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity.ThereisnoevidenceintherecordofanyproposalbythestaffofFultonCountyofsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity.TherehasbeennoevidenceofferedofanydebatewithintheCommissionaboutsubstitutingaprogramofrace‐neutralmeasuresasanalternativetonumericalset‐asidesbaseduponraceandethnicity….Id.

ThecourtfoundthattherandominclusionofethnicandracialgroupswhohadnotsuffereddiscriminationbytheCountyalsomitigatedagainstafindingofnarrowtailoring.Id.ThecourtfoundthattherewasnoevidencethattheCountyconsideredrace‐neutralalternativesasanalternativetorace‐consciousmeasuresnorthatrace‐neutralmeasureswereinitiatedandfailed.Id.at1381.ThecourtconcludedthatbecausetheM/FBEprogramwasnotadoptedasalastresort,itfailedthenarrowtailoringtest.Id.

Additionally,thecourtfoundthattherewasnosubstantialrelationshipbetweenthenumericalgoalsandtherelevantmarket.Id.ThecourtrejectedtheCounty’sargumentthatitsprogramwaspermissiblebecauseitset“goals”asopposedto“quotas,”becausetheprograminEngineeringContractorsAssociationalsoutilized“goals”andwasstruckdown.Id.

PertheM/FBEprogram’sgender‐basedpreferences,thecourtfoundthattheprogramwassufficientlyflexibletosatisfythesubstantialrelationshipprongoftheintermediatescrutinystandard.Id.at1383.However,thecourtheldthattheCountyfailedtopresent“sufficient


probativeevidence”ofdiscriminationnecessarytosustainthegender‐basedpreferencesportionoftheM/FBEprogram.Id.

ThecourtfoundtheCounty’sM/FBEprogramunconstitutionalandenteredapermanentinjunctioninfavoroftheplaintiff.Id.Onappeal,theEleventhCircuitaffirmedpercuriam,statingonlythatitaffirmedonthebasisofthedistrictcourt’sopinion.Websterv.FultonCounty,Georgia,218F.3d1267(11thCir.2000).

23. Associated Gen. Contractors v. Drabik, 50 F. Supp.2d 741 (S.D. Ohio 1999)

ThedistrictcourtinthiscasepointedoutthatithadstruckdownOhio’sMBEstatutethatprovidedrace‐basedpreferencesintheawardofstateconstructioncontractsin1998.50F.Supp.2dat744.Twoweeksearlier,thedistrictcourtfortheNorthernDistrictofOhio,likewise,foundthesameOhiolawunconstitutionalwhenitwasreliedupontosupportastatemandatedset‐asideprogramadoptedbytheCuyahogaCommunityCollege.SeeF.BuddieContracting,Ltd.v.CuyahogaCommunityCollegeDistrict,31F.Supp.2d571(N.D.Ohio1998).Id.at741.

Thestatedefendantsappealedthiscourt’sdecisiontotheUnitedStatescourtofAppealsfortheSixthCircuit.Id.Thereafter,theSupremeCourtofOhioheldinthecaseofRitcheyProduce,Co.,Inc.v.TheStateofOhio,DepartmentofAdministrative,704N.E.2d874(1999),thattheOhiostatute,whichprovidedrace‐basedpreferencesinthestate’spurchaseofnonconstruction‐relatedgoodsandservices,wasconstitutional.Id.at744.

Whilethiscourt’sdecisionrelatedtoconstructioncontractsandtheOhioSupremeCourt’sdecisionrelatedtoothergoodsandservices,thedecisionscouldnotbereconciled,accordingtothedistrictcourt.Id.at744.Subsequently,thestatedefendantsmovedthiscourttostayitsorderofNovember2,1998inlightoftheOhioStateSupremeCourt’sdecisioninRitcheyProduce.ThedistrictcourttooktheopportunityinthiscasetoreconsideritsdecisionofNovember2,1998,andtothereasonsgivenbytheSupremeCourtofOhioforreachingtheoppositeresultinRitcheyProduce,anddecideinthiscasethatitsoriginaldecisionwascorrect,andthatastayofitsorderwouldonlyservetoperpetuatea“blatantlyunconstitutionalprogramofrace‐basedbenefits.Id.at745.

Inthisdecision,thedistrictcourtreaffirmeditsearlierholdingthattheStateofOhio’sMBEprogramofconstructioncontractawardsisunconstitutional.ThecourtcitedtoF.BuddieContractingv.CuyahogaCommunityCollege,31F.Supp.2d571(N.D.Ohio1998),holdingasimilarlocalOhioprogramunconstitutional.ThecourtrepudiatedtheOhioSupremeCourt’sholdinginRitcheyProduce,707N.E.2d871(Ohio1999),whichheldthattheStateofOhio’sMBEprogramasappliedtothestate’spurchaseofnon‐construction‐relatedgoodsandserviceswasconstitutional.ThecourtfoundtheevidencetobeinsufficienttojustifytheOhioMBEprogram.ThecourtheldthattheprogramwasnotnarrowlytailoredbecausetherewasnoevidencethattheStatehadconsideredarace‐neutralalternative.

Strict Scrutiny.ThedistrictcourtheldthattheSupremeCourtofOhiodecisioninRitcheyProducewaswronglydecidedforthefollowingreasons:


(1)Ohio’sMBEprogramofrace‐basedpreferencesintheawardofstatecontractswasunconstitutionalbecauseitisunlimitedinduration.Id.at745.

(2)aprogramofrace‐basedbenefitscannotbesupportedbyevidenceofdiscriminationwhichisover20yearsold.Id.

(3)thestateSupremeCourtfoundthattherewasaseverenumericalimbalanceintheamountofbusinesstheStatedidwithminority‐ownedenterprises,basedonitsuncriticalacceptanceofessentially“worthlesscalculationscontainedinatwenty‐oneyear‐oldreport,whichmiscalculatedthepercentageofminority‐ownedbusinessesinOhioandmisrepresenteddataonthepercentageofstatepurchasecontractstheyhadreceived,allofwhichwaseasilydetectablebyexaminingthedatacitedbytheauthorsofthereport.”Id.at745.

(4)ThestateSupremeCourtfailedtorecognizethattheincorrectlycalculatedpercentageofminority‐ownedbusinessesinOhio(6.7percent)bearsnorelationshiptothe15percentset‐asidegoaloftheOhioAct.Id.

(5)thestateSupremeCourtappliedanincorrectruleoflawwhenitannouncedthatOhio’sprogrammustbeupheldunlessitisclearlyunconstitutionalbeyondareasonabledoubt,whereasaccordingtothedistrictcourtinthiscase,theSupremeCourtoftheUnitedStateshassaidthatallracialclassclassificationsarehighlysuspectandmustbesubjectedtostrictjudicialscrutiny.Id.

(6)theevidenceofpastdiscriminationthattheOhioGeneralAssemblyhadin1980didnotprovideafirmbasisinevidenceforarace‐basedremedy.Id.

Thus,thedistrictcourtdeterminedtheevidencecouldnotsupportacompellingstate‐interestforrace‐basedpreferencesforthestateofOhioMBEAct,inpartbasedonthefactevidenceofpastdiscriminationwasstaleandtwentyyearsold,andthestatisticalanalysiswasinsufficientbecausethestatedidnotknowhowmanyMBE’sintherelevantmarketarequalifiedtoundertakeprimeorsubcontractingworkinpublicconstructioncontracts.Id.at763‐771.ThestatisticalevidencewasfatallyflawedbecausetherelevantuniverseofminoritybuisnessesisnotallminoritybusinessesinthestateofOhio,butonlythosewillingandabletoenterintocontractswiththestateofOhio.Id.at761.Inthecaseofset‐asideprograminstateconstruction,therelevantuniverseisminority‐ownedconstructionfirmswillingandabletoenterintostateconstructioncontracts.Id.

Narrow Tailoring.Thecourtaddressedthesecondprongofthestrictscrutinyanalysis,andfoundthattheOhioMBEprogramatissuewasnotnarrowlytailored.Thecourtconcludedthatthestatecouldnotsatisfythefourfactorstobeconsideredindeterminingwhetherrace‐consciousremediesareappropriate.Id.at763.First,thecourtstatedthattherewasnoconsiderationofrace‐neutralalternativestoincreaseminorityparticipationinstatecontractingbeforeresortingto“race‐basedquotas.”Id.at763‐764.Thecourtheldthatfailuretoconsiderrace‐neutralmeanswasfataltotheset‐asideprograminCroson,andthefailureoftheStateofOhiotoconsiderrace‐neutralmeansbeforeadoptingtheMBEActin1980likewise“doomsOhio’sprogramofrace‐basedquotas”.Id.at765.


Second,thecourtfoundtheOhioMBEActwasnotflexible.Thecourtstatedthatinsteadofallowingflexibilitytoameliorateharmfuleffectsoftheprogram,theimprecisionofthestatutorygoalshasbeenusedtojustifybureaucraticdecisionswhichincreaseitsimpactonnon‐minoritybusiness.”Id.at765.ThecourtsaidthewaiversystemforprimecontractsfocusessolelyontheavailabilityofMBEs.Id.at766.Thecourtnotedtheawardingagencymayremovethecontractfromthesetasideprogramandopenitupforbiddingbynon‐minoritycontractorsifnocertifiedMBEsubmitsabid,orifallbidssubmittedbyMBEsareconsideredunacceptablyhigh.Id.But,ineitherevent,thecourtpointedouttheagencyisthenrequiredtosetasideadditionalcontractstosatisfythenumericalquotarequiredbythestatute.Id.ThecourtconcludedthatthereisnoconsiderationgiventowhethertheparticularMBEseekingaracialpreferencehassufferedfromtheeffectsofpastdiscriminationbythestateorprimecontractors.Id.

Third,thecourtfoundtheOhioMBEActwasnotappropriatelylimitedsuchthatitwillnotlastlongerthanthediscriminatoryeffectsitwasdesignedtoeliminate.Id.at766.Thecourtstatedthe1980MBEActisunlimitedinduration,andthereisnoevidencethestatehaseverreconsideredwhetheracompellingstateinterestexiststhatwouldjustifythecontinuationofarace‐basedremedyatanytimeduringthetwodecadestheActhasbeenineffect.Id.

Fourth,thecourtfoundthegoalsoftheOhioMBEActwerenotrelatedtotherelevantmarketandthattheActfailedthiselementofthe“narrowlytailored”requirementofstrictscrutiny.Id.at767‐768.Thecourtsaidthegoalof15percentfarexceedsthepercentageofavailableminorityfirms,andthusbearsnorelationshiptotherelevantmarket.Id.

Fifth,thecourtfoundtheconclusionoftheOhioSupremeCourtthattheburdensimposedonnon‐MBEsbyvirtueoftheset‐asiderequirementswererelativelylightwasincorrect.Id.at768.Thecourtconcludednon‐minoritycontractorsinvarioustradeswereeffectivelyexcludedfromtheopportunitytobidonanyworkfromlargestateagencies,departments,andinstitutionssolelybecauseoftheirrace.Id.at678.

Sixth,thecourtfoundtheOhioMBEActprovidedrace‐basedbenefitsbasedonarandominclusionofminoritygroups.Id.at770‐771.Thecourtstatedtherewasnoevidenceaboutthenumberofeachracialorethnicgrouportherespectivesharesofthetotalcapitalimprovementexpenditurestheyreceived.Id.at770.Noneofthestatisticalinformation,thecourtsaid,brokedownthepercentageofallfirmsthatwereownedbyspecificminoritygroupsorthedollaramountsofcontractsreceivedbyfirmsinspecificminoritygroups.Id.Thecourt,thus,concludedthattheOhioMBEActincludedminoritygroupsrandomlywithoutanyspecificevidencethatanygroupsufferedfromdiscriminationintheconstructionindustryinOhio.Id.at771.

Conclusion.Thecourtthusdeniedthemotionofthestatedefendantstostaythecourt’spriororderholdingunconstitutionaltheOhioMBEActpendingtheappealofthecourt’sorder.Id.at771.Thisopinionunderscoredthatgovernmentsmustshowseveralfactorstodemonstratenarrowtailoring:(1)thenecessityforthereliefandtheefficacyofalternativeremedies,(2)flexibilityanddurationoftherelief,(3)relationshipofnumericalgoalstotherelevantlabormarket,and(4)impactofthereliefontherightsofthirdparties.ThecourtheldtheOhioMBEprogramfailedtosatisfythistest.


24. Phillips & Jordan, Inc. v. Watts, 13 F. Supp.2d 1308 (N.D. Fla. 1998)

ThiscaseisinstructivebecauseitaddressedachallengetoastateandlocalgovernmentMBE/WBE‐typeprogramandconsideredtherequisiteevidentiarybasisnecessarytosupporttheprogram.InPhillips&Jordan,thedistrictcourtfortheNorthernDistrictofFloridaheldthattheFloridaDepartmentofTransportation’s(“FDOT”)programof“settingaside”certainhighwaymaintenancecontractsforAfricanAmerican‐andHispanic‐ownedbusinessesviolatedtheEqualProtectionClauseoftheFourteenthAmendmenttotheUnitedStatesConstitution.Thepartiesstipulatedthattheplaintiff,anon‐minoritybusiness,hadbeenexcludedinthepastandmaybeexcludedinthefuturefromcompetingforcertainhighwaymaintenancecontracts“setaside”forbusinessenterprisesownedbyHispanicandAfricanAmericanindividuals.ThecourtheldthattheevidenceofstatisticaldisparitieswasinsufficienttosupporttheFloridaDOTprogram.

ThedistrictcourtpointedoutthatFloridaDOTdidnotclaimthatithadevidenceofintentionaldiscriminationintheawardofitscontracts.ThecourtstatedthattheessenceofFDOT’sclaimwasthatthetwo‐yeardisparitystudyprovidedevidenceofadisparitybetweentheproportionofminoritiesawardedFDOTroadmaintenancecontractsandaportionoftheminorities“supposedlywillingandabletodoroadmaintenancework,”andthatFDOTdidnotitselfengageinanyracialorethnicdiscrimination,soFDOTmusthavebeenapassiveparticipantin“somebody’s”discriminatorypractices.

SinceitwasagreedinthecasethatFDOTdidnotdiscriminateagainstminoritycontractorsbiddingonroadmaintenancecontracts,thecourtfoundthattherecordcontainedinsufficientproofofdiscrimination.ThecourtfoundtheevidenceinsufficienttoestablishactsofdiscriminationagainstAfricanAmerican‐andHispanic‐ownedbusinesses.

Thecourtraisedquestionsconcerningthechoiceanduseofthestatisticalpoolofavailablefirmsrelieduponbythedisparitystudy.ThecourtexpressedconcernaboutwhetheritwasappropriatetouseCensusdatatoanalyzeanddeterminewhichfirmswereavailable(qualifiedand/orwillingandable)tobidonFDOTroadmaintenancecontracts.

F. Recent Decisions Involving the Federal DBE Program and its Implementation by State and Local Governments

ThereareseveralrecentandpendingcasesinvolvingchallengestotheUnitedStatesFederalDBEProgramanditsimplementationbythestatesandtheirgovernmentalentitiesforfederally‐fundedprojects.Thesecasescouldhaveasignificantimpactonthenatureandprovisionsofcontractingandprocurementonfederally‐fundedprojects,includingandrelatingtotheutilizationofDBEs.Inaddition,thesecasesprovideaninstructiveanalysisoftherecentapplicationofthestrictscrutinytesttoMBE/WBE‐andDBE‐typeprograms.


Recent Decisions in Federal Circuit Courts of Appeal

1. Mountain West Holding Co., Inc. v. The State of Montana, Montana DOT, et al., 2017 WL 2179120 (9th Cir. May 16, 2017), Memorandum opinion, (Not for Publication) United States Court of Appeals for the Ninth Circuit, May 16, 2017, Docket Nos. 14‐26097 and 15‐35003, dismissing in part, reversing in part and remanding the U.S. District Court decision at 2014 WL 6686734 (D. Mont. Nov. 26, 2014)

Note: TheNinthCircuitCourtofAppealsMemorandumprovides:“ThisdispositionisnotappropriateforpublicationandisnotprecedentexceptasprovidedbyNinthCircuitRule36‐3.”

Introduction. MountainWestHoldingCompanyinstallssigns,guardrails,andconcretebarriersonhighwaysinMontana.ItcompetestowinsubcontractsfromprimecontractorswhohavecontractedwiththeState.Itisnotownedandcontrolledbywomenorminorities.Someofitscompetitorsaredisadvantagedbusinessenterprises(DBEs)ownedbywomenorminorities.InthiscaseitclaimsthatMontana’sDBEgoal‐settingprogramunconstitutionallyrequiredprimecontractorstogivepreferencetotheseminorityorfemale‐ownedcompetitors,whichMountainWestHoldingsCompanyarguesisaviolationoftheEqualProtectionClause,42U.S.C.§1983andTitleVIoftheCivilRightsActof1964,42U.S.C.§2000d,etseq.

Factual and procedural background.InMountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.,2014WL6686734(D.Mont.Nov.26,2014);CaseNo.1:13‐CV‐00049‐DLC,UnitedStatesDistrictCourtfortheDistrictofMontana,BillingsDivision,plaintiffMountainWestHoldingCo.,Inc.(“MountainWest”),allegeditisacontractorthatprovidesconstruction‐specifictrafficplanningandstaffingforconstructionprojectsaswellastheinstallationofsigns,guardrails,andconcretebarriers.MountainWestsuedtheMontanaDepartmentofTransportation(“MDT”)andtheStateofMontana,challengingtheirimplementationoftheFederalDBEProgram.MountainWestbroughtthisactionallegingviolationoftheEqualProtectionClauseoftheFourteenthAmendmentoftheUnitedStatesConstitution,TitleVIoftheCivilRightsAct,42USC§2000(d)(7),and42USC§1983.

FollowingtheNinthCircuit’s2005decisioninWesternStatesPavingv.WashingtonDOT,etal.,MDTcommissionedadisparitystudywhichwascompletedin2009.MDTutilizedtheresultsofthedisparitystudytoestablishitsoverallDBEgoal.MDTdeterminedthattomeetitsoverallgoal,itwouldneedtoimplementrace‐consciouscontractspecificgoals.Baseduponthedisparitystudy,MountainWestallegestheStateofMontanautilizedrace,nationalorigin,andgender‐consciousgoalsinhighwayconstructioncontracts.MountainWestclaimstheStatedidnothaveastrongbasisinevidencetoshowtherewaspastdiscriminationinthehighwayconstructionindustryinMontanaandthattheimplementationofrace,gender,andnationaloriginpreferenceswerenecessaryorappropriate.MountainWestalsoallegesthatMontanahasinstitutedpoliciesandpracticeswhichexceedtheUnitedStatesDepartmentofTransportationDBErequirements.

MountainWestassertsthatthe2009studyconcludedall“relevant”minoritygroupswereunderutilizedin“professionalservices”andAsianPacificAmericansandHispanicAmericanswereunderutilizedin“businesscategoriescombined,”butitalsoconcludedthatall“relevant”


minoritygroupsweresignificantlyoverutilizedinconstruction.MountainWestthusallegesthatalthoughthedisparitystudydemonstratesthatDBEgroupsare“significantlyoverrepresented”inthehighwayconstructionfield,MDThasestablishedpreferencesforDBEconstructionsubcontractorfirmsovernon‐DBEconstructionsubcontractorfirmsintheawardofcontracts.

MountainWestalsoassertsthattheMontanaDBEProgramdoesnothaveavalidstatisticalbasisfortheestablishmentorinclusionofrace,nationalorigin,andgenderconsciousgoals,thatMDTinappropriatelyreliesuponthe2009studyasthebasisforitsDBEProgram,andthatthestudyisflawed.MountainWestclaimstheMontanaDBEProgramisnotnarrowlytailoredbecauseitdisregardslargedifferencesinDBEfirmutilizationinMDTcontractsasamongthreedifferentcategoriesofsubcontractors:businesscategoriescombined,construction,andprofessionalservices;theMDTDBEcertificationprocessdoesnotrequiretheapplicanttospecifyanyspecificracialorethnicprejudiceorculturalbiasthathadanegativeimpactuponhisorherbusinesssuccess;andthecertificationprocessdoesnotrequiretheapplicanttocertifythatheorshewasdiscriminatedagainstintheStateofMontanainhighwayconstruction.

MountainWestandtheStateofMontanaandtheMDTfiledcrossMotionsforSummaryJudgment.MountainWestassertsthattherewasnoevidencethatallrelevantminoritygroupshadsuffereddiscriminationinMontana’stransportationcontractingindustrybecause,whilethestudyhaddeterminedthereweresubstantialdisparitiesintheutilizationofallminoritygroupsinprofessionalservicescontracts,therewasnodisparityintheutilizationofminoritygroupsinconstructioncontracts.

AGC, San Diego v. California DOT and Western States Paving Co. v. Washington DOT.TheNinthCircuitandthedistrictcourtinMountainWestappliedthedecisioninWesternStates,407F.3d983(9thCir.2005),andthedecisioninAGC,SanDiegov.CaliforniaDOT,713F.3d1187(9thCir.2013)asestablishingthelawtobefollowedinthiscase.ThedistrictcourtnotedthatinWesternStates,theNinthCircuitheldthatastate’simplementationoftheFederalDBEProgramcanbesubjecttoanas‐appliedconstitutionalchallenge,despitethefacialvalidityoftheFederalDBEProgram.2014WL6686734at*2(D.Mont.November26,2014).TheNinthCircuitandthedistrictcourtstatedtheNinthCircuithasheldthatwhetherastate’simplementationoftheDBEProgram“isnarrowlytailoredtofurtherCongress’sremedialobjectivedependsuponthepresenceorabsenceofdiscriminationintheState’stransportationcontractingindustry.”MountainWest,2014WL6686734at*2,quotingWesternStates,at997‐998,andMountainWest,2017WL2179120at*2(9thCir.May16,2017)Memorandum,May16,2017,at5‐6,quotingAGC,SanDiegov.CaliforniaDOT,713F.3d1187,1196.TheNinthCircuitinMountainWestalsopointedoutithadheldthat“evenwhendiscriminationispresentwithinaState,aremedialprogramisonlynarrowlytailoredifitsapplicationislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”MountainWest,2017WL2179120at*2,Memorandum,May16,2017,at6,and2014WL6686734at*2,quotingWesternStates,407F.3dat997‐999.

MDT study.MDTobtainedafirmtoconductadisparitystudythatwascompletedin2009.ThedistrictcourtinMountainWeststatedthattheresultsofthestudyindicatedsignificantunderutilizationofDBEsinallminoritygroupsin“professionalservices”contracts,significantunderutilizationofAsianPacificAmericansandHispanicAmericansin“businesscategoriescombined,”slightunderutilizationofnonminoritywomenin“businesscategoriescombined,”


andoverutilizationofallgroupsinsubcontractor“construction”contracts.MountainWest,2014WL6686734at*2.

Inadditiontothestatisticalevidence,the2009disparitystudygatheredanecdotalevidencethroughsurveysandothermeans.ThedistrictcourtstatedtheanecdotalevidencesuggestedvariousformsofdiscriminationexistedwithinMontana’stransportationcontractingindustry,includingevidenceofanexclusive“goodoleboynetwork”thatmadeitdifficultforDBEstobreakintothemarket.Id.at*3.Thedistrictcourtsaidthatdespitethesefindings,theconsultingfirmrecommendedthatMDTcontinuetomonitorDBEutilizationwhileemployingonlyrace‐neutralmeanstomeetitsoverallgoal.Id.TheconsultingfirmrecommendedthatMDTconsidertheuseofrace‐consciousmeasuresifDBEutilizationdecreasedordidnotimprove.

Montanafollowedtherecommendationsprovidedinthestudy,andcontinuedusingonlyrace‐neutralmeansinitsefforttoaccomplishitsoverallgoalforDBEutilization.Id.Basedonthestatisticalanalysisprovidedinthestudy,MontanaestablishedanoverallDBEutilizationgoalof5.83percent.Id.

Montana’s DBE utilization after ceasing the use of contract goals.Thedistrictcourtfoundthatin2006,MontanaachievedaDBEutilizationrateof13.1percent,however,afterMontanaceasedusingcontractgoalstoachieveitsoverallgoal,therateofDBEutilizationdeclinedsharply.2014WL6686734at*3.Theutilizationratedropped,accordingtothedistrictcourt,to5percentin2007,3percentin2008,2.5percentin2009,0.8percentin2010,andin2011,itwas2.8percentId.Inresponsetothisdecline,forfiscalyears2011‐2014,thedistrictcourtsaidMDTemployedcontractgoalsoncertainUSDOTcontractsinordertoachieve3.27percentagepointsofMontana’soverallgoalof5.83percentDBEutilization.

MDTthenconductedandpreparedanewGoalMethodologyforDBEutilizationforfederalfiscalyears2014‐2016.Id.USDOTapprovedthenewandcurrentgoalmethodologyforMDT,whichdoesnotprovidefortheuseofcontractgoalstomeettheoverallgoal.Id.Thus,thenewoverallgoalistobemadeentirelythroughtheuseofrace‐neutralmeans.Id.

Mountain West’s claims for relief.MountainWestsoughtdeclaratoryandinjunctiverelief,includingprospectiverelief,againsttheindividualdefendants,andsoughtmonetarydamagesagainsttheStateofMontanaandtheMDTforallegedviolationofTitleVI.2014WL6686734at*3.MountainWest’sclaimformonetarydamagesisbasedonitsclaimthatonthreeoccasionsitwasalow‐quotingsubcontractortoaprimecontractorsubmittingabidtotheMDTonaprojectthatutilizedcontractgoals,andthatdespitebeingalow‐quotingbidder,MountainWestwasnotawardedthecontract.Id.MountainWestbringsanas‐appliedchallengetoMontana’sDBEprogram.Id.

The two‐prong test to demonstrate that a DBE program is narrowly tailored.TheCourt,citingAGC,SanDiegov.CaliforniaDOT,713F.3d1187,1196,statedthatunderthetwo‐prongtestestablishedinWesternStates,inordertodemonstratethatitsDBEprogramisnarrowlytailored,(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbelimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.MountainWest,2017WL2179120at*2,Memorandum,May16,2017,at6‐7.


District Court Holding in 2014 and the Appeal.ThedistrictcourtgrantedsummaryjudgmenttotheState,andMountainWestappealed.SeeMountainWestHoldingCo.,Inc.v.TheStateofMontana,MontanaDOT,etal.2014WL6686734(D.Mont.Nov.26,2014),dismissedinpart,reversedinpart,andremanded,U.S.CourtofAppeals,NinthCircuit,DocketNos.14‐36097and15‐35003,Memorandum2017WL2179120at**1‐4(9thCir.May16,2017).Montanaalsoappealedthedistrictcourt’sthresholddeterminationthatMountainWesthadaprivaterightofactionunderTitleVI,anditappealedthedistrictcourt’sdenialoftheState’smotiontostrikeanexpertreportsubmittedinsupportofMountainWest’smotion.

Ninth Circuit Holding.TheNinthCircuitCourtofAppealsinitsMemornadumopiniondismissedMountainWest’sappealasmoottotheextentMountainWestpursuesequitableremedies,affirmedthedistrictcourt’sdeterminationthatMountainWesthasaprivaterighttoenforceTitleVI,affirmedthedistrictcourt’sdecisiontoconsiderthedisputedexpertreportbyMountainWest’sexpertwitness,andreversedtheordergrantingsummaryjudgmenttotheState.2017WL2179120at**1‐4(9thCir.May16,2017),U.S.CourtofAppeals,NinthCircuit,DocketNos.14‐36097and15‐35003,Memorandum,at3,5,11.

Mootness.TheNinthCircuitfoundthatMontanadoesnotcurrentlyemploygender‐orrace‐consciousgoals,andthedataitrelieduponasjustificationforitspreviousgoalsarenowseveralyearsold.TheCourtthusheldthatMountainWest’sclaimsforinjunctiveanddeclaratoryreliefarethereforemoot.MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at4.

TheCourtalsoheld,however,thatMountainWest’sTitleVIclaimfordamagesisnotmoot.2017WL2179120at**1‐2.TheCourtstatedthataplaintiffmayseekdamagestoremedyviolationsofTitleVI,see42U.S.C.§2000d‐7(a)(1)‐(2);andMountainWesthassoughtdamages.Claimsfordamages,accordingtotheCourt,donotbecomemootevenifchangestoachallengedprogrammakeclaimsforprospectivereliefmoot.Id.

Theappeal,theNinthCircuitheld,isthereforedismissedwithrespecttoMountainWest’sclaimsforinjunctiveanddeclaratoryrelief;andonlytheclaimfordamagesunderTitleVIremainsinthecase.MountainWest,2017WL2179120at**1(9thCir.),Memorandum,May16,2017,at4.

Private Right of Action and Discrimination under Title VI.TheCourtconcludedforthereasonsfoundinthedistrictcourt’sorderthatMountainWestmaystateaprivateclaimfordamagesagainstMontanaunderTitleVI.Id.at*2.ThedistrictcourthadgrantedsummaryjudgmenttoMontanaonMountainWest’sclaimsfordiscriminationunderTitleVI.

Montanadoesnotdisputethatitsprogramtookraceintoaccount.TheNinthCircuitheldthatclassificationsbasedonracearepermissible“onlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterests.”MountainWest,2017WL2179120(9thCir.)at*2,Memorandum,May16,2017,at6‐7.W.StatesPaving,407F.3dat990(quotingAdarandConstructors,Inc.v.Peña,515U.S.200,227(1995)).AsinWesternStatesPaving,theCourtappliedthesametesttoclaimsofunconstitutionaldiscriminationanddiscriminationinviolationofTitleVI.MountainWest,2017WL2179120at*2,n.2,Memorandum,May16,2017,at6,n.2;see,407F.3dat987.


Montana,theCourtfoundbearstheburdentojustifyanyracialclassifications.Id.Inanas‐appliedchallengetoastate’sDBEcontractingprogram,“(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbe‘limitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.’”MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at6‐7,quoting,Assoc.Gen.ContractorsofAm.v.Cal.Dep’tofTransp.,713F.3d1187,1196(9thCir.2013)(quotingW.StatesPaving,407F.3dat997‐99).Discriminationmaybeinferredfrom“asignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.”MountainWest,2017WL2179120at*2(9thCir.),Memorandum,May16,2017,at6‐7,quoting,CityofRichmondv.J.A.CrosonCo.,488U.S.469,509(1989).

Here,thedistrictcourtheldthatMontanahadsatisfieditsburden.Inreachingthisconclusion,thedistrictcourtreliedonthreetypesofevidenceofferedbyMontana.First,itcitedastudy,whichreporteddisparitiesinprofessionalservicescontractawardsinMontana.Second,thedistrictcourtnotedthatparticipationbyDBEsdeclinedafterMontanaabandonedrace‐consciousgoalsintheyearsfollowingthedecisioninWesternStatesPaving,407F.3d983.Third,thedistrictcourtcitedanecdotesofa“goodol’boys”networkwithintheState’scontractingindustry.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at7.

TheNinthCircuitreversedthedistrictcourtandheldthatsummaryjudgmentwasimproperinlightofgenuinedisputesofmaterialfactastothestudy’sanalysis,andbecausethesecondtwocategoriesofevidencewereinsufficienttoproveahistoryofdiscrimination.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at7.

Disputes of fact as to study.MountainWest’sexperttestifiedthatthestudyreliedonseveralquestionableassumptionsandanopaquemethodologytoconcludethatprofessionalservicescontractswereawardedonadiscriminatorybasis.Id.at*3.TheNinthCircuitpointedoutafewexamplesthatitfoundillustratedtheareasinwhichtherearedisputesoffactastowhetherthestudysufficientlysupportedMontana’sactions:

1. NinthCircuitstatedthatitscasesrequirestatestoascertainwhetherlower‐than‐expectedDBEparticipationisattributabletofactorsotherthanraceorgender.W.StatesPaving,407F.3dat1000‐01.MountainWestarguesthatthestudydidnotexplainwhetherorhowitaccountedforagivenfirm’ssize,age,geography,orothersimilarfactors.Thereport’sauthorswereunabletoexplaintheiranalysisindepositionsforthiscase.Indeed,theCourtnoted,evenMontanaappearstohavequestionedthevalidityofthestudy’sstatisticalresultsMountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at8.

2. ThestudyreliedonatelephonesurveyofasampleofMontanacontractors.MountainWestarguedthat(a)itisunclearhowthestudyselectedthatsample,(b)onlyasmallpercentageofsurveyedcontractorsrespondedtoquestions,and(c)itisunclearwhetherresponsivecontractorswererepresentativeofnonresponsivecontractors.2017WL2179120at*3(9thCir.May16,2017),Memorandumat8‐9.

3. Thestudyreliedonverysmallsamplesizesbutdidnotestsforstatisticalsignificance,andthestudyconsultantadmittedthat“someofthepopulationsampleswereverysmalland


theresultmaynotbesignificantstatistically.”2017WL2179120at*3(9thCir.May16,2017),Memorandumat8‐9.

4. MountainWestarguedthatthestudygaveequalweighttoprofessionalservicescontractsandconstructioncontracts,butprofessionalservicescontractscomposedlessthantenpercentoftotalcontractvolumeintheState’stransportationcontractingindustry.2017WL2179120at*3(9thCir.May16,2017),Memorandumat9.

5. MountainWestarguedthatMontanaincorrectlycomparedtheproportionofavailablesubcontractorstotheproportionofprimecontractdollarsawarded.Thedistrictcourtdidnotaddressthiscriticismorexplainwhythestudy’scomparisonwasappropriate.2017WL2179120at*3(9thCir.May16,2017),Memorandumat9.

The post‐2005 decline in participation by DBEs.TheNinthCircuitwasunabletoaffirmthedistrictcourt’sorderinrelianceonthedecreaseinDBEparticipationafter2005.InWesternStatesPaving,itwasheldthatadeclineinDBEparticipationafterrace‐andgender‐basedpreferencesarehaltedisnotnecessarilyevidenceofdiscriminationagainstDBEs.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at9,quotingWesternStates,407F.3dat999(“If[minoritygroupshavenotsufferedfromdiscrimination],thentheDBEprogramprovidesminoritieswhohavenotencountereddiscriminatorybarrierswithanunconstitutionalcompetitiveadvantageattheexpenseofbothnon‐minoritiesandanyminoritygroupsthathaveactuallybeentargetedfordiscrimination.”);id.at1001(“ThedisparitybetweentheproportionofDBEperformanceoncontractsthatincludeaffirmativeactioncomponentsandonthosewithoutsuchprovisionsdoesnotprovideanyevidenceofdiscriminationagainstDBEs.”).Id.

TheNinthCircuitalsocitedtotheU.S.DOTstatementmadetotheCourtinWesternStates.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at10,quoting,U.S.Dep’tofTransp.,WesternStatesPavingCo.CaseQ&A(Dec.16,2014)(“IncalculatingavailabilityofDBEs,[astate’s]studyshouldnotrelyonnumbersthatmayhavebeeninflatedbyrace‐consciousprogramsthatmaynothavebeennarrowlytailored.”).

Anecdotal evidence of discrimination.TheNinthCircuitsaidthatwithoutastatisticalbasis,theStatecannotrelyonanecdotalevidencealone.MountainWest,2017WL2179120at*3(9thCir.),Memorandum,May16,2017,at10,quoting,CoralConst.Co.v.KingCty.,941F.2d910,919(9thCir.1991)(“Whileanecdotalevidencemaysufficetoproveindividualclaimsofdiscrimination,rarely,ifever,cansuchevidenceshowasystemicpatternofdiscriminationnecessaryfortheadoptionofanaffirmativeactionplan.”);andquoting,Croson,488U.S.at509(“[E]videnceofapatternofindividualdiscriminatoryactscan,ifsupportedbyappropriatestatisticalproof,lendsupporttoalocalgovernment’sdeterminationthatbroaderremedialreliefisjustified.”).Id.

Insum,theNinthCircuitfoundthatbecauseitmustviewtherecordinthelightmostfavorabletoMountainWest’scase,itconcludedthattherecordprovidesaninadequatebasisforsummaryjudgmentinMontana’sfavor.2017WL2179120at*3.

Conclusion.TheNinthCircuitthusreversedandremandedforthedistrictcourttoconductwhateverfurtherproceedingsitconsidersmostappropriate,includingtrialortheresumptionofpretriallitigation.Thus,thecasewasdismissedinpart,reversedinpart,andremandedtothe


districtcourt.MountainWest,2017WL2179120at*4(9thCir.),Memorandum,May16,2017,at11.

2. Midwest Fence Corporation v. U.S. Department of Transportation, Illinois Department of Transportation, Illinois State Toll Highway Authority, 840 F.3d 932, 2016 WL 6543514 (7th Cir. 2016), cert. denied, 2017 WL 497345 (2017)

PlaintiffMidwestFenceCorporationisaguardrailsandfencingspecialtycontractorthatusuallybidsonprojectsasasubcontractor.2016WL6543514at*1.MidwestFenceisnotaDBE.Id.MidwestFenceallegesthatthedefendants’DBEprogramsviolateditsFourteenthAmendmentrighttoequalprotectionunderthelaw,andchallengestheUnitedStatesDOTFederalDBEProgramandtheimplementationoftheFederalDBEProgrambytheIllinoisDOT(IDOT).Id.MidwestFencealsochallengestheIllinoisStateTollHighwayAuthority(Tollway)anditsimplementationofitsDBEProgram.Id.

Thedistrictcourtgrantedallthedefendants’motionsforsummaryjudgment.Id.at*1.SeeMidwestFenceCorp.v.U.S.DepartmentofTransportation,etal.,84F.Supp.3d705(N.D.Ill.2015)(seediscussionofdistrictcourtdecisionbelow).TheSeventhCircuitCourtofAppealsaffirmedthegrantofsummaryjudgmentbythedistrictcourt.Id.ThecourtheldthatitjoinstheotherfederalcircuitcourtsofappealinholdingthattheFederalDBEProgramisfaciallyconstitutional,theprogramservesacompellinggovernmentinterestinremedyingahistoryofdiscriminationinhighwayconstructioncontracting,theprogramprovidesstateswithamplediscretiontotailortheirDBEprogramstotherealitiesoftheirownmarketsandrequirestheuseofrace–andgender‐neutralmeasuresbeforeturningtorace‐andgender‐consciousmeasures.Id.

ThecourtofappealsalsoheldtheIDOTandTollwayprogramssurvivestrictscrutinybecausethesestatedefendantsestablishasubstantialbasisinevidencetosupporttheneedtoremedytheeffectsofpastdiscriminationintheirmarkets,andtheprogramsarenarrowlytailoredtoservethatremedialpurpose.Id.at*1.

Procedural history.MidwestFenceassertedthefollowingprimarytheoriesinitschallengetotheFederalDBEProgram,IDOT’simplementationofit,andtheTollway’sownprogram:

1. Thefederalregulationsprescribeamethodforsettingindividualcontractgoalsthatplacesanundueburdenonnon‐DBEsubcontractors,especiallycertainkindsofsubcontractors,includingguardrailandfencingcontractorslikeMidwestFence.

2. Thepresumptionofsocialandeconomicdisadvantageisnottailoredadequatelytoreflectdifferencesinthecircumstancesactuallyfacedbywomenandthevariousracialandethnicgroupswhoreceivethatpresumption.

3. Thefederalregulationsareunconstitutionallyvague,particularlywithrespecttogoodfaitheffortstojustifyafront‐endwaiver.

Id.at*3‐4.MidwestFencealsoassertedthatIDOT’simplementationoftheFederalDBEProgramisunconstitutionalforessentiallythesamereasons.And,MidwestFencechallengestheTollway’sprogramonitsfaceandasapplied.Id.at*4.


ThedistrictcourtfoundthatMidwestFencehadstandingtobringmostofitsclaimsandonthemerits,andthecourtupheldthefacialconstitutionalityoftheFederalDBEProgram.84F.Supp.3dat722‐23729;id.at*4.

ThedistrictcourtalsoconcludedMidwestFencedidnotrebuttheevidenceofdiscriminationthatIDOTofferedtojustifyitsprogram,andMidwestFencehadpresentedno“affirmativeevidence”thatIDOT’simplementationundulyburdenednon‐DBEs,failedtomakeuseofrace‐neutralalternatives,orlackedflexibility.84F.Supp.3dat733,737;id.at*4.

ThedistrictcourtnotedthatMidwestFence’schallengetotheTollway’sprogramparalleledthechallengetoIDOT’sprogram,andconcludedthattheTollway,likeIDOT,hadestablishedastrongbasisinevidenceforitsprogram.84F.Supp.3dat737,739;id.at*4.Inaddition,thecourtconcludedthat,likeIDOT’sprogram,theTollway’sprogramimposedaminimalburdenonnon‐DBEs,employedanumberofrace‐neutralmeasures,andofferedsubstantialflexibility.84F.Supp.3dat739‐740;id.at*4.

Standing to challenge the DBE Programs generally.ThedefendantsarguedthatMidwestFencelackedstanding.ThecourtofappealsheldthatthedistrictcourtcorrectlyfoundthatMidwestFencehasstanding.Id.at*5.Thecourtofappealsstatedthatbyallegingandthenofferingevidenceoflostbids,decreasedrevenue,difficultieskeepingitsbusinessafloatasaresultoftheDBEprogram,anditsinabilitytocompeteforcontractsonanequalfootingwithDBEs,MidwestFenceshowedbothcausationandredressability.Id.at*5.

ThecourtofappealsdistinguisheditsrulingintheDunnetBayConstructionCo.v.Borggren,799F.3d676(7thCir.2015),holdingthattherewasnostandingfortheplaintiffDunnetBaybasedonanunusualandcomplexsetoffactsunderwhichitwouldhavebeenimpossiblefortheplaintiffDunnetBaytohavewonthecontractitsoughtandforwhichitsoughtdamages.IDOTdidnotawardthecontracttoanyoneunderthefirstbidandhadre‐letthecontract,thusDunnetBaysufferednoinjurybecauseoftheDBEprograminthefirstbid.Id.at*5.ThecourtofappealsheldthiscaseisdistinguishablefromDunnetBaybecauseMidwestFenceseeksprospectivereliefthatwouldenableittocompetewithDBEsonanequalbasismoregenerallythaninDunnetBay.Id.at*5.

Standing to challenge the IDOT Target Market Program.ThedistrictcourthadcarvedoutonenarrowexceptiontoitsfindingthatMidwestFencehadstandinggenerally,findingthatMidwestFencelackedstandingtochallengetheIDOT“targetmarketprogram.”Id.at*6.ThecourtofappealsfoundthatnoevidenceintherecordestablishedMidwestFencebidonorlostanycontractssubjecttotheIDOTtargetmarketprogram.Id.at*6.ThecourtstatedthatIDOThadnotsetasideanyguardrailandfencingcontractsunderthetargetmarketprogram.Id.Therefore,MidwestFencedidnotshowthatithadsufferedfromaninabilitytocompeteonanequalfootinginthebiddingprocesswithrespecttocontractswithinthetargetmarketprogram.Id.

Facial versus as‐applied challenge to the USDOT Program.Inthisappeal,MidwestFencedidnotchallengewhetherUSDOThadestablisheda“compellinginterest”toremedytheeffectsofpastorpresentdiscrimination.Thus,itdidnotchallengethenationalcompellinginterestinremedyingpastdiscriminationinitsclaimsagainsttheFederalDBEProgram.Id.at*6.Therefore,thecourtofappealsfocusedonwhetherthefederalprogramisnarrowlytailored.Id.


First,thecourtaddressedapreliminaryissue,namely,whetherMidwestFencecouldmaintainanas‐appliedchallengeagainstUSDOTandtheFederalDBEProgramorwhether,asthedistrictcourtheld,theclaimagainstUSDOTislimitedtoafacialchallenge.Id.MidwestFencesoughtadeclarationthatthefederalregulationsareunconstitutionalasappliedinIllinois.Id.ThedistrictcourtrejectedtheattempttobringthatclaimagainstUSDOT,treatingitasapplyingonlytoIDOT.Id.at*6citingMidwestFence,84F.Supp.3dat718.Thecourtofappealsagreedwiththedistrictcourt.Id.

Thecourtofappealspointedoutthataprincipalfeatureofthefederalregulationsistheirflexibilityandadaptabilitytolocalconditions,andthatflexibilityisimportanttotheconstitutionalityoftheFederalDBEProgram,includingbecausearace‐andgender‐consciousprogrammustbenarrowlytailoredtoservethecompellinggovernmentalinterest.Id.at*6.Theflexibilityinregulations,accordingtothecourt,makesthestate,notUSDOT,primarilyresponsibleforimplementingtheirownprogramsinwaysthatcomplywiththeEqualProtectionClause.Id.at*6.Thecourtsaidthatastate,notUSDOT,isthecorrectpartytodefendachallengetoitsimplementationofitsprogram.Id.Thus,thecourtheldthedistrictcourtdidnoterrbytreatingtheclaimsagainstUSDOTasonlyafacialchallengetothefederalregulations.Id.

Federal DBE Program: Narrow Tailoring.TheSeventhCircuitnotedthattheEighth,Ninth,andTenthCircuitsallfoundtheFederalDBEProgramconstitutionalonitsface,andtheSeventhCircuitagreedwiththeseothercircuits.Id.at*7.Thecourtfoundthatnarrowtailoringrequires“aclosematchbetweentheevilagainstwhichtheremedyisdirectedandthetermsoftheremedy.”Id.Thecourtstateditlookstofourfactorsindeterminingnarrowtailoring:(a)“thenecessityforthereliefandtheefficacyofalternative[race‐neutral]remedies,”(b)“theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions,”(c)“therelationshipofthenumericalgoalstotherelevantlabor[orhere,contracting]market,”and(d)“theimpactofthereliefontherightsofthirdparties.”Id.at*7quotingUnitedStatesv.Paradise,480U.S.149,171(1987).TheSeventhCircuitalsopointedoutthattheTenthCircuitaddedtothisanalysisthequestionofover‐orunder‐inclusiveness.Id.at*7.

Inapplyingthesefactorstodeterminenarrowtailoring,thecourtsaidthatfirst,theFederalDBEProgramrequiresstatestomeetasmuchaspossibleoftheiroverallDBEparticipationgoalsthroughrace‐andgender‐neutralmeans.Id.at*7,citing49C.F.R.§26.51(a).Next,onitsface,thefederalprogramisbothflexibleandlimitedinduration.Id.Quotasareflatlyprohibited,andstatesmayapplyforwaivers,includingwaiversof“anyprovisionsregardingadministrativerequirements,overallgoals,contractgoalsorgoodfaithefforts,”§26.15(b).Id.at*7.Theregulationsalsorequirestatestoremainflexibleastheyadministertheprogramoverthecourseoftheyear,includingcontinuallyreassessingtheirDBEparticipationgoalsandwhethercontractgoalsarenecessary.Id.

ThecourtpointedoutthatastateneednotsetacontractgoaloneveryUSDOT‐assistedcontract,normusttheysetthosegoalsatthesamepercentageastheoverallparticipationgoal.Id.at*7.Together,thecourtfound,alloftheseprovisionsallowforsignificantandongoingflexibility.Id.at*8.StatesarenotlockedintotheirinitialDBEparticipationgoals.Id.Theiruseofcontractgoalsismeanttoremainfluid,reflectingastate’sprogresstowardsoverallDBEgoal.Id.


Asforduration,thecourtsaidthatCongresshasrepeatedlyreauthorizedtheprogramaftertakingnewlooksattheneedforit.Id.at*8.And,asnoted,statesmustmonitorprogresstowardmeetingDBEgoalsonaregularbasisandalterthegoalsifnecessary.Id.Theymuststopusingrace‐andgender‐consciousmeasuresifthosemeasuresarenolongerneeded.Id.

Thecourtfoundthatthenumericalgoalsarealsotiedtotherelevantmarkets.Id.at*8.Inaddition,theregulationsprescribeaprocessforsettingaDBEparticipationgoalthatfocusesoninformationaboutthespecificmarket,andthatitisintendedtoreflectthelevelofDBEparticipationyouwouldexpectabsenttheeffectsofdiscrimination.Id.at*8,citing§26.45(b).ThecourtstatedthattheregulationsthusinstructstatestosettheirDBEparticipationgoalstoreflectactualDBEavailabilityintheirjurisdictions,asmodifiedbyotherrelevantfactorslikeDBEcapacity.Id.at*8.

Midwest Fence “mismatch” argument: burden on third parties.MidwestFence,thecourtsaid,focusesitscriticismontheburdenofthirdpartiesandarguestheprogramisover‐inclusive.Id.at*8.But,thecourtfound,theregulationsincludemechanismstominimizetheburdenstheprogramplacesonnon‐DBEthirdparties.Id.Aprimaryexample,thecourtpointsout,issuppliedin§26.33(a),whichrequiresstatestotakestepstoaddressoverconcentrationofDBEsincertaintypesofworkiftheoverconcentrationundulyburdensnon‐DBEstothepointthattheycannolongerparticipateinthemarket.Id.at*8.Thecourtconcludedthatstandardscanberelaxedifuncompromisingenforcementwouldyieldnegativeconsequences,forexample,statescanobtainwaiversifspecialcircumstancesmakethestate’scompliancewithpartofthefederalprogram“impractical,”andcontractorswhofailtomeetaDBEcontractgoalcanstillbeawardedthecontractiftheyhavedocumentedgoodfaitheffortstomeetthegoal.Id.at*8,citing§26.51(a)and§26.53(a)(2).

MidwestFencearguedthata“mismatch”inthewaycontractgoalsarecalculatedresultsinaburdenthatfallsdisproportionatelyonspecialtysubcontractors.Id.at*8.Underthefederalregulations,thecourtnoted,states’overallgoalsaresetasapercentageofalltheirUSDOT‐assistedcontracts.Id.However,statesmaysetcontractgoals“onlyonthose[USDOT]‐assistedcontractsthathavesubcontractingpossibilities.”Id.,quoting§26.51(e)(1)(emphasisadded).

MidwestFencearguedthatbecauseDBEsmustbesmall,theyaregenerallyunabletocompeteforprimecontracts,andthistheyargueisthe“mismatch.”Id.at*8.WherecontractgoalsarenecessarytomeetanoverallDBEparticipationgoal,thosecontractgoalsaremetalmostentirelywithsubcontractordollars,which,MidwestFenceasserts,placesaheavyburdenonnon‐DBEsubcontractorswhileleavingnon‐DBEprimecontractorsintheclear.Id.at*8.

ThecourtgoesthroughahypotheticalexampletoexplaintheissueMidwestFencehasraisedasamismatchthatimposesadisproportionateburdenonspecialtysubcontractorslikeMidwestFence.Id.at*8.Intheexampleprovidedbythecourt,theoverallparticipationgoalforastatecallsforDBEstoreceiveacertainpercentageoftotalfunds,butinpracticeinthehypotheticalitrequiresthestatetoawardDBEsforlessthanalloftheavailablesubcontractorfundsbecauseitdeterminesthattherearenosubcontractingpossibilitiesonhalfthecontracts,thusrenderingthemineligibleforcontractgoals.Id.Themismatchisthatthefederalprogramrequiresthestatetosetitsoverallgoalonallfundsitwillspendoncontracts,butatthesametimethecontractseligibleforcontractgoalsmustbeonesthathavesubcontractingpossibilities.Id.Therefore,


accordingtoMidwestFence,inpracticetheparticipationgoalssetwouldrequirethestatetoawardDBEsfromtheavailablesubcontractorfundswhiletakingnobusinessawayfromtheprimecontractors.Id.

Thecourtstatedthatitfound“[t]hisprospectistroubling.”Id.at*9.ThecourtsaidthattheDBEprogramcanimposeadisproportionateburdenonsmall,specializednon‐DBEsubcontractors,especiallywhencomparedtolargerprimecontractorswithwhomDBEswouldcompetelessfrequently.Id.Thispotential,accordingtothecourt,foradisproportionateburden,however,doesnotrendertheprogramfaciallyunconstitutional.Id.ThecourtsaidthattheconstitutionalityoftheFederalDBEProgramdependsonhowitisimplemented.Id.

Thecourtpointedoutthatsomeofthesuggestedrace‐andgender‐neutralmeansthatstatescanuseunderthefederalprogramaredesignedtoincreaseDBEparticipationinprimecontractingandotherfieldswhereDBEparticipationhashistoricallybeenlow,suchasspecificallyencouragingstatestomakecontractsmoreaccessibletosmallbusinesses.Id.at*9,citing§26.39(b).ThecourtalsonotedthatthefederalprogramcontemplatesDBEs’abilitytocompeteequallyrequiringstatestoreportDBEparticipationasprimecontractorsandmakeseffortstodevelopthatpotential.Id.at*9.

ThecourtstatedthatstateswillcontinuetoresorttocontractgoalsthatopenthedoortothetypeofmismatchthatMidwestFencedescribes,buttheprogramonitsfacedoesnotcompelanunfairdistributionofburdens.Id.at*9.SmallspecialtycontractorsmayhavetobearatleastsomeoftheburdenscreatedbyremedyingpastdiscriminationundertheFederalDBEProgram,buttheSupremeCourthasindicatedthatinnocentthirdpartiesmayconstitutionallyberequiredtobearatleastsomeoftheburdenoftheremedy.Id.at*9.

Over‐Inclusive argument.MidwestFencealsoarguedthatthefederalprogramisover‐inclusivebecauseitgrantspreferencestogroupswithoutanalyzingtheextenttowhicheachgroupisactuallydisadvantaged.Id.at*9.Inresponse,thecourtmentionedtwofederal‐specificarguments,notingthatMidwestFence’scriticismsarebestanalyzedaspartofitsas‐appliedchallengeagainstthestatedefendants.Id.First,MidwestFencecontendsnothingprovesthatthedisparitiesrelieduponbythestudyconsultantwerecausedbydiscrimination.Id.at*9.Thecourtfoundthattojustifyitsprogram,USDOTdoesnotneeddefinitiveproofofdiscrimination,butmusthaveastrongbasisinevidencethatremedialactionisnecessarytoremedypastdiscrimination.Id.

Second,MidwestFenceattackswhatitperceivesastheone‐size‐fits‐allnatureoftheprogram,suggestingthattheregulationsoughttoprovidedifferentremediesfordifferentgroups,butinsteadthefederalprogramoffersasingleapproachtoallthedisadvantagedgroups,regardlessofthedegreeofdisparities.Id.at*9.ThecourtpointedoutMidwestFencedidnotarguethatanyofthegroupswerenotinfactdisadvantagedatall,andthatthefederalregulationsultimatelyrequireindividualizeddeterminations.Id.at*10.Eachpresumptivelydisadvantagedfirmownermustcertifythatheorsheis,infact,sociallyandeconomicallydisadvantaged,andthatpresumptioncanberebutted.Id.Inthisway,thecourtsaid,thefederalprogramrequiresstatestoextendbenefitsonlytothosewhoareactuallydisadvantaged.Id.


ThereforethecourtagreedwiththedistrictcourtthattheFederalDBEProgramisnarrowlytailoredonitsface,soitsurvivesstrictscrutiny.

Claims against IDOT and the Tollway: void for vagueness.MidwestFencearguedthatthefederalregulationsareunconstitutionallyvagueasappliedbyIDOTbecausetheregulationsfailtospecifywhatgoodfaitheffortsacontractormustmaketoqualifyforawaiver,andfocusesitsattackontheprovisionsoftheregulations,whichaddresspossiblecostdifferentialsintheuseofDBEs.Id.at*11.MidwestFencearguedthatAppendixAof49C.F.R.,Part26at¶IV(D)(2)istoovagueinitslanguageonwhenadifferenceinpriceissignificantenoughtojustifyfallingshortoftheDBEcontractgoal.Id.Thecourtfoundifthestandardseemsvague,thatislikelybecauseitwasmeanttobeflexible,andamorerigidstandardcouldeasilybetooarbitraryandhinderprimecontractors’abilitytoadjusttheirapproachestothecircumstancesofparticularprojects.Id.at*11.

ThecourtsaidMidwestFence’srealargumentseemstobethatinpractice,primecontractorserrtoofaronthesideofcaution,grantingsignificantpricepreferencestoDBEsinsteadoftakingtheriskoflosingacontractforfailuretomeettheDBEgoal.Id.at*12.MidwestFencecontendsthiscreatesadefactosystemofquotasbecausecontractorsbelievetheymustmeettheDBEgoalorlosethecontract.Id.ButAppendixAtotheregulations,thecourtnoted,cautionsagainstthisveryapproach.Id.Thecourtfoundflexibilityandtheavailabilityofwaiversaffectwhetheraprogramisnarrowlytailored,andthattheregulationscautionagainstquotas,provideexamplesofgoodfaitheffortsprimecontractorscanmakeandstatescanconsider,andinstructabiddertousegoodbusinessjudgmenttodecidewhetherapricedifferenceisreasonableorexcessive.Id.Forpurposesofcontractawards,thecourtholdsthisisenoughtogivefairnoticeofconductthatisforbiddenorrequired.Id.at*12.

Equal Protection challenge: compelling interest with strong basis in evidence.InrulingonthemeritsofMidwestFence’sequalprotectionclaimsbasedontheactionsofIDOTandtheTollway,thefirstissuethecourtaddressesiswhetherthestatedefendantshadacompellinginterestinenactingtheirprograms.Id.at*12.Thecourtstatedthatit,alongwiththeothercircuitcourtsofappeal,haveheldastateagencyisentitledtorelyonthefederalgovernment’scompellinginterestinremedyingtheeffectsofpastdiscriminationtojustifyitsownDBEplanforhighwayconstructioncontracting.Id.But,sincenotallofIDOT’scontractsarefederallyfunded,andtheTollwaydidnotreceivefederalfundingatall,withrespecttothosecontracts,thecourtsaiditmustconsiderwhetherIDOTandtheTollwayestablishedastrongbasisinevidencetosupporttheirprograms.Id.

IDOT program.IDOTreliedonanavailabilityandadisparitystudytosupportitsprogram.ThedisparitystudyfoundthatDBEsweresignificantlyunderutilizedasprimecontractorscomparingfirmavailabilityofprimecontractorsintheconstructionfieldtotheamountofdollarstheyreceivedinprimecontracts.Thedisparitystudycollectedutilizationrecords,definedIDOT’smarketarea,identifiedbusinessesthatwerewillingandabletoprovideneededservices,weightedfirmavailabilitytoreflectIDOT’scontractingpatternwithweightsassignedtodifferentareasbasedonthepercentageofdollarsexpendedinthoseareas,determinedwhethertherewasastatisticallysignificantunder‐utilizationofDBEsbycalculatingthedollarseachgroupwouldbeexpectedtoreceivebasedonavailability,calculatedthedifferencebetween


theexpectedandactualamountofcontractdollarsreceived,andensuredthatresultswerenotattributabletochance.Id.at*13.

ThecourtsaidthatthedisparitystudydetermineddisparityratiosthatwerestatisticallysignificantandthestudyfoundthatDBEsweresignificantlyunderutilizedasprimecontractors,notingthatafigurebelow0.80isgenerallyconsidered“solidevidenceofsystematicunder‐utilizationcallingforaffirmativeactiontocorrectit.”Id.at*13.ThestudyfoundthatDBEsmadeup25.55%ofprimecontractorsintheconstructionfield,received9.13%ofprimecontractsvaluedbelow$500,000and8.25%oftheavailablecontractdollarsinthatrange,yieldingadisparityratioof0.32forprimecontractsunder$500,000.Id.

Intherealmofcontractionsubcontracting,thestudyshowedthatDBEsmayhave29.24%ofavailablesubcontractors,andintheconstructionindustrytheyreceive44.62%ofavailablesubcontracts,butthosesubcontractsamountedtoonly10.65%ofavailablesubcontractingdollars.Id.at*13.This,accordingtothestudy,yieldedastatisticallysignificantdisparityratioof0.36,whichthecourtfoundlowenoughtosignalsystemicunder‐utilization.Id.

IDOTreliedonadditionaldatatojustifyitsprogram,includingconductingazero‐goalexperimentin2002andin2003,whenitdidnotapplyDBEgoalstocontracts.Id.at*13.Withoutcontractgoals,theshareofthecontracts’valuethatDBEsreceiveddroppeddramatically,tojust1.5%ofthetotalvalueofthecontracts.Id.at*13.AndinthosecontractsadvertisedwithoutaDBEgoal,theDBEsubcontractorparticipationratewas0.84%.

Tollway program.TollwayalsoreliedonadisparitystudylimitedtotheTollway’scontractingmarketarea.Thestudyuseda“customcensus”process,creatingadatabaseofrepresentativeprojects,identifyinggeographicandproductmarkets,countingbusinessesinthosemarkets,identifyingandverifyingwhichbusinessesareminority‐andwomen‐owned,andverifyingtheownershipstatusofalltheotherfirms.Id.at*13.ThestudyexaminedtheTollway’shistoricalcontractdata,reporteditsDBEutilizationasapercentageofcontractdollars,andcomparedDBEutilizationandDBEavailability,comingupwithdisparityindicesdividedbyraceandsex,aswellasbyindustrygroup.Id.

Thestudyfoundthatoutof115disparityindices,80showedstatisticallysignificantunder‐utilizationofDBEs.Id.at*14.Thestudydiscussedstatisticaldisparitiesinearningsandtheformationofbusinessesbyminoritiesandwomen,andconcludedthatastatisticallysignificantadverseimpactonearningswasobservedinboththeeconomyatlargeandintheconstructionandconstruction‐relatedprofessionalservicessector.”Id.at*14.Thestudyalsofoundwomenandminoritiesarenotaslikelytostarttheirownbusiness,andthatminoritybusinessformationrateswouldlikelybesubstantiallyandsignificantlyhigherifmarketsoperatedinarace‐andsex‐neutralmanner.Id.

Thestudyusedregressionanalysistoassessdifferencesinwages,business‐ownerearnings,andbusiness‐formationratesbetweenwhitemenandminoritiesandwomeninthewiderconstructioneconomy.Id.at*14.Thestudyfoundstatisticallysignificantdisparitiesremainedbetweenwhitemenandothergroups,controllingforvariousindependentvariablessuchasage,education,location,industryaffiliation,andtime.Id.Thedisparities,accordingtothestudy,wereconsistentwithamarketaffectedbydiscrimination.Id.


TheTollwayalsopresentedadditionalevidence,includingthattheTollwaysetaspirationalparticipationgoalsonasmallnumberofcontracts,andthoseattemptsfailed.Id.at*14.In2004,thecourtnotedtheTollwaydidnotawardasingleprimecontractorsubcontracttoaDBE,andtheDBEparticipationratein2005was0.01%acrossallconstructioncontracts.Id.Inaddition,theTollwayalsoconsidered,likeIDOT,anecdotalevidencethatprovidedtestimonyofseveralDBEownersregardingbarriersthattheythemselvesfaced.Id.

Midwest Fence’s criticisms.MidwestFence’sexpertconsultantarguedthatthestudyconsultantfailedtoaccountforDBEs’readiness,willingness,andabilitytodobusinesswithIDOTandtheTollway,andthatthemethodofassessingreadinessandwillingnesswasflawed.Id.at*14.Inaddition,theconsultantforMidwestFencearguedthatoneofthestudiesfailedtoaccountforDBEs’relativecapacity,“meaningafirm’sabilitytotakeonmorethanonecontractatatime.”Thecourtnotedthatoneofthestudyconsultantsdidnotaccountforfirmcapacityandtheotherstudyconsultantfoundnoeffectivewaytoaccountforcapacity.Id.at*14,n.2.Thecourtsaidonestudydidperformaregressionanalysistomeasurerelativecapacityandlimiteditsdisparityanalysistocontractsunder$500,000,whichwas,accordingtothestudyconsultant,totakecapacityintoaccounttotheextentpossible.Id.

ThecourtpointedoutthatonemajorproblemwithMidwestFence’sreportisthattheconsultantdidnotperformanysubstantiveanalysisofhisown.Id.at*15.TheevidenceofferedbyMidwestFenceanditsconsultantwas,accordingtothecourt,“speculativeatbest.”Id.at*15.Thecourtsaidtheconsultant’srelativecapacityanalysiswassimilarlyspeculative,arguingthattheassumptionthatfirmshavethesameabilitytoprovideservicesupto$500,000maynotbetrueinpractice,andthatiftheestimatesofcapacityaretoolowtheresultingdisparityindexoverstatesthedegreeofdisparitythatexists.Id.at*15.

ThecourtstatedMidwestFence’sexpertsimilarlyarguedthattheexistenceoftheDBEprogram“may”causeanupwardbiasinavailability,thatanyobservationsofthepublicsectoringeneral“may”beaffectedbytheDBEprogram’sexistence,andthatdatabecomelessrelevantastimepasses.Id.at*15.ThecourtfoundthatgiventhesubstantialutilizationdisparityasshowninthereportsbyIDOTandtheTollwaydefendants,MidwestFence’sspeculativecritiquesdidnotraiseagenuineissueoffactastowhetherthedefendantshadasubstantialbasisinevidencetobelievethatactionwasneededtoremedydiscrimination.Id.at*15.

ThecourtrejectedMidwestFence’sargumentthatrequiringittoprovideanindependentstatisticalanalysisplacesanimpossibleburdenonitduetothetimeandexpensethatwouldberequired.Id.at*15.Thecourtnotedthattheburdenisinitiallyonthegovernmenttojustifyitsprograms,andthatsincethestatedefendantsofferedevidencetodoso,theburdenthenshiftedtoMidwestFencetoshowagenuineissueofmaterialfactastowhetherthestatedefendantshadasubstantialbasisinevidenceforadoptingtheirDBEprograms.Id.Speculativecriticismaboutpotentialproblems,thecourtfound,willnotcarrythatburden.Id.

Withregardtothecapacityquestion,thecourtnoteditwasMidwestFence’sstrongestcriticismandthatcourtshadrecognizeditasaseriousprobleminothercontexts.Id.at*15.Thecourtsaidthefailuretoaccountforrelativecapacitydidnotunderminethesubstantialbasisinevidenceinthisparticularcase.Id.at*15.MidwestFencedidnotexplainhowtoaccountfor


relativecapacity.Id.Inaddition,ithasbeenrecognized,thecourtstated,thatdefectsincapacityanalysesarenotfatalinandofthemselves.Id.at*15.

Thecourtconcludedthatthestudiesshowstrikingutilizationdisparitiesinspecificindustriesintherelevantgeographicmarketareas,andtheyareconsistentwiththeanecdotalandlessformalevidencedefendantshadoffered.Id.at*15.ThecourtfoundMidwestFence’sexpert’s“speculation”thatfailuretoaccountforrelativecapacitymighthavebiasedDBEavailabilityupwarddoesnotunderminethestatisticalcoreofthestrongbasisinevidencerequired.Id.

Inaddition,thecourtrejectedMidwestFence’sargumentthatthedisparitystudiesdonotprovediscrimination,notingagainthatastateneednotconclusivelyprovetheexistenceofdiscriminationtoestablishastrongbasisinevidenceforconcludingthatremedialactionisnecessary,andthatwheregrossstatisticaldisparitiescanbeshown,theyalonemayconstituteprimafacieproofofapatternorpracticeofdiscrimination.Id.at*15.ThecourtalsorejectedMidwestFence’sattackontheanecdotalevidencestatingthattheanecdotalevidencebolstersthestatedefendants’statisticalanalyses.Id.at*15.

InconnectionwithMidwestFence’sargumentrelatingtotheTollwaydefendant,MidwestFencearguedthattheTollway’ssupportingdatawasfrombeforeitinstituteditsDBEprogram.Id.at*16.TheTollwayrespondedbyarguingthatitusedthebestdataavailableandthatinanyeventitsdatasetsshowdisparities.Id.at*16.ThecourtfoundthispointpersuasiveevenassumingsomeoftheTollway’sdatawerenotexact.Id.ThecourtsaidthatwhileeverysinglenumberintheTollway’s“arsenalofevidence”maynotbeexact,theoverallpicturestillshowsbeyondreasonabledisputeamarketplacewithsystemicunder‐utilizationofDBEsfarbelowthedisparityindexlowerthan80asanindicationofdiscrimination,andthatMidwestFence’s“abstractcriticisms”donotunderminethatcoreofevidence.Id.at*16.

Narrow Tailoring.ThecourtappliedthenarrowtailoringfactorstodeterminewhetherIDOT’sandtheTollway’simplementationoftheirDBEprogramsyieldedaclosematchbetweentheevilagainstwhichtheremedyisdirectedandthetermsoftheremedy.Id.at*16.Firstthecourtaddressedthenecessityforthereliefandtheefficacyofalternativerace‐neutralremediesfactor.Id.ThecourtreiteratedthatMidwestFencehasnotunderminedthedefendants’strongcombinationofstatisticalandotherevidencetoshowthattheirprogramsareneededtoremedydiscrimination.Id.

BothIDOTandtheTollway,accordingtothecourt,userace‐andgender‐neutralalternatives,andtheundisputedfactsshowthatthosealternativeshavenotbeensufficienttoremedydiscrimination.Id.ThecourtnotedthattherecordshowsIDOTusesnearlyallofthemethodsdescribedinthefederalregulationstomaximizeaportionofthegoalthatwillbeachievedthroughrace‐neutralmeans.Id.

Asforflexibility,bothIDOTandtheTollwaymakefront‐endwaiversavailablewhenacontractorhasmadegoodfaitheffortstocomplywithaDBEgoal.Id.at*17.ThecourtrejectedMidwestFence’sargumentsthattherewerealownumberofwaiversgranted,andthatcontractorsfearofhavingawaiverdeniedshowedthesystemwasadefactoquotasystem.Id.ThecourtfoundthatIDOTandtheTollwayhavenotgrantedlargenumbersofwaivers,buttherewasalsonoevidencethattheyhavedeniedlargenumbersofwaivers.Id.Thecourtpointedoutthatthe


evidencefromMidwestFencedoesnotshowthatdefendantsareresponsibleforfailingtograntfront‐endwaiversthatthecontractorsdonotrequest.Id.

Thecourtstatedintheabsenceofevidencethatdefendantsfailedtoadheretothegeneralgoodfaitheffortguidelinesandarbitrarilydenyordiscouragefront‐endwaiverrequests,MidwestFence’scontentionthatcontractorsfearlosingcontractsiftheyaskforawaiverdoesnotmakethesystemaquotasystem.Id.at*17.MidwestFence’sownevidence,thecourtstated,showsthatIDOTgrantedin2007,57of63front‐endwaiverrequests,andin2010,itgranted21of35front‐endwaiverrequests.Id.at*17.Inaddition,theTollwaygrantedatleastsomefront‐endwaiversinvolving1.02%ofcontractdollars.Id.Withoutevidencethatfarmorewaiverswererequested,thecourtwassatisfiedthateventhislowtotalbytheTollwaydoesnotraiseagenuinedisputeoffact.Id.

Thecourtalsorejectedas“underdeveloped”MidwestFence’sargumentthatthecourtshouldlookatthedollarvalueofwaiversgrantedratherthantherawnumberofwaiversgranted.Id.at*17.Thecourtfoundthatthisargumentdoesnotsupportadifferentoutcomeinthiscasebecausethedefendantsgrantmorefront‐endwaiverrequeststhantheydeny,regardlessofthedollaramountsthoserequestsencompass.MidwestFencepresentednoevidencethatIDOTandtheTollwayhaveanunwrittenpolicyofgrantingonlylow‐valuewaivers.Id.

ThecourtstatedthatMidwest’s“bestargument”againstnarrowedtailoringisits“mismatch”argument,whichwasdiscussedabove.Id.at*17.ThecourtsaidMidwest’sbroadcondemnationoftheIDOTandTollwayprogramsasfailingtocreatea“light”and“diffuse”burdenforthirdpartieswasnotpersuasive.Id.ThecourtnotedthattheDBEprograms,whichsetDBEgoalsononlysomecontractsandallowthosegoalstobewaivedifnecessary,mayendupforeclosingoneofseveralopportunitiesforanon‐DBEspecialtysubcontractorlikeMidwestFence.Id.But,therewasnoevidencethattheyimposetheentireburdenonthatsubcontractorbyshuttingitoutofthemarketentirely.Id.However,thecourtfoundthatMidwestFence’spointthatsubcontractorsappeartobearadisproportionateshareoftheburdenascomparedtoprimecontractors“istroubling.”Id.at*17.

Althoughtheevidenceshoweddisparitiesinboththeprimecontractingandsubcontractingmarkets,underthefederalregulations,individualcontractgoalsaresetonlyforcontractsthathavesubcontractingpossibilities.Id.ThecourtpointedoutthatsomeDBEsareabletobidonprimecontracts,butthenecessarilysmallsizeofDBEsmakesthatdifficultinmostcases.Id.

But,accordingtothecourt,intheendtherecordshowsthattheproblemMidwestFenceraisesislargely“theoretical.”Id.at*18.NotallcontractshaveDBEgoals,sosubcontractorsareonanevenfootingforthosecontractswithoutsuchgoals.Id.IDOTandtheTollwaybothuseneutralmeasuresincludingsomedesignedtomakeprimecontractsmoreassessabletoDBEs.Id.ThecourtnotedthatDBEtruckingandmaterialsupplierscounttowardfulfillmentofacontract’sDBEgoal,eventhoughtheyarenotusedaslineitemsincalculatingthecontractgoalinthefirstplace,whichopensupcontractswithDBEgoalstonon‐DBEsubcontractors.Id.

ThecourtstatedthatifMidwestFence“hadpresentedevidenceratherthantheoryonthispoint,theresultmightbedifferent.”Id.at*18.“EvidencethatsubcontractorswerebeingfrozenoutofthemarketorbearingtheentireburdenoftheDBEprogramwouldlikelyrequireatrialto


determineataminimumwhetherIDOTortheTollwaywereadheringtotheirresponsibilitytoavoidoverconcentrationinsubcontracting.”Id.at*18.ThecourtconcludedthatMidwestFence“hasshownhowtheIllinoisprogramcouldyieldthatresultbutnotthatitactuallydoesso.”Id.

InlightoftheIDOTandTollwayprograms’mechanismstopreventsubcontractorsfromhavingtobeartheentireburdenoftheDBEprograms,includingtheuseofDBEmaterialsandtruckingsuppliersinsatisfyinggoals,effortstodrawDBEsintoprimecontracting,andothermechanisms,accordingtothecourt,MidwestFencedidnotestablishagenuinedisputeoffactonthispoint.Id.at*18.Thecourtstatedthatthe“theoreticalpossibilityofa‘mismatch’couldbeaproblem,butwehavenoevidencethatitactuallyis.”Id.at*18.

Therefore,thecourtconcludedthatIDOTandtheTollwayDBEprogramsarenarrowlytailoredtoservethecompellingstateinterestinremedyingdiscriminationinpubliccontracting.Id.at*18.Theyincluderace‐andgender‐neutralalternatives,setgoalswithreferencetoactualmarketconditions,andallowforfront‐endwaivers.Id.“Sofarastherecordbeforeusshows,theydonotundulyburdenthirdpartiesinserviceofremedyingdiscrimination”,accordingtothecourt.Therefore,MidwestFencefailedtopresentagenuinedisputeoffact“onthispoint.”Id.

Petition for a Writ of Certiorari.MidwestFencefiledaPetitionforaWritofCertioraritotheUnitedStatesSupremeCourtin2017,andCertiorariwasdenied.2017WL497345(2017).

3. Dunnet Bay Construction Company v. Borggren, Illinois DOT, et al., 799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015), cert. denied, Dunnet Bay Construction Co. v. Blankenhorn, Randall S., et al., 2016 WL 193809 (Oct. 3, 2016).

DunnetBayConstructionCompanysuedtheIllinoisDepartmentofTransportation(IDOT)assertingthattheIllinoisDOT’sDBEProgramdiscriminatesonthebasisofrace.ThedistrictcourtgrantedsummaryjudgementtoIllinoisDOT,concludingthatDunnetBaylackedstandingtoraiseanequalprotectionchallengebasedonrace,andheldthattheIllinoisDOTDBEProgramsurvivedtheconstitutionalandotherchallenges.799F.3dat679.(See2014WL552213,C.D.Ill.Fed.12,2014)(SeesummaryofdistrictdecisioninSectionE.below).TheCourtofAppealsaffirmedthegrantofsummaryjudgmenttoIDOT.

DunnetBayengagesingeneralhighwayconstructionandisownedandcontrolledbytwowhitemales.799F.3dat679.Itsaverageannualgrossreceiptsbetween2007and2009wereover$52million.Id.IDOTadministersitsDBEProgramimplementingtheFederalDBEProgram.IDOTestablishedastatewideaspirationalgoalforDBEparticipationof22.77%.Id.at680.UnderIDOT’sDBEProgram,ifabidderfailstomeettheDBEcontractgoal,itmayrequestamodificationofthegoal,andprovidedocumentationofitsgoodfaitheffortstomeetthegoal.Id.at681.Theserequestsformodificationarealsoknownas“waivers.”Id.

TherecordshowedthatIDOThistoricallygrantedgoalmodificationrequestorwaivers:in2007,itgranted57of63pre‐awardgoalmodificationrequests;thesixotherbiddersultimatelymetthecontractgoalwithpost‐bidassistance.Id.at681.In2008,IDOTgranted50ofthe55pre‐awardgoalmodificationrequests;theotherfivebiddersultimatelymettheDBEgoal.Incalendaryear2009,IDOTgranted32of58goalmodificationrequests;theothercontractors


ultimatelymetthegoals.Incalendaryear2010,IDOTreceived35goalmodificationrequests;itgranted21ofthemanddeniedtherest.Id.

DunnetBayallegedthatIDOThadtakenthepositionnowaiverswouldbegranted.Id.at697‐698.IDOTrespondedthatitwasnotitspolicytonotgrantwaivers,butinsteadIDOTwouldaggressivelypursueobtainingtheDBEparticipationintheircontractgoals,includingthatwaiversweregoingtobereviewedatahighleveltomakesuretheappropriatedocumentationwasprovidedinorderforawaivertobeissued.Id.

TheU.S.FHWAapprovedthemethodologyIDOTusedtoestablishastatewideoverallDBEgoalof22.77%.Id.at683,698.TheFHWAreviewedandapprovedtheindividualcontractgoalssetforworkonaprojectknownastheEisenhowerprojectthatDunnetBaybidonin2010.Id.DunnetBaysubmittedtoIDOTabidthatwasthelowestbidontheproject,butitwassubstantiallyoverthebudgetestimatefortheproject.Id.at683‐684.DunnetBaydidnotachievethegoalof22%,butthreeotherbidderseachmettheDBEgoal.Id.at684.DunnetBayrequestedawaiverbasedonitsgoodfaitheffortstoobtaintheDBEgoal.Id.at684.Ultimately,IDOTdeterminedthatDunnetBaydidnotproperlyexercisegoodfaitheffortsanditsbidwasrejected.Id.at684‐687,699.

Becauseallthebidswereoverbudget,IDOTdecidedtorebidtheEisenhowerproject.Id.at687.TherewerefourseparateEisenhowerprojectsadvertisedforbids,andIDOTgrantedoneofthefourgoalmodificationrequestsfromthatbidletting.DunnetBaybidononeoftherebidprojects,butitwasnotthelowestbid;itwasthethirdoutoffivebidders.Id.at687.DunnetBaydidmeetthe22.77%contractDBEgoal,ontherebidprospect,butwasnotawardedthecontractbecauseitwasnotthelowest.Id.

DunnetBaythenfileditslawsuitseekingdamagesaswellasadeclaratoryjudgementthattheIDOTDBEProgramisunconstitutionalandinjunctivereliefagainstitsenforcement.

ThedistrictcourtgrantedtheIDOTDefendants’motionforsummaryjudgementanddeniedDunnetBay’smotion.Id.at687.ThedistrictcourtconcludedthatDunnetBaylackedArticleIIIstandingtoraiseanequalprotectionchallengebecauseithasnotsufferedaparticularizedinjurythatwascalledbyIDOT,andthatDunnetBaywasnotdeprivedoftheabilitytocompeteonanequalbasis.Id.DunnetBayConstructionCompanyv.Hannig,2014WL552213,at*30(C.D.Ill.Feb.12,2014).

EvenifDunnetBayhadstandingtobringanequalprotectionclaim,thedistrictcourtheldthatIDOTwasentitledtosummaryjudgment.ThedistrictcourtconcludedthatDunnetBaywasheldtothesamestandardsaseveryotherbidder,andthuscouldnotestablishthatitwasthevictimofracialdiscrimination.Id.at687.Inaddition,thedistrictcourtdeterminedthatIDOThadnotexceededitsfederalauthorityunderthefederalrulesandthatDunnetBay’schallengetotheDBEProgramfailedundertheSeventhCircuitCourtofAppealsdecisioninNorthernContracting,Inc.v.Illinois,473F.3d715,721(7thCir.2007),whichinsulatesastateDBEProgramfromaconstitutionalattackabsentashowingthatthestateexceededitsfederalauthority.Id.at688.(SeediscussionofthedistrictcourtdecisioninDunnetBaybelowinSectionE).


Dunnet Bay lacks standing to raise an equal protection claim.ThecourtfirstaddressedtheissuewhetherDunnetBayhadstandingtochallengeIDOT’sDBEProgramonthegroundthatitdiscriminatedonthebasisofraceintheawardofhighwayconstructioncontracts.

ThecourtfoundthatDunnetBayhadnotestablishedthatitwasexcludedfromcompetitionorotherwisedisadvantagedbecauseofrace‐basedmeasures.Id.at690.NothinginIDOT’sDBEProgram,thecourtstated,excludedDunnetBayfromcompetitionforanycontract.Id.IDOT’sDBEProgramisnota“setasideprogram,”inwhichnon‐minorityownedbusinessescouldnotevenbidoncertaincontracts.Id.UnderIDOT’sDBEProgram,allcontractors,minorityandnon‐minoritycontractors,canbidonallcontracts.Id.at690‐691.

Thecourtsaidtheabsenceofcompleteexclusionfromcompetitionwithminority‐orwomen‐ownedbusinessesdistinguishedtheIDOTDBEProgramfromothercasesinwhichthecourtruledtherewasstandingtochallengeaprogram.Id.at691.DunnetBay,thecourtfound,hasnotallegedandhasnotproducedevidencetoshowthatitwastreatedlessfavorablythananyothercontractorbecauseoftheraceofitsowners.Id.Thislackofanexplicitpreferencefromminority‐ownedbusinessesdistinguishestheIDOTDBEProgramfromothercases.Id.UnderIDOT’sDBEProgram,allcontractorsaretreatedalikeandsubjecttothesamerules.Id.

Inaddition,thecourtdistinguishedothercasesinwhichthecontractorswerefoundtohavestandingbecauseinthosecasesstandingwasbasedinpartonthefacttheyhadlostanawardofacontractforfailingtomeettheDBEgoalorfailingtoshowgoodfaithefforts,despitebeingthelowbiddersonthecontract,andthesecondlowestbidderwasawardedthecontract.Id.at691.Incontrastwiththesecaseswheretheplaintiffshadstanding,thecourtsaidDunnetBaycouldnotestablishthatitwouldhavebeenawardedthecontractbutforitsfailuretomeettheDBEgoalordemonstrategoodfaithefforts.Id.at692.

TheevidenceestablishedthatDunnetBay’sbidwassubstantiallyovertheprogramestimatedbudget,andIDOTrebidthecontractbecausethelowbidwasovertheprojectestimate.Id.Inaddition,DunnetBayhadbeenleftofftheForBiddersListthatissubmittedtoDBEs,whichwasanotherreasonIDOTdecidedtorebidthecontract.Id.

ThecourtfoundthatevenassumingDunnetBaycouldestablishitwasexcludedfromcompetitionwithDBEsorthatitwasdisadvantagedascomparedtoDBEs,itcouldnotshowthatanydifferenceintreatmentwasbecauseofrace.Id.at692.Forthethreeyearspreceding2010,theyearitbidontheproject,DunnetBay’saveragegrossreceiptswereover$52million.Id.Therefore,thecourtfoundDunnetBay’ssizemakesitineligibletoqualifyasaDBE,regardlessoftheraceofitsowners.Id.DunnetBaydidnotshowthatanyadditionalcostsorburdensthatitwouldincurarebecauseofrace,buttheadditionalcostsandburdensareequallyattributabletoDunnetBay’ssize.Id.DunnetBayhadnotestablished,accordingtothecourt,thatthedenialofequaltreatmentresultedfromtheimpositionofaracialbarrier.Id.at693.

DunnetBayalsoallegedthatitwasforcedtoparticipateinadiscriminatoryschemeandwasrequiredtoconsiderraceinsubcontracting,andthusarguedthatitmayassertthird‐partyrights.Id.at693.Thecourtstatedthatithasnotadoptedthebroadviewofstandingregardingassertingthird‐partyrights.Id.ThecourtconcludedthatDunnetBay’sclaimedinjuryofbeingforcedtoparticipateinadiscriminatoryschemeamountstoachallengetothestate’sapplication


ofafederallymandatedprogram,whichtheSeventhCircuitCourtofAppealshasdetermined“mustbelimitedtothequestionofwhetherthestateexceededitsauthority.”Id.at694,quoting,NorthernContracting,473F.3dat720‐21.ThecourtfoundDunnetBaywasnotdeniedequaltreatmentbecauseofracialdiscrimination,butinsteadanydifferenceintreatmentwasequallyattributabletoDunnetBay’ssize.Id.

ThecourtstatedthatDunnetBaydidnotestablishcausationalorredressability.Id.at695.ItfailedtodemonstratethattheDBEProgramcauseditanyinjuryduringthefirstbidprocess.Id.IDOTdidnotawardthecontracttoanyoneunderthefirstbidandre‐letthecontract.Id.Therefore,DunnetBaysufferednoinjurybecauseoftheDBEProgram.Id.ThecourtalsofoundthatDunnetBaycouldnotestablishredressabilitybecauseIDOT’sdecisiontore‐letthecontractredressedanyinjury.Id.

Inaddition,thecourtconcludedthatprudentiallimitationsprecludeDunnetBayfrombringingitsclaim.Id.at695.Thecourtsaidthatalitigantgenerallymustasserthisownlegalrightsandinterests,andcannotresthisclaimtoreliefonthelegalrightsorinterestsofthirdparties.Id.ThecourtrejectedDunnetBay’sattempttoasserttheequalprotectionrightsofanon‐minority‐ownedsmallbusiness.Id.at695‐696.

Dunnet Bay did not produce sufficient evidence that IDOT’s implementation of the Federal

DBE Program constitutes race discrimination as it did not establish that IDOT exceeded its

federal authority.ThecourtsaidthatinthealternativetodenyingDunnetBaystanding,evenifDunnetBayhadstanding,IDOTwasstillentitledtosummaryjudgment.Id.at696.ThecourtstatedthattoestablishanequalprotectionclaimundertheFourteenthAmendment,DunnetBaymustshowthatIDOT“actedwithdiscriminatoryintent.”Id.

ThecourtestablishedthestandardbasedonitspreviousrulingintheNorthernContractingv.IDOTcasethatinimplementingitsDBEProgram,IDOTmayproperlyrelyon“thefederalgovernment’scompellinginterestinremedyingtheeffectsofpastdiscriminationinthenationalconstructionmarket.”Id.,at697,quotingNorthernContracting,473F.3dat720.Significantly,thecourtheldfollowingitsNorthernContractingdecisionasfollows:“[A]stateisinsulatedfrom[aconstitutionalchallengeastowhetheritsprogramisnarrowlytailoredtoachievethiscompellinginterest],absentashowingthatthestateexceededitsfederalauthority.”Id.quotingNorthernContracting,473F.3dat721.

DunnetBaycontendsthatIDOTexceededitsfederalauthoritybyeffectivelycreatingracialquotasbydesigningtheEisenhowerprojecttomeetapre‐determinedDBEgoalandeliminatingwaivers.Id.at697.DunnetBayassertsthatIDOTexceedsitsauthorityby:(1)settingthecontract’sDBEparticipationgoalat22%withouttherequiredanalysis;(2)implementinga“no‐waiver”policy;(3)preliminarilydenyingitsgoalmodificationrequestwithoutassessingitsgoodfaithefforts;(4)denyingitameaningfulreconsiderationhearing;(5)determiningthatitsgoodfaitheffortswereinadequate;and(6)providingnowrittenorotherexplanationofthebasisforitsgood‐faith‐effortsdetermination.Id.

InchallengingtheDBEcontractgoal,DunnetBayassertsthatthe22%goalwas“arbitrary”andthatIDOTmanipulatedtheprocesstojustifyapreordainedgoal.Id.at698.ThecourtstatedDunnetBaydidnotidentifyanyregulationorotherauthoritythatsuggestspoliticalmotivations


matter,providedIDOTdidnotexceeditsfederalauthorityinsettingthecontractgoal.Id.DunnetBaydoesnotactuallychallengehowIDOTwentaboutsettingitsDBEgoalonthecontract.Id.DunnetBaydidnotpointtoanyevidencetoshowthatIDOTfailedtocomplywiththeapplicableregulationprovidingonlygeneralguidanceoncontractgoalsetting.Id.

TheFHWAapprovedIDOT’smethodologytoestablishitsstatewideDBEgoalandapprovedtheindividualcontractgoalsfortheEisenhowerproject.Id.at698.DunnetBaydidnotidentifyanypartoftheregulationthatIDOTallegedlyviolatedbyreevaluatingandthenincreasingitsDBEcontractgoal,byexpandingthegeographicareausedtodetermineDBEavailability,byaddingpavementpatchingandlandscapingworkintothecontractgoal,byincludingitemsthathadbeensetasideforsmallbusinessenterprises,orbyanyothermeansbywhichitincreasedtheDBEcontractgoal.Id.

Thecourtagreedwiththedistrictcourt’sconclusionthatbecausethefederalregulationsdonotspecifyaprocedureforarrivingatcontractgoals,itisnotapparenthowIDOTcouldhaveexceededitsfederalauthority.Id.at698.

ThecourtfoundDunnetBaydidnotpresentsufficientevidencetoraiseareasonableinferencethatIDOThadactuallyimplementedano‐waiverpolicy.Id.at698.ThecourtnotedIDOThadgrantedwaiversin2009andin2010thatamountedto60%ofthewaiverrequests.Id.ThecourtstatedthatIDOT’srecordofgrantingwaiversrefutesanysuggestionofano‐waiverpolicy.Id.at699.

ThecourtdidnotagreewithDunnetBay’schallengethatIDOTrejecteditsbidwithoutdeterminingwhetherithadmadegoodfaithefforts,pointingoutthatIDOTinfactdeterminedthatDunnetBayfailedtodocumentadequategoodfaithefforts,andthusithadcompliedwiththefederalregulations.Id.at699.ThecourtfoundIDOT’sdeterminationthatDunnetBayfailedtoshowgoodfaitheffortswassupportedintherecord.Id.ThecourtnotedthereasonsprovidedbyIDOT,includedDunnetBaydidnotutilizeIDOT’ssupportiveservices,andthattheotherbiddersallmettheDBEgoal,whereasDunnetBaydidnotcomeclosetothegoalinitsfirstbid.Id.at699‐700.

ThecourtsaidtheperformanceofotherbiddersinmeetingthecontractgoalislistedinthefederalregulationsasaconsiderationwhendecidingwhetherabidderhasmadegoodfaitheffortstoobtainDBEparticipationgoals,andwasaproperconsideration.Id.at700.ThecourtsaidDunnetBay’seffortstosecuretheDBEparticipationgoalmayhavebeenhinderedbytheomissionofDunnetBayfromtheForBidList,butfoundtherebiddingofthecontractremediedthatoversight.Id.

Conclusion.Thecourtaffirmedthedistrictcourt’sgrantofsummaryjudgementtotheIllinoisDOT,concludingthatDunnetBaylacksstanding,andthattheIllinoisDBEProgramimplementingtheFederalDBEProgramsurvivedtheconstitutionalandotherchallengesmadebyDunnetBay.

Petition for a Writ of Certiorari Denied.DunnetBayfiledaPetitionforaWritofCertioraritotheUnitedStatesSupremeCourtinJanuary2016.TheSupremeCourtdeniedthePetitiononOctober3,2016.


4. Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187 (9th Cir. 2013)

TheAssociatedGeneralContractorsofAmerica,Inc.,SanDiegoChapter,Inc.,(“AGC”)soughtdeclaratoryandinjunctivereliefagainsttheCaliforniaDepartmentofTransportation(“Caltrans”)anditsofficersonthegroundsthatCaltrans’DisadvantagedBusinessinitialEnterprise(“DBE”)programunconstitutionallyprovidedrace‐andsex‐basedpreferencestoAfricanAmerican,NativeAmerican‐,Asian‐PacificAmerican‐,andwomen‐ownedfirmsoncertaintransportationcontracts.ThefederaldistrictcourtupheldtheconstitutionalityofCaltrans’DBEprogramimplementingtheFederalDBEProgramandgrantedsummaryjudgmenttoCaltrans.ThedistrictcourtheldthatCaltrans’DBEprogramimplementingtheFederalDBEProgramsatisfiedstrictscrutinybecauseCaltranshadastrongbasisinevidenceofdiscriminationintheCaliforniatransportationcontractingindustry,andtheprogramwasnarrowlytailoredtothosegroupsthatactuallysuffereddiscrimination.ThedistrictcourtheldthatCaltrans’substantialstatisticalandanecdotalevidencefromadisparitystudyconductedbyBBCResearchandConsulting,providedastrongbasisinevidenceofdiscriminationagainstthefournamedgroups,andthattheprogramwasnarrowlytailoredtobenefitonlythosegroups.713F.3dat1190.

TheAGCappealedthedecisiontotheNinthCircuitCourtofAppeals.TheNinthCircuitinitiallyheldthatbecausetheAGCdidnotidentifyanyofthememberswhohavesufferedorwillsufferharmasaresultofCaltrans’program,theAGCdidnotestablishthatithadassociationalstandingtobringthelawsuit.Id.Mostsignificantly,theNinthCircuitheldthateveniftheAGCcouldestablishstanding,itsappealfailedbecausetheCourtfoundCaltrans’DBEprogramimplementingtheFederalDBEProgramisconstitutionalandsatisfiedtheapplicablelevelofstrictscrutinyrequiredbytheEqualProtectionClauseoftheUnitedStatesConstitution.Id.at1194‐1200.

Court Applies Western States Paving Co. v. Washington State DOT decision.In2005theNinthCircuitCourtofAppealdecidedWesternStatesPavingCo.v.WashingtonStateDepartmentofTransportation,407F.3d.983(9thCir.2005),whichinvolvedafacialchallengetotheconstitutionalvalidityofthefederallawauthorizingtheUnitedStatesDepartmentofTransportationtodistributefundstoStatesfortransportation‐relatedprojects.Id.at1191.ThechallengeintheWesternStatesPavingcasealsoincludedanas‐appliedchallengetotheWashingtonDOTprogramimplementingthefederalmandate.Id.Applyingstrictscrutiny,theNinthCircuitupheldtheconstitutionalityofthefederalstatuteandthefederalregulations(theFederalDBEProgram),butstruckdownWashingtonDOT’sprogrambecauseitwasnotnarrowlytailored.Id.,citingWesternStatesPavingCo.,407F.3dat990‐995,999‐1002.

InWesternStatesPaving,theNinthCircuitannouncedatwo‐prongedtestfor“narrowtailoring”:

“(1) the state must establish the presence of discrimination within itstransportation contracting industry, and (2) the remedial program must belimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”Id.1191,citingWesternStatesPavingCo.,407F.3dat997‐998.


Evidence gathering and the 2007 Disparity Study.OnMay1,2006,Caltransceasedtouserace‐andgender‐consciousmeasuresinimplementingtheirDBEprogramonfederallyassistedcontractswhileitgatheredevidenceinanefforttocomplywiththeWesternStatesPavingdecision.Id.at1191.CaltranscommissionedadisparitystudybyBBCResearchandConsultingtodeterminewhethertherewasevidenceofdiscriminationinCalifornia’stransportationcontractingindustry.Id.TheCourtnotedthatdisparityanalysisinvolvesmakingacomparisonbetweentheavailabilityofminority‐andwomen‐ownedbusinessesandtheiractualutilization,producinganumbercalleda“disparityindex.”Id.Anindexof100representsstatisticalparitybetweenavailabilityandutilization,andanumberbelow100indicatesunderutilization.Id.Anindexbelow80isconsideredasubstantialdisparitythatsupportsaninferenceofdiscrimination.Id.

TheCourtfoundtheresearchfirmandthedisparitystudygatheredextensivedatatocalculatedisadvantagedbusinessavailabilityintheCaliforniatransportationcontractingindustry.Id.at1191.TheCourtstated:“Basedonreviewofpublicrecords,interviews,assessmentsastowhetherafirmcouldbeconsideredavailable,forCaltranscontracts,aswellasnumerousotheradjustments,thefirmconcludedthatminority‐andwomen‐ownedbusinessesshouldbeexpectedtoreceive13.5percentofcontactdollarsfromCaltransadministeredfederallyassistedcontracts.”Id.at1191‐1192.

TheCourtsaidtheresearchfirm“examinedover10,000transportation‐relatedcontractsadministeredbyCaltransbetween2002and2006todetermineactualDBEutilization.Thefirmassesseddisparitiesacrossavarietyofcontracts,separatelyassessingcontractsbasedonfundingsource(stateorfederal),typeofcontract(primeorsubcontract),andtypeofproject(engineeringorconstruction).”Id.at1192.

TheCourtpointedoutakeydifferencebetweenfederallyfundedandstatefundedcontractsisthatrace‐consciousgoalswereinplaceforthefederallyfundedcontractsduringthe2002–2006period,butnotforthestatefundedcontracts.Id.at1192.Thus,theCourtstated:“statefundedcontractsfunctionedasacontrolgrouptohelpdeterminewhetherpreviousaffirmativeactionprogramsskewedthedata.”Id.

Moreover,theCourtfoundtheresearchfirmmeasureddisparitiesinalltwelveofCaltrans’administrativedistricts,andcomputedaggregatedisparitiesbasedonstatewidedata.Id.at1192.Thefirmevaluatedstatisticaldisparitiesbyraceandgender.TheCourtstatedthatwithinandacrossmanycategoriesofcontracts,theresearchfirmfoundsubstantialstatisticaldisparitiesforAfricanAmerican,Asian–Pacific,andNativeAmericanfirms.Id.However,theresearchfirmfoundthattherewerenotsubstantialdisparitiesfortheseminoritiesineverysubcategoryofcontract.Id.TheCourtnotedthatthedisparitystudyalsofoundsubstantialdisparitiesinutilizationofwomen‐ownedfirmsforsomecategoriesofcontracts.Id.Afterpublicationofthedisparitystudy,theCourtpointedouttheresearchfirmcalculateddisparityindicesforallwomen‐ownedfirms,includingfemaleminorities,showingsubstantialdisparitiesintheutilizationofallwomen‐ownedfirmssimilartothosemeasuredforwhitewomen.Id.

TheCourtfoundthatthedisparitystudyandCaltransalsodevelopedextensiveanecdotalevidence,by(1)conductingtwelvepublichearingstoreceivecommentsonthefirm’sfindings;(2)receivinglettersfrombusinessownersandtradeassociations;and(3)interviewing


representativesfromtwelvetradeassociationsand79owners/managersoftransportationfirms.Id.at1192.TheCourtstatedthatsomeoftheanecdotalevidenceindicateddiscriminationbasedonraceorgender.Id.

Caltrans’ DBE Program.CaltransconcludedthattheevidencefromthedisparitystudysupportedaninferenceofdiscriminationintheCaliforniatransportationcontractingindustry.Id.at1192‐1193.Caltransconcludedthatithadsufficientevidencetomakerace‐andgender‐consciousgoalsforAfricanAmerican‐,Asian–PacificAmerican‐,NativeAmerican‐,andwomen‐ownedfirms.Id.TheCourtstatedthatCaltransadoptedtherecommendationsofthedisparityreportandsetanoverallgoalof13.5percentfordisadvantagedbusinessparticipation.Caltransexpectedtomeetone‐halfofthe13.5percentgoalusingrace‐neutralmeasures.Id.

CaltranssubmitteditsproposedDBEprogramtotheUSDOTforapproval,includingarequestforawaivertoimplementtheprogramonlyforthefouridentifiedgroups.Id.at1193.TheCaltrans’DBEprogramincluded66race‐neutralmeasuresthatCaltransalreadyoperatedorplannedtoimplement,andsubsequentproposalsincreasedthenumberofrace‐neutralmeasuresto150.Id.TheUSDOTgrantedthewaiver,butinitiallydidnotapproveCaltrans’DBEprogramuntilin2009,theDOTapprovedCaltrans’DBEprogramforfiscalyear2009.

District Court proceedings.AGCthenfiledacomplaintallegingthatCaltrans’implementationoftheFederalDBEProgramviolatedtheFourteenthAmendmentoftheU.S.Constitution,TitleVIoftheCivilRightsAct,andotherlaws.Ultimately,theAGConlyarguedanas‐appliedchallengetoCaltrans’DBEprogram.ThedistrictcourtonmotionsofsummaryjudgmentheldthatCaltrans’programwas“clearlyconstitutional,”asit“wassupportedbyastrongbasisinevidenceofdiscriminationintheCaliforniacontractingindustryandwasnarrowlytailoredtothosegroupswhichhadactuallysuffereddiscrimination.Id.at1193.

Subsequent Caltrans study and program.WhiletheappealbytheAGCwaspending,CaltranscommissionedanewdisparitystudyfromBBCtoupdateitsDBEprogramasrequiredbythefederalregulations.Id.at1193.InAugust2012,BBCpublisheditsseconddisparityreport,andCaltransconcludedthattheupdatedstudyprovidedevidenceofcontinuingdiscriminationintheCaliforniatransportationcontractingindustryagainstthesamefourgroupsandHispanicAmericans.Id.CaltranssubmittedamodifiedDBEprogramthatisnearlyidenticaltotheprogramapprovedin2009,exceptthatitnowincludesHispanicAmericansandsetsanoverallgoalof12.5percent,ofwhich9.5percentwillbeachievedthroughrace‐andgender‐consciousmeasures.Id.TheUSDOTapprovedCaltrans’updatedprograminNovember2012.Id.

Jurisdiction issue.Initially,theNinthCircuitCourtofAppealsconsideredwhetherithadjurisdictionovertheAGC’sappealbasedonthedoctrinesofmootnessandstanding.TheCourtheldthattheappealisnotmootbecauseCaltrans’newDBEprogramissubstantiallysimilartothepriorprogramandisallegedtodisadvantageAGC’smembers“inthesamefundamentalway”asthepreviousprogram.Id.at1194.

TheCourt,however,heldthattheAGCdidnotestablishassociationalstanding.Id.at1194‐1195:TheCourtfoundthattheAGCdidnotidentifyanyaffectedmembersbynamenorhasitsubmitteddeclarationsbyanyofitsmembersattestingtoharmtheyhavesufferedorwillsuffer


underCaltrans’program.Id.at1194‐1195.BecauseAGCfailedtoestablishstanding,theCourthelditmustdismisstheappealduetolackofjurisdiction.Id.at1195.

Caltrans’ DBE Program held constitutional on the merits.TheCourtthenheldthatevenifAGCcouldestablishstanding,itsappealwouldfail.Id.at1194‐1195.TheCourtheldthatCaltrans’DBEprogramisconstitutionalbecauseitsurvivestheapplicablelevelofscrutinyrequiredbytheEqualProtectionClauseandjurisprudence.Id.at1195‐1200.

TheCourtstatedthatrace‐consciousremedialprogramsmustsatisfystrictscrutinyandthatalthoughstrictscrutinyisstringent,itisnot“fatalinfact.”Id.at1194‐1195(quotingAdarandConstructors,Inc.v.Peña,515U.S.200,237(1995)(AdarandIII)).TheCourtquotedAdarandIII:“Theunhappypersistenceofboththepracticeandthelingeringeffectsofracialdiscriminationagainstminoritygroupsinthiscountryisanunfortunatereality,andgovernmentisnotdisqualifiedfromactinginresponsetoit.”Id.(quotingAdarandIII,515U.S.at237.)

TheCourtpointedoutthatgender‐consciousprogramsmustsatisfyintermediatescrutinywhichrequiresthatgender‐consciousprogramsbesupportedbyan‘exceedinglypersuasivejustification’andbesubstantiallyrelatedtotheachievementofthatunderlyingobjective.Id.at1195(citingWesternStatesPaving,407F.3dat990n.6.).

TheCourtheldthatCaltrans’DBEprogramcontainsbothrace‐andgender‐consciousmeasures,andthatthe“entireprogrampassesstrictscrutiny.”Id.at1195.

A. Application of strict scrutiny standard articulated in Western States Paving.TheCourtheldthattheframeworkforAGC’sas‐appliedchallengetoCaltrans’DBEprogramisgovernedbyWesternStatesPaving.TheNinthCircuitinWesternStatesPavingdevisedatwo‐prongedtestfornarrowtailoring:(1)thestatemustestablishthepresenceofdiscriminationwithinitstransportationcontractingindustry,and(2)theremedialprogrammustbe“limitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.”Id.at1195‐1196(quotingWesternStatesPaving,407F.3dat997–99).

1. Evidence of discrimination in California contracting industry.TheCourtheldthatinEqualProtectioncases,courtsconsiderstatisticalandanecdotalevidencetoidentifytheexistenceofdiscrimination.Id.at1196.TheU.S.SupremeCourthassuggestedthata“significantstatisticaldisparity”couldbesufficienttojustifyrace‐consciousremedialprograms.Id.at*7(citingCityofRichmondv.J.A.CrosonCo.,488U.S.469,509(1989)).TheCourtstatedthatalthoughgenerallynotsufficient,anecdotalevidencecomplementsstatisticalevidencebecauseofitsabilitytobring“thecoldnumbersconvincinglytolife.”Id.(quotingInt’lBhd.ofTeamstersv.UnitedStates,431U.S.324,339(1977)).

TheCourtpointedoutthatWashingtonDOT’sDBEprogramintheWesternStatesPavingcasewasheldinvalidbecauseWashingtonDOThadperformednostatisticalstudiesanditofferednoanecdotalevidence.Id.at1196.TheCourtalsostatedthattheWashingtonDOTusedanoversimplifiedmethodologyresultinginlittleweightbeinggivenbytheCourttothepurporteddisparitybecauseWashington’sdata“didnotaccountfortherelativecapacityofdisadvantagedbusinessestoperformwork,nordiditcontrolforthefactthatexistingaffirmativeactionprogramsskewedthepriorutilizationofminoritybusinessesinthestate.”Id.(quotingWestern


StatesPaving,407F.3dat999‐1001).TheCourtsaidthatitstruckdownWashington’sprogramafterdeterminingthattherecordwasdevoidofanyevidencesuggestingthatminoritiescurrentlysuffer–orhaveeversuffered–discriminationintheWashingtontransportationcontractingindustry.”Id.

Significantly,theCourtheldinthiscaseasfollows:“Incontrast,Caltrans’affirmativeactionprogramissupportedbysubstantialstatisticalandanecdotalevidenceofdiscriminationintheCaliforniatransportationcontractingindustry.”Id.at1196.TheCourtnotedthatthedisparitystudydocumenteddisparitiesinmanycategoriesoftransportationfirmsandtheutilizationofcertainminority‐andwomen‐ownedfirms.Id.TheCourtfoundthedisparitystudy“accountedforthefactorsmentionedinWesternStatesPavingaswellasothers,adjustingavailabilitydatabasedoncapacitytoperformworkandcontrollingforpreviouslyadministeredaffirmativeactionprograms.”Id.(citingWesternStates,407F.3dat1000).

TheCourtalsoheld:“Moreover,thestatisticalevidencefromthedisparitystudyisbolsteredbyanecdotalevidencesupportinganinferenceofdiscrimination.Thesubstantialstatisticaldisparitiesalonewouldgiverisetoaninferenceofdiscrimination,seeCroson,488U.S.at509,andcertainlyCaltrans’statisticalevidencecombinedwithanecdotalevidencepassesconstitutionalmuster.”Id.at1196.

TheCourtspecificallyrejectedtheargumentbyAGCthatstrictscrutinyrequiresCaltranstoprovideevidenceof“specificacts”of“deliberate”discriminationbyCaltransemployeesorprimecontractors.Id.at1196‐1197.TheCourtfoundthattheSupremeCourtinCrosonexplicitlystatesthat“[t]hedegreeofspecificityrequiredinthefindingsofdiscrimination…mayvary.”Id.at1197(quotingCroson,488U.S.at489).TheCourtconcludedthatarulerequiringastatetoshowspecificactsofdeliberatediscriminationbyidentifiedindividualswouldruncontrarytothestatementinCrosonthatstatisticaldisparitiesalonecouldbesufficienttosupportrace‐consciousremedialprograms.Id.(citingCroson,488U.S.at509).TheCourtrejectedAGC’sargumentthatCaltrans’programdoesnotsurvivestrictscrutinybecausethedisparitystudydoesnotidentifyindividualactsofdeliberatediscrimination.Id.

TheCourtrejectedasecondargumentbyAGCthatthisstudyshowedinconsistentresultsforutilizationofminoritybusinessesdependingonthetypeandnatureofthecontract,andthuscannotsupportaninferenceofdiscriminationintheentiretransportationcontractingindustry.Id.at1197.AGCarguedthateachofthesesubcategoriesofcontractsmustbeviewedinisolationwhenconsideringwhetheraninferenceofdiscriminationarises,whichtheCourtrejected.Id.TheCourtfoundthatAGC’sargumentoverlookstherationaleunderpinningtheconstitutionaljustificationforremedialrace‐consciousprograms:theyaredesignedtorootout“patternsofdiscrimination.”Id.quotingCroson,488U.S.at504.

TheCourtstatedthattheissueisnotwhetherCaltranscanshowunderutilizationofdisadvantagedbusinessesineverymeasuredcategoryofcontract.Butrather,theissueiswhetherCaltranscanmeettheevidentiarystandardrequiredbyWesternStatesPavingif,lookingattheevidenceinitsentirety,thedatashowsubstantialdisparitiesinutilizationofminorityfirmssuggestingthatpublicdollarsarebeingpouredinto“asystemofracialexclusionpracticedbyelementsofthelocalconstructionindustry.”Id.at1197quotingCroson488U.S.at492.


TheCourtconcludedthatthedisparitystudyandanecdotalevidencedocumentapatternofdisparitiesforthefourgroups,andthatthestudyfoundsubstantialunderutilizationofthesegroupsinnumerouscategoriesofCaliforniatransportationcontracts,whichtheanecdotalevidenceconfirms.Id.at1197.TheCourtheldthisissufficienttoenableCaltranstoinferthatthesegroupsaresystematicallydiscriminatedagainstinpublicly‐fundedcontracts.Id.

Third,theCourtconsideredandrejectedAGC’sargumentthattheanecdotalevidencehaslittleornoprobativevalueinidentifyingdiscriminationbecauseitisnotverified.Id.at*9.TheCourtnotedthattheFourthandTenthCircuitshaverejectedtheneedtoverifyanecdotalevidence,andtheCourtstatedtheAGCmadenopersuasiveargumentthattheNinthCircuitshouldholdotherwise.Id.

TheCourtpointedoutthatAGCattemptedtodiscounttheanecdotalevidencebecausesomeaccountsascribeminorityunderutilizationtofactorsotherthanovertdiscrimination,suchasdifficultieswithobtainingbondingandbreakingintothe“goodolboy”networkofcontractors.Id.at1197‐1198.TheCourtheld,however,thatthefederalcourtsandregulationshaveidentifiedpreciselythesefactorsasbarriersthatdisadvantageminorityfirmsbecauseofthelingeringeffectsofdiscrimination.Id.at1198,citingWesternStatesPaving,407andAGCCII,950F.2dat1414.

TheCourtfoundthatAGCignoresthemanyincidentsofracialandgenderdiscriminationpresentedintheanecdotalevidence.Id.at1198.TheCourtsaidthatCaltransdoesnotclaim,andtheanecdotalevidencedoesnotneedtoprove,thateveryminority‐ownedbusinessisdiscriminatedagainst.Id.TheCourtconcluded:“ItisenoughthattheanecdotalevidencesupportsCaltrans’statisticaldatashowingapervasivepatternofdiscrimination.”Id.TheindividualaccountsofdiscriminationofferedbyCaltrans,accordingtotheCourt,metthisburden.Id.

Fourth,theCourtrejectedAGC’scontentionthatCaltrans’evidencedoesnotsupportaninferenceofdiscriminationagainstallwomenbecausegender‐baseddisparitiesinthestudyarelimitedtowhitewomen.Id.at1198.AGC,theCourtsaid,misunderstandsthestatisticaltechniquesusedinthedisparitystudy,andthatthestudycorrectlyisolatestheeffectofgenderbylimitingitsdatapooltowhitewomen,ensuringthatstatisticalresultsforgender‐baseddiscriminationarenotskewedbydiscriminationagainstminoritywomenonaccountoftheirrace.Id.

Inaddition,afterAGC’searlyincorrectobjectionstothemethodology,theresearchfirmconductedafollow‐upanalysisofallwomen‐ownedfirmsthatproducedadisparityindexof59.Id.at1198.TheCourtheldthatthisindexisevidenceofasubstantialdisparitythatraisesaninferenceofdiscriminationandissufficienttosupportCaltrans’decisiontoincludeallwomeninitsDBEprogram.Id.at1195.

2. Program tailored to groups who actually suffered discrimination.TheCourtpointedoutthatthesecondprongofthetestarticulatedinWesternStatesPavingrequiresthataDBEprogrambelimitedtothosegroupsthatactuallysuffereddiscriminationinthestate’scontractingindustry.Id.at1198.TheCourtfoundCaltrans’DBEprogramislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.Id.TheCourtheldthatthe2007disparitystudyshowed


systematicandsubstantialunderutilizationofAfricanAmerican‐,NativeAmerican‐,Asian‐PacificAmerican‐,andwomen‐ownedfirmsacrossarangeofcontractcategories.Id.at1198‐1199.Id.Thesedisparities,accordingtotheCourt,supportaninferenceofdiscriminationagainstthosegroups.Id.

CaltransconcludedthatthestatisticalevidencedidnotsupportaninferenceofapatternofdiscriminationagainstHispanicorSubcontinentAsianAmericans.Id.at1199.CaliforniaappliedforandreceivedawaiverfromtheUSDOTinordertolimitits2009programtoAfricanAmerican,NativeAmerican,Asian‐PacificAmerican,andwomen‐ownedfirms.Id.TheCourtheldthatCaltrans’program“adherespreciselytothenarrowtailoringrequirementsofWesternStates.”Id.

TheCourtrejectedtheAGCcontentionthattheDBEprogramisnotnarrowlytailoredbecauseitcreatesrace‐basedpreferencesforalltransportation‐relatedcontracts,ratherthandistinguishingbetweenconstructionandengineeringcontracts.Id.at1199.TheCourtstatedthatAGCcitednocasethatrequiresastatepreferenceprogramtoprovideseparategoalsfordisadvantagedbusinessparticipationonconstructionandengineeringcontracts.Id.TheCourtnotedthattothecontrary,thefederalguidelinesforimplementingthefederalprograminstructstatesnottoseparatedifferenttypesofcontracts.Id.TheCourtfoundthereare“soundpolicyreasonstonotrequiresuchparsing,includingthefactthatthereissubstantialoverlapinfirmscompetingforconstructionandengineeringcontracts,asprimeandsubcontractors.”Id.

B. Consideration of race–neutral alternatives.TheCourtrejectedtheAGCassertionthatCaltrans’programisnotnarrowlytailoredbecauseitfailedtoevaluaterace‐neutralmeasuresbeforeimplementingthesystemofracialpreferences,andstatedthelawimposesnosuchrequirement.Id.at1199.TheCourtheldthatWesternStatesPavingdoesnotrequirestatestoindependentlymeetthisaspectofnarrowtailoring,andinsteadfocusesonwhetherthefederalstatutesufficientlyconsideredrace‐neutralalternatives.Id.

Second,theCourtfoundthatevenifthisrequirementdoesapplytoCaltrans’program,narrowtailoringonlyrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”Id.at1199,citingGrutterv.Bollinger,539U.S.306,339(2003).TheCourtfoundthattheCaltransprogramhasconsideredanincreasingnumberofrace‐neutralalternatives,anditrejectedAGC’sclaimthatCaltrans’programdoesnotsufficientlyconsiderrace‐neutralalternatives.Id.at1199.

C. Certification affidavits for Disadvantaged Business Enterprises.TheCourtrejectedtheAGCargumentthatCaltrans’programisnotnarrowlytailoredbecauseaffidavitsthatapplicantsmustsubmittoobtaincertificationasDBEsdonotrequireapplicantstoasserttheyhavesuffereddiscriminationinCalifornia.Id.at1199‐1200.TheCourtheldthecertificationprocessemployedbyCaltransfollowstheprocessdetailedinthefederalregulations,andthatthisisanimpermissiblecollateralattackonthefacialvalidityoftheCongressionalActauthorizingtheFederalDBEProgramandthefederalregulationspromulgatedbytheUSDOT(TheSafe,Accountable,Flexible,EfficientTransportationEquityAct:ALegacyforUsers,Pub.L.No.109‐59,§1101(b),119Sect.1144(2005)).Id.at1200.

D. Application of program to mixed state‐ and federally‐funded contracts.TheCourtalsorejectedAGC’schallengethatCaltransappliesitsprogramtotransportationcontractsfundedby


bothfederalandstatemoney.Id.at1200.TheCourtheldthatthisisanotherimpermissiblecollateralattackonthefederalprogram,whichexplicitlyrequiresgoalstobesetformix‐fundedcontracts.Id.

Conclusion.TheCourtconcludedthattheAGCdidnothavestanding,andthatfurther,Caltrans’DBEprogramsurvivesstrictscrutinyby:1)havingastrongbasisinevidenceofdiscriminationwithintheCaliforniatransportationcontractingindustry,and2)beingnarrowlytailoredtobenefitonlythosegroupsthathaveactuallysuffereddiscrimination.Id.at1200.TheCourtthendismissedtheappeal.Id.

5. Braunstein v. Arizona DOT, 683 F.3d 1177 (9th Cir. 2012)

BraunsteinisanengineeringcontractorthatprovidedsubsurfaceutilitylocationservicesforADOT.BraunsteinsuedtheArizonaDOTandothersseekingdamagesundertheCivilRightsAct,pursuantto§§1981and1983,andchallengingtheuseofArizona’sformeraffirmativeactionprogram,orrace‐andgender‐consciousDBEprogramimplementingtheFederalDBEProgram,allegingviolationoftheequalprotectionclause.

Factual background.ADOTsolicitedbidsforanewengineeringanddesigncontract.Sixfirmsbidontheprimecontract,butBraunsteindidnotbidbecausehecouldnotsatisfyarequirementthatprimecontractorscomplete50percentofthecontractworkthemselves.Instead,Braunsteincontactedthebiddingfirmstoaskaboutsubcontractingfortheutilitylocationwork.683F.3dat1181.AllsixfirmsrejectedBraunstein’sovertures,andBraunsteindidnotsubmitaquoteorsubcontractingbidtoanyofthem.Id.

Aspartofthebid,theprimecontractorswererequiredtocomplywithfederalregulationsthatprovidestatesreceivingfederalhighwayfundsmaintainaDBEprogram.683F.3dat1182.Underthiscontract,theprimecontractorwouldreceiveamaximumof5pointsforDBEparticipation.Id.at1182.Allsixfirmsthatbidontheprimecontractreceivedthemaximum5pointsforDBEparticipation.AllsixfirmscommittedtohiringDBEsubcontractorstoperformatleast6percentofthework.OnlyoneofthesixbiddingfirmsselectedaDBEasitsdesiredutilitylocationsubcontractor.ThreeofthebiddingfirmsselectedanothercompanyotherthanBraunsteintoperformtheutilitylocationwork.Id.DMJMwonthebidforthe2005contractusingAztectoperformtheutilitylocationwork.AztecwasnotaDBE.Id.at1182.

District Court rulings.BraunsteinbroughtthissuitinfederalcourtagainstADOTandemployeesoftheDOTallegingthatADOTviolatedhisrighttoequalprotectionbyusingraceandgenderpreferencesinitssolicitationandawardofthe2005contract.ThedistrictcourtdismissedasmootBraunstein’sclaimsforinjunctiveanddeclaratoryreliefbecauseADOThadsuspendeditsDBEprogramin2006followingtheNinthCircuitdecisioninWesternStatesPavingCo.v.WashingtonStateDOT,407F.3d9882(9thCir.2005).ThisleftonlyBraunstein’sdamagesclaimsagainsttheStateandADOTunder§2000d,andagainstthenamedindividualdefendantsintheirindividualcapacitiesunder§§1981and1983.Id.at1183.

ThedistrictcourtconcludedthatBraunsteinlackedArticleIIIstandingtopursuehisremainingclaimsbecausehehadfailedtoshowthatADOT’sDBEprogramhadaffectedhimpersonally.Thecourtnotedthat“Braunsteinwasaffordedtheopportunitytobidonsubcontractingwork,and


theDBEgoaldidnotserveasabarriertodoingso,norwasitanimpedimenttohissecuringasubcontract.”Id.at1183.ThedistrictcourtfoundthatBraunstein’sinabilitytosecureutilitylocationworkstemmedfromhispastunsatisfactoryperformance,nothisstatusasanon‐DBE.Id.

Lack of standing. TheNinthCircuitCourtofAppealsheldthatBraunsteinlackedArticleIIIstandingandaffirmedtheentryofsummaryjudgmentinfavorofADOTandtheindividualemployeesofADOT.TheCourtfoundthatBraunsteinhadnotprovidedanyevidenceshowingthatADOT’sDBEprogramaffectedhimpersonallyorthatitimpededhisabilitytocompeteforutilitylocationworkonanequalbasis.Id.at1185.TheCourtnotedthatBraunsteindidnotsubmitaquoteorabidtoanyoftheprimecontractorsbiddingonthegovernmentcontract.Id.

TheCourtalsopointedoutthatBraunsteindidnotseekprospectivereliefagainstthegovernment“affirmativeaction”program,notingthedistrictcourtdismissedasmoothisclaimsfordeclaratoryandinjunctivereliefsinceADOThadsuspendeditsDBEprogrambeforehebroughtthesuit.Id.at1186.Thus,Braunstein’ssurvivingclaimswerefordamagesbasedonthecontractatissueratherthanprospectiverelieftoenjointheDBEProgram.Id.Accordingly,theCourtheldhemustshowmorethanthatheis“ableandready”toseeksubcontractingwork.Id.

TheCourtfoundBraunsteinpresentednoevidencetodemonstratethathewasinapositiontocompeteequallywiththeothersubcontractors,noevidencecomparinghimselfwiththeothersubcontractorsintermsofpriceorothercriteria,andnoevidenceexplainingwhythesixprospectiveprimecontractorsrejectedhimasasubcontractor.Id.at1186.TheCourtstatedthattherewasnothingintherecordindicatingtheADOTDBEprogramposedabarrierthatimpededBraunstein’sabilitytocompeteforworkasasubcontractor.Id.at1187.TheCourtheldthattheexistenceofaracialorgenderbarrierisnotenoughtoestablishstanding,withoutaplaintiff’sshowingthathehasbeensubjectedtosuchabarrier.Id.at1186.

TheCourtnotedBraunsteinhadexplicitlyacknowledgedpreviouslythatthewinningbidderonthecontractwouldnothirehimasasubcontractorforreasonsunrelatedtotheDBEprogram.Id.at1186.Atthesummaryjudgmentstage,theCourtstatedthatBraunsteinwasrequiredtosetforthspecificfactsdemonstratingtheDBEprogramimpededhisabilitytocompeteforthesubcontractingworkonanequalbasis.Id.at1187.

Summary judgment granted to ADOT.TheCourtconcludedthatBraunsteinwasunabletopointtoanyevidencetodemonstratehowtheADOTDBEprogramadverselyaffectedhimpersonallyorimpededhisabilitytocompeteforsubcontractingwork.Id.TheCourtthusheldthatBraunsteinlackedArticleIIIstandingandaffirmedtheentryofsummaryjudgmentinfavorofADOT.

6. Northern Contracting, Inc. v. Illinois, 473 F.3d 715 (7th Cir. 2007)

InNorthernContracting,Inc.v.Illinois,theSeventhCircuitaffirmedthedistrictcourtdecisionupholdingthevalidityandconstitutionalityoftheIllinoisDepartmentofTransportation’s(“IDOT”)DBEProgram.PlaintiffNorthernContractingInc.(“NCI”)wasawhitemale‐ownedconstructioncompanyspecializingintheconstructionofguardrailsandfencesforhighwayconstructionprojectsinIllinois.473F.3d715,717(7thCir.2007).Initially,NCIchallengedthe


constitutionalityofboththefederalregulationsandtheIllinoisstatuteimplementingtheseregulations.Id.at719.ThedistrictcourtgrantedtheUSDOT’sMotionforSummaryJudgment,concludingthatthefederalgovernmenthaddemonstratedacompellinginterestandthatTEA‐21wassufficientlynarrowlytailored.NCIdidnotchallengethisrulingandtherebyforfeitedtheopportunitytochallengethefederalregulations.Id.at720.NCIalsoforfeitedtheargumentthatIDOT’sDBEprogramdidnotserveacompellinggovernmentinterest.Id.ThesoleissueonappealtotheSeventhCircuitwaswhetherIDOT’sprogramwasnarrowlytailored.Id.

IDOTtypicallyadoptedanewDBEplaneachyear.Id.at718.InpreparingforFiscalYear2005,IDOTretainedaconsultingfirmtodetermineDBEavailability.Id.Theconsultantfirstidentifiedtherelevantgeographicmarket(Illinois)andtherelevantproductmarket(transportationinfrastructureconstruction).Id.Theconsultantthendeterminedavailabilityofminority‐andwomen‐ownedfirmsthroughanalysisofDun&Bradstreet’sMarketplacedata.Id.ThisinitiallistwascorrectedforerrorsinthedatabysurveyingtheD&Blist.Id.Inlightofthesesurveys,theconsultantarrivedataDBEavailabilityof22.77percent.Id.Theconsultantthenranaregressionanalysisonearningsandbusinessinformationandconcludedthatintheabsenceofdiscrimination,relativeDBEavailabilitywouldbe27.5percent.Id.IDOTconsideredthis,alongwithotherdata,includingDBEutilizationonIDOTs“zerogoal”experimentconductedin2002to2003,inwhichIDOTdidnotuseDBEgoalson5percentofitscontracts(1.5%utilization)anddataofDBEutilizationonprojectsfortheIllinoisStateTollHighwayAuthoritywhichdoesnotreceivefederalfundingandwhosegoalsarecompletelyvoluntary(1.6%utilization).Id.at719.Onthebasisofallofthisdata,IDOTadopteda22.77percentgoalfor2005.Id.

DespitethefacttheNCIforfeitedtheargumentthatIDOT’sDBEprogramdidnotserveacompellingstateinterest,theSeventhCircuitbrieflyaddressedthecompellinginterestprongofthestrictscrutinyanalysis,notingthatIDOThadsatisfieditsburden.Id.at720.Thecourtnotedthat,post‐Adarand,twoothercircuitshaveheldthatastatemayrelyonthefederalgovernment’scompellinginterestinimplementingalocalDBEplan.Id.at720‐21,citingWesternStatesPavingCo.,Inc.v.WashingtonStateDOT,407F.3d983,987(9thCir.2005),cert.denied,126S.Ct.1332(Feb.21,2006)andSherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964,970(8thCir.2003),cert.denied,541U.S.1041(2004).ThecourtstatedthatNCIhadnotarticulatedanyreasontobreakranksfromtheothercircuitsandexplainedthat“[i]nsofarasthestateismerelycomplyingwithfederallawitisactingastheagentofthefederalgovernment….Ifthestatedoesexactlywhatthestatuteexpectsittodo,andthestatuteisconcededforpurposesoflitigationtobeconstitutional,wedonotseehowthestatecanbethoughttohaveviolatedtheConstitution.”Id.at721,quotingMilwaukeeCountyPaversAssociationv.Fielder,922F.2d419,423(7thCir.1991).ThecourtdidnotaddresswhetherIDOThadanindependentinterestthatcouldhavesurvivedconstitutionalscrutiny.

InaddressingthenarrowlytailoredprongwithrespecttoIDOT’sDBEprogram,thecourtheldthatIDOThadcomplied.Id.ThecourtconcludeditsholdinginMilwaukeethatastateisinsulatedfromaconstitutionalattackabsentashowingthatthestateexceededitsfederalauthorityremainedapplicable.Id.at721‐22.ThecourtnotedthattheSupremeCourtinAdarandConstructorsv.Pena,515U.S.200(1995)didnotseizetheopportunitytooverrulethatdecision,explainingthattheCourtdidnotinvalidateitsconclusionthatachallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.Id.at722.


ThecourtfurtherclarifiedtheMilwaukeeopinioninlightoftheinterpretationsoftheopinionsofferedinbytheNinthCircuitinWesternStatesandEighthCircuitinSherbrooke.Id.ThecourtstatedthattheNinthCircuitinWesternStatesmisreadtheMilwaukeedecisioninconcludingthatMilwaukeedidnotaddressthesituationofanas‐appliedchallengetoaDBEprogram.Id.at722,n.5.Relatedly,thecourtstatedthattheEighthCircuit’sopinioninSherbrooke(thattheMilwaukeedecisionwascompromisedbythefactthatitwasdecidedunderthepriorlaw“whenthe10percentfederalset‐asidewasmoremandatory”)wasunconvincingsinceallrecipientsoffederaltransportationfundsarestillrequiredtohavecompliantDBEprograms.Id.at722.FederallawmakesmoreclearnowthatthecompliancecouldbeachievedevenwithnoDBEutilizationifthatweretheresultofagoodfaithuseoftheprocess.Id.at722,n.5.ThecourtstatedthatIDOTinthiscasewasactingasaninstrumentoffederalpolicyandNCI’scollateralattackonthefederalregulationswasimpermissible.Id.at722.

Theremainderofthecourt’sopinionaddressedthequestionofwhetherIDOTexceededitsgrantofauthorityunderfederallaw,andheldthatallofNCI’sargumentsfailed.Id.First,NCIchallengedthemethodbywhichthelocalbasefigurewascalculated,thefirststepinthegoal‐settingprocess.Id.NCIarguedthatthenumberofregisteredandprequalifiedDBEsinIllinoisshouldhavesimplybeencounted.Id.Thecourtstatedthatwhilethefederalregulationslistseveralexamplesofmethodsfordeterminingthelocalbasefigure,Id.at723,theseexamplesarenotintendedasanexhaustivelist.Thecourtpointedoutthatthefifthiteminthelistisentitled“AlternativeMethods,”andstates:“Youmayuseothermethodstodetermineabasefigureforyouroverallgoal.AnymethodologyyouchoosemustbebasedondemonstrableevidenceoflocalmarketconditionsandbedesignatedtoultimatelyattainagoalthatisrationallyrelatedtotherelativeavailabilityofDBEsinyourmarket.”Id.(citing49CFR§26.45(c)(5)).Accordingtothecourt,theregulationsmakeclearthat“relativeavailability”means“theavailabilityofready,willingandableDBEsrelativetoallbusinessready,willing,andabletoparticipate”onDOTcontracts.Id.ThecourtstatedNCIpointedtonothinginthefederalregulationsthatindicatedthatarecipientmustsonarrowlydefinethescopeoftheready,willing,andavailablefirmstoasimplecountofthenumberofregisteredandprequalifiedDBEs.Id.ThecourtagreedwiththedistrictcourtthattheremedialnatureofthefederalschememilitatesinfavorofamethodofDBEavailabilitycalculationthatcastsabroadernet.Id.

Second,NCIarguedthattheIDOTfailedtoproperlyadjustitsgoalbasedonlocalmarketconditions.Id.Thecourtnotedthatthefederalregulationsdonotrequireanyadjustmentstothebasefigure,butsimplyproviderecipientswithauthoritytomakesuchadjustmentsifnecessary.Id.Accordingtothecourt,NCIfailedtoidentifyanyaspectoftheregulationsrequiringIDOTtoseparateprimecontractoravailabilityfromsubcontractoravailability,andpointedoutthattheregulationsrequirethelocalgoaltobefocusedonoverallDBEparticipation.Id.

Third,NCIcontendedthatIDOTviolatedthefederalregulationsbyfailingtomeetthemaximumfeasibleportionofitsoverallgoalthroughrace‐neutralmeansoffacilitatingDBEparticipation.Id.at723‐24.NCIarguedthatIDOTshouldhaveconsideredDBEswhohadwonsubcontractsongoalprojectswheretheprimecontractordidnotconsiderDBEstatus,insteadofonlyconsideringDBEswhowoncontractsonno‐goalprojects.Id.at724.ThecourtheldthatwhiletheregulationsindicatethatwhereDBEswinsubcontractsongoalprojectsstrictlythroughlowbidthiscanbecountedasrace‐neutralparticipation,theregulationsdidnotrequireIDOTtosearchforthisdata,forthepurposeofcalculatingpastlevelsofrace‐neutralDBEparticipation.


Id.Accordingtothecourt,therecordindicatedthatIDOTusednearlyallthemethodsdescribedintheregulationstomaximizetheportionofthegoalthatwillbeachievedthroughrace‐neutralmeans.Id.

ThecourtaffirmedthedecisionofthedistrictcourtupholdingthevalidityoftheIDOTDBEprogramandfoundthatitwasnarrowlytailoredtofurtheracompellinggovernmentalinterest.Id.

7. Western States Paving Co. v. Washington State DOT, 407 F.3d 983 (9th Cir. 2005), cert. denied, 546 U.S. 1170 (2006)

ThiscaseoutoftheNinthCircuitstruckdownastate’simplementationoftheFederalDBEProgramforfailuretopassconstitutionalmuster.InWesternStatesPaving,theNinthCircuitheldthattheStateofWashington’simplementationoftheFederalDBEProgramwasunconstitutionalbecauseitdidnotsatisfythenarrowtailoringelementoftheconstitutionaltest.TheNinthCircuitheldthattheStatemustpresentitsownevidenceofpastdiscriminationwithinitsownboundariesinordertosurviveconstitutionalmusterandcouldnotmerelyrelyupondatasuppliedbyCongress.TheUnitedStatesSupremeCourtdeniedcertiorari.Theanalysisinthedecisionalsoisinstructiveinparticularastotheapplicationofthenarrowlytailoredprongofthestrictscrutinytest.

PlaintiffWesternStatesPavingCo.(“plaintiff”)wasawhitemale‐ownedasphaltandpavingcompany.407F.3d983,987(9thCir.2005).InJulyof2000,plaintiffsubmittedabidforaprojectfortheCityofVancouver;theprojectwasfinancedwithfederalfundsprovidedtotheWashingtonStateDOT(“WSDOT”)undertheTransportationEquityActforthe21stCentury(“TEA‐21”).Id.

CongressenactedTEA‐21in1991andaftermultiplerenewals,itwassettoexpireonMay31,2004.Id.at988.TEA‐21establishedminimumminority‐ownedbusinessparticipationrequirements(10%)forcertainfederally‐fundedprojects.Id.TheregulationsrequireeachstateacceptingfederaltransportationfundstoimplementaDBEprogramthatcomportswiththeTEA‐21.Id.TEA‐21indicatesthe10percentDBEutilizationrequirementis“aspirational,”andthestatutorygoal“doesnotauthorizeorrequirerecipientstosetoverallorcontractgoalsatthe10percentlevel,oranyotherparticularlevel,ortotakeanyspecialadministrativestepsiftheirgoalsareaboveorbelow10percent.”Id.

TEA‐21setsforthatwo‐stepprocessforastatetodetermineitsownDBEutilizationgoal:(1)thestatemustcalculatetherelativeavailabilityofDBEsinitslocaltransportationcontractingindustry(onewaytodothisistodividethenumberofready,willingandableDBEsinastatebythetotalnumberofready,willingandablefirms);and(2)thestateisrequiredto“adjustthisbasefigureupwardordownwardtoreflecttheprovencapacityofDBEstoperformwork(asmeasuredbythevolumeofworkallocatedtoDBEsinrecentyears)andevidenceofdiscriminationagainstDBEsobtainedfromstatisticaldisparitystudies.”Id.at989(citingregulation).Astateisalsopermittedtoconsiderdiscriminationinthebondingandfinancingindustriesandthepresenteffectsofpastdiscrimination.Id.(citingregulation).TEA‐21requiresageneralized,“undifferentiated”minoritygoalandastateisprohibitedfromapportioningtheir


DBEutilizationgoalamongdifferentminoritygroups(e.g.,betweenHispanics,blacks,andwomen).Id.at990(citingregulation).

“Astatemustmeetthemaximumfeasibleportionofthisgoalthroughrace‐[andgender‐]neutralmeans,includinginformationalandinstructionalprogramstargetedtowardallsmallbusinesses.”Id.(citingregulation).Race‐andgender‐consciouscontractgoalsmustbeusedtoachieveanyportionofthecontractgoalsnotachievablethroughrace‐andgender‐neutralmeasures.Id.(citingregulation).However,TEA‐21doesnotrequirethatDBEparticipationgoalsbeusedoneverycontractoratthesameleveloneverycontractinwhichtheyareused;rather,theoveralleffectmustbeto“obtainthatportionoftherequisiteDBEparticipationthatcannotbeachievedthroughrace‐[andgender‐]neutralmeans.”Id.(citingregulation).

Aprimecontractormustuse“goodfaithefforts”tosatisfyacontract’sDBEutilizationgoal.Id.(citingregulation).However,astateisprohibitedfromenactingrigidquotasthatdonotcontemplatesuchgoodfaithefforts.Id.(citingregulation).

UndertheTEA‐21minorityutilizationrequirements,theCitysetagoalof14percentminorityparticipationonthefirstprojectplaintiffbidon;theprimecontractorthusrejectedplaintiff’sbidinfavorofahigherbiddingminority‐ownedsubcontractingfirm.Id.at987.InSeptemberof2000,plaintiffagainsubmittedabidonaprojectfinancedwithTEA‐21fundsandwasagainrejectedinfavorofahigherbiddingminority‐ownedsubcontractingfirm.Id.Theprimecontractorexpresslystatedthatherejectedplaintiff’sbidduetotheminorityutilizationrequirement.Id.

PlaintifffiledsuitagainsttheWSDOT,ClarkCounty,andtheCity,challengingtheminoritypreferencerequirementsofTEA‐21asunconstitutionalbothfaciallyandasapplied.Id.Thedistrictcourtrejectedbothofplaintiff’schallenges.ThedistrictcourtheldtheprogramwasfaciallyconstitutionalbecauseitfoundthatCongresshadidentifiedsignificantevidenceofdiscriminationinthetransportationcontractingindustryandtheTEA‐21wasnarrowlytailoredtoremedysuchdiscrimination.Id.at988.Thedistrictcourtrejectedtheas‐appliedchallengeconcludingthatWashington’simplementationoftheprogramcomportedwiththefederalrequirementsandthestatewasnotrequiredtodemonstratethatitsminoritypreferenceprogramindependentlysatisfiedstrictscrutiny.Id.PlaintiffappealedtotheNinthCircuitCourtofAppeals.Id.

TheNinthCircuitconsideredwhethertheTEA‐21,whichauthorizestheuseofrace‐andgender‐basedpreferencesinfederally‐fundedtransportationcontracts,violatedequalprotection,eitheronitsfaceorasappliedbytheStateofWashington.

Thecourtappliedastrictscrutinyanalysistoboththefacialandas‐appliedchallengestoTEA‐21.Id.at990‐91.Thecourtdidnotapplyaseparateintermediatescrutinyanalysistothegender‐basedclassificationsbecauseitdeterminedthatit“wouldnotyieldadifferentresult.”Id.at990,n.6.

Facial challenge (Federal Government).Thecourtfirstnotedthatthefederalgovernmenthasacompellinginterestin“ensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectsofeitherpublicorprivatediscriminationwithinthetransportationcontracting


industry.”Id.at991,citingCityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1989)andAdarandConstructors,Inc.v.Slater(“AdarandVII”),228F.3d1147,1176(10thCir.2000).Thecourtfoundthat“[b]othstatisticalandanecdotalevidencearerelevantinidentifyingtheexistenceofdiscrimination.”Id.at991.ThecourtfoundthatalthoughCongressdidnothaveevidenceofdiscriminationagainstminoritiesineverystate,suchevidencewasunnecessaryfortheenactmentofnationwidelegislation.Id.However,citingboththeEighthandTenthCircuits,thecourtfoundthatCongresshadampleevidenceofdiscriminationinthetransportationcontractingindustrytojustifyTEA‐21.Id.ThecourtalsofoundthatbecauseTEA‐21setforthflexiblerace‐consciousmeasurestobeusedonlywhenrace‐neutraleffortswereunsuccessful,theprogramwasnarrowlytailoredandthussatisfiedstrictscrutiny.Id.at992‐93.Thecourtaccordinglyrejectedplaintiff’sfacialchallenge.Id.

As‐applied challenge (State of Washington).PlaintiffallegedTEA‐21wasunconstitutionalas‐appliedbecausetherewasnoevidenceofdiscriminationinWashington’stransportationcontractingindustry.Id.at995.TheStateallegedthatitwasnotrequiredtoindependentlydemonstratethatitsapplicationofTEA‐21satisfiedstrictscrutiny.Id.TheUnitedStatesintervenedtodefendTEA‐21’sfacialconstitutionality,and“unambiguouslyconcededthatTEA‐21’sraceconsciousmeasurescanbeconstitutionallyappliedonlyinthosestateswheretheeffectsofdiscriminationarepresent.”Id.at996;seealsoBr.fortheUnitedStatesat28(April19,2004)(“DOT’sregulations…aredesignedtoassistStatesinensuringthatrace‐consciousremediesarelimitedtoonlythosejurisdictionswherediscriminationoritseffectsareaproblemandonlyasalastresortwhenrace‐neutralreliefisinsufficient.”(emphasisinoriginal)).

ThecourtfoundthattheEighthCircuitwastheonlyothercourttoconsideranas‐appliedchallengetoTEA‐21inSherbrookeTurf,Inc.v.MinnesotaDOT,345F.3d964(8thCir.2003),cert.denied124S.Ct.2158(2004).Id.at996.TheEighthCircuitdidnotrequireMinnesotaandNebraskatoidentifyacompellingpurposefortheirprogramsindependentofCongress’snationwideremedialobjective.Id.However,theEighthCircuitdidconsiderwhetherthestates’implementationofTEA‐21wasnarrowlytailoredtoachieveCongress’sremedialobjective.Id.TheEighthCircuitthuslookedtothestates’independentevidenceofdiscriminationbecause“tobenarrowlytailored,anationalprogrammustbelimitedtothosepartsofthecountrywhereitsrace‐basedmeasuresaredemonstrablyneeded.”Id.(internalcitationsomitted).TheEighthCircuitreliedonthestates’statisticalanalysesoftheavailabilityandcapacityofDBEsintheirlocalmarketsconductedbyoutsideconsultingfirmstoconcludethatthestatessatisfiedthenarrowtailoringrequirement.Id.at997.

ThecourtconcurredwiththeEighthCircuitandfoundthatWashingtondidnotneedtodemonstrateacompellinginterestforitsDBEprogram,independentfromthecompellingnationwideinterestidentifiedbyCongress.Id.However,thecourtdeterminedthatthedistrictcourterredinholdingthatmerecompliancewiththefederalprogramsatisfiedstrictscrutiny.Id.Rather,thecourtheldthatwhetherWashington’sDBEprogramwasnarrowlytailoredwasdependentonthepresenceorabsenceofdiscriminationinWashington’stransportationcontractingindustry.Id.at997‐98.“IfnosuchdiscriminationispresentinWashington,thentheState’sDBEprogramdoesnotservearemedialpurpose;itinsteadprovidesanunconstitutionalwindfalltominoritycontractorssolelyonthebasisoftheirraceorsex.”Id.at998.ThecourtheldthataSixthCircuitdecisiontothecontrary,TennesseeAsphaltCo.v.Farris,942F.2d969,970(6thCir.1991),misinterpretedearliercaselaw.Id.at997,n.9.


Thecourtfoundthatmoreover,evenwherediscriminationispresentinastate,aprogramisnarrowlytailoredonlyifitappliesonlytothoseminoritygroupswhohaveactuallysuffereddiscrimination.Id.at998,citingCroson,488U.S.at478.ThecourtalsofoundthatinMontereyMechanicalCo.v.Wilson,125F.3d702,713(9thCir.1997),ithad“previouslyexpressedsimilarconcernsaboutthehaphazardinclusionofminoritygroupsinaffirmativeactionprogramsostensiblydesignedtoremedytheeffectsofdiscrimination.”Id.InMontereyMechanical,thecourtheldthat“theoverlyinclusivedesignationofbenefitedminoritygroupswasa‘redflagsignalingthatthestatuteisnot,astheEqualProtectionClauserequires,narrowlytailored.’”Id.,citingMontereyMechanical,125F.3dat714.Thecourtfoundthatothercourtsareinaccord.Id.at998‐99,citingBuildersAss’nofGreaterChi.v.CountyofCook,256F.3d642,647(7thCir.2001);AssociatedGen.ContractorsofOhio,Inc.v.Drabik,214F.3d730,737(6thCir.2000);O’DonnellConstr.Co.v.DistrictofColumbia,963F.2d420,427(D.C.Cir.1992).Accordingly,thecourtfoundthateachoftheprincipalminoritygroupsbenefitedbyWSDOT’sDBEprogrammusthavesuffereddiscriminationwithintheState.Id.at999.

ThecourtfoundthatWSDOT’sprogramcloselytrackedthesampleUSDOTDBEprogram.Id.WSDOTcalculateditsDBEparticipationgoalbyfirstcalculatingtheavailabilityofready,willingandableDBEsintheState(dividingthenumberoftransportationcontractingfirmsintheWashingtonStateOfficeofMinority,WomenandDisadvantagedBusinessEnterprisesDirectorybythetotalnumberoftransportationcontractingfirmslistedintheCensusBureau’sWashingtondatabase,whichequaled11.17%).Id.WSDOTthenupwardlyadjustedthe11.17percentbasefigureto14percent“toaccountfortheprovencapacityofDBEstoperformwork,asreflectedbythevolumeofworkperformedbyDBEs[duringacertaintimeperiod].”Id.AlthoughDBEsperformed18percentofworkonStateprojectsduringtheprescribedtimeperiod,Washingtonsetthefinaladjustedfigureat14percentbecauseTEA‐21reducedthenumberofeligibleDBEsinWashingtonbyimposingmorestringentcertificationrequirements.Id.at999,n.11.WSDOTdidnotmakeanadjustmenttoaccountfordiscriminatorybarriersinobtainingbondingandfinancing.Id.WSDOTsimilarlydidnotmakeanyadjustmenttoreflectpresentorpastdiscrimination“becauseitlackedanystatisticalstudiesevidencingsuchdiscrimination.”Id.

WSDOTthendeterminedthatitneededtoachieve5percentofits14percentgoalthroughrace‐consciousmeansbasedona9percentDBEparticipationrateonstate‐fundedcontractsthatdidnotincludeaffirmativeactioncomponents(i.e.,9%participationcouldbeachievedthroughrace‐neutralmeans).Id.at1000.TheUSDOTapprovedWSDOTgoal‐settingprogramandthetotalityofits2000DBEprogram.Id.

Washingtonconcededthatitdidnothavestatisticalstudiestoestablishtheexistenceofpastorpresentdiscrimination.Id.Itargued,however,thatithadevidenceofdiscriminationbecauseminority‐ownedfirmshadthecapacitytoperform14percentoftheState’stransportationcontractsin2000butreceivedonly9percentofthesubcontractingfundsoncontractsthatdidnotincludeanaffirmativeaction’scomponent.Id.ThecourtfoundthattheState’smethodologywasflawedbecausethe14percentfigurewasbasedontheearlier18percentfigure,discussedsupra,whichincludedcontractswithaffirmativeactioncomponents.Id.Thecourtconcludedthatthe14percentfiguredidnotaccuratelyreflecttheperformancecapacityofDBEsinarace‐neutralmarket.Id.ThecourtalsofoundtheStateconcededasmuchtothedistrictcourt.Id.


ThecourtheldthatadisparitybetweenDBEperformanceoncontractswithanaffirmativeactioncomponentandthosewithout“doesnotprovideanyevidenceofdiscriminationagainstDBEs.”Id.ThecourtfoundthattheonlyevidenceuponwhichWashingtoncouldrelywasthedisparitybetweentheproportionofDBEfirmsintheState(11.17%)andthepercentageofcontractsawardedtoDBEsonrace‐neutralgrounds(9%).Id.However,thecourtdeterminedthatsuchevidencewasentitledto“littleweight”becauseitdidnottakeintoaccountamultitudeofotherfactorssuchasfirmsize.Id.

Moreover,thecourtfoundthattheminimalstatisticalevidencewasinsufficientevidence,standingalone,ofdiscriminationinthetransportationcontractingindustry.Id.at1001.ThecourtfoundthatWSDOTdidnotpresentanyanecdotalevidence.Id.ThecourtrejectedtheState’sargumentthattheDBEapplicationsthemselvesconstitutedevidenceofpastdiscriminationbecausetheapplicationswerenotproperlyintherecord,andbecausetheapplicantswerenotrequiredtocertifythattheyhadbeenvictimsofdiscriminationinthecontractingindustry.Id.Accordingly,thecourtheldthatbecausetheStatefailedtoprofferevidenceofdiscriminationwithinitsowntransportationcontractingmarket,itsDBEprogramwasnotnarrowlytailoredtoCongress’scompellingremedialinterest.Id.at1002‐03.

Thecourtaffirmedthedistrictcourt’sgrantonsummaryjudgmenttotheUnitedStatesregardingthefacialconstitutionalityofTEA‐21,reversedthegrantofsummaryjudgmenttoWashingtonontheas‐appliedchallenge,andremandedtodeterminetheState’sliabilityfordamages.

ThedissentarguedthatwheretheStatecompliedwithTEA‐21inimplementingitsDBEprogram,itwasnotsusceptibletoanas‐appliedchallenge.

8. Sherbrooke Turf, Inc. v. Minnesota DOT, and Gross Seed Company v. Nebraska Department of Roads, 345 F.3d 964 (8th Cir. 2003), cert. denied, 541 U.S. 1041 (2004)

ThiscaseisinstructiveinitsanalysisofstateDOTDBE‐typeprogramsandtheirevidentiarybasisandimplementation.ThiscasealsoisinstructiveinitsanalysisofthenarrowlytailoredrequirementforstateDBEprograms.InupholdingthechallengedFederalDBEProgramatissueinthiscasetheEighthCircuitemphasizedtherace‐,ethnicity‐andgender‐neutralelements,theultimateflexibilityoftheProgram,andthefacttheProgramwastiedcloselyonlytolabormarketswithidentifieddiscrimination.

InSherbrookeTurf,Inc.v.MinnesotaDOT,andGrossSeedCompanyv.NebraskaDepartmentofRoads,theU.S.CourtofAppealsfortheEighthCircuitupheldtheconstitutionalityoftheFederalDBEProgram(49CFRPart26).ThecourtheldtheFederalProgramwasnarrowlytailoredtoremedyacompellinggovernmentalinterest.Thecourtalsoheldthefederalregulationsgoverningthestates’implementationoftheFederalDBEProgramwerenarrowlytailored,andthestateDOT’simplementationoftheFederalDBEProgramwasnarrowlytailoredtoserveacompellinggovernmentinterest.

SherbrookeandGrossSeedbothcontendedthattheFederalDBEProgramonitsfaceandasappliedinMinnesotaandNebraskaviolatedtheEqualProtectioncomponentoftheFifthAmendment’sDueProcessClause.TheEighthCircuitengagedinareviewoftheFederalDBE


ProgramandtheimplementationoftheProgrambytheMinnesotaDOTandtheNebraskaDepartmentofRoads(“NebraskaDOR”)underastrictscrutinyanalysisandheldthattheFederalDBEProgramwasvalidandconstitutionalandthattheMinnesotaDOT’sandNebraskaDOR’simplementationoftheProgramalsowasconstitutionalandvalid.Applyingthestrictscrutinyanalysis,thecourtfirstconsideredwhethertheFederalDBEProgramestablishedacompellinggovernmentalinterest,andfoundthatitdid.ItconcludedthatCongresshadastrongbasisinevidencetosupportitsconclusionthatrace‐basedmeasureswerenecessaryforthereasonsstatedbytheTenthCircuitinAdarand,228F.3dat1167‐76.Althoughthecontractorspresentedevidencethatchallengedthedata,theyfailedtopresentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoparticipationinhighwaycontracts.Thus,thecourtheldtheyfailedtomeettheirultimateburdentoprovethattheDBEProgramisunconstitutionalonthisground.

Finally,SherbrookeandGrossSeedarguedthattheMinnesotaDOTandNebraskaDORmustindependentlysatisfythecompellinggovernmentalinteresttestaspectofstrictscrutinyreview.Thegovernmentargued,andthedistrictcourtsbelowagreed,thatparticipatingstatesneednotindependentlymeetthestrictscrutinystandardbecauseundertheDBEProgramthestatemuststillcomplywiththeDOTregulations.TheEighthCircuitheldthatthisissuewasnotaddressedbytheTenthCircuitinAdarand.TheEighthCircuitconcludedthatneitherside’spositionisentirelysound.

ThecourtrejectedthecontentionofthecontractorsthattheirfacialchallengestotheDBEProgrammustbeupheldunlesstherecordbeforeCongressincludedstrongevidenceofracediscriminationinconstructioncontractinginMinnesotaandNebraska.Ontheotherhand,thecourtheldavalidrace‐basedprogrammustbenarrowlytailored,andtobenarrowlytailored,anationalprogrammustbelimitedtothosepartsofthecountrywhereitsrace‐basedmeasuresaredemonstrablyneededtotheextentthatthefederalgovernmentdelegatesthistailoringfunction,asastate’simplementationbecomesrelevanttoareviewingcourt’sstrictscrutiny.Thus,thecourtleftthequestionofstateimplementationtothenarrowtailoringanalysis.

Thecourtheldthatareviewingcourtapplyingstrictscrutinymustdetermineiftherace‐basedmeasureisnarrowlytailored.Thatis,whetherthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.ThecontractorshavetheultimateburdenofestablishingthattheDBEProgramisnotnarrowlytailored.Id.ThecompellinginterestanalysisfocusedontherecordbeforeCongress;thenarrow‐tailoringanalysislooksattherolesoftheimplementinghighwayconstructionagencies.

Fordeterminingwhetherarace‐consciousremedyisnarrowlytailored,thecourtlookedatfactorssuchastheefficacyofalternativeremedies,theflexibilityanddurationoftherace‐consciousremedy,therelationshipofthenumericalgoalstotherelevantlabormarket,andtheimpactoftheremedyonthirdparties.Id.UndertheDBEProgram,astatereceivingfederalhighwayfundsmust,onanannualbasis,submittoUSDOTanoverallgoalforDBEparticipationinitsfederally‐fundedhighwaycontracts.See,49CFR§26.45(f)(1).Theoverallgoal“mustbebasedondemonstrableevidence”astothenumberofDBEswhoareready,willing,andabletoparticipateascontractorsorsubcontractorsonfederally‐assistedcontracts.49CFR§26.45(b).Thenumbermaybeadjustedupwardtoreflectthestate’sdeterminationthatmoreDBEswould


beparticipatingabsenttheeffectsofdiscrimination,includingrace‐relatedbarrierstoentry.See,49CFR§26.45(d).

Thestatemustmeetthe“maximumfeasibleportion”ofitsoverallgoalbyrace‐neutralmeansandmustsubmitforapprovalaprojectionoftheportionitexpectstomeetthroughrace‐neutralmeans.See,49CFR§26.45(a),(c).Ifrace‐neutralmeansareprojectedtofallshortofachievingtheoverallgoal,thestatemustgivepreferencetofirmsithascertifiedasDBEs.However,suchpreferencesmaynotincludequotas.49CFR§26.45(b).Duringthecourseoftheyear,ifastatedeterminesthatitwillexceedorfallshortofitsoverallgoal,itmustadjustitsuseofrace‐consciousandrace‐neutralmethods“[t]oensurethatyourDBEprogramcontinuestobenarrowlytailoredtoovercometheeffectsofdiscrimination.”49CFR§26.51(f).

Absentbadfaithadministrationoftheprogram,astate’sfailuretoachieveitsoverallgoalwillnotbepenalized.See,49CFR§26.47.Ifthestatemeetsitsoverallgoalfortwoconsecutiveyearsthroughrace‐neutralmeans,itisnotrequiredtosetanannualgoaluntilitdoesnotmeetitsprioroverallgoalforayear.See,49CFR§26.51(f)(3).Inaddition,DOTmaygrantanexemptionorwaiverfromanyandallrequirementsoftheProgram.See,49CFR§26.15(b).

Likethedistrictcourtsbelow,theEighthCircuitconcludedthattheUSDOTregulations,ontheirface,satisfytheSupremeCourt’snarrowingtailoringrequirements.First,theregulationsplacestrongemphasisontheuseofrace‐neutralmeanstoincreaseminoritybusinessparticipationingovernmentcontracting.345F.3dat972.Narrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butitdoesrequireseriousgoodfaithconsiderationofworkablerace‐neutralalternatives.345F.3dat971,citingGrutterv.Bollinger,539U.S.306.

Second,therevisedDBEprogramhassubstantialflexibility.Astatemayobtainwaiversorexemptionsfromanyrequirementsandisnotpenalizedforagoodfaithefforttomeetitsoverallgoal.Inaddition,theprogramlimitspreferencestosmallbusinessesfallingbeneathanearningsthreshold,andanyindividualwhosenetworthexceeds$750,000.00cannotqualifyaseconomicallydisadvantaged.See,49CFR§26.67(b).Likewise,theDBEprogramcontainsbuilt‐indurationallimits.345F.3dat972.AstatemayterminateitsDBEprogramifitmeetsorexceedsitsannualoverallgoalthroughrace‐neutralmeansfortwoconsecutiveyears.Id.;49CFR§26.51(f)(3).

Third,thecourtfound,theUSDOThastiedthegoalsforDBEparticipationtotherelevantlabormarkets.Theregulationsrequirestatestosetoverallgoalsbaseduponthelikelynumberofminoritycontractorsthatwouldhavereceivedfederalassistedhighwaycontractsbutfortheeffectsofpastdiscrimination.See,49CFR§26.45(c)‐(d)(Steps1and2).Thoughtheunderlyingestimatesmaybeinexact,theexerciserequiresstatestofocusonestablishingrealisticgoalsforDBEparticipationintherelevantcontactingmarkets.Id.at972.

Finally,CongressandDOThavetakensignificantsteps,thecourtheld,tominimizetherace‐basednatureoftheDBEProgram.Itsbenefitsaredirectedatallsmallbusinessesownedandcontrolledbythesociallyandeconomicallydisadvantaged.WhileTEA‐21createsapresumptionthatmembersofcertainracialminoritiesfallwithinthatclass,thepresumptionisrebuttable,wealthyminorityownersandwealthyminority‐ownedfirmsareexcluded,andcertificationisavailabletopersonswhoarenotpresumptivelydisadvantagedthatdemonstrateactualsocial


andeconomicdisadvantage.Thus,raceismaderelevantintheProgram,butitisnotadeterminativefactor.345F.3dat973.Forthesereasons,thecourtagreedwiththedistrictcourtsthattherevisedDBEProgramisnarrowlytailoredonitsface.

SherbrookeandGrossSeedalsoarguedthattheDBEProgramasappliedinMinnesotaandNebraskaisnotnarrowlytailored.UndertheFederalProgram,statessettheirowngoals,basedonlocalmarketconditions;theirgoalsarenotimposedbythefederalgovernment;nordorecipientshavetotiethemtoanyuniformnationalpercentage.345F.3dat973,citing64Fed.Reg.at5102.

ThecourtanalyzedwhatMinnesotaandNebraskadidinconnectionwiththeirimplementationoftheFederalDBEProgram.MinnesotaDOTcommissionedadisparitystudyofthehighwaycontractingmarketinMinnesota.ThestudygroupdeterminedthatDBEsmadeup11.4percentoftheprimecontractorsandsubcontractorsinahighwayconstructionmarket.Ofthisnumber,0.6percentwereminority‐ownedand10.8percentwomen‐owned.Baseduponitsanalysisofbusinessformationstatistics,theconsultantestimatedthatthenumberofparticipatingminority‐ownedbusinesswouldbe34percenthigherinarace‐neutralmarket.Therefore,theconsultantadjusteditsDBEavailabilityfigurefrom11.4percentto11.6percent.Basedonthestudy,MinnesotaDOTadoptedanoverallgoalof11.6percentDBEparticipationforfederally‐assistedhighwayprojects.MinnesotaDOTpredictedthatitwouldneedtomeet9percentofthatoverallgoalthroughraceandgender‐consciousmeans,basedonthefactthatDBEparticipationinStatehighwaycontractsdroppedfrom10.25percentin1998to2.25percentin1999whenitspreviousDBEProgramwassuspendedbytheinjunctionbythedistrictcourtinanearlierdecisioninSherbrooke.MinnesotaDOTrequiredeachprimecontractbiddertomakeagoodfaithefforttosubcontractaprescribedportionoftheprojecttoDBEs,anddeterminedthatportionbasedonseveralindividualizedfactors,includingtheavailabilityofDBEsintheextentofsubcontractingopportunitiesontheproject.

Thecontractorpresentedevidenceattackingthereliabilityofthedatainthestudy,butitfailedtoestablishthatbetterdatawereavailableorthatMinnesotaDOTwasotherwiseunreasonableinundertakingthisthoroughanalysisandrelyingonitsresults.Id.TheprecipitousdropinDBEparticipationwhennorace‐consciousmethodswereemployed,thecourtconcluded,supportsMinnesotaDOT’sconclusionthatasubstantialportionofitsoverallgoalcouldnotbemetwithrace‐neutralmeasures.Id.Onthatrecord,thecourtagreedwiththedistrictcourtthattherevisedDBEProgramservesacompellinggovernmentinterestandisnarrowlytailoredonitsfaceandasappliedinMinnesota.

InNebraska,theNebraskaDORcommissionedadisparitystudyalsotoreviewavailabilityandcapabilityofDBEfirmsintheNebraskahighwayconstructionmarket.Theavailabilitystudyfoundthatbetween1995and1999,whenNebraskafollowedthemandatory10percentset‐asiderequirement,9.95percentofallavailableandcapablefirmswereDBEs,andDBEfirmsreceived12.7percentofthecontractdollarsonfederallyassistedprojects.AfterapportioningpartofthisDBEcontractingtorace‐neutralcontractingdecisions,NebraskaDORsetanoverallgoalof9.95percentDBEparticipationandpredictedthat4.82percentofthisoverallgoalwouldhavetobeachievedbyrace‐and‐genderconsciousmeans.TheNebraskaDORrequiredthatprimecontractorsmakeagoodfaithefforttoallocateasetportionofeachcontract’sfundstoDBEsubcontractors.TheEighthCircuitconcludedthatGrossSeed,likeSherbrooke,failedto


provethattheDBEProgramisnotnarrowlytailoredasappliedinNebraska.Therefore,thecourtaffirmedthedistrictcourts’decisionsinGrossSeedandSherbrooke.(Seedistrictcourtopinionsdiscussedinfra.).

Recent District Court Decisions

9. Midwest Fence Corporation v. United States DOT and Federal Highway Administration, the Illinois DOT, the Illinois State Toll Highway Authority, et al., 84 F. Supp. 3d 705, 2015 WL 1396376 (N.D. Ill, 2015), affirmed, 840 F.3d 932 (7th Cir. 2016).226

InMidwestFenceCorporationv.USDOT,theFHWA,theIllinoisDOTandtheIllinoisStateTollHighwayAuthority,CaseNo.1:10‐3‐CV‐5627,UnitedStatesDistrictCourtfortheNorthernDistrictofIllinois,EasternDivision,PlaintiffMidwestFenceCorporation,whichisaguardrail,bridgerailandfencingcontractorownedandcontrolledbywhitemaleschallengedtheconstitutionalityandtheapplicationoftheUSDOT,DisadvantagedBusinessEnterprise(“DBE”)Program.Inaddition,MidwestFencesimilarlychallengedtheIllinoisDepartmentofTransportation’s(“IDOT”)implementationoftheFederalDBEProgramforfederally‐fundedprojects,IDOT’simplementationofitsownDBEProgramforstate‐fundedprojectsandtheIllinoisStateTollwayHighwayAuthority’s(“Tollway”)separateDBEProgram.

Thefederaldistrictcourtin2011issuedanOpinionandOrderdenyingtheDefendants’MotiontoDismissforlackofstanding,denyingtheFederalDefendants’MotiontoDismisscertainCountsoftheComplaintasamatteroflaw,grantingIDOTDefendants’MotiontoDismisscertainCountsandgrantingtheTollwayDefendants’MotiontoDismisscertainCounts,butgivingleavetoMidwesttorepleadsubsequenttothisOrder.MidwestFenceCorp.v.UnitedStatesDOT,IllinoisDOT,etal.,2011WL2551179(N.D.Ill.June27,2011).

MidwestFenceinitsThirdAmendedComplaintchallengedtheconstitutionalityoftheFederalDBEProgramonitsfaceandasapplied,andchallengedtheIDOT’simplementationoftheFederalDBEProgram.MidwestFencealsosoughtadeclarationthattheUSDOTregulationshavenotbeenproperlyauthorizedbyCongressandadeclarationthatSAFETEA‐LUisunconstitutional.MidwestFencesoughtrelieffromtheIDOTDefendants,includingadeclarationthatstatestatutesauthorizingIDOT’sDBEProgramforState‐fundedcontractsareunconstitutional;adeclarationthatIDOTdoesnotfollowtheUSDOTregulations;adeclarationthattheIDOTDBEProgramisunconstitutionalandotherreliefagainsttheIDOT.TheremainingCountssoughtreliefagainsttheTollwayDefendants,includingthattheTollway’sDBEProgramisunconstitutional,andarequestforpunitivedamagesagainsttheTollwayDefendants.Thecourtin2012grantedtheTollwayDefendants’MotiontoDismissMidwestFence’srequestforpunitivedamages.

22649CFRPart26(ParticipationbyDisadvantagedBusinessEnterprisesinDepartmentofTransportationFinancialAssistancePrograms(“FederalDBEProgram”).SeetheTransportationEquityActforthe21stCentury(TEA‐21)asamendedandreauthorized(“MAP‐21,”“SAFETEA”and“SAFETEA‐LU”),andtheUnitedStatesDepartmentofTransportation(“USDOT”or“DOT”)regulationspromulgatedtoimplementTEA‐21theFederalregulationsknownasMovingAheadforProgressinthe21stCenturyAct(“MAP‐21”),PubL.112‐141,H.R.4348,§1101(b),July6,2012,126Stat405.;precededbyPubL.109‐59,TitleI,§1101(b),August10,2005,119Stat.1156;precededbyPubL.105‐178,TitleI,§1101(b),June9,1998,112Stat.107.


Equal protection framework, strict scrutiny and burden of proof.Thecourtheldthatunderastrictscrutinyanalysis,theburdenisonthegovernmenttoshowbothacompellinginterestandnarrowlytailoring.84F.Supp.3dat720.Thegovernmentmustdemonstrateastrongbasisinevidenceforitsconclusionthatremedialactionisnecessary.Id.SincetheSupremeCourtdecisioninCroson,numerouscourtshaverecognizedthatdisparitystudiesprovideprobativeevidenceofdiscrimination.Id.Thecourtstatedthataninferenceofdiscriminationmaybemadewithempiricalevidencethatdemonstratesasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorsandthenumberofsuchcontractorsactuallyengagedbythelocalityorthelocality’sprimecontractors.Id.Thecourtsaidthatanecdotalevidencemaybeusedincombinationwithstatisticalevidencetoestablishacompellinggovernmentalinterest.Id.

Inadditiontoproviding“hardproof”tobackitscompellinginterest,thecourtstatedthatthegovernmentmustalsoshowthatthechallengedprogramisnarrowlytailored.Id.at720.Whilenarrowtailoringrequires“serious,goodfaithconsiderationofworkablerace‐neutralalternatives,”thecourtsaiditdoesnotrequire“exhaustionofeveryconceivablerace‐neutralalternative.”Id.,citingGrutterv.Bollinger,539U.S.306,339(2003);Fischerv.Univ.ofTexasatAustin,133S.Ct.2411,2420(2013).

Oncethegovernmentalentityhasshownacceptableproofofacompellinginterestinremedyingpastdiscriminationandillustratedthatitsplanisnarrowlytailoredtoachievethisgoal,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplanisunconstitutional.84F.Supp.3dat721.Tosuccessfullyrebutthegovernment’sevidence,achallengermustintroduce“credible,particularizedevidence”ofitsown.Id.

Thiscanbeaccomplished,accordingtothecourt,byprovidinganeutralexplanationforthedisparitybetweenDBEutilizationandavailability,showingthatthegovernment’sdataisflawed,demonstratingthattheobserveddisparitiesarestatisticallyinsignificant,orpresentingcontrastingstatisticaldata.Id.Conjectureandunsupportedcriticismsofthegovernment’smethodologyareinsufficient.Id.

Standing.ThecourtfoundthatMidwesthadstandingtochallengetheFederalDBEProgram,IDOT’simplementationofit,andtheTollwayProgram.Id.at722.Thecourt,however,didnotfindthatMidwesthadpresentedanyfactssuggestingitsinabilitytocompeteonanequalfootingfortheTargetMarketProgramcontracts.TheTargetMarketProgramidentifiedavarietyofremedialactionsthatIDOTwasauthorizedtotakeincertainDistricts,whichincludedindividualcontractgoals,DBEparticipationincentives,aswellasset‐asides.Id.at722‐723.

ThecourtnotedthatMidwestdidnotidentifyanycontractsthatweresubjecttotheTargetMarketProgram,noridentifyanyset‐asidesthatwereinplaceinthesedistrictsthatwouldhavehindereditsabilitytocompeteforfencingandguardrailswork.Id.at723.MidwestdidnotallegethatitwouldhavebidoncontractssetasidepursuanttotheTargetMarketProgramhaditnotbeenpreventedfromdoingso.Id.BecausenothingintherecordMidwestprovidedsuggestedthattheTargetMarketProgramimpededMidwest’sabilitytocompeteforworkintheseDistricts,thecourtdismissedMidwest’sclaimrelatingtotheTargetMarketProgramforlackofstanding.Id.


Facial challenge to the Federal DBE Program.Thecourtfoundthatremedyingtheeffectsofraceandgenderdiscriminationwithintheroadconstructionindustryisacompellinggovernmentalinterest.ThecourtalsofoundthattheFederalDefendantshavesupportedtheircompellinginterestwithastrongbasisinevidence.Id.at725.TheFederalDefendants,thecourtsaid,presentedanextensivebodyoftestimony,reports,andstudiesthattheyclaimprovidedthestrongbasisinevidencefortheirconclusionthatraceandgender‐basedclassificationsarenecessary.Id.ThecourttookjudicialnoticeoftheexistenceofCongressionalhearingsandreportsandthecollectionofevidencepresentedtoCongressinsupportoftheFederalDBEProgram’s2012reauthorizationunderMAP‐21,includingbothstatisticalandanecdotalevidence.Id.

Thecourtalsoconsideredareportfromaconsultantwhoreviewed95disparityandavailabilitystudiesconcerningminority‐andwomen‐ownedbusinesses,aswellasanecdotalevidence,thatwerecompletedfrom2000to2012.Id.at726.Sixty‐fourofthestudieshadpreviouslybeenpresentedtoCongress.Id.Thestudiesexamineprocurementforover100publicentitiesandfundingsourcesacross32states.Id.Theconsultant’sreportopinedthatmetricssuchasfirmrevenue,numberofemployees,andbondinglimitsshouldnotbeconsideredwhendeterminingDBEavailabilitybecausetheyareall“likelytobeinfluencedbythepresenceofdiscriminationifitexists”andcouldpotentiallyresultinabuilt‐indownwardbiasintheavailabilitymeasure.Id.

Tomeasuredisparity,theconsultantdividedDBEutilizationbyavailabilityandmultipliedby100tocalculatea“disparityindex”foreachstudy.Id.at726.Thereportfound66percentofthestudiesshowedadisparityindexof80orbelow,thatis,significantlyunderutilizedrelativetotheiravailability.Id.Thereportalsoexamineddatathatshowedlowerearningsandbusinessformationratesamongwomenandminorities,evenwhenvariablessuchasageandeducationwereheldconstant.Id.Thereportconcludedthatthedisparitieswerenotattributabletofactorsotherthanraceandsexandwereconsistentwiththepresenceofdiscriminationinconstructionandrelatedprofessionalservices.Id.

ThecourtdistinguishedtheFederalCircuitdecisioninRotheDev.Corp.v.Dep’t.ofDef.,545F.3d1023(Fed.Cir.2008)wheretheFederalCircuitCourtheldinsufficienttherelianceononlysixdisparitystudiestosupportthegovernment’scompellinginterestinimplementinganationalprogram.Id.at727,citingRothe,545F.3dat1046.ThecourtherenotedtheconsultantreportsupplementsthetestimonyandreportspresentedtoCongressinsupportoftheFederalDBEProgram,whichcourtshavefoundtoestablisha“strongbasisinevidence”tosupporttheconclusionthatrace‐andgender‐consciousactionisnecessary.Id.

ThecourtfoundthroughtheevidencepresentedbytheFederalDefendantssatisfiedtheirburdeninshowingthattheFederalDBEProgramstandsonastrongbasisinevidence.Id.at727.TheMidwestexpert’ssuggestionthatthestudiesusedinconsultant’sreportdonotproperlyaccountforcapacity,thecourtstated,doesnotcompelthecourttofindotherwise.ThecourtquotingAdarandVII,228F.3dat1173(10thCir.2000)saidthatgeneralcriticismofdisparitystudies,asopposedtoparticularevidenceunderminingthereliabilityoftheparticulardisparitystudiesrelieduponbythegovernment,isoflittlepersuasivevalueanddoesnotcompelthecourttodiscountthedisparityevidence.Id.Midwestfailedtopresent“affirmativeevidence”thatnoremedialactionwasnecessary.Id.


Federal DBE Program is narrowly tailored.Oncethegovernmenthasestablishedacompellinginterestforimplementingarace‐consciousprogram,itmustshowthattheprogramisnarrowlytailoredtoachievethisinterest.Id.at727.Indeterminingwhetheraprogramisnarrowlytailored,courtsexamineseveralfactors,including(a)thenecessityforthereliefandefficacyofalternativerace‐neutralmeasures,(b)theflexibilityanddurationoftherelief,includingtheavailabilityofwaiverprovisions,(c)therelationshipofthenumericalgoalstotherelevantlabormarket,and(d)theimpactofthereliefontherightsofthirdparties.Id.Thecourtstatedthatcourtsmayalsoassesswhetheraprogramis“overinclusive.”Id.at728.ThecourtfoundthateachoftheabovefactorssupportstheconclusionthattheFederalDBEProgramisnarrowlytailored.Id.

First,thecourtsaidthatunderthefederalregulations,recipientsoffederalfundscanonlyturntorace‐andgender‐consciousmeasuresaftertheyhaveattemptedtomeettheirDBEparticipationgoalthroughrace‐neutralmeans.Id.at728.Thecourtnotedthatrace‐neutralmeansincludemakingcontractingopportunitiesmoreaccessibletosmallbusinesses,providingassistanceinobtainingbondingandfinancing,andofferingtechnicalandothersupportservices.Id.Thecourtfoundthattheregulationsrequireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.

Second,thefederalregulationscontainprovisionsthatlimittheFederalDBEProgram’sdurationandensureitsflexibility.Id.at728.ThecourtfoundthattheFederalDBEProgramlastsonlyaslongasitscurrentauthorizingactallows,notingthatwitheachreauthorization,CongressmustreevaluatetheFederalDBEPrograminlightofsupportingevidence.Id.ThecourtalsofoundthattheFederalDBEProgramaffordsrecipientsoffederalfundsandprimecontractorssubstantialflexibility.Id.at728.Recipientsmayapplyforexemptionsorwaivers,releasingthemfromprogramrequirements.Id.PrimecontractorscanapplytoIDOTfora“goodfaitheffortswaiver”onanindividualcontractgoal.Id.

Thecourtstatedtheavailabilityofwaiversisparticularlyimportantinestablishingflexibility.Id.at728.ThecourtrejectedMidwest’sargumentthatthefederalregulationsimposeaquotainlightoftheProgram’sexplicitwaiverprovision.Id.Basedontheavailabilityofwaivers,coupledwithregularcongressionalreview,thecourtfoundthattheFederalDBEProgramissufficientlylimitedandflexible.Id.

Third,thecourtsaidthattheFederalDBEProgramemploysatwo‐stepgoal‐settingprocessthattiesDBEparticipationgoalsbyrecipientsoffederalfundstolocalmarketconditions.Id.at728.ThecourtpointedoutthattheregulationsdelegategoalsettingtorecipientsoffederalfundswhotailorDBEparticipationtolocalDBEavailability.Id.ThecourtfoundthattheFederalDBEProgram’sgoal‐settingprocessrequiresstatestofocusonestablishingrealisticgoalsforDBEparticipationthatarecloselytiedtotherelevantlabormarket.Id.

Fourth,thefederalregulations,accordingtothecourt,containprovisionsthatseektominimizetheProgram’sburdenonnon‐DBEs.Id.at729.Thecourtpointedoutthefollowingprovisionsaimtokeeptheburdenonnon‐DBEsminimal:theFederalDBEProgram’spresumptionofsocialandeconomicdisadvantageisrebuttable;raceisnotadeterminativefactor;intheeventDBEsbecome“overconcentrated”inaparticularareaofcontractwork,recipientsmusttake


appropriatemeasurestoaddresstheoverconcentration;theuseofrace‐neutralmeasures;andtheavailabilityofgoodfaitheffortswaivers.Id.

ThecourtsaidMidwest’sprimaryargumentisthatthepracticeofstatestoawardprimecontractstothelowestbidder,andthefactthefederalregulationsprescribethatDBEparticipationgoalsbeappliedtothevalueoftheentirecontract,undulyburdensnon‐DBEsubcontractors.Id.at729.MidwestarguedthatbecausemostDBEsaresmallsubcontractors,settinggoalsasapercentageofallcontractdollars,whilerequiringaremedytocomeonlyfromsubcontractingdollars,undulyburdenssmaller,specializednon‐DBEs.Id.ThecourtfoundthatthefactinnocentpartiesmaybearsomeoftheburdenofaDBEprogramisitselfinsufficienttowarranttheconclusionthataprogramisnotnarrowlytailored.Id.ThecourtalsofoundthatstrongpolicyreasonssupporttheFederalDBEProgram’sapproach.Id.

ThecourtstatedthatcongressionaltestimonyandtheexpertreportfromtheFederalDefendantsprovideevidencethattheFederalDBEProgramisnotoverlyinclusive.Id.at729.Thecourtnotedthereportobservedstatisticallysignificantdisparitiesinbusinessformationandearningsratesinall50statesforallminoritygroupsandfornon‐minoritywomen.Id.

ThecourtsaidthatMidwestdidnotattempttorebuttheFederalDefendants’evidence.Idat729.Therefore,becausetheFederalDBEProgramstandsonastrongbasisinevidenceandisnarrowlytailoredtoachievethegoalofremedyingdiscrimination,thecourtfoundtheProgramisconstitutionalonitsface.Id.at729.ThecourtthusgrantedsummaryjudgmentinfavoroftheFederalDefendants.Id.

As‐applied challenge to IDOT’s implementation of the Federal DBE Program.InadditiontochallengingtheFederalDBEProgramonitsface,Midwestalsoarguedthatitisunconstitutionalasapplied.Id.at730.ThecourtstatedbecausetheFederalDBEProgramisappliedtoMidwestthroughIDOT,thecourtmustexamineIDOT’simplementationoftheFederalDBEProgram.Id.FollowingtheSeventhCircuit’sdecisioninNorthernContractingv.IllinoisDOT,thecourtsaidthatwhethertheFederalDBEProgramisunconstitutionalasappliedisaquestionofwhetherIDOTexceededitsauthorityinimplementingit.Id.at730,citingNorthernContracting,Inc.v.Illinois,473F.3d715at722(7thCir.2007).Thecourt,quotingNorthernContracting,heldthatachallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.Id.

IDOTnotonlyappliestheFederalDBEProgramtoUSDOT‐assistedprojects,butitalsoappliestheFederalDBEProgramtostate‐fundedprojects.Id.at730.Thecourt,therefore,helditmustdeterminewhethertheIDOTDefendantshaveestablishedacompellingreasontoapplytheIDOTProgramtostate‐fundedprojectsinIllinois.Id.

ThecourtpointedoutthattheFederalDBEProgramdelegatesthenarrowtailoringfunctiontothestate,andthus,IDOTmustdemonstratethatthereisademonstrableneedfortheimplementationoftheFederalDBEProgramwithinitsjurisdiction.Id.at730.Accordingly,thecourtassessedwhetherIDOThasestablishedevidenceofdiscriminationinIllinoissufficientto(1)supportitsapplicationoftheFederalDBEProgramtostate‐fundedcontracts,and(2)demonstratethatIDOT’simplementationoftheFederalDBEProgramislimitedtoaplacewhererace‐basedmeasuresaredemonstrablyneeded.Id.


IDOT’s evidence of discrimination and DBE availability in Illinois.TheevidencethatIDOThaspresentedtoestablishtheexistenceofdiscriminationinIllinoisincludedtwostudies,onethatwasdonein2004andtheotherin2011.Id.at730.Thecourtsaidthatthe2004studyuncovereddisparitiesinearningsandbusinessformationratesamongwomenandminoritiesintheconstructionandengineeringfieldsthatthestudyconcludedwereconsistentwithdiscrimination.IDOTmaintainedthatthe2004studyandthe2011studymustbereadinconjunctionwithoneanother.Id.Thecourtfoundthatthe2011studyprovidedevidencetoestablishthedisparityfromwhichIDOT’sinferenceofdiscriminationprimarilyarises.Id.

The2011studycomparedtheproportionofcontractingdollarsawardedtoDBEs(utilization)withtheavailabilityofDBEs.Id.at730.Thestudydeterminedavailabilitythroughmultiplesources,includingbidderslists,prequalifiedbusinesslists,andothermethodsrecommendedinthefederalregulations.Id.ThestudyappliedNAICScodestodifferenttypesofcontractwork,assigninggreaterweighttocategoriesofworkinwhichIDOThadexpendedthemostmoney.Id.at731.Thisresultedina“weighted”DBEavailabilitycalculation.Id.

The2011studyexaminedprimeandsubcontractsandanecdotalevidenceconcerningraceandgenderdiscriminationintheIllinoisroadconstructionindustry,includingone‐on‐oneinterviewsandasurveyofmorethan5,000contractors.Id.at731.The2011study,thecourtsaid,containedaregressionanalysisofprivatesectordataandfounddisparitiesinearningsandbusinessownershipratesamongminoritiesandwomen,evenwhencontrollingforrace‐andgender‐neutralvariables.Id.

ThestudyconcludedthattherewasastatisticallysignificantunderutilizationofDBEsintheawardofbothprimeandsubcontractsinIllinois.Id.at731.Forexample,thecourtnotedthedifferencethestudyfoundinthepercentageofavailableprimeconstructioncontractorstothepercentageofprimeconstructioncontractsunder$500,000,andthepercentageofavailableconstructionsubcontractorstotheamountofpercentageofdollarsreceivedofconstructionsubcontracts.Id.

IDOTpresentedcertainevidencetomeasureDBEavailabilityinIllinois.Thecourtpointedoutthatthe2004studyandtwosubsequentGoal‐SettingReportswereusedinestablishingIDOT’sDBEparticipationgoal.Id.at731.The2004studyarrivedatIDOT’s22.77percentDBEparticipationgoalinaccordancewiththetwo‐stepprocessdefinedinthefederalregulations.Id.Thecourtstatedthe2004studyemployedaseven‐step“customcensus”approachtocalculatebaselineDBEavailabilityundersteponeoftheregulations.Id.

TheprocessbeginsbyidentifyingtherelevantmarketsinwhichIDOToperatesandthecategoriesofbusinessesthataccountforthebulkofIDOTspending.Id.at731.TheindustriesandcountiesinwhichIDOTexpendsrelativelymorecontractdollarsreceiveproportionatelyhigherweightsintheultimatecalculationofstatewideDBEavailability.Id.Thestudythencountsthenumberofbusinessesintherelevantmarkets,andidentifieswhichareminority‐andwomen‐owned.Id.Toensuretheaccuracyofthisinformation,thestudyprovidesthatittakesadditionalstepstoverifytheownershipstatusofeachbusiness.Id.Understeptwooftheregulations,thestudyadjustedthisfigureto27.51percentbasedonCensusBureaudata.Id.Accordingtothestudy,theadjustmenttakesintoaccountitsconclusionthatbaselinenumbersareartificiallylowerthanwhatwouldbeexpectedinarace‐neutralmarketplace.Id.


IDOTusedseparateGoal‐SettingReportsthatcalculatedIDOT’sDBEparticipationgoalpursuanttothetwo‐stepprocessinthefederalregulations,drawingfrombidderslists,DBEdirectories,andthe2011studytocalculatebaselineDBEavailability.Id.at731.ThestudyandtheGoal–SettingReportsgavegreaterweighttothetypesofcontractworkinwhichIDOThadexpendedrelativelymoremoney.Id.at732.

Court rejected Midwest arguments as to the data and evidence.ThecourtrejectedthechallengesbyMidwesttotheaccuracyofIDOT’sdata.Forexample,Midwestarguedthattheanecdotalevidencecontainedinthe2011studydoesnotprovediscrimination.Id.at732.Thecourtstated,however,whereanecdotalevidencehasbeenofferedinconjunctionwithstatisticalevidence,itmaylendsupporttothegovernment’sdeterminationthatremedialactionisnecessary.Id.Thecourtnotedthatanecdotalevidenceonitsowncouldnotbeusedtoshowageneralpolicyofdiscrimination.Id.

ThecourtrejectedanotherargumentbyMidwestthatthedatacollectedafterIDOT’simplementationoftheFederalDBEProgrammaybebiasedbecauseanythingobservedaboutthepublicsectormaybeaffectedbytheDBEProgram.Id.at732.Thecourtrejectedthatargumentfindingpost‐enactmentevidenceofdiscriminationpermissible.Id.

Midwest’smainobjectiontotheIDOTevidence,accordingtothecourt,isthatitfailedtoaccountforcapacitywhenmeasuringDBEavailabilityandunderutilization.Id.at732.MidwestarguedthatIDOT’sdisparitystudiesfailedtoruleoutcapacityasapossibleexplanationfortheobserveddisparities.Id.

IDOTarguedthatonprimecontractsunder$500,000,capacityisavariablethatmakeslittledifference.Id.at732‐733.Primecontractsofvaryingsizesunder$500,000weredistributedtoDBEsandnon‐DBEsalikeatapproximatelythesamerate.Id.at733.IDOTalsoarguedthatthroughregressionanalysis,the2011studydemonstratedfactorsotherthandiscriminationdidnotaccountforthedisparitybetweenDBEutilizationandavailability.Id.

ThecourtstatedthatdespiteMidwest’sargumentthatthe2011studytookinsufficientmeasurestoruleoutcapacityasarace‐neutralexplanationfortheunderutilizationofDBEs,theSupremeCourthasindicatedthataregressionanalysisneednottakeintoaccount“allmeasurablevariables”toruleoutrace‐neutralexplanationsforobserveddisparities.Id.at733,quotingBazemorev.Friday,478U.S.385,400(1986).

Midwest criticisms insufficient, speculative and conjecture – no independent statistical

analysis; IDOT followed Northern Contracting and did not exceed the federal regulations.ThecourtfoundMidwest’scriticismsinsufficienttorebutIDOT’sevidenceofdiscriminationordiscreditIDOT’smethodsofcalculatingDBEavailability.Id.at733.First,thecourtsaid,the“evidence”offeredbyMidwest’sexpertreports“isspeculativeatbest.”Id.ThecourtfoundthatforareasonablejurytofindinfavorofMidwest,Midwestwouldhavetocomeforwardwith“credible,particularizedevidence”ofitsown,suchasaneutralexplanationforthedisparity,orcontrastingstatisticaldata.Id.ThecourtheldthatMidwestfailedtomaketheshowinginthiscase.Id.


Second,thecourtstatedthatIDOT’smethodofcalculatingDBEavailabilityisconsistentwiththefederalregulationsandhasbeenendorsedbytheSeventhCircuit.Id.at733.Thefederalregulations,thecourtsaid,approveavarietyofmethodsforaccuratelymeasuringready,willing,andavailableDBEs,suchastheuseofDBEdirectories,CensusBureaudata,andbidderslists.Id.Thecourtfoundthatthesearethemethodsthe2011studyadoptedincalculatingDBEavailability.Id.

ThecourtsaidthattheSeventhCircuitCourtofAppealsapprovedthe“customcensus”approachasconsistentwiththefederalregulations.Id.at733,citingtoNorthernContractingv.IllinoisDOT,473F.3dat723.ThecourtnotedtheSeventhCircuitrejectedtheargumentthatavailabilityshouldbebasedonasimplecountofregisteredandprequalifiedDBEsunderIllinoislaw,findingnorequirementinthefederalregulationsthatarecipientmustsonarrowlydefinethescopeofready,willing,andavailablefirms.Id.Thecourtalsorejectedthenotionthatanavailabilitymeasureshoulddistinguishbetweenprimeandsubcontractors.Id.at733‐734.

Thecourtheldthatthroughthe2004and2011studies,andGoal–SettingReports,IDOTprovidedevidenceofdiscriminationintheIllinoisroadconstructionindustryandamethodofDBEavailabilitycalculationthatisconsistentwithboththefederalregulationsandtheSeventhCircuitdecisioninNorthernContractv.IllinoisDOT.Id.at734.ThecourtsaidthatinresponsetotheSeventhCircuitdecisionandIDOT’sevidence,Midwestofferedonlyconjectureabouthowthesestudiessupposedfailuretoaccountforcapacitymayormaynothaveimpactedthestudies’result.Id.

ThecourtpointedoutthatalthoughMidwest’sexpert’sreports“castdoubtonthevalidityofIDOT’smethodology,theyfailedtoprovideanyindependentstatisticalanalysisorotherevidencedemonstratingactualbias.”Id.at734.Withoutthisshowing,thecourtstated,therecordfailstodemonstratealackofevidenceofdiscriminationoractualflawsinIDOT’savailabilitycalculations.Id.

Burden on non–DBE subcontractors; overconcentration.Thecourtaddressedthenarrowtailoringfactorconcerningwhetheraprogram’sburdenonthirdpartiesisundueorunreasonable.ThepartiesdisagreedaboutwhethertheIDOTprogramresultedinanoverconcentrationofDBEsinthefencingandguardrailindustry.Id.at734‐735.IDOTpreparedanoverconcentrationstudycomparingthetotalnumberofprequalifiedfencingandguardrailcontractorstothenumberofDBEsthatalsoperformthattypeofworkanddeterminedthatnooverconcentrationproblemexisted.Midwestpresenteditsevidencerelatingtooverconcentration.Id.at735.ThecourtfoundthatMidwestdidnotshowIDOT’sdeterminationthatoverconcentrationdoesnotexistamongfencingandguardrailcontractorstobeunreasonable.Id.at735.

ThecourtstatedthefactIDOTsetscontractgoalsasapercentageoftotalcontractdollarsdoesnotdemonstratethatIDOTimposesanundueburdenonnon‐DBEsubcontractors,buttothecontrary,IDOTisactingwithinthescopeofthefederalregulationsthatrequiresgoalstobesetinthismanner.Id.at735.Thecourtnotedthatitrecognizessettinggoalsasapercentageoftotalcontractvalueaddressesthewidespread,indirecteffectsofdiscriminationthatmaypreventDBEsfromcompetingasprimesinthefirstplace,andthatasharingoftheburdenbyinnocentparties,herenon‐DBEsubcontractors,ispermissible.Id.ThecourtheldthatIDOTcarriedits


burdeninprovidingpersuasiveevidenceofdiscriminationinIllinois,andfoundthatsuchsharingoftheburdenispermissiblehere.Id.

Use of race–neutral alternatives.ThecourtfoundthatIDOTidentifiedseveralrace‐neutralprogramsitusedtoincreaseDBEparticipation,includingitsSupportiveServices,Mentor–Protégé,andModelContractorPrograms.Id.at735.Theprogramsprovideworkshopsandtrainingthathelpsmallbusinessesbuildbondingcapacity,gainaccesstofinancialandprojectmanagementresources,andlearnaboutspecificprocurementopportunities.Id.IDOTconductedseveralstudiesincludingzero‐participationgoalscontractsinwhichtherewasnoDBEparticipationgoal,andfoundthatDBEsreceivedonly0.84percentofthetotaldollarvalueawarded.Id.

ThecourtheldIDOTwascompliantwiththefederalregulations,notingthatintheNorthernContractingv.IllinoisDOTcase,theSeventhCircuitfoundIDOTemployedalmostallofthemethodssuggestedintheregulationstomaximizeDBEparticipationwithoutresortingtorace,includingprovidingassistanceinobtainingbondingandfinancing,implementingasupportiveservicesprogram,andprovidingtechnicalassistance.Id.at735.ThecourtagreedwiththeSeventhCircuit,andfoundthatIDOThasmadeserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.

Duration and flexibility.ThecourtpointedoutthatthestatestatutethroughwhichtheFederalDBEProgramisimplementedislimitedindurationandmustbereauthorizedeverytwotofiveyears.Id.at736.ThecourtreviewedevidencethatIDOTgranted270ofthe362goodfaithwaiverrequeststhatitreceivedfrom2006to2014,andthatIDOTgranted1,002post‐awardwaiversonover$36millionincontractingdollars.Id.ThecourtnotedthatIDOTgrantedtheonlygoodfaitheffortswaiverthatMidwestrequested.Id.

ThecourtheldtheundisputedfactsestablishedthatIDOTdidnothavea“no‐waiverpolicy.”Id.at736.Thecourtfoundthatitcouldnotconcludethatthewaiverprovisionswereimpermissiblyvague,andthatIDOTtookintoconsiderationthesubstantialguidanceprovidedinthefederalregulations.Id.at736‐737.BecauseMidwest’sownexperiencedemonstratedtheflexibilityoftheFederalDBEPrograminpractice,thecourtsaiditcouldnotconcludethattheIDOTprogramamountstoanimpermissiblequotasystemthatisunconstitutionalonitsface.Id.at737.

ThecourtagainstatedthatMidwesthadnotpresentedanyaffirmativeevidenceshowingthatIDOT’simplementationoftheFederalDBEProgramimposesanundueburdenonnon‐DBEs,failstoemployrace‐neutralmeasures,orlacksflexibility.Id.at737.Accordingly,thecourtgrantedIDOT’smotionforsummaryjudgment.

Facial and as–applied challenges to the Tollway program.TheIllinoisTollwayProgramexistsindependentlyoftheFederalDBEProgram.MidwestchallengedtheTollwayProgramasunconstitutionalonitsfaceandasapplied.Id.at737.LiketheFederalandIDOTDefendants,theTollwaywasrequiredtoshowthatitscompellinginterestinremedyingdiscriminationintheIllinoisroadconstructionindustryrestsonastrongbasisinevidence.Id.TheTollwayreliedona2006disparitystudy,whichexaminedthedisparitybetweentheTollway’sutilizationofDBEsandtheiravailability.Id.


Thestudyemployeda“customcensus”approachtocalculateDBEavailability,andexaminedtheTollway’scontractdatatodetermineutilization.Id.at737.The2006studyreportedstatisticallysignificantdisparitiesforallraceandsexcategoriesexamined.Id.Thestudyalsoconductedan“economy‐wideanalysis”examiningotherraceandsexdisparitiesinthewiderconstructioneconomyfrom1979to2002.Id.Controllingforrace‐andgender‐neutralvariables,thestudyshowedasignificantnegativecorrelationbetweenaperson’sraceorsexandtheirearningpowerandabilitytoformabusiness.Id.

Midwest’s challenges to the Tollway evidence insufficient and speculative.In2013,theTollwaycommissionedanewstudy,whichthecourtnotedwasnotcomplete,buttherewasan“economy‐wideanalysis”similartotheanalysisdonein2006thatupdatedcensusdatagatheredfrom2007to2011.Id.at737‐738.Theupdatedcensusanalysis,accordingtothecourt,controlledforvariablessuchaseducation,ageandoccupationandfoundlowerearningsandratesofbusinessformationamongwomenandminoritiesascomparedtowhitemen.Id.at738.

MidwestattackedtheTollway’s2006studysimilartohowitattackedtheotherstudieswithregardtoIDOT’sDBEProgram.Id.at738.Forexample,Midwestattackedthe2006studyasbeingbiasedbecauseitfailedtotakeintoaccountcapacityindeterminingthedisparities.Id.TheTollwaydefendedthe2006studyarguingthatcapacitymetricsshouldnotbetakenintoaccountbecausetheTollwayassertedtheyarethemselvesaproductofindirectdiscrimination,theconstructionindustryiselasticinnature,andthatfirmscaneasilyrampuporratchetdowntoaccommodatethesizeofaproject.Id.TheTollwayalsoarguedthatthe“economy‐wideanalysis”revealedanegativecorrelationbetweenanindividual’sraceandsexandtheirearningpowerandabilitytoownorformabusiness,showingthattheunderutilizationofDBEsisconsistentwithdiscrimination.Id.at738.

TosuccessfullyrebuttheTollway’sevidenceofdiscrimination,thecourtstatedthatMidwestmustcomeforwardwithaneutralexplanationforthedisparity,showthattheTollway’sstatisticsareflawed,demonstratethattheobserveddisparitiesareinsignificant,orpresentcontrastingdataofitsown.Id.at738‐739.Again,thecourtfoundthatMidwestfailedtomakethisshowing,andthattheevidenceofferedthroughtheexpertreportsforMidwestwasfartoospeculativetocreateadisputedissueoffactsuitablefortrial.Id.at739.Accordingly,thecourtfoundtheTollwayDefendantsestablishedastrongbasisinevidencefortheTollwayProgram.Id.

Tollway Program is narrowly tailored.AstodeterminingwhethertheTollwayProgramisnarrowlytailored,MidwestalsoarguedthattheTollwayProgramimposedanundueburdenonnon‐DBEsubcontractors.LikeIDOT,theTollwaysetsindividualcontractgoalsasapercentageofthevalueoftheentirecontractbasedontheavailabilityofDBEstoperformparticularlineitems.Id.at739.

Thecourtreiteratedthatsettinggoalsasapercentageoftotalcontractdollarsdoesnotdemonstrateanundueburdenonnon‐DBEsubcontractors,andthattheTollway’smethodofgoalsettingisidenticaltothatprescribedbythefederalregulations,whichthecourtalreadyfoundtobesupportedbystrongpolicyreasons.Id.at739.Thecourtstatedthatthesharingofaremedialprogram’sburdenisitselfinsufficienttowarranttheconclusionthattheprogramisnotnarrowlytailored.Id.at739.ThecourtheldtheTollwayProgram’sburdenonnon‐DBEsubcontractorstobepermissible.Id.


Inaddressingtheefficacyofrace‐neutralmeasures,thecourtfoundtheTollwayimplementedrace‐neutralprogramstoincreaseDBEparticipation,includingaprogramthatallowssmallercontractstobeunbundledfromlargerones,aSmallBusinessInitiativethatsetsasidecontractsforsmallbusinessesonarace‐neutralbasis,partnershipswithagenciesthatprovidesupportservicestosmallbusinesses,andotherprogramsdesignedtomakeiteasierforsmallercontractorstodobusinesswiththeTollwayingeneral.Id.at739‐740.ThecourtheldtheTollway’srace‐neutralmeasuresareconsistentwiththosesuggestedunderthefederalregulationsandfoundthattheavailabilityoftheseprograms,whichmirrorIDOT’s,demonstratesserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at740.

Inconsideringtheissueofflexibility,thecourtfoundtheTollwayProgram,liketheFederalDBEProgram,providesforwaiverswhereprimecontractorsareunabletomeetDBEparticipationgoals,buthavemadegoodfaitheffortstodoso.Id.at740.LikeIDOT,thecourtsaidtheTollwayadherestothefederalregulationsindeterminingwhetherabidderhasmadegoodfaithefforts.Id.AsundertheFederalDBEProgram,theTollwayProgramalsoallowsbidderswhohavebeendeniedwaiverstoappeal.Id.

From2006to2011,thecourtstated,theTollwaygrantedwaiversonapproximately20percentofthe200primeconstructioncontractsitawarded.Id.at740.BecausetheTollwaydemonstratedthatwaiversareavailable,routinelygranted,andawardedordeniedbasedonguidancefoundinthefederalregulations,thecourtfoundtheTollwayProgramsufficientlyflexible.Id.

Midwestpresentednoaffirmativeevidence.ThecourtheldtheTollwayDefendantsprovidedastrongbasisinevidencefortheirDBEProgram,whereasMidwest,didnotcomeforwardwithanyconcrete,affirmativeevidencetoshakethisfoundation.Id.at740.ThecourtthusheldtheTollwayProgramwasnarrowlytailoredandgrantedtheTollwayDefendants’motionforsummaryjudgment.Id.

Notice of Appeal.Atthetimeofthisreport,MidwestFenceCorporationhasfiledaNoticeofAppealtotheUnitedStatesCourtofAppealsfortheSeventhCircuit,whichappealispending.

10. Geyer Signal, Inc. v. Minnesota, DOT, 2014 WL 1309092 (D. Minn. March 31, 2014)

InGeyerSignal,Inc.,etal.v.MinnesotaDOT,USDOT,FederalHighwayAdministration,etal.,CaseNo.11‐CV‐321,UnitedStatesDistrictCourtfortheDistrictCourtofMinnesota,theplaintiffsGeyerSignal,Inc.anditsownerfiledthislawsuitagainsttheMinnesotaDOT(MnDOT)seekingapermanentinjunctionagainstenforcementandadeclarationofunconstitutionalityoftheFederalDBEProgramandMinnesotaDOT’simplementationoftheDBEProgramonitsfaceandasapplied.GeyerSignalsoughtaninjunctionagainsttheMinnesotaDOTprohibitingitfromenforcingtheDBEProgramor,alternatively,fromimplementingtheProgramimproperly;adeclaratoryjudgmentdeclaringthattheDBEProgramviolatestheEqualprotectionelementoftheFifthAmendmentoftheUnitedStatesConstitutionand/ortheEqualProtectionclauseoftheFourteenthAmendmenttotheUnitedStatesConstitutionandisunconstitutional,or,inthealternativethatMinnesotaDOT’simplementationoftheProgramisanunconstitutionalviolationoftheEqualProtectionClause,and/orthattheProgramisvoidforvagueness;andotherrelief.


Procedural background.PlaintiffGeyerSignalisasmall,family‐ownedbusinessthatperformstrafficcontrolworkgenerallyonroadconstructionprojects.GeyerSignalisafirmownedbyaCaucasianmale,whoalsoisanamedplaintiff.

SubsequenttothelawsuitfiledbyGeyerSignal,theUSDOTandtheFederalHighwayAdministrationfiledtheirMotiontopermitthemtointerveneasdefendantsinthiscase.TheFederalDefendant‐IntervenorsrequestedinterventiononthecaseinordertodefendtheconstitutionalityoftheFederalDBEProgramandthefederalregulationsatissue.TheFederalDefendant‐IntervenorsandtheplaintiffsfiledaStipulationthattheFederalDefendant‐Intervenorshavetherighttointerveneandshouldbepermittedtointerveneinthematter,andconsequentlytheplaintiffsdidnotcontesttheFederalDefendant‐Intervenor’sMotionforIntervention.TheCourtissuedanOrderthattheStipulationofIntervention,agreeingthattheFederalDefendant‐Intervenorsmayinterveneinthislawsuit,beapprovedandthattheFederalDefendant‐Intervenorsarepermittedtointerveneinthiscase.

TheFederalDefendantsmovedforsummaryjudgmentandtheStatedefendantsmovedtodismiss,orinthealternativeforsummaryjudgment,arguingthattheDBEProgramonitsfaceandasimplementedbyMnDOTisconstitutional.TheCourtconcludedthattheplaintiffs,GeyerSignalanditswhitemaleowner,KevinKissner,raisednogenuineissueofmaterialfactwithrespecttotheconstitutionalityoftheDBEProgramfaciallyorasapplied.Therefore,theCourtgrantedtheFederalDefendantsandtheStatedefendants’motionsforsummaryjudgmentintheirentirety.

Plaintiffsallegedthatthereisinsufficientevidenceofacompellinggovernmentalinteresttosupportarace‐basedprogramforDBEuseinthefieldsoftrafficcontrolorlandscaping.(2014WL1309092at*10)Additionally,plaintiffsallegedthattheDBEProgramisnotnarrowlytailoredbecauseit(1)treatstheconstructionindustryasmonolithic,leadingtoanoverconcentrationofDBEparticipationintheareasoftrafficsignalandlandscapingwork;(2)allowsrecipientstosetcontractgoals;and(3)setsgoalsbasedonthenumberofDBEsthereare,nottheamountofworkthoseDBEscanactuallyperform.Id.*10.PlaintiffsalsoallegedthattheDBEProgramisunconstitutionallyvaguebecauseitallowsprimecontractorstousebidsfromDBEsthatarehigherthanthebidsofnon‐DBEs,providedtheincreaseinpriceisnotunreasonable,withoutdefiningwhatincreasedcostsare“reasonable.”Id.

Constitutional claims.TheCourtstatesthatthe“heartofplaintiffs”claimsisthattheDBEProgramandMnDOT’simplementationofitareunconstitutionalbecausetheimpactofcuringdiscriminationintheconstructionindustryisoverconcentratedinparticularsub‐categoriesofwork.”Id.at*11.TheCourtnotedthatbecauseDBEsare,bydefinition,smallbusinesses,plaintiffscontendthey“simplycannotperformthevastmajorityofthetypesofworkrequiredforfederally‐fundedMnDOTprojectsbecausetheylackthefinancialresourcesandequipmentnecessarytoconductsuchwork.”Id.

Asaresult,plaintiffsclaimedthatDBEsonlycompeteincertainsmallareasofMnDOTwork,suchastrafficcontrol,trucking,andsupply,buttheDBEgoalsthatprimecontractorsmustmeetarespreadoutovertheentirecontract.Id.PlaintiffsassertedthatprimecontractorsareforcedtodisproportionatelyuseDBEsinthosesmallareasofwork,andthatnon–DBEsinthoseareas


ofworkareforcedtobeartheentireburdenof“correctingdiscrimination”,whilethevastmajorityofnon‐DBEsinMnDOTcontractinghaveessentiallynoDBEcompetition.Id.

PlaintiffsthereforearguedthattheDBEProgramisnotnarrowlytailoredbecauseitmeansthatanyDBEgoalsareonlybeingmetthroughafewareasofworkonconstructionprojects,whichburdennon‐DBEsinthosesectorsanddonotalleviateanyproblemsinothersectors.Id.at#11.

PlaintiffsbroughttwofacialchallengestotheFederalDBEProgram.Id.PlaintiffsallegethattheDBEProgramisfaciallyunconstitutionalbecauseitis“fatallypronetooverconcentration”whereDBEgoalsaremetdisproportionatelyinareasofworkthatrequirelittleoverheadandcapital.Id.at11.Second,plaintiffsallegedthattheDBEProgramisunconstitutionallyvaguebecauseitrequiresprimecontractorstoacceptDBEbidseveniftheDBEbidsarehigherthanthosefromnon‐DBEs,providedtheincreasedcostis“reasonable”withoutdefiningareasonableincreaseincost.Id.

Plaintiffsalsobroughtthreeas‐appliedchallengesbasedonMnDOT’simplementationoftheDBEProgram.Id.at12.First,plaintiffscontendedthatMnDOThasunconstitutionallyappliedtheDBEProgramtoitscontractingbecausethereisnoevidenceofdiscriminationagainstDBEsingovernmentcontractinginMinnesota.Id.Second,theycontendedthatMnDOThassetimpermissiblyhighgoalsforDBEparticipation.Finally,plaintiffsarguedthattotheextenttheDBEFederalProgramallowsMnDOTtocorrectforoverconcentration,ithasfailedtodoso,renderingitsimplementationoftheProgramunconstitutional.Id.

A. Strict scrutiny.ItisundisputedthatstrictscrutinyappliedtotheCourt’sevaluationoftheFederalDBEProgram,whetherthechallengeisfacialoras‐applied.Id.at*12.Understrictscrutiny,a“statute’srace‐basedmeasures‘areconstitutionalonlyiftheyarenarrowlytailoredtofurthercompellinggovernmentalinterests.’”Id.at*12,quotingGrutterv.Bollinger,539U.S.306,326(2003).

TheCourtnotesthattheDBEProgramalsocontainsagenderconsciousprovision,aclassificationtheCourtsaysthatwouldbesubjecttointermediatescrutiny.Id.at*12,atn.4.BecauseraceisalsousedbytheFederalDBEProgram,however,theProgrammustultimatelymeetstrictscrutiny,andtheCourtthereforeanalyzestheentireProgramforitscompliancewithstrictscrutiny.Id.

B. Facial challenge based on overconcentration.TheCourtsaysthatinordertoprevailonafacialchallenge,theplaintiffmustestablishthatnosetofcircumstancesexistunderwhichtheFederalDBEProgramwouldbevalid.Id.at*12.TheCourtstatesthatplaintiffsbeartheultimateburdentoprovethattheDBEProgramisunconstitutional.Idat*.

1. Compelling governmental interest.TheCourtpointsoutthattheEighthCircuitCourtofAppealshasalreadyheldthefederalgovernmenthasacompellinginterestinnotperpetuatingtheeffectsofracialdiscriminationinitsowndistributionoffederalfundsandinremediatingtheeffectsofpastdiscriminationinthegovernmentcontractingmarketscreatedbyitsdisbursements.Id.*13,quotingAdarandConstructors,Inc.v.Slater,228F.3d1147,1165(10thCir.2000).Theplaintiffsdidnotdisputethatremedyingdiscriminationinfederaltransportationcontractingisacompellinggovernmentalinterest.Id.at*13.Inaccessingtheevidenceofferedin


supportofafindingofdiscrimination,theCourtconcludedthatdefendantshavearticulatedacompellinginterestunderlyingenactmentoftheDBEProgram.Id.

Second,theCourtstatesthatthegovernmentmustdemonstrateastrongbasisintheevidencesupportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthecompellinginterest.Id.at*13.Inassessingtheevidenceofferedinsupportofafindingofdiscrimination,theCourtconsidersbothdirectandcircumstantialevidence,includingpost‐enactmentevidenceintroducedbydefendantsaswellastheevidenceinthelegislativehistoryitself.Id.ThepartychallengingtheconstitutionalityoftheDBEProgrambearstheburdenofdemonstratingthatthegovernment’sevidencedidnotsupportaninferenceofpriordiscrimination.Id.

Congressional evidence of discrimination: disparity studies and barriers.PlaintiffsarguedthattheevidencerelieduponbyCongressinreauthorizingtheDBEProgramisinsufficientandgenerallycritiquethereports,studies,andevidencefromtheCongressionalrecordproducedbytheFederalDefendants.Id.at*13.But,theCourtfoundthatplaintiffsdidnotraiseanyspecificissueswithrespecttotheFederalDefendants’profferedevidenceofdiscrimination.Id.*14.PlaintiffshadarguedthatnopartycouldeveraffordtoretainanexperttoanalyzethenumerousstudiessubmittedasevidencebytheFederalDefendantsandfindalloftheflaws.Id.*14.FederalDefendantshadproffereddisparitystudiesfromthroughouttheUnitedStatesoveraperiodofyearsinsupportoftheFederalDBEProgram.Id.at*14.Basedonthesestudies,theFederalDefendants’consultantconcludedthatminoritiesandwomenformedbusinessesatdisproportionatelylowerratesandtheirbusinessesearnstatisticallylessthanbusinessesownedbymenornon‐minorities.Id.at*6.

TheFederalDefendants’consultantalsodescribedstudiessupportingtheconclusionthatthereiscreditdiscriminationagainstminority‐andwomen‐ownedbusinesses,concludedthatthereisaconsistentandstatisticallysignificantunderutilizationofminority‐andwomen‐ownedbusinessesinpubliccontracting,andspecificallyfoundthatdiscriminationexistedinMnDOTcontractingwhennorace‐consciouseffortswereutilized.Id.*6.TheCourtnotesthatCongresshadconsideredaplethoraofevidencedocumentingthecontinuedpresenceofdiscriminationintransportationprojectsutilizingFederaldollars.Id.at*5.

TheCourtconcludedthatneitheroftheplaintiffs’contentionsestablishedthatCongresslackedasubstantialbasisintheevidencetosupportitsconclusionthatrace‐basedremedialactionwasnecessarytoaddressdiscriminationinpublicconstructioncontracting.Id.at*14.TheCourtrejectedplaintiffs’argumentthatbecauseCongressfoundmultipleformsofdiscriminationagainstminority‐andwomen‐ownedbusiness,thatevidenceshowedCongressfailedtoalsofindthatsuchbusinessesspecificallyfacediscriminationinpubliccontracting,orthatsuchdiscriminationisnotrelevanttotheeffectthatdiscriminationhasonpubliccontracting.Id.

TheCourtreferencedthedecisioninAdarandConstructors,Inc.228F.3dat1175‐1176.InAdarand,theCourtfoundevidencerelevanttoCongressionalenactmentoftheDBEProgramtoincludethatbothrace‐basedbarrierstoentryandtheongoingrace‐basedimpedimentstosuccessfacedbyminoritysubcontractingenterprisesarecausedeitherbycontinuingdiscriminationorthelingeringeffectsofpastdiscriminationontherelevantmarket.Id.at*14.


TheCourt,citingagainwithapprovalthedecisioninAdarandConstructors,Inc.,foundtheevidencepresentedbythefederalgovernmentdemonstratestheexistenceoftwokindsofdiscriminatorybarrierstominoritysubcontractingenterprises,bothofwhichshowastronglinkbetweenracialdisparitiesinthefederalgovernment’sdisbursementsofpublicfundsforconstructioncontractsandthechannelingofthosefundsduetoprivatediscrimination.Id.at*14,quoting,AdarandConstructors,Inc.228F.3dat1167‐68.Thefirstdiscriminatorybarriersaretotheformationofqualifiedminoritysubcontractingenterprisesduetoprivatediscrimination.Id.Theseconddiscriminatorybarriersaretofaircompetitionbetweenminorityandnon‐minoritysubcontractingenterprises,againduetoprivatediscrimination.Id.Bothkindsofdiscriminatorybarriersprecludeexistingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.Id.

Accordingly,theCourtfoundthatCongress’considerationofdiscriminatorybarrierstoentryforDBEsaswellasdiscriminationinexistingpubliccontractingestablishastrongbasisintheevidenceforreauthorizationoftheFederalDBEProgram.Id.at*14.

Court rejects Plaintiffs’ general critique of evidence as failing to meet their burden of proof.

TheCourtheldthatplaintiffs’generalcritiqueofthemethodologyofthestudiesrelieduponbytheFederalDefendantsissimilarlyinsufficienttodemonstratethatCongresslackedasubstantialbasisintheevidence.Id.at*14.TheCourtstatedthattheEighthCircuitCourtofAppealshasalreadyrejectedplaintiffs’argumentthatCongresswasrequiredtofindspecificevidenceofdiscriminationinMinnesotainordertoenactthenationalProgram.Id.at*14.

Finally,theCourtpointedoutthatplaintiffshavefailedtopresentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoandparticipationinhighwaycontracts.Id.at*15.Thus,theCourtconcludedthatplaintiffsfailedtomeettheirultimateburdentoprovethattheFederalDBEProgramisunconstitutionalonthisground.Id.at*15,quotingSherbrookeTurf,Inc.,345F.3dat971–73.

Therefore,theCourtheldthatplaintiffsdidnotmeettheirburdenofraisingagenuineissueofmaterialfactastowhetherthegovernmentmetitsevidentiaryburdeninreauthorizingtheDBEFederalProgram,andgrantedsummaryjudgmentinfavoroftheFederalDefendantswithrespecttothegovernment’scompellinginterest.Id.at*15.

2. Narrowly tailored.TheCourtstatesthatseveralfactorsareexaminedindeterminingwhetherrace‐consciousremediesarenarrowlytailored,andthatnumerousFederalCourtshavealreadyconcludedthattheDBEFederalProgramisnarrowlytailored.Id.at*15.PlaintiffsinthiscasedidnotdisputethevariousaspectsoftheFederalDBEProgramthatcourtshavepreviouslyfoundtodemonstratenarrowlytailoring.Id.Instead,plaintiffsargueonlythattheFederalDBEProgramisnotnarrowlytailoredonitsfacebecauseofoverconcentration.

Overconcentration.Plaintiffsarguedthatiftherecipientsoffederalfundsuseoverallindustryparticipationofminoritiestosetgoals,yetlimitactualDBEparticipationtoonlydefinedsmallbusinessesthatarelimitedintheworktheycanperform,thereisnowaytoavoidoverconcentrationofDBEparticipationinafew,limitedareasofMnDOTwork.Id.at*15.Plaintiffsassertedthatsmallbusinessescannotperformmostofthetypesofworkneededor


necessaryforlargehighwayprojects,andiftheyhadthecapitaltodoit,theywouldnotbesmallbusinesses.Id.at*16.Therefore,plaintiffsarguedtheDBEProgramwillalwaysbeoverconcentrated.Id.

TheCourtstatesthatinorderforplaintiffstoprevailonthisfacialchallenge,plaintiffsmustestablishthattheoverconcentrationitidentifiesisunconstitutional,andthattherearenocircumstancesunderwhichtheFederalDBEProgramcouldbeoperatedwithoutoverconcentration.Id.TheCourtconcludesthatplaintiffs’claimfailsonthebasisthattherearecircumstancesunderwhichtheFederalDBEProgramcouldbeoperatedwithoutoverconcentration.Id.

First,theCourtfoundthatplaintiffsfailtoestablishthattheDBEProgramgoalswillalwaysbefulfilledinamannerthatcreatesoverconcentration,becausetheymisapprehendthenatureofthegoalsettingmandatedbytheDBEProgram.Id.at*16.TheCourtstatesthatrecipientssetgoalsforDBEparticipationbasedonevidenceoftheavailabilityofready,willingandableDBEstoparticipateonDOT‐assistedcontracts.Id.TheDBEProgram,accordingtotheCourt,necessarilytakesintoaccount,whendetermininggoals,thattherearecertaintypesofworkthatDBEsmayneverbeabletoperformbecauseofthecapitalrequirements.Id.Inotherwords,ifthereisatypeofworkthatnoDBEcanperform,therewillbenodemonstrableevidenceoftheavailabilityofready,willingandableDBEsinthattypeofwork,andthosenon‐existentDBEswillnotbefactoredintothelevelofDBEparticipationthatalocalitywouldexpectabsenttheeffectsofdiscrimination.Id.

Second,theCourtfoundthateveniftheDBEProgramcouldhavetheincidentaleffectofoverconcentrationinparticularareas,theDBEProgramfaciallyprovidesamplemechanismsforarecipientoffederalfundstoaddresssuchaproblem.Id.at*16.TheCourtnotesthatarecipientretainssubstantialflexibilityinsettingindividualcontractgoalsandspecificallymayconsiderthetypeofworkinvolved,thelocationofthework,andtheavailabilityofDBEsfortheworkoftheparticularcontract.Id.Ifoverconcentrationpresentsitselfasaproblem,theCourtpointsoutthatarecipientcanaltercontractgoalstofocuslessoncontractsthatrequireworkinanalreadyoverconcentratedareaandinsteadinvolveothertypesofworkwhereoverconcentrationofDBEsisnotpresent.Id.

ThefederalregulationsalsorequirecontractorstoengageingoodfaitheffortsthatrequirebreakingoutthecontractworkitemsintoeconomicallyfeasibleunitstofacilitateDBEparticipation.Id.Therefore,theCourtfound,theregulationsanticipatethepossibleissueidentifiedbyplaintiffsandrequireprimecontractorstosubdivideprojectsthatwouldotherwisetypicallyrequiremorecapitalorequipmentthanasingleDBEcanacquire.Id.Also,theCourt,statesthatrecipientsmayobtainwaiversoftheDBEProgram’sprovisionspertainingtooverallgoals,contractgoals,orgoodfaithefforts,if,forexample,localconditionsofoverconcentrationthreatenoperationoftheDBEProgram.Id.

TheCourtalsorejectsplaintiffsclaimthat49CFR§26.45(h),whichprovidesthatrecipientsarenotallowedtosubdividetheirannualgoalsinto“group‐specificgoals”,butrathermustprovideforparticipationbyallcertifiedDBEs,asevidencethattheDBEProgramleadstooverconcentration.Id.at*16.TheCourtnotesthatothercourtshaveinterpretedthisprovisiontomeanthatrecipientscannotapportionitsDBEgoalamongdifferentminoritygroups,and


thereforetheprovisiondoesnotappeartoprohibitrecipientsfromidentifyingparticularoverconcentratedareasandremedyingoverconcentrationinthoseareas.Id.at*16.And,eveniftheprovisionoperatedasplaintiffssuggested,thatprovisionissubjecttowaiveranddoesnotaffectarecipient’sabilitytotailorspecificcontractgoalstocombatoverconcentration.Id.at*16,n.5.

TheCourtstateswithrespecttooverconcentrationspecifically,thefederalregulationsprovidethatrecipientsmayuseincentives,technicalassistance,businessdevelopmentprograms,mentor‐protégéprograms,andotherappropriatemeasuresdesignedtoassistDBEsinperformingworkoutsideofthespecificfieldinwhichtherecipienthasdeterminedthatnon‐DBEsareundulyburdened.Id.at*17.AllofthesemeasurescouldbeusedbyrecipientstoshiftDBEsfromareasinwhichtheyareoverconcentratedtootherareasofwork.Id.at*17.

Therefore,theCourtheldthatbecausetheDBEProgramprovidesnumerousavenuesforrecipientsoffederalfundstocombatoverconcentration,theCourtconcludedthatplaintiffs’facialchallengetotheProgramfails,andgrantedtheFederalDefendants’motionforsummaryjudgment.Id.

C. Facial challenged based on vagueness.TheCourtheldthatplaintiffscouldnotmaintainafacialchallengeagainsttheFederalDBEProgramforvagueness,astheirconstitutionalchallengestotheProgramarenotbasedintheFirstAmendment.Id.at*17.TheCourtstatesthattheEighthCircuitCourtofAppealshasheldthatcourtsneednotconsiderfacialvaguenesschallengesbaseduponconstitutionalgroundsotherthantheFirstAmendment.Id.

TheCourtthusgrantedFederalDefendants’motionforsummaryjudgmentwithrespecttoplaintiffs’facialclaimforvaguenessbasedontheallegationthattheFederalDBEProgramdoesnotdefine“reasonable”forpurposesofwhenaprimecontractorisentitledtorejectaDBEs’bidonthebasisofpricealone.Id.

D. As‐Applied Challenges to MnDOT’s DBE Program: MnDOT’s program held narrowly tailored.Plaintiffsbroughtthreeas‐appliedchallengesagainstMnDOT’simplementationoftheFederalDBEProgram,allegingthatMnDOThasfailedtosupportitsimplementationoftheProgramwithevidenceofdiscriminationinitscontracting,setsinappropriategoalsforDBEparticipation,andhasfailedtorespondtooverconcentrationinthetrafficcontrolindustry.Id.at*17.

1. Alleged failure to find evidence of discrimination. TheCourtheldthatastate’simplementationoftheFederalDBEProgrammustbenarrowlytailored.Id.at*18.ToshowthatastatehasviolatedthenarrowtailoringrequirementoftheFederalDBEProgram,theCourtsaysachallengermustdemonstratethat“betterdatawasavailable”andtherecipientoffederalfunds“wasotherwiseunreasonableinundertaking[its]thoroughanalysisandinrelyingonitsresults.”Id.,quotingSherbrookTurf,Inc.at973.

Plaintiffs’expertcritiquedthestatisticalmethodsusedandconclusionsdrawnbytheconsultantforMnDOTinfindingthatdiscriminationagainstDBEsexistsinMnDOTcontractingsufficienttosupportoperationoftheDBEProgram.Id.at*18.Plaintiffs’expertalsocritiquedthemeasuresofDBEavailabilityemployedbytheMnDOTconsultantandthefacthemeasureddiscriminationinbothprimeandsubcontractingmarkets,insteadofsolelyinsubcontractingmarkets.Id.


Plaintiffs present no affirmative evidence that discrimination does not exist.TheCourtheldthatplaintiffs’disputeswithMnDOT’sconclusionthatdiscriminationexistsinpubliccontractingareinsufficienttoestablishthatMnDOT’simplementationoftheFederalDBEProgramisnotnarrowlytailored.Id.at*18.First,theCourtfoundthatitisinsufficienttoshowthat“datawassusceptibletomultipleinterpretations,”instead,plaintiffsmust“presentaffirmativeevidencethatnoremedialactionwasnecessarybecauseminority‐ownedsmallbusinessesenjoynon‐discriminatoryaccesstoandparticipationinhighwaycontracts.”Id.at*18,quotingSherbrookeTurf,Inc.,345F.3dat970.Here,theCourtfound,plaintiffs’experthasnotpresentedaffirmativeevidenceuponwhichtheCourtcouldconcludethatnodiscriminationexistsinMinnesota’spubliccontracting.Id.at*18.

Asforthemeasuresofavailabilityandmeasurementofdiscriminationinbothprimeandsubcontractingmarkets,bothofthesepracticesareincludedinthefederalregulationsaspartofthemechanismsforgoalsetting.Id.at*18.TheCourtfoundthatitwouldmakelittlesensetoseparateprimecontractorandsubcontractoravailability,whenDBEswillalsocompeteforprimecontractsandanysuccesswillbereflectedintherecipient’scalculationofsuccessinmeetingtheoverallgoal.Id.at*18,quotingNorthernContracting,Inc.v.Illinois,473F.3d715,723(7thCir.2007).BecausethesefactorsarepartofthefederalregulationsdefiningstategoalsettingthattheEighthCircuitCourtofAppealshasalreadyapprovedinassessingMnDOT’scompliancewithnarrowtailoringinSherbrookeTurf,theCourtconcludedthesecriticismsdonotestablishthatMnDOThasviolatedthenarrowtailoringrequirement.Id.at*18.

Inaddition,theCourtheldthesecriticismsfailtoestablishthatMnDOTwasunreasonableinundertakingitsthoroughanalysisandrelyingonitsresults,andconsequentlydonotshowlackofnarrowtailoring.Id.at*18.Accordingly,theCourtgrantedtheStatedefendants’motionforsummaryjudgmentwithrespecttothisclaim.

2. Alleged inappropriate goal setting.PlaintiffssecondchallengewastotheaspirationalgoalsMnDOThassetforDBEperformancebetween2009and2015.Id.at*19.TheCourtfoundthatthegoalsettingviolationstheplaintiffsallegedarenotthetypesofviolationsthatcouldreasonablybeexpectedtorecur.Id.PlaintiffsraisednumerousargumentsregardingthedataandmethodologyusedbyMnDOTinsettingitsearliergoals.Id.But,plaintiffsdidnotdisputethateverythreeyearsMnDOTconductsanentirelynewanalysisofdiscriminationintherelevantmarketandestablishesnewgoals.Id.Therefore,disputesoverthedatacollectionandcalculationsusedtosupportgoalsthatarenolongerineffectaremoot.Id.Thus,theCourtonlyconsideredplaintiffs’challengestothe2013–2015goals.Id.

Plaintiffsraisedthesamechallengestothe2013–2015goalsasitdidtoMnDOT’sfindingofdiscrimination,namelythatthegoalsrelyonmultipleapproachestoascertaintheavailabilityofDBEsandrelyonameasurementofdiscriminationthataccountsforbothprimeandsubcontractingmarkets.Id.at*19.BecausethesechallengesidentifyonlyadifferentinterpretationofthedataanddonotestablishthatMnDOTwasunreasonableinrelyingontheoutcomeoftheconsultants’studies,plaintiffshavefailedtodemonstrateamaterialissueoffactrelatedtoMnDOT’snarrowtailoringasitrelatestogoalsetting.Id.

3. Alleged overconcentration in the traffic control market. Plaintiffs’finalargumentwasthatMnDOT’simplementationoftheDBEProgramviolatestheEqualProtectionClausebecause


MnDOThasfailedtofindoverconcentrationinthetrafficcontrolmarketandcorrectforsuchoverconcentration.Id.at*20.MnDOTpresentedanexpertreportthatreviewedfourdifferentindustriesintowhichplaintiffs’workfallsbasedonNAICscodesthatfirmsconductingtrafficcontrol‐typeworkidentifythemselvesby.Id.Afterconductingadisproportionalitycomparison,theconsultantconcludedthattherewasnotstatisticallysignificantoverconcentrationofDBEsinplaintiffs’typeofwork.

Plaintiffs’expertfoundthatthereisoverconcentration,butrelieduponsixothercontractorsthathavepreviouslybidonMnDOTcontracts,whichplaintiffsbelieveperformthesametypeofworkasplaintiff.Id.at*20.But,theCourtfoundplaintiffshaveprovidednoauthorityforthepropositionthatthegovernmentmustconformitsimplementationoftheDBEProgramtoeveryindividualbusiness’self‐assessmentofwhatindustrygrouptheyfallintoandwhatotherbusinessesaresimilar.Id.

TheCourtheldthattorequiretheStatetorespondtoandadjustitscalculationsonaccountofsuchachallengebyasinglebusinesswouldplaceanimpossibleburdenonthegovernmentbecauseanindividualbusinesscouldalwaysmakeanargumentthatsomeoftheotherentitiesintheworkareathegovernmenthasgroupeditintoarenotalike.Id.at*20.This,theCourtstates,wouldrequirethegovernmenttorunendlessiterationsofoverconcentrationanalysestosatisfyeachbusinessthatnon‐DBEsarenotbeingundulyburdenedinitsself‐definedgroup,whichwouldbequiteburdensome.Id.

BecauseplaintiffsdidnotshowthatMnDOT’srelianceonitsoverconcentrationanalysisusingNAICscodeswasunreasonableorthatoverconcentrationexistsinitstypeofworkasdefinedbyMnDOT,ithasnotestablishedthatMnDOThasviolatednarrowtailoringbyfailingtoidentifyoverconcentrationorfailingtoaddressit.Id.at*20.Therefore,theCourtgrantedtheStatedefendants’motionforsummaryjudgmentwithrespecttothisclaim.

III. Claims Under 42 U.S.C. § 1981 and 42 U.S.C. § 2000.BecausetheCourtconcludedthatMnDOT’sactionsareincompliancewiththeFederalDBEProgram,itsadherencetothatProgramcannotconstituteabasisforaviolationof§1981.Id.at*21.Inaddition,becausetheCourtconcludedthatplaintiffsfailedtoestablishaviolationoftheEqualProtectionClause,itgrantedthedefendants’motionsforsummaryjudgmentonthe42U.S.C.§2000dclaim.

Holding.Therefore,theCourtgrantedtheFederalDefendants’motionforsummaryjudgmentandtheStates’defendants’motiontodismiss/motionforsummaryjudgment,anddismissedalltheclaimsassertedbytheplaintiffs.

11. Dunnet Bay Construction Company v. Gary Hannig, in its official capacity as Secretary of Transportation for the Illinois DOT and the Illinois DOT, 2014 WL 552213 (C.D. Ill. 2014), affirmed, Dunnet Bay Construction Co. v. Borggren, Illinois DOT, et al., 799 F.3d 676, 2015 WL 4934560 (7th Cir. 2015).

InDunnetBayConstructionCompanyv.GaryHannig,initsofficialcapacityasSecretaryoftheIllinoisDOTandtheIllinoisDOT,2014WL552213(C.D.Ill.Feb.12,2014),plaintiffDunnetBayConstructionCompanybroughtalawsuitagainsttheIllinoisDepartmentofTransportation(IDOT)andtheSecretaryofIDOTinhisofficialcapacitychallengingtheIDOTDBEProgramand


itsimplementationoftheFederalDBEProgram,includinganallegedunwritten“nowaiver”policy,andclaimingthattheIDOT’sprogramisnotnarrowlytailored.

Motion to Dismiss certain claims granted.IDOTinitiallyfiledaMotiontoDismisscertainCountsoftheComplaint.TheUnitedStatesDistrictCourtgrantedtheMotiontoDismissCountsI,IIandIIIagainstIDOTprimarilybasedonthedefenseofimmunityundertheEleventhAmendmenttotheUnitedStatesConstitution.TheOpinionheldthatclaimsinCountsIandIIagainstSecretaryHannigofIDOTinhisofficialcapacityremainedinthecase.

Inaddition,theotherCountsoftheComplaintthatremainedinthecasenotsubjecttotheMotiontoDismiss,soughtdeclaratoryandinjunctivereliefanddamagesbasedonthechallengetotheIDOTDBEProgramanditsapplicationbyIDOT.PlaintiffDunnetBayallegedtheIDOTDBEProgramisunconstitutionalbasedontheunwrittenno‐waiverpolicy,requiringDunnetBaytomeetDBEgoalsanddenyingDunnetBayawaiverofthegoalsdespiteitsgoodfaithefforts,andbasedonotherallegations.DunnetBaysoughtadeclaratoryjudgmentthatIDOT’sDBEprogramdiscriminatesonthebasisofraceintheawardoffederal‐aidhighwayconstructioncontractsinIllinois.

Motions for Summary Judgment.SubsequenttotheCourt’sOrdergrantingthepartialMotiontoDismiss,DunnetBayfiledaMotionforSummaryJudgment,assertingthatIDOThaddepartedfromthefederalregulationsimplementingtheFederalDBEProgram,thatIDOT’simplementationoftheFederalDBEProgramwasnotnarrowlytailoredtofurtheracompellinggovernmentalinterest,andthattherefore,theactionsofIDOTcouldnotwithstandstrictscrutiny.2014WL552213at*1.IDOTalsofiledaMotionforSummaryJudgment,allegingthatallapplicableguidelinesfromthefederalregulationswerefollowedwithrespecttotheIDOTDBEProgram,andbecauseIDOTisfederallymandatedanddidnotabuseitsfederalauthority,IDOT’sDBEProgramisnotsubjecttoattack.Id.

IDOTfurtherassertedinitsMotionforSummaryJudgmentthatthereisnoEqualProtectionviolation,claimingthatneithertherejectionofthebidbyDunnetBay,northedecisiontore‐bidtheproject,wasbaseduponDunnetBay’srace.IDOTalsoassertedthat,becauseDunnetBaywasrelyingontherightsofothersandwasnotdeniedequalopportunitytocompeteforgovernmentcontracts,DunnetBaylackedstandingtobringaclaimforracialdiscrimination.

Factual background.PlaintiffDunnetBayConstructionCompanyisownedbytwowhitemalesandisengagedinthebusinessofgeneralhighwayconstruction.IthasbeenqualifiedtoworkonIDOThighwayconstructionprojects.Inaccordancewiththefederalregulations,IDOTpreparedandsubmittedtotheUSDOTforapprovalaDBEProgramgoverningfederallyfundedhighwayconstructioncontracts.Forfiscalyear2010,IDOTestablishedanoverallaspirationalDBEgoalof22.77percentforDBEparticipation,anditprojectedthat4.12percentoftheoverallgoalcouldbemetthroughraceneutralmeasuresandtheremaining18.65percentwouldrequiretheuseofrace‐consciousgoals.2014WL552213at*3.IDOTnormallyachievedsomewherebetween10and14percentparticipationbyDBEs.Id.TheoverallaspirationalgoalwasbaseduponastatewidedisparitystudyconductedonbehalfofIDOTin2004.

UtilizationgoalsundertheIDOTDBEProgramDocumentaredeterminedbaseduponanassessmentforthetypeofwork,locationofthework,andtheavailabilityofDBEcompaniesto


doapartofthework.Id.at*4.Eachpayitemforaproposedcontractisanalyzedtodetermineifthereareatleasttwoready,willing,andableDBEstoperformthepayitem.Id.ThecapacityoftheDBEs,theirwillingnesstoperformtheworkintheparticulardistrict,andtheirpossessionofthenecessaryworkforceandequipmentarealsofactorsintheoveralldetermination.Id.

Initially,IDOTcalculatedtheDBEgoalfortheEisenhowerProjecttobe8percent.WhengoalswerefirstsetontheEisenhowerProject,takingintoaccounteveryitemlistedforwork,themaximumpotentialgoalforDBEparticipationfortheEisenhowerProjectwas20.3percent.Eventually,anoverallgoalofapproximately22percentwasset.Id.at*4.

Atthebidopening,DunnetBay’sbidwasthelowestreceivedbyIDOT.ItslowbidwasoverIDOT’sestimatefortheproject.DunnetBay,initsbid,identified8.2percentofitsbidforDBEs.ThesecondlowbidderprojectedDBEparticipationof22percent.DunnetBay’sDBEparticipationbiddidnotmeetthepercentageparticipationinthebiddocuments,andthusIDOTconsideredDunnetBay’sgoodfaitheffortstomeettheDBEgoal.IDOTrejectedDunnetBay’sbiddeterminingthatDunnetBayhadnotdemonstratedagoodfaithefforttomeettheDBEgoal.Id.at*9.

TheCourtfoundthatalthoughitwasthelowbidderfortheconstructionproject,DunnetBaydidnotmeetthegoalforparticipationofDBEsdespiteitsallegedgoodfaithefforts.IDOTcontendeditfollowedallapplicableguidelinesinhandlingtheDBEProgram,andthatbecauseitdidnotabuseitsfederalauthorityinadministeringtheProgram,theIDOTDBEProgramisnotsubjecttoattack.Id.at*23.IDOTfurtherassertedthatneitherrejectionofDunnetBay’sbidnorthedecisiontore‐bidtheProjectwasbasedonitsraceorthatofitsowners,andthatDunnetBaylackedstandingtobringaclaimforracialdiscriminationonbehalfofothers(i.e.,smallbusinessesoperatedbywhitemales).Id.at*23.

TheCourtfoundthatthefederalregulationsrecommendanumberofnon‐mandatory,non‐exclusiveandnon‐exhaustiveactionswhenconsideringabidder’sgoodfaitheffortstoobtainDBEparticipation.Id.at*25.ThefederalregulationsalsoprovidethestateDOTmayconsidertheabilityofotherbidderstomeetthegoal.Id.

IDOT implementing the Federal DBE Program is acting as an agent of the federal government

insulated from constitutional attack absent showing the state exceeded federal authority.TheCourtheldthatastateentitysuchasIDOTimplementingacongressionallymandatedprogrammayrely“onthefederalgovernment’scompellinginterestinremedyingtheeffectsofpassdiscriminationinthenationalconstructionmarket.”Id.at*26,quotingNorthernContractingCo.,Inc.v.Illinois,473F.3d715at720‐21(7thCir.2007).Intheseinstances,theCourtstated,thestateisactingasanagentofthefederalgovernmentandis“insulatedfromthissortofconstitutionalattack,absentashowingthatthestateexceededitsfederalauthority.”Id.at*26,quotingNorthernContracting,Inc.,473F.3dat721.TheCourtheldthataccordingly,any“challengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.”Id.at*26,quotingNorthernContracting,Inc.,473.F.3dat722.Therefore,theCourtidentifiedthekeyissueasdeterminingifIDOTexceededitsauthoritygrantedunderthefederalrulesorifDunnetBay’schallengesareforeclosedbyNorthernContracting.Id.at*26.


TheCourtfoundthatIDOTdidinfactemployathoroughprocessbeforearrivingatthe22percentDBEparticipationgoalfortheEisenhowerProject.Id.at*26.TheCourtalsoconcluded“becausethefederalregulationsdonotspecifyaprocedureforarrivingatcontractgoals,itisnotapparenthowIDOTcouldhaveexceededitsfederalauthority.AnychallengeonthisfactorfailsunderNorthernContracting.”Id.at*26.Therefore,theCourtconcludedthereisnobasisforfindingthattheDBEgoalwasarbitrarilysetorthatIDOTexceededitsfederalauthoritywithrespecttothisfactor.Id.at*27.

The “no‐waiver” policy.TheCourtheldthattherewasnotano‐waiverpolicyconsideringallthetestimonyandfactualevidence.Inparticular,theCourtpointedoutthatawaiverwasinfactgrantedinconnectionwiththesamebidlettingatissueinthiscase.Idat*27.TheCourtfoundthatIDOTgrantedawaiveroftheDBEparticipationgoalforanotherconstructioncontractoronadifferentcontract,butunderthesamebidlettinginvolvedinthismatter.Id.

Thus,theCourtheldthatDunnetBay’sassertionthatIDOTadopteda“no‐waiver”policywasunsupportedandcontrarytotherecordevidence.Id.at*27.TheCourtfoundtheundisputedfactsestablishedthatIDOTdidnothavea“no‐waiver”policy,andthatIDOTdidnotexceeditsfederalauthoritybecauseitdidnotadopta“no‐waiver”policy.Id.Therefore,theCourtagainconcludedthatanychallengebyDunnetBayonthisfactorfailedpursuanttotheNorthernContractingdecision.

IDOT’s decision to reject Dunnet Bay’s bid based on lack of good faith efforts did not exceed

IDOT’s authority under federal law.TheCourtfoundthatIDOThassignificantdiscretionunderfederalregulationsandisoftencalledupontomakea“judgmentcall”regardingtheeffortsofthebidderintermsofestablishinggoodfaithattempttomeettheDBEgoals.Id.at*28.TheCourtstateditwasunabletoconcludethatIDOTerredindeterminingDunnetBaydidnotmakeadequategoodfaithefforts.Id.TheCourtsurmisedthatthestrongestevidencethatDunnetBaydidnottakeallnecessaryandreasonablestepstoachievetheDBEgoalisthatitsDBEparticipationwasunder9percentwhileotherbidderswereabletoreachthe22percentgoal.Id.Accordingly,theCourtconcludedthatIDOT’sdecisionrejectingDunnetBay’sbidwasconsistentwiththeregulationsanddidnotexceedIDOT’sauthorityunderthefederalregulations.Id.

TheCourtalsorejectedDunnetBay’sargumentthatIDOTfailedtoprovideDunnetBaywithawrittenexplanationastowhyitsgoodfaitheffortswerenotsufficient,andthusthereweredeficiencieswiththereconsiderationofDunnetBay’sbidandeffortsasrequiredbythefederalregulations.Id.at*29.TheCourtfounditwasunabletoconcludethatatechnicalviolationsuchastoprovideDunnetBaywithawrittenexplanationwillprovideanyrelieftoDunnetBay.Id.Additionally,theCourtfoundthatbecauseIDOTrebidtheproject,DunnetBaywasnotprejudicedbyanydeficiencieswiththereconsideration.Id.

TheCourtemphasizedthatbecauseofthedecisiontorebidtheproject,IDOTwasnotevenrequiredtoholdareconsiderationhearing.Id.at*24.BecausethedecisiononreconsiderationastogoodfaitheffortsdidnotexceedIDOT’sauthorityunderfederallaw,theCourtheldDunnetBay’sclaimfailedundertheNorthernContractingdecision.Id.

Dunnet Bay lacked standing to raise an equal protection claim.TheCourtfoundthatDunnetBaywasnotdisadvantagedinitsabilitytocompeteagainstaraciallyfavoredbusiness,and


neitherIDOT’srejectionofDunnetBay’sbidnorthedecisiontorebidwasbasedontheraceofDunnetBay’sownersoranyclass‐basedanimus.Idat*29.TheCourtstatedthatDunnetBaydidnotpointtoanyotherbusinessthatwasgivenacompetitiveadvantagebecauseoftheDBEgoals.Id.DunnetBaydidnotciteanycaseswhichinvolveplaintiffsthataresimilarlysituatedtoit‐businessesthatarenotatacompetitivedisadvantageagainstminority‐ownedcompaniesorDBEs‐andhavebeendeterminedtohavestanding.Id.at*30.

TheCourtconcludedthatanycompanysimilarlysituatedtoDunnetBayhadtomeetthesameDBEgoalunderthecontract.Id.DunnetBay,theCourtheld,wasnotatacompetitivedisadvantageand/orunabletocompeteequallywiththosegivenpreferentialtreatment.Id.

DunnetBaydidnotpointtoanothercontractorthatdidnothavetomeetthesamerequirementsitdid.TheCourtthusconcludedthatDunnetBaylackedstandingtoraiseanequalprotectionchallengebecauseithadnotsufferedaparticularizedinjurythatwascausedbyIDOT.Id.at*30.DunnetBaywasnotdeprivedoftheabilitytocompeteonanequalbasis.Id.Also,basedontheamountofitsprofits,DunnetBaydidnotqualifyasasmallbusiness,andtherefore,itlackedstandingtovindicatetherightsofahypotheticalwhite‐ownedsmallbusiness.Id.at*30.BecausetheCourtfoundthatDunnetBaywasnotdeniedtheabilitytocompeteonanequalfootinginbiddingonthecontract,DunnetBaylackedstandingtochallengetheDBEProgrambasedontheEqualProtectionClause.Id.at*30.

Dunnet Bay did not establish equal protection violation even if it had standing.TheCourtheldthatevenifDunnetBayhadstandingtobringanequalprotectionclaim,IDOTstillisentitledtosummaryjudgment.TheCourtstatedtheSupremeCourthasheldthatthe“injuryinfact”inanequalprotectioncasechallengingaDBEProgramisthedenialofequaltreatmentresultingfromtheimpositionofthebarrier,nottheultimateinabilitytoobtainthebenefit.Id.at*31.DunnetBay,theCourtsaid,impliedthatbutforthealleged“no‐waiver”policyandDBEgoalswhichwerenotnarrowlytailoredtoaddressdiscrimination,itwouldhavebeenawardedthecontract.TheCourtagainnotedtherecordestablishedthatIDOTdidnothavea“no‐waiver”policy.Id.at*31.

TheCourtalsofoundthatbecausethegravamenofequalprotectionliesnotinthefactofdeprivationofarightbutintheinvidiousclassificationofpersons,itdoesnotappearDunnetBaycanassertaviableclaim.Id.at*31.TheCourtstateditisunawareofanyauthoritywhichsuggeststhatDunnetBaycanestablishanequalprotectionviolationevenifitcouldshowthatIDOTfailedtocomplywiththeregulationsrelatingtotheDBEProgram.Id.TheCourtsaidthatevenifIDOTdidemploya“no‐waiverpolicy,”suchapolicywouldnotconstituteanequalprotectionviolationbecausethefederalregulationsdonotconferspecificentitlementsuponanyindividuals.Id.at*31.

Inordertosupportanequalprotectionclaim,theplaintiffwouldhavetoestablishitwastreatedlessfavorablythananotherentitywithwhichitwassimilarlysituatedinallmaterialrespects.Id.at*51.Basedontherecord,theCourtstateditcouldonlyspeculatewhetherDunnetBayoranotherentitywouldhavebeenawardedacontractwithoutIDOT’sDBEProgram.But,theCourtfounditneednotspeculateastowhetherDunnetBayoranothercompanywouldhavebeenawardedthecontract,becausewhatisimportantforequalprotectionanalysisisthatDunnetBaywastreatedthesameasotherbidders.Id.at*31.EverybidderhadtomeetthesamepercentagegoalforsubcontractingtoDBEsormakegoodfaithefforts.Id.BecauseDunnetBay


washeldtothesamestandardsaseveryotherbidder,itcannotestablishitwasthevictimofdiscriminationpursuanttotheEqualProtectionClause.Id.Therefore,IDOT,theCourtheld,isentitledtosummaryjudgmentonDunnetBay’sclaimsundertheEqualProtectionClauseandunderTitleVI.

Conclusion.TheCourtconcludedIDOTisentitledtosummaryjudgment,holdingDunnetBaylackedstandingtoraiseanequalprotectionchallengebasedonrace,andthatevenifDunnetBayhadstanding,DunnetBaywasunabletoshowthatitwouldhavebeenawardedthecontractintheabsenceofanyviolation.Id.at*32.Anyotherfederalclaims,theCourtheld,wereforeclosedbytheNorthernContractingdecisionbecausethereisnoevidenceIDOTexceededitsauthorityunderfederallaw.Id.Finally,theCourtfoundDunnetBayhadnotestablishedthelikelihoodoffutureharm,andthuswasnotentitledtoinjunctiverelief.

12. M.K. Weeden Construction v. State of Montana, Montana Department of Transportation, et al., 2013 WL 4774517 (D. Mont.) (September 4, 2013)

Thiscaseinvolvedachallengebyaprimecontractor,M.K.WeedenConstruction,Inc.(“Weeden”)againsttheStateofMontana,MontanaDepartmentofTransportationandothers,totheDBEProgramadoptedbyMDTimplementingtheFederalDBEProgramat49CFRPart26.WeedensoughtanapplicationforTemporaryRestrainingOrderandPreliminaryInjunctionagainsttheStateofMontanaandtheMDT.

Factual background and claims.Weedenwasthelowdollarbidderwithabidof$14,770,163.01ontheArrowCreekSlideProject.Theprojectreceivedfederalfunding,andassuch,wasrequiredtocomplywiththeUSDOT’sDBEProgram.2013WL4774517at*1.MDThadestablishedanoverallgoalof5.83percentDBEparticipationinMontana’shighwayconstructionprojects.OntheArrowCreekSlideProject,MDTestablishedaDBEgoalof2percent.Id.

PlaintiffWeeden,althoughitsubmittedthelowdollarbid,didnotmeetthe2percentDBErequirement.2013WL4774517at*1.Weedenclaimedthatitsbidreliedupononly1.87percentDBEsubcontractors(althoughthecourtpointsoutthatWeeden’sbidactuallyidentifiedonly.81percentDBEsubcontractors).Weedenwastheonlybidderoutofthesixbidderswhodidnotmeetthe2percentDBEgoal.Theotherfivebiddersexceededthe2percentgoal,withbidsrangingfrom2.19percentDBEparticipationto6.98percentDBEparticipation.Id.at*2.

WeedenattemptedtoutilizeagoodfaithexceptiontotheDBErequirementundertheFederalDBEProgramandMontana’sDBEProgram.MDT’sDBEParticipationReviewCommitteeconsideredWeeden’sgoodfaithdocumentationandfoundthatWeeden’sbidwasnon‐compliantastotheDBErequirement,andthatWeedenfailedtodemonstrategoodfaitheffortstosolicitDBEsubcontractorparticipationinthecontract.2013WL4774517at*2.WeedenappealedthatdecisiontotheMDTDBEReviewBoardandappearedbeforetheBoardatahearing.TheDBEReviewBoardaffirmedtheCommitteedecisionfindingthatWeeden’sbidwasnotincompliancewiththecontractDBEgoalandthatWeedenhadfailedtomakeagoodfaithefforttocomplywiththegoal.Id.at*2.TheDBEReviewBoardfoundthatWeedenhadreceivedaDBEbidfortrafficcontrol,butWeedendecidedtoperformthatworkitselfinordertoloweritsbidamount.Id.at*2.Additionally,theDBEReviewBoardfoundthatWeeden’smassemailto158DBE


subcontractorswithoutanyfollowupwasaproformaeffortnotcreditedbytheReviewBoardasanactiveandaggressiveefforttoobtainDBEparticipation.Id.

PlaintiffWeedensoughtaninjunctioninfederaldistrictcourtagainstMDTtopreventitfromlettingthecontracttoanotherbidder.WeedenclaimedthatMDT’sDBEProgramviolatedtheEqualProtectionClauseoftheU.S.ConstitutionandtheMontanaConstitution,assertingthattherewasnosupportingevidenceofdiscriminationintheMontanahighwayconstructionindustry,andtherefore,therewasnogovernmentinterestthatwouldjustifyfavoringDBEentities.2013WL4774517at*2.WeedenalsoclaimedthatitsrighttoDueProcessundertheU.S.ConstitutionandMontanaConstitutionhadbeenviolated.Specifically,WeedenclaimedthatMDTdidnotprovidereasonablenoticeofthegoodfaitheffortrequirements.Id.

No proof of irreparable harm and balance of equities favor MDT.First,theCourtfoundthatWeedendidnotproveforacertaintythatitwouldsufferirreparableharmbasedontheCourt’sconclusionthatinthepastfouryears,Weedenhadobtainedsixstatehighwayconstructioncontractsvaluedatapproximately$26million,andthatMDThad$50millionmoreinhighwayconstructionprojectstobeletduringtheremainderof2013alone.2013WL4774517at*3.Thus,theCourtconcludedthatasdemonstratedbyitspastperformance,WeedenhasthecapacitytoobtainotherhighwayconstructioncontractsandthusthereislittleriskofirreparableinjuryintheeventMDTawardstheProjecttoanotherbidder.Id.

Second,theCourtfoundthebalanceoftheequitiesdidnottipinWeeden’sfavor.2013WL4774517at*3.WeedenhadassertedthatMDTandUSDOTrulesregardinggoodfaitheffortstoobtainDBEsubcontractorparticipationareconfusing,non‐specificandcontradictory.Id.TheCourtheldthatitisobvioustheotherfivebidderswereabletomeetandexceedthe2percentDBErequirementwithoutanydifficultywhatsoever.Id.TheCourtfoundthatWeeden’sbidisnotresponsivetotherequirements,thereforeisnotandcannotbethelowestresponsiblebid.Id.Thebalanceoftheequities,accordingtotheCourt,donottiltinfavorofWeeden,whodidnotmeettherequirementsofthecontract,especiallywhennumerousotherbiddersablydemonstratedanabilitytomeetthoserequirements.Id.

No standing.TheCourtalsoquestionedwhetherWeedenraisedanyseriousissuesonthemeritsofitsequalprotectionclaimbecauseWeedenisaprimecontractorandnotasubcontractor.SinceWeedenisaprimecontractor,theCourthelditisclearthatWeedenlacksArticleIIIstandingtoassertitsequalprotectionclaim.Id.at*3.TheCourtheldthataprimecontractor,suchasWeeden,isnotpermittedtochallengeMDT’sDBEProjectasifitwereanon‐DBEsubcontractorbecauseWeedencannotshowthatitwassubjectedtoaracialorgender‐basedbarrierinitscompetitionfortheprimecontract.Id.at*3.BecauseWeedenwasnotdeprivedoftheabilitytocompeteonequalfootingwiththeotherbidders,theCourtfoundWeedensufferednoequalprotectioninjuryandlacksstandingtoassertanequalprotectionclaimasitwereanon‐DBEsubcontractor.Id.

Court applies AGC v. California DOT case; evidence supports narrowly tailored DBE program.Significantly,theCourtfoundthatevenifWeedenhadstandingtopresentanequalprotectionclaim,MDTpresentedsignificantevidenceofunderutilizationofDBE’sgenerally,evidencethatsupportsanarrowlytailoredraceandgenderpreferenceprogram.2013WL4774517at*4.Moreover,theCourtnotedthatalthoughWeedenpointsoutthatsomebusinesscategoriesin


Montana’shighwayconstructionindustrydonothaveahistoryofdiscrimination(namely,thecategoryofconstructionbusinessesincontrasttothecategoryofprofessionalbusinesses),theNinthCircuit“hasrecentlyrejectedasimilarargumentrequiringtheevidenceofdiscriminationineverysinglesegmentofthehighwayconstructionindustrybeforeapreferenceprogramcanbeimplemented.”Id.,citingAssociatedGeneralContractorsv.CaliforniaDept.ofTransportation,713F.3d1187(9thCir.2013)(holdingthatCaltrans’DBEprogramsurvivedstrictscrutiny,wasnarrowlytailored,didnotviolateequalprotection,andwassupportedbysubstantialstatisticalandanecdotalevidenceofdiscrimination).

TheCourtstatedthatparticularlyrelevantinthiscase,“theNinthCircuitheldthatCalifornia’sDBEprogramneednotisolateconstructionfromengineeringcontractsorprimefromsubcontractstodeterminewhethertheevidenceineachandeverycategorygivesrisetoaninferenceofdiscrimination.”Id.at4,citingAssociatedGeneralContractorsv.CaliforniaDOT,713F.3dat1197.Instead,accordingtotheCourt,California–and,byextension,Montana–“isentitledtolookattheevidence‘initsentirety’todeterminewhetherthereare‘substantialdisparitiesinutilizationofminorityfirms’practicedbysomeelementsoftheconstructionindustry.”2013WL4774517at*4,quotingAGCv.CaliforniaDOT,713F.3dat1197.TheCourt,alsoquotingthedecisioninAGCv.CaliforniaDOT,said:“ItisenoughthattheanecdotalevidencesupportsCaltrans’statisticaldatashowingapervasivepatternofdiscrimination.”Id.at*4,quotingAGCv.CaliforniaDOT,713F.3dat1197.

TheCourtpointedoutthatthereisnoallegationthatMDThasexceededanyfederalrequirementordoneotherthancompliedwithUSDOTregulations.2013WL4774517at*4.Therefore,theCourtconcludedthatgiventhesimilaritiesbetweenWeeden’sclaimandAGC’sequalprotectionclaimagainstCaliforniaDOTintheAGCv.CaliforniaDOTcase,itdoesnotappearlikelythatWeedenwillsucceedonthemeritsofitsequalprotectionclaim.Id.at*4.

Due Process claim.TheCourtalsorejectedWeeden’sbaldassertionthatithasaprotectedpropertyrightinthecontractthathasnotbeenawardedtoitwherethegovernmentagencyretainsdiscretiontodeterminetheresponsivenessofthebid.TheCourtfoundthatMontanalawrequiresthatanawardofapubliccontractforconstructionmustbemadetothelowestresponsiblebidderandthattheapplicableMontanastatuteconfersuponthegovernmentagencybroaddiscretionintheawardofapublicworkscontract.Thus,alowerbiddersuchasWeedenrequiresnovestedpropertyrightinacontractuntilthecontracthasbeenawarded,whichhereobviouslyhadnotyetoccurred.2013WL4774517at*5.Inanyevent,theCourtnotedthatWeedenwasgrantednotice,hearingandappealforMDT’sdecisiondenyingthegoodfaithexceptiontotheDBEcontractrequirement,andthereforeitdoesnotappearlikelythatWeedenwouldsucceedonitsdueprocessclaim.Id.at*5.

Holding and Voluntary Dismissal.TheCourtdeniedplaintiffWeeden’sapplicationforTemporaryRestrainingOrderandPreliminaryInjunction.Subsequently,WeedenfiledaNoticeofVoluntaryDismissalWithoutPrejudiceonSeptember10,2013.


13. Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., U.S.D.C., E.D. Cal. Civil Action No. S‐09‐1622, Slip Opinion (E.D. Cal. April 20, 2011), appeal dismissed based on standing, on other grounds Ninth Circuit held Caltrans’ DBE Program constitutional, Associated General Contractors of America, San Diego Chapter, Inc. v. California Department of Transportation, et al., 713 F.3d 1187 (9th Cir. 2013)

ThiscaseinvolvedachallengebytheAssociatedGeneralContractorsofAmerica,SanDiegoChapter,Inc.(“AGC”)againsttheCaliforniaDepartmentofTransportation(“Caltrans”),totheDBEprogramadoptedbyCaltransimplementingtheFederalDBEProgramat49CFRPart26.TheAGCsoughtaninjunctionagainstCaltransenjoiningitsuseoftheDBEprogramanddeclaratoryrelieffromthecourtdeclaringtheCaltransDBEprogramtobeunconstitutional.

Caltrans’DBEprogramseta13.5percentDBEgoalforitsfederally‐fundedcontracts.The13.5percentgoal,asimplementedbyCaltrans,includedutilizinghalfrace‐neutralmeansandhalfrace‐consciousmeanstoachievethegoal.SlipOpinionTranscriptat42.Caltransdidnotincludeallminoritiesintherace‐consciouscomponentofitsgoal,excludingHispanicmalesandSubcontinentAsianAmericanmales.Id.at42.Accordingly,therace‐consciouscomponentoftheCaltransDBEprogramappliedonlytoAfricanAmericans,NativeAmericans,AsianPacificAmericans,andwhitewomen.Id.

CaltransestablishedthisgoalanditsDBEprogramfollowingadisparitystudyconductedbyBBCResearch&Consulting,whichincludedgatheringstatisticalandanecdotalevidenceofraceandgenderdisparitiesintheCaliforniaconstructionindustry.SlipOpinionTranscriptat42.

Thepartiesfiledmotionsforsummaryjudgment.ThedistrictcourtissueditsrulingatthehearingonthemotionsforsummaryjudgmentgrantingCaltrans’motionforsummaryjudgmentinsupportofitsDBEprogramanddenyingthemotionforsummaryjudgmentfiledbytheplaintiffs.SlipOpinionTranscriptat54.ThecourtheldCaltrans’DBEprogramapplyingandimplementingtheprovisionsoftheFederalDBEProgramisvalidandconstitutional.Id.at56.

ThedistrictcourtanalyzedCaltrans’implementationoftheDBEprogramunderthestrictscrutinydoctrineandfoundtheburdenofjustifyingdifferenttreatmentbyethnicityorgenderisonthegovernment.ThedistrictcourtappliedtheNinthCircuitCourtofAppealsrulinginWesternStatesPavingCompanyv.WashingtonStateDOT,407F.3d983(9thCir.2005).Thecourtstatedthatthefederalgovernmenthasacompellinginterest“inensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectsofeitherpublicorprivatediscriminationwithinthetransportationcontractingindustry.”SlipOpinionTranscriptat43,quotingWesternStatesPaving,407F.3dat991,citingCityofRichmondv.J.A.CrosonCompany,488U.S.469(1989).

ThedistrictcourtpointedoutthattheNinthCircuitinWesternStatesPavingandtheTenthCircuitCourtofAppealsandtheEighthCircuitCourtofAppealshaveupheldthefacialvalidityoftheFederalDBEProgram.

ThedistrictcourtstatedthatbasedonWesternStatesPaving,thecourtisrequiredtolookattheCaltransDBEprogramitselftoseeifthereisastrongbasisinevidencetoshowthatCaltransisactingforaproperpurposeandiftheprogramitselfhasbeennarrowlytailored.SlipOpinion


Transcriptat45.Thecourtconcludedthatnarrowtailoring“doesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butitdoesrequireserious,good‐faithconsiderationofworkablerace‐neutralalternatives.”SlipOpinionTranscriptat45.

ThedistrictcourtidentifiedtheissuesaswhetherCaltranshasestablishedacompellinginterestsupportedbyastrongbasisinevidenceforitsprogram,anddoesCaltrans’race‐consciousprogrammeetthestrictscrutinyrequired.SlipOpinionTranscriptat51‐52.ThecourtalsophrasedtheissueaswhethertheCaltransDBEprogram,“whichdoesgivepreferencebasedonraceandsex,whetherthatprogramisnarrowlytailoredtoremedytheeffectsofidentifieddiscrimination…”,andwhetherCaltranshascompliedwiththeNinthCircuit’sguidanceinWesternStatesPaving.SlipOpinionTranscriptat52.

Thedistrictcourtheld“thatCaltranshasdonewhattheNinthCircuithasrequiredittodo,whatthefederalgovernmenthasrequiredittodo,andthatitclearlyhasimplementedaprogramwhichissupportedbyastrongbasisinevidencethatgivesrisetoacompellinginterest,andthatitsrace‐consciousprogram,theaspectoftheprogramthatdoesimplementrace‐consciousalternatives,itdoesunderastrict‐scrutinystandardmeettherequirementthatitbenarrowlytailoredassetforthinthecaselaw.”SlipOpinionTranscriptat52.

Thecourtrejectedtheplaintiff’sargumentsthatanecdotalevidencefailedtoidentifyspecificactsofdiscrimination,finding“therearenumerousinstancesofspecificdiscrimination.”SlipOpinionTranscriptat52.ThedistrictcourtfoundthataftertheWesternStatesPavingcase,Caltranswenttoaraciallyneutralprogram,andtheevidenceshowedthattheprogramwouldnotmeetthegoalsofthefederally‐fundedprogram,andthefederalgovernmentbecameconcernedaboutwhatwasgoingonwithCaltrans’programapplyingonlyrace‐neutralalternatives.Id.at52‐53.ThecourtthenpointedoutthatCaltransengagedinan“extensivedisparitystudy,anecdotalevidence,bothofwhichiswhatwasmissing”intheWesternStatesPavingcase.Id.at53.

ThecourtconcludedthatCaltrans“didexactlywhattheNinthCircuitrequired”andthatCaltranshasgone“asfarasisrequired.”SlipOpinionTranscriptat53.

Thecourtheldthatasamatteroflaw,theCaltransDBEprogramis,underWesternStatesPavingandtheSupremeCourtcases,“clearlyconstitutional,”and“narrowlytailored.”SlipOpinionTranscriptat56.ThecourtfoundtherearesignificantdifferencesbetweenCaltrans’programandtheprogramintheWesternStatesPavingcase.Id.at54‐55.InWesternStatesPaving,thecourtsaidtherewerenostatisticalstudiesperformedtotryandestablishthediscriminationinthehighwaycontractingindustry,andthatWashingtonsimplycomparedtheproportionofDBEfirmsinthestatewiththepercentageofcontractingfundsawardedtoDBEsonrace‐neutralcontractstocalculateadisparity.Id.at55.

ThedistrictcourtstatedthattheNinthCircuitinWesternStatesPavingfoundthistobeoversimplifiedandentitledtolittleweight“becauseitdidnottakeintoaccountfactorsthatmayaffecttherelativecapacityofDBEstoundertakecontractingwork.”SlipOpinionTranscriptat55.Whereas,thedistrictcourtheldthe“disparitystudyusedbyCaltranswasmuchmorecomprehensiveandaccountedforthisandotherfactors.”Id.at55.ThedistrictnotedthattheStateofWashingtondidnotintroduceanyanecdotalinformation.Thedifferenceinthiscase,the


districtcourtfound,“isthatthedisparitystudyincludesbothextensivestatisticalevidence,aswellasanecdotalevidencegatheredthroughsurveysandpublichearings,whichsupportthestatisticalfindingsoftheunderutilizationfacedbyDBEswithouttheDBEprogram.Addtothattheanecdotalevidencesubmittedinsupportofthesummaryjudgmentmotionaswell.AndthisevidencebeforetheCourtclearlysupportsafindingthatthisprogramisconstitutional.”Id.at56.

Thecourtheldthatbecause“Caltrans’DBEprogramisbasedonsubstantialstatisticalandanecdotalevidenceofdiscriminationintheCaliforniacontractingindustryandbecausetheCourtfindsthatitisnarrowlytailored,theCourtupholdstheprogramasconstitutional.”SlipOpinionTranscriptat56.

ThedecisionofthedistrictcourtwasappealedtotheNinthCircuitCourtofAppeals.TheNinthCircuitdismissedtheappealbasedonlackofstandingbytheAGC,SanDiegoChapter,butruledonthemeritsonalternativegroundsholdingconstitutionalCaltrans’DBEProgram.SeediscussionaboveofAGC,SDCv.Cal.DOT.

14. Geod Corporation v. New Jersey Transit Corporation, et al., 746 F. Supp.2d 642, 2010 WL 4193051 (D. N. J. October 19, 2010)

Plaintiffs,whitemaleownersofGeodCorporation(“Geod”),broughtthisactionagainsttheNewJerseyTransitCorporation(“NJT”)allegingdiscriminatorypracticesbyNJTindesigningandimplementingtheFederalDBEProgram.746F.Supp2dat644.TheplaintiffsallegedthattheNJT’sDBEprogramviolatedtheUnitedStatesConstitution,42U.S.C.§1981,TitleVIoftheCivilRightsActof1964,42U.S.C.§2000(d)andstatelaw.ThedistrictcourtpreviouslydismissedthecomplaintagainstallDefendantsexceptforNJTandconcludedthatagenuineissuematerialfactexistedonlyastowhetherthemethodusedbyNJTtodetermineitsDBEgoalsduring2010weresufficientlynarrowlytailored,andthusconstitutional.Id.

New Jersey Transit Program and Disparity Study.NJTreliedontheanalysisofconsultantsfortheestablishmentoftheirgoalsfortheDBEprogram.Thestudyestablishedtheeffectsofpastdiscrimination,thedistrictcourtfound,bylookingatthedisparityandutilizationofDBEscomparedtotheiravailabilityinthemarket.Id.at648.Thestudyusedseveraldatasetsandaveragedthefindingsinordertocalculatethisratio,including:(1)theNewJerseyDBEvendorList;(2)aSurveyofMinority‐OwnedBusinessEnterprises(SMOBE)andaSurveyofWomen‐OwnedEnterprises(SWOBE)asdeterminedbytheU.S.CensusBureau;and(3)detailedcontractfilesforeachracialgroup.Id.

Thecourtfoundthestudydeterminedanaverageannualutilizationof23percentforDBEs,andtoexaminepastdiscrimination,severalanalyseswereruntomeasurethedisparityamongDBEsbyrace.Id.at648.TheStudyfoundthatallbutonecategorywasunderutilizedamongtheracialandethnicgroups.Id.AllgroupsotherthanAsianDBEswerefoundtobeunderutilized.Id.

Thecourtheldthatthetestutilizedbythestudy,“conductedtoestablishapatternofdiscriminationagainstDBEs,provedthatdiscriminationoccurredagainstDBEsduringthepre‐qualificationprocessandinthenumberofcontractsthatareawardedtoDBEs.Id.at649.The


courtfoundthatDBEsaremorelikelythannon‐DBEstobepre‐qualifiedforsmallconstructioncontracts,butarelesslikelytopre‐qualifyforlargerconstructionprojects.Id.

Forfiscalyear2010,thestudyconsultantfollowedthe“three‐stepprocesspursuanttoUSDOTregulationstoestablishtheNJTDBEgoal.”Id.at649.First,theconsultantdetermined“thebasefigurefortherelativeavailabilityofDBEsinthespecificindustriesandgeographicalmarketfromwhichDBEandnon‐DBEcontractorsaredrawn.”Id.Indeterminingthebasefigure,theconsultant(1)definedthegeographicmarketplace,(2)identified“therelevantindustriesinwhichNJTransitcontracts,”and(3)calculated“theweightedavailabilitymeasure.”Id.at649.

Thecourtfoundthatthestudyconsultantusedpoliticaljurisdictionalmethodsandvirtualmethodstopinpointthelocationofcontractsand/orcontractorsforNJT,anddeterminedthatthegeographicalmarketplaceforNJTcontractsincludedNewJersey,NewYorkandPennsylvania.Id.at649.TheconsultantusedcontractfilesobtainedfromNJTanddataobtainedfromDun&BradstreettoidentifytheindustrieswithwhichNJTcontractsinthesegeographicalareas.Id.TheconsultantthenusedexistingandestimatedexpendituresintheseparticularindustriestodetermineweightscorrespondingtoNJTcontractingpatternsinthedifferentindustriesforuseintheavailabilityanalysis.Id.

TheavailabilityofDBEswascalculatedbyusingthefollowingdata:UnifiedCertificationProgramBusinessDirectoriesforthestatesofNewJersey,NewYorkandPennsylvania;NJTVendorList;Dun&Bradstreetdatabase;2002SurveyofSmallBusinessOwners;andNJTPre‐QualificationList.Id.at649‐650.Theavailabilityrateswerethen“calculatedbycomparingthenumberofready,willing,andableminorityandwomen‐ownedfirmsinthedefinedgeographicmarketplacetothetotalnumberofready,willing,andablefirmsinthesamegeographicmarketplace.Id.TheavailabilityratesineachindustrywereweighedinaccordancewithNJTexpenditurestodetermineabasefigure.Id.

Second,theconsultantadjustedthebasefigureduetoevidenceofdiscriminationagainstDBEprimecontractorsanddisparitiesinsmallpurchasesandconstructionpre‐qualification.Id.at650.Thediscriminationanalysisexamineddiscriminationinsmallpurchases,discriminationinpre‐qualification,tworegressionanalyses,anEssexCountydisparitystudy,marketdiscrimination,andpreviousutilization.Id.at650.

TheFinalRecommendationsReportnotedthatthereweresizeabledifferencesinthesmallpurchasesawardstoDBEsandnon‐DBEswiththeawardstoDBEsbeingsignificantlysmaller.Id.at650.DBEswerealsofoundtobelesslikelytobepre‐qualifiedforcontractsover$1millionincomparisontosimilarlysituatednon‐DBEs.Id.Theregressionanalysisusingthedummyvariablemethodyieldedanaverageestimateofadiscriminatoryeffectof‐28.80percent.Id.Thediscriminationregressionanalysisusingtheresidualdifferencemethodshowedthatonaverage12.2percentofthecontractamountdisparityawardedtoDBEsandnon‐DBEswasunexplained.Id.

Theconsultantalsoconsideredevidenceofdiscriminationinthelocalmarketinaccordancewith49CFR§26.45(d).TheFinalRecommendationsReportcitedinthe2005EssexCountyDisparityStudysuggestedthatdiscriminationinthelabormarketcontributedtotheunexplainedportion


oftheself‐employment,employment,unemployment,andwagegapsinEssexCounty,NewJersey.Id.at650.

TheconsultantrecommendedthatNJTfocusonincreasingthenumberofDBEprimecontractors.Becausequalitativeevidenceisdifficulttoquantify,accordingtotheconsultant,onlytheresultsfromtheregressionanalyseswereusedtoadjustthebasegoal.Id.Thebasegoalwasthenadjustedfrom19.74percentto23.79percent.Id.

Third,inordertopartitiontheDBEgoalbyrace‐neutralandrace‐consciousmethods,theconsultantanalyzedtheshareofallDBEcontractdollarswonwithnogoals.Id.at650.Healsoperformedtwodifferentregressionanalyses:oneinvolvingpredictedDBEcontractdollarsandDBEreceiptsifthegoalwassetatzero.Id.at651.ThesecondmethodutilizedpredictedDBEcontractdollarswithgoalsandpredictedDBEcontractdollarswithoutgoalstoforecasthowmuchfirmswithgoalswouldreceivehadtheynotincludedthegoals.Id.Theconsultantaveragedhisresultsfromallthreemethodstoconcludethatthefiscalyear2010NJTaportionoftherace‐neutralDBEgoalshouldbe11.94percentandaportionoftherace‐consciousDBEgoalshouldbe11.84percent.Id.at651.

Thedistrictcourtappliedthestrictscrutinystandardofreview.Thedistrictcourtalreadydecided,inthecourseofthemotionsforsummaryjudgment,thatcompellinginterestwassatisfiedasNewJerseywasentitledtoadoptthefederalgovernment’scompellinginterestinenactingTEA‐21anditsimplementingregulations.Id.at652,citingGeodv.N.J.TransitCorp.,678F.Supp.2d276,282(D.N.J.2009).Therefore,thecourtlimiteditsanalysistowhetherNJT’sDBEprogramwasnarrowlytailoredtofurtherthatcompellinginterestinaccordancewith“itsgrantofauthorityunderfederallaw.”Id.at652citingNorthernContracting,Inc.v.IllinoisDepartmentofTransportation,473F.3d715,722(7thCir.2007).

Applying Northern Contracting v. Illinois. Thedistrictcourtclarifieditspriorrulingin2009(see678F.Supp.2d276)regardingsummaryjudgment,thatthecourtagreedwiththeholdinginNorthernContracting,Inc.v.Illinois,that“achallengetoastate’sapplicationofafederallymandatedprogrammustbelimitedtothequestionofwhetherthestateexceededitsauthority.”Id.at652quotingNorthernContracting,473F.3dat721.ThedistrictcourtinGeodfollowedtheSeventhCircuitexplanationthatwhenastatedepartmentoftransportationisactingasaninstrumentoffederalpolicy,aplaintiffcannotcollaterallyattackthefederalregulationsthroughachallengetoastate’sprogram.Id.at652,citingNorthernContracting,473F.3dat722.Therefore,thedistrictcourtheldthattheinquiryislimitedtothequestionofwhetherthestatedepartmentoftransportation“exceededitsgrantofauthorityunderfederallaw.”Id.at652‐653,quotingNorthernContracting,473F.3dat722andcitingalsoTennesseeAsphaltCo.v.Farris,942F.2d969,975(6thCir.1991).

ThedistrictcourtfoundthattheholdingandanalysisinNorthernContractingdoesnotcontradicttheEighthCircuit’sanalysisinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964,970‐71(8thCir.2003).Id.at653.ThecourtheldthattheEighthCircuit’sdiscussionofwhethertheDBEprogramsasimplementedbytheStateofMinnesotaandtheStateofNebraskawerenarrowlytailoredfocusedonwhetherthestateswerefollowingtheUSDOTregulations.Id.at653citingSherbrookeTurf,345F.3d973‐74.Therefore,“onlywhenthestateexceedsitsfederalauthorityisitsusceptibletoanas‐appliedconstitutionalchallenge.”Id.


at653quotingWesternStatesPavingCo.,Inc.v.WashingtonStateDepartmentofTransportation,407F.3d983(9thCir.2005)(McKay,C.J.)(concurringinpartanddissentinginpart)andcitingSouthFloridaChapteroftheAssociatedGeneralContractorsv.BrowardCounty,544F.Supp.2d1336,1341(S.D.Fla.2008).

Thecourtheldtheinitialburdenofprooffallsonthegovernment,butoncethegovernmenthaspresentedproofthatitsaffirmativeactionplanisnarrowlytailored,thepartychallengingtheaffirmativeactionplanbearstheultimateburdenofprovingthattheplanisunconstitutional.Id.at653.

InanalyzingwhetherNJT’sDBEprogramwasconstitutionallydefective,thedistrictcourtfocusedonthebasisofplaintiffs’argumentthatitwasnotnarrowlytailoredbecauseitincludesinthecategoryofDBEsracialorethnicgroupsastowhichtheplaintiffsallegedNJThadnoevidenceofpastdiscrimination.Id.at653.Thecourtfoundthatmostofplaintiffs’argumentscouldbesummarizedasquestioningwhetherNJTpresenteddemonstrableevidenceoftheavailabilityofready,willingandableDBEsasrequiredby49CFR§26.45.Id.ThecourtheldthatNJTfollowedthegoalsettingprocessrequiredbythefederalregulations.Id.ThecourtstatedthatNJTbeganthisprocesswiththe2002disparitystudythatexaminedpastdiscriminationandfoundthatallofthegroupslistedintheregulationswereunderutilizedwiththeexceptionofAsians.Id.at654.Incalculatingthefiscalyear2010goals,theconsultantusedcontractfilesanddatafromDun&BradstreettodeterminethegeographicallocationcorrespondingtoNJTcontractsandthenfurtherfocusedthatinformationbyweightingtheindustriesaccordingtoNJT’suse.Id.

TheconsultantusedvariousmethodstocalculatetheavailabilityofDBEs,including:theUCPBusinessDirectoriesforthestatesofNewJersey,NewYorkandPennsylvania;NJTVendorList;Dun&Bradstreetdatabase;2002SurveyofSmallBusinessOwners;andNJTPre‐QualificationList.Id.at654.ThecourtstatedthatNJTonlyutilizedoneoftheexampleslistedin49CFR§26.45(c),theDBEdirectoriesmethod,informulatingthefiscalyear2010goals.Id.

Thedistrictcourtpointedout,however,theregulationsstatethatthe“examplesareprovidedasastartingpointforyourgoalsettingprocessandthattheexamplesarenotintendedasanexhaustivelist.Id.at654,citing46CFR§26.45(c).Thecourtconcludedtheregulationsclarifythatothermethodsorcombinationsofmethodstodetermineabasefiguremaybeused.Id.at654.

ThecourtstatedthatNJThadusedthesemethodsinsettinggoalsforprioryearsasdemonstratedbythereportsfor2006and2009.Id.at654.Inaddition,thecourtnotedthattheSeventhCircuitheldthatacustomcensus,theDun&Bradstreetdatabase,andtheIDOT’slistofDBEswereanacceptablecombinationofmethodswithwhichtodeterminethebasefigureforTEA‐21purposes.Id.at654,citingNorthernContracting,473F.3dat718.

Thedistrictcourtfoundthattheexpertwitnessforplaintiffshadnotconvincedthecourtthatthedatawerefaulty,andthetestimonyattrialdidnotpersuadethecourtthatthedataorregressionanalysesrelieduponbyNJTwereunreliableorthatanothermethodwouldprovidemoreaccurateresults.Id.at654‐655.


Thecourtindiscussingsteptwoofthegoalssettingprocesspointedoutthatthedataexaminedbytheconsultantislistedintheregulationsasproperevidencetobeusedtoadjustthebasefigure.Id.at655,citing49CFR§26.45(d).ThesedataincludedevidencefromdisparitystudiesandstatisticaldisparitiesintheabilityofDBEstogetpre‐qualification.Id.at655.Theconsultantstatedthatevidenceofsocietaldiscriminationwasnotusedtoadjustthebasegoalandthattheadjustmenttothegoalwasbasedonthediscriminationanalysis,whichcontrolsforsizeoffirmandeffectofhavingaDBEgoal.Id.at655.

ThedistrictcourtthenanalyzedNJT’sdivisionoftheadjustedgoalintorace‐consciousandrace‐neutralportions.Id.at655.Thecourtnotedthatnarrowlytailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,butinsteadrequiresserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at655.ThecourtagreedwithWesternStatesPavingthatonly“whenrace‐neutraleffortsproveinadequatedotheseregulationsauthorizeaStatetoresorttorace‐consciousmeasurestoachievetheremainderofitsDBEutilizationgoal.”Id.at655,quotingWesternStatesPaving,407F.3dat993‐94.

ThecourtfoundthatthemethodsutilizedbyNJThadbeenusedbyitonpreviousoccasions,whichwereapprovedbytheUSDOT.Id.at655.ThemethodsusedbyNJT,thecourtfound,alsocompliedwiththeexampleslistedin49CFR§26.51,includingarrangingsolicitations,timesforthepresentationofbids,quantities,specifications,anddeliveryschedulesinwaysthatfacilitateDBEparticipation;providingpre‐qualificationassistance;implementingsupportiveservicesprograms;andensuringdistributionofDBEdirectories.Id.at655.ThecourtheldthatbasedonthesereasonsandfollowingtheNorthernContracting,Inc.v.Illinoislineofcases,NJT’sDBEprogramdidnotviolatetheConstitutionasitdidnotexceeditsfederalauthority.Id.at655.

However,thedistrictcourtalsofoundthatevenundertheWesternStatesPavingCo.,Inc.v.WashingtonStateDOTstandard,theNJTprogramstillwasconstitutional.Id.at655.AlthoughthecourtfoundthattheappropriateinquiryiswhetherNJTexceededitsfederalauthorityasdetailedinNorthernContracting,Inc.v.Illinois,thecourtalsoexaminedtheNJTDBEprogramunderWesternStatesPavingCo.v.WashingtonStateDOT.Id.at655‐656.ThecourtstatedthatunderWesternStatesPaving,aCourtmust“undertakeanas‐appliedinquiryintowhether[thestate’s]DBEprogramisnarrowlytailored.”Id.at656,quotingWesternStatesPaving,407F.3dat997.

Applying Western States Paving.ThedistrictcourtthenanalyzedwhethertheNJTprogramwasnarrowlytailoredapplyingWesternStatesPaving.Underthefirstprongofthenarrowlytailoringanalysis,aremedialprogramisonlynarrowlytailoredifitsapplicationislimitedtothoseminoritygroupsthathaveactuallysuffereddiscrimination.Id.at656,citingWesternStatesPaving,407F.3dat998.Thecourtacknowledgedthataccordingtothe2002FinalReport,theratiosofDBEutilizationtoDBEavailabilitywas1.31.Id.at656.However,thecourtfoundthattheplaintiffs’argumentfailedasthefactsinWesternStatesPavingweredistinguishablefromthoseofNJT,becauseNJTdidreceivecomplaints,i.e.,anecdotalevidence,ofthelackofopportunitiesforAsianfirms.Id.at656.NJTemployeestestifiedthatAsianfirmsinformallyandformallycomplainedofalackofopportunitytogrowandindicatedthattheDBEProgramwasassistingwiththisissue.Id.Inaddition,plaintiff’sexpertconcededthatAsianfirmshavesmalleraveragecontractamountsincomparisontonon‐DBEfirms.Id.


TheplaintiffreliedsolelyontheutilizationrateasevidencethatAsiansarenotdiscriminatedagainstinNJTcontracting.Id.at656.Thecourtheldthiswasinsufficienttoovercometheconsultant’sdeterminationthatdiscriminationdidexistagainstAsians,andthusthisgroupwasproperlyincludedintheDBEprogram.Id.at656.

ThedistrictcourtrejectedPlaintiffs’argumentthatthefirststepofthenarrowtailoringanalysiswasnotmetbecauseNJTfocusesitsprogramonsub‐contractorswhenNJT’sexpertidentified“primecontracting”astheareainwhichNJTprocurementsevidencediscrimination.Id.at656.Thecourtheldthatnarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternativebutitdoesrequireserious,goodfaithconsiderationofworkablerace‐neutralalternatives.Id.at656,citingSherbrookTurf,345F.3dat972(quotingGrutterv.Bollinger,539U.S.306,339,(2003)).Initseffortstoimplementrace‐neutralalternatives,thecourtfoundNJTattemptedtobreaklargercontractsupinordertomakethemavailabletosmallercontractorsandcontinuestodosowhenlogisticallypossibleandfeasibletotheprocurementdepartment.Id.at656‐657.

ThedistrictcourtfoundNJTsatisfiedthethirdprongofthenarrowlytailoredanalysis,the“relationshipofthenumericalgoalstotherelevantlabormarket.”Id.at657.Finally,underthefourthprong,thecourtaddressedtheimpactonthird‐parties.Id.at657.Thecourtnotedthatplacingaburdenonthirdpartiesisnotimpermissibleaslongasthatburdenisminimized.Id.at657,citingWesternStatesPaving,407F.3dat995.Thecourtstatedthatinstanceswillinevitablyoccurwherenon‐DBEswillbebypassedforcontractsthatrequireDBEgoals.However,TEA‐21anditsimplementingregulationscontainprovisionsintendedtominimizetheburdenonnon‐DBEs.Id.at657,citingWesternStatesPaving,407F.3dat994‐995.

ThecourtpointedouttheNinthCircuitinWesternStatesPavingfoundthatinclusionofregulationsallowingfirmsthatwerenotpresumedtobeDBEstodemonstratethattheyweresociallyandeconomicallydisadvantaged,andthusqualifiedforDBEprograms,aswellasthenetworthlimitations,weresufficienttominimizetheburdenonDBEs.Id.at657,citingWesternStatesPaving,407F.3dat955.ThecourtheldthattheplaintiffsdidnotprovideevidencethatNJTwasnotcomplyingwithimplementingregulationsdesignedtominimizeharmtothirdparties.Id.

Therefore,evenifthedistrictcourtutilizedtheas‐appliednarrowtailoringinquirysetforthinWesternStatesPaving,NJT’sDBEprogramwouldnotbefoundtoviolatetheConstitution,asthecourthelditwasnarrowlytailoredtofurtheracompellinggovernmentalinterest.Id.at657.

15. Geod Corporation v. New Jersey Transit Corporation, et seq. 678 F.Supp.2d 276, 2009 WL 2595607 (D.N.J. August 20, 2009)

PlaintiffsGeodanditsofficers,whoarewhitemales,suedtheNJTandstateofficialsseekingadeclarationthatNJT’sDBEprogramwasunconstitutionalandinviolationoftheUnitedStates5thand14thAmendmenttotheUnitedStatesConstitutionandtheConstitutionoftheStateofNewJersey,andseekingapermanentinjunctionagainstNJTforenforcingorutilizingitsDBEprogram.TheNJT’sDBEprogramwasimplementedinaccordancewiththeFederalDBEProgramandTEA‐21and49CFRPart26.


ThepartiesfiledcrossMotionsforSummaryJudgment.TheplaintiffGeodchallengedtheconstitutionalityofNJT’sDBEprogramformultiplereasons,includingallegingNJTcouldnotjustifyestablishingaprogramusingrace‐andsex‐basedpreferences;theNJT’sdisparitystudydidnotprovideasufficientfactualpredicatetojustifytheDBEProgram;NJT’sstatisticalevidencedidnotestablishdiscrimination;NJTdidnothaveanecdotaldataevidencinga“strongbasisinevidence”ofdiscriminationwhichjustifiedarace‐andsex‐basedprogram;NJT’sprogramwasnotnarrowlytailoredandover‐inclusive;NJTcouldnotshowanexceedinglypersuasivejustificationforgenderpreferences;andthatNJT’sprogramwasnotnarrowlytailoredbecauserace‐neutralalternativesexisted.Inopposition,NJTfiledaMotionforSummaryJudgmentassertingthatitsDBEprogramwasnarrowlytailoredbecauseitfullycompliedwiththerequirementsoftheFederalDBEProgramandTEA‐21.

Thedistrictcourtheldthatstatesandtheiragenciesareentitledtoadoptthefederalgovernments’compellinginterestinenactingTEA‐21anditsimplementingregulations.2009WL2595607at*4.Thecourtstatedthatplaintiff’sargumentthatNJTcannotestablishtheneedforitsDBEprogramwasa“redherring,whichisunsupported.”TheplaintiffdidnotquestiontheconstitutionalityofthecompellinginterestoftheFederalDBEProgram.Thecourtheldthatallstates“inheritthefederalgovernments’compellinginterestinestablishingaDBEprogram.”Id.

ThecourtfoundthatestablishingaDBEprogram“isnotcontingentuponastateagencydemonstratinganeedforsame,asthefederalgovernmenthasalreadydoneso.”Id.Thecourtconcludedthatthisreasoningrenderedplaintiff’sassertionsthatNJT’sdisparitystudydidnothavesufficientfactualpredicateforestablishingitsDBEprogram,andthatnoexceedinglypersuasivejustificationwasfoundtosupportgender‐basedpreferences,aswithoutmerit.Id.ThecourtheldthatNJTdoesnotneedtojustifyestablishingitsDBEprogram,asithasalreadybeenjustifiedbythelegislature.Id.

Thecourtnotedthatbothplaintiff’sanddefendant’sargumentswerebasedonanallegedsplitintheFederalCircuitCourtsofAppeal.PlaintiffGeodreliesonWesternStatesPavingCompanyv.WashingtonStateDOT,407F.3d983(9thCir.2005)forthepropositionthatanas‐appliedchallengetotheconstitutionalityofaparticularDBEprogramrequiresademonstrationbytherecipientoffederalfundsthattheprogramisnarrowlytailored.Idat*5.Incontrast,theNJTreliedprimarilyonNorthernContracting,Inc.v.StateofIllinois,473F.3d715(7thCir.2007)forthepropositionthatifaDBEprogramcomplieswithTEA‐21,itisnarrowlytailored.Id.

ThecourtviewedthevariousFederalCircuitCourtofAppealsdecisionsasfactspecificdeterminationswhichhaveledtothepartiesdistinguishingcaseswithoutanysubstantivedifferenceintheapplicationoflaw.Id.

ThecourtreviewedthedecisionsbytheNinthCircuitinWesternStatesPavingandtheSeventhCircuitofNorthernContracting.InWesternStatesPaving,thedistrictcourtstatedthattheNinthCircuitheldforaDBEprogramtopassconstitutionalmuster,itmustbenarrowlytailored;specifically,therecipientoffederalfundsmustevidencepastdiscriminationintherelevantmarketinordertoutilizeraceconsciousDBEgoals.Id.at*5.TheNinthCircuit,accordingtodistrictcourt,madeafactspecificdeterminationastowhethertheDBEprogramcompliedwithTEA‐21inordertodecideiftheprogramwasnarrowlytailoredtomeetthefederalregulation’s


requirements.Thedistrictcourtstatedthattherequirementthatarecipientmustevidencepastdiscrimination“isnothingmorethanarequirementoftheregulation.”Id.

ThecourtstatedthattheSeventhCircuitinNorthernContractingheldarecipientmustdemonstratethatitsprogramisnarrowlytailored,andthatgenerallyarecipientisinsulatedfromthissortofconstitutionalattackabsentashowingthatthestateexceededitsfederalauthority.Id.,citingNorthernContracting,473F.3dat721.ThedistrictcourtheldthatimplicitinNorthernContractingisthefactonemaychallengetheconstitutionalityofaDBEprogram,asitisapplied,totheextentthattheprogramexceedsitsfederalauthority.Id.

Thecourt,therefore,concludedthatitmustdeterminefirstwhetherNJT’sDBEprogramcomplieswithTEA‐21,thenwhetherNJTexceededitsfederalauthorityinitsapplicationofitsDBEprogram.Inotherwords,thedistrictcourtstateditmustdeterminewhethertheNJTDBEprogramcomplieswithTEA‐21inordertodeterminewhethertheprogram,asimplementedbyNJT,isnarrowlytailored.Id.

ThecourtpointedoutthattheEighthCircuitCourtofAppealsinSherbrookTurf,Inc.v.MinnesotaDOT,345F.3d964(8thCir.2003)foundMinnesota’sDBEprogramwasnarrowlytailoredbecauseitwasincompliancewithTEA‐21’srequirements.TheEighthCircuitinSherbrook,accordingtothedistrictcourt,analyzedtheapplicationofMinnesota’sDBEprogramtoensurecompliancewithTEA‐21’srequirementstoensurethattheDBEprogramimplementedbyMinnesotaDOTwasnarrowlytailored.Id.at*5.

ThecourtheldthatTEA‐21delegatestoeachstatethatacceptsfederaltransportationfundstheresponsibilityofimplementingaDBEprogramthatcomportswithTEA‐21.InordertocomportwithTEA‐21,thedistrictcourtstatedarecipientmust(1)determineanappropriateDBEparticipationgoal,(2)examineallevidenceandevaluatewhetheranadjustment,ifany,isneededtoarriveattheirgoal,and(3)iftheadjustmentisbasedoncontinuingeffectsofpastdiscrimination,providedemonstrableevidencethatislogicallyanddirectlyrelatedtotheeffectforwhichtheadjustmentissought.Id.at*6,citingWesternStatesPavingCompany,407F.3dat983,988.

First,thedistrictcourtstatedarecipientoffederalfundsmustdetermine,atthelocallevel,thefigurethatwouldconstituteanappropriateDBEinvolvementgoal,basedontheirrelativeavailabilityofDBEs.Id.at*6,citing49CFR§26.45(c).Inthiscase,thecourtfoundthatNJTdiddetermineabasefigurefortherelativeavailabilityofDBEs,whichaccountedfordemonstrableevidenceoflocalmarketconditionsandwasdesignedtoberationallyrelatedtotherelativeavailabilityofDBEs.Id.ThecourtpointedoutthatNJTconductedadisparitystudy,andthedisparitystudyutilizedNJT’sDBElistsfromfiscalyears1995‐1999andCensusDatatodetermineitsbaseDBEgoal.Thecourtnotedthattheplaintiffs’argumentthatthedatausedinthedisparitystudywerestalewaswithoutmeritandhadnobasisinlaw.Thecourtfoundthatthedisparitystudytookintoaccounttheprimaryindustries,primarygeographicmarket,andraceneutralalternatives,thenadjusteditsgoaltoencompassthesecharacteristics.Id.at*6.

ThecourtstatedthattheuseofDBEdirectoriesandCensusdataarewhatthelegislatureintendedforstateagenciestoutilizeinmakingabaseDBEgoaldetermination.Id.Also,thecourtstatedthat“perhapsmoreimportantly,NJT’sDBEgoalwasapprovedbytheUSDOTeveryyear


from2002until2008.”Id.at*6.Thus,thecourtfoundNJTappropriatelydeterminedtheirDBEavailability,whichwasapprovedbytheUSDOT,pursuantto49CFR§26.45(c).Id.at*6.ThecourtheldthatNJTdemonstrateditsoverallDBEgoalisbasedondemonstrableevidenceoftheavailabilityofready,willing,andableDBEsrelativetoallbusinessesready,willing,andabletoparticipateinDOTassistedcontractsandreflectsitsdeterminationofthelevelofDBEparticipationitwouldexpectabsenttheeffectsofdiscrimination.Id.

Alsoofsignificance,thecourtpointedoutthatplaintiffsdidnotprovideanyevidencethatNJTdidnotsetaDBEgoalbasedupon49C.F.§26.45(c).ThecourtthusheldthatgenuineissuesofmaterialfactremainonlyastowhetherareasonablejurymayfindthatthemethodusedbyNJTtodetermineitsDBEgoalwassufficientlynarrowlytailored.Id.at*6.

Thecourtpointedoutthattodeterminewhatadjustmenttomake,thedisparitystudyexaminedqualitativedatasuchasfocusgroupsonthepre‐qualificationstatusofDBEs,workingwithprimecontractors,securingcredit,anditseffectonDBEparticipation,aswellasprocurementofficerinterviewstoanalyze,andcompareandcontrasttheirrelationshipswithnon‐DBEvendorsandDBEvendors.Id.at*7.ThisqualitativeinformationwasthencomparedtoDBEbidsandDBEgoalsforeachyearinquestion.NJT’sadjustmenttoitsDBEgoalalsoincludedananalysisoftheoveralldisparityratio,aswellas,DBEutilizationbasedonrace,genderandethnicity.Id.Adecompositionanalysiswasalsoperformed.Id.

ThecourtconcludedthatNJTprovidedevidencethatit,ataminimum,examinedthecurrentcapacityofDBEstoperformworkinitsDOT‐assistedcontractingprogram,asmeasuredbythevolumeofworkDBEshaveperformedinrecentyears,aswellasutilizingthedisparitystudyitself.Thecourtpointedoutthereweretwomethodsspecificallyapprovedby49CFR§26.45(d).Id.

ThecourtalsofoundthatNJTtookintoaccountraceneutralmeasurestoensurethatthegreatestpercentageofDBEparticipationwasachievedthroughraceandgender‐neutralmeans.Thedistrictcourtconcludedthat“critically,”plaintiffsfailedtoprovideevidenceofanother,moreperfect,methodthatcouldhavebeenutilizedtoadjustNJT’sDBEgoal.Id.at*7.ThecourtheldthatgenuineissuesofmaterialfactremainonlyastowhetherNJT’sadjustmenttoitsDBEgoalissufficientlynarrowlytailoredandthusconstitutional.Id.

NJT,thecourtfound,adjusteditsDBEgoaltoaccountfortheeffectsofpastdiscrimination,notingthedisparitystudytookintoaccounttheeffectsofpastdiscriminationinthepre‐qualificationprocessofDBEs.Id.at*7.Thecourtquotedthedisparitystudyasstatingthatitfoundnon‐trivialandstatisticallysignificantmeasuresofdiscriminationincontractamountsawardedduringthestudyperiod.Id.at*8.

Thecourtfound,however,thatwhatwas“gravelycritical”aboutthefindingofthepasteffectsofdiscriminationisthatitonlytookintoaccountsixgroupsincludingAmericanIndian,Hispanic,Asian,blacks,womenand“unknown,”butdidnotincludeananalysisofpastdiscriminationfortheethnicgroup“Iraqi,”whichisnowagroupconsideredtobeaDBEbytheNJT.Id.Becausethedisparityreportincludedacategoryentitled“unknown,”thecourtheldagenuineissueofmaterialfactremainsastowhether“Iraqi”islegitimatelywithinNJT’sdefinedDBEgroupsandwhetherademonstrablefindingofdiscriminationexistsforIraqis.Therefore,thecourtdenied


bothplaintiffs’anddefendants’MotionsforSummaryJudgmentastotheconstitutionalityofNJT’sDBEprogram.

ThecourtalsoheldthatbecausethelawwasnotclearlyestablishedatthetimeNJTestablisheditsDBEprogramtocomplywithTEA‐21,theindividualstatedefendantswereentitledtoqualifiedimmunityandtheirMotionforSummaryJudgmentastothestateofficialswasgranted.Thecourt,inaddition,heldthatplaintiff’sTitleVIclaimsweredismissedbecausetheindividualdefendantswerenotrecipientsoffederalfunds,andthattheNJTasaninstrumentalityoftheStateofNewJerseyisentitledtosovereignimmunity.Therefore,thecourtheldthattheplaintiff’sclaimsbasedontheviolationof42U.S.C.§1983weredismissedandNJT’sMotionforSummaryJudgmentwasgrantedastothatclaim.

16. South Florida Chapter of the Associated General Contractors v. Broward County, Florida, 544 F. Supp.2d 1336 (S.D. Fla. 2008)

Plaintiff,theSouthFloridaChapteroftheAssociatedGeneralContractors,broughtsuitagainsttheDefendant,BrowardCounty,FloridachallengingBrowardCounty’simplementationoftheFederalDBEProgramandBrowardCounty’sissuanceofcontractspursuanttotheFederalDBEProgram.PlaintifffiledaMotionforaPreliminaryInjunction.ThecourtconsideredonlythethresholdlegalissueraisedbyplaintiffintheMotion,namelywhetherornotthedecisioninWesternStatesPavingCompanyv.WashingtonStateDepartmentofTransportation,407F.3d983(9thCir.2005)shouldgoverntheCourt’sconsiderationofthemeritsofplaintiffs’claim.544F.Supp.2dat1337.Thecourtidentifiedthethresholdlegalissuepresentedasessentially,“whethercompliancewiththefederalregulationsisallthatisrequiredofDefendantBrowardCounty.”Id.at1338.

TheDefendantCountycontendedthatasarecipientoffederalfundsimplementingtheFederalDBEProgram,allthatisrequiredoftheCountyistocomplywiththefederalregulations,relyingoncaselawfromtheSeventhCircuitinsupportofitsposition.544F.Supp.2dat1338,citingNorthernContractingv.Illinois,473F.3d715(7thCir.2007).Theplaintiffsdisagreed,andcontendedthattheCountymusttakeadditionalstepsbeyondthoseexplicitlyprovidedforinthefederalregulationstoensuretheconstitutionalityoftheCounty’simplementationoftheFederalDBEProgram,asadministeredintheCounty,citingWesternStatesPaving,407F.3d983.ThecourtfoundthattherewasnocaselawonpointintheEleventhCircuitCourtofAppeals.Id.at1338.

NinthCircuitApproach:WesternStates.ThedistrictcourtanalyzedtheNinthCircuitCourtofAppealsapproachinWesternStatesPavingandtheSeventhCircuitapproachinMilwaukeeCountyPaversAssociationv.Fiedler,922F.2d419(7thCir.1991)andNorthernContracting,473F.3d715.ThedistrictcourtinBrowardCountyconcludedthattheNinthCircuitinWesternStatesPavingheldthatwhetherWashington’sDBEprogramisnarrowlytailoredtofurtherCongress’sremedialobjectivedependsuponthepresenceorabsenceofdiscriminationintheState’stransportationcontractingindustry,andthatitwaserrorforthedistrictcourtinWesternStatesPavingtoupholdWashington’sDBEprogramsimplybecausethestatehadcompliedwiththefederalregulations.544F.Supp.2dat1338‐1339.ThedistrictcourtinBrowardCountypointedoutthattheNinthCircuitinWesternStatesPavingconcludeditwouldbenecessaryto


undertakeanas‐appliedinquiryintowhetherthestate’sprogramisnarrowlytailored.544F.Supp.2dat1339,citingWesternStatesPaving,407F.3dat997.

Inafootnote,thedistrictcourtinBrowardCountynotedthattheUSDOT“appearsnottobeofonemindonthisissue,however.”544F.Supp.2dat1339,n.3.Thedistrictcourtstatedthatthe“UnitedStatesDOThas,inanalysispostedonitsWebsite,implicitlyinstructedstatesandlocalitiesoutsideoftheNinthCircuittoignoretheWesternStatesPavingdecision,whichwouldtendtoindicatethatthisagencymaynotconcurwiththe‘opinionoftheUnitedStates’asrepresentedinWesternStates.”544F.Supp.2dat1339,n.3.ThedistrictcourtnotedthattheUnitedStatestookthepositionintheWesternStatesPavingcasethatthe“statewouldhavetohaveevidenceofpastorcurrenteffectsofdiscriminationtouserace‐consciousgoals.”544F.Supp.2dat1338,quotingWesternStatesPaving.

TheCourtalsopointedoutthattheEighthCircuitCourtofAppealsinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964(8thCir.2003)reachedasimilarconclusionasinWesternStatesPaving.544F.Supp.2dat1339.TheEighthCircuitinSherbrooke,likethecourtinWesternStatesPaving,“concludedthatthefederalgovernmenthaddelegatedthetaskofensuringthatthestateprogramsarenarrowlytailored,andlookedtotheunderlyingdatatodeterminewhetherthoseprogramswere,infact,narrowlytailored,ratherthansimplyrelyingonthestates’compliancewiththefederalregulations.”544F.Supp.2dat1339.

SeventhCircuitApproach:MilwaukeeCountyandNorthernContracting.ThedistrictcourtinBrowardCountynextconsideredtheSeventhCircuitapproach.TheDefendantsinBrowardCountyagreedthattheCountymustmakealocalfindingofdiscriminationforitsprogramtobeconstitutional.544F.Supp.2dat1339.TheCounty,however,tookthepositionthatitmustmakethisfindingthroughtheprocessspecifiedinthefederalregulations,andshouldnotbesubjecttoalawsuitifthatprocessisfoundtobeinadequate.Id.Insupportofthisposition,theCountyreliedprimarilyontheSeventhCircuit’sapproach,firstarticulatedinMilwaukeeCountyPaversAssociationv.Fiedler,922F.2d419(7thCir.1991),thenreaffirmedinNorthernContracting,473F.3d715(7thCir.2007).544F.Supp.2dat1339.

BasedontheSeventhCircuitapproach,insofarasthestateismerelydoingwhatthestatuteandfederalregulationsenvisageandpermit,theattackonthestateisanimpermissiblecollateralattackonthefederalstatuteandregulations.544F.Supp.2dat1339‐1340.Thisapproachconcludesthatastate’sroleinthefederalprogramissimplyasanagent,andinsofar“asthestateismerelycomplyingwithfederallawitisactingastheagentofthefederalgovernmentandisnomoresubjecttobeingenjoinedonequalprotectiongroundsthanthefederalcivilservantswhodraftedtheregulations.”544F.Supp.2dat1340,quotingMilwaukeeCountyPavers,922F.2dat423.

TheNinthCircuitaddressedtheMilwaukeeCountyPaverscaseinWesternStatesPaving,andattemptedtodistinguishthatcase,concludingthattheconstitutionalityofthefederalstatuteandregulationswerenotatissueinMilwaukeeCountyPavers.544F.Supp.2dat1340.In2007,theSeventhCircuitfollowedupthecritiquesmadeinWesternStatesPavingintheNorthernContractingdecision.Id.TheSeventhCircuitinNorthernContractingconcludedthatthemajorityinWesternStatesPavingmisreaditsdecisioninMilwaukeeCountyPaversasdidtheEighthCircuitCourtofAppealsinSherbrooke.544F.Supp.2dat1340,citingNorthernContracting,473


F.3dat722,n.5.ThedistrictcourtinBrowardCountypointedoutthattheSeventhCircuitinNorthernContractingemphasizedagainthatthestateDOTisactingasaninstrumentoffederalpolicy,andaplaintiffcannotcollaterallyattackthefederalregulationsthroughachallengetothestateDOT’sprogram.544F.Supp.2dat1340,citingNorthernContracting,473F.3dat722.

ThedistrictcourtinBrowardCountystatedthatothercircuitshaveconcurredwiththisapproach,includingtheSixthCircuitCourtofAppealsdecisioninTennesseeAsphaltCompanyv.Farris,942F.2d969(6thCir.1991).544F.Supp.2dat1340.ThedistrictcourtinBrowardCountyheldthattheTenthCircuitCourtofAppealstookasimilarapproachinEllisv.Skinner,961F.2d912(10thCir.1992).544F.Supp.2dat1340.ThedistrictcourtinBrowardCountyheldthattheseCircuitCourtsofAppealhaveconcludedthat“whereastateorcountyfullycomplieswiththefederalregulations,itcannotbeenjoinedfromcarryingoutitsDBEprogram,becauseanysuchattackwouldsimplyconstituteanimpropercollateralattackontheconstitutionalityoftheregulations.”544F.Supp.2dat1340‐41.

ThedistrictcourtinBrowardCountyheldthatitagreedwiththeapproachtakenbytheSeventhCircuitCourtofAppealsinMilwaukeeCountyPaversandNorthernContractingandconcludedthat“theappropriatefactualinquiryintheinstantcaseiswhetherornotBrowardCountyhasfullycompliedwiththefederalregulationsinimplementingitsDBEprogram.”544F.Supp.2dat1341.Itissignificanttonotethattheplaintiffsdidnotchallengetheas‐appliedconstitutionalityofthefederalregulationsthemselves,butratherfocusedtheirchallengeontheconstitutionalityofBrowardCounty’sactionsincarryingouttheDBEprogram.544F.Supp.2dat1341.ThedistrictcourtinBrowardCountyheldthatthistypeofchallengeis“simplyanimpermissiblecollateralattackontheconstitutionalityofthestatuteandimplementingregulations.”Id.

ThedistrictcourtconcludedthatitwouldapplythecaselawassetoutintheSeventhCircuitCourtofAppealsandconcurringcircuits,andthatthetrialinthiscasewouldbeconductedsolelyforthepurposeofestablishingwhetherornottheCountyhascompliedfullywiththefederalregulationsinimplementingitsDBEprogram.544F.Supp.2dat1341.

Subsequently,therewasaStipulationofDismissalfiledbyallpartiesinthedistrictcourt,andanOrderofDismissalwasfiledwithoutatrialofthecaseinNovember2008.

17. Western States Paving Co. v. Washington DOT, USDOT & FHWA, 2006 WL 1734163 (W.D. Wash. June 23, 2006) (unpublished opinion)

ThiscasewasbeforethedistrictcourtpursuanttotheNinthCircuit’sremandorderinWesternStatesPavingCo.WashingtonDOT,USDOT,andFHWA,407F.3d983(9thCir.2005),cert.denied,546U.S.1170(2006).Inthisdecision,thedistrictcourtadjudicatedcrossMotionsforSummaryJudgmentonplaintiff’sclaimforinjunctionandfordamagesunder42U.S.C.§§1981,1983,and§2000d.

BecausetheWSDOTvoluntarilydiscontinueditsDBEprogramaftertheNinthCircuitdecision,supra,thedistrictcourtdismissedplaintiff’sclaimforinjunctivereliefasmoot.Thecourtfound“itisabsolutelyclearinthiscasethatWSDOTwillnotresumeorcontinuetheactivitytheNinthCircuitfoundunlawfulinWesternStates,”andcitedspecificallytotheinformationallettersWSDOTsenttocontractorsinformingthemoftheterminationoftheprogram.


Second,thecourtdismissedWesternStatesPaving’sclaimsunder42U.S.C.§§1981,1983,and2000dagainstClarkCountyandtheCityofVancouverholdingneithertheCityortheCountyactedwiththerequisitediscriminatoryintent.ThecourtheldtheCountyandtheCityweremerelyimplementingtheWSDOT’sunlawfulDBEprogramandtheiractionsinthisrespectwereinvoluntaryandrequirednoindependentactivity.ThecourtalsonotedthattheCountyandtheCitywerenotpartiestotheprecisediscriminatoryactionsatissueinthecase,whichoccurredduetotheconductofthe“Statedefendants.”Specifically,theWSDOT—andnottheCountyortheCity—developedtheDBEprogramwithoutsufficientanecdotalandstatisticalevidence,andimproperlyreliedontheaffidavitsofcontractorsseekingDBEcertification“whoaverredthattheyhadbeensubjectto‘generalsocietaldiscrimination.’”

Third,thecourtdismissedplaintiff’s42U.S.C.§§1981and1983claimsagainstWSDOT,findingthembarredbytheEleventhAmendmentsovereignimmunitydoctrine.However,thecourtallowedplaintiff’s42U.S.C.§2000dclaimtoproceedagainstWSDOTbecauseitwasnotsimilarlybarred.ThecourtheldthatCongresshadconditionedthereceiptoffederalhighwayfundsoncompliancewithTitleVI(42U.S.C.§2000detseq.)andthewaiverofsovereignimmunityfromclaimsarisingunderTitleVI.Section2001specificallyprovidesthat“aStateshallnotbeimmuneundertheEleventhAmendmentoftheConstitutionoftheUnitedStatesfromsuitinFederalcourtforaviolationof…TitleVI.”ThecourtheldthatthislanguageputtheWSDOTonnoticethatitfacedprivatecausesofactionintheeventofnoncompliance.

ThecourtheldthatWSDOT’sDBEprogramwasnotnarrowlytailoredtoserveacompellinggovernmentinterest.Thecourtstressedthatdiscriminatoryintentisanessentialelementofaplaintiff’sclaimunderTitleVI.TheWSDOTarguedthatevenifsovereignimmunitydidnotbarplaintiff’s§2000dclaim,WSDOTcouldbeheldliablefordamagesbecausetherewasnoevidencethatWSDOTstaffknewoforconsciouslyconsideredplaintiff’sracewhencalculatingtheannualutilizationgoal.Thecourtheldthatsincethepolicywasnot“faciallyneutral”—andwasinfact“specificallyraceconscious”—anyresultingdiscriminationwasthereforeintentional,whetherthereasonfortheclassificationwasbenignoritspurposeremedial.Assuch,WSDOT’sprogramwassubjecttostrictscrutiny.

InorderforthecourttoupholdtheDBEprogramasconstitutional,WSDOThadtoshowthattheprogramservedacompellinginterestandwasnarrowlytailoredtoachievethatgoal.ThecourtfoundthattheNinthCircuithadalreadyconcludedthattheprogramwasnotnarrowlytailoredandtherecordwasdevoidofanyevidencesuggestingthatminoritiescurrentlysufferorhavesuffereddiscriminationintheWashingtontransportationcontractingindustry.ThecourtthereforedeniedWSDOT’sMotionforSummaryJudgmentonthe§2000dclaim.TheremedyavailabletoWesternStatesremainsforfurtheradjudicationandthecaseiscurrentlypending.

18. Northern Contracting, Inc. v. Illinois, 2005 WL 2230195 (N.D. Ill., 2005), affirmed, 473 F.3d 715 (7th Cir. 2007)

Thisdecisionisthedistrictcourt’sorderthatwasaffirmedbytheSeventhCircuitCourtofAppeals.ThisdecisionisinstructiveinthatitisoneoftherecentcasestoaddressthevalidityoftheFederalDBEProgramandlocalandstategovernments’implementationoftheprogramasrecipientsoffederalfunds.Thecasealsoisinstructiveinthatthecourtsetforthadetailed


analysisofrace‐,ethnicity‐,andgender‐neutralmeasuresaswellasevidentiarydatarequiredtosatisfyconstitutionalscrutiny.

Thedistrictcourtconductedatrialafterdenyingtheparties’MotionsforSummaryJudgmentinNorthernContracting,Inc.v.StateofIllinois,IllinoisDOT,andUSDOT,2004WL422704(N.D.Ill.March3,2004),discussedinfra.Thefollowingsummarizestheopinionofthedistrictcourt.

NorthernContracting,Inc.(the“plaintiff”),anIllinoishighwaycontractor,suedtheStateofIllinois,theIllinoisDOT,theUnitedStatesDOT,andfederalandstateofficialsseekingadeclarationthatfederalstatutoryprovisions,thefederalimplementingregulations(“TEA‐21”),thestatestatuteauthorizingtheDBEprogram,andtheIllinoisDBEprogramitselfwereunlawfulandunconstitutional.2005WL2230195at*1(N.D.Ill.Sept,8,2005).

UnderTEA‐21,arecipientoffederalfundsisrequiredtomeetthe“maximumfeasibleportion”ofitsDBEgoalthroughrace‐neutralmeans.Id.at*4(citingregulations).IfarecipientprojectsthatitcannotmeetitsoverallDBEgoalthroughrace‐neutralmeans,itmustestablishcontractgoalstotheextentnecessarytoachievetheoverallDBEgoal.Id.(citingregulation).[ThecourtprovidedanoverviewofthepertinentregulationsincludingcompliancerequirementsandqualificationsforDBEstatus.]

Statistical evidence. Tocalculateits2005DBEparticipationgoals,IDOTfollowedthetwo‐stepprocesssetforthinTEA‐21:(1)calculationofabasefigurefortherelativeavailabilityofDBEs,and(2)considerationofapossibleadjustmentofthebasefiguretoreflecttheeffectsoftheDBEprogramandthelevelofparticipationthatwouldbeexpectedbutfortheeffectsofpastandpresentdiscrimination.Id.at*6.IDOTengagedinastudytocalculateitsbasefigureandconductacustomcensustodeterminewhetheramorereliablemethodofcalculationexistedasopposedtoitspreviousmethodofreviewingabidder’slist.Id.

IncompliancewithTEA‐21,IDOTusedastudytoevaluatethebasefigureusingasix‐partanalysis:(1)thestudyidentifiedtheappropriateandrelevantgeographicmarketforitscontractingactivityanditsprimecontractors;(2)thestudyidentifiedtherelevantproductmarketsinwhichIDOTanditsprimecontractorscontract;(3)thestudysoughttoidentifyallavailablecontractorsandsubcontractorsintherelevantindustrieswithinIllinoisusingDun&Bradstreet’sMarketplace;(4)thestudycollectedlistsofDBEsfromIDOTand20otherpublicandprivateagencies;(5)thestudyattemptedtocorrectforthepossibilitythatcertainbusinesseslistedasDBEswerenolongerqualifiedor,alternatively,businessesnotlistedasDBEsbutqualifiedassuchunderthefederalregulations;and(6)thestudyattemptedtocorrectforthepossibilitythatnotallDBEbusinesseswerelistedinthevariousdirectories.Id.at*6‐7.Thestudyutilizedastandardstatisticalsamplingproceduretocorrectforthelattertwobiases.Id.at*7.Thestudythuscalculatedaweightedaveragebasefigureof22.7percent.Id.

IDOTthenadjustedthebasefigurebasedupontwodisparitystudiesandsomereportsconsideringwhethertheDBEavailabilityfigureswereartificiallylowduetotheeffectsofpastdiscrimination.Id.at*8.OnestudyexamineddisparitiesinearningsandbusinessformationratesasbetweenDBEsandtheirwhitemale‐ownedcounterparts.Id.AnotherstudyincludedasurveyreportingthatDBEsarerarelyutilizedinnon‐goalsprojects.Id.


IDOTconsideredthreereportspreparedbyexpertwitnesses.Id.at*9.Thefirstreportconcludedthatminority‐andwomen‐ownedbusinesseswereunderutilizedrelativetotheircapacityandthatsuchunderutilizationwasduetodiscrimination.Id.Thesecondreportconcluded,aftercontrollingforrelevantvariablessuchascreditworthiness,“thatminoritiesandwomenarelesslikelytoformbusinesses,andthatwhentheydoformbusinesses,thosebusinessesachievelowerearningsthandidbusinessesownedbywhitemales.”Id.Thethirdreport,againcontrollingforrelevantvariables(education,age,maritalstatus,industryandwealth),concludedthatminority‐andfemale‐ownedbusinesses’formationratesarelowerthanthoseoftheirwhitemalecounterparts,andthatsuchbusinessesengageinadisproportionateamountofgovernmentworkandcontractsasaresultoftheirinabilitytoobtainprivatesectorwork.Id.

IDOTalsoconductedaseriesofpublichearingsinwhichanumberofDBEownerswhotestifiedthatthey“wererarely,ifever,solicitedtobidonprojectsnotsubjecttodisadvantaged‐firmhiringgoals.”Id.Additionally,witnessesidentified20primecontractorsinIDOTDistrict1alonewhorarelyorneversolicitedbidsfromDBEsonnon‐goalsprojects.Id.TheprimecontractorsdidnotrespondtoIDOT’srequestsforinformationconcerningtheirutilizationofDBEs.Id.

Finally,IDOTreviewedunremediatedmarketdatafromfourdifferentmarkets(theIllinoisStateTollHighwayAuthority,theMissouriDOT,CookCounty’spublicconstructioncontracts,anda“non‐goals”experimentconductedbyIDOTbetween2001and2002),andconsideredpastutilizationofDBEsonIDOTprojects.Id.at*11.Afteranalyzingallofthedata,thestudyrecommendedanupwardadjustmentto27.51percent.However,IDOTdecidedtomaintainitsfigureat22.77percent.Id.

IDOT’srepresentativetestifiedthattheDBEprogramwasadministeredona“contract‐by‐contractbasis.”Id.ShetestifiedthatDBEgoalshavenoeffectontheawardofprimecontractsbutthatcontractsareawardedexclusivelytothe“lowestresponsiblebidder.”IDOTalsoallowedcontractorstopetitionforawaiverofindividualcontractgoalsincertainsituations(e.g.,wherethecontractorhasbeenunabletomeetthegoaldespitehavingmadereasonablegoodfaithefforts).Id.at*12.Between2001and2004,IDOTreceivedwaiverrequestson8.53percentofitscontractsandgrantedthreeoutoffour;IDOTalsoprovidedanappealprocedureforadenialfromawaiverrequest.Id.

IDOTimplementedanumberofrace‐andgender‐neutralmeasuresbothinitsfiscalyear2005planandinresponsetothedistrictcourt’searliersummaryjudgmentorder,including:

1. A“promptpaymentprovision”initscontracts,requiringthatsubcontractorsbepaidpromptlyaftertheycompletetheirwork,andprohibitingprimecontractorsfromdelayingsuchpayments;

2. AnextensiveoutreachprogramseekingtoattractandassistDBEandothersmallfirmsenterandachievesuccessintheindustry(includingretaininganetworkofconsultantstoprovidemanagement,technicalandfinancialassistancetosmallbusinesses,andsponsoringnetworkingsessionsthroughoutthestatetoacquaintsmallfirmswithlargercontractorsandtoencouragetheinvolvementofsmallfirmsinmajorconstructionprojects);


3. Reviewingthecriteriaforprequalificationtoreduceanyunnecessaryburdens;

4. “Unbundling”largecontracts;and

5. AllocatingsomecontractsforbiddingonlybyfirmsmeetingtheSBA’sdefinitionofsmallbusinesses.

Id.(internalcitationsomitted).IDOTwasalsointheprocessofimplementingbondingandfinancinginitiativestoassistemergingcontractorsobtainguaranteedbondingandlinesofcredit,andestablishingamentor‐protégéprogram.Id.

ThecourtfoundthatIDOTattemptedtoachievethe“maximumfeasibleportion”ofitsoverallDBEgoalthroughrace‐andgender‐neutralmeasures.Id.at*13.ThecourtfoundthatIDOTdeterminedthatrace‐andgender‐neutralmeasureswouldaccountfor6.43percentofitsDBEgoal,leaving16.34percenttobereachedusingrace‐andgender‐consciousmeasures.Id.

Anecdotal evidence. AnumberofDBEownerstestifiedtoinstancesofperceiveddiscriminationandtothebarrierstheyface.Id.TheDBEownersalsotestifiedtodifficultiesinobtainingworkintheprivatesectorand“unanimouslyreportedthattheywererarelyinvitedtobidonsuchcontracts.”Id.TheDBEownerstestifiedtoareluctancetosubmitunsolicitedbidsduetotheexpenseinvolvedandidentifiedspecificfirmsthatsolicitedbidsfromDBEsforgoalsprojectsbutnotfornon‐goalsprojects.Id.Anumberofthewitnessesalsotestifiedtospecificinstancesofdiscriminationinbidding,onspecificcontracts,andinthefinancingandinsurancemarkets.Id.at*13‐14.Onewitnessacknowledgedthatallsmallfirmsfacedifficultiesinthefinancingandinsurancemarkets,buttestifiedthatitisespeciallyburdensomeforDBEswho“frequentlyareforcedtopayhigherinsuranceratesduetoracialandgenderdiscrimination.”Id.at*14.TheDBEwitnessesalsotestifiedtheyhaveobstaclesinobtainingpromptpayment.Id.

Theplaintiffcalledanumberofnon‐DBEbusinessownerswhounanimouslytestifiedthattheysolicitbusinessequallyfromDBEsandnon‐DBEsonnon‐goalsprojects.Id.Somenon‐DBEfirmownerstestifiedthattheysolicitbidsfromDBEsonagoalsprojectforworktheywouldotherwisecompletethemselvesabsentthegoals;otherstestifiedthatthey“occasionallyawardworktoaDBEthatwasnotthelowbidderinordertoavoidscrutinyfromIDOT.”Id.Anumberofnon‐DBEfirmownersaccusedoffailingtosolicitbidsfromDBEsonnon‐goalsprojectstestifiedanddeniedtheallegations.Id.at*15.

Strict scrutiny. Thecourtappliedstrictscrutinytotheprogramasawhole(includingthegender‐basedpreferences).Id.at*16.Thecourt,however,setforthadifferentburdenofproof,findingthatthegovernmentmustdemonstrateidentifieddiscriminationwithspecificityandmusthavea“‘strongbasisinevidence’toconcludethatremedialactionwasnecessary,beforeitembarksonanaffirmativeactionprogram…Ifthegovernmentmakessuchashowing,thepartychallengingtheaffirmativeactionplanbearsthe‘ultimateburden’ofdemonstratingtheunconstitutionalityoftheprogram.”Id.Thecourtheldthatchallengingparty’sburden“canonlybemetbypresentingcredibleevidencetorebutthegovernment’sproffereddata.”Id.at*17.

Tosatisfystrictscrutiny,thecourtfoundthatIDOTdidnotneedtodemonstrateanindependentcompellinginterest;however,aspartofthenarrowlytailoredprong,IDOTneededtoshow“that


thereisademonstrableneedfortheimplementationoftheFederalDBEProgramwithinitsjurisdiction.”Id.at*16.

ThecourtfoundthatIDOTpresented“anabundance”ofevidencedocumentingthedisparitiesbetweenDBEsandnon‐DBEsintheconstructionindustry.Id.at*17.Theplaintiffarguedthatthestudywas“erroneousbecauseitfailedtolimititsDBEavailabilityfigurestothosefirms…registeredandpre‐qualifiedwithIDOT.”Id.TheplaintiffalsoallegedthecalculationsoftheDBEutilizationratewereincorrectbecausethedataincludedIDOTsubcontractsandprimecontracts,despitethefactthatthelatterareawardedtothelowestbidderasamatteroflaw.Id.Accordingly,theplaintiffallegedthatIDOT’scalculationofDBEavailabilityandutilizationrateswasincorrect.Id.

Thecourtfoundthatotherjurisdictionshadutilizedthecustomcensusapproachwithoutsuccessfulchallenge.Id.at*18.Additionally,thecourtfound“thattheremedialnatureofthefederalstatutescounselsforthecastingofabroadernetwhenmeasuringDBEavailability.”Id.at*19.ThecourtfoundthatIDOTpresented“anarrayofstatisticalstudiesconcludingthatDBEsfacedisproportionatehurdlesinthecredit,insurance,andbondingmarkets.”Id.at*21.Thecourtalsofoundthatthestatisticalstudieswereconsistentwiththeanecdotalevidence.Id.Thecourtdidfind,however,that“therewasnoevidenceofevenasingleinstanceinwhichaprimecontractorfailedtoawardajobtoaDBEthatofferedthelowbid.This…is[also]supportedbythestatisticaldata…whichshowsthatatleastatthelevelofsubcontracting,DBEsaregenerallyutilizedatarateinlinewiththeirability.”Id.at*21,n.31.Additionally,IDOTdidnotverifytheanecdotaltestimonyofDBEfirmownerswhotestifiedtobarriersinfinancingandbonding.However,thecourtfoundthatsuchverificationwasunnecessary.Id.at*21,n.32.

Thecourtfurtherfound:

That such discrimination indirectly affects the ability of DBEs to compete forprimecontracts,despitethefactthattheyareawardedsolelyonthebasisoflowbid,cannotbedoubted:‘[E]xperienceandsizearenotrace‐andgender‐neutralvariables…[DBE]constructionfirmsaregenerallysmallerandlessexperiencedbecauseofindustrydiscrimination.’

Id.at*21,citingConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950(10thCir.2003).

ThepartiesstipulatedtothefactthatDBEutilizationgoalsexceedDBEavailabilityfor2003and2004.Id.at*22.IDOTalleged,andthecourtsofound,thatthehighutilizationongoalsprojectswasduetothesuccessoftheDBEprogram,andnottoanabsenceofdiscrimination.Id.ThecourtfoundthatthestatisticaldisparitiescoupledwiththeanecdotalevidenceindicatedthatIDOT’sfiscalyear2005goalwasa“‘plausiblelower‐boundestimate’ofDBEparticipationintheabsenceofdiscrimination.”Id.ThecourtfoundthattheplaintiffdidnotpresentpersuasiveevidencetocontradictorexplainIDOT’sdata.Id.

Theplaintiffarguedthatevenifacceptedatfacevalue,IDOT’smarketplacedatadidnotsupporttheimpositionofrace‐andgender‐consciousremediesbecausetherewasnoevidenceofdirectdiscriminationbyprimecontractors.Id.ThecourtfoundfirstthatIDOT’sindirectevidenceof


discriminationinthebonding,financing,andinsurancemarketswassufficienttoestablishacompellingpurpose.Id.Second,thecourtfound:

[M]ore importantly, plaintiff fails to acknowledge that, in enacting its DBEprogram,IDOTactednottoremedyitsownpriordiscriminatorypractices,butpursuanttofederallaw,whichbothauthorizedandrequiredIDOTtoremediatetheeffectsofprivatediscriminationonfederally‐fundedhighwaycontracts.Thisis a fundamental distinction … [A] state or local government need notindependentlyidentifyacompellinginterestwhenitsactionscomeinthecourseofenforcingafederalstatute.

Id.at*23.

ThecourtdistinguishedBuildersAss’nofGreaterChicagov.CountyofCook,123F.Supp.2d1087(N.D.Ill.2000),aff’d256F.3d642(7thCir.2001),notingthattheprograminthatcasewasnotfederally‐funded.Id.at*23,n.34.

Thecourtalsofoundthat“IDOThasdoneitsbesttomaximizetheportionofitsDBEgoal”throughrace‐andgender‐neutralmeasures,includinganti‐discriminationenforcementandsmallbusinessinitiatives.Id.at*24.Theanti‐discriminationeffortsincluded:aninternetwebsitewhereaDBEcanfileanadministrativecomplaintifitbelievesthataprimecontractorisdiscriminatingonthebasisofraceorgenderintheawardofsub‐contracts;andrequiringcontractorsseekingprequalificationtomaintainandproducesolicitationrecordsonallprojects,bothpublicandprivate,withandwithoutgoals,aswellasrecordsofthebidsreceivedandaccepted.Id.Thesmallbusinessinitiativeincluded:“unbundling”largecontracts;allocatingsomecontractsforbiddingonlybyfirmsmeetingtheSBA’sdefinitionofsmallbusinesses;a“promptpaymentprovision”initscontracts,requiringthatsubcontractorsbepaidpromptlyaftertheycompletetheirwork,andprohibitingprimecontractorsfromdelayingsuchpayments;andanextensiveoutreachprogramseekingtoattractandassistDBEandothersmallfirmsDBEandothersmallfirmsenterandachievesuccessintheindustry(includingretaininganetworkofconsultantstoprovidemanagement,technicalandfinancialassistancetosmallbusinesses,andsponsoringnetworkingsessionsthroughoutthestatetoacquaintsmallfirmswithlargercontractorsandtoencouragetheinvolvementofsmallfirmsinmajorconstructionprojects).Id.

Thecourtfound“[s]ignificantly,plaintiffdidnotquestiontheefficacyorsincerityoftheserace‐andgender‐neutralmeasures.”Id.at*25.Additionally,thecourtfoundtheDBEprogramhadsignificantflexibilityinthatutilizedcontract‐by‐contractgoalsetting(withoutafixedDBEparticipationminimum)andcontainedwaiverprovisions.Id.ThecourtfoundthatIDOTapproved70percentofwaiverrequestsalthoughwaiverswererequestedononly8percentofallcontracts.Id.,citingAdarandConstructors,Inc.v.Slater“AdarandVII”,228F.3d1147,1177(10thCir.2000)(citingforthepropositionthatflexibilityandwaiverarecriticallyimportant).

ThecourtheldthatIDOT’sDBEplanwasnarrowlytailoredtothegoalofremedyingtheeffectsofracialandgenderdiscriminationintheconstructionindustry,andwasthereforeconstitutional.


19. Northern Contracting, Inc. v. State of Illinois, Illinois DOT, and USDOT, 2004 WL 422704 (N.D. Ill. March 3, 2004)

ThisistheearlierdecisioninNorthernContracting,Inc.,2005WL2230195(N.D.Ill.Sept.8,2005),seeabove,whichresultedintheremandofthecasetoconsidertheimplementationoftheFederalDBEProgrambytheIDOT.ThiscaseinvolvesthechallengetotheFederalDBEProgram.TheplaintiffcontractorsuedtheIDOTandtheUSDOTchallengingthefacialconstitutionalityoftheFederalDBEProgram(TEA‐21and49CFRPart26)aswellastheimplementationoftheFederalProgrambytheIDOT(i.e.,theIDOTDBEProgram).ThecourtheldvalidtheFederalDBEProgram,findingthereisacompellinggovernmentalinterestandthefederalprogramisnarrowlytailored.ThecourtalsoheldthereareissuesoffactregardingwhetherIDOT’sDBEProgramisnarrowlytailoredtoachievethefederalgovernment’scompellinginterest.ThecourtdeniedtheMotionsforSummaryJudgmentfiledbytheplaintiffandbyIDOT,findingtherewereissuesofmaterialfactrelatingtoIDOT’simplementationoftheFederalDBEProgram.

ThecourtinNorthernContracting,heldthatthereisanidentifiedcompellinggovernmentalinterestforimplementingtheFederalDBEProgramandthattheFederalDBEProgramisnarrowlytailoredtofurtherthatinterest.Therefore,thecourtgrantedtheFederaldefendants’MotionforSummaryJudgmentchallengingthevalidityoftheFederalDBEProgram.Inthisconnection,thedistrictcourtfollowedthedecisionsandanalysisinSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964(8thCir.2003)andAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000)(“AdarandVII”),cert.grantedthendismissedasimprovidentlygranted,532U.S.941,534U.S.103(2001).Thecourtheld,likethesetwoCourtsofAppealsthathaveaddressedthisissue,thatCongresshadastrongbasisinevidencetoconcludethattheDBEProgramwasnecessarytoredressprivatediscriminationinfederally‐assistedhighwaysubcontracting.ThecourtagreedwiththeAdarandVIIandSherbrookeTurfcourtsthattheevidencepresentedtoCongressissufficienttoestablishacompellinggovernmentalinterest,andthatthecontractorshadnotmettheirburdenofintroducingcredibleparticularizedevidencetorebuttheGovernment’sinitialshowingoftheexistenceofacompellinginterestinremedyingthenationwideeffectsofpastandpresentdiscriminationinthefederalconstructionprocurementsubcontractingmarket.2004WL422704at*34,citingAdarandVII,228F.3dat1175.

Inaddition,thecourtanalyzedthesecondprongofthestrictscrutinytest,whetherthegovernmentprovidedsufficientevidencethatitsprogramisnarrowlytailored.Inmakingthisdetermination,thecourtlookedatseveralfactors,suchastheefficacyofalternativeremedies;theflexibilityanddurationoftherace‐consciousremedies,includingtheavailabilityofwaiverprovisions;therelationshipsbetweenthenumericalgoalsandrelevantlabormarket;theimpactoftheremedyonthirdparties;andwhethertheprogramisover‐or‐under‐inclusive.Thenarrowtailoringanalysiswithregardtotheas‐appliedchallengefocusedonIDOT’simplementationoftheFederalDBEProgram.

First,thecourtheldthattheFederalDBEProgramdoesnotmandatetheuseofrace‐consciousmeasuresbyrecipientsoffederaldollars,butinfactrequiresonlythatthegoalreflecttherecipient’sdeterminationofthelevelofDBEparticipationitwouldexpectabsenttheeffectsofthediscrimination.49CFR§26.45(b).Thecourtrecognized,asfoundintheSherbrookeTurfandAdarandVIIcases,thattheFederalRegulationsplacestrongemphasisontheuseofrace‐neutral


meanstoincreaseminoritybusinessparticipationingovernmentcontracting,thatalthoughnarrowtailoringdoesnotrequireexhaustionofeveryconceivablerace‐neutralalternative,itdoesrequire“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”2004WL422704at*36,citingandquotingSherbrookeTurf,345F.3dat972,quotingGrutterv.Bollinger,539U.S.306(2003).ThecourtheldthattheFederalregulations,whichprohibittheuseofquotasandseverelylimittheuseofset‐asides,meetthisrequirement.ThecourtagreedwiththeAdarandVIIandSherbrookeTurfcourtsthattheFederalDBEProgramdoesrequirerecipientstomakeaseriousgoodfaithconsiderationofworkablerace‐neutralalternativesbeforeturningtorace‐consciousmeasures.

Second,thecourtfoundthatbecausetheFederalDBEProgramissubjecttoperiodicreauthorization,andrequiresrecipientsofFederaldollarstoreviewtheirprogramsannually,theFederalDBEschemeisappropriatelylimitedtolastnolongerthannecessary.

Third,thecourtheldthattheFederalDBEProgramisflexibleformanyreasons,includingthatthepresumptionthatwomenandminorityaresociallydisadvantagedisdeemedrebuttedifanindividual’spersonalnetworthexceeds$750,000.00,andafirmownedbyindividualwhoisnotpresumptivelydisadvantagedmayneverthelessqualifyforsuchstatusifthefirmcandemonstratethatitsownersaresociallyandeconomicallydisadvantaged.49CFR§26.67(b)(1)(d).ThecourtfoundotheraspectsoftheFederalRegulationsprovideampleflexibility,includingrecipientsmayobtainwaiversorexemptionsfromanyrequirements.RecipientsarenotrequiredtosetacontractgoaloneveryUSDOT‐assistedcontract.Ifarecipientestimatesthatitcanmeettheentiretyofitsoverallgoalsforagivenyearthroughrace‐neutralmeans,itmustimplementtheProgramwithoutsettingcontractgoalsduringtheyear.Ifduringthecourseofanyyearinwhichitisusingcontractgoalsarecipientdeterminesthatitwillexceeditsoverallgoals,itmustadjusttheuseofrace‐consciouscontractgoalsaccordingly.49CFR§26.51(e)(f).RecipientsalsoadministeringaDBEProgramingoodfaithcannotbepenalizedforfailingtomeettheirDBEgoals,andarecipientmayterminateitsDBEProgramifitmeetsitsannualoverallgoalthroughrace‐neutralmeansfortwoconsecutiveyears.49CFR§26.51(f).Further,arecipientmayawardacontracttoabidder/offerorthatdoesnotmeettheDBEParticipationgoalssolongasthebidderhasmadeadequategoodfaitheffortstomeetthegoals.49CFR§26.53(a)(2).Theregulationsalsoprohibittheuseofquotas.49CFR§26.43.

Fourth,thecourtagreedwiththeSherbrookeTurfcourt’sassessmentthattheFederalDBEProgramrequiresrecipientstobaseDBEgoalsonthenumberofready,willingandabledisadvantagedbusinessinthelocalmarket,andthatthisexerciserequiresrecipientstoestablishrealisticgoalsforDBEparticipationintherelevantlabormarkets.

Fifth,thecourtfoundthattheDBEProgramdoesnotimposeanunreasonableburdenonthirdparties,includingnon‐DBEsubcontractorsandtaxpayers.ThecourtfoundthattheFederalDBEProgramisalimitedandproperlytailoredremedytocuretheeffectsofpriordiscrimination,asharingoftheburdenbypartiessuchasnon‐DBEsisnotimpermissible.

Finally,thecourtfoundthattheFederalDBEProgramwasnotover‐inclusivebecausetheregulationsdonotprovidethateverywomanandeverymemberofaminoritygroupisdisadvantaged.Preferencesarelimitedtosmallbusinesseswithaspecificaverageannualgrossreceiptoverthreefiscalyearsof$16.6millionorless(atthetimeofthisdecision),and


businesseswhoseowners’personalnetworthexceed$750,000.00areexcluded.49CFR§26.67(b)(1).Inaddition,afirmownedbyawhitemalemayqualifyassociallyandeconomicallydisadvantaged.49CFR§26.67(d).

ThecourtanalyzedtheconstitutionalityoftheIDOTDBEProgram.ThecourtadoptedthereasoningoftheEighthCircuitinSherbrookeTurf,thatarecipient’simplementationoftheFederalDBEProgrammustbeanalyzedunderthenarrowtailoringanalysisbutnotthecompellinginterestinquiry.Therefore,thecourtagreedwithSherbrookeTurfthatarecipientneednotestablishadistinctcompellinginterestbeforeimplementingtheFederalDBEProgram,butdidconcludethatarecipient’simplementationoftheFederalDBEProgrammustbenarrowlytailored.ThecourtfoundthatissuesoffactremainintermsofthevalidityoftheIDOT’sDBEProgramasimplementedintermsofwhetheritwasnarrowlytailoredtoachievetheFederalGovernment’scompellinginterest.Thecourt,therefore,deniedthecontractorplaintiff’sMotionforSummaryJudgmentandtheIllinoisDOT’sMotionforSummaryJudgment.

20. Sherbrooke Turf, Inc. v. Minnesota DOT, 2001 WL 1502841, No. 00‐CV‐1026 (D. Minn. 2001) (unpublished opinion), affirmed 345 F.3d 964 (8th Cir. 2003)

SherbrookeinvolvedalandscapingservicecontractorownedandoperatedbyCaucasianmales.ThecontractorsuedtheMinnesotaDOTclaimingtheFederalDBEprovisionsoftheTEA‐21areunconstitutional.Sherbrookechallengedthe“federalaffirmativeactionprograms,”theUSDOTimplementingregulations,andtheMinnesotaDOT’sparticipationintheDBEProgram.TheUSDOTandtheFHWAintervenedasFederaldefendantsinthecase.Sherbrooke,2001WL1502841at*1.

TheUnitedStatesDistrictCourtinSherbrookereliedsubstantiallyontheTenthCircuitCourtofAppealsdecisioninAdarandConstructors,Inc.v.Slater,228F.3d1147(10thCir.2000),inholdingthattheFederalDBEProgramisconstitutional.Thedistrictcourtaddressedtheissueof“randominclusion”ofvariousgroupsasbeingwithinthePrograminconnectionwithwhethertheFederalDBEProgramis“narrowlytailored.”ThecourtheldthatCongresscannotenactanationalprogramtoremedydiscriminationwithoutrecognizingclassesofpeoplewhosehistoryhasshownthemtobesubjecttodiscriminationandallowingstatestoincludethosepeopleinitsDBEProgram.

ThecourtheldthattheFederalDBEProgramattemptstoavoidthe“potentiallyinvidiouseffectsofprovidingblanketbenefitstominorities”inpart,

byrestrictingastate’sDBEpreferencetoidentifiedgroupsactuallyappearinginthetargetstate. Inpractice, thismeansMinnesotacanonlycertifymembersofoneoranothergroupaspotentialDBEsiftheyarepresentinthelocalmarket.Thisminimizesthechancethatindividuals—simplyonthebasisoftheirbirth—willbenefit fromMinnesota’sDBEprogram. Ifagroup isnotpresent in thelocalmarket, or if they are found in such small numbers that they cannot beexpected to be able to participate in the kinds of construction work TEA‐21covers,thatgroupwillnotbeincludedintheaccountingusedtosetMinnesota’soverallDBEcontractinggoal.


Sherbrooke,2001WL1502841at*10(D.Minn.).

Thecourtrejectedplaintiff’sclaimthattheMinnesotaDOTmustindependentlydemonstratehowitsprogramcomportswithCroson’sstrictscrutinystandard.Thecourtheldthatthe“Constitutioncallsoutfordifferentrequirementswhenastateimplementsafederalaffirmativeactionprogram,asopposedtothoseoccasionswhenastateorlocalityinitiatestheProgram.”Id.at*11(emphasisadded).ThecourtinafootnoteruledthatTEA‐21,beingafederalprogram,“relievesthestateofanyburdentoindependentlycarrythestrictscrutinyburden.”Id.at*11n.3.ThecourtheldstatesthatestablishDBEprogramsunderTEA‐21and49CFRPart26areimplementingaCongressionally‐requiredprogramandnotestablishingalocalone.Assuch,thecourtconcludedthatthestateneednotindependentlyproveitsDBEprogrammeetsthestrictscrutinystandard.Id.

21. Gross Seed Co. v. Nebraska Department of Roads, Civil Action File No. 4:00CV3073 (D. Neb. May 6, 2002), affirmed 345 F.3d 964 (8th Cir. 2003)

TheUnitedStatesDistrictCourtfortheDistrictofNebraskaheldinGrossSeedCo.v.Nebraska(withtheUSDOTandFHWAasInterveners),thattheFederalDBEProgram(codifiedat49CFRPart26)isconstitutional.ThecourtalsoheldthattheNebraskaDepartmentofRoads(“NebraskaDOR”)DBEProgramadoptedandimplementedsolelytocomplywiththeFederalDBEProgramis“approved”bythecourtbecausethecourtfoundthat49CFRPart26andTEA‐21wereconstitutional.

Thecourtconcluded,similartothecourtinSherbrookeTurf,thattheStateofNebraskadidnotneedtoindependentlyestablishthatitsprogrammetthestrictscrutinyrequirementbecausetheFederalDBEProgramsatisfiedthatrequirement,andwasthereforeconstitutional.ThecourtdidnotengageinathoroughanalysisorevaluationoftheNebraskaDORProgramoritsimplementationoftheFederalDBEProgram.ThecourtpointsoutthattheNebraskaDORProgramisadoptedincompliancewiththeFederalDBEProgram,andthattheUSDOTapprovedtheuseofNebraskaDOR’sproposedDBEgoalsforfiscalyear2001,pendingcompletionofUSDOT’sreviewofthosegoals.Significantly,however,thecourtinitsfindingsdoesnotethattheNebraskaDORestablisheditsoverallgoalsforfiscalyear2001baseduponanindependentavailability/disparitystudy.

ThecourtupheldtheconstitutionalityoftheFederalDBEProgrambyfindingtheevidencepresentedbythefederalgovernmentandthehistoryofthefederallegislationaresufficienttodemonstratethatpastdiscriminationdoesexist“intheconstructionindustry”andthatracialandgenderdiscrimination“withintheconstructionindustry”issufficienttodemonstrateacompellinginterestinindividualareas,suchashighwayconstruction.ThecourtheldthattheFederalDBEProgramwassufficiently“narrowlytailored”tosatisfyastrictscrutinyanalysisbasedagainontheevidencesubmittedbythefederalgovernmentastotheFederalDBEProgram.


G. Recent Decisions and Authorities Involving Federal Procurement That May Impact DBE and MBE/WBE Programs

1. Rothe Development, Inc. v. U.S. Dept. of Defense, U.S. Small Business Administration, et al., 836 F3d 57, 2016 WL 4719049 (D.C. Cir. 2016), cert. denied, 2017 WL 1375832 (2017), affirming on other grounds, Rothe Development, Inc. v. U.S. Dept. of Defense, U.S. Small Business Administration, et al., 107 F.Supp. 3d 183 (D.D.C. 2015)

Inasplitdecision,themajorityofathree‐judgepaneloftheUnitedStatesCourtofAppealsfortheDistrictofColumbiaCircuitupheldtheconstitutionalityofsection8(a)oftheSmallBusinessAct,whichwaschallengedbyPlaintiff‐AppellantRotheDevelopmentInc.(Rothe).RotheallegedthatthestatutorybasisoftheUnitedStatesSmallBusinessAdministration’s8(a)businessdevelopmentprogram(codifiedat15U.S.C.§637),violateditsrighttoequalprotectionundertheDueProcessClauseoftheFifthAmendment.836F.3d57,2016WL4719049,at*1.Rothecontendsthestatutecontainsaracialclassificationthatpresumescertainracialminoritiesareeligiblefortheprogram.Id.Thecourtheld,however,thatCongressconsideredandrejectedstatutorylanguagethatincludedaracialpresumption.Id.Congress,accordingtothecourt,choseinsteadtohingeparticipationintheprogramonthefaciallyrace‐neutralcriterionofsocialdisadvantage,whichitdefinedashavingsufferedracial,ethnic,orculturalbias.Id.

ThechallengedstatuteauthorizestheSmallBusinessAdministration(SBA)toenterintocontractswithotherfederalagencies,whichtheSBAthensubcontractstoeligiblesmallbusinessesthatcompeteforthesubcontractsinashelteredmarket.Id*1.Businessesownedby“sociallyandeconomicallydisadvantaged”individualsareeligibletoparticipateinthe8(a)program.Id.Thestatutedefinessociallydisadvantagedindividualsaspersons“whohavebeensubjectedtoracialorethnicprejudiceorculturalbiasbecauseoftheiridentityasamemberofagroupwithoutregardtotheirindividualqualities.”Id.,quoting15U.S.C.§627(a)(5).

The Section 8(a) statute is race‐neutral.ThecourtrejectedRothe’sallegations,findinginsteadthattheprovisionsoftheSmallBusinessActthatRothechallengesdonotontheirfaceclassifyindividualsbyrace.Id*1.ThecourtstatedthatSection8(a)usesfaciallyrace‐neutraltermsofeligibilitytoidentifyindividualvictimsofdiscrimination,prejudice,orbias,withoutpresumingthatmembersofcertainracial,ethnic,orculturalgroupsqualifyassuch.Id.Thecourtsaidthatmakesthisstatutedifferentfromotherstatutes,whichexpresslylimitparticipationincontractingprogramstoracialorethnicminoritiesorspecificallydirectthirdpartiestopresumethatmembersofcertainracialorethnicgroups,orminoritiesgenerally,areeligible.Id.

Incontrasttothestatute,thecourtfoundthattheSBA’sregulationimplementingthe8(a)programdoescontainaracialclassificationintheformofapresumptionthatanindividualwhoisamemberofoneoffivedesignatedracialgroupsissociallydisadvantaged.Id*2,citing13C.F.R.§124.103(b).Thiscase,thecourtheld,doesnotpermitittodecidewhethertherace‐basedregulatorypresumptionisconstitutionallysound,becauseRothehaselectedtochallengeonlythestatute.Id.Rothe’sdefinitionoftheracialclassificationitattacksinthiscase,accordingtothecourt,doesnotincludetheSBA’sregulation.Id.


Becausethecourtheldthestatute,unliketheregulation,lacksaracialclassification,andbecauseRothehasnotallegedthatthestatuteisotherwisesubjecttostrictscrutiny,thecourtappliedrational‐basisreview.Idat*2.Thecourtstatedthestatute“readilysurvives”therationalbasisscrutinystandards.Id*2.Thecourt,therefore,affirmedthejudgmentofthedistrictcourtgrantingsummaryjudgmenttotheSBAandtheDepartmentofDefense,albeitondifferentgrounds.Id.

Thus,thecourtheldthecentralquestiononappealiswhetherSection8(a)warrantsstrictjudicialscrutiny,whichthecourtnotedthepartiesandthedistrictcourtbelievethatitdid.Id*2.Rothe,thecourtsaid,advancedonlythetheorythatthestatute,onitsface,Section8(a)oftheSmallBusinessAct,containsaracialclassification.Id*2.

Thecourtfoundthatthedefinitionoftheterm“sociallydisadvantaged”doesnotcontainaracialclassificationbecauseitdoesnotdistributeburdensorbenefitsonthebasisofindividualclassifications,itisrace‐neutralonitsface,anditspeaksofindividualvictimsofdiscrimination.Id*3.Onitsface,thecourtstatedthetermenvisionsaindividual‐basedapproachthatfocusesonexperienceratherthanonagroupcharacteristic,andthestatuterecognizesthatnotallmembersofaminoritygrouphavenecessarilybeensubjectedtoracialorethnicprejudiceorculturalbias.Id.Thecourtsaidthatthestatutedefinitionoftheterm“socialdisadvantaged”doesnotprovideforpreferentialtreatmentbasedonanapplicant’srace,butratheronanindividualapplicant’sexperienceofdiscrimination.Id*3.

Thecourtdistinguishedcasesinvolvingsituationsinwhichdisadvantagednon‐minorityapplicantscouldnotparticipate,butthecourtsaidtheplaintermsofthestatutepermitindividualsinanyracetobeconsidered“sociallydisadvantaged.”Id*3.Thecourtnoteditskeypointisthatthestatuteiseasilyreadnottorequireanygroup‐basedracialorethnicclassification,statingthestatutedefinessociallydisadvantagedindividualsasthoseindividualswhohavebeensubjectedtoracialorethnicprejudiceorculturalbias,notthoseindividualswhoaremembersorgroupsthathavebeensubjectedtoprejudiceorbias.Id.

ThecourtpointedoutthattheSBA’simplementationofthestatute’sdefinitionmaybebasedonaracialclassificationiftheregulationscarryitoutinamannerthatgivespreferencebasedonraceinsteadofindividualexperience.Id*4.But,thecourtfound,RothehasexpresslydisclaimedanychallengetotheSBA’simplementationofthestatute,andasaresult,theonlyquestionbeforethemiswhetherthestatuteitselfclassifiesbasedonrace,whichthecourtheldmakesnosuchclassification.Id*4.Thecourtdeterminedthestatutorylanguagedoesnotcreateapresumptionthatamemberofaparticularracialorethnicgroupisnecessarilysociallydisadvantaged,northatawhitepersonisnot.Id*5.

Thedefinitionofsocialdisadvantage,accordingtothecourt,doesnotamounttoaracialclassification,foritultimatelyturnsonabusinessowner’sexperienceofdiscrimination.Id*6.Thestatutedoesnotinstructtheagencytolimitthefieldtocertainracialgroups,ortoracialgroupsingeneral,nordoesittelltheagencytopresumethatanyonewhoisamemberofanyparticulargroupis,bythatmembershipalone,sociallydisadvantaged.Id.

ThecourtnotedthattheSupremeCourtandthiscourt’sdiscussionsofthe8(a)programhaveidentifiedtheregulations,notthestatute,asthesourceofitsracialpresumption.Id*8.Thecourt


distinguishedSection8(d)oftheSmallBusinessActascontainingarace‐basedpresumption,butfoundinthe8(a)programtheSupremeCourthasexplainedthattheagency(notCongress)presumesthatcertainracialgroupsaresociallydisadvantaged.Id.at*7.

The SBA statute does not trigger strict scrutiny.Thecourtheldthatthestatutedoesnottriggerstrictscrutinybecauseitisrace‐neutral.Id*10.ThecourtpointedoutthatRothedoesnotarguethatthestatutecouldbesubjectedtostrictscrutiny,evenifitisfaciallyneutral,onthebasisthatCongressenacteditwithadiscriminatorypurpose.Id*9.IntheabsenceofsuchaclaimbyRothe,thecourtdetermineditwouldnotsubjectafaciallyrace‐neutralstatutetostrictscrutiny.Id.Theforeseeabilityofraciallydisparateimpact,withoutinvidiouspurpose,thecourtstated,doesnottriggerstrictconstitutionalscrutiny.Id.

Becausethestatutedoesnottriggerstrictscrutiny,thecourtfoundthatitneednotanddoesnotdecidewhetherthedistrictcourtcorrectlyconcludedthatthestatuteisnarrowlytailoredtomeetacompellinginterest.Id*10.Instead,thecourtconsideredwhetherthestatuteissupportedbyarationalbasis.Id.Thecourtheldthatitplainlyissupportedbyarationalbasis,becauseitbearsarationalrelationtosomelegitimateend.Id*10.

Thestatute,thecourtstated,aimstoremedytheeffectsofprejudiceandbiasthatimpedebusinessformationanddevelopmentandsuppressfaircompetitionforgovernmentcontracts.Id.Counteractingdiscrimination,thecourtfound,isalegitimateinterest,andincertaincircumstancesqualifiesascompelling.Id*11.Thestatutoryscheme,thecourtsaid,isrationallyrelatedtothatend.Id.

Thecourtdeclinedtoreviewthedistrictcourt’sadmissibilitydeterminationsastotheexpertwitnessesbecauseitstatedthatitwouldaffirmthedistrictcourt’sgrantofsummaryjudgmentevenifthedistrictcourtabuseditsdiscretioninmakingthosedeterminations.Id*11.Thecourtnotedtheexpertwitnesstestimonyisnotnecessaryto,norinconflictwith,itsconclusionthatSection8(a)issubjecttoandsurvivesrational‐basisreview.Id.

Other issues.Thecourtdeclinedtoreviewthedistrictcourt’sadmissibilitydeterminationsastotheexpertwitnessesbecauseitstatedthatitwouldaffirmthedistrictcourt’sgrantofsummaryjudgmentevenifthedistrictcourtabuseditsdiscretioninmakingthosedeterminations.Id*11.Thecourtnotedtheexpertwitnesstestimonyisnotnecessaryto,norinconflictwith,itsconclusionthatSection8(a)issubjecttoandsurvivesrational‐basisreview.Id.

Inaddition,thecourtrejectedRothe’scontentionthatSection8(a)isanunconstitutionaldelegationoflegislativepower.Id*11.BecausetheargumentispremisedontheideathatCongresscreatedaracialclassification,whichthecourthashelditdidnot,Rothe’salternativeargumentondelegationalsofails.Id.

Dissenting Opinion.Therewasadissentingopinionbyoneofthethreemembersofthecourt.ThedissentingjudgestatedinherviewthattheprovisionsoftheSmallBusinessActatissuearenotfaciallyrace‐neutral,butcontainaracialclassification.Id*12.ThedissentingjudgesaidthattheactprovidesmembersofcertainracialgroupsanadvantageinqualifyingforSection8(a)’scontractpreferencebyvirtueoftheirrace.Id*13.


ThedissentingopinionpointedoutthatallthepartiesandthedistrictcourtfoundthatstrictscrutinyshouldbeappliedindeterminingwhethertheSection8(a)programviolatesRothe’srighttoequalprotectionofthelaws.Id*16.Intheviewofthedissentingopinionthestatutorylanguageincludesaracialclassification,andtherefore,thestatuteshouldbesubjecttostrictscrutiny.Id*22.

2. Rothe Development Corp. v. U.S. Dept. of Defense, et al., 545 F.3d 1023 (Fed. Cir. 2008)

AlthoughthiscasedoesnotinvolvetheFederalDBEProgram(49CFRPart26),itisananalogouscasethatmayimpactthelegalanalysisandlawrelatedtothevalidityofprogramsimplementedbyrecipientsoffederalfunds,includingtheFederalDBEProgram.Additionally,itunderscorestherequirementthatrace‐,ethnic‐andgender‐basedprogramsofanynaturemustbesupportedbysubstantialevidence.InRothe,anunsuccessfulbidderonafederaldefensecontractbroughtsuitallegingthattheapplicationofanevaluationpreference,pursuanttoafederalstatute,toasmalldisadvantagedbidder(SDB)towhomacontractwasawarded,violatedtheEqualProtectionclauseoftheU.S.Constitution.ThefederalstatutechallengedisSection1207oftheNationalDefenseAuthorizationActof1987andasreauthorizedin2003.Thestatuteprovidesagoalthat5percentofthetotaldollaramountofdefensecontractsforeachfiscalyearwouldbeawardedtosmallbusinessesownedandcontrolledbysociallyandeconomicallydisadvantagesindividuals.10U.S.C.§2323.CongressauthorizedtheDepartmentofDefense(“DOD”)toadjustbidssubmittedbynon‐sociallyandeconomicallydisadvantagedfirmsupwardsby10percent(the“PriceEvaluationAdjustmentProgram”or“PEA”).

Thedistrictcourtheldthefederalstatute,asreauthorizedin2003,wasconstitutionalonitsface.Thecourtheldthe5percentgoalandthePEAprogramasreauthorizedin1992andappliedin1998wasunconstitutional.ThebasisofthedecisionwasthatCongressconsideredstatisticalevidenceofdiscriminationthatestablishedacompellinggovernmentalinterestinthereauthorizationofthestatuteandPEAprogramin2003.CongresshadnotdocumentedorconsideredsubstantialstatisticalevidencethattheDODdiscriminatedagainstminoritysmallbusinesseswhenitenactedthestatutein1992andreauthorizeditin1998.Theplaintiffappealedthedecision.

TheFederalCircuitfoundthatthe“analysisofthefacialconstitutionalityofanactislimitedtoevidencebeforeCongresspriortothedateofreauthorization.”413F.3d1327(Fed.Cir.2005)(affirminginpart,vacatinginpart,andremanding324F.Supp.2d840(W.D.Tex.2004).ThecourtlimiteditsreviewtowhetherCongresshadsufficientevidencein1992toreauthorizetheprovisionsin1207.Thecourtheldthatforevidencetoberelevanttoastrictscrutinyanalysis,“theevidencemustbeproventohavebeenbeforeCongresspriortoenactmentoftheracialclassification.”TheFederalCircuitheldthatthedistrictcourterredinrelyingonthestatisticalstudieswithoutfirstdeterminingwhetherthestudieswerebeforeCongresswhenitreauthorizedsection1207.TheFederalCircuitremandedthecaseanddirectedthedistrictcourttoconsiderwhetherthedatapresentedwassooutdatedthatitdidnotprovidetherequisitestrongbasisinevidencetosupportthereauthorizationofsection1207.

OnAugust10,2007theFederalDistrictCourtfortheWesternDistrictofTexasinRotheDevelopmentCorp.v.U.S.Dept.ofDefense,499F.Supp.2d775(W.D.Tex.Aug10,2007)issuedits


OrderonremandfromtheFederalCircuitCourtofAppealsdecisioninRothe,413F.3d1327(FedCir.2005).Thedistrictcourtupheldtheconstitutionalityofthe2006ReauthorizationofSection1207oftheNationalDefenseAuthorizationActof1987(10USC§2323),whichpermitstheU.S.DepartmentofDefensetoprovidepreferencesinselectingbidssubmittedbysmallbusinessesownedbysociallyandeconomicallydisadvantagedindividuals(“SDBs”).Thedistrictcourtfoundthe2006Reauthorizationofthe1207Programsatisfiedstrictscrutiny,holdingthatCongresshadacompellinginterestwhenitreauthorizedthe1207Programin2006,thattherewassufficientstatisticalandanecdotalevidencebeforeCongresstoestablishacompellinginterest,andthatthereauthorizationin2006wasnarrowlytailored.

Thedistrictcourt,amongitsmanyfindings,foundcertainevidencebeforeCongresswas“stale,”thattheplaintiff(Rothe)failedtorebutotherevidencewhichwasnotstale,andthatthedecisionsbytheEighth,NinthandTenthCircuitsinthedecisionsinConcreteWorks,AdarandConstructors,SherbrookeTurfandWesternStatesPaving(discussedaboveandbelow)wererelevanttotheevaluationofthefacialconstitutionalityofthe2006Reauthorization.

2007 Order of the District Court (499 F.Supp.2d 775). IntheSection1207Act,Congresssetagoalthat5percentofthetotaldollaramountofdefensecontractsforeachfiscalyearwouldbeawardedtosmallbusinessesownedandcontrolledbysociallyandeconomicallydisadvantagedindividuals.Inordertoachievethatgoal,CongressauthorizedtheDODtoadjustbidssubmittedbynon‐sociallyandeconomicallydisadvantagedfirmsupto10percent.10U.S.C.§2323(e)(3).Rothe,499F.Supp.2d.at782.PlaintiffRothedidnotqualifyasanSDBbecauseitwasownedbyaCaucasianfemale.AlthoughRothewastechnicallythelowestbidderonaDODcontract,itsbidwasadjustedupwardby10percent,andathirdparty,whoqualifiedasaSDB,becamethe“lowest”bidderandwasawardedthecontract.Id.Rotheclaimsthatthe1207ProgramisfaciallyunconstitutionalbecauseittakesraceintoconsiderationinviolationoftheEqualProtectioncomponentoftheDueProcessClauseoftheFifthAmendment.Id.at782‐83.Thedistrictcourt’sdecisiononlyreviewedthefacialconstitutionalityofthe2006Reauthorizationofthe2007Program.

ThedistrictcourtinitiallyrejectedsixlegalargumentsmadebyRotheregardingstrictscrutinyreviewbasedontherejectionofthesameargumentsbytheEighth,Ninth,andTenthCircuitCourtsofAppealintheSherbrookeTurf,WesternStatesPaving,ConcreteWorks,AdarandVIIcases,andtheFederalCircuitCourtofAppealinRothe.Rotheat825‐833.

ThedistrictcourtdiscussedandcitedthedecisionsinAdarandVII(2000),SherbrookeTurf(2003),andWesternStatesPaving(2005),asholdingthatCongresshadacompellinginterestineradicatingtheeconomicrootsofracialdiscriminationinhighwaytransportationprogramsfundedbyfederalmonies,andconcludingthattheevidencecitedbythegovernment,particularlythatcontainedinTheCompellingInterest(a.k.a.theAppendix),morethansatisfiedthegovernment’sburdenofproductionregardingthecompellinginterestforarace‐consciousremedy.Rotheat827.BecausetheUrbanInstituteReport,whichpresenteditsanalysisof39stateandlocaldisparitystudies,wascross‐referencedintheAppendix,thedistrictcourtfoundthecourtsinAdarandVII,SherbrookeTurf,andWesternStatesPaving,alsoreliedonitinsupportoftheircompellinginterestholding.Id.at827.


ThedistrictcourtalsofoundthattheTenthCircuitdecisioninConcreteWorksIV,321F.3d950(10thCir.2003),establishedlegalprinciplesthatarerelevanttothecourt’sstrictscrutinyanalysis.First,Rothe’sclaimsfordeclaratoryjudgmentontheracialconstitutionalityoftheearlier1999and2002Reauthorizationsweremoot.Second,thegovernmentcanmeetitsburdenofproductionwithoutconclusivelyprovingtheexistenceofpastorpresentracialdiscrimination.Third,thegovernmentmayestablishitsowncompellinginterestbypresentingevidenceofitsowndirectparticipationinracialdiscriminationoritspassiveparticipationinprivatediscrimination.Fourth,oncethegovernmentmeetsitsburdenofproduction,Rothemustintroduce“credible,particularized”evidencetorebutthegovernment’sinitialshowingoftheexistenceofacompellinginterest.Fifth,Rothemayrebutthegovernment’sstatisticalevidencebygivingarace‐neutralexplanationforthestatisticaldisparities,showingthatthestatisticsareflawed,demonstratingthatthedisparitiesshownarenotsignificantoractionable,orpresentingcontrastingstatisticaldata.Sixth,thegovernmentmayrelyondisparitystudiestosupportitscompellinginterest,andthosestudiesmaycontrolfortheeffectthatpre‐existingaffirmativeactionprogramshaveonthestatisticalanalysis.Id.at829‐32.

BasedonConcreteWorksIV,thedistrictcourtdidnotrequirethegovernmenttoconclusivelyprovethatthereispervasivediscriminationintherelevantmarket,thateachpresumptivelydisadvantagedgroupsufferedequallyfromdiscrimination,orthatprivatefirmsintentionallyandpurposefullydiscriminatedagainstminorities.Thecourtfoundthattheinferenceofdiscriminatoryexclusioncanarisefromstatisticaldisparities.Id.at830‐31.

ThedistrictcourtheldthatCongresshadacompellinginterestinthe2006Reauthorizationofthe1207Program,whichwassupportedbyastrongbasisintheevidence.ThecourtreliedinsignificantpartuponsixstateandlocaldisparitystudiesthatwerebeforeCongresspriortothe2006Reauthorizationofthe1207Program.ThecourtbasedthisevidenceonitsfindingthatSenatorKennedyhadreferencedthesedisparitystudies,discussedandsummarizedfindingsofthedisparitystudies,andRepresentativeCynthiaMcKinneyalsocitedthesamesixdisparitystudiesthatSenatorKennedyreferenced.Thecourtstatedthatbasedonthecontentofthefloordebate,itfoundthatthesestudieswereputbeforeCongresspriortothedateoftheReauthorizationofSection1207.Id.at838.

Thedistrictcourtfoundthatthesesixstateandlocaldisparitystudiesanalyzedevidenceofdiscriminationfromadiversecross‐sectionofjurisdictionsacrosstheUnitedStates,and“theyconstituteprimafacieevidenceofanation‐widepatternorpracticeofdiscriminationinpublicandprivatecontracting.”Id.at838‐39.Thecourtfoundthatthedatausedinthesesixdisparitystudiesisnot“stale”forpurposesofstrictscrutinyreview.Id.at839.ThecourtdisagreedwithRothe’sargumentthatallthedatawerestale(datainthestudiesfrom1997through2002),“becausethisdatawasthemostcurrentdataavailableatthetimethatthesestudieswereperformed.”Id.Thecourtfoundthatthegovernmentalentitiesshouldbeabletorelyonthemostrecentlyavailabledatasolongasthosedataarereasonablyup‐to‐date.Id.Thecourtdeclinedtoadopta“bright‐linerulefordeterminingstaleness.”Id.

ThecourtreferredtothereliancebytheNinthCircuitandtheEighthCircuitontheAppendixtoaffirmtheconstitutionalityoftheUSDOTMBE[nowDBE]Program,andrejectedfiveyearsasabright‐lineruleforconsideringwhetherdataare“stale.”Id.atn.86.Thecourtalsostatedthatit“acceptsthereasoningoftheAppendix,whichthecourtfoundstatedthatforthemostpart“the


federalgovernmentdoesbusinessinthesamecontractingmarketsasstateandlocalgovernments.Therefore,theevidenceinstateandlocalstudiesoftheimpactofdiscriminatorybarrierstominorityopportunityincontractingmarketsthroughoutthecountryisrelevanttothequestionofwhetherthefederalgovernmenthasacompellinginteresttotakeremedialactioninitsownprocurementactivities.”Id.at839,quoting61Fed.Reg.26042‐01,26061(1996).

ThedistrictcourtalsodiscussedadditionalevidencebeforeCongressthatitfoundinCongressionalCommitteeReportsandHearingRecords.Id.at865‐71.ThecourtnotedSBAReportsthatwerebeforeCongresspriortothe2006Reauthorization.Id.at871.

ThedistrictcourtfoundthatthedatacontainedintheAppendix,theBenchmarkStudy,andtheUrbanInstituteReportwere“stale,”andthecourtdidnotconsiderthosereportsasevidenceofacompellinginterestforthe2006Reauthorization.Id.at872‐75.ThecourtstatedthattheEighth,NinthandTenthCircuitsreliedontheAppendixtoupholdtheconstitutionalityoftheFederalDBEProgram,citingtothedecisionsinSherbrookeTurf,AdarandVII,andWesternStatesPaving.Id.at872.ThecourtpointedoutthatalthoughitdoesnotrelyonthedatacontainedintheAppendixtosupportthe2006Reauthorization,thefacttheEighth,Ninth,andTenthCircuitsreliedonthesedatatoupholdtheconstitutionalityoftheFederalDBEProgramasrecentlyas2005,convincedthecourtthatabright‐linestalenessruleisinappropriate.Id.at874.

AlthoughthecourtfoundthatthedatacontainedintheAppendix,theUrbanInstituteReport,andtheBenchmarkStudywerestaleforpurposesofstrictscrutinyreviewregardingthe2006Reauthorization,thecourtfoundthatRotheintroducednoconcrete,particularizedevidencechallengingthereliabilityofthemethodologyorthedatacontainedinthesixstateandlocaldisparitystudies,andotherevidencebeforeCongress.ThecourtfoundthatRothefailedtorebutthedata,methodologyoranecdotalevidencewith“concrete,particularized”evidencetothecontrary.Id.at875.Thedistrictcourtheldthatbasedonthestudies,thegovernmenthadsatisfieditsburdenofproducingevidenceofdiscriminationagainstAfricanAmericans,AsianAmericans,HispanicAmericans,andNativeAmericansintherelevantindustrysectors.Id.at876.

ThedistrictcourtfoundthatCongresshadacompellinginterestinreauthorizingthe1207Programin2006,whichwassupportedbyastrongbasisofevidenceforremedialaction.Id.at877.Thecourtheldthattheevidenceconstitutedprimafacieproofofanationwidepatternorpracticeofdiscriminationinbothpublicandprivatecontracting,thatCongresshadsufficientevidenceofdiscriminationthroughouttheUnitedStatestojustifyanationwideprogram,andtheevidenceofdiscriminationwassufficientlypervasiveacrossraciallinestojustifygrantingapreferencetoallfivepurportedlydisadvantagedracialgroups.Id.

Thedistrictcourtalsofoundthatthe2006Reauthorizationofthe1207Programwasnarrowlytailoredanddesignedtocorrectpresentdiscriminationandtocounterthelingeringeffectsofpastdiscrimination.Thecourtheldthatthegovernment’sinvolvementinbothpresentdiscriminationandthelingeringeffectsofpastdiscriminationwassopervasivethattheDODandtheDepartmentofAirForcehadbecomepassiveparticipantsinperpetuatingit.Id.ThecourtstateditwaslawofthecaseandcouldnotbedisturbedonremandthattheFederalCircuit


inRotheIIIhadheldthatthe1207Programwasflexibleinapplication,limitedindurationanditdidnotundulyimpactontherightsofthirdparties.Id.,quotingRotheIII,262F.3dat1331.

Thedistrictcourtthusconductedanarrowlytailoredanalysisthatreviewedthreefactors:

1. Theefficacyofrace‐neutralalternatives;

2. Evidencedetailingtherelationshipbetweenthestatednumericalgoalof5percentandtherelevantmarket;and

3. Over‐andunder‐inclusiveness.

Id.ThecourtfoundthatCongressexaminedtheefficacyofrace‐neutralalternativespriortotheenactmentofthe1207Programin1986andthattheseprogramswereunsuccessfulinremedyingtheeffectsofpastandpresentdiscriminationinfederalprocurement.Id.ThecourtconcludedthatCongresshadattemptedtoaddresstheissuesthroughrace‐neutralmeasures,discussedthosemeasures,andfoundthatCongress’adoptionofrace‐consciousprovisionswerejustifiedbytheineffectivenessofsuchrace‐neutralmeasuresinhelpingminority‐ownedfirmsovercomebarriers.Id.Thecourtfoundthatthegovernmentseriouslyconsideredandenactedrace‐neutralalternatives,buttheserace‐neutralprogramsdidnotremedythewidespreaddiscriminationthataffectedthefederalprocurementsector,andthatCongresswasnotrequiredtoimplementorexhausteveryconceivablerace‐neutralalternative.Id.at880.Rather,thecourtfoundthatnarrowtailoringrequiresonly“serious,goodfaithconsiderationofworkablerace‐neutralalternatives.”Id.

Thedistrictcourtalsofoundthatthe5percentgoalwasrelatedtotheminoritybusinessavailabilityidentifiedinthesixstateandlocaldisparitystudies.Id.at881.Thecourtconcludedthatthe5percentgoalwasaspirational,notmandatory.Id.at882.Thecourtthenexaminedandfoundthattheregulationsimplementingthe1207Programwerenotover‐inclusiveforseveralreasons.

November 4, 2008 decision by the Federal Circuit Court of Appeals. OnNovember4,2008,theFederalCircuitCourtofAppealsreversedthejudgmentofthedistrictcourtinpart,andremandedwithinstructionstoenterajudgment(1)denyingRotheanyreliefregardingthefacialconstitutionalityofSection1207asenactedin1999or2002,(2)declaringthatSection1207asenactedin2006(10U.S.C.§2323)isfaciallyunconstitutional,and(3)enjoiningapplicationofSection1207(10U.S.C.§2323).

TheFederalCircuitCourtofAppealsheldthatSection1207,onitsface,asreenactedin2006,violatedtheEqualProtectioncomponentoftheFifthAmendmentrighttodueprocess.ThecourtfoundthatbecausethestatuteauthorizedtheDODtoaffordpreferentialtreatmentonthebasisofrace,thecourtappliedstrictscrutiny,andbecauseCongressdidnothavea“strongbasisinevidence”uponwhichtoconcludethattheDODwasapassiveparticipantinpervasive,nationwideracialdiscrimination—atleastnotontheevidenceproducedbytheDODandreliedonbythedistrictcourtinthiscase—Section1207failedtomeetthisstrictscrutinytest.545F.3dat1050.


Strict scrutiny framework. TheFederalCircuitCourtofAppealsrecognizedthattheSupremeCourthasheldagovernmentmayhaveacompellinginterestinremedyingtheeffectsofpastorpresentracialdiscrimination.545F.3dat1036.ThecourtcitedthedecisioninCroson,488U.S.at492,thatitis“beyonddisputethatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxcontributionsofallcitizens,donotservetofinancetheevilofprivateprejudice.”545F.3d.at1036,quotingCroson,488U.S.at492.

Thecourtheldthatbeforeresortingtorace‐consciousmeasures,thegovernmentmustidentifythediscriminationtoberemedied,publicorprivate,withsomespecificity,andmusthaveastrongbasisofevidenceuponwhichtoconcludethatremedialactionisnecessary.545F.3dat1036,quotingCroson,488U.S.at500,504.Althoughthepartychallengingthestatutebearstheultimateburdenofpersuadingthecourtthatitisunconstitutional,theFederalCircuitstatedthatthegovernmentfirstbearsaburdentoproducestrongevidencesupportingthelegislature’sdecisiontoemployrace‐consciousaction.545F.3dat1036.

Evenwherethereisacompellinginterestsupportedbystrongbasisinevidence,thecourtheldthestatutemustbenarrowlytailoredtofurtherthatinterest.Id.Thecourtnotedthatanarrowtailoringanalysiscommonlyinvolvessixfactors:(1)thenecessityofrelief;(2)theefficacyofalternative,race‐neutralremedies;(3)theflexibilityofrelief,includingtheavailabilityofwaiverprovisions;(4)therelationshipwiththestatednumericalgoaltotherelevantlabormarket;(5)theimpactofreliefontherightsofthirdparties;and(6)theoverinclusivenessorunderinclusivenessoftheracialclassification.Id.

Compelling interest – strong basis in evidence. TheFederalCircuitpointedoutthatthestatisticalandanecdotalevidencereliefuponbythedistrictcourtinitsrulingbelowincludedsixdisparitystudiesofstateorlocalcontracting.TheFederalCircuitalsopointedoutthatthedistrictcourtfoundthatthedatacontainedintheAppendix,theUrbanInstituteReport,andtheBenchmarkStudywerestaleforpurposesofstrictscrutinyreviewofthe2006Authorization,andtherefore,thedistrictcourtconcludedthatitwouldnotrelyonthosethreereportsasevidenceofacompellinginterestforthe2006reauthorizationofthe1207Program.545F.3d1023,citingtoRotheVI,499F.Supp.2dat875.SincetheDODdidnotchallengethisfindingonappeal,theFederalCircuitstatedthatitwouldnotconsidertheAppendix,theUrbanInstituteReport,ortheDepartmentofCommerceBenchmarkStudy,andinsteaddeterminedwhethertheevidencereliedonbythedistrictcourtwassufficienttodemonstrateacompellinginterest.Id.

Six state and local disparity studies. TheFederalCircuitfoundthatdisparitystudiescanberelevanttothecompellinginterestanalysisbecause,asexplainedbytheSupremeCourtinCroson,“[w]herethereisasignificantstatisticaldisparitybetweenthenumberofqualifiedminoritycontractorswillingandabletoperformaparticularserviceandthenumberofsuchcontractorsactuallyengagedby[a]localityorthelocality’sprimecontractors,aninferenceofdiscriminatoryexclusioncouldarise.”545F.3dat1037‐1038,quotingCroson,488U.S.C.at509.TheFederalCircuitalsocitedtothedecisionbytheFifthCircuitCourtofAppealsinW.H.ScottConstr.Co.v.CityofJackson,199F.3d206(5thCir.1999)thatgivenCroson’semphasisonstatisticalevidence,othercourtsconsideringequalprotectionchallengestominority‐participationprogramshavelookedtodisparityindices,ortocomputationsofdisparitypercentages,indeterminingwhetherCroson’sevidentiaryburdenissatisfied.545F.3dat1038,quotingW.H.Scott,199F.3dat218.


TheFederalCircuitnotedthatadisparitystudyisastudyattemptingtomeasurethedifference‐ordisparity‐betweenthenumberofcontractsorcontractdollarsactuallyawardedminority‐ownedbusinessesinaparticularcontractmarket,ontheonehand,andthenumberofcontractsorcontractdollarsthatonewouldexpecttobeawardedtominority‐ownedbusinessesgiventheirpresenceinthatparticularcontractmarket,ontheotherhand.545F.3dat1037.

Staleness. TheFederalCircuitdeclinedtoadoptaperserulethatdatamorethanfiveyearsoldarestaleperse,whichrejectedtheargumentputforthbyRothe.545F.3dat1038.Thecourtpointedoutthatthedistrictcourtnotedothercircuitcourtshavereliedonstudiescontainingdatamorethanfiveyearsoldwhenconductingcompellinginterestanalyses,citingtoWesternStatesPavingv.WashingtonStateDepartmentofTransportation,407F.3d983,992(9thCir.2005)andSherbrookeTurf,Inc.v.MinnesotaDepartmentofTransportation,345F.3d964,970(8thCir.2003)(relyingontheAppendix,publishedin1996).

TheFederalCircuitagreedwiththedistrictcourtthatCongress“shouldbeabletorelyonthemostrecentlyavailabledatasolongasthatdataisreasonablyup‐to‐date.”545F.3dat1039.TheFederalCircuitaffirmedthedistrictcourt’sconclusionthatthedataanalyzedinthesixdisparitystudieswerenotstaleattherelevanttimebecausethedisparitystudiesanalyzeddatapertainedtocontractsawardedasrecentlyas2000oreven2003,andbecauseRothedidnotpointtomorerecent,availabledata.Id.

Before Congress. TheFederalCircuitfoundthatforevidencetoberelevantinthestrictscrutinyanalysis,it“mustbeproventohavebeenbeforeCongresspriortoenactmentoftheracialclassification.”545F.3dat1039,quotingRotheV,413F.3dat1338.TheFederalCircuithadissueswithdeterminingwhetherthesixdisparitystudieswereactuallybeforeCongressforseveralreasons,includingthattherewasnoindicationthatthesestudiesweredebatedorreviewedbymembersofCongressorbyanywitnesses,andbecauseCongressmadenofindingsconcerningthesestudies.545F.3dat1039‐1040.However,thecourtdetermineditneednotdecidewhetherthesixstudieswereputbeforeCongress,becausethecourtheldinanyeventthatthestudiesdidnotprovideasubstantiallyprobativeandbroad‐basedstatisticalfoundationnecessaryforthestrongbasisinevidencethatmustbethepredicatefornation‐wide,race‐consciousaction.Id.at1040.

ThecourtdidnotethatfindingsregardingdisparitystudiesaretobedistinguishedfromformalfindingsofdiscriminationbytheDOD“whichCongresswasemphaticallynotrequiredtomake.”Id.at1040,footnote11(emphasisinoriginal).TheFederalCircuitcitedtheDeanv.CityofShreveportcasethatthe“governmentneednotincriminateitselfwithaformalfindingofdiscriminationpriortousingarace‐consciousremedy.”545F.3dat1040,footnote11quotingDeanv.CityofShreveport,438F.3d448,445(5thCir.2006).

Methodology. TheFederalCircuitfoundthatthereweremethodologicaldefectsinthesixdisparitystudies.Thecourtfoundthattheobjectionstotheparametersusedtoselecttherelevantpoolofcontractorswasoneofthemajordefectsinthestudies.545F.3dat1040‐1041.

Thecourtstatedthatingeneral,“[a]disparityratiolessthan0.80”—i.e.,afindingthatagivenminoritygroupreceivedlessthan80percentoftheexpectedamount—“indicatesarelevantdegreeofdisparity,”and“mightsupportaninferenceofdiscrimination.”545F.3dat1041,


quotingthedistrictcourtopinioninRotheVI,499F.Supp.2dat842;andcitingEngineeringContractorsAssociationofSouthFlorida,Inc.v.MetropolitanDadeCounty,122F.3d895,914(11thCir.1997).Thecourtnotedthatthisdisparityratioattemptstocalculatearatiobetweentheexpectedcontractamountofagivenrace/gendergroupandtheactualcontractamountreceivedbythatgroup.545F.3dat1041.

Thecourtconsideredtheavailabilityanalysis,orbenchmarkanalysis,whichisutilizedtoensurethatonlythoseminority‐ownedcontractorswhoarequalified,willingandabletoperformtheprimecontractsatissueareconsideredwhenperformingthedenominatorofadisparityratio.545F.3dat1041.Thecourtcitedtoanexpertusedinthecasethata“crucialquestion”indisparitystudiesistodevelopacrediblemethodologytoestimatethisbenchmarkshareofcontractsminoritieswouldreceiveintheabsenceofdiscriminationandthetouchstoneformeasuringthebenchmarkistodeterminewhetherthefirmisready,willing,andabletodobusinesswiththegovernment.545F.3dat1041‐1042.

ThecourtconcludedthecontentionbyRothe,thatthesixstudiesmisappliedthis“touchstone”ofCrosonanderroneouslyincludedminority‐ownedfirmsthatweredeemedwillingorpotentiallywillingandable,withoutregardtowhetherthefirmwasqualified,wasnotadefectthatsubstantiallyundercuttheresultsoffourofthesixstudies,because“thebulkofthebusinessesconsideredinthesestudieswereidentifiedinwaysthatwouldtendtoestablishtheirqualifications,suchasbytheirpresenceoncitycontractrecordsandbidderlists.”545F.3dat1042.Thecourtnotedthatwithregardtothesestudiesavailableprimecontractorswereidentifiedviacertificationlists,willingnesssurveyofchambermembershipandtradeassociationmembershiplists,publicagencyandcertificationlists,utilizedprimecontractor,bidderlists,countyandothergovernmentrecordsandothertypelists.Id.

Thecourtstateditwaslessconfidentinthedeterminationofqualifiedminority‐ownedbusinessesbythetwootherstudiesbecausetheavailabilitymethodologyemployedinthosestudies,thecourtfound,appearedlesslikelytohaveweededoutunqualifiedbusinesses.Id.However,thecourtstateditwasmoretroubledbythefailureoffiveofthestudiestoaccountofficiallyforpotentialdifferencesinsize,or“relativecapacity,”ofthebusinessincludedinthosestudies.545F.3dat1042‐1043.

Thecourtnotedthatqualifiedfirmsmayhavesubstantiallydifferentcapacitiesandthusmightbeexpectedtobringinsubstantiallydifferentamountsofbusinessevenintheabsenceofdiscrimination.545F.3dat1043.TheFederalCircuitreferredtotheEleventhCircuitexplanationsimilarlythatbecausefirmsarebigger,biggerfirmshaveabiggerchancetowinbiggercontracts,andthusonewouldexpectthebigger(onaverage)non‐MWBEfirmstogetadisproportionatelyhigherpercentageoftotalconstructiondollarsawardedthanthesmallerMWBEfirms.545F.3dat1043quotingEngineeringContractorsAssociation,122F.3dat917.Thecourtpointedoutitsissueswiththestudiesaccountingfortherelativesizesofcontractsawardedtominority‐ownedbusinesses,butnotconsideringtherelativesizesofthebusinessesthemselves.Id.at1043.

Thecourtnotedthatthestudiesmeasuredtheavailabilityofminority‐ownedbusinessesbythepercentageoffirmsinthemarketownedbyminorities,insteadofbythepercentageoftotalmarketplacecapacitythosefirmscouldprovide.Id.Thecourtsaidthatforadisparityratioto


haveasignificantprobativevalue,thesametimeperiodandmetric(dollarsornumbers)shouldbeusedinmeasuringtheutilizationandavailabilityshares.545F.3dat1044,n.12.

Thecourtstatedthatwhiletheseparametersrelatingtothefirmsizemayhaveensuredthateachminority‐ownedbusinessinthestudiesmetacapacitythreshold,theseparametersdidnotaccountfortherelativecapacitiesofbusinessestobidformorethanonecontractatatime,whichfailurerenderedthedisparityratioscalculatedbythestudiessubstantiallylessprobativeontheirown,ofthelikelihoodofdiscrimination.Id.at1044.Thecourtpointedoutthatthestudiescouldhaveaccountedforfirmsizeevenwithoutchangingthedisparityratiomethodologiesbyemployingregressionanalysistodeterminewhethertherewasastatisticallysignificantcorrelationbetweenthesizeofafirmandtheshareofcontractdollarsawardedtoit.545F.3dat1044citingtoEngineeringContractorsAssociation,122F.3dat917.Thecourtnotedthatonlyoneofthestudiesconductedthistypeofregressionanalysis,whichincludedtheindependentvariablesofafirm‐ageofacompany,ownereducationlevel,numberofemployees,percentofrevenuefromtheprivatesectorandownerexperienceforindustrygroupings.Id.at1044‐1045.

Thecourtstated,to“beclear,”thatitdidnotholdthatthedefectsintheavailabilityandcapacityanalysesinthesesixdisparitystudiesrenderthestudieswhollyunreliableforanypurpose.Id.at1045.Thecourtsaidthatwherethecalculateddisparityratiosarelowenough,thecourtdoesnotforeclosethepossibilitythataninferenceofdiscriminationmightstillbepermissibleforsomeoftheminoritygroupsinsomeofthestudiedindustriesinsomeofthejurisdictions.Id.Thecourtrecognizedthataminority‐ownedfirm’scapacityandqualificationsmaythemselvesbeaffectedbydiscrimination.Id.Thecourtheld,however,thatthedefectsitnoteddetracteddramaticallyfromtheprobativevalueofthesixstudies,andinconjunctionwiththeirlimitedgeographiccoverage,renderedthestudiesinsufficienttoformthestatisticalcoreofthestrongbasisandevidencerequiredtoupholdthestatute.Id.

Geographic coverage. Thecourtpointedoutthatwhereasmunicipalitiesmustnecessarilyidentifydiscriminationintheimmediatelocalitytojustifyarace‐basedprogram,thecourtdoesnotthinkthatCongressneedstohavehadevidencebeforeitofdiscriminationinall50statesinordertojustifythe1207program.Id.Thecourtstressed,however,thatinholdingthesixstudiesinsufficientinthisparticularcase,“wedonotnecessarilydisapproveofdecisionsbyothercircuitcourtsthathaverelied,directlyorindirectly,onmunicipaldisparitystudiestoestablishafederalcompellinginterest.”545F.3dat1046.Thecourtstatedinparticular,theAppendixreliedonbytheNinthandTenthCircuitsinthecontextofcertainrace‐consciousmeasurespertainingtofederalhighwayconstruction,referencestheUrbanInstituteReport,whichitselfanalyzedover50disparitystudiesandreliedforitsconclusionsonover30ofthosestudies,afarbroaderbasisthanthesixstudiesprovidedinthiscase.Id.

Anecdotal evidence. Thecourtheldthatgivenitsholdingregardingstatisticalevidence,itdidnotreviewtheanecdotalevidencebeforeCongress.Thecourtdidpointout,however,thattherewasnotevidencepresentedofasingleinstanceofallegeddiscriminationbytheDODinthecourseofawardingaprimecontract,ortoasingleinstanceofallegeddiscriminationbyaprivatecontractoridentifiedastherecipientofaprimedefensecontract.545F.3dat1049.ThecourtnotedthislackofevidenceinthecontextoftheopinioninCrosonthatifagovernmenthasbecomeapassiveparticipantinasystemofracialexclusionpracticedbyelementsofthelocal


constructionindustry,thenthatgovernmentmaytakeaffirmativestepstodismantletheexclusionarysystem.545F.3dat1048,citingCroson,488U.S.at492.

TheFederalCircuitpointedoutthattheTenthCircuitinConcreteWorksnotedtheCityofDenverofferedmorethandollaramountstolinkitsspendingtoprivatediscrimination,butinsteadprovidedtestimonyfromminoritybusinessownersthatgeneralcontractorswhousethemincityconstructionprojectsrefusetousethemonprivateprojects,withtheresultthatDenverhadpaidtaxdollarstosupportfirmsthatdiscriminatedagainstotherfirmsbecauseoftheirrace,ethnicityandgender.545F.3dat1049,quotingConcreteWorks,321F.3dat976‐977.

Inconcluding,thecourtstatedthatitstresseditsholdingwasgroundedintheparticularitemsofevidenceofferedbytheDOD,and“shouldnotbeconstruedasstatingblanketrules,forexampleaboutthereliabilityofdisparitystudies.AstheFifthCircuithasexplained,thereisno‘precisemathematicalformula’toassessthequantumofevidencethatrisestotheCroson‘strongbasisinevidence’benchmark.’”545F.3dat1049,quotingW.H.ScottConstr.Co.,199F.3dat218n.11.

Narrowly tailoring. TheFederalCircuitonlymadetwoobservationsaboutnarrowlytailoring,becauseitheldthatCongresslackedtheevidentiarypredicateforacompellinginterest.First,itnotedthatthe1207Programwasflexibleinapplication,limitedinduration,andthatitdidnotundulyimpactontherightsofthirdparties.545F.3dat1049.Second,thecourtheldthattheabsenceofstronglyprobativestatisticalevidencemakesitimpossibletoevaluateatleastoneoftheothernarrowlytailoringfactors.WithoutsolidbenchmarksfortheminoritygroupscoveredbytheSection1207,thecourtsaiditcouldnotdeterminewhetherthe5percentgoalisreasonablyrelatedtothecapacityoffirmsownedbymembersofthoseminoritygroups—i.e.,whetherthatgoaliscomparabletotheshareofcontractsminoritieswouldreceiveintheabsenceofdiscrimination.”545F.3dat1049‐1050.

3. Rothe Development, Inc. v. U.S. Dept. of Defense and Small Business Administration, 107 F. Supp. 3d 183, 2015 WL 3536271 (D.D.C. 2015), affirmed on other grounds, 836 F.3d 57, 2016 WL 4719049 (D.C. Cir. 2016).

PlaintiffRotheDevelopment,Inc.isasmallbusinessthatfiledthisactionagainsttheU.S.DepartmentofDefense(“DOD”)andtheU.S.SmallBusinessAdministration(“SBA”)(collectively,“Defendants”)challengingtheconstitutionalityoftheSection8(a)Programonitsface.

TheconstitutionalchallengethatRothebringsinthiscaseisnearlyidenticaltothechallengebroughtinthecaseofDynaLanticCorp.v.UnitedStatesDepartmentofDefense,885F.Supp.2d237(D.D.C.2012).TheplaintiffinDynaLanticsuedtheDOD,theSBA,andtheDepartmentofNavyallegingthatSection8(a)wasunconstitutionalbothonitsfaceandasappliedtothemilitarysimulationandtrainingindustry.SeeDynaLantic,885F.Supp.2dat242.DynaLantic’scourtdisagreedwiththeplaintiff’sfacialattackandheldtheSection8(a)Programasfaciallyconstitutional.SeeDynaLantic,885F.Supp.2dat248‐280,283‐291.(SeealsodiscussionofDynaLanticinthisAppendixbelow.)

ThecourtinRothestatesthattheplaintiffRothereliesonsubstantiallythesamerecordevidenceandnearlyidenticallegalargumentsasintheDynaLanticcase,andurgesthecourttostrikedowntherace‐consciousprovisionsofSection8(a)ontheirface,andthustodepartfrom


DynaLantic’sholdinginthecontextofthiscase.2015WL3536271at*1.BoththeplaintiffRotheandtheDefendantsfiledcross‐motionsforsummaryjudgmentaswellasmotionstolimitorexcludetestimonyofeachother’sexpertwitnesses.ThecourtconcludesthatDefendants’expertsmeettherelevantqualificationstandardsundertheFederalRules,andthereforedeniesplaintiffRothe’smotiontoexcludeDefendants’experttestimony.Id.Bycontrast,thecourtfoundsufficientreasontodoubtthequalificationsofoneofplaintiff’sexpertsandtoquestionthereliabilityofthetestimonyoftheother;consequently,thecourtgrantstheDefendants’motionstoexcludeplaintiff’sexperttestimony.

Inaddition,thecourtinRotheagreeswiththecourt’sreasoninginDynaLantic,andthusthecourtinRothealsoconcludesthatSection8(a)isconstitutionalonitsface.Accordingly,thecourtdeniesplaintiff’smotionforsummaryjudgmentandgrantsDefendants’cross‐motionforsummaryjudgment.

DynaLantic Corp. v. Department of Defense. ThecourtinRotheanalyzedtheDynaLanticcase,andagreedwiththefindings,holdingandconclusionsofthecourtinDynaLantic.See2015WL3536271at*4‐5.ThecourtinRothenotedthatthecourtinDynaLanticengagedinadetailedexaminationofSection8(a)andtheextensiverecordevidence,includingdisparitystudiesonracialdiscriminationinfederalcontractingacrossvariousindustries.Id.at*5.ThecourtinDynaLanticconcludedthatCongresshadacompellinginterestineliminatingtherootsofracialdiscriminationinfederalcontracting,fundedbyfederalmoney,andalsothatthegovernmenthadestablishedastrongbasisinevidencetosupportitsconclusionthatremedialactionwasnecessarytoremedythatdiscrimination.Id.at*5.Thisconclusionwasbasedonthefindingthegovernmentprovidedextensiveevidenceofdiscriminatorybarrierstominoritybusinessformationandminoritybusinessdevelopment,aswellassignificantevidencethat,evenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinbothpublicandprivatesectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.at*5,citingDynaLantic,885F.Supp.2dat279.

ThecourtinDynaLanticalsofoundthatDynaLantichadfailedtopresentcredible,particularizedevidencethatunderminedthegovernment’scompellinginterestorthatdemonstratedthatthegovernment’sevidencedidnotsupportaninferenceofpriordiscriminationandthusaremedialpurpose.2015WL3536271at*5,citingDynaLantic,at279.

Withrespecttonarrowtailoring,thecourtinDynaLanticconcludedthattheSection8(a)Programisnarrowlytailoredonitsface,andthatsinceSection8(a)race‐consciousprovisionswerenarrowlytailoredtofurtheracompellingstateinterest,strictscrutinywassatisfiedinthecontextoftheconstructionindustryandinotherindustriessuchasarchitectureandengineering,andprofessionalservicesaswell.Id.ThecourtinRothealsonotedthatthecourtinDynaLanticfoundthatDynaLantichadthusfailedtomeetitsburdentoshowthatthechallengeprovisionswereunconstitutionalinallcircumstancesandheldthatSection8(a)wasconstitutionalonitsface.Id.

Defendants’ expert evidence.OneofDefendants’expertsusedregressionanalysis,claimingtohaveisolatedtheeffectinminorityownershiponthelikelihoodofasmallbusinessreceivinggovernmentcontracts,specificallyusinga“logitmodel”toexaminegovernmentcontractingdatainordertodeterminewhetherthedatashowanydifferenceintheoddsofcontractsbeingwon


byminority‐ownedsmallbusinessesrelativetoothersmallbusinesses.2015WL3536271at*9.Theexpertcontrolledforothervariablesthatcouldinfluencetheoddsofwhetherornotagivenfirmwinsacontract,suchasbusinesssize,age,andlevelofsecurityclearance,andconcludedthattheoddsofminority‐ownedsmallfirmsandnon‐8(a)SDBfirmswinningcontractswerelowerthansmallnon‐minorityandnon‐SDBfirms.Id.Inaddition,theDefendants’expertfoundthatnon‐8(a)minority‐ownedSDBsarestatisticallysignificantlylesslikelytowinacontractinindustriesaccountingfor94.0%ofcontractactions,93.0%ofdollarsawarded,andinwhich92.2%ofnon‐8(a)minority‐ownedSDBsareregistered.Id.Also,theexpertfoundthatthereisnoindustrywherenon‐8(a)minority‐ownedSDBshaveastatisticallysignificantadvantageintermsofwinningacontractfromthefederalgovernment.Id.

ThecourtrejectedRothe’scontentionthattheexpertopinionisbasedoninsufficientdata,andthatitsanalysisofdatarelatedtoasubsetoftherelevantindustrycodesistoonarrowtosupportitsscientificconclusions.Id.at*10.Thecourtfoundconvincingtheexpert’sresponsetoRothe’scritiqueabouthisdataset,explainingthat,fromamathematicalperspective,excludingcertainNAICScodesandanalyzingdataatthethree‐digitlevelactuallyincreasesthereliabilityofhisresults.Theexpertoptedtousecodesatthethree‐digitlevelasacompromise,balancingtheneedtohavesufficientdataineachindustrygroupingandtherecognitionthatmanyfirmscanswitchproductionwithinthebroaderthree‐digitcategory.Id.TheexpertalsoexcludedcertainNAICSindustrygroupsfromhisregressionanalysesbecauseofincompletedata,irrelevance,orbecausedataissuesinagivenNAICSgrouppreventedtheregressionmodelfromproducingreliableestimates.Id.Thecourtfoundthattheexpert’sreasoningwithrespecttotheexclusionsandassumptionshemakesintheanalysisarefullyexplainedandscientificallysound.Id.

Inaddition,thecourtfoundthatpost‐enactmentevidencewasproperlyconsideredbytheexpertandthecourt.Id.Thecourtfoundthatnearlyeverycircuittoconsiderthequestionoftherelevanceofpost‐enactmentevidencehasheldthatreviewingcourtsneednotlimitthemselvestotheparticularevidencethatCongressrelieduponwhenitenactedthestatuteatissue.Id.,citingDynaLantic,885F.Supp.2dat257.

Thus,thecourtheldthatpost‐enactmentevidenceisrelevanttoconstitutionalreview,inparticular,followingthecourtinDynaLantic,whenthestatuteisover30yearsoldandtheevidenceusedtojustifySection8(a)isstaleforpurposesofdeterminingacompellinginterestinthepresent.Id.,citingDynaLanticat885F.Supp.2dat258.ThecourtalsopointsoutthatthestatuteitselfcontemplatesthatCongresswillreviewthe8(a)Programonacontinuingbasis,whichrenderstheuseofpost‐enactmentevidenceproper.Id.

ThecourtalsofoundDefendants’additionalexpert’stestimonyasadmissibleinconnectionwiththatexpert’sreviewoftheresultsofthe107disparitystudiesconductedthroughouttheUnitedStatessincetheyear2000,allbut32ofwhichweresubmittedtoCongress.Id.at*11.ThisexperttestifiedthatthedisparitystudiessubmittedtoCongress,takenasawhole,providestrongevidenceoflarge,adverse,andoftenstatisticallysignificantdisparitiesbetweenminorityparticipationinbusinessenterpriseactivityandtheavailabilityofthosebusinesses;thedisparitiesarenotexplainedsolelybydifferencesinfactorsotherthanraceandsexthatareuntaintedbydiscrimination;andthedisparitiesareconsistentwiththepresenceofdiscriminationinthebusinessmarket.Id.at*12.


ThecourtrejectsRothe’scontentionstoexcludethisexperttestimonymerelybasedontheargumentbyRothethatthefactualbasisfortheexpert’sopinionisunreliablebasedonallegedflawsinthedisparitystudiesorthatthefactualbasisfortheexpert’sopinionsareweak.Id.ThecourtstatesthatevenifRothe’scontentionsarecorrect,anattackontheunderlyingdisparitystudiesdoesnotnecessitatetheremedyofexclusion.Id.

Plaintiff’s expert’s testimony rejected.Thecourtfoundthatoneofplaintiff’sexpertswasnotqualifiedbasedonhisownadmissionsregardinghislackoftraining,education,knowledge,skillandexperienceinanystatisticaloreconometricmethodology.Id.at*13.Plaintiff’sotherexpertthecourtdeterminedprovidedtestimonythatwasunreliableandinadmissibleashispreferredmethodologyforconductingdisparitystudies“appearstobewelloutsideofthemainstreaminthisparticularfield.”Id.at*14.Theexpert’smethodologyincludedhisassertionthattheonlyproperwaytodeterminetheavailabilityofminority‐ownedbusinessesistocountthosecontractorsandsubcontractorsthatactuallyperformorbidoncontracts,whichthecourtrejectedasnotreliable.Id.

The Section 8(a) Program is constitutional on its face.ThecourtfoundpersuasivethecourtdecisioninDynaLantic,andheldthatinasmuchasRotheseekstore‐litigatethelegalissuespresentedinthatcase,thiscourtdeclinesRothe’sinvitationtodepartfromtheDynaLanticcourt’sconclusionthatSection8(a)isconstitutionalonitsface.Id.at*15.

ThecourtreiterateditsagreementwiththeDynaLanticcourtthatracialclassificationsareconstitutionalonlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterest.Id.at*17.Todemonstrateacompellinginterest,thegovernmentdefendantsmustmaketwoshowings:firstthegovernmentmustarticulatealegislativegoalthatisproperlyconsideredacompellinggovernmentalinterest,andsecondthegovernmentmustdemonstrateastrongbasisinevidencesupportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthatinterest.Id.at*17.Insodoing,thegovernmentneednotconclusivelyprovetheexistenceofracialdiscriminationinthepastorpresent.Id.Thegovernmentmayrelyonbothstatisticalandanecdotalevidence,althoughanecdotalevidencealonecannotestablishastrongbasisinevidenceforthepurposesofstrictscrutiny.Id.

Ifthegovernmentmakesbothshowings,theburdenshiftstotheplaintifftopresentcredible,particularizedevidencetorebutthegovernment’sinitialshowingofacompellinginterest.Id.Onceacompellinginterestisestablished,thegovernmentmustfurthershowthatthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.Id.

ThecourtheldthatthegovernmentarticulatedandestablishedcompellinginterestfortheSection8(a)Program,namely,remedyingrace‐baseddiscriminationanditseffects.Id.Thecourtheldthegovernmentalsoestablishedastrongbasisinevidencethatfurtheringthisinterestrequiresrace‐basedremedialaction–specifically,evidenceregardingdiscriminationingovernmentcontracting,whichconsistedofextensiveevidenceofdiscriminatorybarrierstominoritybusinessformationandforcefulevidenceofdiscriminatorybarrierstominoritybusinessdevelopment.Id.at*17,citingDynaLantic,885F.Supp.2dat279.


ThegovernmentdefendantsinthiscaserelieduponthesameevidenceasintheDynaLanticcaseandthecourtfoundthatthegovernmentprovidedsignificantevidencethatevenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinboththeprivateandpublicsectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.at*17.ThecourtheldthatRothehasfailedtorebuttheevidenceofthegovernmentwithcredibleandparticularizedevidenceofitsown.Id.at*17.Furthermore,thecourtfoundthatthegovernmentdefendantsestablishedthattheSection8(a)Programisnarrowlytailoredtoachievetheestablishedcompellinginterest.Id.at*18.

Thecourtfound,citingagreementwiththeDynaLanticcourt,thattheSection8(a)Programsatisfiesallsixfactorsofnarrowtailoring.Id.First,alternativerace‐neutralremedieshaveprovedunsuccessfulinaddressingthediscriminationtargetedwiththeProgram.Id.Second,theSection8(a)Programisappropriatelyflexible.Id.Third,Section8(a)isneitherovernorunder‐inclusive.Id.Fourth,theSection8(a)Programimposestemporallimitsoneveryindividual’sparticipationthatfulfilledthedurationalaspectofnarrowtailoring.Id.Fifth,therelevantaspirationalgoalsforSDBcontractingparticipationarenumericallyproportionate,inpartbecausetheevidencepresentedestablishedthatminorityfirmsareready,willingandabletoperformworkequaltotwotofivepercentofgovernmentcontractsinindustriesincludingbutnotlimitedtoconstruction.Id.Andsix,thefactthattheSection8(a)Programreservescertaincontractsforprogramparticipantsdoesnot,onitsface,createanimpermissibleburdenonnon‐participatingfirms.Id.;citingDynaLantic,885F.Supp.2dat283‐289.

Accordingly,thecourtconcurredcompletelywiththeDynaLanticcourt’sconclusionthatthestrictscrutinystandardhasbeenmet,andthattheSection8(a)Programisfaciallyconstitutionaldespiteitsrelianceonrace‐consciouscriteria.Id.at*18.Thecourtfoundthatonbalancethedisparitystudiesonwhichthegovernmentdefendantsrelyreveallarge,statisticallysignificantbarrierstobusinessformationamongminoritygroupsthatcannotbeexplainedbyfactorsotherthanrace,anddemonstratethatdiscriminationbyprimecontractors,privatesectorcustomers,suppliersandbondingcompaniescontinuestolimitminoritybusinessdevelopment.Id.at*18,citingDynaLantic,885F.Supp.2dat261,263.

Moreover,thecourtfoundthattheevidenceclearlyshowsthatqualified,eligibleminority‐ownedfirmsareexcludedfromcontractingmarkets,andaccordinglyprovidespowerfulevidencefromwhichaninferenceofdiscriminatoryexclusioncouldarise.Id.at*18.ThecourtconcurredwiththeDynaLanticcourt’sconclusionthatbasedontheevidencebeforeCongress,ithadastrongbasisinevidencetoconcludetheuseofrace‐consciousmeasureswasnecessaryin,atleast,somecircumstances.Id.at*18,citingDynaLantic,885F.Supp.2dat274.

Inaddition,inconnectionwiththenarrowtailoringanalysis,thecourtrejectedRothe’sargumentthatSection8(a)race‐consciousprovisionscannotbenarrowlytailoredbecausetheyapplyacrosstheboardinequalmeasures,forallpreferredraces,inallmarketsandsectors.Id.at*19.ThecourtstatedthepresumptionthataminorityapplicantissociallydisadvantagedmayberebuttediftheSBAispresentedwithcredibleevidencetothecontrary.Id.at*19.Thecourtpointedoutthatanypersonmaypresentcredibleevidencechallenginganindividual’sstatusassociallyoreconomicallydisadvantaged.Id.ThecourtsaidthatRothe’sargumentisincorrectbecauseitisbasedonthemisconceptionthatnarrowtailoringnecessarilymeansaremedythatislaser‐focusedonasinglesegmentofaparticularindustryorarea,ratherthanthecommon


understandingthatthe“narrowness”ofthenarrow‐tailoringmandaterelatestotherelationshipbetweenthegovernment’sinterestandtheremedyitprescribes.Id.

Conclusion.Thecourtconcludedthatplaintiff’sfacialconstitutionalchallengetotheSection8(a)Programfailed,thatthegovernmentdefendantsdemonstratedacompellinginterestforthegovernment’sracialclassification,thepurportedneedforremedialactionissupportedbystrongandunrebuttedevidence,andthattheSection8(a)programisnarrowlytailoredtofurtheritscompellinginterest.Id.at*20.

4. DynaLantic Corp. v. United States Dept. of Defense, et al., 885 F.Supp.2d 237, 2012 WL 3356813 (D.D.C., 2012), appeals voluntarily dismissed, United States Court of Appeals, District of Columbia, Docket Numbers 12‐5329 and 12‐5330 (2014)

Plaintiff,theDynaLanticCorporation(“DynaLantic”),isasmallbusinessthatdesignsandmanufacturesaircraft,submarine,ship,andothersimulatorsandtrainingequipment.DynaLanticsuedtheUnitedStatesDepartmentofDefense(“DoD”),theDepartmentoftheNavy,andtheSmallBusinessAdministration(“SBA”)challengingtheconstitutionalityofSection8(a)oftheSmallBusinessAct(the“Section8(a)program”),onitsfaceandasapplied:namely,theSBA’sdeterminationthatitisnecessaryorappropriatetosetasidecontractsinthemilitarysimulationandtrainingindustry.2012WL3356813,at*1,*37.

TheSection8(a)programauthorizesthefederalgovernmenttolimittheissuanceofcertaincontractstosociallyandeconomicallydisadvantagedbusinesses.Id.at*1.DynaLanticclaimedthattheSection8(a)isunconstitutionalonitsfacebecausetheDoD’suseoftheprogram,whichisreservedfor“sociallyandeconomicallydisadvantagedindividuals,”constitutesanillegalracialpreferenceinviolationoftheequalprotectioninviolatingitsrighttoequalprotectionundertheDueProcessClauseoftheFifthAmendmenttotheConstitutionandotherrights.Id.at*1.DynaLanticalsoclaimedtheSection8(a)programisunconstitutionalasappliedbythefederaldefendantsinDynaLantic’sspecificindustry,definedasthemilitarysimulationandtrainingindustry.Id.

AsdescribedinDynaLanticCorp.v.UnitedStatesDepartmentofDefense,503F.Supp.2d262(D.D.C.2007)(seebelow),thecourtpreviouslyhaddeniedMotionsforSummaryJudgmentbythepartiesanddirectedthemtoproposefutureproceedingsinordertosupplementtherecordwithadditionalevidencesubsequentto2007beforeCongress.503F.Supp.2dat267.

The Section 8(a) Program.TheSection8(a)programisabusinessdevelopmentprogramforsmallbusinessesownedbyindividualswhoarebothsociallyandeconomicallydisadvantagedasdefinedbythespecificcriteriasetforthinthecongressionalstatuteandfederalregulationsat15U.S.C.§§632,636and637;see13CFR§124.“Sociallydisadvantaged”individualsarepersonswhohavebeen“subjectedtoracialorethnicprejudiceorculturalbiaswithinAmericansocietybecauseoftheiridentitiesasmembersofgroupswithoutregardtotheirindividualqualities.”13CFR§124.103(a);seealso15U.S.C.§637(a)(5).“Economicallydisadvantaged”individualsarethosesociallydisadvantagedindividuals“whoseabilitytocompeteinthefreeenterprisesystemhasbeenimpairedduetodiminishedcapitalandcreditopportunitiesascomparedtoothersinthesameorsimilarlineofbusinesswhoarenotsociallydisadvantaged.”13CFR§124.104(a);seealso15U.S.C.§637(a)(6)(A).DynaLanticCorp.,2012WL3356813at*2.


Individualswhoaremembersofcertainracialandethnicgroupsarepresumptivelysociallydisadvantaged;suchgroupsinclude,butarenotlimitedto,BlackAmericans,HispanicAmericans,NativeAmericans,Indiantribes,AsianPacificAmericans,NativeHawaiianOrganizations,andotherminorities.Id.at*2quoting15U.S.C.§631(f)(1)(B)‐(c);seealso13CFR§124.103(b)(1).Allprospectiveprogramparticipantsmustshowthattheyareeconomicallydisadvantaged,whichrequiresanindividualtoshowanetworthoflessthan$250,000uponenteringtheprogram,andashowingthattheindividual’sincomeforthreeyearspriortotheapplicationandthefairmarketvalueofallassetsdonotexceedacertainthreshold.2012WL3356813at*3;see13CFR§124.104(c)(2).

Congresshasestablishedan“aspirationalgoal”forprocurementfromsociallyandeconomicallydisadvantagedindividuals,whichincludesbutisnotlimitedtotheSection8(a)program,offivepercentofprocurementsdollarsgovernmentwide.See15U.S.C.§644(g)(1).DynaLantic,at*3.Congresshasnot,however,establishedanumericalgoalforprocurementfromtheSection8(a)programspecifically.SeeId.EachfederalagencyestablishesitsowngoalbyagreementbetweentheagencyheadandtheSBA.Id.DoDhasestablishedagoalofawardingapproximatelytwopercentofprimecontractdollarsthroughtheSection8(a)program.DynaLantic,at*3.TheSection8(a)programallowstheSBA,“wheneveritdeterminessuchactionisnecessaryandappropriate,”toenterintocontractswithothergovernmentagenciesandthensubcontractwithqualifiedprogramparticipants.15U.S.C.§637(a)(1).Section8(a)contractscanbeawardedona“solesource”basis(i.e.,reservedtoonefirm)orona“competitive”basis(i.e.,betweentwoormoreSection8(a)firms).DynaLantic,at*3‐4;13CFR124.501(b).

Plaintiff’s business and the simulation and training industry.DynaLanticperformscontractsandsubcontractsinthesimulationandtrainingindustry.Thesimulationandtrainingindustryiscomposedofthoseorganizationsthatdevelop,manufacture,andacquireequipmentusedtotrainpersonnelinanyactivitywherethereisahuman‐machineinterface.DynaLanticat*5.

Compelling interest.TheCourtrulesthatthegovernmentmustmaketwoshowingstoarticulateacompellinginterestservedbythelegislativeenactmenttosatisfythestrictscrutinystandardthatracialclassificationsareconstitutionalonlyiftheyarenarrowlytailoredmeasuresthatfurthercompellinggovernmentalinterests.”DynaLantic,at*9.First,thegovernmentmust“articulatealegislativegoalthatisproperlyconsideredacompellinggovernmentinterest.”Id.quotingSherbrookeTurfv.Minn.DOT.,345F.3d964,969(8thCir.2003).Second,inadditiontoidentifyingacompellinggovernmentinterest,“thegovernmentmustdemonstrate‘astrongbasisinevidence’supportingitsconclusionthatrace‐basedremedialactionwasnecessarytofurtherthatinterest.”DynaLantic,at*9,quotingSherbrooke,345F.3d969.

Afterthegovernmentmakesaninitialshowing,theburdenshiftstoDynaLantictopresent“credible,particularizedevidence”torebutthegovernment’s“initialshowingofacompellinginterest.”DynaLantic,at*10quotingConcreteWorksofColorado,Inc.v.CityandCountyofDenver,321F.3d950,959(10thCir.2003).ThecourtpointsoutthatalthoughCongressisentitledtonodeferenceinitsultimateconclusionthatrace‐consciousactioniswarranted,itsfact‐findingprocessisgenerallyentitledtoapresumptionofregularityanddeferentialreview.DynaLantic,at*10,citingRotheDev.Corp.v.U.S.Dep’tofDef.(“RotheIII“),262F.3d1306,1321n.14(Fed.Cir.2001).


ThecourtheldthatthefederalDefendantsstateacompellingpurposeinseekingtoremediateeitherpublicdiscriminationorprivatediscriminationinwhichthegovernmenthasbeena“passiveparticipant.”DynaLantic,at*11.TheCourtrejectedDynaLantic’sargumentthatthefederalDefendantscouldonlyseektoremedydiscriminationbyagovernmentalentity,ordiscriminationbyprivateindividualsdirectlyusinggovernmentfundstodiscriminate.DynaLantic,at*11.TheCourtheldthatitiswellestablishedthatthefederalgovernmenthasacompellinginterestinensuringthatitsfundingisnotdistributedinamannerthatperpetuatestheeffectofeitherpublicorprivatediscriminationwithinanindustryinwhichitprovidesfunding.DynaLantic,at*11,citingWesternStatesPavingv.WashingtonStateDOT,407F.3d983,991(9thCir.2005).

TheCourtnotedthatanypublicentity,stateorfederal,hasacompellinginterestinassuringthatpublicdollars,drawnfromthetaxdollarsofallcitizens,donotservetofinancetheevilsofprivateprejudice,andsuchprivateprejudicemaytaketheformofdiscriminatorybarrierstotheformationofqualifiedminoritybusinesses,precludingfromtheoutsetcompetitionforpubliccontractsbyminorityenterprises.DynaLanticat*11quotingCityofRichmondv.J.A.CrosonCo.,488U.S.469,492(1995),andAdarandConstructors,Inc.v.Slater,228F.3d1147,1167‐68(10thCir.2000).Inaddition,privateprejudicemayalsotaketheformof“discriminatorybarriers”to“faircompetitionbetweenminorityandnon‐minorityenterprises...precludingexistingminorityfirmsfromeffectivelycompetingforpublicconstructioncontracts.”DynaLantic,at*11,quotingAdarandVII,228F.3dat1168.

Thus,theCourtconcludedthatthegovernmentmayimplementrace‐consciousprogramsnotonlyforthepurposeofcorrectingitsowndiscrimination,butalsotopreventitselffromactingasa“passiveparticipant”inprivatediscriminationintherelevantindustriesormarkets.DynaLantic,at*11,citingConcreteWorksIV,321F.3dat958.

Evidence before Congress.TheCourtanalyzedthelegislativehistoryoftheSection8(a)program,andthenaddressedtheissueastowhethertheCourtislimitedtotheevidencebeforeCongresswhenitenactedSection8(a)in1978andreviseditin1988,orwhetheritcouldconsiderpost‐enactmentevidence.DynaLantic,at*16‐17.TheCourtfoundthatnearlyeverycircuitcourttoconsiderthequestionhasheldthatreviewingcourtsmayconsiderpost‐enactmentevidenceinadditiontoevidencethatwasbeforeCongresswhenitembarkedontheprogram.DynaLantic,at*17.TheCourtnotedthatpost‐enactmentevidenceisparticularlyrelevantwhenthestatuteisoverthirtyyearsold,andevidenceusedtojustifySection8(a)isstaleforpurposesofdeterminingacompellinginterestinthepresent.Id.TheCourtthenfollowedthe10thCircuitCourtofAppeals’approachinAdarandVII,andreviewedthepost‐enactmentevidenceinthreebroadcategories:(1)evidenceofbarrierstotheformationofqualifiedminoritycontractorsduetodiscrimination,(2)evidenceofdiscriminatorybarrierstofaircompetitionbetweenminorityandnon‐minoritycontractors,and(3)evidenceofdiscriminationinstateandlocaldisparitystudies.DynaLantic,at*17.

TheCourtfoundthatthegovernmentpresentedsufficientevidenceofbarrierstominoritybusinessformation,includingevidenceonrace‐baseddenialofaccesstocapitalandcredit,lendingdiscrimination,routineexclusionofminoritiesfromcriticalbusinessrelationships,particularlythroughclosedor“oldboy”businessnetworksthatmakeitespeciallydifficultforminority‐ownedbusinessestoobtainwork,andthatminoritiescontinuetoexperiencebarriers


tobusinessnetworks.DynaLantic,at*17‐21.TheCourtconsideredaspartoftheevidentiarybasisbeforeCongressmultipledisparitystudiesconductedthroughouttheUnitedStatesandsubmittedtoCongress,andqualitativeandquantitativetestimonysubmittedatCongressionalhearings.Id.

TheCourtalsofoundthatthegovernmentsubmittedsubstantialevidenceofbarrierstominoritybusinessdevelopment,includingevidenceofdiscriminationbyprimecontractors,privatesectorcustomers,suppliers,andbondingcompanies.DynaLantic,at*21‐23.TheCourtagainbasedthisfindingonrecentevidencesubmittedbeforeCongressintheformofdisparitystudies,reportsandCongressionalhearings.Id.

State and local disparity studies.AlthoughtheCourtnotedtherehavebeenhundredsofdisparitystudiesplacedbeforeCongress,theCourtconsidersinparticularstudiessubmittedbythefederalDefendantsof50disparitystudies,encompassingevidencefrom28statesandtheDistrictofColumbia,whichhavebeenbeforeCongresssince2006.DynaLantic,at*25‐29.TheCourtstateditreviewedthestudieswithafocusontwoindicatorsthatothercourtshavefoundrelevantinanalyzingdisparitystudies.First,theCourtconsideredthedisparityindicescalculated,whichwasadisparityindex,calculatedbydividingthepercentageofMBE,WBE,and/orDBEfirmsutilizedinthecontractingmarketbythepercentageofM/W/DBEfirmsavailableinthesamemarket.DynaLantic,at*26.TheCourtsaidthatnormally,adisparityindexof100demonstratesfullM/W/DBEparticipation;theclosertheindexistozero,thegreatertheM/W/DBEdisparityduetounderutilization.DynaLantic,at*26.

Second,theCourtreviewedthemethodbywhichstudiescalculatedtheavailabilityandcapacityofminorityfirms.DynaLantic,at*26.TheCourtnotedthatsomecourtshavelookedcloselyatthesefactorstoevaluatethereliabilityofthedisparityindices,reasoningthattheindicesarenotprobativeunlesstheyarerestrictedtofirmsofsignificantsizeandwithsignificantgovernmentcontractingexperience.DynaLantic,at*26.TheCourtpointedoutthatalthoughdiscriminatorybarrierstoformationanddevelopmentwouldimpactcapacity,theSupremeCourtdecisioninCrosonandtheCourtofAppealsdecisioninO’DonnellConstructionCo.v.DistrictofColumbia,etal.,963F.2d420(D.C.Cir.1992)“requiretheadditionalshowingthateligibleminorityfirmsexperiencedisparities,notwithstandingtheirabilities,inordertogiverisetoaninferenceofdiscrimination.”DynaLantic,at*26,n.10.

Analysis: Strong basis in evidence.Basedonananalysisofthedisparitystudiesandotherevidence,theCourtconcludedthatthegovernmentarticulatedacompellinginterestfortheSection8(a)programandsatisfieditsinitialburdenestablishingthatCongresshadastrongbasisinevidencepermittingrace‐consciousmeasurestobeusedundertheSection8(a)program.DynaLantic,at*29‐37.TheCourtheldthatDynaLanticdidnotmeetitsburdentoestablishthattheSection8(a)programisunconstitutionalonitsface,findingthatDynaLanticcouldnotshowthatCongressdidnothaveastrongbasisinevidenceforpermittingrace‐consciousmeasurestobeusedunderanycircumstances,inanysectororindustryintheeconomy.DynaLantic,at*29.

TheCourtdiscussedandanalyzedtheevidencebeforeCongress,whichincludedextensivestatisticalanalysis,qualitativeandquantitativeconsiderationoftheuniquechallengesfacingminoritiesfromallbusinesses,andanexaminationoftheirrace‐neutralmeasuresthathave


beenenactedbypreviousCongresses,buthadfailedtoreachtheminorityownedfirms.DynaLantic,at*31.TheCourtsaidCongresshadspentdecadescompilingevidenceofracediscriminationinavarietyofindustries,includingbutnotlimitedtoconstruction.DynaLantic,at*31.TheCourtalsofoundthatthefederalgovernmentproducedsignificantevidencerelatedtoprofessionalservices,architectureandengineering,andotherindustries.DynaLantic,at*31.TheCourtstatedthatthegovernmenthastherefore“establishedthatthereareatleastsomecircumstanceswhereitwouldbe‘necessaryorappropriate’fortheSBAtoawardcontractstobusinessesundertheSection8(a)program.DynaLantic,at*31,citing15U.S.C.§637(a)(1).

Therefore,theCourtconcludedthatinresponsetoplaintiff’sfacialchallenge,thegovernmentmetitsinitialburdentopresentastrongbasisinevidencesufficienttosupportitsarticulated,constitutionallyvalid,compellinginterest.DynaLantic,at*31.TheCourtalsofoundthattheevidencefromaroundthecountryissufficientforCongresstoauthorizeanationwideremedy.DynaLantic,at*31,n.13.

Rejection of DynaLantic’s rebuttal arguments.TheCourtheldthatsincethefederalDefendantsmadetheinitialshowingofacompellinginterest,theburdenshiftedtotheplaintifftoshowwhytheevidencereliedonbyDefendantsfailstodemonstrateacompellinggovernmentalinterest.DynaLantic,at*32.TheCourtrejectedeachofthechallengesbyDynaLantic,includingholdingthat:thelegislativehistoryissufficient;thegovernmentcompiledsubstantialevidencethatidentifiedprivateracialdiscriminationwhichaffectedminorityutilizationinspecificindustriesofgovernmentcontracting,bothbeforeandaftertheenactmentoftheSection8(a)program;anyflawsintheevidence,includingthedisparitystudies,DynaLantichasidentifiedinthedatadonotrisetothelevelofcredible,particularizedevidencenecessarytorebutthegovernment’sinitialshowingofacompellinginterest;DynaLanticcitednoauthorityinsupportofitsclaimthatfraudintheadministrationofrace‐consciousprogramsissufficienttoinvalidateSection8(a)programonitsface;andCongresshadstrongevidencethatthediscriminationissufficientlypervasiveacrossraciallinestojustifygrantingapreferenceforallfivegroupsincludedinSection8(a).DynaLantic,at*32‐36.

Inthisconnection,theCourtstateditagreedwithCrosonanditsprogenythatthegovernmentmayproperlybedeemeda“passiveparticipant”whenitfailstoadjustitsprocurementpracticestoaccountfortheeffectsofidentifiedprivatediscriminationontheavailabilityandutilizationofminority‐ownedbusinessesingovernmentcontracting.DynaLantic,at*34.Intermsofflawsintheevidence,theCourtpointedoutthattheproponentoftherace‐consciousremedialprogramisnotrequiredtounequivocallyestablishtheexistenceofdiscrimination,norisitrequiredtonegateallevidenceofnon‐discrimination.DynaLantic,at*35,citingConcreteWorkIV,321F.3dat991.Rather,astrongbasisinevidenceexists,theCourtstated,whenthereisevidenceapproachingaprimafaciecaseofaconstitutionalorstatutoryviolation,notirrefutableordefinitiveproofofdiscrimination.Id,citingCroson,488U.S.500.Accordingly,theCourtstatedthatDynaLantic’sclaimthatthegovernmentmustindependentlyverifytheevidencepresentedtoitisunavailing.Id.DynaLantic,at*35.

Also,intermsofDynaLantic’sargumentsaboutflawsintheevidence,theCourtnotedthatDefendantsplacedintherecordapproximately50disparitystudieswhichhadbeenintroducedordiscussedinCongressionalHearingssince2006,whichDynaLanticdidnotrebutorevendiscussanyofthestudiesindividually.DynaLantic,at*35.DynaLanticassertedgenerallythatthe


studiesdidnotcontrolforthecapacityofthefirmsatissue,andwerethereforeunreliable.Id.TheCourtpointedoutthatCongressneednothaveevidenceofdiscriminationinall50statestodemonstrateacompellinginterest,andthatinthiscase,thefederalDefendantspresentedrecentevidenceofdiscriminationinasignificantnumberofstatesandlocalitieswhich,takentogether,representsabroadcross‐sectionofthenation.DynaLantic,at*35,n.15.TheCourtstatedthatwhilenotallofthedisparitystudiesaccountedforthecapacityofthefirms,manyofthemdidcontrolforcapacityandstillfoundsignificantdisparitiesbetweenminorityandnon‐minorityownedfirms.DynaLantic,at*35.Inshort,theCourtfoundthatDynaLantic’s“generalcriticism”ofthemultitudeofdisparitystudiesdoesnotconstituteparticularevidenceunderminingthereliabilityoftheparticulardisparitystudiesandthereforeisoflittlepersuasivevalue.DynaLantic,at*35.

IntermsoftheargumentbyDynaLanticastorequiringproofofevidenceofdiscriminationagainsteachminoritygroup,theCourtstatedthatCongresshasastrongbasisinevidenceifitfindsevidenceofdiscriminationissufficientlypervasiveacrossraciallinestojustifygrantingapreferencetoallfivedisadvantagedgroupsincludedinSection8(a).TheCourtfoundCongresshadstrongevidencethatthediscriminationissufficientlypervasiveacrossraciallinestojustifyapreferencetoallfivegroups.DynaLantic,at*36.Thefactthatspecificevidencevaries,tosomeextent,withinandbetweenminoritygroups,wasnotabasistodeclarethisstatutefaciallyinvalid.DynaLantic,at*36.

Facial challenge: Conclusion.TheCourtconcludedCongresshadacompellinginterestineliminatingtherootsofracialdiscriminationinfederalcontractingandhadestablishedastrongbasisofevidencetosupportitsconclusionthatremedialactionwasnecessarytoremedythatdiscriminationbyprovidingsignificantevidenceinthreedifferentarea.First,itprovidedextensiveevidenceofdiscriminatorybarrierstominoritybusinessformation.DynaLantic,at*37.Second,itprovided“forceful”evidenceofdiscriminatorybarrierstominoritybusinessdevelopment.Id.Third,itprovidedsignificantevidencethat,evenwhenminoritybusinessesarequalifiedandeligibletoperformcontractsinboththepublicandprivatesectors,theyareawardedthesecontractsfarlessoftenthantheirsimilarlysituatednon‐minoritycounterparts.Id.TheCourtfoundtheevidencewasparticularlystrong,nationwide,intheconstructionindustry,andthattherewassubstantialevidenceofwidespreaddisparitiesinotherindustriessuchasarchitectureandengineering,andprofessionalservices.Id.

As‐applied challenge.DynaLanticalsochallengedtheSBAandDoD’suseoftheSection8(a)programasapplied:namely,theagencies’determinationthatitisnecessaryorappropriatetosetasidecontractsinthemilitarysimulationandtrainingindustry.DynaLantic,at*37.Significantly,theCourtpointsoutthatthefederalDefendants“concedethattheydonothaveevidenceofdiscriminationinthisindustry.”Id.Moreover,theCourtpointsoutthatthefederalDefendantsadmittedthatthere“isnoCongressionalreport,hearingorfindingthatreferences,discussesormentionsthesimulationandtrainingindustry.”DynaLantic,at*38.ThefederalDefendantsalsoadmitthattheyare“unawareofanydiscriminationinthesimulationandtrainingindustry.”Id.Inaddition,thefederalDefendantsadmitthatnoneofthedocumentstheyhavesubmittedasjustificationfortheSection8(a)programmentionsoridentifiesinstancesofpastorpresentdiscriminationinthesimulationandtrainingindustry.DynaLantic,at*38.


ThefederalDefendantsmaintainthatthegovernmentneednottieevidenceofdiscriminatorybarrierstominoritybusinessformationanddevelopmenttoevidenceofdiscriminationinanyparticularindustry.DynaLantic,at*38.TheCourtconcludesthatthefederalDefendants’positionisirreconcilablewithbindingauthorityupontheCourt,specifically,theUnitedStatesSupremeCourt’sdecisioninCroson,aswellastheFederalCircuit’sdecisioninO’DonnellConstructionCompany,whichadoptedCroson’sreasoning.DynaLantic,at*38.TheCourtholdsthatCrosonmadeclearthegovernmentmustprovideevidencedemonstratingtherewereeligibleminoritiesintherelevantmarket.DynaLantic,at*38.TheCourtheldthatabsentanevidentiaryshowingthat,inahighlyskilledindustrysuchasthemilitarysimulationandtrainingindustry,thereareeligibleminoritieswhoarequalifiedtoundertakeparticulartasksandareneverthelessdeniedtheopportunitytothrivethere,thegovernmentcannotcomplywithCroson’sevidentiaryrequirementtoshowaninferenceofdiscrimination.DynaLantic,at*39,citingCroson,488U.S.501.TheCourtrejectsthefederalgovernment’spositionthatitdoesnothavetomakeanindustry‐basedshowinginordertoshowstrongevidenceofdiscrimination.DynaLantic,at*40.

TheCourtnotesthattheDepartmentofJusticehasrecognizedthatthefederalgovernmentmusttakeanindustry‐basedapproachtodemonstratingcompellinginterest.DynaLantic,at*40,citingCortezIIIServiceCorp.v.NationalAeronautics&SpaceAdministration,950F.Supp.357(D.D.C.1996).InCortez,theCourtfoundtheSection8(a)programconstitutionalonitsface,butfoundtheprogramunconstitutionalasappliedtotheNASAcontractatissuebecausethegovernmenthadprovidednoevidenceofdiscriminationintheindustryinwhichtheNASAcontractwouldbeperformed.DynaLantic,at*40.TheCourtpointedoutthattheDepartmentofJusticehadadvisedfederalagenciestomakeindustry‐specificdeterminationsbeforeofferingset‐asidecontractsandspecificallycautionedthemthatwithoutsuchparticularizedevidence,set‐asideprogramsmaynotsurviveCrosonandAdarand.DynaLantic,at*40.

TheCourtrecognizedthatlegislationconsideredinCroson,AdarandandO’Donnellwereallrestrictedtooneindustry,whereasthiscasepresentsadifferentfactualscenario,becauseSection8(a)isnotindustry‐specific.DynaLantic,at*40,n.17.TheCourtnotedthatthegovernmentdidnotproposeanalternativeframeworktoCrosonwithinwhichtheCourtcananalyzetheevidence,andthatinfact,theevidencethegovernmentpresentedinthecaseisindustryspecific.Id.

TheCourtconcludedthatagencieshavearesponsibilitytodecideiftherehasbeenahistoryofdiscriminationintheparticularindustryatissue.DynaLantic,at*40.AccordingtotheCourt,itneednottakeaparty’sdefinitionof“industry”atfacevalue,andmaydeterminetheappropriateindustrytoconsiderisbroaderornarrowerthanthatproposedbytheparties.Id.However,theCourtstated,inthiscasethegovernmentdidnotarguewithplaintiff’sindustrydefinition,andmoresignificantly,itprovidednoevidencewhatsoeverfromwhichaninferenceofdiscriminationinthatindustrycouldbemade.DynaLantic,at*40.

Narrowly tailoring.Inadditiontoshowingstrongevidencethatarace‐consciousprogramservesacompellinginterest,thegovernmentisrequiredtoshowthatthemeanschosentoaccomplishthegovernment’sassertedpurposearespecificallyandnarrowlyframedtoaccomplishthatpurpose.DynaLantic,at*41.TheCourtconsideredseveralfactorsinthenarrowlytailoringanalysis:theefficacyofalternative,race‐neutralremedies,flexibility,over‐orunder‐


inclusivenessoftheprogram,duration,therelationshipbetweennumericalgoalsandtherelevantlabormarket,andtheimpactoftheremedyonthirdparties.Id.

TheCourtanalyzedeachofthesefactorsandfoundthatthefederalgovernmentsatisfiedallsixfactors.DynaLantic,at*41‐48.TheCourtfoundthatthefederalgovernmentpresentedsufficientevidencethatCongressattemptedtouserace‐neutralmeasurestofosterandassistminorityownedbusinessesrelatingtotherace‐consciouscomponentinSection8(a),andthattheserace‐neutralmeasuresfailedtoremedytheeffectsofdiscriminationonminoritysmallbusinessowners.DynaLantic,at*42.TheCourtfoundthattheSection8(a)programissufficientlyflexibleingrantingrace‐consciousreliefbecauseraceismaderelevantintheprogram,butitisnotadeterminativefactororarigidracialquotasystem.DynaLantic,at*43.TheCourtnotedthattheSection8(a)programcontainsawaiverprovisionandthattheSBAwillnotacceptaprocurementforawardasan8(a)contractifitdeterminesthatacceptanceoftheprocurementwouldhaveanadverseimpactonsmallbusinessesoperatingoutsidetheSection8(a)program.DynaLantic,at*44.

TheCourtfoundthattheSection8(a)programwasnotover‐andunder‐inclusivebecausethegovernmenthadstrongevidenceofdiscriminationwhichissufficientlypervasiveacrossraciallinestoallfivedisadvantagedgroups,andSection8(a)doesnotprovidethateverymemberofaminoritygroupisdisadvantaged.DynaLantic,at*44.Inaddition,theprogramisnarrowlytailoredbecauseitisbasednotonlyonsocialdisadvantage,butalsoonanindividualizedinquiryintoeconomicdisadvantage,andthatafirmownedbyanon‐minoritymayqualifyassociallyandeconomicallydisadvantaged.DynaLantic,at*44.

TheCourtalsofoundthattheSection8(a)programplacesanumberofstrictdurationallimitsonaparticularfirm’sparticipationintheprogram,placestemporallimitsoneveryindividual’sparticipationintheprogram,andthataparticipant’seligibilityiscontinuallyreassessedandmustbemaintainedthroughoutitsprogramterm.DynaLantic,at*45.Section8(a)’sinherenttimelimitandgraduationprovisionsensurethatitiscarefullydesignedtoendureonlyuntilthediscriminatoryimpacthasbeeneliminated,andthusitisnarrowlytailored.DynaLantic,at*46.

Inlightofthegovernment’sevidence,theCourtconcludedthattheaspirationalgoalsatissue,allofwhichwerelessthanfivepercentofcontractdollars,arefaciallyconstitutional.DynaLantic,at*46‐47.Theevidence,theCourtnoted,establishedthatminorityfirmsareready,willing,andabletoperformworkequaltotwotofivepercentofgovernmentcontractsinindustriesincludingbutnotlimitedtoconstruction.Id.TheCourtfoundtheeffectsofpastdiscriminationhaveexcludedminoritiesfromformingandgrowingbusinesses,andthenumberofavailableminoritycontractorsreflectsthatdiscrimination.DynaLantic,at*47.

Finally,theCourtfoundthattheSection8(a)programtakesappropriatestepstominimizetheburdenonthirdparties,andthattheSection8(a)programisnarrowlytailoredonitsface.DynaLantic,at*48.TheCourtconcludedthatthegovernmentisnotrequiredtoeliminatetheburdenonnon‐minoritiesinordertosurvivestrictscrutiny,butalimitedandproperlytailoredremedytocuretheeffectsofpriordiscriminationispermissibleevenwhenitburdensthirdparties.Id.TheCourtpointstoanumberofprovisionsdesignedtominimizetheburdenonnon‐minorityfirms,includingthepresumptionthataminorityapplicantissociallydisadvantagedmayberebutted,anindividualwhoisnotpresumptivelydisadvantagedmayqualifyforsuch


status,the8(a)programrequiresanindividualizeddeterminationofeconomicdisadvantage,anditisnotopentoindividualswhosenetworthexceeds$250,000regardlessofrace.Id.

Conclusion.TheCourtconcludedthattheSection8(a)programisconstitutionalonitsface.TheCourtalsoheldthatitisunabletoconcludethatthefederalDefendantshaveproducedevidenceofdiscriminationinthemilitarysimulationandtrainingindustrysufficienttodemonstrateacompellinginterest.Therefore,DynaLanticprevailedonitsas‐appliedchallenge.DynaLantic,at*51.Accordingly,theCourtgrantedthefederalDefendants’MotionforSummaryJudgmentinpart(holdingtheSection8(a)programisvalidonitsface)anddenieditinpart,andgrantedtheplaintiff’sMotionforSummaryJudgmentinpart(holdingtheprogramisinvalidasappliedtothemilitarysimulationandtrainingindustry)anddenieditinpart.TheCourtheldthattheSBAandtheDoDareenjoinedfromawardingprocurementsformilitarysimulatorsundertheSection8(a)programwithoutfirstarticulatingastrongbasisinevidencefordoingso.

Appeals voluntarily dismissed, and Stipulation and Agreement of Settlement Approved and

Ordered by District Court.ANoticeofAppealandNoticeofCrossAppealwerefiledinthiscasetotheUnitedStatesCourtofAppealsfortheDistrictofColumbiabytheUnitedStatusandDynaLantic:DocketNumbers12‐5329and12‐5330.Subsequently,theappealswerevoluntarilydismissed,andthepartiesenteredintoaStipulationandAgreementofSettlement,whichwasapprovedbytheDistrictCourt(Jan.30,2014).Thepartiesstipulatedandagreedinteralia,asfollows:(1)theFederalDefendantswereenjoinedfromawardingprimecontractsundertheSection8(a)programforthepurchaseofmilitarysimulationandmilitarysimulationtrainingcontractswithoutfirstarticulatingastrongbasisinevidencefordoingso;(2)theFederalDefendantsagreedtopayplaintiffthesumof$1,000,000.00;and(3)theFederalDefendantsagreedtheyshallrefrainfromseekingtovacatetheinjunctionenteredbytheCourtforatleasttwoyears.

TheDistrictCourtonJanuary30,2014approvedtheStipulationandAgreementofSettlement,andSoOrderedthetermsoftheoriginal2012injunctionmodifiedasprovidedintheStipulationandAgreementofSettlement.

5. DynaLantic Corp. v. United States Dept. of Defense, et al., 503 F. Supp.2d 262 (D.D.C. 2007)

DynaLanticCorp.involvedachallengetotheDOD’sutilizationoftheSmallBusinessAdministration’s(“SBA”)8(a)BusinessDevelopmentProgram(“8(a)Program”).InitsOrderofAugust23,2007,thedistrictcourtdeniedbothparties’MotionsforSummaryJudgmentbecausetherewasnoinformationintherecordregardingtheevidencebeforeCongresssupportingits2006reauthorizationoftheprograminquestion;thecourtdirectedthepartiestoproposefutureproceedingstosupplementtherecord.503F.Supp.2d262,263(D.D.C.2007).

Thecourtfirstexplainedthatthe8(a)Programsetsagoalthatnolessthan5percentoftotalprimefederalcontractandsubcontractawardsforeachfiscalyearbeawardedtosociallyandeconomicallydisadvantagedindividuals.Id.Eachfederalgovernmentagencyisrequiredtoestablishitsowngoalforcontractingbutthegoalsarenotmandatoryandthereisnosanctionforfailingtomeetthegoal.Uponapplicationandadmissionintothe8(a)Program,smallbusinessesownedandcontrolledbydisadvantagedindividualsareeligibletoreceive


technological,financial,andpracticalassistance,andsupportthroughpreferentialawardofgovernmentcontracts.Forthepastfewyears,the8(a)ProgramwastheprimarypreferentialtreatmentprogramtheDODusedtomeetits5percentgoal.Id.at264.

ThiscasearosefromaNavycontractthattheDODdecidedtoawardexclusivelythroughthe8(a)Program.Theplaintiffownedasmallcompanythatwouldhavebidonthecontractbutforthefactitwasnotaparticipantinthe8(a)Program.AftermultiplejudicialproceedingstheD.C.Circuitdismissedtheplaintiff’sactionforlackofstandingbutgrantedtheplaintiff’smotiontoenjointhecontractprocurementpendingtheappealofthedismissalorder.TheNavycancelledtheproposedprocurementbuttheD.C.Circuitallowedtheplaintifftocircumventthemootnessargumentbyamendingitspleadingstoraiseafacialchallengetothe8(a)programasadministeredbytheSBAandutilizedbytheDOD.TheD.C.Circuitheldtheplaintiffhadstandingbecauseoftheplaintiff’sinabilitytocompeteforDODcontractsreservedto8(a)firms,theinjurywastraceabletotherace‐consciouscomponentofthe8(a)Program,andtheplaintiff’sinjurywasimminentduetothelikelihoodthegovernmentwouldinthefuturetrytoprocureanothercontractunderthe8(a)Programforwhichtheplaintiffwasready,willing,andabletobid.Id.at264‐65.

Onremand,theplaintiffamendeditscomplainttochallengetheconstitutionalityofthe8(a)Programandsoughtaninjunctiontopreventthemilitaryfromawardinganycontractformilitarysimulatorsbasedupontheraceofthecontractors.Id.at265.Thedistrictcourtfirstheldthattheplaintiff’scomplaintcouldbereadonlyasachallengetotheDOD’simplementationofthe8(a)Program[pursuantto10U.S.C.§2323]asopposedtoachallengetotheprogramasawhole.Id.at266.Thepartiesagreedthatthe8(a)Programusesrace‐consciouscriteriasothedistrictcourtconcludeditmustbeanalyzedunderthestrictscrutinyconstitutionalstandard.Thecourtfoundthatinordertoevaluatethegovernment’sproffered“compellinggovernmentinterest,”thecourtmustconsidertheevidencethatCongressconsideredatthepointofauthorizationorreauthorizationtoensurethatithadastrongbasisinevidenceofdiscriminationrequiringremedialaction.ThecourtcitedtoWesternStatesPavinginsupportofthisproposition.Id.ThecourtconcludedthatbecausetheDODprogramwasreauthorizedin2006,thecourtmustconsidertheevidencebeforeCongressin2006.

ThecourtcitedtotherecentRothedecisionasdemonstratingthatCongressconsideredsignificantevidentiarymaterialsinitsreauthorizationoftheDODprogramin2006,includingsixrecentlypublisheddisparitystudies.Thecourtheldthatbecausetherecordbeforeitinthepresentcasedidnotcontaininformationregardingthis2006evidencebeforeCongress,itcouldnotruleontheparties’MotionsforSummaryJudgment.Thecourtdeniedbothmotionsanddirectedthepartiestoproposefutureproceedingsinordertosupplementtherecord.Id.at267.

APPENDIX C.

Quantitative Analysis

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX C, PAGE 1

APPENDIX C. Quantitative Analysis

Figure C‐1. Percentage of workers 25 and older with at least a four‐year college degree, Denver and the United States, 2012‐2016

Note:

**/++ Denotes that the difference in proportions between the minority group and non‐Hispanic whites (or between women and men) is statistically significant at the 95% confidence levels for Denver and the United States as a whole, respectively.


Source:


FigureC‐1indicatesthat,comparedtonon‐HispanicwhiteAmericansworkinginDenver,smallerpercentagesofBlackAmericans,AsianPacificAmericans,HispanicAmericans,andNativeAmericanshavefour‐yearcollegedegrees.Incontrast,comparedtonon‐HispanicwhiteAmericansandmen,alargerpercentageofSubcontinentAsianAmericansandwomenworkinginDenverhavefour‐yearcollegedegrees,respectively.


Figure C‐2. Percent representation of minorities in various industries in Denver, 2012‐2016

Note: *, ** Denotes that the difference in proportions between minority workers in the specified industry and all industries is statistically significant at the 90% and 95% confidence level, respectively.

The representation of minorities among all Denver workers is 5 percent for Black Americans, 19 percent for Hispanic Americans, 4 percent for Asian Pacific Americans, 1 percent for Subcontinent Asian Americans, 1 percent for Other race minorities, and 30 percent for all minorities considered together.

Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, and scientific research industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and other personal were combined into one category of childcare, hair, and nails.


FigureC‐2indicatesthattheDenverindustrieswiththehighestrepresentationsofminorityworkersareconstruction;otherservices;andchildcare,hair,andnails.TheDenverindustrieswiththelowestrepresentationsofminorityworkersareextractionandagriculture;education;andarchitectureandengineering.


Figure C‐3. Percent representation of women in various industries in Denver, 2012‐2016

Note: ** Denotes that the difference in proportions between women workers in the specified industry and all industries is statistically significant at the 95% confidence level.

The representation of women among all Denver workers is 46 percent.

Workers in the finance, insurance, real estate, legal services, accounting, advertising, architecture, management, and scientific research industries were combined to one category of Architecture & Engineering; Workers in the rental and leasing, travel, investigation, waste remediation, arts, entertainment, recreation, accommodations, food services, and select other services were combined into one category of Other services; Workers in child day care services, barber shops, beauty salons, nail salons, and other personal were combined into one category of childcare, hair, and nails.


FigureC‐3indicatesthattheDenverindustrieswiththehighestrepresentationsofwomenworkersarechildcare,hair,andnails;healthcare;andeducation.TheDenverindustrieswiththelowestrepresentationsofwomenworkersareextractionandagriculture;manufacturing;andconstruction.


Figure C‐4. Race/ethnicity and gender of workers in study‐related industries and all industries, Denver and the United States, 2012‐2016

Note: ** Denotes that the difference in proportions between workers in each study‐related industry and workers in all industries is statistically significant at the 95% confidence level.


FigureC‐4indicatesthattherearesmallerpercentagesofAsianPacificAmericans,BlackAmericans,andwomenworkingintheDenverconstructionindustrythaninallindustriesconsideredtogether.Inaddition,therearesmallerpercentagesofBlackAmericans,HispanicAmericans,andwomenworkingintheprofessionalservicesindustrythaninallindustriesconsideredtogether.Finally,thereisalargerpercentageofwomenworkinginthegoodsandservicesindustrythanallindustriesconsideredtogether.

Denver

Race/ethnicity

Black American 4.5 % 1.8 % ** 3.5 % ** 5.1 %

Asian Pacific American 2.7 % 1.0 % ** 2.5 % 2.5 %

Subcontinent Asian American 0.4 % 0.0 % 1.3 % ** 0.9 %

Hispanic American 14.2 % 28.1 % ** 6.8 % ** 13.4 %

Native American 1.1 % 1.6 % 0.8 % 1.1 %

Other race minority 0.4 % 0.4 % 0.4 % 0.4 %

Total minority 23.4 % 32.9 % 15.3 % 23.4 %

Non‐Hispanic white 76.6 % 67.1 % ** 84.7 % ** 76.6 %

Total 100.0 % 100.0 % 100.0 % 100.0 %

Gender

Women 45.5 % 10.9 % ** 43.9 % ** 35.3 % **

Men 54.5 % 89.1 % ** 56.1 % ** 64.7 % **

Total 100.0 % 100.0 % 100.0 % 100.0 %

United States

Race/ethnicity

Black American 10.9 % 6.2 % ** 9.0 % ** 10.8 % **

Asian Pacific American 3.4 % 1.2 % ** 4.4 % ** 3.2 % **

Subcontinent Asian American 0.7 % 0.2 % ** 1.9 % ** 0.9 % **

Hispanic American 10.7 % 15.0 % ** 7.0 % ** 10.9 % **

Native American 1.2 % 1.6 % ** 0.9 % ** 1.0 % **

Other race minority 0.4 % 0.4 % 0.4 % 0.5 %

Total minority 27.3 % 24.5 % 23.6 % 27.2 %

Non‐Hispanic white 72.7 % 75.5 % ** 76.4 % ** 72.8 %

Total 100.0 % 100.0 % 100.0 % 100.0 %

Gender

Women 46.5 % 9.9 % ** 46.0 % ** 31.9 % **

Men 53.5 % 90.1 % ** 54.0 % ** 68.1 % **

Total 100.0 % 100.0 % 100.0 % 100.0 %

All Industries

(n=59,067)

All Industries

(n=6,832,970)

Construction

(n=480,280)

(n=4,770)

Construction

Goods &

Services

(n=9,187)

Goods &

Services

(n=926,709)

Professional

Services

(n=370,271)

(n=5,758)

Professional

Services


Figure C‐5. Percent representation of minorities in construction occupations in Denver, 2012‐2016

Note: * Denotes that the difference in proportions between minority workers in the specified occupation and all construction occupations considered together is statistically significant at the 90% confidence level.


The representation of minorities among all Denver construction workers is 2 percent for Black Americans, 39 percent for Hispanic Americans, 1 percent for Asian Pacific Americans, 0 percent for Subcontinent Asian Americans, 1 percent for Native Americans, 0 percent for Other race minorities, and 43 percent for all minorities considered together.

Data on plasterers and stucco masons are not presented, because none were found in the study area sample.

Crane and tower operators, dredge, excavating and loading machine operators, paving, surfacing and tamping equipment operators and other construction equipment operators were combined into the single category of miscellaneous construction equipment operators.

Source: BBC Research & Consulting from 2012‐2016 ACS 5% sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

FigureC‐5indicatesthattheDenverconstructionoccupationswiththehighestrepresentationsofminorityworkersarecementmasonandterrazzoworkers;roofers;anddrywallinstallers,ceilingtileinstallers,andtapers.TheDenverconstructionoccupationswiththelowestrepresentationsofminorityworkersaresheetmetalworkers;ironandsteelworkers;andsecretaries.


Figure C‐6. Percent representation of women in selected construction occupations in Denver, 2012‐2016

Note: *, ** Denotes that the difference in proportions between women workers in the specified occupation and all construction occupations considered together is statistically significant at the 90% and 95% confidence level, respectively.


The representation of women among all Denver construction workers is 10 percent.

Data on plasterers and stucco masons are not presented, because none were found in the study area sample.

Crane and tower operators, dredge, excavating and loading machine operators, paving, surfacing and tamping equipment operators and other construction equipment operators were combined into the single category of miscellaneous construction equipment operators.

Source: BBC Research & Consulting from 2012‐2016 ACS 5% sample. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

FigureC‐6indicatesthattheDenverconstructionoccupationswiththehighestrepresentationsofwomenworkersaresecretaries;painters;andsheetmetalworkers.TheDenverconstructionoccupationswiththelowestrepresentationsofwomenworkersarebrickmasons,blockmasons,andstonemasons;cementmasonsandterrazzoworkers;ironandsteelworkers;andhelpers.


Figure C‐7. Percentage of workers who worked as a manager in each study‐related industry, Denver and the United States, 2012‐2016

Note:



Source:


FigureC‐7indicatesthat,comparedtonon‐HispanicwhiteAmericans,smallerpercentagesofBlackAmericans,HispanicAmericans,andNativeAmericansworkasmanagersintheDenverconstructionindustry.SmallerpercentagesofBlackAmericans,AsianPacificAmericans,andHispanicAmericansworkasmanagersintheDenverprofessionalservicesindustry.Inaddition,smallerpercentagesofBlackAmericans,AsianPacificAmericans,HispanicAmericans,andNativeAmericansworkasmanagersintheDenvergoodsandservicesindustry.Inaddition,comparedtomen,asmallerpercentageofwomenworkasmanagersintheDenvergoodsandservicesindustry.Incontrast,alargerpercentageofwomenthanmenworkasmanagersintheDenverconstructionindustry.

Denver

Race/ethnicity

Black American 5.6 % ** 6.2 % ** 3.7 % **

Asian Pacific American 12.2 % 5.8 % ** 4.4 % **

Subcontinent Asian American 0.0 % † 9.0 % 9.7 %


Native American 3.9 % ** 11.3 % 3.3 % **

Other Race Minority 6.9 % † 0.0 % † 0.0 % *


Gender

Women 14.5 % ** 8.7 % 6.3 % *

Men 10.5 % 9.5 % 7.3 %


United States

Race/ethnicity

Black American 5.0 % ** 4.4 % ** 2.2 % **

Asian Pacific American 10.4 % 6.7 ** 5.7 %

Subcontinent Asian American 14.3 % ** 9.4 9.2 % **

Hispanic American 3.1 % ** 5.5 ** 2.3 % **

Native American 5.8 % ** 6.5 ** 3.3 % **

Other Race Minority 6.3 % ** 5.8 ** 3.9 % **


Gender

Women 10.0 % ** 6.9 % ** 4.3 % **

Men 8.0 % 9.1 % 5.2 %


Construction

Goods &

Services

Goods &

Services

Construction

Professional

Services

Professional

Services


Figure C‐8. Mean annual wages, Denver and the United States, 2012‐2016

Note:


**/++ Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level for Denver and the United States as a whole, respectively.

Source:


FigureC‐8indicatesthat,comparedtonon‐HispanicwhiteAmericans,BlackAmericans,HispanicAmericans,NativeAmericans,andotherraceminoritiesinDenverexhibitlowermeanannualwages.Inaddition,womeninDenverexhibitlowermeanannualwagesthanmen.Incontrast,comparedtonon‐HispanicwhiteAmericans,SubcontinentAsianAmericansexhibithighermeanannualwages.


Figure C‐9. Predictors of annual wages (regression), Denver, 2012‐2016

Note:

The regression model includes 45,861 observations.


For ease of interpretation, the exponentiated form of the coefficients is displayed in the figure.

*, ** Denotes statistical significance at the 90% and 95% confidence levels, respectively.

The referent for each set of categorical variables is as follows: non‐Hispanic whites for the race variables, high school diploma for the education variables, manufacturing for industry variables.

Source:


FigureC‐9indicatesthat,comparedtobeinganon‐HispanicwhiteAmericaninDenver,beingBlackAmerican,AsianPacificAmerican,SubcontinentAsianAmerican,HispanicAmerican,NativeAmerican,orotherraceminorityisrelatedtolowerannualwages,evenafteraccountingforvariousotherpersonalcharacteristics.(Forexample,themodelindicatesthatbeingBlackAmericanisassociatedwithmakingapproximately$0.76foreverydollarthatanon‐HispanicwhiteAmericanmakes,allelsebeingequal.)Inaddition,beingawomanisrelatedtolowerannualwagescomparedtobeingamaninDenver,evenafteraccountingforvariousotherpersonalcharacteristics.

Variable

Constant 7425.547 **

Black American 0.764 **

Asian Pacific American 0.869 **

Subcontinent Asian American 0.913 **

Hispanic American 0.877 **

Native American 0.850 **

Other minority group 0.862 *

Women 0.800 **

Less than high school education 0.836 **

Some college 1.153 **

Four‐year degree 1.560 **

Advanced degree 2.047 **

Disabled 0.799 **

Military experience 0.998

Speaks English well 1.260 **

Age 1.067 **

Age‐squared 0.999 **

Married 1.114 **

Children 1.023 **

Number of people over 65 in household 0.891 **

Public sector worker 1.067 **

Manager 1.275 **

Part time worker 0.350 **

Extraction and agriculture 1.340 **

Construction 0.882 **

Wholesale trade 0.969

Retail trade 0.714 **

Transportation, warehouse, & information 1.010

Professional services 1.051 **

Education 0.618 **

Health care 1.001

Other services 0.692 **

Public administration and social services 0.837 **

Exponentiated

Coefficient


Figure C‐10. Predictors of annual wages (regression), United States, 2012‐2016

Note:

The regression model includes 4,032,836 observations.



** Denotes statistical significance at the 95% confidence level.

The referent for each set of categorical variables is as follows: non‐Hispanic whites for the race variables, high school diploma for the education variables, manufacturing for industry variables, and Northeast for region variables.

Source:


FigureC‐10indicatesthat,comparedtobeinganon‐HispanicwhiteAmericanintheUnitedStates,beingBlackAmerican,AsianPacificAmerican,SubcontinentAsianAmerican,HispanicAmerican,NativeAmerican,orotherraceminorityisrelatedtolowerannualwages,evenafteraccountingforvariousotherpersonalcharacteristics.(Forexample,themodelindicatesthatbeingBlackAmericanisassociatedwithmakingapproximately$0.86foreverydollarthatanon‐HispanicwhiteAmericanmakes,allelsebeingequal.)Inaddition,beingawomanisrelatedtolowerannualwagescomparedtobeingaman,evenafteraccountingforvariousotherpersonalcharacteristics.

Variable

Constant 7784.638 **






Other minority group 0.908 **

Women 0.781 **

Less than high school education 0.854 **




Disabled 0.794 **

Military experience 0.999


Age 1.058 **


Married 1.121 **

Children 1.011 **


Midwest 0.881 **

South 0.895 **

West 0.986 **

Public sector worker 1.109 **

Manager 1.305 **

Part time worker 0.363 **

Extraction and agriculture 0.958 **

Construction 0.930 **

Wholesale trade 0.967 **

Retail trade 0.751 **

Transportation, warehouse, & information 1.031 **

Professional services 1.062 **

Education 0.657 **

Health care 1.000

Other services 0.710 **

Public administration and social services 0.824 **

Exponentiated

Coefficient


Figure C‐11. Home Ownership Rates, Denver and the United States, 2012‐2016

Note:

The sample universe is all households.

**, ++ Denotes statistically significant differences from non‐Hispanic whites at the 95% confidence level for Denver and the United States as a whole, respectively.

Source:


FigureC‐11indicatesthat,comparedtonon‐HispanicwhiteAmericans,smallerpercentagesofBlackAmericans,AsianPacificAmericans,SubcontinentAsianAmericans,HispanicAmericans,andNativeAmericansinDenverownhomes.


Figure C‐12. Median home values, Denver and the United States, 2012‐2016

Note:

The sample universe is all owner‐occupied housing units.

Source:


FigureC‐12indicatesthatBlackAmerican,AsianPacificAmerican,HispanicAmerican,NativeAmerican,andotherraceminorityhomeownersinDenverownhomesoflowermedianvaluesthannon‐HispanicwhiteAmericanhomeowners.Incontrast,SubcontinentAsianAmericanhomeownersinDenverownhomesofhighermedianvaluesthannon‐HispanicwhiteAmericanhomeowners.


Figure C‐13. Denial rates of conventional purchase loans for high‐income households, Denver and the United States, 2016

Note:

High‐income borrowers are those households with 120% or more of the HUD area median family income (MFI).

Source:

FFIEC HMDA data. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.

FigureC‐13indicatesthatin2016BlackAmericans;AsianAmericans;HispanicAmericans;NativeAmericans;andNativeHawaiianorOtherPacificIslandersinDenverweredeniedconventionalhomepurchaseloansatagreaterratethannon‐HispanicwhiteAmericans.


Figure C‐14. Percent of conventional home purchase loans that were subprime, Denver and the United States, 2016

Source:

FFIEC HMDA data 2016. The raw data extract was obtained from the Consumer Financial Protection Bureau HMDA data tool: http://www.consumerfinance.gov/hmda/explore.

FigureC‐14indicatesthatin2016BlackAmericans;HispanicAmericans;NativeAmericans;andNativeHawaiianorOtherPacificIslandersinDenverwereawardedsubprimeconventionalhomepurchaseloansatagreaterratethannon‐HispanicwhiteAmericans.


Figure C‐15. Business loan denial rates, Mountain Division and the United States, 2003

Note:

** Denotes that the difference in proportions from businesses owned by non‐Hispanic white men is statistically significant at the 95% confidence level.

The Mountain Census Division consists of Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada, and Wyoming.

Source:

BBC Research & Consulting from 2003 Survey of Small Business Finance.

FigureC‐15indicatesthat,in2003,BlackAmerican‐ownedbusinessesintheUnitedStatesweredeniedbusinessloansatagreaterratethanbusinessesownedbynon‐Hispanicwhitemen.


Figure C‐16. Businesses that did not apply for loans due to fear of denial, Mountain Division and the United States, 2003

Note:

** Denotes that the difference in proportions from businesses owned by non‐Hispanic white men is statistically significant at the 95% confidence level.


Source:


FigureC‐16indicatesthat,in2003,BlackAmerican‐,HispanicAmerican‐,andnon‐Hispanicwhitewoman‐ownedbusinessesintheUnitedStatesweremorelikelythanbusinessesownedbynon‐Hispanicwhitementonotapplyforbusinessloansduetoafearofdenial.


Figure C‐17. Mean values of approved business loans, Mountain Division and the United States, 2003

Note:

**, ++ Denotes statistically significant differences from non‐Hispanic white men (for minority groups and women) at the 95% confidence level for the United States as a whole and the South Atlantic Division, respectively.


Source:


FigureC‐17indicatesthat,in2003,minority‐andwoman‐ownedbusinessesintheUnitedStateswhoreceivedbusinessloanswereapprovedforloansthatwereworthlessthanthosethatbusinessesownedbynon‐Hispanicwhitemenreceived.


Figure C‐18. Self‐employment rates in study‐related industries, Denver and the United States, 2012‐2016

Note:



Source:


FigureC‐18indicatesthat,comparedtonon‐HispanicwhiteAmericans,BlackAmericans,AsianPacificAmericans,andHispanicAmericansexhibitedlowerratesofself‐employment(i.e.,businessownership)intheDenverconstructionindustry;BlackAmericans,AsianPacificAmericans,SubcontinentAsianAmericans,andHispanicAmericansexhibitedlowerratesofself‐employmentintheDenverprofessionalservicesindustry;andBlackAmericans,SubcontinentAsianAmericans,andHispanicAmericansexhibitedlowerratesofself‐employmentintheDenvergoodsandservicesindustry.Inaddition,womenworkingintheDenverconstructionindustryexhibitedlowerratesofself‐employmentthanmen.

Denver

Race/ethnicity

Black American 14.3 % ** 7.9 % ** 6.8 % **

Asian Pacific American 17.9 % * 7.8 % ** 11.3 %

Subcontinent Asian American 0.0 % † 3.3 % ** 5.8 % **


Native American 18.2 % 15.5 % 16.3 %

Other Race Minority 23.9 % † 4.8 % † 6.6 %


Gender

Women 16.4 % ** 19.4 % ** 13.3 %

Men 21.4 % 16.9 % 12.5 %

All individuals 20.9 % 17.9 % 12.8 %

United States

Race/ethnicity

Black American 17.8 % ** 8.2 % ** 7.3 % **

Asian Pacific American 23.2 % ** 11.5 % ** 11.4 % **

Subcontinent Asian American 22.9 % ** 7.5 % ** 8.4 % **


Native American 18.4 % ** 15.4 % ** 14.1 %

Other Race Minority 23.1 % 13.5 % ** 13.4 %


Gender

Women 16.1 % ** 15.2 % ** 12.7 % **

Men 24.0 % 16.7 % 13.0 %

All individuals 23.2 % 16.0 % 12.9 %

Construction

Construction

Goods &

Services

Goods &

Services

Professional

Services

Professional

Services


Figure C‐19. Predictors of business ownership in construction (probit regression), Denver, 2012‐2016

Note:

The regression includes 4,740 observations.

*,** Denote statistical significance at the 90% and 95% confidence levels, respectively.

Subcontinent Asian omitted from regression due to small sample size.

The referent for each set of categorical variables is as follows: high school diploma for the education variables and non‐Hispanic whites for the race variables.

Source:

BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa.

FigureC‐19indicatesthat,comparedtobeinganon‐HispanicwhiteAmericaninDenver,beingHispanicAmericanisrelatedtoalowerlikelihoodofowningaconstructionbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.Inaddition,comparedortobeingamaninDenver,beingawomanisrelatedtoalowerlikelihoodofowningaconstructionbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.

Variable

Constant ‐2.5441 **

Age 0.0576 **

Age‐squared ‐0.0004 **

Married 0.0149

Disabled 0.0686

Number of children in household ‐0.0172


Owns home ‐0.0775

Home value ($000s) 0.0003 **

Monthly mortgage payment ($000s) 0.0086

Interest and dividend income ($000s) 0.0031

Income of spouse or partner ($0000s) 0.0012 **


Less than high school education ‐0.0863

Some college ‐0.0381

Four‐year degree ‐0.1920 **

Advanced degree ‐0.3448 **




Hispanic American ‐0.3820 **

Native American ‐0.1239

Other minority group 0.1749

Women ‐0.4076 **

Coefficient


Figure C‐20. Disparities in business ownership rates for Denver construction workers, 2012‐2016

Note: The benchmark figure can only be estimated for records with observed (rather than imputed) dependent variable values. Thus, the study team made comparisons between actual and benchmark self‐employment rates only for the subset of the sample for which the dependent variable was observed.

Analyses are limited to those groups that showed negative coefficients that were statistically significant in the regression model.

Source: BBC Research & Consulting from 2012‐2016 ACS 5% Public Use Microdata samples. The raw data extract was obtained through the IPUMS program of the MN Population Center: http://usa.ipums.org/usa/.

FigureC‐20indicatesthatHispanicAmericansownconstructionbusinessesinDenverataratethatis31percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans.Inaddition,non‐HispanicwhitewomenownconstructionbusinessesinDenverataratethatis59percentthatofsimilarly‐situatednon‐Hispanicwhitemen.

Group

Hispanic American 11.7% 38.0% 31

Non‐Hispanic white women 17.9% 30.3% 59

Self‐Employment Rate Disparity Index

Actual Benchmark (100 = Parity)


Figure C‐21. Predictors of business ownership in professional services (regression), Denver, 2012‐2016

Note:


*, ** Denote statistical significance at the 90% and 95% confidence levels, respectively.


Source:


FigureC‐21indicatesthat,comparedtobeinganon‐HispanicwhiteAmericaninDenver,beingBlackAmerican,AsianPacificAmerican,orSubcontinentAsianAmericanisrelatedtoalowerlikelihoodofowningaprofessionalservicesbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.Incontrast,comparedortobeingamaninDenver,beingawomanisrelatedtoagreaterlikelihoodofowningaprofessionalservicesbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.

Variable


Age 0.0500 **

Age‐squared ‐0.0003 *

Married ‐0.0259

Disabled ‐0.0293

Number of children in household 0.0271

Number of people over 65 in household 0.0826 *

Owns home ‐0.2009 **

Home value ($000s) 0.0004 **


Interest and dividend income ($000s) 0.0018 *

Income of spouse or partner ($0000s) 0.0009 **


Less than high school education 0.2545




Black American ‐0.3617 **

Asian Pacific American ‐0.4676 **

Subcontinent Asian American ‐0.7729 **


Native American 0.0590

Other minority group ‐0.8808

Women 0.1113 **

Coefficient


Figure C‐22. Disparities in business ownership rates for Denver professional services workers, 2012‐2016




FigureC‐22indicatesthatBlackAmericansownprofessionalservicesbusinessesinDenverataratethatis54percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans.AsianPacificAmericansownprofessionalservicesbusinessesinDenverataratethatis48percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans;andSubcontinentAsianAmericansownprofessionalservicesbusinessesinDenverataratethatis25percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans.

Group

Black American 8.2% 15.2% 54

Asian Pacific American 8.0% 16.5% 48

Subcontinent Asian American 3.5% 13.8% 25




Figure C‐23. Predictors of business ownership in goods and services (regression), Denver, 2012‐2016

Note:


*, ** Denote statistical significance at the 90% and 95% confidence levels, respectively.


Source:


FigureC‐23indicatesthat,comparedtobeinganon‐HispanicwhiteAmericaninDenver,beingaBlackAmericanorSubcontinentAsianAmericanisrelatedtoalowerlikelihoodofowningagoodsandservicesbusiness,evenafteraccountingforvariousotherpersonalcharacteristics.

Variable


Age 0.0415 **

Age‐squared ‐0.0003 **

Married ‐0.0511

Disabled 0.1126

Number of children in household 0.0347

Number of people over 65 in household 0.0839 *

Owns home ‐0.2004 **

Home value ($000s) 0.0004 **


Interest and dividend income ($000s) 0.0040 **

Income of spouse or partner ($0000s) 0.0005

Speaks English well 0.1168

Less than high school education ‐0.0882

Some college 0.0256

Four‐year degree ‐0.0011

Advanced degree ‐0.0198

Black American ‐0.3303 **


Subcontinent Asian American ‐0.4132 *



Other minority group ‐0.1338

Women 0.0330

Coefficient


Figure C‐24. Disparities in business ownership rates for Denver goods and services workers, 2012‐2016




FigureC‐24indicatesthatBlackAmericansowngoodsandservicesbusinessesinDenverataratethatis57percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans.Inaddition,SubcontinentAsianAmericansowngoodsandservicesbusinessesinDenverataratethatis47percentthatofsimilarly‐situatednon‐HispanicwhiteAmericans.

Group

Black American 7.3% 12.8% 57

Subcontinent Asian American 5.4% 11.4% 47




Figure C‐25. Rates of business closure, expansion, and contraction, Colorado and the United States, 2002‐2006

Note:

Data only include only privately‐held businesses.

Equal Gender Ownership refers to those businesses for which ownership is split evenly between women and men.

Statistical significance of these results cannot be determined, because sample sizes were not reported.

Source:

Lowrey, Ying. 2010. “Race/Ethnicity and Establishment Dynamics, 2002‐2006.” U.S. Small Business Administration Office of Advocacy. Washington D.C.

Lowrey, Ying. 2014. "Gender and Establishment Dynamics, 2002‐2006." U.S. Small Business Administration Office of Advocacy. Washington D.C.

FigureC‐25indicatesthatminority‐ownedbusinessesinColoradoshowhigherclosureratesthannon‐HispanicwhiteAmerican‐ownedbusinesses.Woman‐ownedbusinessesinColoradoshowhigherclosureratesthanbusinessesownedbymen.Inaddition,BlackAmerican‐andAsianAmerican‐ownedbusinessesinColoradoshowlowerexpansionratesandhighercontractionratesthannon‐HispanicwhiteAmerican‐ownedbusinesses.


Figure C‐26. Mean annual business receipts (in thousands), Denver‐Aurora, CO CSA and the United States, 2012

Note:

Includes employer and non‐employer firms. Does not include publicly‐traded companies or other firms not classifiable by race/ethnicity and gender.

Source:

2012 Survey of Business Owners, part of the U.S. Census Bureau’s 2012 Economic Census.

FigureC‐26indicatesthat,in2012,BlackAmerican‐;AsianAmerican‐;HispanicAmerican‐;AmericanIndianandAlaskanNative‐;andNativeHawaiianandOtherPacificIslander‐ownedbusinessesintheDenver‐AuroraCSAshowedlowermeanannualbusinessreceiptsthannon‐HispanicwhiteAmerican‐ownedbusinesses.Inaddition,woman‐ownedbusinessesintheDenver‐AuroraCSAshowedlowermeanannualbusinessreceiptsthanbusinessesownedbymen.


Figure C‐27. Mean annual business owner earnings, Denver and the United States, 2012‐2016

Note:


**, ++ Denotes statistically significant differences from non‐Hispanic whites (for minority groups) or from men (for women) at the 95% confidence level for Denver and the United States as a whole, respectively.


Source:


FigureC‐27indicatesthattheownersofBlackAmerican‐,HispanicAmerican‐,andNativeAmerican‐ownedbusinessesinDenverearnlessonaveragethantheownersofnon‐HispanicwhiteAmerican‐ownedbusinesses.Inaddition,theownersofwoman‐ownedbusinessesintheDenverearnlessonaveragethantheownersofbusinessesownedbymen.


Figure C‐28. Predictors of business owner earnings (regression), Denver, 2012‐2016

Note:




** Denotes statistical significance at the 95% confidence level.


Source:


FigureC‐28indicatesthat,comparedtobeinganownerofabusinessownedbynon‐HispanicwhiteAmericansormeninDenver,beingBlackAmericanorawomanisrelatedtosignificantlylowerearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.

Variable

Constant 531.365 **

Age 1.166 **


Married 1.224 **

Speaks English well 1.065

Disabled 0.627 **

Less than high school 0.528 **

Some college 0.925




Asian Pacific American 1.143


Hispanic American 1.005


Other race minority 0.854

Women 0.539 **

Exponentiated

Coefficient


Figure C‐29. Predictors of business owner earnings (regression), United States, 2012‐2016

Note:



The sample universe is business owners age 16 and over who reported positive earnings. All amounts in 2015 dollars.

*, ** Denotes statistical significance at the 90% and 95% confidence level, respectively.


Source:


FigureC‐29indicatesthat,comparedtobeingtheownerofanon‐HispanicwhiteAmerican‐ownedbusinessintheUnitedStates,beinganownerofaBlackAmerican‐orNativeAmerican‐ownedbusinessisrelatedtolowerearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.Inaddition,comparedtobeingtheownerofabusinessownedbymenintheUnitedStates,beinganownerofawoman‐ownedbusinessisrelatedtolowerearnings,evenafteraccountingforvariousotherbusinessandpersonalcharacteristics.

Variable

Constant 550.652 **

Age 1.148 **


Married 1.242 **


Disabled 0.583 **

Less than high school 0.746 **









Other race minority 1.115 *

Women 0.527 **

Exponentiated

Coefficient

APPENDIX D.

Qualitative Information about Marketplace Conditions

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX D, PAGE 1

APPENDIX D. Qualitative Information about Marketplace Conditions

AppendixDpresentsqualitativeinformationthatthestudyteamcollectedandanalyzedthroughthepublicengagementprocessfortheCityandCountyofDenver(theCity)DisparityStudy.BBCcollectedpublictestimonyfromstakeholdersusingavarietyofmethodsandconductedin‐depthinterviewswithbusinessownersandtradeassociationrepresentativesintheregion.Intotal,morethan100businessandtradeassociationrepresentativesprovidedwrittenorspokencommentstothestudyteam.AppendixDsummarizesthekeythemesandinsightsthatemergedfromthosecommentsandisdividedintothefollowing13sections:

A. Introduction. ThissectiondescribesthepublicengagementprocessforgatheringandanalyzingthequalitativeinformationsummarizedinAppendixD.

B. Background on Denver businesses. Thissectiondescribesthecharacteristicsofthebusinesseswhoseownersorrepresentativesprovidedpublictestimonyorgaveaninterviewforthedisparitystudy.Thissectionpresentsinformationonbusinesstype,businesssize,businessformation,andcurrenteconomicconditionsinDenver

C. Keys to business success. Thissectionpresentsbusinessowners’andrepresentatives’perspectivesonthekeystobusinesssuccessintheDenvermarketplace.

D. Doing business as a prime contractor or subcontractor. Thissectiondescribesbusinesses’mixofprimecontractandsubcontractwork,theirexperiencesinthoseroles,andhowtheyobtaintheirwork.

E. Potential barriers to doing business in Denver. ThissectiondescribesthebarriersthatbusinessesfaceintheDenvermarketplaceanddetailsaboutwhetherrace‐orgender‐baseddiscriminationmaybecontributingtothosebarriers.

F. Work with the City and other public organizations.Thissectiondescribesbusinessowners’experiencesworkingwithorattemptingtoworkwiththeCityofDenverandotherpublicorganizationsintheregion.

G. Allegations of unfair treatment. Thissectiondocumentsbusinessowners’andrepresentatives’experienceswithunfairtreatmentbycustomers,primecontractors,orotherpartieswhenbiddingonorperformingcontractwork.

H. Insights regarding race‐/ethnicity‐ or gender‐based discrimination. ThissectionpresentsinformationaboutanyexperiencesbusinessownersorrepresentativeshavehadwithdiscriminationinthePennsylvaniamarketplaceandhowthatbehavioraffectsminority‐,woman‐,LGBT‐,veteran‐ordisabled‐ownedbusinesses.


I. Insights regarding business assistance programs. Thissectiondescribesbusinessowners’opinionsaboutbusinessassistanceprogramsandotherstepstoremovebarriersforsmallbusinessdevelopmentinDenver.

J. Insights regarding contracting processes. Thissectioncapturesbusinessownersandrepresentatives’feedbackabouttheCommonwealth’sandPennDOT’scontractingprocessesandprocurementpolicies.

K. Insights regarding minority‐ and woman‐owned business programs. Thissectionpresentsinformationaboutbusinesses’experienceswithminority‐andwoman‐ownedbusinessprogramsandtheCity’sprogram.

L. Insights regarding certification. Thissectionpresentsinformationaboutbusinesses’experienceswithcertificationprocesses,includingtheCity’scertificationprocess.

M. Other insights and recommendations regarding City contracting and programs. ThissectionpresentsadditionalcommentsandsuggestionsfortheCitytoconsider.

A. Introduction

Throughoutthestudyperiod,businessownersandmanagers;tradeassociationrepresentatives;andotherinterestedpartieshadtheopportunitytodiscusstheirexperiencesworkingintheDenvermarketplaceandprovidepublictestimony.Thoseinsightswerecollectedthroughseveraldifferentchannels:

Participatinginanin‐depthinterview;

Participatinginanavailabilitysurvey;

Providingoralorwrittentestimonyduringapublicmeeting;and

Submittingwrittentestimonyviaemail.

FromSeptember2017throughSeptember2018,thestudyteamusedavarietyofpublicengagementmethodstogatherthosecommentsandfacilitatedseveralpublicmeetingsaboutthedisparitystudy.Thestudyteam’spublicengagementstrategyconsistedofthefollowing:

In‐depth interviews. Thestudyteamconductedin‐depthinterviewswithrepresentativesofbusinessesandtradeassociationsinDenver.Theinterviewsincludeddiscussionsaboutinterviewees’perceptionsofandexperienceswithgovernmentcontracting;theCity’sMinority‐andWomen‐ownedBusinessEnterprise(MWBE),EmergingBusinessEnterprise(EBE),SmallBusinessEnterprise(SBE),andFederalDisadvantagedBusinessEnterprise(DBE)Programs;andbusinesses’experiencesworkingorattemptingtoworkwithpublicagenciesintheregion.In‐depthinterviewcommentsareidentifiedinAppendixDbyrandominterviewnumbers(i.e.,#1,#2,#3,etc.).

Availability surveys.Thestudyteamconductedavailabilitysurveysforthedisparitystudyin2017and2018.Asapartoftheavailabilitysurveys,thestudyteamaskedbusinessownersandmanagerswhethertheircompanieshaveexperiencedbarriersordifficultiesstartingor


expandingbusinessesintheirindustriesorwithobtainingworkintheDenvermarketplace.ThestudyteamanalyzedthoseresponsesandincludedillustrativeexamplesofthedifferentcommenttypesandthemesinAppendixD.AvailabilitysurveycommentsareindicatedthroughoutAppendixDbytheprefix“AS.”

Publicmeetings.ThestudyteamsolicitedwrittenandverbaltestimonyatpublicmeetingsheldintheDenverregioninlate2017.Thestudyteamreviewedandanalyzedallpubliccommentsfromthosemeetings.Publicmeetingcommentsaredenotedbytheprefix“PT”throughoutAppendixD.

Written testimony.Throughoutthestudy,interestedpartieshadtheopportunitytosubmitwrittentestimonydirectlytothestudyteamviaemail.Allwrittentestimonyreceivedbyemailwasanalyzedbythestudyteam.Writtentestimonyisindicatedbytheprefix“WT”throughoutAppendixD.

B. Background on Denver Businesses

PartBsummarizesinformationrelatedto:

Howbusinessesbecomeestablished;

Challengesinstarting,operating,andgrowingabusiness;

Typesofworkthatbusinessesperform;

Sizeofbusinesses;

Capabilityofbusinessestoperformdifferenttypesandsizesofcontracts;

Localeffectsoftheeconomicdownturn;

Currenteconomicconditions;and

Businessowners’experiencespursingpublicandprivatesectorwork.

How businesses become established.Mostintervieweesreportedthattheircompanieswerestarted(orpurchased)byindividualswithconnectionsintheirrespectiveindustries.

Many interviewees worked in the industry or a related industry before starting their own

businesses, or have worked for many years in the industry.[e.g.,#4,#16,#30] Forexample:

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmreportedthathestartedthefirmbyhimselfandhasalwaysbeenthesoleownerandmanagerofthefirm.Headdedthathestartedhisfirm27yearsagoandhasbeenworkinginhisindustryforover40years.[#3]

TheBlackAmericanmalebusinessownersaidthatheworkedfor18yearsinengineeringandhas"beenasmallbusinessownerforabouteight[or]nineyearsnow."[PT#1c]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatsheispresidentandCEOofthefirm.Shesaidthatshefoundedthecompany


about10yearsagoandnotedthatsheworkedforanumberofengineeringfirmsbeforestartingherown.[#5]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthathestartedthecompanyalmost10yearsagoaftermovingtotheUnitedStates.HeaddedthatheusedtoownabusinessinPakistanandpreferstobe“hisownboss.”[#18]

ThesamebusinessownersaidthatsomeofhisrelativesintheU.S.havethesametypeofcompany,soitdidn’ttakelongforhimtofigureoutwhatheneededtodotogetstarted.[#18]

Thenon‐Hispanicwhitemaleownerofaconstructionfirmstatedthatheistheownerandpresidentofthecompany.Headded,“IstartedthebusinessbecauseIwantedtobemyownbossandmyfatherhadthissametypeofbusinessinDenver.IlearnedeverythingIknowfromhim.”[#24]

Thesamebusinessownercontinued,“Thecompanywasformedaboutfiveyearsago.ThereasonIstarteditwasbecauseIwantedtostartmyownbusiness.Ididn’twanttohavesomeoneelsebossingmearound.Notevenmyfather.Ilearnedmyskillsfromhimandwantedtobelikehim.”[#24]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthathehasbeenpresidentofthecompanyfornineyears.Hesaidthathisbusinessmergedwithanotherengineeringcompanyafewyearsago,andnotedthathisprimaryresponsibilityaspresidentisbusinessdevelopment.[#25]

Whenaskedwhyhestartedthefirm,thesamebusinessownerstatedthathewas“laidofffromanotherengineeringcompanywhentheeconomysloweddown.”Hesaid,“Ilookedaroundforawhileforanotherposition,butdecidedthatIcouldandshouldstartmyowncompany.”[#25]

Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmreportedthatheispresidentofthecompanyandthathefoundeditin2008.Hecontinued,“IstartedthiscompanyafterIwaslaidofffromanothercommercialmechanicalemployer.Iwantedtobemoreincontrolofmysuccess.”[#31]

Whenaskedtodescribetheformationofhisfirm,thesamebusinessownerstated,“Iwantedtohavesomethingofmyown.Afterbeinglaidoff,Ithoughtmyowncompanygrowthwouldbemorepredictable[and]notdependonhowmuchmoneyanothercompanywasmaking.”[#31]

Whenaskedhowhecametobetheownerofthefirm,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Iactuallystartedmyownbusinessinthe[mid‐1970s]duringabusinessdownturn.Ihadbeenlaidofffromanumberoffirms,soIjuststarteddoingkitchenremodels,deckadditions,houseadditions,singlefamilyhouses,whateverIcouldfind.Imovedintopublicwork,andmy


firstprojectwasfortheDenverUrbanRenewalAuthority,thenIhadacontractwith[RegionalTransportationDistrict].”[#22]

Thesamebusinessownerwentontosaythatthecompanyinitspresentformbeganinthemid‐1990s.Headded,“Ireallytransitionedintopublicworkwhentheybuilttheairport,andthatwasinthelate1980swhenthefirst[anti‐discrimination]ordinancewasestablished.Ijoinedforceswithotherminorityarchitectsandcontractororganizations….Asaresultofthat,wegotsomeworkattheairport.Theairportworkandtheordinancereallyhelpedourfirmgrowuntil9/11.Wehadalotofcontractsthatjuststopped[then],sowelaidoffpeople.Itwasverypainful.”[#22]

Thenon‐Hispanicwhitemaleownerofanengineeringcompanystatedthathehasbeenpresidentofthecompanysinceitsfoundingover20yearsago.Headded,“Iusedtoworkfor[acityintheDenverarea]….Workingthereandothergovernmentplaces,it’seasytogetin,butnottomoveup.Afterafewyearsthere,Imovedto[workatan]engineeringcompany.Ihaveover40yearsofengineeringexperienceinpublicandprivatecompanies.Iknewitwastimetostartmyowncompanymanyyearsago.”[#26]

Whenaskedabouttheformationofhisfirm,thesamebusinessownersaid,“Iwantedtostartmyowncompany…tobetheboss.Ihadsatisfactoryexperiencesworkingfor[acityintheDenverarea]andthe…engineeringcompany.But,Ireallyfeltitwastimeformyowncompanyandnotworkingforsomeoneelse.”[#26]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthatheismajorityownerandfounderofthefirm.Theotherowner,heexplained,isanon‐Hispanicwhitefemale.Hesaidthatheformedthecompanyafterabout30yearsofexperienceasacontractfurniturerepresentative.[#9]

Thesamebusinessowneradded,“Iwasasalesmanagerforalightingpolemanufacturerforaboutthreeorfouryears,[then]decidedIshouldstartmyownbusiness….Itwasacombinationofobservationinthemarketplacealongwithresearchthatledmetodiscoveramarketin[ourparticular]market,anichethatIthoughtwecouldfulfill.”[#9]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthecompanywasfoundedalmost40yearsagobyanon‐Hispanicwhitemale.Henotedthatthefounderstillownsthefirm.[#21a]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthatheisthepresident,principalengineer,andmajorityownerofthefirm.Hesaidthatbeforestartinghisownfirminthelate1980s,hepreviouslyservedasvicepresidentofanothersimilarfirm.[#14]

Whenaskedwhyhestartedthefirm,thesamebusinessownerreportedthathewantedtocaptureupcomingworkatthenewDenverInternationalAirport.HesaidthathegothisMBEcertificationaboutayearafterstartingthecompany,whichenabledthefirmtosecurecontractswiththem.[#14]


Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaidthatsheisinchargeofbusinessdevelopment,contractanddepartmentmanagementatthefirm.Regardingthefirm’sbackground,shesaid,“Thefounderstarteditfromscratchbecausehewantedtobehisownboss.Hehadworkedformanyothercompaniesandfelthehadenoughexperiencetobesuccessfulonhisown.[He]didrunthebusinessforabout12yearsandwitnessedmuchsuccess.”[#28]

Thesamebusinessrepresentativecontinued,“Thefounderpromotedoneofhismanagers[to]presidentaboutsevenyearsago,buthasstayed[withthecompany]inaleadershiprole,similartoaCEOinmanyothercompanies.Hiscurrentdutiesincludeoverseeingcompanygrowth.”[#28]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstatedthatheworkedinthecablingindustryformanyyearsbeforedecidingtostarthisowncompany.Headded,“IstartedthiscompanybecauseIfeltveryconfidentIcoulddothejobasboss,justas[well]assomeofthemanagersIworkedwithatlargercompanies.”[#32a]

Thesamebusinessownercontinued,“Istartedthiscompany[over10]yearsago.Ittookabouttwoyearsinthedevelopmentandresearchphase.IwantedtobemyownbossandfeltasthoughIhadenoughcontactsintheindustry.Ihaveworkedinthiscapacityforothercompaniesforabout20years.”[#32a]

Whenaskedtodescribetheformationofthefirm,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatshestartedthecompanyalmost20yearsagoandworkedintheindustrypriortothat.[#20]

One business assistance organization representative discussed the organization’s formation.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatshehasbeenwiththeorganizationforaboutfiveyears.Whenaskedabouttheorganization’sformation,shesaid,“Whentheorganizationstartedintheearly90swewerejustaroundtheDenvermetroarea.Overtimethatstartedtogrowintoaregionalfocus,[and]thenin2013wetookagiantleapacrossthecountry….By2015weexpandedourinfluencethroughtheNationalCenterforAmericanIndianEnterpriseDevelopment.”[#37]

Some business owners gave a wide variety of reasons for starting their own businesses.Forexample:

Whenaskedhowthefirmstarted,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmstated,“Ilostmyjobandwasoutofworkforacouplemonths,[and]mycousinaskedmetohelphercleanahouseforaconstructioncompany.Atthattime,Ididn’tevenknowaboutanopportunitylikethat.[Itwas]afterhelpingher[that]Idecidedtostartabusiness.”Shereportedthatshestartedthefirmover10yearsago.[#35]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthathestartedthefirmsixyearsago.Heexplainedthatthefirmbeganasasidehobbybeforeturninginto


acommercialventure.Hesaid,“Initially,westartedasanonlinestore,andafterwegotsomeinitialattentionandwentviral,westarteddoingcustomcommissionsanditjustkindofbloomedfromthere.”[#10]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmreportedthatsheissoleownerofthefirmandthatherresponsibilitiesinclude“businessdevelopment,finances,payroll,humanresources,”and“anythingelserequiredtokeepthebusinessgoing.”[#27]

Thesamebusinessownerwentontosaythatthefirmstartedabouteightyearsago.Sheadded,“Mydaughterusedtoowna…companyandIworkedforherasthepayrollclerk.Myhusbandworkedforherastheaccountant.[After]shedied…myhusbandandIweregoingtotakeoverhercompany,butunfortunatelythefinancesofthatcompanywerenotsound.Infact,weprobablywouldhavehadtofilebankruptcy,sowestartedanewcompanydoing[similar]work.”[#27]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatsheisownerandpresidentofthefirm,whichshestartedover25yearsagoafterleavingajobshewasn’tsatisfiedwith.Sheadded,“Ireviewthedesignworkthatiscominginfrommystaff….I’minchargeofeverything.Ioccasionallywillmanageprojects.Iwilldosomeofourlargerprojectsastheprincipalincharge.”[#12]

Whenaskedaboutthecircumstancesofthefirm’sfounding,thesamebusinessownersaid,“Ihadbeenworkinginaplanningenvironmentdowntowninasmallcompany….Ineededtotravelforthejob,andIdidn’treallylikethejob….Inadditiontothat,mybossdidreallyinappropriatethings,butofcourseI[was]justwas20yearsold…andthoughtitwasthecourseofdoingbusiness.”[#12]

Shecontinued,“So,allthosethingsledtothecreationofmyfirm.Ireallydidn’tlikedoingplanningwork,andIhadworkedinsmall‐scaleresidentialconstructionpriortothat,whichIenjoyedmore.Myhusband,whoreallyencouragedme,hadacorporatejobatthetimesotherewassomeflexibilitywithinourfamily.That’swhatmademegetitstarted.IstillhavethebusinessplanthatIwrote.”[#12]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthathisfirmhasbeeninbusinessforalmost30years.Regardinghowhisfirmbecameestablished,hesaidthatshortlyafterstartingthefirmhewasintriguedbyamagazinearticleabout[hisfield].Hestated,“IflewtoChicagoandlookedatthemanufacturers[ofthatproduct].…”Henotedthatthiswasanuntappedmarketatthetime,andreportedthatthefirmeventuallyexpandedtheirservices.[#39]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmreportedthatsheholdsavarietyofrolesatthefirm,including“CEO,janitor,billing/invoicing,[and]frontdesk.”Sheaddedthatshestartedthecompanyabouttwoyearsago.[#19]


ThesamebusinessownerwentontosaythatshewasCOOofmanymajorhospitalsbeforestartingthefirm.Sheexplained,“IstartedfeelingthatIwantedsomethingmore,soIstartedlookingaroundtofindacompanytobuy….[I]startedtobuyanotherstripingcompany,butdiscoveredthefinancialsjustdidn’tlookright.Numbers…justdidn’taddup.So,Istartedthiscompany.”[#19]

Shecontinued,“Ididn’tknowanythingabout[myfield].”Sheadded,“Thisjustfellintomylap.Originally,Ithoughtaboutstartinganinvestmentcompany.Thenwithmoreresearch,becausetherearenotalotof…companiesavailable[inmyfield],Irealizeditwasanopportunityformetostartmyownbusiness.[Ihave]noregretsorsecondthoughtsatall.”[#19]

TheHispanicAmericanmaleownerofanarchitecturalengineeringfirmstatedthatheispresidentandseniorpartnerofthefirmaswellasco‐founder.Hesaidthathestudiedarchitectureandengineeringincollegeandgotlicensedinbothdisciplines.HeaddedthatheandhiswifemovedtoColoradowhenshepursuedagraduatedegree,andthathejoinedalocalfirmthatdidbotharchitectureandengineeringbeforestartinghisownfirmalongsideanon‐Hispanicwhitemalecolleaguemanyyearsago.[#16]

ThesamebusinessowneraddedthathispartnerhadcontactsatColoradoStateUniversitythatwerecriticaltogettingthebusinessstarted.Henotedthatheissemi‐retired,andthathisformerpartnerhaslongsinceretired.Hewentontosaythatbecauseheistheonlyarchitectatthefirmheoverseesalldesignfunctions.[#16]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathestartedatthefirmasoperationsmanager.Whenaskedhowhecametobeownerofthefirm,hesaid,“Istartedthecompanywithfourotherindividualsin[thelate1990s],sotherewerefiveofus.OvertheyearsIboughttheothersout.Thelastbuyoutwasabout[twoyears]ago.”HewentontosaythattheotherfounderswerealsoBlackAmericanmales.[#36]

Whenaskedwhytheydecidedtostartthefirm,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“MypartnersandIwerelookingforanopportunity,andonepartnerattendedaneventwherehelearnedaboutapossibleopportunitywith[alargefirm].Westartedtalkingto[thisfirm]andtheysaidtheyweregoingtosellsomestoresandtheywantedtogetminoritiesintothatbusiness….Theconversationledtousbuyingsomeoftheirstores,andthat’swhenwestarted[thecompany].”[#36]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmexplainedthatheformedhiscompanyinpursuitofabetterbalancebetweenhisworkandhishomelife.Henoted,"Istartedoffrunningmybusiness,doingeverythingmyself,andeventuallygottoapointwhereIcouldhireemployeesanddelegatethework."[#4]

Thesameownerwentontoadd,"Iworkedasanelectricianforacoupleofthebig[contractingfirms]intown,andIfeltlikeIgottothehighestpointIcouldwiththem."[#4]


Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmstatedthathestartedhisownfirmbecause"[he]wantedtohavebettercontrolover[his]risks.”Headded,“Iwantedtohavethecommunityasthecenterofwhywe'reinbusiness,andtobeabletousetechnologytoabetterextentthantheenvironmentIhadbeenatbefore."[#3]

Whenaskedhowthefirmstarted,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaidthatwhenherdaughterwasyoungshebegan[creatingaproduct]forherandherfriends.Afterdoingthisformanyyears,shesaid,“IjustthoughtitwasreallyfunandIhadbeeninaccountingfor35years,[so]onedayIdecidedIwantedtodothisinsteadofaccounting.”Shenotedthattheotherco‐ownerisalsoanon‐Hispanicwhitefemale.[#8]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmreportedthatthefirmwasfoundedbyanon‐Hispanicwhitemalein2005.Whenaskedwhythefirmwasformed,hesaidthattheownerhadapreviousbusiness,andstartedthecurrentfirmbecausehewantedtore‐entertheindustry.[#34]

TheBlackAmericanveteranmaleownerofageneralcontractingcompanyreportedthathestartedhisbusinessalmost10yearsagoandistheonlyownerofthefirm.HesaidthathemovedtoColoradotostartabusinessshortlyafterleavingthemilitary,andadded,“Iknewafewpeoplehere,andtheyknewalotofpeoplelookingforsomeonetoworkonprojects.Ihaveplentyofworkthatkeepsmeverybusy.”[#29]

Thesamebusinessownerwentontosay,“WhenImovedhere,IknewIneededsomethingtodotomakemoney.Iknowaboutconstruction.Ilearneditfrommyfatherasaboy,andIhavebeendoingitforyears.”[#29]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidshejoinedthefirmasco‐ownerin2004alongsideafamilymember.Shesaidthefamilymemberformedthecompanyafterworkingforseveralconstructioncompaniespreviously.[#2]

Thesamebusinessco‐owneradded,“Iresearchedalotofthings.ItalkedtopeopleIwasconnectedwith,goodpeoplewithintheCityofDenverthathelpeduswithquestions.There’ssomuchoutthere,butalotofpeopledon’twantyoutosucceedandthey’llkindof…makeitalittlebitharder[togettheinformation].”[#2]

Whenaskedhowherbusinessbecameestablished,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmcommentedthatshedecidedtostartthecompanyafterhavingherfirstchild.Sheexplained,“WhenIcamebackfrommymaternityleave,[mypreviousemployer]hadmovedallofmystuffoutofthecorneroffice[andinto]asharedoffice.[Theyalso]informedmethatIhadbeenremovedfromthebonuspoolbecauseIwasnolongerconsideredaseriousemployee,becauseIonlyworked36hoursaweekinsteadof40.”[#5]

Thesamebusinessownerwentontosaythatafterleavingthecompanysheknew“there[had]tobeabetterway.”Shesaid,“There[was]awayI[could]beanengineerandamom,”andnoted,“Theconcept[ofmyfirm]isthatit’sapartofthewhole.Idonotintendtosuck


thelifeoutofmyemployees.Iintendtobeanassettothem.Mygoalistoprovideallthefinancialsecuritythateveryoneofmyindividualemployeesneedsaswellasthetimeoffthattheyneed.”[#5]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisprimarilyresponsibleforthegeneralhealthandwellbeingofthefirm,includingmarketingandbilling.Theotherco‐owner,hereported,isalsoaBlackAmericanmale.Hesaidthatthefirmopenedabouttwoyearsagoafterheworkedforaplumbingcompany.Hesaid,“Wesaw[that]the…companywereferred[customers]towasreallytakingadvantageofhomeowners,andtheyweren’treallydoingagoodjob.”[#7]

Thesamebusinessco‐ownersaidthatatthatpointhecalledacolleagueandaskedifhewantedtostartacompanywithhim.Hewentontosay,“Wegottogetherandwentthroughallthecertifications,theclasses…courses,[and]filedforourbusinessID….Then[we]justgotstartedbymarketingwithexisting[companies]andlettingthemknowthatwewouldtakecareoftheircustomers.”[#7]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatsheis51percentownerofthefirm.Theotherowner,sheadded,isanon‐Hispanicwhitemaleandlicensedarchitect.Shestatedthatshewasinitiallyhiredalmost20yearsagotodobilling,butthatherdutiesevolveduntilshefinallyboughtintothecompany.Shesaidthatshenowmanagesalladministrativeduties.[#15a]

Some business owners reported that they inherited or work for a family‐owned business.Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidherfatherstartedthebusinessover40yearsago.Beingafamily‐ownedbusiness,shecommented,“Everyoneisanemployee,whetheryoulikeitornot.”Shesaidsheworkedinmediamanagementandsalesaftergraduatingcollege,andstartedatthefirmafterbeingaskedtoreviewitsmarketingmaterials.[#13]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatthefirmwasstartedover60yearsagobyanon‐Hispanicwhitemale,andthatthefirmisstillownedbythesamefamily.[#23a]

Thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmstatedthathisfatherstartedthebusinessover20yearsagoandthathetookoveraspresidentabout10yearsago.Henotedthathehasalwaysbeeninvolvedinthebusiness,andadded,“Whenmyfatherfoundedthebusiness,therewasalwaysaconsiderationofmetakingoversomedayasthepresident.”[#30]

Thesamebusinessownercontinued,“Iwasalwaysinvolvedinthebusinessgrowingup.Ilearnedeveryjobthatthecompanyperforms.IneverthoughtIwoulddoanythingelse.”Hesaidthathebecamepresidentofthefirmaftergraduatingcollege.[#30]


Challenges in starting, operating, and growing a business.Interviewees’commentsaboutthechallengesinstarting,operating,andgrowingabusinessvaried.

Business owners and representatives reported lack of access to capital or high cost of

materials as a challenge in starting, sustaining, or growing their business, among other

challenges.[e.g.,#3c,AS#39,PT#3c]Forexample:

Regardingtheriskassociatedwithstartingasmallbusiness,thefemalerepresentativeofasmallbusinesssaid,“[With]smallbusinessowners,ittakesaspecialperson…togointothatandtakealltheriskandwhathaveyou….Itisacrosstheboard…peoplenotwantingtobeowners.”[PT#2b]

Regardingchallengesthatnewfirmssuchashisfacewhenstartingorgrowingabusinessinthelocalmarketplace,thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“Ihavetheexperiences,expertise,andlicensingnecessarytobuildandcontinuetogrowmybusiness,[but]Icoulduseassistancein…thebondingarea.”[#31]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmstated,“Atfirst,itwasdifficultobtainingfinancingandbonding.Themoreworkwecompleted,theeasierthatbecame.Iknowrightnowcompaniesarefacingworkforceshortagesthat[are]affectingtheirabilitytostartsomejobs.Oneofthebenefitsofhavingourtypeofbusinessmodel[isthat]wearen’talwaysouttherelookingforpersonnel.Wehavehiredthemasemployees,andtheyareherereadytowork.”[#28]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Startupshaveproblemsobtainingfinancing.”[#22]

Asurveyrespondentsaid,“It'sdifficultforasmallcompanytobreakintoworkinthearea.”[AS#37]

A few business assistance organization representatives discussed start‐up challenges faced by

member firms.Commentsinclude:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Ithinkoverall,ourcommunityfacesanuphillbattle.Whetheryouareminority‐ownedorwoman‐owned,therearebarrierslikefinancingtogetabusinessupandrunning,andthenit’shardtocompetewithpeoplewhoarealreadyestablished.Thecertificationprocessisabarrierbecauseit’sverycumbersome.Iftherewasawayyoucoulddomoreofitonline,itcertainlywouldhelp.Andthefactthattheairportcertificationisdifferentfrom[RegionalTransportationDistrict]…ifthoseagenciescouldcommunicatemorewitheachother,itmighthelptogetmorecompaniescertified.”[#37]

Whenaskedwhatchallengesmembersfaceinstartingorgrowingabusiness,andifthereareadditionaldifficultiesforminoritiesorwomen,thesamebusinessassociationrepresentativesaid,“Theobviousoneiscapital,andit’sachallengeanysmallbusinessisgoingtoencounter.Andthenwaitingtogetpaid.Youneedmoneytopayemployeesand


purchasesuppliesforaproject.Theytellmethey’dlovetobeonaschoolprojector[RegionalTransportationDistrictproject]but,unfortunately,theycan’twait90daystogetpaid.Youneedalotofcashflowtopayemployeeseveryweekforthreeorfourmonthswhileyouwaitforyourmoney.Gettingloansforequipmenttogrowtheirbusinessisalsoachallenge.WeencouragethemtoapplywiththeSBAorNativeAmericanBank,ordifferentorganizationsthatmighthelptheminwaysthatatraditionalbankmightnotbeableto.”[#37]

Whenaskedwhatchallengeshismembersfaceinstartingorgrowingabusiness,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthatnewmembersoftendonotknow“where[to]start.”Headded,“Wehavealotofgreatresourcesandweencouragememberstousethem,likethe[Denver]MetroChamber[ofCommerce],theSBA,etcetera.”[#33]

Thesamebusinessassistanceorganizationrepresentativecontinued,“TheMinoritySupplierDevelopmentCouncilisagreatresource[too].Localbanksprovideresources.Aproblemforusthough,isthatimmigrantsbringlanguagechallenges.AsiansarecursedbecausethereisnoonesinglelanguagelikeSpanish.YouhaveCantonese,Japanese,Vietnamese,Hindi…thereareeasily25ormorelanguages.Tryingtosecureloans[and]workingwithpublicagenciestogettheirbusinessstartedismorepronouncedintheimmigrantAsianpopulation.”[#33]

Many survey respondents commented on high rent costs as a barrier for new firms.[e.g.,AS#31,AS#41,AS#54]Commentsinclude:

Asurveyrespondentsaid,“Themainbarrieristhepriceofrent.I'velookedalloverDenverandtherewasnothingsmallenoughforme.Itakealittleover700squarefeet,andIcouldn'taffordtorent.Thereisnothingsmallenoughtolowerthecostofrent.”[AS#42]

RegardingbarriersordifficultiesinDenverassociatedwithstartingorexpandingthebusiness,asurveyrespondentcommented,“Commercialrentpricesaretooexpensive.”[AS#35]

One business assistance association representative noted that high housing costs deter

potential work force.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidit’sdifficulttofindqualifiedemployeesintheDenvermetroarea.Sheadded,“Andtryingtoattractworkforcefromanotherareadoesn’tworkbecausehousingistooexpensive.”[#37]

One survey respondent indicated that some customers prefer to work with more established

businesses.Asurveyrespondentsaid,“We'veencounteredclientswhohavenotbeenwillingtoworkwithnewsmallbusinesses.”[AS#13]

One business owner reported on early challenges with business partners.TheHispanicAmericanmaleownerofaspecialtycontractingfirmstatedthathebeganhiscompanyasthesoleownerbuttookonapartnerwhenthefirmwasyoung.HeexplainedthathereliedonthepartnertoassistwithMBEcertification,thoughthepartnerwouldnothelpduetohispolitical


stance.Thefounderthendecidedtobuyouthispartnertoonceagainbethesoleownerofthefirm.[#4]

Another business owner indicated that the decision to start a business can be one of the

biggest challenges of business start‐up.TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatdecidingtostartabusinessisahugestepwithalotofrisk.HeaddedthatSBE/MBE/WBEsshouldconsiderbusinessclosuretobeanon‐optionatfirst.[#14]

Many survey respondents reported facing tax‐related challenges.SomereportedonhighpropertytaxesintheDenverareaamongotherrelatedissues.[e.g.,AS#32,AS#52,AS#59]Forexample:

Regardingtaxes,asurveyrespondentsaid,“Youarekillinguswithpropertytax.Wecan'tbuynewequipment.Denveritselfhasyouthtax.Allthosetaxesmakeus[un]competitivewithothercompanies….”[AS#58]

Asurveyrespondentsaid,“Propertytaxesaresohighthatwe'removingthebusiness.”[AS#60]

Asurveyrespondentstated,“MyonlycomplaintisgettingtaxbillsayearlateronoldprojectsfromDenver.Ifeelthosetaxesshouldbeputinthebidsinitially.[AS#28]

Types of work that businesses perform.Intervieweesdiscussedwhetherandwhyovertimetheirfirmschangedthetypesofworkthattheyperform.

Some interviewees indicated that their companies have changed, evolved, or expanded their

lines of work over time, or conducted a wide range of services. Forexample:

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmstatedthatheperformsservicesforresidentialcustomersstatewide,andcommentedthatthereisnojobtoosmallforhisfirm.[#18]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthathisfirmexpandeditsproductsandservicestoincludeofficesuppliesandprinting.Whenaskedwhy,hesaidthesupplyindustrywasconsolidating,whichprovidedanopportunityforhimtoenterthemarketasa“nicheplayer.”Headdedthathespecificallytargetscompanieswithatleast15officeworkers,tribesthroughoutthenation,andthefederalgovernment.Hewentontosaythatthefirm’sgrowthcanbeattributedto“knowingwhere[they]aregoing,”andcommented,“Wedon’tjustgetonthehighway.Wehavearoadmapthatwewanttofocuson.”[#39]

Whenaskedabouttheservicesofferedbyhisfirm,theBlackAmericanveteranmaleownerofageneralcontractingcompanystatedthathisfirmperforms“alltypes”ofresidentialwork,includingelectrical,drywall,plumbing,andhomerepairs.[#29]


Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthathercompanyoffersstructuralengineeringanalysis,structuralconstructiondocumentsandspecifications,andconstructionadministrationasitrelatestostructures.[#5]

Whenaskedaboutthegrowthofherfirm,thesamebusinessownersaidtheyhavegrownmuchslowerthanothersintheindustryduetohowspecializedtheyareasastructuralengineeringcompany.[#5]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthathisfirmprovidesgeotechnicalandenvironmentalservices,includingconstructioninspection,bridgeinspection,andmaterialstesting.Hesaidthatthepercentageofworkinthevarioussectorsvariesfromyear‐to‐yeardependingonthetypesofprojectsinthemarket.[#14]

Whenaskedabouttheservicesofferedbythefirm,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthattheydoavarietyofservicesforcommercialandresidentialclients.[#35]

Whenaskedabouttheservicesofferedbythefirm,thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Thecompanydoesenvironmentalconsulting.However,weareveryuniqueinthatweprovidealltypesofcivilsiteservices,whichincludeearthwork,demolitionanddismantlement,constructionsitecleanup,andotherservicesacustomermightneed.”[#28]

Whenaskedabouttheproductsandservicesofferedbythefirm,thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthattheyareacustomprojectshop.Hestated,“Wedoalittlebitofeverything.”[#10]

Whenaskedwhatproductsandservicesthefirmoffers,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthecompanyprovidespreconstructionanddesignassist,design‐build,construction,baggagehandlingsystems,andspecialprojectsservices.Henotedthattheshareofbusinessforeachaccountvariesyearlyasitcanbeimpactedbyaverylargeproject.[#21a]

Many trade association and business assistance organization representatives discussed

membership and the services offered by their organization.Forexample:

Whenaskedwhatservicestheorganizationoffersmembersandwhynewmemberswouldwanttogetinvolved,thenon‐Hispanicwhitemalerepresentativeofatradeassociationreportedthattheyofferopportunitiesformembers,especiallyspecialtycontractors,todeveloprelationshipswitheachother.Heexplained,“Thenumberonereasonaspecialtycontractorwouldjoinourorganizationwouldbetohaveabetterrelationshipandtostarttofigureouthowtoworkwiththosegeneralcontractorsagain.”[#40]

Thesametradeassociationrepresentativecontinued,“So,whenapublicprojectinDenvercomesoutforbidorproposal,theyalreadyknowwhatthatgeneralcontractorwantsin


termsofprequalification…estimates…drawingsandmodeling,andstaffing,andwhattheirwholeprogramissotheycanbeasophisticatedpartner.Andthenthesuppliers,obviously,wanttosupplytothespecialtycontractorsuptothegeneralcontractors.”[#40]

Hewentontosaythatinsum,theorganizationoffersspecialtycontractors“educationandtraining”and“provide[s]networking”forgeneralcontractors.Regardingnetworking,hesaid,“Wesurveyourmembers[and]knowourcustomersandreally,whatdifferentiatesus[fromother]constructionassociation[s]inthemarket…isthatwemakeitveryeasy…tomeettheexactpersonyouneedtomeetwithinafirmtodobusinesswiththem.”[#40]

Whenaskedtodescribetheorganization’sservices,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“WeareatradeassociationwhosemissionistoassistcommercethatbenefitsAmericanIndiancommunitiesthrougheconomicdevelopment.”[#37]

Thesamebusinessassistanceorganizationrepresentativecontinued,“Weprovidetrainingandcommunitydevelopmentprogramssuchastaxworkshops,businesslegislationworkshops…mortgagetraining,healthequityprograms,entrepreneurialprograms,plusweserveasaresourceforournon‐nativemembers,andmore.We’vepartneredwiththeNationalCenterforAmericanIndianEnterpriseDevelopmentandtheAmericanIndianProcurementTechnicalAssistanceCentertohelpAmericanIndianbusinesseswithgovernmentcontracts.Oneofourlongestlegaciesistheannual…achievementawards,supportingandrecognizingAmericanIndianscholars,businesses,nonprofits,andprofessionals.”[#37]

Regardingtheorganization’smembership,shesaid,“Ourmembershipincludescompaniesinvolvedinclothingandaccessories,likeNativeAmericanjewelry;businessandprofessionalservices;construction;foodanddining;legaland[finance];governmentagencies;andtribalentities.”[#37]

Whenaskedwhattypesofbusinessestheorganizationserves,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Themembershipincludeslargecorporations,largeengineeringfirms,B2Bs,smallerbusinesses,andrestaurants.Inaddition,therearemajoracademicpartnersandcompaniesinthehealthcaresector.Wealsohaveaconcessionaireat[DenverInternationalAirport],andwe’reveryproudofthat.”[#33]

Whenaskedifmanyoftheorganization’smembersworkintransportation‐relatedconstructionorengineering,thesamebusinessassistanceorganizationrepresentativestatedthatafewoftheirmembersworkontransportation‐relatedconstruction.Hesaid,“Wehave[amemberwhois]aconcessionaireattheairport.Wehaveafewengineers,butIcouldprobablycountononehandhowfewAsianengineersthereare.When[RegionalTransportationDistrict]ortheairportreachouttous,wefranklystrugglewithgettingattendees.”[#33]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthattheorganizationhelpsadvocateonbehalfofminority‐andwomen‐ownedsmallbusinesses,as


wellasforsomelargerprimecontractors.Heexplained,“Inmanyways,wearetheconnectorbetweenoursmallbusinesses,theminority‐andwomen‐ownedbusinesses,andtheprimes,aswellaspublicentities,thecity,publicschools,[RegionalTransportationDistrict],CDOT,andtheairport.”[#11]

Thesametradeassociationrepresentativecontinued,“Wetrytogatherinformationfromthosevariouspublicentitiesandprovidethatinformationtoourmembers.Wealsolookforprivateworkand[other]opportunitiesandensurethatourmembershipisawareofthoseopportunities.”Hesaidthatmostmembersareinvolvedintheconstructionindustry,butnoted,“Wehavesomeprintshops,marketingfolks,consultants,andothersoftskillslikeHRconsultants….”[#11]

Whenaskedaboutthetypesofworkmembersperform,hesaidthatmembersworkontransportation‐relatedconstructionandengineeringwork.Heexplained,“Theydobothverticalandhorizontalworkaswellasprofessionaldesign.OneofthethingsthatwearealsoworkingonistryingtoattractmoreprofessionalservicesfirmstoourorganizationbecauseIthinkithasalwaysbeenknownasconstruction….Therearealotofprofessionalservicescompaniesouttherethatcouldbenefitfromourorganization,anditwouldbenefitbothsidesbecausethenyougettoknowwho'sactuallydesigningtheengineering…andthenwho’sbuildingit.”[#11]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatshehasbeenwiththeorganizationforover25years.Shedescribedtheorganizationasabusinessassociationforhorizontalandverticalengineeringfirmsintheprivatesector.”Shesaid,“Besidestransportation,bridges,[and]roads,[members]arealso[working]withwaterinfrastructure.That’swhatIconsiderhorizontal,butthere’salsotheverticalside.”[#38]

Whenaskedwhattheorganizationoffersitsmembers,thesametradeassociationrepresentativesaid,“Wedoalotofnetworkingevents,educationalprogramming,[and]anythingdealingwiththebusinesssideofengineering.”Shesaidthatmembersseekmembershipwithherassociation“becausetheyknow[theassociation]canhelpthemwiththebusinessside[ofthings].”Engineersgotoschooltobeengineersinthetechnicalside.Theydon’tgotoschooltolearnabouthowtorunabusiness.”[#38]

Shecontinued,“Wehelpthemwiththattransitionfrombeingtechnicalexpertstorunningtheirbusiness,[tobecome]businesspeople….Theylooktousforthosewaysinwhichtheycan…growtheirbusinessesandbeastrongbusinessentity.”[#38]

Many interviewees reported stable work types or little or no change in the type of work they

do.[e.g.,#6,#7,#9,#12,#15a,#16,#19,#20,#22,#23a,#24,#25,#26,#27,#31,#32a,#34,#36]

Employment size of businesses.Businessownersandrepresentativeswereaskedaboutthenumberofpeopletheyemployandiftheiremploymentsizefluctuates.Manydiscussedtheirfirms’growthincomparisontoothersintheindustry.


TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthatheisthesoleemployeeofhiscompany.Whenaskedwhathedoesifajobistoobig,heindicatedthathehiresindependentcontractors.Heexplained,“IhavemanyfellowcontractorsthatIuseinthatsituation.”[#18]

Whenaskedaboutthegrowthofhiscompany,thesamebusinessownersaidthathisbusinessiscurrentlyveryprofitableandthathehasthecapitaltobuildanewprimarybusinesslocation.Hewentontocommentthatmostothercontractorsheworkswitharealsoprivatecontractorswithfirmsofsimilarsize.[#18]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatherfirmhastwoemployees,includingherself.Whenaskedtodescribethefirm’sgrowth,shesaid,“I’vebeeninbusiness[over10]yearsandstillonlyhavetwoemployees,soI’mnotgrowing.”Shelaternotedthatsheseesalotofsmallfirmslikehersthatarealsonotgrowing.[#35]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthatthefirmconsistsofonlytwoemployees,includinghimself.Regardinghowhisfirm’sgrowthcomparestoothersintheindustry,heindicatedthatthefirmisdoingaswellasothers.Henotedthatthey’veseenconsistentandsteadygrowthsince2011.[#9]

TheBlackAmericanveteranmaleownerofageneralcontractingcompanyreportedthatheistheonlyemployeeofthefirm.Heexplained,“IfIneedhelp,IwillhirepeopleIknowthatcandothejob.Therearemanyindependentcontractorsoutthere.”[#29]

Whenaskedaboutthefirm’sgrowth,thesamebusinessownersaidthatheissatisfiedwiththeamountandtypeofworkhereceives.Headded,“Iusedtohaveanofficein[acityintheDenverarea],[but]movedtheofficeintomyhousefortheconvenienceoftakingcareofpaperworkanytimeofthedayornight.Iworksixdaysperweek,andthat’sthewayothercontractorsareworkingnow.ThereisalotofworkinDenverrightnow.Weallfeelwehavetotakefulladvantageofitwhilewecan.”[#29]

Thenon‐Hispanicwhitemaleownerofanengineeringcompanystated,“Iusedtohavefiveemployeesandapartner,andacontractdrafter.Butasthingshavesloweddown,Ileteveryoneelsego….I’monlyplanningtoworkanother4[to]5years.”[#26]

Whenaskedhowthegrowthofhiscompanycomparestoothersintheindustry,thesamebusinessownersaid,“Ihaveseenasteady,slowdownturnintheworkIdo….AsIlaidoffemployees,Imovedtoasmalleroffice…atthesamephysicaladdress.Iknowtherearealotofotherhigh‐endresidentialengineersdoingverywell,[but]IamsatisfiedwithwhereIamnowinmycareer.”[#26]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatsheandtheotherco‐owneraretheonlyemployeesofthecompany.Regardingthefirm’sgrowth,shesaid,“With[ourlineofwork],it’skindoflikewhenyoufindadentistandstaywithadentist.I’mgettingsomeothercustomersfromotherbusinesses,butmostlyit’snew


customersthatarecomingtome.Newbusinessesareaskingfortheirworktobedonehere.”[#8]

Whenaskedhowmanyemployeeshisfirmhas,thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“Iamtheownerandtheprimaryworker,[but]Ihavehiredahelperbecausethereisjustsomuchworkrightnow.So,thetotalnumber[ofemployees]istwo.ThisissatisfactoryformerightnowbecauseIworkoutofmyhome.”[#31]

Regardingthegrowthofhiscompany,thesamebusinessownerstated,“Allsmallindependentbusinesseslikemineareexperiencingverygoodgrowthrightnow.Iwasoffforaboutsix‐monthslastyearbecauseofsurgery[and]I’mjustnowgettingbacktothelevelIwanttobe.I’mverypleasedaboutthatbecausemymarketingcomesfromwordofmouth.Idon’tevenhaveawebsitetoadvertise.”[#31]

Whenaskedhowmanyemployeeshiscompanyhas,theHispanicAmericanmaleownerofanengineeringfirmreportedthattheycurrentlyhavefouremployees,allofwhicharelicensedprofessionalengineers.[#16]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatthefirmhasfivefull‐timeemployees.Hesaidthathebelievesthefirm’sgrowthrateishigherthantheindustryaverage.Heexplained,“We’reaveryagilecompany,andsowekindofgowherethemarketis.Andwegrowtomeettheneedsofourconsumersandourclients.So,whileothercompaniesmightspecializeinjustonething,wedon’tnecessarilyspecialize.Wegeneralizeinalotofwayssowecanbettersuitwhatourcustomersneedfortheirspecificprojects.”[#10]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatthefirmhasfivefull‐timeemployees,includingherself.Sheaddedthatthefirmhasonepart‐timeemployeeandonecontractemployee.Whenaskedhowthegrowthofherfirmcomparestoothersintheindustry,shesaidtheirgrowthis“conservative.”Sheexplained,“Wehaven’ttriedtopushourgrowthreallyaggressively,butall[professionalserviceswork]tendstofolloweconomiccycles….We’rethesameastherestoftheworldinthatcapacity,oratleasttherestoftheindustry.”[#12]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmreportedthatthefirmcurrentlyhasfivefull‐timeemployees.Shesaid,“IwishIcouldhiremore.It’shardtofindpeoplethatwanttostandoutintheweatherdirectingtraffic.”[#27]

Regardingthegrowthofherfirm,thesamebusinessownerstatedthatsheissatisfied.Sheexplained,“WegetalotofworkfromCDOTbecauseofalloftheprojectsaroundthestatethatneedtheserviceweprovide.Idon’tseethatslowingdownatall.Therearesofew…companies[inourfield],[so]wereallydon’tmarket.[Clients]cometous.Thereisalotofrepeatbusinessbecausewedoagoodjob.Idon’tbelieveIcouldtakeonmuchmoreworkbecauseIdon’thavethestaffrightnow.”[#27]


TheHispanicAmericanmaleownerofaspecialtycontractingfirmstatedthathisfirmhassevenemployees,allofwhomworkfulltime.Hewentontosaythatthegrowthofhiscompanyhasbeensteady.Headded,"Ithinkweareanichetypeoffirmthatisnotcomparabletoageneralfirm[intheindustry]….Iwouldsaywe'recomparabletoa[specialty]contractorintermsofgrowth."[#4]

Thesamefirmownerreportedthathetriestokeephisfirm'sgrowthincheck.Heexplained,“Idon'tmarket[tootherfirms]becauseIfeellikeI'mgoingtogettoobusyandI'llhavetohirepermanentguysandgetmoretruckstokeepupwiththatflowofevenservicework.”Hewentontoexplainthatthefirmdoeshopetogrowinthefuturewhentheyhavetheappropriateresources.[#4]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatshehasfourpart‐timeemployeesandfourfull‐timeemployees.[#5]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatherfirmhasfivefull‐timeemployees,includingherself,andsixpart‐timeemployees.Sheaddedthatsheispleasedwiththesteadygrowthofhercompany,andcommented,“IneedtomakesurethatIamconstantlyawareofthatgrowth.Itwouldbedangerousgrowingtoofast,agreeingoncontracts,andnothavinglabororequipmenttosatisfythescope.”[#19]

Whenaskedhowhercompany’sgrowthcomparestoothersintheindustry,thesamebusinessownerstated,“Ihaveoneverylargecompetitorthathasbeenaroundfor[almost]30years.I’mnotsurehowtheirgrowthis,[but]Ibelieveourgrowthisabovetherestbecausewedoepoxy,whichisrequiredforCDOTjobs.Thosemachinesareexpensive,andIdon’tbelievetheothersmallcompanieshavethatequipment.”[#19]

Whenaskedaboutthefirm’semploymentsize,theAsian‐PacificAmericanfemalerepresentativeofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“Wecurrentlyhave12employeesworkingforusfulltime.Ikeeptrackofthatverycloselytomakesurewehaveallweneedfortheworkweget.Mostoftheemployeeshavebeenaroundforatleasttwoyears.”[#32b]

Whenaskedabouthisfirm’semploymentsize,thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthattheycurrentlyhaveeightfull‐timeemployeesand“sixjuniorengineers.”Hecommented,“Whenwemerged,[mypartner]camewiththreetotalemployees.Wehaveastronggroupthatworkswelltogether.”[#25]

Whenaskedtodescribethegrowthofhiscompany,thesamebusinessownerstated,“ThecurrentlocationiswhereIhavealwayshadmyoffice.Wegotbiggerspaceintheofficebuildingwhenwemerged.”Headded,“Thislocationistheonlyoffice.”[#25]

Whenaskedtodescribethegrowthofhisfirm,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“Iamverypleasedwiththegrowthwehaverightnow,[but]Ibelieveopportunities[maybe]slowingdownsome.


That’sbasedonconversationswehavewithanothercablingcompany.However,wehaven’tfeltanyimpactyet.”[#32a]

Thesamebusinessownercontinued,“Ihaveheardfromother…companiesthattheirworkisslowingdownconsiderably,and[that]theamountsofthecontractsaregettingsmaller.Weconcentrateonmakingsureourcustomerissatisfied.Thatiswhymostofourbusinesscomesfromwordofmouth.”Headded,“Thecompanyhasnevermissedadeadline….Ourannualrevenuesareabout$2million.”[#32a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmhas10full‐timeemployeesand15part‐timeemployees.Regardinghisfirm’sgrowthcomparedtothecompetition,hesaid,“Somehavegrownalotfasterthanwehavebecauseweconcentrateonaparticulartypeofcustomer,andwedon’tmarketinthesamewaythatotherfirmsdo.Wedon’tuseGooglemarketing[or]payforanalytics.Ourbusinessmodelisbasicallyreferralsandwordofmouth.”[#7]

Thesamebusinessco‐owneradded,“We’renotaggressivelytryingtogrowintoalargercompany.Wewanttostayasmallbusinessbecauseit’sawayforustodeliverwhatwesaywewanttodeliverasasmallbusiness,[whichis]enablingtheownertogoseeeverysinglecustomer.Weknow[that]ifwegrowintoalargerbusiness,thatwon’tbepossible.”[#7]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE,SBE,andESB‐certifiedprofessionalservicesfirmreported,“Icurrentlyemploy17staff.”[WT#15]

Whenaskedaboutthefirm’semploymentsize,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmreportedthatthefirmhas25employees.[#34]

Regardingthefirm’sgrowth,thesamebusinessownersaidthatithasbeengrowingsteadilysincetheendoftherecession.Whenaskedwhatgotthemthroughtherecession,heresponded,“Goingdigital[did].”[#34]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatthefirmemploysabout28people.Shesaidthatthefirmisnotmeetingitsgrowthpotentialbecauseshedoesnotpursuemanycontractsnationwide.Sheexplainedthatsheisthinkingaboutretirementanddoesnotwanttojeopardizeherhouseandretirementsavingstogrowthefirm.[#20]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthatthefirmhas“roughly40employees…fiveof[which]arepart‐time.”[#36]

Whenaskedaboutthefirm’sgrowth,thesamebusinessownerstated,“Theretailportionhasbeenfairlysteady.Theonlywaytogrowthatistoinvestinmorelocations.Thewholesalebusinesshasbeendifficultatbest.Atonetimewewerecertifiedwith[RegionalTransportationDistrict],butweoutgrewtheirprogram[and]lostthatcontract.Thatwasabitofasetback.”[#36]


Hecontinued,“Nowitgoesupanddownwiththeeconomy.WehavealotofbigcompetitorsouttherethathavemorebuyingpowerthanIdo.I’minasecondarypositionwhenIgotothe[supplier]becauseIdon’thaveenoughvolumetogetadirectcontract.Withoutadirectcontract,you’reatapricedisadvantage.I’moneortwocentsovercostbecauseIhavetogothroughajobber.”[#36]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthathestartedhisfirmbyhimself,thoughoverthenextthreetofouryearsitgrewto10employees.Sincethen,headded,hisfirmhasgrowntoitscurrentsizeof48employees.[#14]

Whenaskedaboutthegrowthofthefirm,thesamebusinessownersaidthatitisclosetotheaverageforhisindustry.Henotedthatseveralotherminority‐ownedfirmsinhisindustryhavegrownfaster,thoughhesaidthatheattributesthatgrowthtotheirhireofformerCDOTemployees.[#14]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmstatedthathercompanyhasaworkforceof25to50employees.Shelateraddedthatthecompanygrewtotwolocations.[#13]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmreported,“Thereareabout200employeesinthecompany.Aboutfive[yearsago]wechangedthebusinessmodeltoonethatprovidedfull‐servicetocustomers[with]ateamapproachtocompletingprojects.Thecompanywillself‐performmostoftheprojectsawarded,whichmeanswedotheworkfromstarttofinish.Thetypesofpositionswehaveincludedesign,estimating,construction,andprojectmanagement.”[#28]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthecompanyhas567employees,whichincludestheirUtahandArizonaoffices.[#21d]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmdescribedthefirm’sgrowthasaboveaveragefortheindustry.Hesaidthatthefirmwasawardeda$75millionproject10yearsafteritsfounding.Yearslater,headded,thefirmwasawardedthelargestdesign‐buildprojectinNorthAmericaatthattime.By2016,hesaidthattheyperformedover$2billionoflargecommercialandindustrialinstallationprojectsintheU.S.andabroad.[#21a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatthefirmhasroughly10,000nationwideemployees,withabout600ofthoseinColorado.Headdedthattheirgrowthisaboveaveragebecausetheyareoneofthelargestelectricaldistributorsinthecountry.[#23a]

A number of companies reported that they expand and contract their employment size

depending on work opportunities or market conditions.Somereportedusingsubcontractors,whenneeded,toincreaseresources.[e.g.,#18]Forexample:


TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthefirmcurrentlyhassixemployeesandisintheprocessofhiringtwomore.[#15a]

Whenaskedaboutthefirm’sgrowthcomparedtoothersintheindustry,thesamebusinessco‐ownercommentedthatgrowthhasbeen“flat.”Shesaidthatthefirmhasnotbouncedbackfromtherecession.Sheadded,“It’sachallengeforsmallfirmstoovercometheperceptionof[not]beingabletocompletethework.Peopleareafraidwewillgetoverloadedandbeunabletocompletethework,[though]we’venevermissedadeadline.”[#15a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatthefirmhaseightemployees.Whenaskedtodescribethefirm’sgrowth,hesaid,“WhenIfirststartedmycompanyIwasasoleproprietor,andIslowlyaddedoneortwopeople.Andthenin[theearly1980s]Itookonapartner….Thatlastedaboutfouryearsandwegotintolargerprojects.In[themid‐1990s]thecompanytookonadifferentcorporatestructurewhenItookonfourpartners.Wegrewtoabout20[employees]until9/11,thenthefirmshranktoabout10….”[#22]

Whenaskedhowthegrowthofhisfirmcomparestootherfirmsintheindustry,thesamebusinessownerstated,“That’stoughtosay.Itseemslikethelargerfirmsgetlargerandthesmallerfirmsgetsmaller.Ifyou’rea100‐plusfirm,you’readdingpeople.Ifyou’re20orless,you’relosingpeople.”[#22]

Whenaskedthefirm’semploymentsize,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Wecurrentlyhave13full‐timeemployees,[and]oneofthoseemployeeshasbeenwiththecompanysincemyfatherstartedit.”[#30]

Whenaskedaboutthegrowthofthefirm,thesamebusinessownersaid,“Wedidopenabranchin[anotherstate]severalyearsagobecauseweweregettingalotofworkdownthere,[but]unfortunatelythatdriedupbecausecompaniesfinditeasiertoprintin‐house.Weonlyhave[one]locationnow.Wewereonlyin[anotherstate]foraboutayear.”Regardingmanagingmultiplelocations,hesaid,“It’shardtomanagemorethanonesite.Thedemandsofmanagingemployees,financials,andmarketingtodifferenttypesofcustomersismorethanafull‐timejob….Eventhoughweclosedin[anotherstate]…everythingisrighthereatthehomeoffice,andit’seasiertomanage.”[#30]

Whenaskedhowthefirm’sgrowthcomparestoothersintheindustry,hesaid,“Weareoneofthelastbig[companiesinourfield].Wecontinuetodevelopbusinessrelationshipstostayinbusiness.”[#30]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmreportedthathercompanyemploys45people.Shesaidithasgoneashighas50full‐timeemployeeswhentheyhaveincreasedworkloads.Whenaskedaboutthegrowthofhercompany,shesaidthey'vegrownatarateslowerthanotherfirms.[#2]


Thenon‐Hispanicwhitemaleownerofaconstructionfirmstated,“Iamtheonlyemployeeofmycompany.”Headdedthatifajobis“toobig,”hewillhireotherelectricalcontractorsasneeded.[#24]

Whenaskedaboutthefirm’sgrowth,thesamebusinessownersaid,“Iamverysatisfiedwiththegrowthofmycompany.I’vealwaysworkedoutofmyhome.Itallowsmetospendtimewithmy[family].”[#24]

Thenon‐Hispanicwhitemaleowneroraprofessionalservicesfirmreportedthatheemployedsixorsevenpeoplefiveyearsafterthefoundingofhisfirm.Henowemploysfourpeople,attributingthedeclinetotherecessionin2008.[#3]

Thesamefirmownerwentontosaythatfirmsheisfamiliarwithhaveexperiencedsignificantgrowthinrecentyears.Headded,"I'mnotasinterestedingrowthasIaminmaintainingthetypeofworkthatwedo.Ihaveneverhadadesiretohaveabiggerfirm."Heattributedthispreferenceforhavingasmallfirmtothehighdegreeofspecializationofsmallerfirms.Healsonoted,"Itrytostaffforacomfortablelevel.I'mnotinthehabitofhiringpeopleandthenlayingthemoff."[#3]

One business owner indicated that the firm’s employment size sometime fluctuates

seasonally.TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“Whenthingsareslow,Ikeepthepart‐timeemployeesbusydoingmaintenance.Ijustcan’taffordtolosethem.Thisworkcanbeseasonal,andworkforceistightrightnow.”[#19]

A trade association representative reported that most member firms have 30 employees or

less.Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“Wehave260‐memberfirmsthroughoutthestatethatemployover11,500people.”Whenaskedaboutthesizeofmemberfirms,shesaid,“Seventy‐fivepercentofourmembersare30peopleorless.They’recomfortablebeingthatsmallsize,butatthesametimetheyneedtobesurethatthey’reinapositiontobeasuccessfulbusiness.So,theylooktousforthat.”[#38]

Capability of businesses to perform different types and sizes of contracts. Businessownersandrepresentativesdiscussedthetypes,sizes,andlocationsofcontractsthattheirfirmsperform.Contractsizesrangefrom$100totensofmillionsofdollars.Commentsinclude:

TheBlackAmericanveteranmaleownerofageneralcontractingcompanystated,“Mycontractsareusually$15,000uptoabout$30,000.”[#29]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmstatedthattheyusuallyworkdirectlywithclientsandthatordersrangebetween$10,000and$30,000.[#10]

Thenon‐Hispanicwhitemaleownerofaconstructionfirmstated,“[I]workonsmallandlargejobs.Thejobsmycompanyperformsareapproximately$30,000to$50,000.Itdependsonthejob,butifit’stoobigIwillhireotherelectricalcontractors.Therearelotsofindependentcontractorsoutthere,andIworkwithmanyofthem.”[#24]


Regardinghisfirm’sannualrevenue,thenon‐Hispanicwhitemaleownerofanengineeringcompanysaid,“Therevenuesvary.Wedon’tmakealotofmoney,but[it’s]enough.”[#25]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatherpreferredcontractsizeis7,000to50,000squarefeet.[#35]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmreportedthattheircontractsrangefrom$100to$100,000.[#34]

Whenaskedaboutthesizesofcontractshisfirmpursues,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthattheybidcontractsranginganywherefrom$5,000to$100,000.[#7]

Regardingthesizesofcontractshisfirmpursues,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthattheyhavecompletedcontractsrangingfrom$100toaround$350,000.[#9]

Thesamebusinessownerlatersaid,“We’veworkedwithacoupleofprimes[where]theprojectswerereally,reallysmallinrelationtosomeoftheotherprojectsthatwe’vedone.[Forexample],$10,000or$15,000versus$100,000or$250,000[contracts].”[#9]

Thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“[Our]contractsrangefrom$500to$500,000insize,[though]thoseverylargecontractsarehardtocomebynow.[#30]

Whenaskedwhatsizecontractsherfirmbidsonorperforms,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatherfirm’sdesignbudgetsrangefrom$2,000to$15,000.Sheadded,“Thenourconstructionobservationfeesprobablyrunaboutthesame.Wehaveconstructionfeesthatrunupto$30,000.Theprojectswebuildrangeinvaluefrom$20,000uptohalfamilliondollars….”[#12]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthathisfirmonlyobtainsbusinessintheFrontRange.Headded,"Atfirst,mybiggestcontractwas$50,000,thenitwas$100,000,thenitwas$200,000,andnowit's$300,000.Rightaroundthat$300,000or$500,000markisaboutmylimitrightnow,asfaraskeepingupwithlaborwagesandmaterialcostsandothercosts."Headded,"Idon'twanttogrowtoomuchbecauseIdon'twanttogettoapointwhereItrytotackleamillion‐dollarjobanddon'thavethebackingforit."[#4]

Whenaskedaboutthetypesandsizesofcontractsherfirmpursues,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Thelargestcontractwe’vehadwasjustshyof$300,000,and[that]lastedforthreeyears.”Shecontinued,“Rightnow,ourlargestcontractis$200,000.Ithinkwecouldgoupto$500,000beforewestarttobecrushedundertheload[ofwork].”[#5]


Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmreportedthattheirfirm'slargestcontractwasover$1million,whichhedescribedasbeingdifficultforafirmwithonlyfouremployees.Thefirm'saveragecontractsrangefrom$250,000to$500,000perproject.[#3]

Whenaskedwhatsizesofcontracts/ordersthefirmbidsonorperforms,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Thefeerangeisanywherefrom$5,000to$1million.”[#22]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“Lastyearwehad120projectsand$4millioninrevenue….Weperformanythingfrom$500to$1,000jobsallthewayuptoasingleprojectsizeof$1.7million.”[#19]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Ourcontractsizesareabout$2million.Wearedefinitelylookingtogrowthatnumberbycontinuingtoseekotherprojects.I’mnotsureiftherearesimilarcompaniesthathaveadoptedthismodelofself‐performingthework.”Shewentontocomment,“Ourcompanyreputationspeaksforitself.Weoftenaresoughtafterforotherprojectwork.”[#28]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathisfirmcanhandlecontractsrangingfromafewthousanddollarstomillionsofdollars.[#14]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatthefirm’scontractsaregenerallyintherangeof$1millionto$2million.Sheaddedthattheyonlydotimeandmaterials(T&M)contractsandavoid“hardbids.”[#20]

Whenaskedaboutthesizesofcontractshisfirmpursues,thenon‐Hispanicwhitemaleownerofanengineeringcompanystated,“Theirsizesareinthemillions[ofdollars].”[#26]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmreportedthatherfirmbidsonprojectsrangingfrom$50,000to$4million.[#2]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatthefirmbidsoncontractsrangingfrom$100,000to$30million,andthattenantimprovementcanrangeupto$50million.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthecompanyhasgrowntobecomeatop‐rankedcontractorinColoradoandtheUnitedStatesingeneral.Hesaidtheymainlydolargeandsmallcommercialandindustrialprojects;theirfive‐yearaverageisalmost$82millioninrevenues.[#21a]

One business owner reported not bidding often due to the nature of the firm’s work.TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,


“Becauseitisawholesaletypecommodity,therearenotalotofthingsyoubidon.If…it’sliketheCityandCountyofDenverputtingoutabidfor[oneofourproducts],webidonthatofcourse.Also,theothermunicipalitiesputoutbidsaswellforfuelthatwewilltrytobidon.Therestofthecommercialmarketdoesn’thavealineitem.”Headded,“Someofthebigtransportationcompaniesmighthavebidopportunities,buttheyareoutofreachforusbecausethey’renationalinscope.”[#36]

A trade association representative reported that members perform a wide range of contract

sizes.TheBlackAmericanfemalerepresentativeofatradeassociationsaidthatthecontractsmemberfirmsbidonrangefromtensofthousandsofdollarstomillionsofdollars.Shesaidthelargestcontractamongmemberstodatewasvaluedatover$90million,andaddedthat60to75percentofherchapter’smembersareengagedintransportation‐relatedconstructionandengineeringwork.[#6]

Many firms reported working on contracts throughout City and County of Denver.SomefirmsreportedworkingonlyintheDenvermetroarea,whileothersreportedworkingstatewideandoutofstate.Forexample:

Regardingtheareaswherehisfirmperforms,thenon‐Hispanicwhitemaleownerofanengineeringcompanysaid,“Itrytostayinthemetroarea,includingthemountains.”[#26]

Regardingtheareaswherehisfirmperforms,thenon‐Hispanicwhitemaleownerofaconstructionfirmstated,“ItrytostayintheDenvermetroarea,butwillworkaroundthestate.”[#24]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmstated,“WeprefertoworkintheDenvermetroarea,butwilltravelaroundthestate[ifnecessary].”[#25]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatthefirmservicestheDenvermetroarea,andareasrangingnorthandsouthofDenver.[#35]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatthecompanyworksinnorthernandsouthernareasofthestate.[#8]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatthefirmisheadquarteredintheDenverarea.SheindicatedthattheyworkonlyintheDenvermetroarea.[#20]

Regardingtheregionswherethefirmworks,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthatthefirmisheadquarteredinDenverandservicestheI‐25corridor,“about80milesnorthandsouthoftheDenvermetroarea.”[#36]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmreportedthatthefirmisheadquarteredandconductsmostoftheirbusinessintheDenvermetroarea.Hewentontosaythattheyhaveoneout‐of‐stateclient.[#34]


Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmstatedthathisfirmworksintheCityofDenverandincommunitiesalongtheFrontRange,aswellasdoingworkwiththeColoradoDepartmentofTransportation,theColoradoDivisionofWildlifeandtheDenverWaterDepartment.[#3]

Thesameownerreportedthathisfirmhasdoneasmallnumberofinternationalprojects,butthefirmnolongerpursuesthoseprojectsduetodifficultiesreceivingpayment.[#3]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmisheadquarteredinParkerandthattheyseekbusinessasfarawaythroughoutthestate.HeaddedthattheyalsodoalotofworkalongtheFrontRange,Denvermetroarea,andotherareas.[#7]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidthathercompanyseeksbusinessonlyinColorado,specificallytheDenvermetroarea.Shewentontosaythattheyhaveperformedinotherareasofthestate.[#2]

Regardingtheregionswherehisfirmperforms,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmreportedthattheyareheadquarteredinBoulderandgenerallyperformworkalongtheFrontRange.Headdedthattheyusedtodoworkinseveralstates,butcurrentlyonlyhavelicensesinColoradoandCalifornia.[#16]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthattheyseekbusinessalongtheFrontRangeand“upintothemountains,”butgoasfarasNewMexicoorWyoming,oranywherein“thearidwest.”ShereportedthatthefirmislocatedinDenver.[#12]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmreported,“[We]workalloverthestateandarestartingtodojobsinWyoming.”[#19]

Whenaskedabouttheregionswhereherfirmworks,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaidthatshehaslicensesin19states.Sheaddedthatthey’veproposedonprojectsinMongolia,Qatar,andGuam,thoughtheyhaveyettoworkinternationally.ShereportedthatherfirmislocatedinDenverwithoneofficelocation.[#5]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“WehavestarteddoingworkinCaliforniaoverthelastfewmonths.Thatadditiontothecompanyhasbeengoodsofar.”[#32a]

Whenaskedwheresheworks,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmstatedthattheydoworkstatewideandarelicensedinnumerousotherstates.Denver,sheadded,isthefirm’ssolelocation.Shewentontosaythattheyhaveregularnationwideworkforoneoftheirclients.[#15a]


Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatthefirmdoesbusinessnationwideandisheadquarteredinTexas.[#23a]

Whenaskedaboutthefirm’sservicearea,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmstated,“Wewillprovide[our]servicetoanycompanyoranyoneacrossthenation,[and]wehaveprovidedthisserviceacrossthenation.”HelateraddedthatthefirmisheadquarteredintheDenverarea.[#30]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathisfirmworksnationally.HesaidthathisfirmisheadquarteredintheDenverarea,butalsohasofficesinotherColoradocities.Hewentontosaythatthemajorityofhisout‐of‐stateworkiswiththeU.S.FishandWildlifeService.[#14]

A few business owners and representatives reported that their firms also work internationally.Forexample:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthecompanyhasofficesinColorado,Utah,andArizona,andhasperformedworkthroughouttheWesternUnitedStatesandinternationally.[#21a]

Whenaskedwhatregionsthefirmworksin,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“WenormallyworkintheDenvermetroarea.Theonlytimeweventureoutiswhenalocalclienthasaprojectinanotherstate.WehavedoneprojectsasfarawayasTaiwan,butthatwasthroughalocalpharmaceuticalcompany…Someofthefederalprojectmanagerscoverwideregions,andthattakesustootherstates.We’vehadprojectsinTexas,NorthDakota,etcetera.”Headdedthatthefirm’ssolelocationisintheDenvermetroarea.[#22]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthatthefirm’ssoleheadquartersisinDenver.Headded,“OurprimarymarketisNorthAmerica,althoughwehavedoneacoupleofprojectsoutsideofthatmarket.One[was]inAustraliaandoneinGermany.”[#9]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatthefirmoperatesinternationally.Headdedthatthefirm’ssolelocationisinColorado.[#10]

Some trade association and business assistance organization representatives reported on the

regions where they seek members, and where members primarily work.Forexample:

Whenaskedhowfartheorganizationtypicallyseeksmembers,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationreportedthattheorganization’smembersareconcentratedwithintheDenvermetroarea.HenotedthattheorganizationhashadeventswithColoradoStateUniversityinFortCollins,andthattheyalsohaveeventsinColoradoSprings.HewentontosaythattheorganizationisheadquarteredinDenver.[#33]


Thesamebusinessassistanceorganizationrepresentativecontinued,“Membershipoverthelastfouryearshasgrownapproximately10percent.Moreimportantly,wehaveexpandedourpositionandbrandacrosstheUnitedStates,andalso…international[ly]…duetoafocusedeffortoninternationaltrade[and]workingwithourconsularoffices.ThereareconsularofficesforJapan,Taiwan,andSingaporewhicharelookingtobuildaconsularofficehere.WealsohavearelationshipwiththeconsularofficeofthePeople’sRepublicofChinawhichisbasedinChicago.Wegoondelegationtrips[andare]lookingatpotentiallygoingtoVietnamlaterthisyear.”[#33]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“The[heaviest]concentration[ofmembers]isalongtheFrontRangefromFortCollinstoColoradoSprings…butwehavemembersandprovideprogramsorhavemeetingsinotherparts[of]thestate,whetherit’snorth,south,[orthe]WesternSlope.”[#38]

Whenaskedhowfartheorganizationtypicallyseeksmembers,aNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“WeserveIndiancommunitiesaroundtheUnitedStates,andhaveafewcontactsabroad.”[#37]

Whenaskedwheretheorganizationisheadquartered,thesamebusinessassistanceorganizationrepresentativereportedthattheyarebasedinDenver.However,shenotedthattheyserveIndiancommunitiesthroughoutthecountry.[#37]

Thenon‐HispanicwhitemalerepresentativeofatradeassociationreportedthattheorganizationservesthegreaterColoradoarea.[#40]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthattheorganizationislocatedinDenver,andthatmostmembersarefromtheDenvermetroarea,thoughtheyhavemembersasfarsouthasPueblo,andasfarnorthasFortCollins.Headded,“OneofthegoalsthatwehopetoexplorewithinthenextyearisdoinganopenhouseintheColoradoSprings/Puebloarea,andpossiblyuptoFortCollinsandGreeleytointroduceourorganizationandwhatweareallabout.”[#11]

Whenaskedwheretheorganization’smembersreside,theBlackAmericanfemalerepresentativeofatradeassociationsaidthatbecauseit’sanationalorganization,membersarenationwidethrough35activechapters.Shenotedthatsomemembersworkinternationally.[#6]

Whenaskedaboutherlocalchapterspecifically,thesametradeassociationrepresentativesaid,“WehaveatleastonememberdowninColoradoSprings.WehadamemberfromWyomingatonepoint,too….Someofourmembershavemembershipsinotherstates[too],[in]citieslikeSeattle[and]Boston.”[#6]

Local effects of the economic downturn.Afewintervieweessharedcommentsabouttheirexperienceswiththebarriersandchallengesassociatedwiththeeconomicdownturn.Forexample:


Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Ithinkbetween2008and2009ourgrossrevenuedroppedby50percent,andtonsofarchitecture…engineeringandconstructioncompanieswentoutofbusinessintheGreatRecession.Itwasvery,verysignificant.Companiessay,‘Yeah,wemadeitthrough,’andthat’sabigdeal.Everyonejustlimpedalong.WeweremakingitonHailMaryprayers[and]notreallyanythingelse.Thenin2011[through2012]thingsstartedtoreallypickup,andthenit’sjustbeen[great]sincethen.”[#12]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmreportedthatduetotherecessionin2008hisfirmhadtoreducethenumberofemployeesfrom"sixorseven"tofour,andthatnumberhas"remainedatthatlevelsincethattime."[#3]

Thesamefirmownerexplainedthatpublicsectorworkwasslowforhisfirmuntilabouttwoyearsago,butbeforethattheyhadmoreprivatesectorwork.Hestated,"Itwasabouttwoyearsagothatwesawthemarketstarttocomeoutoftherecessioninawaythatimpactedus.Ithinktheprivatesectorspendingwaspickingupfasterthan[in]thepublicsector."[#3]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedconstructionfirmsaid,“The[hiring]issue…comesfromthelossoftalentandexperience,andknowledgethatwehadasaresultofthe2008[recession].Ithinkit’sfinallycaughtup.”Sheadded,“Ithinkwenowhaveallofthese…peopleintheconstructionsidethatdon’tknowhowtodrawdrawings….So,onbigsetsofdrawings,theyburydetails.Theydon’tdetailthingsproperly….”[PT#3d]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmstated,“Therearefewercompanies[inmybusiness]duetotherecession,andeverythingismoredigital.”[#34]

TheHispanicAmericanmaleownerofanarchitecturalengineeringfirmsaidthatthecompanyusedtohave14employeesinsteadoffour,buttheywereforcedtodownsizeduringtherecession.[#16]

Current economic conditions.Mostintervieweesreportedagoodorimprovingeconomyinthemarketplace.[e.g.,#20,#21a,#35,#37,#39]Severaldescribedlocalmarketplaceconditionsas“booming.”Commentsinclude:

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Marketplaceconditionsaregreat.Therejustseemstobesomanyopportunitiesavailable.Notonlyforacompanylikeoursthatselfperforms,but[for]thosetraditionalconstructioncompanies.Ihaveheardthatitisstrongintheprivatesector[with]residentialbuildingtoo.Wejustdon’tseethingsslowingdownintheconstructionareaatall…anytimesoon.Ibelieve[if]you…haveagoodreputationoutthere[then]youcanfindwork.”[#28]

Whenaskedaboutlocalmarketplaceconditions,thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstated,“Thereissomuchworkoutthere,[so]Iwould


describethemarketplaceconditionsasverygood.Rightnow,ourcompanygoesfromonecontracttoanother,[and]Idon’tbelieveanyother…company[inourfield]isexperiencingdifficultyorlackofwork.”[#27]

Whenaskedaboutthemarketplaceconditions,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmcommentedthatthereiswork“everywhere”inthelocalmarketplace.Shesaid,“Youcan’treallycomplainthatyou’renotmakingmoney.I’mcomplainingthatwecan’tdopublicsectorwork,butwe’redoinggreat[otherwise].You’dhavetobeamoroninthisindustrytobedoingpoorlyrightnow,butayearfromnow,itcouldbeawholedifferentstory.”[#12]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“Thereisalotofworkoutthere.Notjustgovernment,butprivateworkbecausetheeconomyissogood.”Shecontinued,“Mybusinessmodelisflexible.Idon’tneedjustthebigjobsallofthetime[because]thecompanycandosmall[projects]too.”[#19]

Regardingcurrentmarketplaceconditions,theBlackAmericanveteranmaleownerofageneralcontractingcompanysaid,“Thereissomuchworkouttherenow[thatit’s]besttotakefulladvantageofit.Ihopeitdoesn’tslowdownanytimesoon.”[#29]

Regardingoverallmarketplaceconditions,theHispanicAmericanmalerepresentativeofatradeassociationsaidthatduetoalargenumberofongoingprojectsinthelocalmarketplace,hefeelsthereisalotofcompetitionthatexistsbetweencompaniesandcontractors.Headded,“Therearealotofnew,emergingbusinesses,andwe'reseeingthat.Thatiswhyweputalotoffocusonrelationship‐buildingandtrainingtomakesurethatfolksarepreparedtodotheworkwhentheygetthework.”[#11]

Thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaidthatmarketplaceconditionshavebeensteadilyimprovingoverthepastseveralyears,especiallyintheprivatesector.Hestated,“ConstructionintheDenverareahasstayedatasteadyrateofgrowth,andprivateownersprimarilyworkforthesebigcommercialbuildings….Andthere’salotofflexibilityoverwhomyoucanselect.Youmightknowalotof…companies,butyou’relike,‘Theyarebusyrightnow.Theseotherguysarenot.Theyhavegottheirall‐starsuperintendentavailable.Iwantthemonmyjob….’”[#40]

Whenaskedtodescribecurrentmarketplaceconditions,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Ibelievethemarketplaceconditionsareverygood.Companiesarelookingtoincreasetheirtechnologyallthetime,[and]increasingtechnologyincludesaddingnewequipmentandsystems.”Hewentontosay,“Idon’tknowhowothercompaniesinthisindustryaredoing,[butit’s]agoodtimeforus.”[#32a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmindicatedthatcurrentmarketplaceconditionsaregood.HestatedthatthereiscurrentlyalotofworkintheDenvermetroareainboththeprivatesectorandpublicsector.Henotedthatthefirmisverybusy.[#23a]


Thesamebusinessrepresentativelatersaid,“We’reinanextremelyhotspot.PartsofCaliforniaareprettytoughforustoday.OntheEastCoastthereisnotmuchyoucandowhenyou’reasbuiltoutastheyare.Seattle,SanFrancisco,Denver,Dallas,[and]Austinareprettyhottoday.”[#23a]

Whenaskedaboutcurrentmarketplaceconditions,thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“Thingsareverygoodrightnow.Idon’tknowanysmallcompanythatis[struggling]togetjobs.Havingagoodreputationgoesalongway.Iknowit’sbusyonthepublicsidetoo[because]Iseealltheconstructioncranesaroundtown.”[#31]

WhenaskedaboutcurrentmarketplaceconditionsinColorado,thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmstated,“Wedowhatwecantoworkwithlocalbusinesseswheneverandhoweverpossible….Iwouldsayfromwhatwe’reseeing,therearealotoflocalbusinessescomingtousforourmanufacturingservices.”[#10]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatcurrently“thereisahigherlevelofpublicsectorworkthan[we]wouldnormallysee”becauseoftheirfirm’scontinuedinvolvementwithairportprojects.Headded,“Theairporthasamassiveimpactontheentiremarketbecausethesearemonstrousprojects…[andthe]privatesectorisbooming….”[#1a]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmstated,"Ithinkourlocalmarketplaceisatanall‐timehighinwork….Therearealotofpeoplehere,andthatgenerallydrivesourserviceindustryreallywell….Themarket'sbetterthanI'veeverseenit."[#4]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmstatedthatmarketplaceconditionsinthelocalareaareexcellentinallsectors.[#34]

Whenaskedaboutlocalmarketplaceconditions,theHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidtheyaregood.Shenoted,“ThebondprogramthatgotapprovedbyvotersinNovemberfortheCityandCountyofDenverisexcellent[becauseitwillbenefitnewconstructionwork].”[#2]

Thesamebusinessco‐ownercontinued,“Marketplaceconditionsarepositivelyimpactedbytheoverallgrowththatwehaveseenwithinthemetroarea,andbecausemany…oftheothergovernmententitiesareputtingtheirmoneytowardsreconstructingandimprovingroads.[This]haspositivelyimpactedthemarketplaceconditions.”[#2]

Whenaskedaboutcurrentmarketplaceconditions,thenon‐Hispanicwhitemaleownerofaconstructionfirmstated,“ItissobusynowintheDenverarea.Ifyouwanttowork,youcanfindit.”Healsonotedthebenefitofhavingagoodreputation,andsaid,“[If]acompanyhas…agoodreputationoutthere…theworkwillcome.”[#24]

Apublicmeetingparticipantindicatedthatcurrentmarketplaceconditionsaregood.Shecommented,“Thewomen’smovementhasjustbeenonfiretheselastcoupleofyears,and


womenhavebeenenteringintobusinessownershiporentrepreneurshipataveryhighrate.”[PT#4]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmindicatedthatmarketplaceconditionsinhisindustryaregood.Hestatedthatheisnotinterestedingrowingthecompanyanylargeratthistime,andaddedthathehasenoughbusinessnowasitis.Hewentontocommentthathedoesnotwanttogrowhiscompanylargerbecausethequalityofhisworkmaysuffer.[#18]

Whenaskedaboutlocalmarketplaceconditions,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmstated,“Therealwaysseemstobeworkavailable.”Hereiteratedthattheyhadtodownsizeaftertherecession,butnotedthattheywereabletosurviveonsmallprojects.[#16]

Some interviewees and survey respondents reported that while economic conditions are good,

a lack of qualified labor presents challenges.[e.g.,AS#49]Forexample:

Whenaskedtodescribelocalmarketplaceconditions,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Theconditionsarerobust,[but]it’shardtogetpeopletobid.Youcan’tfindsubsandsubscan’tfindworkers.Thepublicsectoris25percentmoreactivethantheprivatesector.”[#22]

Asurveyrespondentsaidthereis“oversaturationinColorado,”andadded,“Laborforceisthehardestissue.”[AS#23]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“There’salotofworkgoingonjustinDenveralone.There’salotofworkoutthere,andthatcompetesagainstalltheotherworkthatisintheprivatesector….Allwehaveto[dois]lookaround,andweseebuildingsand…multi‐familydevelopmentgoingup.That’sacompetitioninaway,fortalent.That’sthebiggestconcernthatalotofpeoplehave,is[whether]there[is]enoughtalenttodoalloftheseprojects.It’stight,[and]it’sveryhardtofindpeople.”[#38]

Thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaid,“Thebiggestthing[firms]aresayingisthatthecityisabouttodoa[tremendous]amountofworkandthere’snotenoughqualityminority‐certifiedfirmstodeliver15,20,25,or30percentofthecity’sbuildingsthatthey’rebuildinginthenextfiveyears.There’sjustnotenough.Andwedesperatelywouldlikethecitytoactuallydoanassessment….”[#40]

Thesametradeassociationrepresentativecontinued,“Butifthat’sonly12percentandnot30percent…we’regoingtostartrunningintoproblemswhenweforceahighernumberthantheminorityfirmcapacitycanhandle,whilewegothroughthislarge,largebubble.Andthishappenedwhen[DenverInternationalAirport]wasbuiltin1995….Wehave[some]ofourmembersonthe[CityandCountyofDenver’s]goalcommittee.But…it’sscaryforusto…raiseourhandandsay,‘Maybeyououghttoreevaluatethegoal,’becauseitcanlooklikewe’reanti‐minorityandthat’sthefurthestfromthecase.[So],ournaturalinclinationistojustsitbackandsay,‘Well,weseethisproblemcomingbutwe’renotsurewhattodoaboutit.’”[#40]


Helatersaid,“Probablythebiggestissueoutthereistheworkforceitself,andthefactthatwe’vegonefrom104,000to172,000[employees].Weshouldprobablybeataroundsome180,000to185,000employeesbasedontheamountofconstructioninthemarket.”[#40]

Asurveyrespondentreported,“Thebiggestchallengetodayisstaffing.There'snotrainedworkforcereadilyavailabletohire.”[AS#14]

One business owner said that while marketplace conditions are good, his firm struggles to stay

competitive as a small business.Whenaskedaboutlocalmarketplaceconditions,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathissegmentoftheindustryislesssupportiveofsmallbusinessesasitwaswhenhestartedthefirm.However,headded,“Themarketisgreat,[but]everybody[is]busybutme….Youdon’tseealotofnewfolkstryingtogetintothisbusiness.It’smostlymultigenerationalbusinesses,andtheyarebeingboughtoutbybiggercompanies….Myvolumeistothepointwheremypricingisstillnotwhereitshouldbetocompeteonavolumebasis.Thebigguysarebuyingbytherailcar….”[#36]

Some business assistance organization representatives commented on current marketplace

conditions and its effect on members.Forexample:

Whenaskedabouttheoverallconditionsinthemarketplace,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthatmanymembersarestrugglingwithemployeerecruitmentandretainage.Hesaid,“Withthelowunemployment,mymemberstellmetheyhavetroublefindingandretainingemployees.Wehaveaveryhealthylocaleconomy,[and]ourexportsaregreat.Ouroveralltradeeconomiesaregood.Thatdoestrickledowntoourmembers,butthesmallestonesarestruggling.”[#33]

Whenaskedtodescribetheoverallmarketconditionsformembers,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“WehaveseenalotofgrowthintheDenvermetroarea,andeverybodywantstogetinontheaction.[However],thebigstruggleisfindingemployees,sothatislimitingtheopportunities…theyareeventurningdownwork.Andtryingtoattractworkforcefromanotherareadoesn’tworkbecausehousingistooexpensive.”[#37]

Some interviewees indicated that current economic and marketplace conditions are poor, or

slowing down.Oneintervieweeindicatedthatpoormarketplaceconditionsareduetofewprimecontractorswillingtoengagesmall,minoritybusinesses.Commentsinclude:

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthat“theeconomyisstartingtoslowdown.”Headdedthattheprojectstheybidonare“muchsmaller”thanthosefromafewyearsago.[#25]

Thesamebusinessownerlaternotedthathiscompanyonlyworksintheprivatesector,sohecanonlyspeakinregardstothat.Hesaid,“Therearealotofapartmentsandcommercialbuildingprojectsgoingon,[and]wehavebeenverysuccessfulinthatarea.EventhoughI


thinkthingsareslowingdown,theprivateworkcankeepyouverybusy.”Headded,“Youjusthavetogetoutthereandsellyourselfandwhatyourcompanycando.”[#25]

Regardingthecurrenteconomicconditions,thefemaleownerofasmallbusinessindicatedthatchallengesexistforsmallbusinessownersintheDenvermarketplace.[PT#2b]

Regardingmarketplaceconditionsinhisindustry,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Unfortunately,thenumberofordersandthesizeofcontractshavesloweddownconsiderably.Technologyadvanceshavegivencompaniesanopportunitytodotheirown[work]in‐house.Iftheneedsofacustomeraresmallenough,andnotaverylargejob,theyfinditmoreeconomicaltodoitthemselves.”[#30]

A trade association representative indicated that conditions in the local marketplace can be a

barrier for some members.Whenaskedaboutlocalmarketplaceconditions,theBlackAmericanfemalerepresentativeofatradeassociationcommented,“Nodoubt,theyaretight.”Shecontinued,“It’sveryinterestingtoseeandhearfromsmallbusinessesthattheyhaveachoiceofwhichprojectstheywanttoparticipateon.Iheardthatsomeprimeswererequestingcertaincriteria,whetherbondingorwhathaveyou,andthesubelectedoutofparticipatingontheprojectandwenttoadifferentproject….[This]issomethingyoudon’thearofoften,orseeoften.”[#6]

Thesametradeassociationrepresentativesaidthatthereis“minimumparticipation”ofprimecontractors,asthey“electnottoparticipateinthespacewhereownerentitiesarerequiringgoalsforminorityparticipation.”Sheadded,“They’drathernotdealwiththat.Somefinditlabor‐intensiveintheamountofdocumentation,andjustthesteps[needed]toengagesmall,minoritybusinesses.”[#6]

Shewentontosay,“I’vebeentoacoupleofhiringfairswhereIwalkedaroundasifIwerelookingforajob,andinquiredwithdifferentfolks,[asking],‘DoyouparticipateinprojectsthatrequireDBEs[or]MWBEs?’Andtheywouldsay,‘Oh,no.That’stoomuchwork.’”Shecontinued,“They’llletyouknowrightupfront.Theythinkit’stoomuchwork,orthey’vehadtrouble,ortheysaythere’stoomuchworkoutforthemtodowhattheyneedtoinordertogothatrouteandpursuethosekindsofcontracts.”[#6]

Many interviewees discussed whether local marketplace conditions have changed in recent

years.Mostindicatedthatconditionshavechangedsignificantly.Forexample:

Regardingchangesinmarketplaceconditions,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“In10yearswe’vegonefromarecessiontothisincredibleexpansion.Ithoughtthingsweregoingtotankfouryearsago,butitjustkeepsgoing.”[#22]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Thebigguysaregettingbiggerandthesmallguysaregettingsmaller.[Alargefirm]justgotbought,andtheywerehuge…everyone’sbuyingeachotherup.Irememberwhentheybrokeup[afirm]andalltheopportunitiesthatcreated,[and]nowwe’rebacktowhereitstarted.”[#36]


Whenaskedifandhowmarketplaceconditionshavechanged,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaidthatthe“booming”economyofDenverhasmadeallthedifferenceforherfirm.Shewentontosay,“Theyestimatethat$10billionisgoingtocomeinoverthenext10years.Usuallyonlythefirstfractionofthatworkisindesign,whiletherestisconstruction,maintenance,andoperation.”[#5]

Thesamebusinessownercontinued,“Inotherwords,this$10billionworthofworkisprobablygoingtobetwoyears’worthofworkinthedesignfield,soI’malreadylookingaheadandtryingtopositionmyselftogetfederalworksothatwhenthesecityprojectswanedown,I’llbestartingtobringinfederalworkaroundthecountrythatwillhelp[to]keepuswhereIdon’thavetolayanybodyoff.”[#5]

Whenaskedifmarketplaceconditionshavechangedinrecentyears,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthattheprivatesectorhasbecomemoresaturatedinthelastyearandahalf.Headded,“It’sreallyhappenedalongsidethegrowthofColorado.Lotsofcompaniesarecominginfromoutofstate.Yourunintothemandtheysay[they’re]fromTexas[or]Kansas.”Hewentontosay,“They’relatetojobsbecausetheydon’tknowhowtogetthere.They[don’t]knowadifferentwaythanthehighwaybecausethey’reallnew.So,it’saninfluxofpeoplethatarecomingin.”[#7]

Whenaskedtodescribecurrentmarketplaceconditionsinthelocalarea,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaid,“Ialwaystellourguys…thatthere’soneconstantinallthis,andthatis[that]thingsarealwayschanging.So…ifthere’saclientouttherethatyou’vebeentryingtoget[workwith],justbepatientenoughandyou’llgetin….He’seithergonnabegone,orsomebodyelseisgonnabeinhisplace[togivebusiness].”[#14]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmsaid,“Ithinkourfirmcompares[to]otherlocalengineeringcompanies,butIbelievetheeconomyisstartingtoslowdown.Webidonsomeprojectsandwinthem,butthesizeofthoseprojectsismuchsmallerthanafewyearsago,andgetting[even]smaller.”[#25]

Whenaskedifmarketplaceconditionshavechangedinrecentyears,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthat“bigfirms”haverecentlybeenacquiringsmallerfirms,leadingtoarchitecturalfirmsgettingbigger,onaverage.[#15a]

Thesamebusinessco‐ownerwentontocomment,“[In]alltheyearswehavebeeninbusiness,even[during]theworstdownturn,weneverlaidanybodyoffbecausetherewasn’tmoneyforthesalaries.Wediddecreaseeveryoneto90percentoftheirsalary,butitwasadecisionmadebythegroup.Inabigfirm,you’dneverhavetheopportunitytohelpmakethatdecision.”[#15a]

Whenaskedaboutanychangesinmarketplaceconditions,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Thereisan


enormousamountofworkalongtheFrontRange,butithasalsobroughtinalotofout‐of‐statecontractorswhoarenowvyingforbusinesswithlocalcompanies,especiallysmallbusinesses.”[#20]

Regardingpastandcurrentmarketplaceconditions,theBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmstated,“I’veseenrecession,depression,nowork,toomuchwork,[and]youknow,theboomrightnow.So,I’veseenallofit.”[#13]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmsaidthatmarketplaceconditionshavebeenprettystableandthatthenatureoftheworkhasremainedaboutthesame.However,henoted,“Itebbsandflowsthroughtheyears,dependingontheeconomics.”[#1a]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmsaidthatconditionshavenotchangedmuchsincehestartedhisbusinessalmost10yearsago.HewentontonotethattherehasalwaysbeensteadyworkinDenver.[#18]

Whenaskedwhatchangeshehasseeninmarketplaceconditions,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstated,“Otherthanthespeedofbusiness,there’snotmuchIcanthinkof.Thingshappenalotfasterthantheyusedto,[and]technologydrivesthat.Expectationshavemovedupquiteabit[becauseof]culture.Peoplewantthingstoday.”[#23a]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthathehasnotnoticedanychangesinmarketplaceconditions.[#39]

A few trade association and business assistance organization representatives discussed

changes in local marketplace conditions.Commentsinclude:

Whenaskedifshehasnoticedanyrecentchangesinmarketplaceconditions,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Inthelast18months,theissueofnotenoughemployeesandpeopleturningdowncontracts[hasincreased].”[#37]

Whenaskedaboutanyrecentchangesinmarketplaceconditions,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationnotedthatheseesmoreandmorepublicopportunitiesandisseekingwaystogetmoremembersinvolved.However,hecommented,“Togetintoa[DenverInternationalAirport]concourseitisatleasta$2millionbuild,thenyouroverheadandeverythingelse[ontopofthat].Thathurdleisprohibitiveformany,manyfolks.”[#33]

Whenaskedaboutchangesinmarketplaceconditions,theHispanicAmericanmalerepresentativeofatradeassociationsaidthathehasseengrowthamongsomeoftheminority‐andwomen‐ownedbusinessesthatcomprisetheorganization’smembership.Heexplained,“Ihaveseensomegrowthintheirbusinesses,whichhasbeenwonderfultosee


happen,tothepointwheretheycanbeprimes.Maybenotontheverylargestprojects,buttheyareprimesandtheyarecompetingoutofthatmarketplace.”[#11]

Thesametradeassociationrepresentativecontinued,“Iseeexpansionofbusinesses.Iseefolkswhocaremore.I'malsoseeing,ontheprimes'side,morerespecttowardsthecertificationprocessandtheneedforgoalsettingandtheirwillingnesstoparticipateinthoseprograms.Notjustbecauseitisarequirement,butbecausetheyalsoaretryingtobuildmorecapacityinourcommunity,andthewaytodothatiswithoursmallbusinessesandcertifiedfirms.”[#11]

Some business owners and representatives discussed whether marketplace conditions differ

between the public sector and private sector.Commentsinclude:

Regardinglocalmarketplaceconditions,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Intheprivatesectorthereisalotofopportunity,buttherearemoresmallcompaniesdoing[herlineofwork].Inthepublicsectorthereisalsoalotofwork,butnotasmuchcompetitionfor[herlineofwork]becauseitrequirescertification.”Sheadded,“Theyareaboutthesame.Rightnow[CityandCountyofDenver]isgettingalotofwork[with]themuseum,theconventioncenter,andtheairport.”[#35]

Whenaskedifmarketplaceconditionsdifferinthepublicsectorversustheprivatesector,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmindicatedthatconditionsarebetterinthepublicsectorduetoDBE/MWBEcontractgoals.Shesaid,“PublicprimesarebecomingawareofandcomplyingwithMWBEandDBErequirements.Privatesector[primes]havenosuchrequirements,andworkwiththeir‘good[ol’]boy’partnerswhomthey’veworkedwithforthepast25years….Ihavenochanceofwinningthatwork.”[#5]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaidthatmarketplaceconditionsdifferineachsector.Heexplained,“Intheprivatesector,thelocalmarketplaceissaturatedwithcompaniesthatdowhatIdo.It’sverycompetitiveandit’sallaboutrelationshipsthatyoubuildasfarasreferrals.Inthepublicsector,Idon’tfeelit’sthatcompetitiveatall.Ithinkit’sjustgiventoacertaingroupofcompanies,and[ifthat]groupofcompanies…can’tdothework,theysubitout.”[#7]

Whenaskedifmarketplaceconditionsdifferineachsector,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthattheydo.Heexplained,“Thereismorescrutinyinthepublicsector.Intheprivatesectortheyjustslapsomethingtogether.Thereisprobablya25percentsurchargeforpublicworkbecauseofallthepaperwork,butbecauseofthatthereislessrisk.”[#22]

Whenaskedifmarketplaceconditionsdifferbetweensectors,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmindicatedthattheydonot.Hesaid,“Ithinktheeconomyissuchthatpeople,whetheryouareprivateorpublic…arestilllookingatvalue.Youstillhavetobecompetitive.Theyhavetohaveacomfortlevel.It’sthesamewhetherit’spublicorprivate.”[#39]


Whenaskedifcurrentmarketplaceconditionsdifferbetweensectors,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatasfarasshecantell,theydonot.Shewentontosaythatanyrecentchangesinmarketplaceconditionshavenotbeennoticeable.[#8]

Whenaskedifmarketplaceconditionsarethesameinbothsectors,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthattheyare.Headded,“Ithinkwithalltheprojectsthatwehavegoingonrightnow…[with]whatDenver’stryingtodowithmobility,Ithinkitisgreat.”[#9]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatmarketplaceconditionsintheDenverareadonotdifferbetweensectors.Hecommentedthatbothsectorsare“booming.”[#23a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatmarketplaceconditionsareexcellentinbothsectors.However,hecommented,“Itseemswheneveryouhaveaboom,morecontractorsmovein,whichgenerateslowermargins.”[#21a]

One trade association representative noted that marketplace conditions do differ between

sectors.TheHispanicAmericanmalerepresentativeofatradeassociationexplained,“Inthepublicsectoryouhavegoalsthattheentityistryingtoachieve,sothereforetheprimesaremorededicatedintryingtoachievethosegoalsandbringingoncertifiedfirms.However,Iamseeingmoreactivitywiththeprimesintheprivatesectorastheytakealongsomeofthecertifiedprogramswiththemonthose[privatesector]jobsaswell.”[#11]

Business owners’ experiences pursuing public and private sector work.Intervieweesdiscussedtheirexperienceswiththepursuitofpublicandprivatesectorwork.Somediscussedthedifferencesbetweenpublicandprivatesectorwork.Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmnotedthatitiseasiertoperformpublicsectorworkbecauseofherfamiliaritywithitandtherelationshipsthatshehasforged.Sheadded,“It’sadifferentapproachtoprivateworkinhowyoubid,whichbecomesmoreaboutcoststhanrelationships.”[#13]

Whenaskedaboutthedifferencesbetweenworkinginthepublicsectorversustheprivatesector,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatshepreferspublicsectorwork.Sheexplained,“Intheprivatesector,therearetwospacesyoucanworkin.Oneistheresidentialspace,[which]we’resuperfamiliarwith….Butalotofprivatesectorworkinvolvesdevelopers,anddevelopersaretheclientswedon’treallywanttoworkforandwhobasicallytendtobe[difficulttoworkwith].They’reveryaggressive,verypricedriven,[and]verydeadlinedriven.”[#12]

Thesamebusinessownercontinued,“Mostofthetimewhenwe’veworkedforgovernmententities,the[publicrepresentatives]haveatleastknownwhatthey’redoing.Theyunderstandthey’regoingtobuildasculpturepark.”Shenotedhoweverthatit’seasierto


secureprivatesectorworkbecausethepublicsectorisdependentuponpastperformanceonsimilarprojects.[#12]

Whenaskedhowhegoesaboutsecuringworkandifitdiffersbetweensectors,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaid,“Youmustidentifythedepartmentandpersonthathandlesyourcommodityandservices,andthenworkthroughthemazetoreachouttothem.”Heexplainedthattopenetratethe“maze,”hegenerallyreachesouttospecializeddepartmentstohelpguidehimthroughtheprocess.Henoted,“Westaywithinourdisciplines,sowedon’treachoutanddootherdisciplinesthatwearenotreallysureof.”[#39]

Thesamebusinessowneradded,“Wegoafterprivate,government,andtribe[work].We’vebeeninbusinessfor[almost30]years,so[we]focusongovernmentcontractorsandtribes.”Heexplainedthathedirectshiseffortsinthiswayduetohisfamiliaritywiththemarketplace.[#39]

Regardingdifferencesbetweenpublicsectorandprivatesectorwork,hesaid,“Withthegovernment,youhavetodotthei’sandcrossthet’smore.Couldbemoreregulationsonthegovernmentside.”Hewentontosaythathisexperienceinbothsectorshasbeengood,ashastheprofitabilityineach.Henotedthathedoesnotregardonesectormorefavorablythantheother.[#39]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthathisfirmusedtofocusonprivatesectorworkuntil9/11,when“alotofcontracts…juststopped.”Hesaid,“Allthedevelopersjustwalkedawayfromprojectsandleftarchitects,engineers,andcontractorsholdingthebag.Idecidedthentofocusonpublicwork,becauseapublicentitywouldneverstartaprojectunlesstheyhadthemoneycomingin.”[#22]

Thesamebusinessownercontinued,“Theotherthingaboutpublicclientsisthatyou’reusuallydealingwithprofessionals[like]architects,engineers,[and]contractorsthathavebeentrainedinthosefields,sotheyknowtheprocess.Allprivatedevelopersareconcernedaboutismakingmoneyintheend.Theyareimpatientanddon’thavemuchappreciationfortheprocess.So,wemadetheshiftandIgotcertifiedasan[SBA]8(a)withthefederalgovernment,andwestilldoalotoffederalwork.”[#22]

Helaterreportedthatanadvantagetopublicsectorworkisthatitismore“stable.”However,henoted,“Inaway,thepublicsectorismoredifficultinthatit’saveryrigorousprocess.Onceyoumastertheprocess,itbecomeseasierovertime….So,inthatrespect,thepublicsectoris[fairer.]”Incontrast,hereportedthatprivatesectorworkis“riskierbecauseit’smoredemanding.”Headded,“Plansaremoreincomplete.”[#22]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatpublicsectorprojectshavespecificgoalstomeetand“boxestocheck”thatinformthedynamicsofateamforaproject.Sheexplainedthatincomparison,privatesectorprojectsaremorerelationship‐orientedandbasedonqualificationsratherthanthelogisticsofteamformation.Shenotedthatintheprivatesector,theirfirmismorelikelyto


talkaboutwhytheyarethebestfirmratherthanfocusingonpublicrequirementsthatmustbemetforworkinthepublicsector.[#1b]

Whenaskedaboutthedifferencesbetweenpublicsectorandprivatesectorwork,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Intheprivatesector,someoftheprojectsare[basedon]bid,butsomearerelational.Someonemaylikewhatwe’redoingandaskforapriceonit.Theymaygetthreebidsandthensaywewonthebid.”Hesaidthatthisisincontrasttopublicsectorwork,wherealloftheworkisbidout.[#9]

Thesamebusinessownerlatersaidthattheprocessofgettingworkismoredifficultinthepublicsector,largelyduetothe“backandforth”natureofsecuringaproject.Hesaid,“Ontheprivateside,youmayhaveanentitythat’sgoingtodoaproject….There’sanownerthere[and]youhaveanopportunitytogetwiththeownertogetinvolvedwiththeproject.Thenthere’sacontractor,[and]youhaveanotheropportunity.”[#9]

Hecontinued,“[However],onthepublicsideyouendupwithfourorfiveprimecontractors.Yougothroughthewholeprocess,butwhenyougettothecontractorpartyouhave…fiveprimeswhoarebiddingonthesameproject,andfourofthosefivearen’tgonnagetit.Ifyouweresmartandhadtheresources,youwouldprovidepricingtoallofthem.”[#9]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreported,“Ithinkthattheprivatesectorismuchmorebasedonpurequalificationsandyourabilitytoshowthatyoucanmeettheirschedule,budget,andthelead’sexpectations.”[#1a]

Thesamebusinessrepresentativestatedthatobtainingworkintheprivatesectorisbasedonafirm’squalifications,butsometimestheworkismoredollar‐driventhanpublicsectorwork.[#1a]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaidthatit’smoredifficulttogetworkinthepublicsectorthantheprivatesector.Sheexplained,“Comingfromafinancebackground,Ibelievethatonceacompanyorpublicsectorpersongetsmarriedto[aparticularcompany],ittakesquiteabittogetthemtodecidetogowithsomebodyelse.Forinstance,theycanhavecomplaintsforyears,butitmaybetoomuchofanefforttochangevendors.”[#8]

Thesamebusinessco‐owneraddedthatdoingworkinthepublicsectoriseasierthanintheprivatesector.Sheindicatedthatpublicsectorworktendstobelesscomplicatedthanprivatesectorwork,andsaid,“WhenweworkedwiththeCityofLongmont,theyhadtheirdesign,anditwasmyjobto[decide]howwe[would]solve[their]problem.’”[#8]

Whenaskedifit’seasierorhardertoreceivepaymentforpublicsectorwork,shestatedthatit’smucheasier.Sheexplained,“Theyhavepaymentcardswhenthey’reordering.Theyputdowntheirdeposit,andwhentheycometopickituptheypaytheirentirepayment.[In


theprivatesector],asinglepersonmayorderfourthingsandsaytheywillpayinaweekandahalfwhentheycangetuphere.”[#8]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmsaid,"Ourprivatesectorworkseemstofocusalotaroundcontractorswhileourpublicsectorclientsseemtovalueengineeringmorethanaprivatesectorclient…."Headdedthatattimespublicsectorclientswilltakealowcontractbidwithoutconsideringthatsomeonewithmoreexpertiseandahigherpricemayprovideabetterproduct.Hewentontosaythattherearenotsignificantdifferencesbetweenpublicandprivatesectorwork.[#3]

Whenaskedaboutthedifferencesbetweenpublicsectorandprivatesectorwork,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Therereallyisn’tthatmuchdifferenceworkingintheprivateorpublicsectors.Youworkonthebid,reviewtomakesureyou’veincludedeverything,andsubmit.Wearestartingtogetrecognizedasaqualitycompany,andthatreputationgoesalongway.”[#32a]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthatthebiddingprocessintheprivate‐andpublic‐sectorsareessentiallythesame.Headdedthatwagesarethemostnoticeabledifferencebetweenthetwosectors,explainingthat"InthepublicsectorwepayDavis‐Baconwages.Intheprivatesector,itvaries."[#4]

Thesamebusinessowneralsonoted,"Ithinkbothsectorshavetheirtrade‐offs.Ithinkasfaras[workingwith]management,it'seasierinthepublicsector.Butasfarastheamountofpaperwork,it'sharder."[#4]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“The[nature]oftheconstructionsectormixofworkhaschanged.EveryoneislookingforMWBEsrightnow,whichhasmadeahugedifference.IftheydoawaywiththisMWBEprogram,alltheseMWBEfirmswillfail.”[#5]

Thesamebusinessownerlatersaid,“Itisnexttoimpossibletogetworkinthepublicsectorbecausepublicworkisthisgiantthingthat[noteveryonecan]break…into[or]sink[their]teethinto….Iinterviewedfor[apublicsectorproject]andIsaidwecanhandleprojectsof$500,000.AndtheguysatthereandlookedatmelikeIwasoutofmymind,andhesaidtheycouldn’tbreakitupintosomethingthatsmall.”[#5]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaidthatshedoesnotseesubstantialdifferenceswhenworkinginthepublicsectorversustheprivatesector.Sheexplained,“Mycompanyhasbeenveryfortunateingettingworkinbothsectors.[Our]positivereputationisoutthere….Thetypeofworkthecompanydoesisbasicallythesame[acrosssectors].Theworkdependsonwhattheownerwants.”[#19]

Thesamebusinessownerwentontosaythatthepaymentstructureisdifferentbetweensectorsandthatdifferentmaterialisused.Shesaid,“Adjustmentsaremadebasedonthe


customer.Wehaveamixofcustomersandsizesofcontracts.Wecouldn’tjustdosmalljobsandsucceed.”[#19]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Idon’tthinkthereareconsiderabledifferencesinworkingeitherpublicorprivate.Thereisalwayssomeonecomingouttoinspectyourwork,andtherearedeadlines.Themunicipalitieswehavebeenworkingwithpayonatimelybasissolongasthepaperworkissubmittedcorrectlyandtimely.”[#28]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatthereisnodifferenceasasupplierinattemptingtodoworkinonesectorcomparedtotheother.Hecommented,“Aconstructionprojectisaconstructionproject.”[#23a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthatworkineachsectorissimilarandcommentedthatthefirmissuccessfulinbothsectors.Hewentontosaythatoneminordifferenceisthatthereisgenerallymorepaperworkinvolvedinthepublicsector.[#21a]

Thesamebusinessrepresentativeadded,“Boththeprivatesectorandpublicsector[havetheir]ownchallenges,butthepublicsectorismorerigidintermsofpoliciesandprocedures.However,theprivatesectorworkcanalsohaverigidpoliciesandprocedures,dependingontheclient.”[#21a]

Whenaskedifthereareanysubstantialdifferencesbetweenworkinginthepublicsectorversustheprivatesector,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthattherearenosuchdifferencesinhislineofwork.Heexplained,“Itallcomesbacktogettingtheorder,executingitandmakingsureyourcustomerissatisfied.”[#36]

Whenaskedifthereareanydifferenceswhenworkinginthepublicsectorversustheprivatesector,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatbasedonherexperiencewithonepublicsectorjob,shedoesnotseeany.Sheexplained,“[I]getaschedule,seehowmanypeopleIneed,makesuretheworkisgood,andthengetpaid.”[#35]

Whenaskedifherprocessofgettingworkdiffersbetweensectors,thesamebusinessownersaid,“Inthepublicsector,itishardertogettoknowtherightpeopleforthebigcontractor.Someofmycompetitorshavepeoplewhodotheestimatingandtheycangiveabetterprice.Idoallofmy[own]estimating.Intheprivatesector,itismoreaboutwhoknowsme.”Sheaddedthatitiseasiertogetworkintheprivatesectorbecauseshehasbeenworkingtherelonger.[#35]

Shelateradded,“Doingtheworkisstressfulinbothsectors….Ithinkthat’sbecausethereismorecompetitionforthisworkintheprivatesector.Alotofcompanieswon’tgetcertified.”[#35]


Many interviewees indicated that their firms conduct both public sector and private sector

work.[e.g.,#13,#15a,#16,#28,#30]Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidthat“probably90[percent]”ofherworkisinthepublicsector.Shesaidhergoalistoachieve20percentprivatesectorworkby2019.Whenaskedwhyshe’sstrivingformoreprivatesectorwork,shesaidshehastodiversifyherportfoliobecausemanypublicsectoropportunitiesinwhichshepreviouslysupplementedherbusinesshavebeenmovedordelayed.[#13]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Inthefirsteightyearsofmybusiness,90percentofitwasprivatesector.Inthelasttwoyears,80percentispublic.”Shewentontosaythatthisratioconstantlychangesbecauseofthesizeofherbusiness.Sheexplained,“Becausewearesosmall,whenIgetabigcontractitdominates.Askmeinsixmonthswhatproportionofourworkispublicsectorversusprivate,andit[may]betheotherwayaround.”[#5]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathisfirmworksmainlyinthepublicsector.Hesaidthatduetoalargeamountofavailablepublicsectorwork,roughly80percentofhisfirm’sworkcurrentlycomesfromthepublicsector.[#14]

Whenaskedifthisamountofpublicsectorworkvariesyearly,thesamebusinessownercommented,“It’salwaysajugglingact.”Hesaidthatitalldependsonpublicsectoragencies’fundstosupportpublicprojects.Hewentontosaythatitisimportanttohaveabalanceofpublicandprivatesectorworkbecausetherearealways“upsanddowns”regardingthehealthofbothsectors.[#14]

Whenaskedwhatproportionofhisworkcomesfromeachsector,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthat60percentcomesfrompublicsectorand40percentfromtheprivatesector.Hesaidtherehasbeenatrendtowardspublicworkthatisdrivenbytheeconomy.[#22]

Whenaskedifthismixofworkvariesyear‐to‐year,thesamebusinessownerreportedthatitdoes.Heexplained,“Itdependsontheeconomy.Inarecessionyouwillsurviveonpublicsectorwork.[And]actually,wedobetterinarecession.Duringthegoodtimes,thebigfirmsdoalotofprivatework[like]thecasinos[and]hotels.Whentheeconomygoessouth,theyjumpbackintothepublicsectorandittakesthemawhiletogettraction.Meanwhilewe’retherehummingalongdoingpublicwork.”[#22]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatcurrentlythefirmperformsmostlyinthepublicsector.However,henotedthatthisisbecauseofalargeDenverInternationalAirportcontract,andcommentedthattheyusuallyperformmoreprivatesectorwork.[#21a]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmnotedthatpublicsectorworkrepresentsapproximately40percentoftheirprojects,with


aviationworkrepresentingabout35percentofthatpercentage.Meanwhile,shesaidprivatesectorworkrepresentsabout60percentoftheirprojects.[#1b]

Whenaskedwhatproportionofhisfirm’sworkcomesfromthepublicsectorversustheprivatesector,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Ibelieveourprojectworkisclosetobeing50percentpublicand50percentprivate.Wehaveanongoingtwo‐year[publicsector]contract…todo…desktopsupport.Thathappenedasaresultofacontractwewontoinstall5,000feetofcablefor[thesameclient].Theylikethewaywework[and]wehavenevermissedadeadline.Iwouldreallyliketogetafewmoreofthoseongoingservicecontracts,andwecontinuetobidonthem.Webidinthepublicandprivatesector.”[#32a]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmreportedthatherfirmperformsinbothsectors.Shesaid,“Therearesomanyprojectsgoingonnow[and]thereisconsiderablepublicworkoutthere.However,Idon’tshyawayfromaparkinglotjob.”Shecontinued,“Thecompanybusinesscycledoesn’tvaryyeartoyear,itvariesbyseason.Oursmallerjobsareusuallyinthewintermonths.”[#19]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmexplainedthattheirprojectsdonotdiffermuchbetweenpublicsectorandprivatesectorwork.Headded,"Basicallyweliketoenvisionourselvesasanextensionoftheclient'sstaff,whetherthatbeapublicsectororaprivatesectorclient.Mostofourworkisinthepublicsectorhowever."[#3]

Thesamefirmowneralsonotedthattheirproportionsofpublicandprivatesectorworkvaryeachyearbasedonwhatpublicprojectsarehappeningatthetime.Heexplained,"Itiseasierforustogetworkinthepublicsectorbecausewearespecialized."[#3]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthathisfirmdoesabout40percentoftheirworkinthepublicsectorand60percentintheprivatesector.Healsonotedthatthemixofpublicandprivatesectorworkhasbeenrelativelyconsistentovertheyears.[#4]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthatabout70percentofhisfirm’sworkcomesfromtheprivatesector.Whenaskediftherehasbeenatrendtowardsorawayfromprivatesectorwork,hesaidthatithasremainedthesameforawhile.[#9]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthat80to85percentofherfirm’sworkisintheprivatesectorwhile15to20percentisinthepublicsector.Shereportedthatthismixhasbeensteadyyear‐to‐year,andcommentedthattheyaretryingtoincreasetheirpublicsectorwork.[#12]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthat90percentofhisfirm’sworkcomesfromtheprivatesector.Hesaidthathisfirmhastrendedawayfrompublicsectorworkduetothedifficultytheyhavetryingtogeton


vendorlistsasaprime.Headded,“Forschoolboards…cities[and]municipalities,theprocessisjustdaunting….”[#7]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatpublicsectorprojectsaremorechallengingtoworkonasasubcontractorduetoprimeconsultants’inclinationtohiresmall,minority‐,andwomen‐ownedsubcontractorsfirst.[#1a]

Whenaskedwhatpercentageofthefirm’sworkcomesfromeachsector,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatthemajorityoftheirworkisintheprivatesector.Sheadded,“Iwouldsayprobablylessthaneightpercentcomesfromthepublicsector.”[#8]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatherfirmworksalmostexclusivelyintheprivatesector.[#35]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthat99percentofhisworkhasbeenintheprivatesectorsincelosingaRegionalTransportationDistrictcontract.[#36]

Trade association and businesses assistance organization representatives reported a healthy

number of members working in each sector.[e.g.,#6]Forexample:

Whenaskedwhatpercentageofmembers’workcomesfromthepublicsectorversustheprivatesector,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationindicatedthatbetween50and90percentofmembers’workisinthepublicsector.”[#37]

Whenaskedifthismixofworkvariesyear‐to‐year,thesamebusinessassistanceorganizationrepresentativesaid,“Thereisalotofpublicworkrightnow.Acoupleofyearsagotherewasaburstofmarijuana‐relatedconstruction,butthathassloweddown.Soyes,itdoesvary.”[#37]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationreportedthatwhilemostmembersworkintheprivatesector,onelong‐timememberhasregularcontractswithRegionalTransportationDistrict.[#33]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationreportedthatmembersworkinbothsectors.Sheadded,“Someofthe[smallfirms]thataredoingworkinthepublicsectorarealsodoingworkintheprivatesector.IalwaysencouragetheMWBEs,oranyofthem…todoworkintheprivatesectortoo.You’vegottohaveyourfootinboth[sectors].That[canbe]hardforasmallfirm.”[#38]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthatmostmemberfirmsworkinthepublicsector.Headded,“Thepublicsectorhasgoalsontheirprojects,andsothereisarequirementforthebigguystohavesubcontractorsthatarecertified,andsoalotofthemareinthatarena.”[#11]


Thesametradeassociationrepresentativeaddedthatsomemembershaveneverworkedforapublicentity,oronlyworkforonepublicentityinsteadofbranchingout.Heexplained,“Forinstance,doingworkattheairportcanbeverydifficultandalotmoreexpensivethandoingaprojectatareccenteror[withDenverPublicSchools].Andso,forthemtodoworkattheairport,Ialwaysremindthem,‘Makesureyouknowallthecostsassociatedbeforeyougooutthereandbidonsomething.’”[#11]

Helatersaidthathebelievestheretobeatrendformoreprivatesectorworkamongmembers.Heexplained,“Ithinkasfolkshavedevelopedrelationshipsandyoudogoodwork,[theprimecontractors]wanttotakeyouontheirwork,whetheritispublicorprivate.[#11]

Some interviewees reported that they prefer public sector work to private sector, or that there

are benefits to public sector work.Forexample:

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmstatedthattherearebenefitstoworkinginthepublicsector.Heexplained,"Theprivatesectorcanbemoredemandingschedule‐wise.It'sbeenourexperiencethatsometimestheprivatesectorisnotasorganizedastheyshouldbe,andthatthescheduledemandscanbegreater.Sometimesthoseintheprivatesectordonotknowwhattheyreallywant."[#3]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmstated,“Inthepublicsector,Ibelievetheemployeesseemuchmoregratificationnotonlyinthepaybutalsointheworkenvironment.Ithinktheyfeelmuchmoreappreciated….[Theyseem]alittlemoreexcitedtoworkpubliclythanprivately.Ithinkthere'sasafetystandardthatalsomakesthemfeelmoresecure.”[#4]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmstated,“Mostofourworknowcomesfromthepublicsector.Countiesandmunicipalitiesinthisareaarelookingtoupgrademanystructuresandfacilities.Ibelieve[it’s]becausewehaveaself‐performingbusinessmodel[that]weareaskedtobidonthosejobs.Thefactthatwehavein‐housestafftohandlethebeginningtotheendisanattractiveoptionforthem.”[#28]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthatforthetypeofworkhiscompanydoes,itiseasiertogetworkinthepublicsector.[#14]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatpaymentisfasterinthepublicsectorwhichcanleadtomoreprofitability.[#7]

Some trade association representatives indicated that there are advantages to working in the

public sector.Forexample:

Whenaskedifmembersworkmoreofteninthepublicsectororprivatesector,theBlackAmericanfemalerepresentativeofatradeassociationreportedthatmembersmostoftenworkinthepublicsector.Shecommented,“Itisin[thepublicsector]thattheyaregivenan


opportunitythroughthegoalsandprogramsthatareinplace.Theycanbuildtheircapacity,theirexpertise,andtheirknowledgebase,andthenfeelmorecomfortabletoexpandintotheprivatesector.We’veseenthathappenalot.We’vealsoseenalotoffolkswhoprefertostayinthepublicspace.”[#6]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatpaymentismorereliablewhenworkingwithpublicentities.Hecommented,“Thepaymenttakeslongertogetsometimes,butyouaregoingtogetit.”[#11]

A few business owners reported working exclusively in the public sector.Forexample:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidalltheirworkisinthepublicsector,mostlyonindustrialprojectssuchasrestorationandnewconstruction.SheaddedthatthisworktakesplaceacrossseveraldifferentcountiesaroundtheDenvermetroarea.[#2]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstated,“Allofourcompany’sworkcomesfromthepublicsector,specificallyCDOT.”Weworkprimarilyonhighways.ThoseroadsaretheresponsibilityofCDOT.Thatiswhytheyhireus.”[#27]

Thesamebusinessownerwentontosay,“[CDOT]know[s]thequalityofourwork.Theykeepusverybusy.Wedon’thavealotofemployees,[so]sometimesthereareprojectsavailablethatwedon’tgoafterbecauseofthenumberofpeoplewehaveonstaff.Fortunately,wehaveenoughtogetthejobdone[mostofthetime].”[#27]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatherfirmworksonlyasasubcontractoronpublicsectorcontractsatDenverInternationalAirport.[#20]

Some interviewees reported that they prefer private sector work to public sector, or that there

are benefits to private sector work.[e.g.,#1b,#10,#15a,#24,#30]Manysaidthatpaymentisconsiderablyfasterintheprivatesector.Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmstated,“Theprivatesectoriseasybecausedecisionsarefast,”comparedtothepublicsector.Sheadded,“Youdon’thavetogothroughalotofiterationsofthings.”[#13]

Thesamebusinessownerwentontosay,“EveniftheprivatesectorrequiresanRFI,areplyisgenerallyreceivedwithin48hours.”Shesaidinthepublicsectoritcantake30to45daysforareply,andadded,“Therewasadelayofupto90daysforanRFIreplyfromapublicsectorbusiness.Overtheyears[responsetime]dependsonwhothegeneralcontractororprojectmanageris.”[#13]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmnotedthatgettingworkinthepublicsectorismoredifficultbecauseofallofthefactorsinvolvedincontractingoutcertainportionsoftheprojectandachievingcertaingoalsinthe


hiringofteammembers.Shementionedthatsometimesherfirmgetspassedoverorhastodelegateoutaportionoftheprojecttoanotherbusinessinordertomeetmandatedrequirements.[#1b]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatprivatesectorprojectsaremuchmorestraightforwardthanpublicsectorprojects,astherearemoredirectchannelsofcommunicationanddecision‐making.Hestatedthatpublicsectorprojectscostmore“becausetheprojectsgetextendedoverlongerperiodsoftime,andtherearemultiplereviewsandprocessesthatyouhavetogothrough.”Headded,“Whenthatstartstoextendovermonths,itjustbecomesahighlyinefficientprocess….”[#1a]

Thesamebusinessrepresentativewentontoexplainthat,unlikepublicsectorprojects,privatesectorprojectstypicallyhaveapointpersonwhoisresponsibleforcommunicatingdecisionsandisempoweredtomakedecisionsonthespot,ratherthanspendingtimedeliberatingandnegotiating.Herecommendedthattheprocessbeimprovedby“empowering…projectmanagerstomakedecisions.”[#1a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaidtherearestarkdifferencesingettingprivatesectorworkversuspublicsectorwork.Heexplained,“Intheprivatesector,ifthecustomertrustsyouandyoucandothework,that’swhatit’sallabout.Itmattersifyouhaveagoodreputation.Inthepublicsector,it’smorewhoyouknowthanwhatyouknow,ortheexperiencesyouhaveorwhatqualities…orwhatqualificationsyoubring.Allofthoseaspectsaresecondarybecauseyoucan’tevenshowyourqualificationsbecauseyoucan’tgetinthedoor.”[#7]

TheHispanicAmericanmaleownerofanarchitecturalengineeringfirmreportedthattheymainlyfocusontheprivatesector,thoughtheycurrentlyhaveacontractwithBoulderCounty.Hewentontosaythatreceivingpaymentisneveranissueintheprivatesector.[#16]

Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmsaid,“Workingintheprivatesectorforahomeownerorasmallbusiness,likeamomandpopstore,willgetyoupaidmuchquickerthangoingthroughlargecontractors.”[#31]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmindicatedthatprivatesectorworkcanbeadvantageousduetolesspaperwork.Hesaid,“Thereismorepaperwork[involved]onpublicsectorjobs.”[#23b]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmindicatedthatitiseasiertogetworkintheprivatesectorbecausethecontractsareprice‐based.[#36]

One business assistance organization representative reported that most small member firms

work mainly in the private sector.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Thesmallfirmsworkprimarilyintheprivatesector.Whenwetrytotellpeopletheyhavetogoaftercontractswiththecityorstate,thebiggestconcernisthatit’s


cumbersometogetthroughthepaperwork.Theyoftensaythatforwhattheydo,thehasslewon’tpayoffinopportunities.So,theychoosenottodoit,especiallysincetheycangetcontractsmorequicklyintheprivatesector.Weareencouragingthemtofullylookatthefullportfolioofworktheycanpursue,andthatincludespublic[work].”[#37]

Thesamebusinessassistanceorganizationrepresentativelatercommentedthatmemberspreferprivatesectorworkbecause“theycanturnadollarquicker.”Sheadded,“Therearemorerestrictionsinthepublicsectorthatyouwon’tencounterintheprivate,likewhatkindsofwindowsordoorhardwareyou’reallowedtouse.”[#37]

Some business owners reported working exclusively in the private sector.Commentsinclude:

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthatheonlyworksintheprivatesector.Hewentontosaythatheprefersprivatesectorworkbecausedecisionsaremadequicklyandpaymentisalmostimmediate.[#18]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthatallofhisworkcomesfromtheprivatesector.Hesaid,“Privatejobsarestilloutthere,theyarejustgettingsmaller.Ihavebidonpublicworkafewtimes,buthaven’tbeensuccessful.Theagency[or]departmentdoesn’tsharewithyouwhyyourbidwasn’taccepted.Afteraperiodoftime[of]nothearingfromthem,youjustassumeyourcompanydidn’tgetthejob.Anyway,youarenotifiedalmostimmediatelyintheprivatesectorifyougotthejob,andyouarepaidquickly.”[#25]

Thenon‐Hispanicwhitemaleownerofanengineeringcompanyreportedthatallofhisworkcomesfromtheprivatesectorviaresidentialconstructionprojects.Headded,“[I]haveneverworkedfor[and]wouldneverworkfortheCityofDenver.Iworkedforcitygovernmentsbefore[startingmyfirm],[and]Idon’tlikeit.”[#26]

TheBlackAmericanandveteranmaleownerofageneralcontractingcompanyreportedthatallofhisworkisresidentialandintheprivatesector.Hestated,“IhaveheardfromothercontractorsthathavetriedtodoworkwithDenverforalongtime,and[nocontractscome]outoftheirattempts.So,whyshouldIeventrytogetworktherewhenIhavemorethanenoughthewayIrunmybusiness?”[#29]

One interviewee said that his firm is limited to private sector work because of its low capacity.Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“Myfirmdoesn’thavethecapacitytoworkinthepublicsector.Allofmyworkcomesfromprivatecontracts,andthatishowImakealiving.”[#31]

Several trade association and business assistance organization representatives commented on

members’ experiences pursuing public and private sector work.Forexample:

Regardingthedifferencesbetweenpublicandprivatesectorwork,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Obviouslyintheprivatesectorthingsmovequicker,butitismoreuncertain.Thepublic


sectormovesalotslower,butthereismorecertaintythatthefundingwillbethere,theprojectwillfinish,andyouwilleventuallygetpaid.”[#37]

Thesamebusinessassistanceorganizationrepresentativelatersaid,“Relationshipsareimportantinboth[sectors],butinthepublicsectorthebuyerismorereluctanttodeveloparelationshipbecausetheydon’twanttobeseenashavingapreference.[So],theytendtogobywhat’sonpaper.”Shesaid,“IftherearenoDBEgoals,it’smore[drivenby]relationship[s].”[#37]

Sheadded,“When[members]doworkinthepublicsector,theyknowtheywilleventuallygetpaid,andthatisreassuring.Intheprivatesectorthereismoreliability….WhenworkingwiththeNativeAmericantribes,youreallyhavetoknowwhatyou’redoing.Inadditiontostrongrelationships,youneedtounderstandthetriballegalissues,becausetherearenorecoursesifsomethinggoesawry.Ifthetribedoesn’twanttopayyouforsomereason,that’syourproblem.Idon’tseeithappeningalot,butthere’salwaysthatrisk.”[#37]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Inthepublicsectorthereismoreofacashcrunchbecausetheypaysoslow.Private[sectorwork]ismorestraightforward.”Headded,“Privateworkhaslesspaperworkandregulations.Thoseeatupalotoftimeforasmallbusiness.”[#33]

Thesamebusinessassistanceorganizationrepresentativewentontosaythatinthepublicsector“thereismorelipserviceregardingminorityprograms[than]follow‐through.”[#33]

Whenaskedifthereareanysubstantialdifferencesbetweenworkinginthepublicsectorversustheprivatesector,theBlackAmericanfemalerepresentativeofatradeassociationreportedthatthereare.Shesaid,“Theessenceofhavingtheprogramsinplace,thecompliance…reporting,themanagementofit,theoversight,allofthosethingsmakethepublicsectorexperiencedifferent.”Shenotedthatthiscanmakeiteasierormoredifficultforfirms,dependingonhowwelltheirengagementandhabitslineupwithprogramrequirementsandcompliance.[#6]

Inaddition,whenaskedwhichsectoriseasierformemberstosecureworkin,thesametradeassociationrepresentativesaid,“Theopportunitiesintheprogramhaveallowed[members]tocomeinandhaveaspacetoperformatgroundlevel,oratalevelwheretheycancomeinandthengrow.”Sheaddedthatsheisunsureifthereisthesame“tolerance”fornewfirmsintheprivatesector,andsaid,“Intermsofprocessesinplacetosupport[newfirms],I’mnotsurethatexistsintheprivatesector,atleastnottothedegreethatourprogramsdo.”[#6]

Regardingthedifferencesbetweenpublicsectorandprivatesectorwork,thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaid,“Yougetoverinthepublicarena,andtobefair,alotoftheadjustmentsthatmakelogicalsensecan’tbedonebecauseeveryonehastohaveanequalshot….Typically,thepublicagencycan’tjustgoanddesigntheprojectandgetsomeearlynumbersfromacoupleofgeneralcontractors.Lateron,theyhavea


muchmorelinearprocesswherethey’vehiredthearchitect[andgot]thedrawingstoacertainpoint,andthentakeproposals.”[#40]

Thesametradeassociationrepresentativecontinued,“OneofthethingsI’llsay[CityandCountyofDenver]isdoingbetteristhey’reusingsomedesign‐build/at‐risk[bids]andnotjustalowbidenvironmentsotheycangetsomeofthoseprivatesectoradvantagesintheirprojects….Theconventioncenterisagoodexample.Theybroughtinthearchitect,butthey’llgetacertainamountofdesignandthentheywilldoasolicitationforacontractor,atleastatthegeneralcontractorlevel,andsoon.”[#40]

WhenaskedaboutMWBEmembers’experiencesworkinginbothsectors,hesaid,“Ifthey’recompetent,certification…isagoodwaytogetinvolvedinthepublic[sector].But,therearemany,manyfirmsonthelistthatgetcertifiedandneverdoasinglejob.We’restilltryingtofigurethatout.”[#40]

Some interviewees discussed how the profitability of public sector and private sector work

compare.Responsesastowhetherpublicsectororprivatesectorworkismoreprofitablewerebroad.Forexample:

Whenaskediftherearedifferencesintheprofitabilityofpublicsectorversusprivatesectorwork,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Itdepends.Ifyou’redoingTacoBellsorautodealerships,it’sprobablyhighlyprofitablebecauseyouhaveaniche.Inthepublicsectoryourprofitisprobablymorepredictable….Intheprivatesector,you’resubjecttothewhimofthedeveloper.Theymaynotgettheirfinancingsotheworkstopsandyoumaynevergetyourmoney.Or,themarketchangesandtheprojectshavetochange,andyoueithermakethechangesothedevelopercangettheirmoney,oryoudon’tandyouloseyourmoney.Inthepublicsectorthereisalotofscrutiny[inthe]scope[of]services,soit’sfarmorepredictable.”[#22]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthattheprofitabilitydoesdifferbetweensectors.Heexplained,“There’smoreprofitinthepublicsectorbecauseyoudon’thavetogofightforyourmoney.You’renotgoingtogosuethepublicsectorfornotpayingyou.You’renotgoingtohavetomarketasmuchinthepublicsector[either].Intheprivatesector[however],it’sallmarketingandyouhavetogochasedownyourdollar….It’sdifferentinthepublicsector[because]there’sasettime,net30[or]net60,andyourmoney’scomingtoyou.Soyes,everyonewouldprefertoworkinthepublicsector[becauseofthat].”[#7]

Whenaskedifprofitabilitydiffersbetweenthepublicandprivatesectors,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthatitdoes.Heexplained,“Ithinkyouhavealittlemoreleewayontheprivateside.Ifsomebodylikesyourproduct,they’vesetastandardforwhattheywant.Onthepublicside,theysay,‘Itneedstobesomethingsimilartothis,’andthereareavarietyofqualitieswithinthat.”[#9]


Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmstatedthatprivatesectorprojectsaremoreprofitablethanpublicsectorprojects.Heattributedthisdifferencetothelowercostoffacilitation,theshorterandmoreconcentratedtimeframeforeachproject,andthemorestraightforwardprocess,withfewer“layersofpeople”associatedwithprivateprojects.[#1a]

Whenaskedtodescribethefirm’sexperienceattemptingtogetworkinthepublicandprivatesectors,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmsaid,“Itisprettymuchthesameforboth.Wejustidentifywhatprojectsareneeded.Whetherit’sanindividual,acorporation,orapublicentity,theyallhaveabudget.Youquotethemaprice….Wearewillingtoworkwiththemifourpricedoesn’tmeettheirexpectations.”[#34]

Thesamebusinessrepresentativeadded,“Inthepublicsector,itsometimestakeslongertogetadecisionbecauseyoudon’talwaysknowexactlywhothedecisionmakeris.[Forexample],it[couldbe]someoneinadepartmentorinpurchasing.Inbothsectors,timeisakeyelement.Everyonewantsthingsfaster.Sometimesyouhavethecustomerwithleadtimeandanotherwhoneedssomethingtomorrow.Wetrytoworkwithbothatthesametime.”[#34]

Whenaskedifitiseasiertogetworkinonesectorcomparedtotheother,hesaidthatitiseasiertosecureprivatesectorworkbecausetheyhavemorerelationshipsinthatsector.Helaternotedthattheexperienceofperformingworkdoesnotdifferbetweensectors.[#34]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatprofitabilitydoesnotdifferbetweensectors.Heexplained,“Ithinkthatforthemostpartit’sprettyclose.It’spartofthebiddingprocess[and]you’restillcompetingagainsteveryonelookingatthesamework.It’sprettysimilar.”[#23a]

Thesamebusinessrepresentativewentontosay,“Onapublicjobthere’smoreinfluencefromaroundthecountry.There’salotofstateworkandcityworkwherepeoplefromoutsidethestatearebiddingon[it],andsometimestheydothingsthataredifferentfromourprofitabilitystandpoint.”[#23a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Theprofitabilitybetweenprivateandpublicisn’tanydifferent,atleastnotinthecablingindustry.”[#32a]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthatprofitabilityineachsectorisaboutthesame,anddescribedhisprofitsas“good.”[#39]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Inbothsectorsthemarginsarereallysqueezed.Peoplewillbidapennyovertheircostandcarrythepaperfor30days.”Headded,“InthepublicsectorImightbeabletocompeteiftheybrokeitintosmallerquantities.”[#36]


Regardingeachsector’sprofitability,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedstructuralengineeringfirmsaidthattheprofitabilitydoesnotdiffer,thoughthepublicsectorcanbemoredifficultifabusinessownerisnotpreparedforitsmoretime‐consumingnature.Shecommented,“Publicsectorprojectsrequiresomuchmoremeetingtime,butifyou’resmart,youputthattimeinyourcontractandyou’reokay.”[#5]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatprofitabilityisgenerallythesameinbothsectors.Shenotedthatinthepublicsectorshecanwriteoffpartofanexpenseasadonation.Sheexplained,“Icanwriteoffpartoftheirbillasdonationbywayofadiscount….Idid[this]withtheschooldistrict.”[#8]

Whenaskedifprofitabilitydiffersbetweensectors,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatforherfirmitdoesnot.Sheexplained,“Ithinkthat’salittlebitonus….Weneedtobesmartinhowwewrite.Ithinkalotofpeoplelosetheirshirts,butIhaven’tbeeninbusinessfor[over25]yearsbygivingstuffaway.”[#12]

Whenaskedifprofitabilitygenerallydiffersbetweensectors,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatprofitabilitydependsonhowwellyounegotiateacontract,notwhetheritispublicorprivatesectorwork.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmindicatedthatprofitabilitydoesnotdifferbetweensectors.Hesaid,“Thekeytoprofitability,whetherpublicorprivate,isunderstandingwhattheclientwantsandiftheirbudgetisrealistic.Iftheirbudgetisnotrealistic,wewillthendiscussoptionswiththeclientthatfitintheirbudget.”[#34]

Whenaskedifprofitabilitydiffersbetweensectors,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaiditisaboutthesame“inthelongrun.”Heexplained,“Thereareyearswhenwehavebetterprofitsthanothers,andalotofitprobablyhasmoretodowiththe[factthatthe]privatesectorallowsyoutodothingsthatthepublicsectordoesn't.Forexample,valueengineering.Thepublicsectorhasaspecandyoucan’tchangethat.”[#21a]

Whenaskedifprofitabilitydiffersbetweensectors,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmstated,“Itdepends.It’samatterofinsurancecosts…[and]howmanyhoursIneedtospendintheofficedoingpaperwork.Italsodependsonhowoftenwehavetolookforthatprimeifwehavequestionsthatneedanswers.”[#35]

Trade association and business assistance organization representatives also discussed the

profitability of each sector.Afewindicatedthatprofitmarginsareeasiertomanageintheprivatesector.Forexample:


Whenaskedifprofitabilitydiffersbetweensectors,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“That’satoughone.Icanthinkofcompaniesthatworkinthepublic[sectorthat]areveryprofitable.However,intheprivatesectorthebusinessownercanbettermanagehisprofitmargins.It’snotasconstrained.”[#33]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatmanyofhermembersthataresmallfirmsconcentrateonprivatesectorworkbecauseitismoreprofitableforthem.Shesaid,“Ithinkitdependsonthediscipline,[but]rightnowontheverticalsidethere’salotofprivatework….That’swherethey’vedevelopedtherelationships,butit’svaried.Youcouldimaginehowmanyclientstheyhaveversus…just[having]theCityandCountyofDenver,or…CDOT.”[#38]

Whenaskedabouttheprofitabilityofbothsectors,theBlackAmericanfemalerepresentativeofatradeassociationsaidthattheprofitabilitygenerallydiffers.Sheexplained,“Inthepublicsectorwetalkaboutbreakingtheprojectdownintosmaller,morefeasiblepackages.Whereasintheprivatesector,ifyoucandothework,youcanjustdothework.There’saspaceforbothandthere’sconsiderationforboth.Breakingprojectsdowncanbegoodforsmallfirmsthatneedtheopportunity.”Sheaddedthatthereshouldstillbe“meaningfulopportunitiesfor[larger]firmsthat…canhandlemorework.”[#6]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatprofitabilitydiffersbetweensectors.Hesaidthatinthepublicarenatherearesometimesunforeseencostssuchasbondingandinsurancethatsmallfirmsmaynotknowabout.[#11]

Whenaskedifprofitabilitydiffersbetweenpublicsectorandprivatesectorwork,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstatedthatitdoesnot,butnotedthatthe“speedatwhichacompanygetspaid”does.Shereiteratedthatpaymentisfasterintheprivatesector.[#37]

C. Keys to Business Success

Thestudyteamaskedfirmownersandrepresentativesaboutbarrierstodoingbusinessandaboutkeystobusinesssuccess.Topicsthatinterviewersdiscussedwithbusinessownersandrepresentativesincluded:

Keystosuccessingeneral;

Relationship‐building;

Employees;

Equipment,materials,orproducts;

Competitivepricing(pricingorcredit);

Financingandaccesstocapital;

Bonding;

Insurance;and


Otherkeystobusinesssuccess.

Keys to success in general. Manybusinessownersandrepresentativesexpressedthekeyfactorstosuccessasprofessionalism,communication,teamwork,training,experience,andreliability.[e.g.,#12]Examplesofrelatedandotherfactorsinclude:

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmcitedcommunication,customerserviceandexperienceaskeystosuccessintheirlineofwork.Hestated,"Ifourclientswantsomethingdone,theyknowthatthey'llgetmeoroneofmystaffmembersonthephone….Atourfirmwehaveapersonalrelationshipwitheachandeveryoneofourclients….Wekeeptheminformedastotheprogressoftheworkaswellasproblemswemayencounter….Theyalsoknowthatweareworkinghardforthem,thatwearepleasanttoworkwith,andthatwebringgoodideastothetable…."[#3]

Whenaskedwhatittakesforafirmtobecompetitiveinherindustry,theHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidthatownersmustpayattentiontosafety,asworkers’compensationcostshaveabigimpactonacompany’sbid.Sheexplained,“Ifyourworkers’compensation[costs]aretwiceortriplethatofyourcompetitor,thenthat’showmuchmore[money]youhavetoputintoyourbids.Materialscostthesameforeverybody.Overhead[costs]varybytheentity,[but]laboriswhatfluctuatesthemost.So,safetyisatremendouspartofit.”[#2]

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofbusiness,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidittakestherightpricing,therightproduct,andproductsthatareunique.Heexplained,“Therearealotof[product]providersinthemarketplace,andoftenasuccessfulmanufacturerwillcomealong,soeverybodycarriesthatsamestyle.Butifyoureallywanttobedifferent,youhavetohavesomethingthat’sdifferentthanstylesthatotherfirmshaveaninterestin.”[#9]

Thesamebusinessownercontinued,“Havingsomethingdifferentcanbebothanadvantageandadisadvantage.Asanexample,almosteverythingtheCityofDenverdoesisbasedonastandardthatwasdonebackinthe1950s.Butthemarkethaschangedalotsincethen.Youstillneeda300‐pound[product]that[will]lastfor50years,butnowpeoplearelookingforexperientialenvironments[and]thingsthatareunique.Andso,ifothersareonlyallowingformoretraditionalstylestohappen,thenitmakesitdifficultforsomeonewhohasuniquestufftobemoresuccessfulindoingworkwiththecity.”[#9]

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofwork,thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmsaidittakes“agility”tobecompetitive.Headded,“Italsorequiresbeinguptodate,becausealotofthingsmoveatthespeedoftheinternet….Somethingmaybeveryhotandverypopularoneday,[but]itmightfizzleanddiethenextweek.So,it’sbeingpreparedandup‐to‐dateonwhatispopularsothatwecanmovequicklyenoughandcapitalizeonthoseopportunities.”[#10]

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofbusiness,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirm


saidthatbecauseengineeringworkisbasedonqualifications,asuccessfulfirmmusthavegoodqualifications.Headdedthattobecompetitive,firmsalsoneedto[understand]whatclients’needsare.[#14]

Whenaskedwhatittakesforafirmtobecompetitiveinherindustry,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatitcomesdownto“exposure.”Sheadded,“IfIcanconvinceyoutohireme,you’llseeourcompetence,butIcan’tgetyoutohiremeifyoucan’tseeme.”[#5]

ThesamebusinessowneralsosaidthatsheattendsseveralexposandtradefairsthatoccurbecauseoftheMWBErequirement.Shecommented,“Ican’temphasizeenough[that]thereisnoplaceIcangotogetthetypeofexposure[that]beingaMWBEfirmgivesme.EvenifIgotomytradepartnersormyprofessionalnetworks,Imightgetinfrontof[them],butthey’renotrequiredtohireaMBWE….Ifthey’veusedthesamefirmforthelast15years,whywouldtheyconsiderhiringsomeoneelse?”[#5]

Whenaskedwhatittakesforafirminherindustrytobecompetitiveinthelocalmarketplace,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatfirmsshouldhaveknowledgeonhowtoobtaincontractsandhowtomarkettothepublicsector.[#8]

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofwork,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaidthatmarketingiskey.Headded,“Forone,wehavetomarketbetterwithourplumbers….Rightnow,it’sreallycompetitive…sodoingthatandtryingtogetontheinsurancecompany’spreferredvendorlist…isreallyimportant,eventhoughitisanotherdauntingtask.”[#7]

Whenaskedwhatittakestobecompetitiveinhisindustry,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmstated,“Inordertobecompetitiveinthislineofbusinessyoumustbeknowledgeable;[youmust]listentowhattheclientwants;stayup‐to‐dateonconstructionpractices[regarding]whatcanandcan’tbedone,andcommunicatethatclearlytotheclient.Mostcritical[is]know[ing]whentosay,‘Ican’tdothat.’”[#16]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“Youneedtoproveyourcompanycandothework,whetherit’sprivateormunicipal.Also,becausewehavedifferenttypesofequipment,ourcompanycandothingssmallcompaniescan’t.Wehavepositionedourselvesforagreatfuture.”[#19]

Whenaskedwhatmakesfirmsinherindustrycompetitive,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaid,“Afull‐timemarketing[and]businessdevelopmentperson,but[wedon’t]havethemoneyforthat.Wehadapart‐timemarketingpersonseveralyearsago,butcouldn’taffordhersalary….Ittakesfourorfiveyearsformarketingseedstogerminate,andsmallfirmsareonashoestringbudget.”[#15a]


Importance of a good reputation.Manynotedtheimportanceofagoodreputation.[e.g.,#5,#18,#19,#25,#28,#31,#32a]Businessownersalsodiscussedtheimportanceofexperience,qualitywork,andotherkeyfactors.[e.g.,#12,#39]Commentsinclude:

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmhighlightedtheimportanceofbothrelationship‐buildingandexpertise.Heexplained,“Ourclientsareourbestmarketers.Wehadoneclientrecentlyrecommendourfirmtoalargeprimeconsultant.Theclientrecommendedthattheprime…includeusintheirteambecauseweknewmoreaboutthefacilitiesthananyothersubthattheycouldthinkof.”[#3]

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofwork,theBlackAmericanveteranmaleownerofageneralcontractingcompanystated,“I’magoodcontractorwithagreatreputation.Wordofmouthgoesalongway.Peopletalk.I’maskedifIcoulddojobswhenIhaven’tevenmetthepeople,becauseIhaveagoodreputation.”[#29]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirm’sreputationwithprimeshelpsthemtosecuresubcontractingwork.Headded,“Theprimescontactusbecauseofourmilitaryandminoritystatus,andtheyknowthatwedoverypersonalwork.Theyknowwe’llgooutthere,asowners,onthebeginningandtheendofjobstomakesureit’sdonecorrectly.”[#7]

Thenon‐Hispanicwhitemaleownerofaconstructionfirmsaid,“ThereisalotofworkoutthereandIhaveagoodreputation,andmuchofmyworkisrepeatcustomersandwordofmouth.IbelieveIamdoingaswellasotherindependentcontractors.”[#24]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstated,“Ofcourse,thereputationyourcompany…goesalongwaytogettingjobs.Ourreputationisverygood.”[#27]

Whenaskedwhatittakesforafirmtobecompetitiveintheindustry,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstated,“Inourlineofbusiness,it’svalue.[Wehavetoget]materialsthereontime.Ourcontractorswantnothingmorethantogettheirmaterialsexactlywhentheywantthem.Inordertodothat,wehavetohaveaprettyheftylineupofgoodsintheback,readytogo.”[#23a]

Thesamebusinessrepresentativeadded,“And[there’s]knowledge.Whenyouthinkabouttheintricaciesofanelectricalprojecttoday,theyaremuchmorecomplexthantheyusedtobe.So,[wehavetomake]surewehavequalitypeopleonstafftoanswertechnicalquestions,andaprojectmanagementteamtomakesurethatcustomersgetwhatevertheywant.”[#23a]

Whenaskedwhatittakesforafirmtobecompetitiveinherlineofbusiness,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstated,“Thekeythingsforafirmtobecompetitiveinthislineofbusinessiscostandreputation.”[#20]


A trade association representative commented on the importance of members’ work quality

and performance.Whenaskedwhatittakesformemberfirmstobecompetitiveinthelocalmarketplace,theBlackAmericanfemalerepresentativeofatradeassociationsaidthatqualityworkandperformancearekey.Sheadded,“It’sonethingtobeagreatwidgetmaker,butinthisdayandage[it’s]incrediblyimportanttohaveastrongbackoffice.It’sincrediblyimportanttohavealevelofeducationandexpertiseaboutyourownscopes,andwherethey’reheadedinthefuture.”[#6]

Thesametradeassociationrepresentativecontinued,“Bigdataissuchabigpartofwhat’sdrivingalotofthedecisionsinmunicipalities,owneragencies,etcetera.Oursmallbusinessesreallyneedtoknowhowthat’sgoingtorolldowntothem,howrequirementsaregoingtochange,howdeliverymechanismsaregoingtochange,howengagementmechanismsaregoingtochange….”[#6]

Relationship‐building.Acrossindustries,mostbusinessownersandrepresentativesidentifiedrelationship‐buildingasakeycomponenttosuccess.

Whether easy or difficult to achieve, many considered relationship‐building a key to business

success.[e.g.,#13,#19,#33,#35,#37,#39]Forexample:

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmstated,“We’reaconsultingfirmandtheabilitytointerfacewithclientsandtounderstandtheirneedsandtoberesponsivetotheirneedsisthekeytobeingsuccessful….”[#1a]

Thesamebusinessrepresentativereportedthattheirprivatesectorbusinesscomesprimarilyfromword‐of‐mouthreferralsandthatclientsseekthefirmbecauseofitscapabilitiesforspecificprojects.[#1a]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmnotedthatclientreferralsleadtonewbusinessforhiscompany,especiallyasasubcontractor.Heexplained,“Ourbestmarketersareourclients….We’reasmallfirm…so[clients]wouldsuggestthatmaybeanotherfirmcouldbetheprimeandwecouldbethesub….”[#3]

Thesamebusinessownerwentontosaythatmostofhisfirm’ssubcontractingworkiswithrepeatclients.Hesaid,“Theyfindoutthatwecandotheworkforalotless…soitmakesthemmorecost‐competitive,andwefrequentlyhavemoreexpertiseintheareathantheydo.”[#3]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Whenyougetintothedesignsideofit,it’sallaboutrelationshipsandcommunication.[It’s]becauseyouhavetobeabletocommunicatetomeyourvision,andIhavetobeabletotakethatvisionandgodomywork.Intermsofbeingcompetitive,it’saboutrelationshipfirst,reputationsecond,competence…ormaybeprice,third.”[#5]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmsaid,“It’samatterofmaintainingrelationships.Beingabusinessownerisnotapart‐timecommitment.Istayverybusyrunningthisbusiness.”[#27]


Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatbecauserepeatbusinessisvitaltothecompany’ssuccess,theyhavealonghistorywithmanyoftheircustomers.[#23b]

One business owner noted the importance of relationship‐building in public sector

contracting.TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthatrelationshipsareespeciallyimportantinpublicsectorcontracting.Heexplainedthatsomebuyersareaccustomedtodealingwithparticularsuppliersandaremorecomfortablecontinuingthatrelationship.[#39]

Some trade association representatives commented on the importance of relationship‐

building to members’ success.[e.g.,#6]Forexample,theHispanicAmericanmalerepresentativeofatradeassociationsaidthathebelievesrelationship‐buildingisoneofthekeystogettingworkintheindustry.Hecontinued,“Ifirmlybelieve[that]onceyoudeveloprelationships,whensomeoneneedssomethingtheyaregoingtocallpeopletheyhavebuiltarelationshipwith….Itdoesnotmatterwhetheritisapublicsectorjoborprivatesector[job].Notalltheprimesself‐performeverything.Manyoftheprimessuboutalotoftheirwork.Whentheyneedasubcontractor,theyarejustlookingforsomebodywhotheyhavefaithinandwhocandothework.Ithasnothingtodowithcertificationwhenitisintheprivatesector.”[#11]

Employees.Businessownersandrepresentativessharedcommentsabouttheimportanceofqualifiedemployees.Manyintervieweesandsurveyrespondentsindicatedthathigh‐qualityworkersareakeytobusinesssuccessandsometimesdifficulttofind. [e.g.,#28,#40,AS#3,AS#4,AS#6,AS#8,AS#14,AS#17,AS#21,AS#23,AS#24,AS#25,AS#29,AS#30,AS#33,AS#41,AS#45,AS#50,AS#53,AS#56,AS#57,PT#3d]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Inmycase,themajoritemincreasingmycostsislabor.Itisgettingharderandhardertofindqualified,experiencedlaborers.”Sheadded,“Laborisabigissueinthismarket.Itisveryhardtofindtherightpeople.Millennialsdonothavethesameworkethicaspastgenerations.Inaddition,toofewpeoplearegettingtrainedinskilledtrades.”[#20]

Thesamebusinessownerlatersaid,“FromthecompanysideIhavetheexperienceandexpertise,butfindingqualifiedemployeeswiththerightexpertiseisincreasinglydifficult.”[#20]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmindicatedthatit’sdifficulttofindpersonnelandlabor.Sheexplained,“Iwenttothe[ColoradoStateUniversity]careerfairthisyeartryingtorecruitbecausetherearelaborissues…andIcoulddefinitelyseethoseyoung,malegraduatesgravitatingtowardsthebigger,male‐ownedfirms.”[#12]

Thesamebusinessownercontinued,“Theschoolsareperpetuatingthat.ThatwashowitwaswhenIwenttoschool.[Schoolssay],‘Youneedtogoworkforthesebigfirms,[they’re]therealthing.’Youcouldseethatalphamalesatthiscareerfairwereallheadingtotalkto


themandalotoffemalescameandtalkedtous.It’shardforusnottobepigeon‐holedasanall‐femalecompany.”[#12]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidhermainconcernisfindingaskilledworkforce.Shesaidthereisastigmaassociatedwithworkingconstruction,andnotedthatlittleisdonetoalleviatethatperception,particularlywithBlackAmericans.[#13]

Thesamebusinessownercontinued,“It’sreallyhardtofindthosewhowanttogothroughtheapprenticeshipprogram,andreallybepipefitters,sheetmetalworkers,andplumbers,andallthosethings.It’sjustnotwhatpeoplethinkofasacareer.”[#13]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstatedthatitcanbedifficulttofindqualifiedcraftspeople.Heexplained,“Colorado’seconomyismorediversifiedthanitwasinthe80s,sothereismorepressureontheworkforce.Everyoneiscompetingforworkforce.”[#21a]

Asurveyrespondentsaid,“Laborresources[arescarce].Itisastruggletofindemployees,andweareshort‐staffed.”[AS#9]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatfindinggoodgeotechnicalengineershasalwaysbeenachallenge.Hesaidthatthisisbecausegeotechnicalengineersneedanadvanceddegree,andthatmostcivilengineeringstudentsgotoworkrightaftertheygettheirundergraduatedegree.Headdedthatgeotechnicalengineeringisveryspecialized,andthatmostpeoplepreferawiderrangeofopportunities.[#14]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“Iknowthelabormarketisverytightrightnow,butIknowhowtotreatmypeopleandtheystayaround.I’veevensetupabonusprogram,anditisworking.”[#19]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmsaidthatshewishesshecouldhiremoreemployees.Sheexplained,“Ihavegonethroughmanysourcestofindemployees….Imightfindoneortwoemployeeshereorthere,buttheyjustdon’tstaywhenthereareothertypesofworkoutthere.”[#27]

Thesamebusinessownerlatersaid,“Theonlyproblemmycompanyisexperiencingisthelackofavailableemployees.Thelabormarketissotight[that]wecan’tfindanyonethatwillstayaroundlongterm.”Sheadded,“[And]thatisnotabarrierexperiencedbecauseofrace,ethnicity,[or]gender.Theworkforceisjustnotthere.”[#27]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Findingdriversrightnowisdefinitelyaproblem.Maybeit’sjustmymindset.WhatkindoftalentwillIbeabletoattractasaBlackowner?Wouldtheyratherworkforsomeonewhotheythinkhasmorelongevity?[Ifso],thatstartstoshrinktheemployeepool.”[#36]


Whenaskedaboutbarriersregardinglaborandpersonnel,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatfindingsomeonewhowantstoworkforasmallfirmisachallenge.Sheexplained,“Thereisaperceptionthatthefirmwillgooutofbusiness.We’vehadthreeindividualswhowouldhavebeenfabulousfits,[but]theywentbacktotheirfirms[afterthey]wereofferedraisesandotheraccommodations.”[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthatthefirmdoesfacebarriersinfindingemployeeswiththeappropriateexperienceandexpertise.Heexplained,“Technologyischangingsorapidly.Findingemployeeswiththerightexperienceandexpertiseisachallenge.”Headded,“[There’s]notenoughyoungpeople…enteringourfield.”[#23b]

A few trade association representatives commented on the importance of quality labor for

member firms.Onenotedthatmembershavenoissuesfindingqualitypersonnel,whereasanotherreporteditisoneoftheirmembership’sbiggestchallenges.Forexample:

TheBlackAmericanfemalerepresentativeofatradeassociationsaidthatmembersselectsubcontractorsthroughrelationshipsandcapabilities.Sheadded,“EspeciallyasaDBE,youwanttomakesureyouhaveagoodteamoffolksthatyoucanbringonfordifferentprojects.Youwanttobeabletotrustyourworkandtrustyourpeople.”[#6]

TheHispanicAmericanmalerepresentativeofatradeassociationindicatedthatmembershavenoissuesfindingpersonnelwithadequateexperienceandexpertise.[#11]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatoneofthebiggestchallengeshermembersfaceinthemarketplaceisfindingqualifiedemployees.Shesaid,“Tenyearsago,wehadarecession[and]peoplelefttheindustry….Engineershaveverytransferrableskills.Theycangointootherthings[like]business,finance,a…varietyofthings,[so]theydon’tcomeback.”[#38]

Regardingstudentsthatarestudyingengineering,thesametradeassociationrepresentativesaid,“There’safairnumberofpeople,students,goingintoscienceandengineering.But…[alot]wouldrathergointoaerospace,biotech,[or]IT,[where]theycanmakeawholelotmoremoneythanbeingacivilengineer.Civilengineers’salarystartingoutisatthebottomofthebarrel.”[#38]

Some business assistance organization representatives indicated that member firms struggle

to find quality employees.Onerepresentativenotedthatsomepotentialworkersfacelanguage‐relatedbarriers.Forexample:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthatformembers,“thebigstruggleisfindingemployees.”Shereiteratedthatthislimitsopportunitiesbecausesomemembers“areeventurningdownwork”duetoashortageofqualifiedworkers.Sheaddedthatthelackofemployeesisaproblemforallmembers,notonlythoseinconstruction.[#37]


Whenaskedaboutbarriersthatmembersfaceregardingpersonnel/labor,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Alotofmembers,especiallyintherestaurantindustry,arehavingtroublehiringduetotheimpactofthemarijuanaindustry.Whyworkat10to$17anhourinarestaurantwhentheycanmake$35ormore?”[#33]

Thesamebusinessassistanceorganizationrepresentativecontinued,“Languagecanalsobeaproblembecauseimmigrantsusetheirnativelanguageinthebackroomofarestaurant,soEnglishspeakersmaybeuncomfortable.[However],thatischangingbecauseoftheshortageofworkers.YounowseeMexicansworkinginaChineserestaurant.”[#33]

Whenaskedaboutbarriersregardingexperienceandexpertise,hecommentedthatwhileimmigrantmembershavegoodexperienceandexpertise,theystillfacebarriersduetolanguagechallenges.[#33]

One business owner reported that employee recruitment is a challenge when competing

against larger firms.TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatitisdifficultforafirmhissizetocompetewithlarge,60‐personfirmsforemployees,ashisfirmisviewedaslessstableinthelongterm.[#22]

Some business owners indicated that hiring good employees is not a challenge for their firm.Commentsinclude:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmindicatedthathiringgoodemployeesisnotachallengeforfirmsinherindustryinthelocalmarketplace.[#2]

TheHispanicAmericanmaleownerofanarchitecturalandengineeringfirmreportedthathisfirmhasnoproblemsretaininggoodengineers.Hewentontocomment,“Thegoodoneshavethegumptiontogooutandlookforthekindofjobtheywant.Iftheydon’tknowtheformulaforcalculatingloadsoffthetopoftheirhead,[we’re]notinterestedinthem.”[#16]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatfindingqualityemployeesisnotanissueforthefirm.[#10]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatfindinggoodemployeesisnotabarrierforherfirm.Shestated,“[On]occasionswhenIneedtohire,IcontactMiCasaResourceCenterandalsocheckwithfriendsandfamily.”[#35]

Equipment, materials, or products.Someintervieweesdiscussedequipmentandmaterialsneeds,andtheimportanceofhavingtherightoperationalequipmentandmaterialsatareasonablecost.[e.g.,#2,#33,#34]Forexample:

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmindicatedthathavingtherightoperationalequipmentata


reasonablecostgivesherfirmanadvantageoverothersintheindustry.Shereportedthattheirequipmentismaintainedin‐house,whichallowsthemtokeepmaintenancecostsdown.Othersintheindustry,sheexplained,havetotaketheirequipmenttooutsidecompaniestohavethemaintenanceworkdone.[#19]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatherfirmdoesnothaveahugeinvestmentinequipment.However,sheadded,“Don’tgetmewrong,Ispentover$20,000lastyearinsoftwaremaintenance,andthat’sjuststandardupkeep.That’snotbecausewehadaproblem.That’sjustthepriceoflicensureforthesoftwareandlicensesthatwehold.”[#5]

Regardinghowtostaycompetitiveinhisindustry,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Youhavetobeextremelyflexibleinwhatyouprinttobecompetitivethesedays.Ourmachinery[triestobe]flexible.Thereareonlyoneortwomachinesthatcoulddo[the]manydifferent…typesofjobsouttherenow.”[#30]

Regardingequipment,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“It’sterriblyexpensive.I’mprobablylookingatatrucklease,whichofcourseismoreexpensive.”[#36]

A business assistance organization representative commented on the high cost of construction

equipment.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Someoftheconstructionequipmentisveryexpensive.Wehavearelationshipwith[anationalrentalfirm],andtheysometimesgiveusaheads‐upwhentheyaresellingtheirequipmentatanauction.”[#37]

For some interviewees, equipment is not needed or is not a challenge to obtain for their firm.[e.g.,#12,#22]Commentsinclude:

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmindicatedthatthefirmhasnoissuesacquiringtheequipmentthattheyneed.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmindicatedthatacquiringequipmentisnotanissueforthefirm.Headdedthattheyhavenoissuesobtaininginventoryorothermaterialsandsupplies.Heexplained,“Mostlarge…wholesalersstaywellstocked.Theonlybarrierforanycontractordoingbusinesswithusismeetingourcreditstandards.”[#23b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatequipmentisnotanissueforthefirmbecausetheygenerallyuseprimecontractors’equipmentonprojects.Sheaddedthattheyhavenoissuesobtaininginventoryorothermaterialsandsupplies.[#20]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstatedthatsubcontractorswhocanmeetasupplier’screditrequirementsshouldhavenoproblemobtainingnecessarymaterialsandsupplies.However,henotedthatiftheycannotmeetthecreditrequirementstheyfaceabarriertodoingbusiness.[#21a]


TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshehasnoproblemsgettingtheequipmentsheneeds.Sheaddedthatshehasnoissuesobtaininginventoryorothermaterialsandsupplies,andnotedthatshehasanMWBE‐certifiedcontactwhosellshercleaningsupplies.[#35]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatobtainingnecessaryequipmentisnotachallengeforthefirm.[#10]

One trade association representative said that small firms sometimes get equipment “through

their prime.”TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatheisnotawareofmembersexperiencingbarriersrelatedtoequipment.Headded,“Alotofourguys,smallguys,willgothroughtheirprimetogettheequipmentthattheyneed,especiallyforspecificprojects.”[#11]

Competitive pricing.Businessownersandrepresentativesdiscussedtheneedforcompetitivepricingandcreditwhenseekingbusinesssuccess.[e.g.,#20,#34]However,forsome,stayingcompetitiveisachallenge.Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatcostandpricingareimportantfactorstobusinesssuccess.Sheadded,“MBEsareoftenconcernedthattheywon’tgetthejobunlesstheycutthemselvesoffatthekneesregardingpricing.”Shesaidshehasbeenadvisedtoanalyzehowmuchitreallycoststorunherbusinessasopposedtoonlytellingcustomerswhattheywanttohear.[#13]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthathehasexperiencedafew“upsanddowns”sincestartingthefirm,thoughhestucktohisbusinessplan.Hewentontosay,“Youstillhavetocompeteonprice,andIwill.CorporateAmerica’sperceptionisthatsmallbusinessesareunabletocompete,butwe’vebeenabletodefythatbecausewecancompeteonserviceandtechnology.”HealsonotedthathehasaGSAScheduleContractwiththefederalgovernment,whichhebelievescontributestohiscompetitiveness.[#39]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmhighlightedtheimportanceofcompetitivepricingasvitalinrunningasuccessfulbusiness.Heexplained,"Ittakesthewillingnesstoacceptsmallprofit….Mostpeople’sbiggestmistakeshappenwhentheyputtheirbottomlineastheirnumberonepriority.Iftheydon'tmake30,40,50percentprofitonthejob,they'redone.They'rereadytohangitupandthey'renotwillingtodotheworkandpaythepricethatittakestogettothatlevel.Tobesuccessful,youhavetobedisciplinedenoughtostayasteadycourse,[one]thatwillnotgetyourichovernight.”[#4]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthatinhisindustrymaterialsandsuppliesareveryexpensive,whichmeanshehastobuytheminlargequantitiestogetfavorablepricing.Henotedthatthislargevolumecreatesastorageissue,whichisalsoexpensive.[#36]


One business assistance organization representative noted the importance of competitive

pricing for goods and services firms.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatcompetitivepricingisakeytobusinesssuccess,especiallyforgoodsandservicesfirms.[#37]

Financing and access to capital.Manyfirmownersreportedthatobtainingfinancingwaschallengingandimportantinestablishingandgrowingtheirbusinesses.[e.g.,#12,#21a,#28,#35,#36]Someindicatedthatfinancingwasnecessarytopurchaseequipmentorsurvivepoormarketconditions.Commentsinclude:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidobtainingfinancingwasachallengewhenshestartedherbusiness.Shesaidthefirstbanksheapproachedforalineofcreditturnedherdown.Shesaidthesecondbanksheapproached,alocalbank,grantedherthelineofcreditandhasbeenherbankeversince.[#2]

TheBlackAmericanandveteranmaleownerofageneralcontractingcompanystated,“WhenIfirstmovedhere,gettingfinancingwasachallenge.Ididn’thavealotofcredit….Ineededcashforsuppliesandupdatedequipment.ButbecauseIhavemoneycominginnow,thatisn’tanissueanymore.”[#29]

Whenaskedaboutfinancing,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatfinancingcanbeaproblemforfirmsofallsizesiftheyhavecashflowissues.[#23b]

Whenaskedwhatittakestobecompetitiveinhisindustry,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Alotofmoney.Youneedtobeverywellcapitalizedbecause[you]needtobeabletobuyacommodityatagoodprice,thenholditlongenoughtomakemoney.Inordertobeadistributoryou’regoingtoneedstorage…andthetruckstodeliver[myproduct]areveryexpensive.”[#36]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Obtainingfinancingasasmallbusinesshasbeenanissue.Thewaythatbanksevaluatesmallbusinessesmakesalineofcreditarealchallenge.IdonothavemuchW‐2incomebecauseIjustutilizebusinessincometohelppaythemortgage…andtheydonotcountthatasincome.”[#20]

One business assistance organization representative reported on his own challenges in

obtaining financing as a small business owner.Whenaskedwhatittakesforafirmtobecompetitiveinthelocalmarketplace,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Itboilsdowntofinancialresourcesandcapacity.Ihaveasmallbusinessmyself,soIspeakfromexperience.Ittakesahighlevelofintegrity,professionalism,[and]accountability.Beingabletosecurea2to$4millionloantoenterintotheairportorhavethecapacitythroughemployees…isverydifficult.”[#33]

Some business owners indicated that financing has not been a challenge. [e.g.,#8,#22]Forexample:


Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaidthat,toherknowledge,obtainingfinancingisnotabarriertofirmsinthelocalmarketplace.[#5]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisfirmisself‐fundedandthatfinancingisnotabarrier.[#9]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatfinancingisnotaproblemforhisfirm.[#14]

Bonding.Businessownersandrepresentativesreportedontheiraccesstobonding.Someexperiencesreportedarepositive,somearenegative.Forsome,bondingismisunderstoodornotobtainable.

For more established businesses, bonding is obtainable. But for newer, smaller, and poorly

capitalized businesses, securing bonding is difficult.[e.g.,#28,#31]Commentsinclude:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidherfirmisrepresentedbyagoodbondingcompanyandhavehadnoclaims.Shesaidthecityrequiresabondforcontractsover$50,000,andsaidthebondingcompanyconsidersthelevelofriskwhenitcomestocollectingoninvoices,payingsuppliers,andwhetherafirmhasalineofcreditasabackupintheeventofnon‐payment.[#13]

Thesamebusinessowneradded,“It’sdifferentifyouareaminority‐ownedbusiness….It’sjustthewayoftheworld.Youknow,ifIcoulddoamagicwandandchangeit,andmakeeverybodyequal,Iwould,butthat’snothowitworks.It’sjustdifferent.”[#13]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatherexposuretopotentialbarriersislimited.Sheexplained,“WhenIfirststartedmybusiness,mybondinglimitswereverylow.Thatcanbeveryprohibitivebecauseyouknowyoucandobiggerwork,butlowlimitsessentiallykeepyourrevenuesatacap.”Shesaidthatshewasabletoacquireadditionalbondinglimitsthroughabankshehadanestablishedrelationshipwith.[#19]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Bondingisalwaysaquestionforusbecausewetendtobesuppliersandinstallers,andnormallythatinvolvescompaniesthataremuchlargerinsize.”Hewentontocomment,“YoucanmarkN/A[forbondingontheproposal],buthowisthatinterpreted?Aretheyinterpreting[that]it’snotavailableor[that]you’renotthesizetobeabletobond,or[that]youdon’thaveabondingcapability?”[#9]

Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“It’sdifficulttogetlargeliabilityinsurancecoverageand…bonding.[Because]mycompanyissmall,insurancecompaniesandbondingcompaniesdon’twanttotakethechance.EventhoughIhavetheexperience,itisdifficult.”[#31]


Other interviewees reported little or no problems obtaining bonds, or that bonding was not

required in their industry.[e.g.,#5,#14,#35]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“I’vebeenabletosecureandobtainbondingwhenneeded,butIhaven’trecentlyhadtobond.ItisabigreasonwhyIsticktosubcontracting.”[#20]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmindicatedthatbondingisnotanissueforherfirm,andsaiditisusuallynotrequiredinherindustry.[#2]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthatintheirindustrybondingisnotrequired.[#23b]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatbondingisnotrequiredinherindustry.[#8]

TheHispanicAmericanmaleownerofanarchitecturalengineeringfirmreportedthathehasneverhadtobondforanything.[#16]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaidthat,toherknowledge,obtainingbondingisnotabarriertofirmsinthelocalmarketplace.[#5]

Insurance.Thestudyteamaskedbusinessownersandrepresentativeswhetherinsurancerequirementsandobtaininginsurancepresentedbarrierstobusinesssuccess.

Some could secure insurance, but the challenge of sustaining it, especially for small

businesses, is reported to be a barrier.[e.g.,#36,#38]Forexample:

Inregardstoobtaininginsurance,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Healthinsuranceisabarrier.Tryingtoattractqualitypeopleawayfromlargerfirmsandbeingabletoprovidebenefitsisahugebarrierforsmallbusinesses.”[#5]

TheHispanicAmericanmaleownerofanengineeringfirmsaidthatsustainingprofessionalliabilityinsurancehasalwaysbeenchallengingforhisfirmduetoitshighcost.[#16]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Insuranceisabigissueworkingat[DenverInternationalAirport]becauseIpayalmostdoubleformygeneralliability[there],butwithoutitIcan’tworkattheAirport.”[#20]

Regardingbarrierstoworkinginthelocalmarketplace,asurveyrespondentsaid,“It'simpossibletomeetrequirementstoevenstartthebiddingprocess[duetorequired]insurancecoverage.”[AS#16]


Regardinginsurancerequirements,thenon‐HispanicwhitefemalerepresentativeofaHispanicAmericanfemale‐ownedDBE‐,ACDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconsultingfirmsaid,“Thecity[requires]minoritybusinesspartnerstocarryinsuranceattheleveloftheprimecontractors.Asaself‐fundedstartup,insuranceatthislevelisdifficulttoafford,particularlyasaMWBEonanon‐callcontractat[DenverInternationalAirport].”[WT#7]

Some interviewees reported that insurance requirements or obtaining insurance were

not barriers, but indicated that insurance is an important, and sometimes costly, business

expense.[e.g.,#23b,#35]Forexample:

Regardinginsurance,theHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaiditisveryimportanttoworkwithqualityinsurancecompaniesthatknowyourfirmwell.Shesaid,“It’samatterofhavingthe[right]networktomakesureyou’regettingthemostaccurateinformation[about]whatyouneed.It’sexpensivewhenyoustart,butitpaysoff.Itreallydoes.”[#2]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisfirmfacesnobarriersregardinginsurance.[#9]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthathisfirmalwaysshopsaroundforthebestinsuranceratesandindicatedthatacquiringinsuranceisnotaproblem.Hewentontosaythatiftheygetalargeprojectthatrequiresanincreaseinliabilityinsurance,suchas$3millioninsteadof$1million,itusuallyrequiresachangeincarrierbecausesomecarriershaveacaponwhattheywillcover.[#14]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthathehasnotexperiencedanybarriersordiscriminationregardingobtaininginsuranceorinsurancerequirements.Hecommented,“Justpaywhattheyask.”[#22]

Other keys to business success.Severalbusinessownersandrepresentativesmentionedkeystosuccessthatdonotfallintotheabovecategories.Oneintervieweenotedtheimportanceofkeepingupwithtechnologicaladvancementsintheindustry.Commentsinclude:

Whenaskedwhatittakesforafirmtobecompetitiveinhislineofbusiness,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“I'dsay[it’s]innovation,consistentprocesses…trainedstaff,andgoodmanagement.That'showyou'dbemorecompetitive.Ifyou'renotontopofyourgame,youcan'tmakeit.”[#21a]

Thesamebusinessrepresentativecontinued,“Thetechnologiesthatarecomingoutaregoingtobewaybeyondwhatthey'veeverbeen.Alotofdifferentcontrolsystemsaredonecompletelydifferentnow.Youcan'tjustputinalightfixtureanymore.Youhavetobuildaprogrammedcomputerbeforeyoucanturnthatlighton,soit'sgettingprettytechnical.”[#21a]


Whenaskedwhatittakesforafirmtobecompetitiveinhislineofbusiness,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“[Ittakes]creativity.Thinkingoutsidethebox.Bringinginnovativesolutionstothetable,evenintheRFPstage.”[#22]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatlearningeachpublicagency’sprocessisakeytobusinesssuccess.HesaidthatworkingwithCDOTiseasiestforhisfirmbecausetheyareveryfamiliarwiththeirprocessesandpeople.[#14]

Whenaskedwhatittakesforafirmtobecompetitiveintheindustry,thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmstated,“[It’s]price,capabilities,abilitytomeetdeadlinesoneverythingfromweddingstoseminarsinKeystone.Weworkdailyonallofthesefactors.”[#34]

Whenaskedwhatittakesforafirmtobecompetitiveinherlineofwork,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“[It’s]whoyouknow,[andhaving]goodreferences,certification,andaccessibilitytoopportunities.”[#35]

A trade association representative said that monitoring a firm’s growth is a key to business

success.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatinorderforafirmtobecompetitiveinthelocalmarketplace,ownersneedtoensurethattheycarefullymonitorthegrowthoftheirfirm.Hestated,“Ifyougrowtoofastandnotwisely,youaregoingtoloseyourbusiness.Ihaveseenthathappen.Oryouslidebackwards,soitisamatterofknowinghowtogrowyourbusiness.Donottaketoomuchthatyoucannothandle[it].”[#11]

D. Doing Business as a Prime Contractor or Subcontractor

Businessownersandrepresentativesdiscussed:

Mixofprimecontractandsubcontractwork;

Challengesforsmallandminority‐andwomen‐ownedbusinesseswhenseekingworkasprimecontractors/consultants;

Challengesforsmallandminority‐andwomen‐ownedbusinesseswhenseekingworkassubcontractors.

Mix of prime contract and subcontract work.Businessownersdescribedtheirexperienceworkingasprimecontractorsand/orsubcontractors.

A number of firms that the study team interviewed reported that they work as both prime

contractors and as subcontractors/subconsultants, and discussed their experiences.[e.g.,#1b,#4,#7,#8,#12,#13,#15a,#16,#26]Forexample:


TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatherfirm“subcontractsabout98percentofthetime.”Sheadded,“Occasionallytherewillbeajobthatweprime,butnotveryoften.”[#19]

Whenaskedaboutthefirm’sworkasaprimeorsubcontractor,thesamebusinessownerstated,“Customersarestartingtoknowwhattypeofqualityofworkwedo.[Wedon’t]haveproblemsinfindingwork.”Sheaddedsheisnetworkingwithcompaniesthatcouldpossiblyusetheirservices.[#19]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Iwouldsaythatwe’reprime90percentandsub10percent.”Whenaskedwhyhisfirmtypicallyfunctionsasaprimecontractor,hestated,“It’sthatwholeissuethatwe’reonlyhiredbyengineersonalargeprojecttosatisfytheirgoal.Weeatatthetablewhereaneight‐personfirmisinvited.[#22]

Whenaskedifprimesthatusehimonpublicsectorworkalsousehimonprivatesectorwork,thesamebusinessownersaid,“Nope.Mostofthebigprimesweworkwithdon’tdoprivatesectorwork.”Whenaskedifhemarketsthefirmtoprimes,hesaid,“Yes,atthenetworkingevents.It’sbeenverysuccessfulforus.”[#22]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmreportedthathisfirmworksasaprimecontractor75percentofthetimeandasasubcontractor25percentofthetime.[#3]

Thesamefirmownerexplainedthatsometimeshisfirmbeginsacontractbidasaprimecontractorthenteamsupwithanotherfirmtogetthecontract.Hestated,"Acommonexperienceforusisthatwewouldconsiderrespondingasaprime…thenapotentialprimecontactsusandasksifwewouldliketoteam[up]withthemasasubandreducethecompetition."[#3]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatherfirmworksmostoftenasaprimecontractor.Whenaskedhowthefirmfindsworkasasubcontractor,shesaidtheyuseRockyMountainBidNet.Sheexplained,“YoucanidentifywhohasdownloadedRFPsforanygivenproject,thenyoucancallthemupandschmoozethem,andtellthemthatyou’dliketobeontheirteam.Wedothatsometimes.We’lljustrandomlycoldcallarchitectsandtrytobeontheirteams.”[#12]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthefirmperformsasbothaprimecontractorandsubcontractor.Henotedthatthismixofworkvariesyearly.[#21a]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmindicatedthatherfirmworksasbothaprimecontractorandasubcontractor.Shelaternotedthattheyprefertoworkasaprimecontractor.[#2]


TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathiscompanyperformsanequalamountofprimecontractandsubcontractwork.[#14]

Thesamebusinessowneraddedthattheyusuallyperformcertainspecializedworkasasubcontractor.Hesaidthattheirconstructionmanagementworkisoftenperformedasaprimecontractor.[#14]

Most trade association and business assistance organization representatives said that

members work as both prime contractors and subcontractors.[e.g.,#6,#33,#40]Onesaidthatmostperformassubcontractorsbecausetheylackthe“resources”toworkasaprime.Commentsinclude:

Whenaskedifmembersworkasbothprimecontractorsandsubcontractors,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Obviouslytherearenotasmanyprimecontractorsbecauseittakesalotofresources….Themajorityaresubs.”[#37]

Thesamebusinessassistanceorganizationrepresentativecontinued,“Ithinkmanypeoplefindasweetspotregardingtheircompanysize.Forthosewhowanttogrowandeventuallyprime,itcantakealongtime.WeencouragethemtodeveloparelationshipwiththeSBAandtakeadvantageoftheirprograms,likethe[SBA]8(a),iftheywanttogrowtheircompanies.”[#37]

Whenaskedhowmembersgetonprojectsassubcontractors,shesaid,“Usuallythey’reoutnetworking.They’llcometooneofoureventsandaskmetomakeintroductions.They’llgoouttothecommunitythemselves.Sometimesamemberwillprovideavenue.[Alargesub]recentlyhadanopenhouseandintroducedmemberstoprimesandothersubs.”Shenoted,“Constructionisrelationship‐based.”[#37]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthatcertifiedmembersmostlyperformassubcontractors.Whenaskedhowmembersfindthissubcontractwork,hesaidthatit’susuallythroughprimecontractoroutreach.Heexplained,“Typically,whentheyaregettingreadytoputtheirpackagestogether,primesreachouttofirmsthattheyhaverelationshipswithandtalktothemaboutsubmittingabidproposaltobepartofateam.Fortherecord,theydosendcommunicationsouttoallcertifiedfirms,butthepersonal[out]reachisonlytofirmsthattheyhaverelationshipswith.”[#11]

Whenaskedifmembersprefertoworkwithsomeprimesoverothers,thesametradeassociationrepresentativesaid,“Alotofithastodowithpromptpay,costofmaterials,andavariousnumberofotherthings.”[#11]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationreportedthatmembersworkasbothprimecontractorsandsubcontractors.[#38]


Some business owners said they sometimes hire second‐tier subcontractors when they are

hired as a sub.[e.g.,#21a]Otherssaidtheydonot.[e.g.,#2,#20]Commentsfromthein‐depthinterviewsinclude:

Regardingsecond‐tiersubcontractors,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatshewillsometimeshiresecond‐tiersubcontractors.[#8]

Whenaskedhowsheselectsthesefirms,thesamebusinessco‐ownersaidthatherfirststepistoobtainasampleandchecktheirproduct’squality.[#8]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathiscompanydoeshiresecond‐tiersubcontractors.[#14]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatshehires“specialty”subcontractorstoperformassecond‐tiersubcontractorstoherfirm.Sheadded,“Wetypicallyfocusoncommercial,industrial,andtransit‐relateddesign,butIknowpeoplewhocan[bea]subcontractorontheportionsofworkwedon’tdo.”[#5]

Whenaskedhowsheselectsthesesecond‐tiersubcontractors,thesamebusinessownercommented,“I’mgoingtosteerbusinesstosomebodywhoisgoingtosteerbusinesstome.”[#5]

Whenaskedifhisfirmhiressecond‐tiersubcontractors,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisfirmalwayssubsouttheinstallationservicestoothersmallbusiness.[#9]

Whenaskedhowheselectsthesesubcontractors,thesamebusinessownersaidheusuallyworkswiththosewhoseworkethicandcapabilitiesarefamiliar.Heexplained,“Becauseofwhatwedo,wehavetoknowthepeoplethataregoingtowork.So,wehavetwodifferentsubcontractorsthatweworkwith,andoneofthemwe’veworkedwithsincetheinceptionofourbusiness.Thesecondcompanyisonethatwe’vedoneworkwithoverthelasttwoyears.”[#9]

Hewentontosay,“Weworkwithalotofdifferententities,soweworkwithlandscapearchitects,developers,andcommercialpropertymanagementfirms.Andsometimes,particularlywiththecommercialpropertymanagementandthedevelopmentfirms,wemayhavesomebodywhoreallywantstouseourproduct.Theymay[askifwecan]handle[it].Hesaidthathemightinterviewafewfirmsthattheyhavedonebusinesswithandinvitethemtoworkwiththemonthatparticularproject.[#9]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatheoccasionallyhiressecond‐tiersubcontractors.Heexplained,“Buildingsystemsubs,structural,mechanical,[and]electrical.Generally,it’swhenanengineeringfirmistheprimeandtheywantustodothebuilding,sowedoeverythingassociatedwiththebuilding.”[#22]


Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmreportedthattheirprocessforselectingsub‐vendorsisdrivenbywhatthecustomerwants.Hesaidthatthecompanydependsonrelationshipstofindsuppliersthatcarryspecificitemsthatcustomersmightneed[#34]

Thesamebusinessrepresentativelatersaidthattherearesub‐vendorsthattheytrytouseallthetime.Regardingthesesub‐vendors,hesaid,“Weallknowwhatneedstogetdone,andweknowthequalityoftheirproduct.”[#34]

Whenaskedifsheeverhiredsecond‐tiersubcontractors,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmstated,“For[one]projectIhiredanMWBEsupplierformy…products.”Whenaskedhowsheselectedthissubcontractor,shesaid,“[Iknew]themthroughthemeetingsIgoto….”[#35]

Some firms that the study team interviewed reported that they primarily work as prime

contractors/consultants or prefer prime contracting work.[e.g.,#2,#4,#7,#15a]Forexample:

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatthefirmworksexclusivelyasaprimecontractor.Heexplained,“It’sextraordinarilyrarethatwearesubcontractedoutwithsomeoneelse.Weusuallyworkdirectlywiththepeople.Thenatureoftheindustryissuchthatthereareveryspecificneedsthatpeoplehave,andeithertheydon’tknowwhattheyneedorit’snotsomethingthatcanbefarmedout.So,it’seasiertofindthepersonwhocantakecareofthethingforyouratherthangoshoppingaroundforvendors.”[#10]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmstatedthathiscompanyis“allprime.”[#39]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatherfirmpreferstobeaprimecontractor,asitinvolvesmoreclientinteractionandmoreresponsibilitytoensurethatthedeliverablesandtherequirementsoftheclientaremet.[#1b]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthattheymainlyworkasaprimecontractor,thoughtherehavebeencaseswheretheyservedasasubcontractor.Sheaddedthattheirroledependsonthescopeoftheproject.[#8]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthatthecompanyisalmostalwaystheprimecontractoronthecontractstheypursue.Headded,“Ican’timagineaprojectsolargethatwe…wouldrequireanadditionalengineeringcompany.”Heexplained,“Engineeringcompaniesareusuallytheupfrontpiecethatdesignsthejobfromtheowner’svision.Itreallyisn’tnecessarytobringinmorethanthatinitialcompany.”Hewentontosaythattheyhaveneverusedasubcontractor,andcommented,“Wehavealltheassistanceweneedfromourownstaff.”[#25]


Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmindicatedthatshepreferstoworkasaprimecontractor.Whenshedoesworkasasubcontractor,shesaidthereislittledifferenceworkingwithpublicsectorversusprivatesectorprimes.Shelatersaidthatprivatesectorprimesexpecthertobeamentorinadditionto“getting[her]workdone.”[#13]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthatheworksprimarilyasaprimecontractor.Headdedthathesometimeshiresothercontractorstoassisthim,asneeded,andcommented,“ItrustthecompaniesIhaveworkedwithbefore,andItrytousethemwhenIhaveabiggerjob.”Hewentontosay,“Idon’tknowifthecompaniesIusearecertified,Ijustwantsomeonethatcandothejob.”[#18]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmindicatedthatheprefersprimecontractingworkbecauseitallowsformorecontrolovertheprojectandoftenincludesfasterpayment.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmindicatedthatthefirmworksmostlyasaprimecontractor.Whenaskedhowtheyselectsubcontractors,hereportedthattheyselectthroughaqualificationprocess“tomakesurethatwhateverworktheyperform,they'requalifiedtodo[it]anddon'tgetthemselvesintrouble,or[thefirm]introuble.”Henotedthatthisprocessisthesameforbothpublicandprivatesectorwork.[#21a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmindicatedthatheprefersprimecontractwork.Whenaskedhowhehiressubcontractors,hesaid,“Weselectoursubsbasedontheirknowledgeoftheprojecttype,iftheyhaveworkedwiththeclientbefore,ifthey’veworkedwithusbefore,andtheirfees.That’sthesameforprivateaswellaspublicsectorwork.”Henotedthatintheprivatesectorhedoesn’thavetoconsidergoalswhenhiringsubcontractors,whileinthepublicsectorhedoes.[#22]

Whenaskedifheusesthesamesubcontractorsonmultipleprojects,thesamebusinessownersaid,“Yes,it’sdrivenbygoodrelationships.IknowI’mgoingtogetthebestservice.[Iusethemif]theyaregoingtoberesponsive,theyaregoodsolidperformers,[and]they’renotgoingtogetmeintrouble.”[#22]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthattheyalwaysworkasaprimecontractor“ontheresidentialside,”whichaccountsformostofthefirm’swork.Regardingsubcontracting,shesaid,“Theroleofsubsonbigprojectsfor[myfield]isaprettyundesirablerolebecauseyouareveryfardownstreamintheprocess[of]workingondeadlines….You’rethelastpersonwhogetsthedrawingset.”[#12]

Thesamebusinessownercontinued,“IhavemadeitapriorityforourcompanythatIwon’thavemystaffworkalldaySaturdayandSundaytomeetsomedeveloper’sgoal.Also,[that]typeofworkmeanszerocreativity.….So,wereallyshyawayfromthatsubcontractorwork.Wehavenotpursueditbecausewearemoreinterestedindoingcreativework.”She


added,“Ongovernmentcontractsit’sthesamething.Wehavea[DenverPublicSchools]contract,andwe’realwayslast[receivingthedrawings].”[#12]

Whenaskedifherfirmhiressubcontractors,shereportedthattheyneversuboutdesignwork,thoughtheypartnerwithothertypesoffirms.Sheadded,“Alotoftimes,we’llhavetheclienthireacivil[engineer]orsomeoneforthethingsthatwecan’tdoratherthanadministercontracts.We’reasmallcompany[and]wejusttelltheowner,‘Youknowwhat?Youneedtohirethecivilengineer.Youcanhirethemyourselves.I’lldothereportweneedorprovidetheinformation,andyoucanjustpayhimandthenwewon’tmarkhimup….’So,wedon’tputtogetherbigteams.Wehaven’thadthatexperienceyet.”[#12]

Some firms said they do not hire subcontractors.[e.g.,#34,#36]Commentsinclude:

Whenaskedifthefirmworksmainlyasaprimecontractororsubcontractor,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmstated,“Weprefertocontractdirectlywiththeownerofaproject.Ifasubcontractorisneeded,wewillrecommendafirmtotheowner,buttheclienthastohirethemdirectly.Onrareoccasionswesubtoanarchitect,butwouldrathercontractdirectlywiththeowner.”[#16]

Whenaskedifheworksprimarilyasaprimecontractororsubcontractor,thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“I’mnotinterestedinthoseroles.Iworkedforalargemechanicalcompanyandsawfirst‐handthedifficultiesbothofthoseentitieshadintryingtosatisfytheowner.Thewaymycompanyworksissomeonecallsme,Iinvestigatewhatexactlytheywantmetodo,[and]Iagreetodothejobandgetpaid.”[#31]

Thesamebusinessownercontinued,“Ifthejobistoobig,occasionallyIwillaskotherindependentcontractorsiftheyareinterestedinworkingwithme.Occasionally,IwillgetacallfromanotherindependentcontractorandhewillaskmeifI’minterested.Thatarrangementworksbestformeatthisstageinmybusiness.”[#31]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Wedon’tprimeorsubcontractprojects.Wearehiredtodothe[work]andwehavetheemployeestodotheentirejob.Ican’timaginewhenacompanywouldcallusinasaprimeorsubcontractor.Thetypeofworkwedoisdonebyuscompletely.”[#32a]

Thenon‐Hispanicwhitemaleownerofaconstructionfirmstated,“Iamanindependent[contractor].Idon’tworkwithprimesorsubs.WhenIneedhelponaproject,IwillcallothersthatIhavedoneworkwithonotherprojects.”[#24]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Thefirmhasthebusinessmodelofself‐performingcontractsnow.Wedon’treallyhaveprimeandsubrelationshipsanymore.Thereareoccasionswhenwedohavetohiresubstodoaparticularpieceofajob,butthoseinstancesarereallybecomingfewerandfewer.Wehavefoundthattheself‐performingmodelallowsustobemoreincontrolofthescheduleandquality.”[#28]


Thesamebusinessrepresentativecontinued,“[We]don’t[anticipate]goingbacktothetraditionalprocessofactingasaprimeandfindingsubstoworkunderthecompany.Ifwedidgobacktothetraditionalmodelandfoundthatweneededsubsforcontracts,wewouldusthosewehaveusedbefore.Ibelievesomeofthemarecertified,butIdon’tknow[forsure].”Sheadded,“Wehavebeenintheconstructionbusinessforalongtime.Wehavealistofsubsthatwewouldreachouttoanddetermineiftheywouldbeinterestedintheproject.”[#28]

Thenon‐Hispanicwhitemaleownerofanengineeringcompanyindicatedthatheworksmainlyasaprimecontractor.Hesaid,“IamaprincipleengineerontheresidentialworkIdo.Idon’tworkwithprimesorsubs.Asanengineer,Iaminchargeofmyprojects.”[#26]

TheBlackAmericanandveteranmaleownerofageneralcontractingcompanyindicatedthatheworksmainlyasaprimecontractor.Hesaid,“Iworkformyselfandgetmyowncontracts.Idon’tconsidertheindividualsandcompaniesthatworkformeassubcontractors.Weareallindependentcontractors.TheyjustdowhatIaskthemtodoandIpaythem.”[#29]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatthefirmisneitheraprimenorasubcontractor.Heexplainedthattheysellmainlytosubcontractors,andonlytoprimes“when[we’re]told[we]haveto.”Hewentontosaythattheymainlyselltosubcontractorsbecausesubsperformthemajorityofelectricalwork.[#23a]

Whenaskedifthecompanyworksasaprimecontractororsubcontractor,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Ourcompanydoesn’thavethosetypesofbusinessrelationships.Ourworkisbetweenacustomerandthecompany.Wehaveneverworkedinthatway,andIcan’timaginethattypeofbusinessmodelinthefutureatall[dueto]thetypeofworkwedo.”[#30]

Many business owners and representatives discussed their firms’ efforts to include MBEs,

WBEs, and other small businesses in contracts, and shared experiences working with these

firms.MostreportedsolicitingSBE/MBE/WBEsmallbusinessesforbidsorquotes.Commentsinclude:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreported,“We’vehiredsubstodosomeasbestosjobsthataretoolarge.Wetypicallystickwithminoritysubs,andthenweusesubsthatdon’thaveabadreputationwiththeBBBorYelp,orthingslikethat.But,it’sprimarilysmallbusinesssubsthatweuse.”[#7]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthattheydosolicitSBE/MBE/WBEsubsforbids,mainlywhentherearecontractgoals.Hesaidtheyhaverelationshipswithsomecertifiedfirms,andthatothersapproachthemforopportunities.Hewentontosaythatifthereisaneedandtheyarequalified,theywillbehired.[#21a]


Thesamebusinessrepresentativelaterindicatedthatthefirmdoesnotmakethesesamesolicitationsforprivatesectorwork.However,henotedthatthereareMWBEstheyuseforprivateworkduetotheirexpertise.[#21a]

Whenaskedifthefirm’sexperiencesworkingwithSBE/MBE/WBEsubsversusnon‐SBE/MBE/WBEsubsdiffer,hereportedthattheydonotbecausethefirmholdsallsubcontractorstothesamestandard.Heexplained,“Wehaveaconsistentwayofenforcingourpoliciesandprocedures,andmakingsurethattheybondtheirworkifit'sanythingover$50,000….That's[just]companypolicy.”[#21a]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthatwhenhedoescontractout,hedoessowith“peopleofcolorwhen[hisfirm]can.”Headded,“Ithinkthatisimportant.”Henotedthathedoesbusinesswithsubcontractorsheknowsandhasarelationshipwith.[#39]

Thesamebusinessownercontinued,“Youstillhavetocompete.Thesubstillhastobecompetitive[and]havetheirresume.JustbecausesomeoneisBlack,Hispanic,orIndiandoesn’tmeantheyaregoingtodobusinesswithme….Asubisasub.Itdoesn’tmatterwhatcolortheyare.Theyeitherdotheworkortheydon’tdothework.”Headdedthathetakesthesameapproachforhiringsubcontractorsinboththepublicsectorandprivatesector.[#39]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthatheoftensolicitsMBE/WBE/SBEfirmsforbidsandquotes.Hesaidthathehasbuiltreciprocalsubcontractorrelationshipsovermanyyears,andnotedthatheusessomeofthesamesubcontractorsforbothpublicsectorandprivatesectorwork.Forexample,hesaidthathefrequentlyusesaparticularWBE‐certifieddrillingcompanybecausetheyhaveappropriateequipment.[#14]

WhenaskedhowoftenhesolicitsSBE/MBE/WBEsubsforbids/quotes,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthathefrequentlydoes.Whenaskedhowhegoesaboutthis,hesaid,“Usuallyatnetworkingevents,andtheyalsogenerallyfindme.Theymarketthemselvestome.”[#22]

WhenaskedwhyhesolicitsSBE/MBE/WBEsubcontractors,thesamebusinessownersaidthatheisgenerallyexpectedtohelpmeetthegoalswithhissubcontractorsonpublicprojects.Hewentontoadd,“Iknowwhatit’sliketobeaDBE/MWBE/SBE.”Henotedthathehasusedthesamecertifiedsubsforbothpublicandprivatesectorwork,andthatheexperiencesnodifferenceswhenworkingwithcertifiedsubsversusnon‐certifiedsubs.[#22]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmindicatedthatshemakeseffortstoincludeothersmallbusinessesincontracts.Shesaidit’simportantto“reachbackandhelppeoplethebestasyoucan,oratleastgivethemanopportunity.”Shewentontocomment,“Ican’tguaranteeyouajob,butIcandefinitelyguaranteeyouanopportunity.”[#13]


Whenaskedaboutherexperienceworkingwithminority‐andwomen‐ownedfirmsversusnon‐Hispanicwhitemale‐ownedfirms,thesamebusinessownersaid,“It’saccesstocapital.IfindthatmySBEsarewhitefirmswithmoreaccesstocapital.Theyjust[haveit].TheyhavealowerbondingratethantheMBEsthatweworkwith.”[#13]

ThesamebusinessowneraddedthattheexpenseofhiringMBE/WBEfirmsishigherthanitisfornon‐Hispanicwhitefirms.Sheadded,“They’llhavemoreopportunitiesintheprivatesectorthanmyMBEs[or]WBEs…sotheyhaveworkedmoreandknowdifferentpeople.”[#13]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthefirmusesaselectgroupofsubcontractorsthattheyarefamiliarwithindisciplineslikeelectrical,HVAC,andplumbing.Sheexplainedthatthesesubcontractorsaregenerallysmallfirms,andadded,“Intheend,itisveryprice‐generated.”Shewentontosaythattheydonotcheckcertificationsbecausetheydoverylittlepublicwork.[#15a]

WhenaskedifshesolicitsMBEs,WBEs,andothersmallsubcontractorsforquotesassecond‐tiersubs,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“IalwaystrytohireaMWBE,[and]Ifindquitefrankly[that]Igetbetterservice.Theytakemeseriously.WhenI[try]tohirealargerfirm,I’mjustsuch[a]smallpotatotothemthatIdon’tgetservice.”[#5]

Thesamebusinessownercontinued,“SometimesI’llputoutanRFP….Forinstance,recentlyIhadaprojectinNorthDenverthatmyclientwantedasoilengineer[for],soIwroteupanRFPandsentitouttothreecompaniesthatIhaddonebusinesswithbefore….[WhenI]gottheirproposalsback…itbecameveryclearwhomtohire.Anothertime,forresidentialwork,IjustwenttothepersonI[knewwas]competent.Thatwasforaprivatecontract.”[#5]

WhenaskedifshesolicitsSBE/MBE/WBEsubsforbids/quotes,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatsheusedanMWBE‐certifiedcleaningsuppliescompanyonheronlypublicsectorcontract.SheaddedthatshealsousesMWBEfirmsonprivatework.WhenaskedwhyshesolicitshelpfromMWBEcompanies,shesaidit’sbecauseshe“know[s]whatit’sliketobeanMWBEcompany.”[#35]

WhenaskediftheprocessofutilizingSBE/MBE/WBEsubcontractorsdiffersfromnon‐SBE/MBE/WBEsubcontractors,thesamebusinessownersaid,“Itisthesame,[though]thereismorepaperworktouseanSBE/MBE/WBEonapublicproject.”Sheaddedthattheysometimesusethesamesubcontractorsrepeatedlybecause“[they]trusteachother.”[#35]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatthefirmlooksforminority‐andwoman‐ownedbusinessestoworkassubcontractors.SheexplainedthatthefirmusesalistpublishedontheCityandCountyofDenverwebsite,butnotesthatthelistisnotoftenupdated.[#1b]


TheHispanicAmericanmaleownerofaspecialtycontractingfirmstatedthathisfirmdoeshireSBE/MBE/WBEsubconsultantswhenthereisarequirementinplace.Henotedthatthisdoesnothappenoften,however,astherearerarelygoalsonbidsthathisfirmpursues.Healsoaddedthatforprivate‐sectorprojects,hisfirmhasneverbeenrequiredtoseekoutsubconsultantswithspecificcertifications.[#4]

Whenaskedaboutherworkasaprimeorsubcontractor,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaidthatshedoesnotspecificallytargetMBE/WBEorSBEcompanieswhenhiringsubcontractors.Shestated,“[Myfirm]doesn’tusesubsthatoften.Iamlookingforcompaniesthatcandotheworkofthescope.Ihavethesamephilosophyforpublicandprivatework.Therearenotthatmany…companies[inmyfield]outthere.Wearetryingtobuildagoodreputation.”[#19]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmstated,“IthinkI’veworkedwithanSBE‐,WBE‐,[or]MBE‐certifiedfirmmaybeoncesofar,butthepotentialdoesexisttodo[moreof]that.”[#9]

Whenaskedabouthisfirm’seffortstoincludeminority‐andwomen‐ownedfirmsincontracts,themalerepresentativeofanon‐Hispanicwhitemale‐ownedfirmsaidmanyfirmsincludedonthelistpublishedbytheCityandCountyofDenverarenotableorinterestedindoingthework.[#1a]

WhenaskedifthefirmsolicitsSBE/MBE/WBEsforbids/quotes,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatthefirmdoesnotsolicitbidsbecausetheyfunctionasasupplier.Therefore,headded,contractorsapproachthemforbusiness.Hewentontosaythatthefirmdoesnotaskaboutcertificationbecausethecertificationstatusoffirmstheysupplytoisirrelevanttothem.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmreported,“Therehavenotbeenanyjobsintheprivatesectorbecausetheroadworkresponsibilitiesarehandledbymunicipalities.Asaresultofthetypeofworkwedo,thereisnoneedtosolicitSBE,MBE,[or]WBEcompanies.”[#27]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmsaidthattheyarenotawareiftheirsub‐vendorsarecertifiedfirms.Hecommented,“We’veneveraskedwhoownsthebusinessoriftheywerecertified….It’sprobablysomethingweshouldaskaboutwithothervendorsweknow….”[#34]

Regardingfindingsubcontractorsinthepublicsectorversustheprivatesector,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Publicsectorsubstypicallyalreadyhaveacontractagreementwithaschooldistrictoracity,orsomethinglikethat.Theprivatesectorisprettymuchgeneralmarketing,andthere’snosetformatwithintheprivatesector.Inthepublicsector,usuallyyouhaveasetpricepointandsetstandards.”[#7]


Whenaskedifhisfirmusesthesamesubcontractorsinbothsectors,thesamebusinessco‐ownersaidthattheyrarelydo.Heexplained,“Onoccasionwewill,butwetypicallyusepublicsectorsubsbecausetheyunderstandtheworkenvironmentinthepublicsector.Theyunderstandwhat…whatcertificationsyoumusthave,thestandardsyoumusthave,andthingsofthatnature.”[#7]

Trade association and business assistance organization representatives also discussed member

firms’ efforts to include DBEs and other small businesses in contracts.Mostindicatedthatmembersmakeagenuineefforttoincludesuchfirms.Forexample:

WhenaskedifmemberssolicitDBEsubsforbids/quotes,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthattheydo.HenotedthatthefrequencyinwhichtheysolicitDBEsubsis“afunctionofhowoftentheygetcontractswiththebigprimes.”Headded,“WhentheydosolicitDBEs,theyrelyonanetworkofcohortsbecausesmallbusinessesfeelmorecomfortableworkingwithanothersmallbusiness.”HewentontosaythatmembersusingDBEsubsdosoforbothpublicandprivatesectorwork.[#33]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatmembersdosolicitbids/quotesfromDBEsubs,andnotedthat“the[organization]isveryinvestedintheDBEprogram.”Sheadded,“[Members]willfirstdodirectsolicitations.Ifthey’renotgettingtheresponsetheywant,theywillcontactmebecausethe[organization]hasadatabasethatidentifiesmembersbykeywords.So,basedonthekeywordsIcansendouttargetedsolicitations.Ifthatdoesn’twork,theAmericanIndianProcurementTechnicalAssistanceCenterwilljumpinthereandhelpcontactDBEs.So,wehaveacouplelayersinouroutreach.”[#37]

Whenaskedwhymemberschoosetosolicitbids/quotesfromcertifiedfirms,thesamebusinessassistanceorganizationrepresentativesaid,“It’stohelpmeetthegoals.Butit’salsotohelpmembersofthe[organization]becausetheyrememberhowharditwastostartacompany.”Shealsonoted,“Forthepublicworktheyselectsubsbasedontherequirementsoftheproject,andtheycheckwhetherpotentialsubshaveeverworkedonapublicproject…[andif]theyknowtheexpectations….Intheprivatesectortheyaremoreopentogivingpeopleashot.”[#37]

Whenaskedaboutmembers’experiencesworkingwithDBEsubscomparedwithnon‐DBEsubs,shesaid,“Ifthey’reworkingwithDBEsubsonapublicproject,theyknowthosepeopleareprettyfamiliarwiththeworkprocesses.Iftheyuseanon‐DBEonapublicproject,theyask[themselves],‘Whatisthelearningcurvegoingtobe?’”[#37

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationreportedthatmembersworkingasprimecontractorsfindothersmallbusinessestoteamwithbyattendingnetworkingevents.Sheadded,“Wehavemeetingsallthetime.That’soneofthebenefitsofbelongingtoanorganizationlikeours.You’repartofamembership,andnetworkingopportunitiesareavailablewiththepeoplethatyouwanttoteamwith,thatgoaftertheworkthatyou’reinterestedin,whetherit’sCDOTorwhetherit’stheCityandCountyofDenver.”[#38]


ThesametradeassociationrepresentativelaternotedthatitcanbedifficultformemberstofindDBEsubcontractorsspecifically.Shesaid,“[Members]needtohavethem.Theyneedtomeetthegoals,sothey’relookingforthemandthenumberisshrinking.IhaveanumberofMWBEsthathavebeensoldtolargecompanies.”Shecontinued,“We’vegotalotofcertifiedfirms,buttheymaynotbeenoughinallthedifferentdisciplinestogetagoodpoolofpeoplegoingafterthatwork.Andbecausethere’ssomuchworkoutthere,youwouldevenhaveless.”[#38]

ShewentontosaythatmanylargeprimesmeetDBEgoalsbyusinggeotechnicalfirms,becausetheprimesdonotprovidethoseservices.Sheadded,“Youknow[that]whentheyhavetomeetthegoal,that’showthey’regoingtodoit.[However],someofthose[geotechnicalfirms]havegrownquitewellovertheyears,andoneinparticularhasalreadygraduated.Asecondonewillgraduate[inthe]nextfewyears.”[#38]

Whenaskedwhatmembers’experienceshavebeenworkingwithDBEsubsversusnon‐DBEsubs,thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaidthatmembersfirstlookforfirmsthatarecapableofthework.Heexplained,“Iftheyfindafirmthat’scompetent,theyhavetobecarefulorthey’lljustworkthemrightoutofbusiness.Becausethey’resogood,they’llgivethemalltheworktheyhave,andthey[may]givethemmorethantheycanhandle….They’llgrowthemoutoftheprogram.”[#40]

TheBlackAmericanfemalerepresentativeofatradeassociationsaidtherelationalandtrustaspectofselectingsubsissimilarinbothsectors,thoughcertifiedbusinesseshaveasomewhatdifferentapproachinthepublicsectorbecausetheywanttogiveopportunitiestoothersmallandminority‐ownedbusinesses.Shesaid,“Ithinkthefirstpersonthey’relookingforissomebodyjustlikethem,somebodywhoisalsocertified,maybeanunderutilizedfirm[that]canuseanopportunity.That’snotnecessarilythefirstgo‐toforprimes.”[#6]

Thesametradeassociationrepresentativeaddedthatthisefforttochooseandworkwithotherminorityandunderutilizedfirmsistomaintainthelevelofparticipationthattheythemselvesbringtotheproject.Sheadded,“Iftheysubouttoanon‐DBE,[it]diminishestheamountofparticipationthattheprimeisgoingtoget.Anotherfactoristhefactthatmentor‐protégésandjointventuringisbeingpromotedmoreso[recently].Finally,Ithinkthe…mentalityofpayingitforwardanddoingthesameforothersisagrowing[trend].”ShelaternotedthatmemberssolicitDBEbidsbygoingthroughtheDBE/MWBEdirectories.[#6]

Whenaskedaboutmembers’experiencesworkingwithDBEsubscomparedtonon‐DBEsubs,shesaidthatmemberexperiencesvary.Sheadded,“BeingaDBEandengagingorsubbingouttoaDBEandgettingtheopportunitytodothepaperworkfromadifferentperspectiveandreviewitcanbehelpful.Theyknowwhattoexpect[regardingpaperwork].Asfarassubbingouttoanon‐DBEexcessively,it’sgoingtobeaprojectthat’shighlyspecialized…orafirmthatcanhelpbolstertheDBE’sstatus.So,ifI’maDBEandI’msubbingsomeworkouttoa[non‐DBE]…thathasaparticularlooktoittoo.”[#6]


A few business owners said that certifications are irrelevant when soliciting other contractors.Forexample:

WhenaskedifhesolicitsSBE/MBE/WBEfirms,theBlackAmericanandveteranmaleownerofageneralcontractingcompanyreportedthatallofhisworkisintheprivatesectorandthatcertificationsdonotmattertohim.Heexplained,“Idon’tworkonpublicjobs,[so]Idon’tknowifanyoftheothercontractorsIusehavethosecertifications.IjustusethepeoplethatIknowthatcandothework.IfIdon’tlikethewaysomeonedoesaprojectthatI’vehiredthemtodo,Iwon’tusethemagain.”[#29]

Whenaskedifheusesthesamecontractorsallthetime,thesamebusinessownersaid,“Ofcourse….Idon’tgoouttryingtofindotherstodotheworkwhenIknowwhatI’mgettingwiththecontractorsIhaveusedbefore.”[#29]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatthefirmdoesnotmakedistinctionsaboutwhotheyaregoingtoworkwithbasedongender,race,ethnicity,orcertificationstatus.Hestated,“We’veworkedacrossthespectrum.Theindustryispredominantly…whitemale‐ownedcompanies,butthereareanumberof[other]peoplethatwedoworkwith.”[#10]

Thesamebusinessownercontinued,“Oneofthem,forinstance,isownedbyawomaninSeattle,Washington.She’soneofourfavoriteclientsactually.[But]dowedistinguish?Notsomuch.It’srarethatthatevercomesupasafactor.Butitis[also]raretohaveanythingbutthatmaindemographicjustbecausethat’showtheindustryisbrokendown.”[#10]

One business owner described her experiences working with MBEs as positive, and described

such experiences as mentorship opportunities.TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidthatshelikestomentorMBEsandhelpthemfigureouthowtobettertheirbusiness.Sheadded,“Asfarasanon‐minorityornon‐certifiedcompany,Ithinktheyhavetheresourcesandknowledge[necessary]andit’sdifferent[forthem],butIdon’tfeelit’sinanywaydiscriminatory,orharder,forthenon‐minorityfirmsthantheminoritytogettheexperience,training,andcertificationstheyneed.”[#2]

Other businesses reported preferring subcontracting opportunities, being limited to

subcontract‐based work or having difficulty breaking into the prime contracting arena.[e.g.,#19]Commentsinclude:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatherfirmneverworksasaprimeoncityorcountyprojects.Whenaskedwhy,shecommented,“Wedon’treallyhaveprojectmanagementinourskillset,andweprovideonething,whichisstructuralengineering.”ShelatercommentedthatshehasneverworkedwithanMBE/WBE/SBEprimecontractor.[#5]

Whenaskedhowshemarketsherfirmtoprimes,thesamebusinessownersaidthatshereviewsplanholderslistsandthenmarketsbysendinganemailorcallingthemandsettingupameeting.Shealsonotedthatshenetworkswithprofessionalorganizations.[#5]


Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmnotedthatalthoughhisfirmworksmainlyasaprimecontractor,thereareadvantagesworkingasasubcontractor.Heexplained,"Whatwereallyliketodoistheengineering,andtheothercompany[can]beresponsibleformanagementoftheproject."[#3]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisfirmhasneverworkedasaprimecontractor.Headded,“We’vealwaysbeenasuborasupplier,oraninstaller.”Hesaidthathegetssubcontractworkthrougheitherapreexistingrelationshiporwhenaspecialtyproductisneeded.Heexplained,“Inthecaseof[a]propertymanagementfirm,theymaycallusandsay,‘Hey,weneed10[specialtyproducts],’or‘Oh,bytheway,canyouinstallthese?’”[#9]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatthefirmonlyperformsasasubcontractor.Whenaskedwhy,shesaidthatthattheyare“toosmall”todoprimecontractwork.[#35]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmreportedthatherfirmalwaysoperatesasasubcontractorbecauseofthetypeofworktheydo.Shesaid,“Wearealwaysthesubcontractor,justbythenatureofwhatwedo.Wearehiredbyaprimetohandlethatportionoftheircontract.”[#27]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstated,“Ionlydosubcontractingwork.Idon’thavethecapacity,bonding,insurance,[or]lineofcredittodoprimeworkbecausetheprojectsaretoolarge.Ialsoneverhiresubcontractors.”[#20]

A trade association representative commented that most members are limited to subcontract

work because they lack the capacity and bonding ability to prime.TheBlackAmericanfemalerepresentativeofatradeassociationreportedthatmostmembersworkassubcontractorsratherthanprimes.However,shenoted,“Wehavehadanincreaseintheamountof[prime]opportunities.”ShewentontosaythatCDOTis“lookingatprojectsforthelatterhalfoftheyearwhereDBEsorESBEswillbeabletoprimeon…projectsforthefirsttimeever,”andcommented,“Thatwasahugewinforus….”[#6]

Whenaskedwhymostmemberfirmsaresubcontractorsratherthanprimes,thesametradeassociationrepresentativesaidthatmostmembersare“stillbuildingcapacity,”andarelimitedtosubcontractwork“duetobondingrequirementsandcapacityrequirements.”[#6]

A business assistance organization representative reported that most members are limited to

subcontract work.TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthatmostmembersworkassubcontractorsbecausetheylackthecapacitytoperformasprimecontractors.Whenaskedifprimesthatusemembersonpublicsectorworkalsousethemonprivatesectorwork,hesaidthattheydo.[#33]

Whenaskedhowmembersidentifyprimecontractorstoworkwith,hesaidthatmembersdoingpublicworkgotooutreacheventstolearnaboutprojectsandmeetkeycontractors.Headded


thatmembersalsogotobidopenings,andthatsomeareverysuccessfulatsecuringpublicwork.[#33]

Some interviewees discussed how working with MBEs, WBEs, and other small businesses

compare to working with non‐certified firms.AfewindicatedthatworkingwithSBE/MBE/WBEprimecontractorshasbenefits.Commentsinclude:

Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmreportedthathecannotdifferentiatebetweenSBE/MBE/WBEandnon‐SBE/MBE/WBEprimecontractorsorsubcontractors.[#3]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthatbasedonhisexperience,SBE/MBE/WBEprimecontractorstendtobemoreorganizedthannon‐certifiedprimes.Hestated,“Badmoneymanagementtypicallyendsupbeingthebiggestissuewithnon‐certifiedprimes,whichtricklesdowntoalotofotherissues.Ithinkthey'renotheldtoanystandard,sotheygooffoftheirhip.”[#4]

Describinghisexperiences,theBlackAmericanmaleco‐ownerofaDBE/MBE/WBE/SBE/ESB‐certifiedgoodsandservicesfirmsaid,“MyexperienceworkingwithSBE,MBE,[and]WBEfirmshasbeencloudedbythefactthat,foralotoftheprojectsthathavebeengoingonprobablyforthelast,I’dsay,sixorsevenyears,we’vegonetotheoutreachmeetings,we’veprovidedlinecards,weprovidedconversationsaboutourcapabilitiesandwhatwe[can]do,[but]wehavebeenunsuccessfulinwinninganyofthosebids….Andinoneparticularinstance,ourcategoryofproductwasactuallyawardedtoadrywallcontractorbyanSBEprime.”[#9]

Whenaskedaboutherexperiencesworkingwithcertifiedprimes,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“IthinkIhaveonlyworkedwithoneSBE/MBE/WBEprime,andthatwasdoingfinalcleanona[project]inBoulder.Ihavejustgottentoknowthemandhopetoworkwiththemonotherjobs.”[#35]

Whenaskedtodescribethefirm’sexperienceworkingwithcertifiedprimescomparedwithnon‐certifiedprimes,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatherfirmisonateamwithanMBEprimeintheproposalphase,sotheyhaveyettocompleteanyworkwiththem.Shesaidthatthusfarshehasnotobservedanydifferences.[#12]

A few business assistance organization representatives discussed members’ experiences

working with DBEs and other small businesses.Commentsinclude:

Whenaskedaboutmembers’experiencesworkingwithDBEprimesversusnon‐DBEprimes,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthatbecauseDBEprimesaresmaller,“nimbler,”andrequirelesspaperwork,thereisanadvantagetoworkingwiththem.Headdedthatthereis“lessoverheadandbureaucracy”aswell.[#33]


Whenaskedaboutmembers’experiencesworkingwithDBEprimesversusnon‐DBEprimes,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“IftheyworkwithaNativeAmerican‐ownedprime,Ithinktheprimehasalittlemorepatiencebecausetheywanttogetthemtothepointofsuccess.Theywillsometimesevenprovideadditionalresourcestohelpthemgetwheretheyneedtogo,becausetheyaremoreinvestedinNativeAmericancompanies.”[#37]

Challenges for small and minority‐ and women‐owned businesses when seeking work as prime contractors/consultants.Businessownersdescribedtheirexperiencesandanychallengestheyfacedwhenseekingprimecontracting/consultingopportunities.

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Thereisnoopportunity,inmyopinion,withinthediversityprogramforminority‐ownedfirmstogetprimework.What[minoritysubcontractors]bidoutisscopedsolargethatafirmofourswouldn’tbequalifiedtodothat.Therearedefinitelywayssomeprojectscouldbebrokendownintosmallerprojectssothattheycouldbringinfirmsthatdon’thavecapacitytodo$3millionwork.”[#12]

Apublicmeetingparticipantsaid,“Todayit’shardertobeaminoritywoman‐ownedbusinessthaneverintheCityandCountyofDenver.Idon’tevenknowhowsmallbusinessesdoit.IlookatthewayIstarted,andthehoopsandthewallsandtheobstaclesthatasmallbusiness[has]toputupwithtodaytoactuallybefunctional,[and]it’salmostimpossible.Imean,Icouldnotdoitagain….”[PT#4]

Thesamepublicmeetingparticipantcontinued,“Anotherchallengethatsmallerbusinesseshaveis[thatif]youhaveafirmthatsells$200,000[or]$100,000intotalrevenue,howdoyouputthatbusinesstocompetewithafirmthatfallsinthesamecategorythatsells$10million[or]$12millionayear?Itdoesnotmakesense.”[PT#4]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Therearelargerfirmsthatalwayshaveaconnectiontogetrightinonabid,andyoufindyourselffightinganuphillbattle.Evenonceyougetin,thebidclosedortheyalreadyhaveasmallgroupthey’regoingtoselectfrom.So,ifyoudon’tknowanyoneyou’remostlikelynotgoingtogetachancetobid.”[#7]

One trade association representative commented that a “catch‐22” prevents new and small

firms from bidding as a prime on public agency contracts.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatexperiencerequirementspreventthesefirmsfrombiddingonsomeprojects,saying,“Wellifyou'veneverdoneschoolconstruction,youdonotgettocheckthatbox.[And]ifyoudonotcheckthatbox,youdonotgetmovedtothenextlevel.[Somepublicagencies]continuetousethesamefolksallthetimebecausetheyaretheonlyoneswhohaveexperience.”[#11]

Some mentioned barriers including a preference on some jobs for large primes with greater

resources, prompt payment issues, and other challenges. [e.g.,#12,#15b,#35,WT#3]Forexample:


TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthatinhisindustrytherearesometimesconsequencesforbuyersthatdeviatefromnormsandbuyfromsmallmanufacturers,particularlyifproblemsarise.Heexplainedthatthereisaperceptionwithincorporationsthatfewerproblemsarisewhenworkingwithlarger,moreestablishedcompanies.[#39]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Becausemycompanyisverysmall,findingaprojectinthepublicsectorthatissmallenoughformeisdifficult.”[#35]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthathethinkshisfirmissometimesdismissedbecausetheyareasmallerfirm.Headded,“Wedon’thavethebrandnamelikeoneofthebigthree[competitor]companies.Iwouldsaythatthe[products]wedooffercompetesquitefavorablywiththebigguys.”[#9]

Regarding“oncall”contracts,thenon‐HispanicwhitefemaleownerofaWBE‐certifiedprofessionalservicesfirmsaid,“I’minvitedtoparticipateonan‘oncall’contractasasubconsultant[and]Ihavetosignaformcalledletterofintent.And…Igetthoseblank,soIhavenowayofevertracking…whattheirprojectedparticipationofmyfirmisorhowmyfirmisgoingtocontributetothegoalthathasbeenset….ButIdon’thaveany[information].Idon’tknowifit’sonepercent.Idon’tknowifit’shalf[a]percent.”[PT#3c]

Thesamebusinessownercontinued,“Theyhavetomeetagoal,butthey'renotgonnatellmewhatpercent.Ifthegoalis10percent,they'renotgonnatellme.”Sheadded,“Ihavenowayofknowingwhat[thepercent]is,andthere'sthisreallycrazyexpectationthatI’mjustgonnasign[theforms].Imean…I’vebeendoingit[though].Isigntheblankforms.”[PT#3c]

Asurveyrespondentsaid,“[It’s]difficulttogetinthemixofbigmunicipalworkwhenlargerfirmshavedoneamillionof[thoseprojects].”[AS#36]

Apublicmeetingparticipantsaid,“AreallybigproblemthatIsee[is]letterofintent,whichsaysthatwe’regoingtoprovidethisamountofmoneyforthistypeofopportunitytominoritybusinesses….Ithinkwhathappensisthattheletter[s]ofintentaren’tbeingmetinallcases.I’mnotsayingeveryoneofthe,butnotinallcases.Now,theDSBOwillsaythere’sbeenagoodfaitheffort.”[PT#4]

A trade association representative said that high overhead costs make it difficult for small

engineering firms to be competitive.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatrelationship‐buildingiswhatmakesfirmsmostcompetitiveinconstruction‐relatedindustries.However,henotedthatsmallengineeringfirmsareatadisadvantageincompetingwithlargerfirmsbecauseofoverheadcosts.Hestated,“Theproblemwithengineeringis[that]asmall,certifiedengineeringfirmcan’tcompetewiththelargerguysonmostprojects.Foraschooltheycancompetewiththem,buttheoverheadcostiswhatprohibitsthemfrombeingtrulycompetitivebecausetheyaresmaller.”[#11]


A few business owners and representatives described “on‐call” contracts as barriers

preventing small businesses from working as prime contractors.Commentsinclude:

TheHispanicAmericanfemalerepresentativeofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid“on‐call”contractsisabarrierforherfirm.Sheexplained,“[It’s]awaytocircumventeverythingwe’repayingforasataxpayerinallthesesmallbusinesses….‘Oncall’contractshavenogoals,norepresentativeorder101,absolutelynoaccesstoparticipation.”[PT#3b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“[CityandCountyofDenver]haveon‐callcontracts.So,whenasmall,littlepieceof[work]needstogetdone,theyhavefiveon‐call[firms]thatworkforthem,firmsthatcandecidewhat12shrubsneedtogointhisbed.”Shecontinued,“Itwouldbeperfecttosetasidethreeofthoseon‐callcontractsforfirmsthathadn’tworkedfortheCityofDenverbefore….”[#12]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“On‐callcontractsareoftenusedasaworkaroundforcitystaffwhowanttoavoidtheeffortofputtingprojectsouttobid.Indoingso,opportunitiesarelostforSBE/MWBE/DBEfirms.Theselectingandawardingofindividualon‐callprojectsisnotopenforpublicreview.”[WT#3]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Therehavenotbeenmanyprojectsthathavebeenissuedfromthedefinedpoolforarchitectstoprime.IbelievethisisbecauseDenverhason‐callarchitecturalservicecontractsthattheyusetodosmallprojects.”[WT#2]

Some interviewees reported that they try to avoid working with some subcontractors.Forexample:

Whenaskediftherearesubcontractorsthathewillnotworkwith,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Theone[subcontractor]Iwillneverworkwithagainwillremainanonymous.Idon’tthinkithasanythingtodowiththeMWBEclassification,it’smoreaboutthe[contractor’s]personality.[Theywere]verydifficulttoworkwith.”[#22]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmsaidtherearesubcontractorshisfirmwillnotworkwith,butdidnotspecifybetweenminority‐orwoman‐ownedsubsversusothersubs.Hesaidrelationshipsandpasthistoryareveryimportanttohisfirm.Headdedthatcollaborativerelationshipsarecritical,andnotedthatforcingthoserelationshipsforotherreasonscanhindertheprogressofaproject.[#1a]

Regardingsubcontractorsthathiscompanychoosesnottoworkwith,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthattherearesomedrillingcompaniesthathisfirmwillnotworkwithbecausetheydonothavetherighttypeofequipmentforhisindustry.Hewentontoindicatethathe


rarelyworkswithsubcontractorsfocusedinresidentialwork.Hesaidthatmanyofthesesubcontractorsarenotawareofpublicsectorrequirementsforroadandbridgework.[#14]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthattherearesubshisfirmwillnotworkwithbecausetheyeitherhaveunethicalbusinesspracticesorareconsideredunreliable.[#7]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthattherearesubcontractorsthattheywillnotworkwith.Heexplained,“It’smorealongourgeneralbusinesspracticesregardingcreditreferencesandcreditterms.”[#23a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthattherearesubcontractorsthefirmwillnotworkwith,“primarilybecausetheydon'thavetheabilitytodothejob.”Headded,“It'sallbasedon[qualifications],andtheyareprettyconsistentthroughoutthecompany.”[#21a]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmstated,“IfIfeeltheyarenotqualified,Iamnotgoingtoworkwiththem.I’vedoneworkonthereservationbeforefora…project,andItrytomakesureIhaveapersonofcolorworkingthatbecauseIthinktherewillbelessconflict,orupsanddowns.ButI’vealsousedCaucasians,[so]it’snotnecessarilythecolor.”Headdedthat“Caucasians”sometimeshavetoearnthetrustoftribes.[#39]

A trade association representative indicated that members’ relationships with hired

subcontractors have improved in recent years.Whenaskediftherearesubsthatmemberswillnotworkwith,theBlackAmericanfemalerepresentativeofatradeassociationsaid,“Yearsago,IwouldhearmoreofthatthanI’mhearingnow.Ithinkwiththeincreaseofsupport[and]servicesthathavebeenoffered,thisdoesn’thappenasmuchasitusedto.”[#6]

One interviewee reported facing challenges finding qualified subcontractors when the need

arose.Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthatononeoccasionthefirmhiredasmallminority‐ownedbusinessasasubcontractor,butfoundthebusinesswastoosmallandunqualifiedforthework.Shewentontonotethatitisdifficultforherfirmtosubcontractoutforprojectsinthepublicsector.Sheexplainedthatthediversityrequirementsdonotaccountforhowmanyfirmsareactuallycapableofdoingtheworkspecifictotheprojects.Therefore,shenoteditischallengingtomeetthediversityrequirementsandensurethattheprojectsaredonebythosewithrelevantexperience.[#1b]

Thesamebusinessrepresentativeadded,“We[hadbeen]toldinpreviouscontractsthatwedidn’tgetitbecauseourdiversityplanwasn’tstrongenoughandweonlyincludedonespecificfirmandgavethemalargerole.Andtheysaidtheywantedustoincludefivefirmsandgivelotsofpeopleroles.”ShealsomentionedthatthefirmsubcontractedouttoafirminDallasbecausenominority‐orwomen‐ownedfirmswerequalified,andthefirmneededtomeetthetechnical


minorityrequirements.Sheexplained,“You’rehurtingbusinessesinthecitybecauseofthatrequirement.Nowwe’regoingoutofstate.”[#1b]

Challenges for small and minority‐ and women‐owned businesses when seeking work as subcontractors.Businessownersandrepresentativesdescribedtheirexperiencesandanychallengestheyfacedwhenseekingsubcontractingopportunities.

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmsaid,“Whenyouhaveparticipationrequirementsforsmallbusinessrequirements,thentheeasiestthingfortheprimefirmistonotimpacttheirworkload.Thenwearealwaysinthepositionofhowtocompetewithsmallerorminority‐orwomen‐ownedbusinesses.Theprimefirmsdon’twanttodecreasetheirwork,andsoit’seasierforthemtojustsay,‘We’regoingtohavetheengineeringdonebyasmallbusiness.’”[#1a]

Thefemalerepresentativeofaminority‐andwomen‐ownedbusinessstatedthatlargeprimesoftenargueforlowerparticipationgoalsthanthosesetbyMayorHancock.Shesaid,"Theyadvocatethisgoalandsay,well,there’snocapacity….Howcansomeonetellmewhatmytopcapacityisthatdoesn’tevenknowme,mycompany,myemployees,ourgrowthstrategy?"Shecommentedthatthisbehaviorisabarriertominority‐andwomen‐ownedbusinessesattemptingtogrow.[PT#1b]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaiditcanbedifficultforminoritiestogetlinesofcredittopurchaseequipmentforsubcontractjobs.Shenotedthatstripingrequiresexpensiveequipment,andadded,“Therearevarious…companieswhoarenon‐minorityandhaveallthisequipment,andthereareveryfewminoritycompaniesinthatworkcode.So,it’salotmoredifficultforthemtogettothatpointwhenthey’restartingbecausethisequipmentissoexpensive.Theexperienceisthere,it’sjustamatteroffindingtherightpieceofequipmenttohelpthemout.”[#2]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthatsometimeshewillresupplypotentialprimeswiththeinformationtheyrequest,thoughit’s“exhausting”tosubmitinformationagain.Hecommented,“I’vedonethisfivetimeswiththisparticularprimeandIdidn’tgetselectedthepreviousfourtimes,sowhyshouldIredothis?Chancesarewe’renotgoingtogetanythingoutofit.”[#9]

TheHispanicAmericanfemalerepresentativeofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Therearebarriersinaccesstoallprimes.It’sabarrier….[Aprime]whohas[a]$173millioncontractattheairport[meets]theirDBEgoalswiththesamevendor[and]withcheaplaborat$8.50anhour.That’swhattheypaythedriversinthevans,andtheypaylessforthepeoplethatpushthewheelchairs.”[PT#3b]

Thesamebusinessrepresentativecontinued,“Wecannotoperatewith,norwouldweoperateunderthattypeofsituationinourcommunitiestoofferthosetypeofwages.Wewouldn’tbeleftstanding.Thoseindividualsthataremakingthosewages…areEthiopians.Ifthat’snotaformofculturalandethnicoppression,Idon’tknowwhatis….[Theselargeprimes]tellustheseindividualscanliveontips[andthat]they'reallowedtotaketips.It’sa


barrierforcompetitivewagesandourabilitytoanswerRFPs.It’sawayforgiganticcorporationstoundermineourdollars,ourbids,[and]ournumbers.”[PT#3b]

TheBlackAmericanfemalerepresentativeofatradeassociationsaidthatoneofthebiggestchallengesforminority‐andwomen‐ownedfirmsisfiguringouthowtomakepointsofcontactwithprimes,andknowinghowto“getin.”Sheexplained,“Therearesomanydifferentgroupsoutthere.Itcanbedifficultforthemtoknowwhotoalignthemselveswithand[how]tofindopportunitiestobuildrelationships,andrapport,withdifferentprimes.”[#6]

Thesametradeassociationrepresentativecontinued,“Knowingthedifferentnuancesandbuildingrelationshipswithavarietyofteamscanbedifficult,[especially]becausealotofsmallbusinessescan’ttaketimeawayfromtheir[firms]toattendallthesedifferentevents.It’slikedarnedifyoudo,darnedifyoudon’t….Theydon’thavethelevelofsupportofalargerbusinessorabackoffice,soitcanbeacatch‐22.”[#6]

Whenaskedhowhisfirmfindsoutaboutsubcontractingwork,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“We’llknowofajoborthey’llcontactusthroughmyco‐ownerormyself,andthenwe’llsubmitabidtothemforustodotheworkviaXactimate,whichisthesystemweuse.”[#7]

Whenaskedifhisfirmpreferstoworkwithsomeprimecontractorsoverothers,thesamebusinessco‐ownersaidthatthereare.Headded,“Weliketousethembecauseoftheirlevelofworkanddetail,andbecausetheydowhattheysaythey’regoingtodowhentheysaythey’regoingtodoit.”[#7]

Apublicmeetingparticipantsaid“ittakesalotmorecapitaltoworkoutattheairport”forminorityandwomenbusinessowners.[PT#4]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthecompanyrelieson“wordofmouth”tosecuresubcontractingwork.Shesaidthatthefirmisrarelyaskedtobeondesign‐buildteams,andadded,“Itisusuallywordofmouth.Acontractorwillcallandindicatetheyarepursuingaproject,theninquirewhetherweareinterestedortoobusy.”[#15a]

One trade association representative discussed small businesses’ lack of resources as a barrier

to securing work.Thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaidthatsmallbusinessescanbeatadisadvantagebecauseoftheirlackofresourceswhentryingtogetonprojects.Heexplained,“Thebigbusinesseshavededicatedbusinessdevelopmentpeople.Thesearepeoplethatknowhowtobuild,buttheyalsohavesalesskillsandthey’regoingoutforthespecialtycontractorsandcallingonthe[big]generalcontractors.So,thatisahugedisadvantageforsmallbusinessesbecausetheydon’thave[those]level[s]ofresourcesorsophisticationasalargecompany,andonepersoniswearingallthehats…doingfinanceandestimating,andrunningthefieldoperations.”[#40]

Some interviewees reported that they try to avoid working with some prime contractors.Forexample:


Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmsaidtherearesomeprimeshisfirmrefusestoworkwith.Heexplained,“Therearesomefirmsthatareextremelydifficulttoworkwith….Iftheprimedoesn’tkeeptheprojectundercontrol,theneverybodycanbespendingalotoftimeandmoneyonthingsthattheyshouldn’tbespendingtimeandmoneyon,andthosewon’tbesuccessfulprojects,financially,toanybodyworkingonthem.”[#1a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthattherearesomeprimecontractorshisfirmtriestoavoidworkingwith.Heexplained,“Someofthemhaveunethicalbusinesspractices,andsomearelateallthetimeandtheiremployeesareprettyinconsistentinthelevelofservicetheygive.Sometimeswehaveissueswithpayment,too.”[#7]

Whenaskediftherearesomeprimecontractorsthathewon’tworkwith,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Yes,therearesomewhoarenotveryethical.Theymakeitdifficult.They’renotresponsivetoourneeds.Theyhaveacorporatementality[and]arenotprofessional.”[#22]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmstatedthatinresponsetoabadexperiencewithaprimehe"wouldjustbeasdiplomaticas[he]couldbynotteamingupwiththemagain."[#3]

Whenaskedifthereareprimecontractorsshepreferstonottoworkwith,theBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidthereisaprominentgeneralcontractorsheworkedforpreviouslywithquestionablebusinesspracticesconcerningfieldchangeorders.Shesaidthegeneralcontractorallowedchangeorderstoaccumulateandavoidedmeetingstodiscussmatters,andoftendisputedthepriceafterherfirmcompletedthework.[#13]

Thesamebusinessownersaidherfirmacceptedadiscountedsettlementafteralmostayearofnegotiatingwiththegeneralcontractor.ShestatedthattheDSBOwashelpful,however,andconcludedthatherfirmandthegeneralcontractordidnot“mixwelltogether.”[#13]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthattherearenoprimecontractorsthathisfirmavoids.Henotedthathisfirmiscurrentlybuildingrelationshipswithnewprimes,andthathisfirmrecentlysecuredworkwithoneofthem.[#14]

ThesamebusinessowneraddedthatthereareveryfewSBE,MBE,orWBEprimesinhissegmentoftheindustrybecausetheprojectsaresolarge.Heexplainedthatthereareseveralcontractsinthebillion‐dollarrangeandthattherearenoSBE,MBE,orWBEprimeswiththecapacitytodothoseprojects.[#14]

Whenaskedifthereareprimeorsubcontractorsthatherfirmchoosesnottoworkwith,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“I’vedevelopedgoodrelationshipswiththem,andalotofmy


businessisrepeatbusiness.However,thereisoneprimeIwillnotworkwithagain.IhavetoldthemthatandI’drathernotsaywhothisis,buttheygetalotofwork.Ijustdon’tliketheirbusinesspracticesorbusinessethics,andIwon’tcompromiseminetoworkwiththem.”[#19]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatshewillnotworkwithsomeprimesbecausesheisn’tyet“prepared”todoso.Shesaid,“Onecompanythatwasmentoringmetookmealongtoameetingwith[anationalcontractor],andIlearneditwasgoodIdidn’thaveacontractwiththem.”Sheexplained,“Ilistenedtoeverythingthatwasinthecontract[suchas]safety,andthisandthat,andIsawwhatallthebigcompaniesexpect.IsawIwasn’tpreparedyet.Itwasagoodlesson.”[#35]

Some trade association and business assistance organization representatives commented on

members’ preferences to work with certain prime contractors.

Whenaskedifmemberstrytoavoidworkingwithcertainprimecontractors,theBlackAmericanfemalerepresentativeofatradeassociationindicatedthattheysometimesdo.Shesaidthatsomemembershavetalkedaboutprimesthatarechallengingtoworkwith.[#6]

Whenaskedifthereareprimesthatmemberswon’tworkwith,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Asfarasconstructiongoes,Ican’tthinkofany.WithlargecorporationstherearesomethathavetakenpoliticalpositionsthatgoagainstthevaluesofIndiancountry,andpeopledon’twanttoworkwiththem.”Sheaddedthatmembersprefertoworkwithprimecontractorsthat“givebacktothecommunity.”[#37]

E. Potential Barriers to Doing Business in Denver

Inadditiontobarrierssuchasaccesstocapital,bonding,andinsurancethatmaylimitfirms’abilitytoworkwithpublicagencies,intervieweesdiscussedotherissuesrelatedtoworkingforpublicagencies.Topicsincluded:

Learningaboutpublicsectoropportunitiesasaprimeorasubcontractor;

Opportunitiestomarketthefirm;

Accesstocapitalandobtainingfinancing;

Bondingrequirementsandobtainingbonds;

Insurancerequirementsandobtaininginsurance;

Prequalificationrequirements;

Licensingandpermits;

Sizeandspanofcontracts;

Anyunnecessarilyrestrictivecontractspecifications;


Prevailingwage,projectlaboragreements,oranyrequirementstouseunionworkers;

Biddingprocesses;and

Timelypaymentbytheagencyorprime.

Learning about public sector opportunities as a prime or a subcontractor. Businessownersandrepresentativesreportedchallengestolearningaboutavailableworkinthepublicsector.Forexample:

Thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“IhavetriedtocontacttheCityofDenver,[but]itisimpossibletofindtherightpersontotalkto.Iknowthattheyuse[myproducts]formanyoftheirdepartmentsandagencies,[but]wheneverIhavecalledIgettherunaround.Someonetakesamessage,but[I]never[get]areturncall.”[#30]

Thesamebusinessownercontinued,“Ihaven’tfiguredoutifit’sprocurementoranotherdepartment,butsomeoneis[usingmyproducts].I’msureiftheydoitin‐houseit’smoreexpensivethanwewouldquotethem.I’veevenaskedthepeoplefromthestateiftheyhaveacontactIcancall,andtheycan’ttellmeacontactpersoneither.”[#30]

Whenaskedifitiseasyordifficulttofindoutaboutpublicsectorworkopportunities,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedspecialtyservicesfirmsaid,“Publicagenciesareallmoreofachallengethanprivatecompaniesbecauseit’shardertofindoutwhotherightcontactis.”[#34]

Whenaskedhowthefirmlearnsaboutworkopportunities,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“WesubscribetoBidNet.TheofficealsochecksallthewebsitesweeklytoseewhatRFPsandRFQsareoutthere.Thewebsitesalsolistplanholders,soifweareinterestedwecanreachouttothosepeople.Theotherwayistogotothe[pre‐bid]conferenceandmeetpeople.”[#22]

RegardingbarriersordifficultiesinDenverassociatedwithexpandingthebusiness,asurveyrespondentsaid,“Experienceisnottheissue.However,havingbiddingopportunities…[has]beenaproblem.”[AS#8]


opportunities for members to learn about public sector work.Forexample:

Whenaskedhowmemberslearnaboutpublicsectoropportunities,theBlackAmericanfemalerepresentativeofatradeassociationcommented,“Iftheybuiltarelationshipwithinthatnetwork,thenthey’realreadykindoftiedinandheythengetprivatesectorworkfromthat.Ourpartnershipsaremainlyinthepublicsector,sowedon’ttypicallyseehowthey’reengagingoutsideofthepublicsector.”[#6]

Thesametradeassociationrepresentativeaddedthatrelationship‐buildingisthebiggestpartofthemarketingprocess.Shenoted,“Alotofthemarketingthatisdonewithour


members…comesthroughourmonthlymembershipmeetingswherewebringintheprimeprojectteamsorthekeydecisionmakers,andallowthemtosharedetailsnotonlyofcurrentprojects,butalsoinregardstoupcomingprojects.”Shecontinued,“Wehaveaverystrongnetworkingplatform.Alotofourmembersenduphavingmeetings[withprimes]immediatelyaftersomeofthesemembershipmeetings….”[#6]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthattheorganizationputsinformationontheirwebsite,releasesemailnewsletters,andusessocialmediatodisseminateinformationaboutpublicsectorworkopportunitiestomembers.[#33]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthattheCityandCountyofDenverisdoingagoodjobwithelectronicnotifications.However,shenotedthatmemberscomplainaboutBidNet,whichgathersfederal,state,andlocalgovernmentRFPsfromacrossthecountry.ShesaidthatBidNetonlygiveslimitedinformationforfree,andcommented,“[Members]don’twanttopay$299iftheycan’tuseit.”[#37]

Some interviewees indicated that learning about available work in the public sector is easy.[e.g.,#14,#33]Commentsinclude:

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Wegetnotificationsallthetimeaboutprojectsthataregoingonintheoutreach.Weseeinformationinthepaper.Wearereferredtodifferentprojectsbecauseofourcontactsinthecommunity,andjustbybeinginvolvedinthecommunity.”[#9]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“For[CityandCountyofDenver],I’mcertifiedandtheyemailopportunities.”[#35]

Opportunities to market the firm.Businessownersandrepresentativessharedarangeofmarketingexperience.Somereportedbeingconstrainedbytheirownmarketingeffortsorhavinglimitedaccesstogoodmarketingopportunities.Anumberreportedthatword‐of‐mouthreferralsaretheextentoftheirmarketing.[e.g.,#20,AS#2]Forexample:

Whenaskedhowthefirmmarketsitself,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthattheyhaveawebsiteandadvertisein50to80homemagazines.Sheadded,“We’vepartneredwiththemagazines,andwe’reanactiveparticipantwiththem.Wealsousesignsonourconstructionsites.”[#12]

Thesamebusinessownercontinued,“WepursuepublicsectorworkthroughRockyMountainBidNet,andthroughschmoozingarchitects,whichisagiantwasteoftime.[It]doesn’teverseemtowork.And[werelyon]wordofmouth.Referralsaccountfor50to60percentofourwork.”[#12]


TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaidthatwhenbusinessisslowshe“sendsoutsomeofthestaffwithflyersdescribingthe[work]thecompanycando.”Sheadded,“ThatisagoodmarketingpiecethatIdon’tbelieveother…companiesaredoing.”[#19]

Thesamebusinessownerwentontosaythatsheis“workingonawebsite,”thoughshehasn’thadtimetofinishityet.Sheadded,“WejoinedColorado[Contractors]AssociationbecauseIwanttomakesureothercompaniesknowI’minthisindustry.”[#19]

Whenaskedhowshemarketsthefirm,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Igoto[TheBlueBook]events,meetings,outreachevents,[andrelyon]word‐of‐mouthandreferrals.”Sheadded,“Fortheprivatesector,TheBlueBooksendsmeopportunitiestobid,andIalsogetreferrals.”[#35]

Whenaskedifshemarketsthefirmtoprimecontractors,thesamebusinessownerindicatedthatshedoes.Shesaid,“LastSeptember[I]didtheTurnerUniversityclasses,andI’vedonesomeKiewitclasses….Igotodifferentmeetingswheretheytalkaboutprojectsthatarecomingup.Ifindoutthecontractorthatwillbeinvolved,andItalktothem.UptonowIjusthavetheone…contract.”[#35]

Whenaskedhowthefirmmarketsitself,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatsomeemployeesaretaskedwithbusinessdevelopmentandattendfunctionsandbriefingspresentedbyagenciessuchasCDOT,DenverInternationalAirport,andCityandCountyofDenver.HeaddedthattheseemployeesalsobelongtonumerousprofessionalassociationssuchasColoradoContractorsAssociation,AmericanCouncilofEngineeringCompanies,andHispanicContractorsofColorado.[#14]

Whenaskedifhemarketsthefirmtoprimecontractors,thesamebusinessownerindicatedthatitisnotnecessary.Hesaidthathehaslong‐standingrelationshipswithmultiplelargeengineeringfirms.[#14]

Whenaskedhowhisfirmmarketsitself,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmstated,“Wehavebeenaroundalongtime,somostofourworkcomesbywordofmouth,eitherfromcustomersorreferralsfromotherengineerswhodon’tdothistypeofwork.”[#16]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthathisfirmnetworksthroughavarietyofassociations,includingtheUrbanLandInstitute(ULI).Headdedthathisfirmalsoexhibitsatlocal,regional,andnationaltradeshowsandwritesamonthlynewsletter.[#9]

Thesamebusinessownercontinued,“Weblogandweattempt,wherepossible,tospeakatassociationsorevents….Inadditiontothat,weattendintroductorymeetingsforallofthedifferentprojectsthatpeoplearedoingwithcontractors,withthecity,andfindoutwhatotherorganizationsareinvolvedinsomeofthoseprojects.Finally,wehostorparticipatein


lunch‐and‐learnsatanarchitecturaloffice,usually,orotherplaceswhenwegettheopportunitytodoso.”[#9]

Whenaskedhowthefirmmarketsitself,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthattheyemployanhourlyconsultantwhoisveryfamiliarwiththeindustrytomarketthefirm,usuallyviacoldcalls.Shenotedthatrepeatbusinessiskey,andcommented,“Almosteveryonewhohasuseduswilluseusagainwhentheopportunityarises.”[#15a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmmarketsitselfprimarilythroughHomeAdvisorandthroughreferralsfromplumbersandHVACcompanies.Hewentontosay,“Wepayareferralfee.”[#7]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmstated,"Ourclientsareourbestmarketers."Hewentontoexplainthatmuchoftheirbusinessisduetowordofmouthandreferralsfrompastclients.[#3]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthathedoesnotmarkethisbusiness.Heexplainedthathestillworkswiththesameclientsthatheworkedwithwhenhefirstbeganhisbusiness,butnewbusinesstypicallycomesfromword‐of‐mouthreferrals.[#4]

Regardingthefirm’smarketingefforts,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthattheymarketthroughonlinepresencessuchasFacebook,andthatsomecustomerscometoherbecauseofword‐of‐mouthreferrals.[#8]

Whenaskedhowhemarketsthefirm,theSubcontinentAsianAmericanmaleownerofspecialtycontractingfirmstatedthathedoesnot.Heexplainedthathisjobscomefromword‐of‐mouthreferrals,andthatbecausehehasbeenaroundforalmost10yearshisreputationforqualityworkiswellknown.Hewentontosaythathehasasignonhistruckshowinghiscompany’sphonenumber,andcommented,“That’senough.”[#18]

Whenaskedhowhisfirmmarketsitself,thenon‐Hispanicwhitemaleownerofanengineeringcompanystated,“Myexperienceisthatbuildersareveryloyaltoengineerstheyhaveworkedwithbefore.So,[it’s]wordofmouth.”[#26]

Whenaskedaboutthefirm’smarketing,theBlackAmericanveteranmaleownerofageneralcontractingcompanyreportedthathedoesnotmarketthefirm.Heexplained,“PeopleknowwhattypeofworkIdo,andit’sthroughwordofmouth.Ihaven’thadanyproblemgettingwork.”[#29]

Whenaskedhowthefirmmarketsitself,thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmstated,“Ourcompanyhasagreatreputationintheindustry.However,wedoaconsiderableamountofnetworking.WebelongtotheRotary[ClubofDenver],[NationalSocietyofProfessionalEngineers],andtheDenverMayor’staskforceforbetteringsmallbusiness.”[#25]


Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatthecompanyhasamarketingstaffchargedwithstayinginformedofplannedconstructionprojects.Henotedthattheyalsohaveexcellentrelationshipswithawiderangeofgeneralcontractorsthatcontactthemregardingopportunities.Headdedthattheyarealsoinvolvedinanumberofconstructiontradeassociations.[#21a]

Whenaskedhowthefirmmarketsitself,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaid,“Wehaveoutsidesalesrepresentativesassignedtoaccountstodevelopandmaintainrelationships.Thecompanyalsobelongstoasmany…associationsaspossible.”[#23a]

Whenaskedtodescribehowthefirmmarketsitself,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Basically,theretaildivisionhaspeoplewhogooutandknockondoors.Iknockondoors[too].Insidesalespeoplecallcustomers.So,it’salotofB2Bsales.WejoinedtheAssociatedGeneralContractors…about18monthsago,andIhaveasalespersonwhoattendstheirevents.[Still],weprobablyneedtogetalittlemoreactive.”[#36]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthat,universally,theirmembersspendalotoftimemarketingbothinthepublicandprivatesectors.Headded,“Iknowfirmsthatdoalotofprivatesectorwork.IknowfirmsthatdorepeatedworkatCoors[BrewingCompany]becausethey'vedonegoodworkandtheycontinuetomarket….Theyalsowilldoworkwith[RegionalTransportationDistrict]andCDOTatthesametime,soitalldependsonwheretheyfoundalittlefooting.Butthoseareprobablybiggerorganizationsthathavetheopportunitytospendsometimeonmarketinganddevelopmentofwork.Asmallshopdoesnothavethatopportunity…[which]iswhyorganizationslikeoursprovideabigbenefittothem.”[#11]

A trade association representative said that one barrier for small businesses in the

marketplace is understanding how to market.Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“Theirabilitytomarket,tolearnhowtomarket,[and]toknowwhentostartthatmarketing[isachallenge].I’vehadsomethatdoworkforsomeoftheentitiesbecauseoftheirMWBEprograms,like…CDOTwiththeirESBprogram,[and]they’llliterallytellme[thatthey]don’thavetomarketanymore…becausefirmswanttopartner[then].”[#38]

Thesametradeassociationrepresentativecontinued,“It’snotagoodthingthattheydon’tknowhowtomarkettoother[places].Atthesametime,they’resmall.It’shardtobeabletodoallthingstoexpandtheirclientbasebecausetheydon’thaveenoughbodies,and…alotoftimes…they’restretched.”[#38]

A business assistance organization representative reported on members’ efforts to market to

prime contractors.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatmembersdomarketthemselvestoprimecontractors.Shesaid,“Theyuseoureventsandourwebsite….Theyactivelymonitorprojectsinthepipelineandtheprimesthataregoingafterthework,andtrytoconnectwiththem.ItalsohelpsiftheprimemakesNativeAmericancompaniesapriority.”Sheadded,“Theestablishedcompanieshaveagoodsuccessrate,butnewcompanieshavedifficultiesgettingtheirfootinthedoor.”[#37]


One business owner reported adjusting the firm’s marketing strategy in hopes of improving its

effectiveness.Whenaskedhowherfirmmarketsitself,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“I’mgoingthroughawholemarketingupheavalrightnowandjustturningeverythingonits[head].Whatwe’vedonehistorically[formarketing]is…makecontactsthroughtheprofessionalsocietiesofwhichIamamember,[though]Iamnolongerusingthatasamarketingstrategy.”[#5]

Thesamebusinessownerwentontosay,“We…subscribetoacoupleofagenciesthatgatherinformationoncapitalimprovementprojectsthatarecomingupforvariousagenciesandprivateentities….TheypublishmemossayinganRFPisoutfor[a]project,andthatthere’sapre‐proposalmeetingonsuchandsuchadate.Ihaveamarketingpersonwholookseverydaytoseewhatprojectsarecomingupandifithasastructuralcomponenttoit.Ifso,weputanemailblastouttoalloftheplanholdersintroducingourfirm….Wehooksomepeoplethatway.”[#5]

Another business owner reported relying on repeat business and being disillusioned by the

fact that there are “fewer and fewer” opportunities in the marketplace for new work.Whenaskedhowthefirmmarketsitself,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmstated,“Mostofourworkcomesfromrepeatbusiness.Thefactthatwehavebeenaround[over30]yearshelpsinpromotingourbusiness.Occasionally,thereisaninquiryaboutmakingacustom[product],[but]thoseinquiriesarebecomingfewerandfewer.Theentire…industryisslowingdownbecausethereareotheroptionstocommunicatewithcustomers.”[#30]

Some business owners reported minimal challenges when marketing. Forexample:

Whenaskedaboutthefirm’smarketingefforts,thenon‐HispanicwhitemaleownerofagoodsandservicesfirmsaidthattheyprimarilymarketonlinethroughsocialmediaviaFacebookAds,GoogleAds,andoccasionallythroughadsonYouTubeandInstagram.[#10]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidherfirm“[doesn’t]reallymarketfor[themselves].”Sheadded,“Wereallyhavebenefitedfromgreatclients,wordofmouthkindofstuff….Peoplefindusmoreoftenthanusmarketingourselves.”[#13]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidthatthereisnomarketinginvolved,asherfirmisall"hardbid."[#2]

Prequalification requirements.Publicagencies,includingstateagencies,sometimesrequireconstructioncontractorstoprequalifyinordertobidorproposeongovernmentcontracts.

Many business owners and representatives reported that prequalification requirements in the

public sector present barriers to obtaining or performing work, including for the City and

County of Denver.[e.g.,#7,#24,AS#44]Forexample:

Regardingprequalificationrequirements,theHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaid,“Idohavefriendswhohavehadsomesortofbarrierswith,not[necessarily]theprequalification,but…thelicensingportion[neededto]workwithinthecity.”[#2]


Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatshesometimesavoidsopportunitiesbecausetheprequalificationrequirementsareso“onerous.”Sheexplained,“Biggeneralcontractorsdonotdifferentiate[prequalificationrequirements]betweenlargeandsmallbusinesses.”[#20]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstatedthatsomesubcontractorsdohaveproblemsmeetingprequalificationrequirementsbecausetheylackthefinancialdepthandexperienceforaparticulartypeofconstructionproject.[#21a]

Whenaskedaboutbarriersordiscriminationregardingprequalificationrequirements,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatprequalificationrequirementshavebeenabarrier.[#22]

One trade association representative noted that while there are a lot of opportunities for “the

small guys” to bid projects with public agencies, requirements can prevent them from doing

so.TheHispanicAmericanmalerepresentativeofatradeassociationsaid,“[DenverPublicSchools],forexample,willsay,‘[Tell]metheexperienceyouhaveinbuildingorworkinginschoolconstruction.’Wellifyou'veneverdoneschoolconstruction,youdonotgettocheckthatbox.[And]ifyoudonotcheckthatbox,youdonotgetmovedtothenextlevel.Andso,asacatch‐22,youcontinuetousethesamefolksallthetimebecausetheyaretheonlyoneswhohaveexperience.”[#11]

Some interviewees, however, indicated that prequalification requirements are not a barrier,

or are not standard in their industry.[e.g.,#9,#10,#23b,#33,#36,#37]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatallpublicagenciesshehasworkedwithrequiredprequalification.Sheexplained,“Youhavetosubmitthisproposalthathasalotofqualifyinginformation,[suchas]resumes[and]howmuchinsuranceyouhave.We’reusedtosubmittingthatstuff.We’recomfortabledoingthat.”[#12]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthatprequalificationrequirementsarenotabarrierforhisfirm.[#14]

Whenaskedaboutprequalificationrequirements,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Wegetproposalsandwesubmitproposals.Becausewe[actas]consultantstotheprimes,wedon’tgetbonded[or]prequalified.”[#5]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatprequalificationwasnotrequiredforanyofthepublicsectorworksheperformedthusfar.[#8]


TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatprequalificationisnotnecessaryforthefirmbecausetheyarequalifications‐based.[#15a]

Licensing and permits.Certainlicenses,permits,andcertificationsarerequiredforbothpublicandprivatesectorprojects.Thestudyteamdiscussedwhetherlicenses,permitsandcertificationspresentedbarrierstodoingbusiness.

Many business owners and representatives reported that obtaining licenses and permits is not

overly difficult or not required in their industry.[e.g.,#8,#12,#20,#35]Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatobtaininglicensesandpermitsisnotabarrierforhisfirm.[#7]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmindicatedthathisfirmfacesnobarrierswithlicensingorpermits.[#9]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthattheyhavenoissuesobtainingrequiredlicensesandpermits.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatwhilespeciallicensingisrequiredinhisindustry,itisnotabarrierforthefirmortheiremployees.[#21a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatobtaininglicensesandpermitsarenotabarrierforthefirm.[#22]

A number of interviewees and survey respondents reported that obtaining licensing or permits

could be more of a barrier for small and minority‐ and women‐owned businesses than larger

firms.[e.g.,AS#18,AS#55]Forexample:

RegardingbarrierswithlicensingthroughCityandCountyofDenver,asurveyrespondentcommented,“Theirtestingprocessforlicensingisnotveryfriendlytowardsanybodythathasadisability.”[AS#22]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmstatedthatherfemalecolleaguestruggledtoobtainlicensureforsidewalkrepairs.Sheexplained,“Youhavetogoandgetthelicenseandshowthatyouarenotonlycapable,thatthebusinessiscapable,butalsothatthepersoniscapableofdoingthework.”[#2]

Thesamebusinessco‐ownercontinued,“Whenthatfemalebusinessownerapplied[forthelicense],shewasturned[down]becauseshehadn’tdonetheworkherselfdespitehavingacompanywherethereareworkerswhodoknowhowtodoit.”Shewentontosaythatsomelicensesrequireaboutfiveyears’experience,whichcanbedifficultfornewerfirmstodemonstrate.[#2]


Regardinglicensesrequiredintheirindustry,asurveyrespondentsaid,“Havingtosecurelicensesforeachcityorcountytodoworkversusotherstates[isabarrier].”[AS#29]

Regardingobtainingpermitsintheconstructionindustry,asurveyrespondentreported,“Gettingpermitsforconstructionisverydifficult.It'snotaneasyprocess.”[AS#48]

RegardingbarriersordifficultiesinDenver,asurveyrespondentcommented,“Thepermitprocesstakesalongtime.”[AS#11]

Asurveyrespondentdescribedtheprocessofobtainingpermitsas“difficult.”[AS#27]

One business assistance organization representative said that obtaining licensing and permits

is challenging for all firms.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationcommentedthatthetimeittakestogetsomelicensesandpermitsis“waytoolong,”thoughshesaidthisistrueforeveryone,notjustminorities.[#37]

Size and span of contracts. Intervieweeshadarangeofcommentsastowhetherthesizeofcontractspresentedabarriertobidding.

Some business owners reported being restricted by contract size or that the size and length of

contracts they typically secure do not reflect their capability to perform larger, longer‐term

jobs.[e.g.,#28]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“There’snoreasonthatyoucan’tputouta$2billioncontractandhavetheHVACasaset‐aside…thestructuralasaset‐aside,orthenorthterminalasaset‐aside.Youcouldbreakitupgeographically[or]byspecialty,[or]byphasing.Ijustthinkthattherearesomanymissedopportunities[for]smallbusinessset‐asides[likethose].”[#5]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“[Contract]officersfurtherstackthedeckinfavorofincumbentsbyassemblinglargeprojectpackagesthatsmaller[firms]can’tcompeteon,andagainbringinthesame‘goodol’boy’consultantsastheyalwayshave.BreakingprojectsdownintosmallercomponentswouldmakeCityofDenverprojectsaccessibletoamuchwiderrangeofDBE/WBE/SBEconsultants.”[WT#11]

One business owner indicated that clients sometimes avoid working with small businesses

because of their small size.TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmindicatedthatsomecustomersandbuyersavoiddoingbusinesswithsmallfirmsbecause“there’sastigmaoutthereaboutsmallbusiness.”[#9]

A business assistance organization representative indicated that unbundling large contracts

would benefit members.TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“Letthemdemonstratetheirperformance,thentheycantacklealargeramount.Providetheopportunityforthemtosay,‘ThisiswhatIdo,andIcandoitwell.’”[#33]


Any unnecessarily restrictive contract specifications.Thestudyteamaskedbusinessownersandrepresentativesifcontractspecificationspresentedabarriertobidding,particularlyonpublicsectorcontracts.

Some business owners and representatives indicated that some specifications are overly

restrictive, do not make sense, or present barriers.Onebusinessownercomparedcomplyingwithspecificationsto“jumpingthroughhoops.”Forexample:

Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmreportedonanissuehehadwhenworkingwiththeColoradoDepartmentofTransportation.Heexplained,“Wehadbeenselectedforourthirdnon‐project‐specificcontractandthecontractingofficertoldmethatwehadtwoprojects,andthatshouldbethelimit.[Theysaid],‘Donotbothercomingbackforafourth.’WehavenotworkedforCDOTsince….Youshouldbeselectedintermsofyourqualifications,notonhowmanycontractsyouhavedoneornot….”[#3]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Itishardertogetonpublicsectorworkbecausemanyoftheprojectsaresobig….Therearealotmorerequirements,likeasafetyprogram.”Whenaskedifshefacesbarrierswithunnecessarilyrestrictivecontractspecifications,shestated,“Yes,thespecificationsaretoobigandcomplicated.”[#35]

Whenaskedifhehasfacedanybarriersordiscriminationregardingunnecessarilyrestrictivecontractspecificationsorbiddingprocedures,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthathehas.Heexplained,“It’sthejumpingthroughhoops,askingforfinancials,[and]the[required]experiencelevel.Wegotadebrieffrom[DenverPublicSchools]workwepursued.TherearelargefirmsthatspecializeinK‐12work.Wegotmarkeddownbecausewedon’tdo20schoolsayear.Doingaschoolisnodifferentfromdoingafirestationintermsofwhattheclientneedsandwhattheusersneed.Theybuilditintotheir‘goodol’boys’network.”[#22]

Some trade association and business assistance organization representatives indicated that

restrictive contract specifications are more of a barrier for small businesses than large firms.Forexample:

Whenaskedifsheisawareofunnecessarilyrestrictivecontractspecificationsorbiddingproceduresasbarriersformembers,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Wedefinitelyseethatwhenbidsrequirethingslikeacertainfont,acertainformat,submittedinanenvelope.Smallbusinessesdon’thavedepartmentsdedicatedtothosetypesofdetails.”[#37]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatthebiggestbarriersmallbusinessesfaceis“onerouscontractlanguage.”Shewentontosay,“[Publicagenciesare]askingpeopletoputtheirfirmsonthelinewithoutinsurancecoverage.They’lltakeontheresponsibility,[but]theycan’thavethatkindofinsurancecoverage.”[#38]


A small number of other interviewees reported no barriers resulting from overly restrictive

specifications.[e.g.,#7,#15a,#21a,#33]Forexample:

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatwhencontractspecificationsandbiddingproceduresareunnecessarilyrestrictive,theyjustpresenttheirratesandwhattheywilldoforthatprice.Heindicatedthatitisnotabarrierforhisfirm.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofanybarriersregardingunnecessarilyrestrictivecontractspecifications.[#23b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatshehasnoissueswithunnecessarilyrestrictivecontractspecifications.[#20]

Prevailing wage, project labor agreements, or any requirements to use union workers.Contractorsdiscussedprevailingwagerequirementsthatgovernmentagenciesplaceoncertainpubliccontracts.Theyalsodiscussedotherwage‐andunion‐relatedtopics.

Some firms said that prevailing wage requirements are fair and requirements for union

workers are not a barrier when working on public projects.Examplesfollow:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidshedoesnotworkwithunionsanddoesnotperceiveworkingwithunionstobeabarrierforherfirmorfirmsinthelocalmarketplace.[#2]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofanyissuesregardingworkingwithunions.Thefirm,henoted,workswithunionandopenshopcompanies.[#23a]

Thesamebusinessrepresentativeaddedheisnotawareofdiscriminationbasedonbeingaunionornon‐unionemployer.Bothunionandnon‐unionemployers,hesaid,arestrugglingtofindworkersduetoalowunemploymentrateand“boomers”retiringfromtheconstructionindustry.[#23a]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmindicatedthatrequirementsforusingunionworkersisnotabarrierforhisfirm.[#14]

Some trade association and business assistance organization representatives said that

prevailing wage requirements and requirements to use union workers are not barriers for

members.[e.g.,#37]Forexample,regardingunionlabor,theHispanicAmericanmalerepresentativeofatradeassociationsaidthatwhilehehasnotwitnesseddiscriminationbasedonrace,ethnicity,orgender,hehasnoticedthatunionshopswillnotworkwithnon‐unionshops,andviceversa.[#11]


Another trade association representative described prevailing wage requirements as a barrier

for some member firms.Thenon‐Hispanicwhitemalerepresentativeofatradeassociationindicatedthatprevailingwagerequirementscanbeabarrierformembersthatseekworkinthepublicsector.[#40]

A survey respondent indicated that prevailing wage requirements and requirements to use

union workers are barriers. Regardingbarriersordifficultiesforthefirminthelocalmarketplace,asurveyrespondentsaid,“Itishardtocompeteagainstnon‐unionwithunioncontracting.”[AS#1]

Bidding processes.Intervieweessharedanumberofcommentsaboutbiddingprocesses.

Many business owners and representatives said that procedures for bidding present a barrier

to obtaining work or put larger firms at an advantage.[e.g.,#7]Forexample:

Whenaskedaboutbarriersordiscriminationinthebiddingprocess,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstated,“Whenwebidonlubricantsfor[CityandCountyofDenver]awhileback,IgotreallyaggressiveandIlostitbyabout$1,000.Wewerecompetingagainstpeoplewhobuy[ourproductinlargevolume].Itwasstrictlyprice,therewasnootherconsideration.Whyaren’ttheytryingtostrengthenallsectorsoftheeconomy?It’sthesamepeoplewhogetthesamebusiness.Therehastobesomethingforminoritywholesalecommodityfolks.”[#36]

Thesamebusinessownerlatersaid,“WesubmittedabidtoJeffersonCountyandIthinkwewerecompetitive,buttheywentwiththeincumbent.Theysayit’saboutprice,butIthinkit’saboutothermitigatingfactorssotheycancontinuetodowhatthey’vealwaysdone.”[#36]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Thebidprocessforalloftheagenciesrequiresalotofpaperwork.[Also],theywantsomanythingslikeinsurance,asafetyprogram,andbonding.”Sheaddedthatshedoesnotconsiderthebiddingprocessabarrier,thoughitistimeconsuming.[#35]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmexpressedherfrustrationwiththecurrentbiddingprocedure.Shestatedherperceptionisthatthegoalscommitteehasbecomeawayforsomememberstogetadvancenoticeofprojectstheythenbidon,ratherthanfulfillingthepurposeofacitydiversitygoalscommittee.[#1c]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Letmejustsayoneotherthing,andthisspeakstothecity,andsomethinghastobedone.Theprocurementofficeisdiscriminatingseverelyagainstus….[In]98percentofthebidsI’vebeenin,they’llstandupandthey’llsayyes,thisisRepresentativeOrder101,butthereisn’tagoalonthisprojectorinthisbid.Sotherefore,justsignupthe…forms.Don’tbeconcernedaboutit[and]don’tworryaboutit.”[PT#3a]


Thesamebusinessownercontinued,“TheprocurementdepartmentofthecityandcountyofDenverisseverelytakingstepstogooutandensurethattherepresentativeorderisnotencouraged….It’scompletelyimpotent.”[PT#3a]

Whenaskedaboutbarriersordiscriminationinthebiddingprocess,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“It’shardtocompeteforprofessionalservicesbecausethescopeisusuallynotwell‐defined.Whenacontractorbidsonsomething,theyhaveasetofdesigndocuments.Allwegetisstatementslike,‘Wewantabuildingthatmakesusfeelcomfortable,that’scoolinthesummertime,wherewecangetinandoutsafely.Howmuchisthatgoingtocostus?’”[#22]

Some business assistance organization representatives reported on challenges members face

in the bid process.Forexample:

Whenaskedifsheisawareofbarriersinbiddingprocessesthataffectmembers,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Sometimesonthelargerprojects,[bidprocessareabarrier]becauseitrequiresalotofmoneytomeetalltherequirements.”Shelatersuggestedthatpublicagenciesprovidebidprocesstrainingorsimilarassistance.[#37]

Whenaskedaboutbarriersordiscriminationthathismembersfaceregardingbiddingprocesses,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Memberscomplainthattheagenciesseemtohavepreferredcontractors,andthosecompaniessomehowseemtogetmostofthework.It’shardforanewcompanytogetintotheloop.”[#33]

One trade association representative discussed whether prime contractors conduct sincere

outreach to DBEs, or only reach out to “check off” a requirement.TheHispanicAmericanmalerepresentativeofatradeassociationcommentedthathisperceptionisthatthisvariesfromprojecttoproject.Hestated,“Ithinktherearetimeswhenitisverymuch…justcheckingtheboxoff.”Hesaidthishappensmoreoftenthanheiscomfortablewith,andadded,“I’llhearsomeofthegood,certifiedfirmssaytheydidn'tget[notified]orthattheyweren’taskeduntiltwodaysbeforeitwasdue,[sothey]donothavetimetosubmitaproposal.”[#11]

Short deadlines to submit bids/proposals or no feedback. Afewreportedveryshortbidding/proposaldeadlinesonsomeprojects.[e.g.,#28]Somecommentedonalackoffollow‐upregardingopportunitiesorlostbids.Forinstance:

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthatsometimesRFQdeadlinesaretooshort.Heexplainedthatattimes,theyonlyhave24hourstorespond.[#39]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatwhileshegetsalotofsolicitationsfromprimecontractors,thereisno“follow‐up”afterwards.[#20]


TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“Thetypeofassistance[we]needismorefollow‐upfromthecustomer.Weneverhearfromanyonewhyourbidwasn’taccepted.Itfeelslikeweareinthedarkwhensubmitting.”[#32a]

One trade association representative recalled members’ experiences with short deadlines in

the bidding process.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatcertifiedfirms“saytheydidn'tget[notified],orthattheyweren’taskeduntiltwodaysbeforeitwasdue”tosubmitaproposalandbid.[#11]

Some interviewees reported no knowledge of barriers within the bidding process.Forexample:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofanydiscriminationinthebiddingprocess.Headdedthatheisnotawareofdiscriminationinthefactorspublicagenciesorothersusetomakecontractawards.[#23b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatshehasnotexperienceddiscriminationorbarriersinthebiddingprocess.[#12]

A trade association representative commented that in his own experience, City and County of

Denver’s bid process is “relatively easy.”TheHispanicAmericanmalerepresentativeofatradeassociationsaidheisnotsureifCityandCountyofDenver’sbidprocessiseasierorharderthanotherpublicagencies,thoughinhisownexperiencehefindsittoberelativelyeasy.[#11]

Timely payment by the agency or prime.Intervieweesoftenmentionedslowpaymentornon‐paymentbythecustomerorprimecontractorasabarriertosuccessinbothpublicandprivatesectorwork.[e.g.,PT#3c,PT#4]Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmstatedthatpublicsectorpaymentscanbeheldupifinvoicingiswrong,insurancecertificatesarenotintact,orifprevailingwagesarenotpaid.Shesaidthatmanytimesherfirmisnotmadeawarethatpaymentswillbeheld,andsaidtheprocesscantake45to60daystoresolve.[#13]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedproblemsrelatedtotimelypayment.Hestated,"InDenverIliterallywillwaituptosixmonthsforpayments.Evenifit'sjusttheretainerattheend,itstilldoesn'tcomeinuntilsixmonthsaftertheprojectisdone.So,itistough."Hewentontosay,"Idon'tthinkpaymenthasbeenanissueofdiscrimination.Ithinkit'sjustpoormoneymanagementandlackofintegritywhenthereareissuesinthatmatter."[#4]

Thesamefirmownerreported,"I'vehadonegeneralcontractor[intheprivatesector]notpaymeandcontinuallynotpayme.AndIhavetogoafterhim,continually.I'venoticedthatsomeofhisothersubswerenothavingthesameissue."[#4]


TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“I’mveryfortunatethatwe’vehadlongrelationshipswithbankingbusinessesthatwehavealineofcredit.Youusethatentirelineofcredit.Why?Becauseyou'realwayspaidlate.Youareneverpaidontime.Youhavetoutilizethatmoney.Itcostsyouandsothenyoustartdowntheroadofpayingfordollarstosubsidizethecontractthatyoualreadyhaveaverysmallmarginofprofit,andImeanskinnymarginofprofiton.”[PT#3a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Someprimeswillpayyouupfrontbasedonnegotiatedprices[while]somewillliterallyonlypayyouiftheygetpaid,evenwhenit[wasn’t]negotiatedthatway.”Hecontinued,“They’lljustnotpayyou.They’llsay,‘Hey,wedidn’tgetallourmoneysowecanonlypayyouacertainamount,eventhoughweagreedupfrontto[payyou]infull.’Itendsupthatwehavetotakeonthecourt,andforus,thatgetsexpensiveasasmallbusiness.”[#7]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatpaymenthasbeendelayedacoupleoftimes,andaswithmostmunicipalities,itissometimeshardtofindsomeonetomakedecisionsaboutinvoices.Hecommented,“Toomuchbureaucracy.Itwouldbehelpfuliftheyhadapolitepersonthatcanmakeadecision.”[#21a]

Business owners and representatives indicated that slow payment can be damaging to

companies.Intervieweesreportedthatpaymentissuesmighthaveagreatereffectonsmallorpoorlycapitalizedbusinesses.[e.g.,#7,#40,PT#3a,PT#4]Forexample,theBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“OnsomeprojectsIhavehadpaymentissues.Ihaveexperiencedwaittimesofuptoandbeyond50days,andwastoldbyonecontractorthatIwas‘highmaintenance’whenIaddressedthepaymentissues.”[WT#12]

Thesamebusinessownercontinued,“Ihavealsohadissueswhereinvoicesdidnotgetprocessedatall.Manyoftheseprimeshavefiguredoutthattheycanplayalotofgameswiththepaymentstosmallminority‐andwomen‐ownedfirms.Thisisasneakywaytosqueezethemfinanciallytothepointofbeggingtogetpaid.Andifyouspeakup,youareblacklistedandwilldoa‘whispercampaign’totheirbuddiesatotherconstructionfirmsorarchitecturalfirmsintheregion.”[WT#12]

Some trade association and business assistance organization representatives reported that

members struggle to receive timely payment in the public sector.[e.g.,#6,#40]Forexample,whenaskedtodescribemembers’experiencesgettingpaidonpublicwork,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthatallpublicworktakeslongertopaythanprivatework.Headded,“Therearequiteafewsubswhotellmetheyare60to90daysout,anditreallyimpactscashflow.Theaccountsreceivablecycleisjusttoolong,andthey’rereallystressedout.”[#33]

A number of business owners reported no experience with late or untimely payments by

public agencies or primes.[e.g.,#15a,WT#3]Forexample:


Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatthefirmhasnoissueswithuntimelypaymentbyprimesonpublicsectorprojects.Shecommented,“OneoftheprimesI’veworkedwithforyearsfrequentlyhelpswithcashflowissues.”[#20]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmstatedthatshehasneverwitnessedanypaymentdiscrimination.Shealsoindicatedthatshehasnotexperiencedanylateoruntimelypaymentsbyagenciesorprimes.[#8]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisexperiencesgettingpaidonprojectswithCityandCountyofDenverhavebeengenerallypositive.[#9]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthatheneverhadproblemsgettingpaidbyRegionalTransportationDistrict.Heexplained,“Inthisindustryyougetpaidrightaway.Everybodyknowstherefinersarethebigguys,andtheypayin10days.”[#36]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatheneverhasissuesgettingpaid.Helaternoted,“PaymentsfromCDOTsometimeslagalittle,butnotverymuch.”[#14]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmstated,“Sofar,Ihaven’thadproblemsgettingpaidontime.”[#35]

One trade association representative reported on methods that could be used to enforce

prompt payments.TheHispanicAmericanmalerepresentativeofatradeassociationstated,“IfI'mdoingabuildingandweareworkingonthesidewalk,whenthesidewalkisdoneandthecityhasapprovedthesidewalkbeingdone,paymentshouldbeissued.Itshouldnotbetiedintomultipleitemsbytheprime.Theconcernaboutthatmethodisitmeanstherearemultiplesubmissionsofitemsandthecitylikestotakeoneitematatimeandlumpitalltogether,andthenpaytheprimeallofit.ButlikeIsaid,ifsignaturesaremissingoffapieceofthedocumentation,theneverythingisheldup.”[#11]

F. Work with the City and Other Public Organizations

Intervieweesdiscussedthefollowingtopics:

ExperiencesworkingwithCityandCountyofDenverorotherpublicagencies;

LearningaboutprimeandsubcontractopportunitieswithCityandCountyofDenver;and

Recommendationsforimprovingstateagencies’bidding,contracts,promptpaymentandotherprocesses.

Experiences working with City and County of Denver or other public agencies. IntervieweesspokeabouttheirexperienceswithpublicagenciesingeneralandwithCityandCountyofDenverinparticular.


Many business owners and representatives interviewed reported working with City and

County of Denver or other public agencies. [e.g.,#4,#13,#39,WT#8,WT#12,WT#14]Forexample:

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedworkingfor“justabouteverybody”intheDenverarea.[#22]

Whenaskedaboutthenatureoftheseprojects,thesamebusinessownersaid,“Abigpartofourpracticeison‐callservices.We’vealsogoneafteranimalshelters,libraries,vehiclemaintenancecenters,cityhalls,historicpreservation,aviation,andofficerenovation.”HeaddedthatthefirmwasaprimecontractorformostofthepublicworkheperformedintheDenverarea.[#22]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreported,“Mostofourdealingswiththecityactuallytakeplaceattheairport.WeactuallydoworkundertheCityandCountyofDenverarchitecturalon‐call,butourmaincommercialworkisactuallylarge‐scaleofficebuildingsandlarge‐scalecommercialshoppingdevelopmentsliketheCherryCreekMall.”[#1b]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmstatedthattheirfirmwas“ontheCityofDenveron‐call,”andhasworkedonfivetosevenotherpublicagencyprojectsinadditiontoworkingontheDenverAirport.[#1d]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthattheyworkprimarilywithDenverInternationalAirport(DIA)andotherairportsaroundthecountrybyinstallingandmaintainingspecialtymachinery.ShelatersaidthatshesubcontractsconsistentlyonDIAprojects,andthatthisworkisthemajorityofherfirm’sbusiness.[#20]

Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmreportedworkingwithseveralpublicagenciesintheDenverarea.HestatedthathisfirmhasworkedwiththeCityandCountyofDenver,theColoradoDepartmentofTransportation,theColoradoDivisionofWildlife,theDenverWaterDepartment,andasasubconsultantatDenverInternationalAirport.HeaddedthathisfirmhasdoneworkinandforFortCollins,Windsor,Greeley,Longmont,Erie,HighlandsRanch,theCityofCastleRock,andColoradoSpringsUtilities.[#3]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatcurrentlythefirm’slargestprimecontractiswithCityandCountyofDenver.HeaddedthatthefirmhasalsoworkedwithDenverInternationalAirport,DenverWater,DenverWastewaterManagement,andanumberoffederalandotherlocal/stateagencies.[#21a]

Whenaskedaboutthenatureoftheprojects,thesamebusinessrepresentativereportedthatpublicprojectsincludeworkforairports,municipalbuildings,correctionalfacilities,andwatertreatmentfacilities,amongothers.Headdedthatthefirmperformsasbothaprimecontractorandsubcontractorontheseprojects.[#21a]


TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmreportedthatherfirmhasworkedwiththeCityandCountyofDenver,DouglasCounty,AdamsCounty,CastleRock,thetownofParker,thetownofSuperior,andCDOT.Whenaskedifshebidasaprimeorsubcontractorwiththeseagencies,shesaidshebidmostlyasaprime,thoughshedidsomeworkasasubcontractor.[#2]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathisfirmhasworkedwithseveralpublicagenciesintheDenverarea,includingDenverPublicWorks,DenverTransportation&Mobility,DenverEnvironmentalHealth,andDenverPublicSchools.HeaddedthatthefirmhasalsoworkedwithCDOTandRegionalTransportationDistrict.[#9]

Regardingherfirm’sworkwithpublicagenciesintheDenverarea,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatherfirmworkedasaprimeforCityofLoneTreeandMetro[UrbanLand]Conservancy,andasasubcontractorforDenverPublicSchools.[#12]

ThesamebusinessowneraddedthatthefirmalsoworkedforDenverHousingAuthorityonafewsmallprojects.Shewentontosay,“TheotherthingIshouldsayis[that]we’vedonelotsofquasi‐publicwork.Thingslikechurches.We’veworkedforHudsonGardens,[which]isaplacethat’spublic,butit’snotapublicagency….They’republicplaces.”[#12]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmreportedthathercompanyhasdonealotofworkforpublicagencies,includingforCDOT.Shesaid,“Iworkedfor[Denver]PublicWorksasasubforthemontheperiphery,[though]I’veneverbeenaprimeforthem.Ididbidonalarge…jobandlostbythelittlestamount.”Shecommented,“Everybidyousubmitgivesyouexperiencesandhowtorespondtothenextone.”[#19]

Whenaskedaboutherfirm’sexperienceworkingwithpublicagenciesinDenver,thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmstated,“Wehavedonesomejobsfor[Denver]PublicWorks….Theprojectresultwasfine.Nothingstandsoutabouttheworkortheinteractionswiththestaff.However,wedoalotofworkforothergovernmentalagenciesaroundthemetroarea.ExampleswouldbeDouglasCounty,Boulder[ValleySchoolDistrict],andCityofFruita.Ibelievetheyfind[that]ourworkisqualityand[our]completionistimely.”[#28]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatherfirmmostlybidsasasubcontractoronCityandCountyofDenverprojectsandforotherpublicagencies.[#5]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathisonlypublicsectorworkwasacontractwithRegionalTransportationDistrictyearsago,and“onesmallcontractwith[DenverInternationalAirport].”HeaddedthatheattemptedtogetworkwithCityandCountyofDenver,Aurora,DenverPublicSchools,andCityofEnglewoodwithnosuccess.[#36]


TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathisfirmhasworkedwithmanypublicagencies,includingCityandCountyofDenver,DenverPublicSchools,DouglasCounty,DouglasCountySchoolDistrict,JeffersonCounty,JeffersonCountySchoolDistrict,andCDOT.Headdedthathisfirmhasanon‐callcontractsasaprimecontractorwithCityandCountyofDenverinthepast.[#14]

Thesamebusinessownersaidthecompany’sveryfirstprojectwasforDenverWater.However,hesaidthathisfirmnolongercontractswithDenverWaterbecausetheynowrequireacertifiedProjectManagementProfessional(PMP)ontheteam,whichhisfirmlacks.Hecommented,“So,thatDenverWaterworkwentaway.”[#14]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmtypicallyseeksasbestosandmoldprimecontractworkwhenpursuingworkwithpublicagencies,andadded,“Typically,thecityalreadyhasavendorthey’regoingtocallrightawaytodo[mytypeofwork].Theyhavevendorstheywillcallinsteadofbiddingthatworkoutbecauseit’smore[so]emergencywork.”Conversely,hereportedthathisfirmhasworkedasaprimecontractoronprojectsinAurora,Golden,andBroomfield.[#7]

WhenaskedwhichpublicagenciesthefirmhasworkedorattemptedtoworkwithintheDenverarea,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstated,“Iwouldsayallofthem….WeworkwithDenverWater,[RegionalTransportationDistrict],CityofDenver,schools,[and]theairport.”Hereportedthattheysupplycomponentsforhighways,dams,airports,andschools.Helaternotedthatasasupplier,thefirmdoesnotworkdirectlywithCityofDenverortheairport.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE,SBE,andESB‐certifiedprofessionalservicesfirmstated,“WehaveperformedcivilengineeringconsultingservicesfornumerousclientsincludingCDOT,[RegionalTransportationDistrict],theCityandCountyofDenverandmanyothermunicipalities.”[WT#15]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmreportedthatherfirmworksexclusivelywithCDOT.”[#27]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthefirmusedtodoworkforJeffersonCountySchoolDistrict,butbecausethefirmhasnotpassedabondinyears,theyhavehadnorecentopportunities.[#15a]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatshehasattemptedtoworkwithallpublicagenciesintheDenverarea,thoughshehasonlyhadonepubliccontract.[#35]

Whenaskedaboutthecompany’sexperiencesworkingintheprivateandpublicsectors,thenon‐HispanicwhitemaleownerofaspecialtyservicesfirmsaidthathisfirmdoesworkforColoradoPublicEmployeesRetirementAssociation(PERA)aboutonceayear.Henoted,“That’stheonlypublicworkwedo.Everythingelseisintheprivatesector.”[#30]


Trade association and business assistance organization representatives indicated that

members work for a wide range of Denver public agencies, and discussed members’

experiences pursuing the work.Commentsinclude:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“TheyworkwithCDOT,[RegionalTransportationDistrict],DenverPublicSchools,[DenverInternationalAirport],highereducationsystems,DenverHousingAuthority,DenverWater…prettymuchallofthem.”Regardingthenatureofthiswork,shesaidmembersdoawidevarietyofconstruction,bothverticalandhorizontal,plusgoodsandservices.Shenotedthatmostmembersbidassubcontractors.[#37]

Whenaskedhowmanymembersworkontransportation‐relatedconstructionorengineeringwork,thesamebusinessassistanceorganizationrepresentativesaid,“Wehavequiteafew.Someofthemworkonprojectslikethe[RegionalTransportationDistrict]raillineoutto[DenverInternationalAirport]andCDOTprojects.Thereisalsoatrendoftribesstartingtheirownconstructioncompaniesandgoingafterconstructionprojects.[A]tribeoutofOregonpartneredwith[alocalprime]forprojectsinthisregion,andtheyarealsodoingworkinMontana.”[#37]

Whenaskedaboutmembers’experiencesingettingworkwithpublicagenciesinDenver,theBlackAmericanfemalerepresentativeofatradeassociationsaidthat“CDOT…historicallyhashadaverychallengingtime,andnotsogoodofareputationasitpertainstoengagingsmallbusinesses.”However,shenoted,“Overthepastthreetofiveyears,theyhavebroughtonanewteamthathasbeenveryfocused,dedicatedtorebranding,reporting,and…restructuringtheirprogramtothepointnowwhereyou’reseeingalotoftraction….”[#6]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthatprimecontractormembersgenerallybidonlarge,verticalconstructionprojectswithCityandCountyofDenver,DenverInternationalAirport,CDOT,andDenverPublicSchools.HesaidthattheirMWBEcommunityusuallybidasfirst‐tiersubsonmanyofthecontracts.[#11]

ThesametradeassociationrepresentativelatersaidthatCityandCountyofDenverismoredifficulttoworkwiththanotherpublicagenciesbecausetheyhavemultiplecertificationprogramswithinoneentity.Heexplained,“[Denverrecognizes]MWBE,SBE,DBE,[and]EBE[certifications],andsoitisharderforfolkstoknowexactlywhichprogramisbeingimplementedonthatparticularbid.CDOTand[RegionalTransportationDistrict]aremainlyDBE.Theyhavenolocalprogram….So,IwouldsaytheCity'sisalittlebitmoredifficultjustforthemagnitudeofworkandthe[certification]programsthatareinplace.”[#11]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“Idohaveamemberwhodoesalotofthe[RegionalTransportationDistrict]lightingprojects,hasbeenaroundalongtime,andhasworkedasasubforsomeofthemajorprimes.[However],about90percentofoursmallbusinessmembersdoprivatework.”[#33]


Some business owners reported not working for City and County of Denver, or that such work

is slowing down. [e.g.,#7,#24]Forexample:

WhenaskedifheeverworkedwithpublicagenciesintheDenverarea,theSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmstatedthatheandaBlackAmericancontractorbidonacontractwiththeZoobutneverheardback.Hesaidthattheyspenthourscollectinginformationforthebidandultimatelydecidedtolowballitjusttogettheirfootinthedoor.Hecommented,“[Ithink]theyalreadyhadthecompanypickedout,andwantedtoworkwithsomeonetheykneworhadworkedwithbefore.”[#18]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthathiscompanyhasbeenunsuccessfulinpursuingpublicsectorwork.Heexplained,“[We]respondedtobidsfromtheCityofDenver,specifically[Denver]PublicWorks,duringthetimethecompanywas[a]certified[SBE].Weneverwonanyofthosebids,[and]stoppedrespondingafterthe[SBE]certificationlapsed.”[#25]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatwhilethefirmhasneverworkedwithanypublicagenciesinCityandCountyofDenver,they’veworkedwithCityofLongmont,CityofBerthoud,andalocalschooldistrict.[#8]

Thesamebusinessco‐ownerlateraddedthatsheneversubmittedabidforthework.Instead,shesaidthattheentitiesreachedouttoher.Sheexplained,“Theycontactedme.Ihavenoideahowtocontactpublicentitiesforcontracts.Theyjustsaid,‘Hey,weneedanew[vendorforherproduct].Canyoudothisjobforusandhaveitreadybythe[deadline]?’”ShewentontosaythatsheworkedasaprimeonprojectsforCityofLongmont.[#8]

Thenon‐Hispanicwhitemaleownerofanengineeringcompanyreportedthathehasneverworkedforand“wouldneverworkfortheCityofDenver.”Hesaidthathehadanegativeexperienceworkingwithacitygovernmentbeforestartinghisownfirm.[#26]

WhenaskedifhehasworkedwithorattemptedtoworkwithanypublicagenciesintheDenverarea,theBlackAmericanveteranmaleownerofageneralcontractingcompanyreportedthathehasnot.Headded,“Idon’twanttoworkforthegovernment.”[#29]

A number of business owners and representatives discussed positive experiences while

working with City and County of Denver or other public agencies.[e.g.,#39]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstatedthatherfirmhas“agoodpartnership”withCDOT.[#27]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmstated,“WeabsolutelyloveworkingwiththeCityandCountyofDenver.TheDepartmentofPublicWorks…personnelareexcellenttoworkwith.Thecityimplementsanhonestyandtransparencyprotocolwitheverybodythey’reworkingwith,andthatreflectsalot.”[#2]


Thesamebusinessco‐ownercontinued,“WearemorethanecstatictocontinuetoworkwiththeCityandCountyofDenver.It’soneofthebest,ifnotthebest,governmententitiestoworkforasaprimeandasasub.”[#2]

Themalerepresentativeofawoman‐ownedspecialtyservicesfirmsaid,“Denversupportedusandawardedawonderfulcontract….Thishasbeenawonderfulthingforourbusinessandwearethankful.WithoutDenverlookingtofindsmaller,locallyownedbusinesses,wewouldneverhavebeenabletoadd150additionalemployeestoourroster.”[WT#1]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatherexperiencewithDenverParksandRecreationwasverypositivebecauseoftheagency’sinvolvement.Shecontinued,“With[Denver]ParksandRec,theyhada…jobin[apublicpark].Theywouldtalkwithuseverydaybecausethejobwassovisibletotheneighborhood.”[#19]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmindicatedthathisexperiencesworkingwithCityandCountyofDenverandotherpublicagenciesintheDenverarea,includingCDOT,havebeenpositive.[#14]

Whenaskedaboutthefirm’sexperienceasasupplierworkingwithCityofDenver,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaid,“[Subcontractors]checktheirboxesandwegetthemeverythingtheyneed.[It’s]notdifficult.”[#23b]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstatedthatworkingwithCityandCountyofDenverandDenverInternationalAirporthasbeenpositiveoverall.Hesaidthathehasnotheardofany“nightmares.”[#21a]

One business assistance organization representative reported positively on members’

experiences working with Denver public agencies.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“[DenverInternationalAirport]and[CityandCountyofDenver]areveryresponsive.DenverPurchasinghasbeenexcellentaboutsendingflyersoutabouttheirevents,andtheystayincontact.DenverHousingAuthorityhasreallyfocusedondevelopingtheirrelationshipwithusthelastcoupleyears.”[#37]

Some business owners and representatives discussed challenges they face when working with

or trying to get work with City and County of Denver or other public agencies. Forexample,untimelypayments,paperworkissuesandotherbarriersfollow:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE,SBE,andESB‐certifiedprofessionalservicesfirmsaid,“Ourexperienceworkingwiththe[CityandCountyofDenver]hasbeenchallenging,particularlyoverthepastfewyears.Mybiggestconcernispromptpayment,orlackthereof.Allofourcontracts,unfortunately,arepaywhengetpaid.Myfirmistypicallyasecond‐tiersub.Itiscommonplaceformyfirmtowaitsixmonthsormoreforpaymentfrom[CityandCountyofDenver].Wewererecentlypaidonworkweperformedtwoyearsago.”[WT#15]


Asurveyrespondentsaid,“Foracompanyjuststartingout,saythefirst24[to]36months,itisimpossibleforacompanytoworkforapublicentity.It'sthequalificationsandRFQs,becausethecompanydoesn'thaveaproventrackrecord.”[AS#44]

RegardingchallengesthathesometimesfaceswhentryingtoworkwithDenverpublicagencies,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaid,“Sometimeswithpublicagenciesit’shardertoworkthroughthemazetogetanswerstoyourquestions.”[#39]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmreportedthatthefirm’sworkisalmostexclusivelyintheprivatesector.HenotedthattheybrieflyattemptedtodoworkwithpublicagenciesintheDenverarea,andcommented,“Therewasmorepaperworkthanwereallywantedtodo….Itwasn’t[necessarily]adeterrent.Itwasmore[that]we[would]comebacktoitbecausetherewerelower[hanging]fruit.”[#10]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Themunicipalitiesandpublicagenciesthatrequireproposalsarethemostdifficult,sowegenerallydon’tdothatbecausewearealwayshigh….Irefusetolowball.We’vecomeintriple.Ithinkthefolkswhoaresuccessfullowballit,andthencomeinwithlotsofchangeorders.”HelaterindicatedthathehadanegativeexperienceworkingwithDenverPublicSchools.[#22]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedproblemswithcommunicationandtimelinelimitations.Hestated,"TheonlyrecommendationIhave[fortheCityofDenver]isthatduringthetermofwork,changeordersneedtobeprocessedinaquickermanner…[because]wehaveatimeline.When[they]arenotprocessedquickenougheverybodyrunslate."[#4]

RegardingworkwithCityandCountyofDenver,asurveyrespondentstated,“It’sbeenalittlebitdifficult.Justthewaytheyconductbusiness,they'renotsmallbusiness‐friendly.[Thereis]alotofbureaucracy,and[theyare]notreallyopentosmallbusiness.”[AS#51]

Asurveyrespondentsaid,“Thepeopleinchargeonlyhelppeopletheyknow.We'veparticipatedincitycommittees,butweren'tsuccessfulingettingcontracts.It'simpossibletomeetrequirementstoevenstartthebiddingprocess[duetorequired]insurancecoverage.[AS#16]

Apublicmeetingparticipantsaid,“Ifyouareplanningtodoworkwith[CityandCountyofDenver]…you’vegottohaveatleast$60,000to$100,000incash,withpaymentsbeingreallyslow.”Sheadded,“Youarecommittingsuicideforyourbusiness,somakesureyouhavecash.Ihavecontractshere.I’lltellyoubecauseIknow.”[PT#4]

TheHispanicAmericanmaleownerofaDBE‐,MBE‐andSBE‐certifiedconstructionfirmstated,“Weareverydisappointedasa[certified]contractor.Wefinallygetacontractwith[CityandCountyofDenver],butwenevergotanyrequestsforpricing.ThisisafailingeffortbytheCitytoprovideopportunitiestocontractdirectlywithsmallbusinesses.”[WT#14]


TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatitisdifficulttosecurepublicsectorworkwithoutMBEorWBEcertification.Sheaddedthatthefirm’sSBEcertificationdoesnotsetthefirmapartbecause“toomany”firmshavethecertification.[#15a]

Regardingthefirm’sworkwithCDOT,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmcommentedthattheircontracthadunclearspecifications.Sheexplained,“Theywouldn’ttellyouaboutthespecsuntilyoumadeamistake.Theywouldtalktoyouthen,notaheadoftime.Itwasjustnotpartoftheinformationtheyprovided.”Shewentontosay,“Someoftheinformationcomesfromtheredbookorthegreenbook.Thoseareguidelinesforconstructionprojects.It’salwayschanging.”[#19]

Thesamebusinessownercontinued,“Ididalarge…project,[but]unfortunatelyit[had]threedifferentcontractors…threedifferentspecs,andthreedifferentCDOTinspectors,[allonthe]sameroad.Threedifferentprimeswonthejobandtheyselectedusforalloftheroad.Itwas10milesandthespecschangedwitheachprime.”Shecommented,“Itwasbizarreworkinglikethat.Astemperatureschangedandtheapplicationrateschanged…itwasalmostlikeeachwasitsownlittleminiproject,butourlinesconnected.”[#19]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“Ihavebeenonseveralprojectsthatare[CityandCountyofDenver]projects.Myworkisusuallywiththeprimecontractor.IhavefoundtheCityofDenvertobearatherdifferenttypeofentitytoworkwith.[There’sa]lotofstufftogothrough.Keepingtrackofallofthecertificationsandgettingpassedaroundtodifferentpeoplewhentryingtogetinformationabout[work]opportunities[canbeachallenge].”[WT#12]

Thesamebusinessownercontinued,“Itcanbecomerathercumbersome,andasaresult,IdonotpursuemuchCityofDenverwork.”Headded,however,“Withthenewordinancesthatwerediscussedatthelast[ConstructionEmpowermentInitiative]meeting,itissomethingImayreconsiderifthosebecomelaw.”[WT#12]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaid,“Sometimes…CDOTrunsoutofmoneyandcancelsataskorder.Thenyouhavepeople[just]standingaround.”However,helatersaid,“Ithinkit’seasiesttofindoutaboutworkwithCDOTbecauseweknowalotof[theirrepresentatives],andwecancallthemand…seethemrightaway.”[#14]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatshetriedtogetworkwithpublicagenciesotherthanDenverInternationalAirportwithnosuccess.Shecommented,“Itisveryhardtogetafootinthedoorwithotherpublicentities.”[#20]

ThesamebusinessownercontinuedbysayingsheattemptedtoworkwithCDOT,RegionalTransportationDistrict,andDenverWaterintheareasofconstructionmanagementandlaborsupport.Shenoted,however,thatshedoesnothavetherelationshipstobidasasubcontractorinthoseindustries.[#20]


Thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Theproblemwehavefacedisfindingouthowtobreakintothecityandothergovernmententities,tosellourproduct.I’msuretheyprobablyusethesamevendorstheyhavealwaysused,and[are]notinterestedinfindingoutifthereissomethingmorecompetitiveavailable.”[#30]

TheBlackAmericanandveteranmaleownerofaDBE‐andMBE‐certifiedconstructionfirmsaid,“MoreneedstobedonetoincludeMWBEsintelecommunicationprocurementsattheairport.”[WT#13]

A few trade association and business assistance organization representatives discussed

challenges members sometimes face when working with or trying to work with City and

County of Denver and other public agencies.Forexample:

Thenon‐HispanicwhitefemalerepresentativeofatradeassociationsaidthatmanymembersfinditdifficulttogetworkwithpublicagenciesinDenver.Shesaid,“Ithinksomeofthemfeelliketheopportunitiesaren’tthere….Somefeelthattheykeepgivingworktothesamefirmsoverandover,[and]Iknowthatthisisn’tjustwith[theCityandCountyof]Denver….Someprojectmanagersarecomfortablewithacertainfirm,andthat’salltheywanttodobusinesswith.”Sheaddedthatcontractadministratorsfinditeasytoworkwithfirmstheyalreadyknow,andcommented,“Theyknowthem,soit’slessriskontheirpart[and]lessthattheyhavetomanage.[#38]

Whenaskedtodescribemembers’experiencesattemptingtogetworkwiththesepublicagencies,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Ithinkgettingthatfirstcontractisthebigchallenge.Oncetheygetthefirstone,they’re[okay].Ifthey’vebeenworkingintheprivatesector,they’renotusedtoalltherules.Ihadamemberwhosubmittedabidandputitinanenvelopeasrequired.Whenheturneditin,theytookitoutoftheenvelopeandstampedit,butdidn’tputitbackintheenvelope,andhewasdisqualified.So,thatwasashock.”Shelateradded,“WehaveadifficulttimegettingresponsesfromDenverWater.”[#37]

Regardingmembers’experiencesworkingwithCityandCountyofDenver,theBlackAmericanfemalerepresentativeofatradeassociationsaid,“Unfortunately,alotofthecommentsIhearare[that]it’samessoverthere[and]theydon’tknowwhatthey’redoing….Therearesomanyquestions[regarding]theorganization,theadministrationofthedepartments,[etcetera],andit’sbeenachallenge.”[#6]

Some interviewees and survey respondents discussed challenges specific to small businesses

when pursuing work with City and County of Denver or other public agencies.Commentsinclude:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidworkingwithinthepublic‐schoolsystemisdifficult.Shesaidthepresenceofchildrenandrelativesafetyconcernsaddstothechallenge,andsaid,“Youhavetoapproachitadifferentway.Andthey,admittedly,willtellyouthiswhenyoucomeonboard.[They’llsay],‘Hey,thisisnotgoingtobethecityandcounty.It’snotgoingtobeaspleasantasyouthinkitmightbe.’”[#13]


RegardinghiseffortstogetworkwithpublicagenciesintheDenverarea,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Forcommodities,youhavetoputinthetimeandefforttosubmityourbid.[However],thevolumesaresuchthatthelargecompaniesbenefitbecausetheygetabetterpricefortheproductandcanmakemoney.”[#36]

Thenon‐Hispanicwhitemaleownerofaconstructionfirmindicatedthathehasnotpursuedworkwithpublicagencies.Hesaid,“Ihaveheardthatyouhavetojumpthroughalltypesofhoopstoworkonpublicprojects.I’dratherstayasanindependentcontractor.”Hecontinued,“I’veheardyouhavetogotopre‐bidmeetings,trytobuildarelationshipwithothercompaniesthataregoingaftertheproject,[and]theydon’tnotifyyouifyougotitornot.And[most]importantly,youdon’tgetpaidinatimelybasis….[So],I’dratherstayasanindependentcontractor.”[#24]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthereisanegativeperceptionthatsmallbusinessescannotcompeteagainstlargerfirms“becausetheydon’thavetheinfrastructureinplacetocompete,”orbecause“theydon’thavetheexperienceorqualifications.”Henotedthatsmallbusinessesaremorelikelytohavequalificationswiththeirkeypeopleratherthanthefirmasawhole.[#39]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatsmallfirmsareviewedasriskierandpotentiallyunabletofinishaproject.Shesaidthatthisperceptionispresentinthepublicsectoraswellastheprivatesector.[#15a]

Whenaskedabouthisfirm’sexperienceattemptingtoworkwithpublicagenciesintheDenverarea,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“Denverhasitsowntechnologydepartment.Thatdepartmentdoesallofthedatacommunicationsfortheentirecity,[but]therehasnotbeenanopportunitytogetanyofthatwork.Ifthateverchanges,wearereadytocableinstall,providetechnicalsupport,[and]anythingelse.Rightnow[though],wedon’tseethathappening.However,municipalitiesarealwayslookingtocontrolandreducecosts,[so]thatcouldbesomethinginthefuture.”[#32a]

Asurveyrespondentnoted,“WorkintheDenverarea,aswellastheDenverInternationalAirportarea,allseemtobecontrolledbythesamegeneralcontractor.”[AS#10]

Some trade association and business assistance organization representatives indicated that

small businesses face unique challenges when pursuing work with City and County of Denver

and other public agencies.Commentsinclude:

Regardinglackofexperienceasabarriertoperformingpublicsectorwork,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Ihaveheardthatcomeup.Oneofthethingswetrytodoisencouragethemtostartoutwithaverysmallcontracttogettheirfootinthedoor.I’vealsoheardthatsometimesthereisarequirementforextensiveexperiencedoingaprojectlikeaschool,andforasmallbusinessthat’sabarrier.”[#37]


TheHispanicAmericanmalerepresentativeofatradeassociationsaid,“[Denver]justputthroughanewproposal,ormaybeanordinance,spellingoutthepromptpayguidelinesandreinforcingwhatwealreadyhadinplace.Buttheissueisforacertifiedfirmthatmaybeathird‐orfourth‐tier[subcontractor].Theydotheirwork[then]theyhavetosubmitthepaperworktogetpaid.Ifsomebodydidn'tsubmittheirpaperworkonthesamepackagecorrectly,thewholepackageishelduntilthenextcycle,untilallthepaperworkiscorrected.”[#11]

Thesametradeassociationrepresentativecontinued,“Wedonothaveagoodsystem….Whenworkisdoneandcompleted…theapprovedpaymentshouldbemade.Thepaymentsmadetothesetiersubcontractorswhodidtheworkshouldalsobewithinacertainamountoftime.Ithinkitisgoingtogetbetter.Butasmallbusinesscannotholdintheiraccountsreceivable60[or]90days.Theycannotholdpayrollback60or90dayswhilewaitingforpaymentfromthecity.”[#11]

WhenaskedaboutchallengesthatsmallbusinessesfacewhenpursuingworkwithCityandCountyofDenverorotherpublicagencies,thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatdelayingcontractsafterteamshavebeenformedandcontractshavebeensignedisdamagingtosmallbusinesses.Sheadded,“Whatisthatsmallfirmsupposedtodo?Theygearedup[and]wereready….They[then]havetoput[staff]onanotherjob.”[#38]

Thesametradeassociationrepresentativesaidthat,intheseinstances,aprimecontractorfindsanothersubcontractorthatmightnotbeaDBE.Shecommented,“Sometimes…Idonotbelievethatpublicentitiesunderstandbusinessatall,andwhatthosefirmshavetogothrough.”[#38]

Shelatersaid,“Imetwithawomanlastnight[whoowns]afirmof17people.Shetriestoprimeasmuchaspossible.She’sonotherpeople’steams,butshewantstobeaprime….Theclientselectionpool[needsto]givethosefirmsanopportunitytoreallybeinchargeoftheirowndestiny.Ithinkthat’spartof[what]publicentities[don’tunderstandabout]business.[#38]

Some business owners and representatives indicated that there is not enough local firm

participation in the public sector and with City and County of Denver specifically.[e.g.,WT#1,WT#9,PT#3a]Forexample:

Thenon‐Hispanicwhitemalerepresentativeofanengineeringfirmstated,“Wehaveenormousfirmsinthiscommunitythathavetremendouscapacitythatarenot100percentutilizedbythecity.”[PT#2a]

Thenon‐HispanicwhitefemalerepresentativeofaWBE‐certifiedprofessionalservicesfirmsaid,“[In]Denverinparticular,youseegiantcompaniesbegintocome[inandgetlargeprojects].…[Theybring]theirconsultantsandtheirgiantMBEsoutofChicagothatmeetthe…qualifiersattheairport.[Afirmfrom]Chicagowona$30millionprojectmanagementcontract….”[PT#3b]


TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaidthat“manyconstruction/engineering/architecturalfirms”intheregiongivehisfirma“hardtime”whenhejustifieshisfees,andoftenturntoout‐of‐statetalent.Heexplained,“It'snotthattheydon'thavethebudgetorthemoney,theyjustdon'twanttoproperlycompensatethedynamiclocaltalent….”[WT#12]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatincreasedworkalongtheFrontRangehasattracted“out‐of‐statecontractors”thatarecompetingwithlocalfirms,“especiallysmallbusinesses.”[#20]

Thesamebusinessownerlatersaid,“IjustlostabigcontractopportunitybecausetherewasnorequirementforlocalMWBEparticipation.Becauseoflosingthiscontract,Iwillhavetolayoff14employees.Thewinningbiddertoldmethatbecausetherewasnoincentivetousealocalcompany,theysawnovalueinusingmycompany.”[#20]

ShesaidthatshebelievesDenverInternationalAirportismarketingheavilytoout‐of‐statecompanieswithnopreferenceforlocalcompanies.Shestated,“TheCityandCountyofDenverand[DIA]needtohavealocalrequirementontheircontracts.Ithinktheyshouldaddincentivestocontractorsthatutilizelocalsubcontractors.”[#20]

Some interviewees spoke about their positive experiences with outreach efforts by City and

County of Denver and other public agencies.[e.g.,#5,#13,#35]Forexample:

TheHispanicAmericanmaleownerofaspecialtycontractingfirmstatedthatrelativetoothercitiesandcountieshehasworkedfor,itiseasierforhimtofindoutaboutworkopportunitiesfromtheCityandCountyofDenverandDenverPublicLibraries.Hereportedthattheseentitiesaremorecommunicativethanothers,specificallyviaemail.[#4]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthatit’srelativelyeasytofindoutaboutworkopportunitieswithCityandCountyofDenver.Intheprivatesector,headded,workopportunitiesaremoredependentonrelationshipswithprimespursuingthattypeofwork.[#21a]

Thesamebusinessrepresentativelatersaid,“Ifyou'reawareofwheretogo,youcanprettymuchfindwhatthecityisdoing.Andtheyalwayshaveoutreachevents.WerecentlyattendedonefortheNationalWesternComplex.”[#21a]

A trade association representative spoke positively about members’ experiences with public

agency outreach.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatmembersgetalotoftheirinformationaboutupcomingjobsorprojectsthroughpublicagencyoutreach.Hesaidthatthereareseveralgeneralcontractorswhoalsodotheirownoutreachandinvitetheirmembershiptoattendpresentations.Headded,“Manytimes,theairportwillhaveoutreacheventsandyouwanttotakealookandseewhotheprimesareatanyoneofthosemeetings.Youwanttoknowthefolksthataretherebecausethosearethefolkswhoareformingteamsandthosearethefolksthatthesmallerguysinourmembershipwanttotalkto.”[#11]


ThesametradeassociationrepresentativelatersaidthatdiscoveringworkopportunitiesiseasiestforDenverInternationalAirport.HeexplainedthatDIACommerceHubhelpspromoteandconductoutreachoncontractingopportunitiesavailableattheairport.[#11]

Some interviewees reported limited outreach from the City and County of Denver and other

related challenges regarding outreach efforts.[e.g.,#6,#23b,WT#12,PT#3b,PT#4]Examplesfollow:

TheAsian‐PacificAmericanmaleownerofaMWBE‐certifiedconsultingfirmsaid,“Recentlywehaveinvestedmuchmoretimeandenergyintopursuingstateandfederalopportunitiesrelatedtoourbusiness,[though]wehaveyettobeawardedprojectsthroughtheseavenues….ItismyhopethattheStateofColoradocontinuestosupportsmalland[MWBEs]inthefuture,particularlythosewhoembraceandadoptcorporatecitizenshipprinciplesbeneficialtothecommunity.Thusfar,Ihavealsofounditabitdifficulttotrackdownpotential/applicablestateRFPsusingtheinformationresourcesavailable….IwouldlovetohavemoreexposuretoinformationaroundRFPsthatwouldfitourskillsetandcapabilities,aswellasourstatusasaminority‐ownedsmallbusiness.”[WT#6]

Regardingthecity’soutreachefforts,thenon‐HispanicwhitefemaleownerofaWBE‐certifiedprofessionalservicesfirmsaid,“Thestaffatthecityisoverwhelmedwiththeirtasks.They'reunderstaffed,andthecity’sgrowing[at]anexplosivepace….Ithinktheydon’thaveenoughpeopletodeliverworldclassservicesfromaworldclasscity.Andwe’reseeing…maybenotaspromptpublicnotificationforthesemeetings[asthereshouldbe].”[PT#3c]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“IfI’vealreadybeentoanoutreach[event]andprovidedthenecessaryinformation,butthenwedon’tgetinvitedtoparticipate,myquestionis,‘Why?’”Hecontinued,“[If]we’vedonethethingsthatyou’veaskedustodotoparticipate,[whyaren’twe]seeinganyfeedback?”[#9]

Themalerepresentativeofaconstructionservicesfirmsaid,“Asaprospectivevendor,Ihavegonetoalloftheevents[and]metthepeopleIneededtomeet.Ifollowedupwithanemailthankingthemfortheirtime,[and]setupmeetingswiththemandhadgreatconversationsaboutuspartneringwiththemforfuturebusiness.Ihavestatedtimeandtimeagainwearelookingforalong‐termrelationship[ratherthan]aone‐offbusinessdeal.[However],wepartways,shakehandsandwesaywewillgettogetheragain.[I]send[a]follow‐upemail…askingforanotherappointment,andcallandleaveavoicemailto[no]avail.Weeksgo[byand]noresponseviaemailorphonecall.”Hecommented,“Whatwouldyouthinkwithnofurtherreplyfromthem?”[WT#4]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthateventhoughhewascertifiedwithseveralagencies,hedidnotgetautomaticnoticesregardingopportunitiesinhismarket.[#36]


Some business owners and representatives commented on how late/untimely payments from

City and County of Denver or other public entities impact the success of firms.[e.g.,WT#3,WT#15,AS#26,PT#3a,PT#3c]Forexample:

RegardingherworkwithpublicagenciesingeneralinDenver,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“Allmunicipalityworkischallenging,andthenthereisalwayswaitingtobepaid.Thecitypaymentmighttakemonths.”Sheadded,“TheprimesIworkwithmakesureI’mnotwaitingtoolong,andwillmakepaymenttothecompanybeforetheyarepaid.”[#19]

Apublicmeetingparticipantsaidthat“payments[are]reallyslow”whenworkingwithCityofDenver.Sheaddedthatitcantake“uptotwoyearstogetyourmoneyback.”[PT#4]

Whenaskedtodescribethefirm’sexperiencegettingpaidonworkwithpublicagencies,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Itreallyvaries.Itdependsontheagency.Thefirstpaymentisgenerallypainfulbecauseyouhavetounderstandtheirprocess.Everyoneisdifferent…theyallbreakthingsoutdifferently,evenwithindifferentDenverdepartments.Wehavebattledover$140on$10,000worthofworkbecauseofratesthathavechanged,andit’sintheirfavor.”[#22]

Whenaskedaboutthefirm’sexperiencegettingpaidonpublicsectorwork,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmcommented,“Itcanbeslowerthanothers.”[#23a]

Regardingthefirm’sexperiencegettingpaidonpublicsectorwork,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatgettingpaidonpublicsectorworkcanbeslowbecausebothprimecontractorsandsubcontractorsarepaidbeforesuppliersgetspaid.[#23b]

RegardinguntimelypaymentfromCityandCountyofDenver,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“Recentlytherewasadelayonaproject,anditfilteredallthewaydowntooursubs,andtheirsubs,becausethosesubswereapproachingus[asking],‘Howcomeyou'renotpaying?’”Hecontinued,“Thesituationbotheredmebecausewehavealwayspaidoursubsontime.Ilookedintoitandfound[thatCityofDenver]hadhelduppayment.”Headded,“Theydidfinallyreleasepayment,withinterest.”[#21a]

A few trade association and business assistance organization representatives discussed how

late/untimely payments from City and County of Denver or other public agencies impact

members’ success.[e.g.,#33]Commentsinclude:

RegardinglatepaymentsbyCityandCountyofDenver,thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaid,“Thatreallyaffects[firms],especiallyminority[and]woman‐ownedcertifiedbusiness[es].Theyareasmallbusinessandtheycan’tsufferthecashflowofwaiting…60or90daysforpayment.Theyneedpaymentevery30days.[#40]


TheBlackAmericanfemalerepresentativeofatradeassociationreportedthatmembersareoftennotpaidontimewhenworkingonCityandCountyofDenverprojects.Sheexplained,“Oneofourmembersinparticularshared[that]ithadtakenseveralmonthsforthemtogettheirpayment.Iwanttosay[itwas]ninemonthsorsomething.”Sheadded,“Otherstalkaboutthedifferentstepsinternally,likenotknowingwhatthestatusisbecauseyoucallintoonedepartmentandthey’resayingthattheydon’thaveit,ortheydon’tknowandit’skindofarunaround.”[#6]

Thesametradeassociationrepresentativewentontosay,“Ifafirmisnewer,they’renotclearonwhattheprocessis.Ifthey’remoreseasonedcontractors,they’vebeenaroundtheblockenoughtohavelearnedwhattheprocessisorisn’t,andtheyhavejustkindofaccepteditbecausethat’sthewaythecityworks….Someareveryhesitanttocomeforwardandsayanythingbecausetheydon’twantanyretaliation.”[#6]

Thenon‐HispanicwhitefemalerepresentativeofatradeassociationsaidthatpromptpaymentisanissueformembersworkingwithCityandCountyofDenverasbothprimecontractorsandsubcontractors.[#38]

Learning about prime and subcontract opportunities with City and County of Denver and Other Public Agencies.FirmsdiscussedlearningaboutprimeandsubcontractopportunitieswithCityandCountyofDenverandhowitcomparestootherpublicagencies.Someindicatedthatitisdifficultforthemtolearnaboutprimeorsubcontractopportunities.[e.g.,WT#12]Othersreportedeffectivewaysoflearningaboutpotentialsubcontracting,orthatprimecontractorsreachouttothem.Forexample:

RegardinglearningaboutworkopportunitieswiththeCityandCountyofDenver,apublicmeetingparticipantsaid,“Theprocessformehasbeenreally,reallyfrustrating.It’sbeenmanyyearsthatI’vebeentryingtoworkwiththeCityandCountyofDenver,andI’mreadytoserve.”Hecontinued,“Iservemycommunity[and]Idoitwell.Wehaveagoodnetworkofindividuals,reallygoodpeoplewhoarecommittedandwanttodothingsforourcommunities.[However],thatprocesstocomeonboardwiththeCityandCountyofDenverhasbeen…reallycumbersome.”[PT#4]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidittakes“twoorthreephonecalls”togetintouchwithsomeoneatthecity.Sheaddedthatothermunicipalitieshaveamuchslowerresponsetime,sosheviewsherlocalexperiencewiththecitysomewhatfavorably.Shewentontosaythatherpositiverelationshipwithprimecontractorshasallowedhertogettheprocesspushedthroughmoreswiftly.[#13]

Thesamebusinessownerlatersaiditismoredifficulttofindworkwiththestatebecauseoftheextensivetimerequiredtoreviewopportunitiesthroughtheirbidmanagementtool,BidNet.Shesaid,“Yougottapaythesubscriptionprice….Andifyou’reasmallfirmjuststartingoff,you’repayingasubscriptionjusttolookatthescreentoseetheproject,anddon’tevengettobid.”Shewentontosay,“[It’s]easierwiththeCityandCountyofDenverbecausenotonlydotheyemailyou[aboutopportunities],theyputitontheirwebsite.”[#13]


Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmstatedthatheispleasedwithhoweasytheCityandCountyofDenvermakeslearningaboutprojects.Healsoreportedthatheispleasedwithotheragencies,saying,"WegetcommunicationsfromDenverPublicSchoolsthatannounceopportunities…[the]CityofAurorahasstaffthatwillcallustomakeusawareof[projects]….TheDenvermetroareaisanunusuallygoodplaceforanengineertowork,whichisbasedonmyexperienceworking[inthisfield]forover40years."[#3]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidfindingoutaboutupcomingprojectswithpublicagencieswasrelativelythesameacrosstheboard.However,shenotedthatforCityandCountyofDenver,firmsalsohavetocheckthewebsite.ShesaidthatforotherpublicagenciesshegetsnotificationsthroughBidNet,andadded,“Youhavetogoinmanuallytothe[CityandCountyof]Denverwebsiteforwork.Otherentities,themajorityofthemifnotall,gothroughtheBidNetnetworkwhereyoupayforasubscriptionandyougetemails[relevant]toyourcodes.”[#2]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaiditishardertofindoutaboutCityandCountyofDenveropportunitiesversusthoseofotherpublicagencies.Heexplained,“Itisalittleharderbecausebythetimeit’spublishedoryoufindout,it’salreadybeenbidonby[what]Icalltheinsiders.Theygetnotifiedwellbeforethebidgoesout,andthebidisusuallytailoredtooneofthosecompanies.”[#7]

WhenaskedifitiseasierorhardertofindoutaboutworkopportunitieswithCityandCountyofDenverversusotherpublicagencies,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatthereisnotmuchdifferencebetweenpublicagencieswhenitcomestofindingoutaboutworkopportunities.[#23a]

Some trade association and business assistance organization representatives compared

City and County of Denver’s outreach to other public agencies’.SomeindicatedthatmembersstruggletolearnaboutpublicsectorprimeandsubcontractopportunitiesinDenver.[e.g.,#38]Forexample,whenaskedaboutprimecontractopportunitieswithpublicagenciesinDenver,theBlackAmericanfemalerepresentativeofatradeassociationsaid,“WithCDOT,you’regoingtostartseeingmoreprimingopportunitiesbecausethat’ssomethingthat’sontheirtable,somethingthey’vebeenconsideringandmakingroomforwiththeirbudgets,withtheallocationofprojectsandallofthat.”[#6]

Thesametradeassociationrepresentativecontinued,“WiththeCityandCountyofDenver,I’venotnecessarilyseenasmuchopportunityforpriming.Thereareafewhereandthere,butIdon'tknowwhattheirprogramlookslikeintermsofdedicatedfocus.Isthere[even]aninitiativethatsupportsthat?”[#6]

ShewentontosaythattheCityandCountyofDenverDGSusuallykeepsmembersup‐to‐dateregardingopportunities,andadded,“Everyweek,ifnotmorethanonceaweek,wearegettingcommunications.Wearebroadcastingthoseonourwebsiteandourpublications,sowhatwegetwecertainlypasson[toothers].”ShenotedthatRegionalTransportationDistrictandCDOTalsokeepherorganizationintheloopregardingopportunities.[#6]


One business assistance organization representative said that although agencies do a good job

of promoting opportunities, the opportunities are rare.TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“Thereareopportunities,buttheyarefewandfarbetween.Caseinpoint,[DenverPublicSchools],theairportexpansion,[and]theNationalWesternComplex.Engagingwiththeseprojectsischallengingforthem.I’vegottenfeedbackfrommembersthatwhile[DenverPublicSchools]saysthey’rereachingouttodiversecommunities,quitecynically,itislipservice.Thecompaniesinourmemberfamilyarenotseeingit.”[#33]

Inregardstolearningaboutworkopportunitieswithpublicagencies,thesamebusinessassistanceorganizationrepresentativestated,“Overall,theagenciesalldoagoodjobofgettinginformationout,andit’salsoontheirwebsites.Oneoftheareasthatshouldbegivenmoreweightisopportunitiestoprovideprofessionalserviceslikemarketingandgraphicdesign.TheseopportunitiesareequallyimportanttoourMWBEs.A$10,000or$20,000jobisveryattractivetoasmallbusiness.”Headded,“[Agenciesshould]sliceoutdifferentsize[d]work.”[#33]

For some, learning about contract opportunities is not a barrier.[e.g.,#20]Forexample:

Whenaskedifit’seasyordifficulttofindoutaboutCityandCountyofDenverworkopportunities,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“IthinktheCityandCountyofDenverhasmoreinformationavailableabouttheirprojectsthanprettymuchanyoneelse.Icangoouttothe[Denver]website,seewhatisthere,seewhatprojectsI’vebidon,andseewhatprojectsarepending.”[#5]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“IamalwaysonBidNetand[iSqFt]researchingwhatwouldbethebestbidstogoafter.”[#19]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatsheisnotawareofanypotentialbarrierstolearningaboutopportunitiesinthelocalmarketplace.However,shenoted,“Ifthere’samagiclistofpeoplethatgetflyersandbroadcastemails,I’mnotonit.”[#8]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthathisfirmprimarilydoesqualifications‐basedengineeringwork.Becauseofthis,headded,theysubmitproposalsratherthanbids.HewentontosaythatCDOTworkistheeasiesttosecurebecausetheyworkoftenwiththeagencyandknowtheirprocesses.Therefore,headded,hiscompany’sproposalisverytargeted.Henoted,“Onceyouknowtheprocess,it’seasy.”[#14]

One business assistance organization representative reported positively on City and County of

Denver’s outreach regarding work opportunities.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“TheCityandCountyofDenverdoagreatjobtellingfolksthatsomethingiscomingdownthepike.”However,shenotedthatintheprivatesector“it’smuchhardertogetthatinformation.”[#37]


Recommendations for improving state agencies’ bidding, contracts, prompt payment, and other processes. Anumberofbusinessownersandrepresentativescommentedonormadesuggestionsforimprovingotherstateagencyprocedures.

WhenaskedifshehasanyrecommendationsforCityandCountyofDenvertoimproveitsnotificationorbidprocesses,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Theprojectplanshavesomanypages,andsomuchdoesnotapplytous.Justhaveasectionaboutthecleaning.[And]please,justputwhatweneedinthefront.Lookingthrougheverythingtakesalotoftime.”[#35]

WhenaskedifshehasanyrecommendationsrelatedtoimprovingtheadministrationofcontractsorpaymentmethodsbyCityandCountyofDenver,thesamebusinessownersaid,“[When]Isendaninvoice,[it]hastogotodifferentplaces,thentheysendusacheck,whichisanotherfive‐daydelay.Itwouldbenicetohavedirectdeposit[so]Idon’thavetoaskwhenthecheckiscoming.”[#35]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaiditwouldbehelpfultobenotifiedbyemailorfaxofCityandCountyofDenverbiddingopportunities.SheaddedthatasofnowCityandCountyofDenveronlynotifyofopportunitiesquarterly,andsaidit'sinconvenientandinefficientthatthereisnotaplaceforfirmstocheckforworkonaregularbasis.[#2]

Thesamebusinessco‐ownerwentontosaythatgettingpaidiseasythroughCityandCountyofDenverbecauseit'sdoneonlinewhileotheragenciesdon'tutilizeonlinepayments.Shealsonotedthatasaprimecontractorshehashadnoissuesgettingpaidacrossseveralagencies.Whenaskedifthisisthecaseforsubcontractwork,shestated,“Wearesometimespaid60to90daysaftertheprimesarepaid,"andcommented,"Generalcontractorsliketoworkontheirsubcontractor’smoney."Shesuggestedthatpublicagenciesfollow‐upwithgeneralcontractorsthatdonotcomplywithpromptpaymentguidelines.[#2]

WhenaskedifhehasanyrecommendationsforCityandCountyofDenvertoimproveitsnotificationorbidprocesses,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Thereisalottheycoulddo.Whenyouregisterwiththemyou’resupposedtogetbidnotificationswhensomethingcomesupinyourNAICScode,butyoudon’t.Ihavetogoinquireallthetime.I’vetriedtogetinto[RegionalTransportationDistrict’s]automaticsystemforyears,buthaven’tbeensuccessful.SamethingwithDenver.AndIknowthey’reouttherebuyingsmallerquantitiesofthings,buttheynevertellyouaboutthoseopportunities.Whenyou’rerunningabusiness,youdon’thavetimetoknockonthatdoortimeaftertime.”[#36]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthatCityandCountyofDenvershouldimprovetheirnotificationandbidprocesses.Shesaid,“Whycan’t[firms]goonRockyMountainBidNetlikeeverybodyelse?YouhavetogoonWork4Denver,[but]thereseemtometobetonsofprojectsthatnevershowup[there],suchas,[alocalpublicprojectinmyneighborhood].Iliveinthis


neighborhoodandIworkinthisneighborhood.Allofasudden,thishugeprojectwastakingplacethatIhadnoideaabout.[#12]

Thesamebusinessownercontinued,“So,findingtheworkishard.Ithinktonsofworkdoesn’tevergothrough[Work4Denver].Theyhaveon‐callservicesforarchitectsandlandscapearchitects,whichishowtheirsmallprojectsareaddressed.So,thesebigfirmsgettheseon‐callcontracts.Irealizeitwouldbemoreworkfor[CityandCountyofDenver],butsomeofthesesmallerprojectswouldreallybeagreatwaytobringinnewbloodratherthanusingthesameold…whitemale‐ownedplayersoverandoveragain.”ShealsodescribedtheDenverPublicSchoolsbidprocessas“arduous,”andindicatedthatitshouldbestreamlined.[#12]

Whenaskedifhehasanysuggestionsforimprovingtheadministrationofcontractsorpaymentmethods,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Yes.Thefederalgovernmenthasagreatsystem.Theyhaveacontractmanagerandtheyhaveaprojectmanager.Alotofmunicipalandstateagencieshaveaprojectmanager,andyouknowwhothatis,[but]thenyourinvoicegoesintotheaccountingdepartmentandyoudon’tknowwhothatpersonis.Itmaysitonsomeone’sdeskandtheymaynotevenknowwhatthecontractis.”[#22]

Thesamebusinessownercontinued,“Afteritsitsontheirdeskforaweek,theygobacktotheprojectmanagerandask,‘Whatisthis?’Theprojectmanagerhastoexplainittothem.So[then]theygobackandcrunchthenumbers,andsay,‘It’s$5off,havethemresubmitit.’Thepromptpayordinancedoesn’tkickinuntiltheyapprovetheinvoice.Inthefederalworldyousendittoboth,sotheytalktoeachotherandyouknowwhothatcontractmanageris.Andtheyareusuallyatthemeetings,sotheyknowwhatisgoingonwiththeproject.IftheyhadthatatDenver,thestate,[orRegionalTransportationDistrict],itwouldbesomuchbetter.”[#22]

WhenaskedhowCityandCountyofDenverandDenverInternationalAirportbidprocessescomparetootherpublicagencies’,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“Thereis…theissueofdeliverymethods.Someallowdesign‐buildor[constructionmanager/generalcontractor],[but]otherswon'tdoanythingbutdesign,bid,build.Thebidprocessisdifferentforeachdeliverymethod.”[#21a]

Thesamebusinessrepresentativelatersaid,“Gettingchangeordersapprovedinatimelymannerwouldhelp.Itgoesbacktothefactthateveryonecansay,‘No,’butnoonewillsay,‘Yes.’It'sgettingthechangeordersapprovedsoyoucanbillforthem[that’simportant].We'recomingoutofpocketforlongperiodsoftime,financingachangeorder,andcan'tgetitapproved.”[#21a]

RegardinguntimelypaymentbyCityandCountyofDenver,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE,SBE,andESB‐certifiedprofessionalservicesfirmsaid,“Thereisalwaysareason,adisputeontheprime’sinvoice,pendingchangeorders,etcetera.Thebottomlineis[that]cashflowconcernsareresultinginsmallbusinessesclosingshoporallowinglargerfirmstopurchasetheminfiresales.Ihaveadvocatedforconsiderationof


DBEsubconsultantpaymentwaiversrequiringpaymentamaximumof60daysfromsubinvoiceacceptance.PromptpaymentfromtheCityandourclientsisthebestwaytosupportsmalldisadvantagedbusinessesinmyopinion.”[WT#15]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedconstructionservicesfirmsaid,“IfIcouldmakeanysuggestionstohelpimprovetheprogram,Iwouldrecommend…Denverrequirethatbusinessesthathavetomeetgoals[also]havesomerequirementstotrynewwomen‐orminority‐ownedbusinesses[togive]othercompanies…achancetocompete.”Sheadded,“HaveDenverrequiremorepercentageforwomenversusminorityintheconstructionindustry.Ibelievethatiswherethereisthemostdisparity.”[WT#5]

WhenaskedifhehasanyrecommendationsforCityandCountyofDenvertoimproveitsnotificationorbidprocesses,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthattheyshouldpostcontactinformationforprojectmanagerssomewhereontheirwebsite.Hecommented,“Youneedtoknowwho’scallingtheshots.”[#14]

Thesamebusinessownerlatersaidthatbettercommunicatingagencypersonnelchangesonprojectswouldbehelpful.Hesaidthatwhenapersonnelchangeoccurshiscompanyspendsalotoftimetryingtofigureoutwhothereplacementis.[#14]

WhenaskedifhehasanyrecommendationsonhowtoimprovetheadministrationofcontractsorpaymentmethodsforpublicagencieswithinCityandCountyofDenver,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthatheisfairlyhappywiththecurrentsystem.Headded,“Although,ontheprivatesidewenormally[get]adepositfortheorderthatwedo.Wehaveneveraskedacityforadeposit.Butiftheywerewillingtodothat,we’llgladlyacceptit.”[#9]

RegardingwaystoimprovecontractingprocessesbyCityandCountyofDenverandDenverInternationalAirport,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstated,“Sometimestheyneedinsurancerequirementsorotherdocuments,andI’llhavetoprovidethosetothemsothesubgetspaid.Iwishtheywoulddothatonthefrontendratherthanthebackend.”[#23b]

Regardingtimelypayments,theBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatstateandlocalpublicentitiesshouldfollowinthefederalgovernment’sfootsteps.Shesaidthefederalgovernmentisthebestentityatpayinginatimelymanner.[#13]

Thesamebusinessownercontinued,“The[federalgovernmentdoes]thebestofgettingyourmoneyrightnow.Itusedtobetheopposite.Theyweretheworstatgettingyouyourcash,butnowtheyarereallygoodatgettingelectronicpaymentsinfairlyquickly.”Sheconcluded,“Ithinkwe’rejuststuckinthepublicsystemofit’sgoingtotake45daysto90days,to120days.Andonceyougetto120,you’re[thinking],‘Oh,goodgrief.’”[#13]


Apublicmeetingparticipantsaid,“The[CityofDenver’s]paymentprocess[is]soconvoluted.Ican’ttellyouhowmanytimesIhadtoreviseapayapplicationbecausedifferentpeoplewantedtoseethings.It’snotastreamlinedprocess,andeverybodyhastheirpreferences….We’vehadtocalldifferentpeopleindifferentdepartments,andIspendhoursandhoursandhoursonthephonetryingtotrackdownsomethingthatshouldbereallyeasy.”[PT#4]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaidthatfederalgovernmentcontracting“seemstobealittlefairer,”andexplained,“Theyhavemorechecksandbalancesbecauseoffraudthathasgoneonovertheyearswithgovernmentcontracting.It’sdaunting,butonceyougetthere,theyareprettysetsteps[suchas]meetthesecriteria,thenextcriteria,andthenextcriteria….It’sprettystraightforward.Theyhaveset‐asidesforminorities,forwomen,forveterans,thingslikethat.So,it’salittlebitfairer.”[#7]

Thesamebusinessco‐ownerlatersaiditwouldbehelpfulifCityandCountyofDenvermadechangestoitsprocurementprocesses.Hesaid,“Itwouldbegreatiftheysentouttheirpre‐bidscopeofwork,whattheyrequire,andthenfollow[ed]upwithdeadlinedatesofwhenthebidisturnedin,andalsodeadlinedatesofwhentheywillselectthebidderandmakeitallpublic[ly]accessible.Itwouldbenicetoknowhowtheypicktheirvendors….That’dbenicetoknowbecauseitwouldallowotherpeopleapplyingforabidonthosejobstoknowwhatthey’relackingandhowtopreparethemselvesforthenext[incoming]bid….”Hewentontosay,“Ithinkiftheydidthat,someofthecompaniesthatgetthebidstheyreceivemightnotgetmultiplebids.”[#7]

Some trade association and business assistance organization representatives discussed ways

City and County of Denver can improve its bidding procedures and other procurement

processes.Forexample:

WhenaskedifshehasrecommendationstoimprovetheadministrationofcontractsorpaymentmethodswithDenverpublicagencies,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Perhapspayingbycreditcard,orotherdigitalpaymentprocesseslikeelectronicfundstransfer[wouldbehelpful].Thatwouldbesomuchfasterthanputtingacheckinthemail.”[#37]

WhenaskedifhehasanyrecommendationsfortheCityandCountyofDenvertoimproveitsnotificationorbidprocess,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“Becausesomanyprofessionalbusinessesaremembersofchambersofcommerce,IwouldasktheCityandCounty[ofDenver]toleveragethoserelationshipsandpushmoreopportunitiesoutthroughthosechannels.”[#33]

ThesamebusinessassistanceorganizationrepresentativeaddedthattheDenversmallbusinessofficedoesnotcollectrobustdataregardingpaymentstosubs,likeRegionalTransportationDistrictdoeswithitsE2form.Hestated,“Itwouldseemtomethatthesecitysubsshouldbeonareportablelist,[and]perhapsinanidealsituationsomeoneismonitoringthat.”[#33]


TheHispanicAmericanmalerepresentativeofatradeassociationsuggestedthatCityandCountyofDenverimplementaprogramthatmimicsthenotificationandbidprocessesofDenverInternationalAirport’sCommerceHUB,whichpromotesopportunitiesattheairport.[#11]

Thesametradeassociationrepresentativelatersaid,“MostoftheDBEprogramsinthe[CityandCountyofDenver]andfromCDOTarealways…horizontalwork.Theyareusuallylargedollarprojects,mostofwhichareattheairport.Ourcertifiedfirmscannotcompeteinthatarenaunlesstherearemandatorysubcontractoropportunities.”[#11]

WhenaskedhowpaymentprocessesbyCityandCountyofDenvercanbeimproved,theBlackAmericanfemalerepresentativeofatradeassociationsuggestedthattherebebetterinternalcommunication.Shesaid,“Publicworks,DSBO,auditing,andwhoeverelsetouchesthepayoutallneedtogetinthesameroomanddeterminewhatpointofentryandpointofcontactwillbehad.”Shewentontocomment,“Whatplatformcantheyusesoeverybodygetsthesameinformationatthesametime?”[#6]

A trade association representative suggested that City and County of Denver require prime

contractors to use subcontractors they have never partnered with before.Thenon‐HispanicwhitefemalerepresentativeofatradeassociationsaidthatmembersenjoyaprocurementbonusofferedbyCDOT,andindicatedthatCityandCountyofDenvermightdowellinadoptingasimilarpractice.SheexplainedthatCDOToffersaprocurementbonuswhenfirmstrytodoworkwithasubcontractorthatthey’veneverworkedwithbefore.Shesaid,“They…gothroughtheprocessofhavingallthesepeoplesubmitproposals.”However,shenotedthat“they[still]havetheirfavorites,andthat’swhotheywant.”[#38]

Regardingpaymentprocesses,thesametradeassociationrepresentativesaidthatasystemtotrackpaymentswouldbehelpfulforsmallfirms.Shesaid,“Ithink[something]likeTextura[wouldbehelpful].I’mconfused[asto]whythe[CityandCountyofDenver]hasallowedTexturatobeusedfordesignprofessionalsand[not]publicworks.Whyisthat?[It’s]agoodtrackingmechanism.”[#38]

Shelatersaid,“Designprofessionalsatastatelevel[and]federallevelneedtobeselectedfirstonqualifications….Theprocurementmethodisknownasqualifications‐basedselection,[and]wewanttoseethatatacitylevelandacountylevel….[Instead],theyareallaboutlowbid.”Sheadded,“Whynot…selectwhoyouthinkisthemostqualifiedthroughwhatevercriteriayouhave,then…sitdownanddiscussscope?”[#38]

One business owner suggested that City and County of Denver implement “tiered contracts”

like CDOT.Thenon‐HispanicwhitefemaleownerofaMWBE‐,SBE‐,andEBE‐certifiedengineeringfirmsaid,“Wetalkalotatourcompanyaboutwinningmeaningfulwork.ThismeansnotbeingmerelyaplaceholdersubconsultantinordertofulfilltheMWBE/DBErequirements…butbeingabletowinworkwhereweactuallygettoshowcaseourabilitiesandourexpertise.OneofthebestwayswearecurrentlyabletowinmeaningfulworkisthroughtheCDOT[tiered]contract[s].ThistieredapproachbyCDOT[is]focusedonbringinginandsupportingsmallerfirmsthattraditionallyhaven’tbeensuccessfulproposingonCDOTprojects.”[WT#8]


Thesamebusinessownercontinued,“Beingtheprimeconsultantonthiscontracthasallowedustowinafairlysubstantial…intersectionupgradeproject,andwearehopingforfutureprojectsaswell.Irecommend[that]CityandCountyofDenverdosomethingsimilartoCDOT.Splitsomeofthecontinuingservicescontractsintosmalltierandlargetiercontracts.Denvercanthentargetsmallerbusinesseswithinthesmalltiercontract,therebyprovidingtheopportunityformeaningfulworkforsmallbusinesseswithinDenver.”[WT#8]

Another business owner said there is an “artificial cap” on the size of contracts awarded to

professional services firms.TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Ifyou’rearound…afive‐yearcontract,ifyou’rereachinganywhere[from]$1.5[or]$3million,you’re…goingtoseethatartificialcap.You’regonnaseewhatthey’regivinginDenvertosmallbusinessunlessyou’reintrucking,unlessyou’reintrafficcontrol,[or]unlessyou’reinconstruction.Ifyou’reprofessionalservices,you'regoingto…verymuchsee…acapthat’sgiventous.”[PT#3a]

G. Allegations of Unfair Treatment

Intervieweesdiscussedpotentialareasofunfairtreatment,including:

Deniedopportunitytobid;

Bidshoppingandbidmanipulation;

Treatmentbyprimecontractorsandcustomersduringperformanceofthework;

Unfavorableworkenvironmentforminoritiesorwomen;and

Anydoublestandardsforminority‐orwoman‐ownedfirmswhenperformingwork.

Denied opportunity to bid. Theinterviewteamaskedbusinessownersandrepresentativesiftheyexperienceddenialoftheopportunitytobid.

Many interviewees indicated that they did not experience or have knowledge of denial of

opportunities to bid.[e.g.,#4,#15a,#36]Forexample:

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathehasneverbeendeniedanopportunitytosubmitabidorpricequote.However,henotedthatinsomecaseshedoesnotreceivethesolicitationsthatotherpotentialfirmsreceive.Heexplained,“Bythetimewedofindoutaboutit,we’reaweekawayfromwhentheinformationisdue.Normally,ifyouworkwithinaprojectlikethatyouneedthreeweeksoramonthtodeterminewhatitisthatyou’reaskingfor[and]seewhereyoufigureintoit….”[#9]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreportedthatshehasneverbeendeniedtheopportunitytosubmitapricequotetoaprime.[#5]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidshehasneverbeendeniedtheopportunitytobid,butcommented,“For[this]industry,youloseabout20percent[ofwhat]youthrow…againstthewall.”[#13]


TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshehasnotbeendeniedtheopportunitytosubmitabidorpricequotetoaprimecontractor.Shecommentedthatherproblemiswinningbids,notbeingdeniedtheopportunitytobid.[#35]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathehasnotexperiencedanyunfairdenialofbidopportunities.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthattheirfirmhasneverbeendeniedtheopportunitytosubmitapricequotetoacustomer.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatshehasneverbeendeniedtheopportunitytosubmitabidorpricequotetoaprimecontractor.[#20]

Whenaskedifthefirmhaseverbeendeniedtheopportunitytosubmitabidorpricequotetoaprime,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“Therearetimeswhenwe'returneddowntogetonajobbecauseofwhateverreason.Wemaynothavetheresumetodoaspecificjob,eventhoughIthinkwedo.Theownerortheclientmaynotthinkso,sotherearetimeswegetrejectedaswell.”[#21a]

Most trade association and business assistance organization representatives reported no

knowledge of members being denied bid opportunities.Forexample:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthathehasnotheardofmemberfirmsbeingdeniedtheopportunitytosubmitabidorpricequotetoaprime.[#11]

Whenaskedifhehaseverheardofmembersbeingdeniedtheopportunitytosubmitabidorpricequotetoaprime,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthathehasnot.[#33]

Whenaskedifmembershaveeverbeendeniedbidopportunities,theBlackAmericanfemalerepresentativeofatradeassociationreportedthat,toherknowledge,theyhavenot.[#6]

Other interviewees reported being denied opportunities to bid, or not knowing, but suspecting, denial of opportunity for bid might have occurred.[e.g.,#14,#18]Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmwasdeniedtheopportunitytosubmitabid.Heexplained,“Weweretold,byanon‐minorityprime,thatweweren’tpartoftheirgroupandcouldnotbid.[Wewere]notpartoftheprimarygroupofcontractorsthattheyuse.Idon’tknowwhy.Maybebecausethey’dmetusinpersonandtheynoticedwedidn’tlooklikeeveryoneelsewhowasinthe


room.That’stheonlythingIcouldthinkof.Itrynottogothere,butthat’stheonlythingIsawthatwasobviouslydifferent.”[#7]

Thesamebusinessco‐ownerlatersharedanexampleofatimewhenhisfirmwasnotinvitedtothetabletobid.Hesaid,“Therewasacompanythatweknowbecauseweknowalotofthepeoplewhodothesameworkthatwedo.So,wewenttobidonajobinDenverataschoolonanasbestosjob.Weheardaboutitthroughanemployeeoftheschool,[and]whenwe[inquiredabout]bid[ding]…[we]didn’tgetacallback.Andthen[we]foundoutfromanothercompanythat’salittlebitlargerthanusandthathasitsownconnections,thattheygotthebidtwoweeksprior.”[#7]

Hecontinued,“Wefinallygotacallthreeweekslaterthatsaid,‘Oh,thebidjustclosed,’butweknewthefirmhadalreadystartedworkonthejob.”HewentontosaythathetoldDenverPublicSchoolsthatheheardtheprojecthadalreadybegun,andtheyrespondedthatitmusthavebeenamistakeandthatpaperworkmayhavegottenlost.Headded,“Eitherway,weknewwhywedidn’tgetit[because]theotherfirmtolduswhytheygotit.Theyknewasuperintendent,andthat’showtheygotthejob.”[#7]

Whenaskedifherfirmhaseverbeendeniedtheopportunitytosubmitabidorpricequotetoaprime,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatprimeshavetoldherfirmthattheydonotwanttopartner.Sheexplained,“Theysaynoallthetime,butIthinkit’sdifferentthanwithcontractorswhomightwanttogetthreedrywallquotes.That’snothowRFPsinarchitecturework,typically.Theywon’tgetquotesbecausethequoteisnotthemostimportantthing.It’saboutthefancyproposal.Thedocumentthattheyputtogether,orthat…weputtogether.Alotoftimestheyalreadyhavealandscapearchitect.They’reusingthesameonethatthey’vealwaysused.”[#12]

Thesamebusinessownerlatersaidthatshedoesbelievethatsomefirmsaredeniedopportunitiestobidduetodiscrimination.Sheexplained,“Idefinitelyfeelliketherearepowerstructuresthatarewhite,male‐dominated….[Somemaythink],‘What’sthatgirldoing?Whatdoessheknow?’”[#12]

Whenaskedifhehaseverbeendeniedtheopportunitytosubmitabidorpricequotetoaprime,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Yes,sometimestheprimehasalreadyselectedsomeoneelsewhodoeswhatwedo.”[#22]

One business assistance organization representative indicated that some members are denied

bid opportunities.Whenaskedifshehasknowledgeofmembersbeingdeniedtheopportunitytosubmitabidorpricequotetoaprime,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Onthepublicsectorside,I’veheardfrommemberswhosaytheirbidwasrejectedbecausetheydidn’tusetherightcolorink,theydidn’tputitinafolder,andotherlittlethings.Whenitcomestotheprimesdirectly,it’stheissuesthatopportunitiesareoutthere,butthesmallcompanydidn’thearaboutthem.Bythetimetheyhear,theopportunitiesarealreadyfilled.That’swhenIremindthemhowimportant


relationship‐buildingis.Theyconstantlyhavetoremindtheprimesthatthey’rethere.[Ifthey’re]outofsight,[they’re]outofmind.”[#37]

Bid shopping and bid manipulation.Businessownersandrepresentativesoftenreportedbeingconcernedaboutbidshopping,bidmanipulation,andtheunfairdenialofcontractsandsubcontractsthroughthosepractices.

Many interviewees indicated that bid shopping and/or bid manipulation exists or they felt

that it might be prevalent.[e.g.,#21a,#36,WT#5]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Bidshoppingisverycommonandpitssmallbusinessesagainsteachother.”Shewentontosaythatsheisnotawareofbidmanipulation.[#20]

Regardingbidshoppingandbidmanipulation,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Inthepublicsector,certainvendorsarecontactedwellbeforethebidcomesout,andthey’vetoldmeaboutit.Iplayedgolfwiththemandtheysaid,‘Ohyeah…Iwastoldaboutthattwomonthsagobutwejustdidn’twanttodoit[because]it’stoosmall,’or,‘Weknowanothercompanygotthatbidalready,[so]don’twasteyourtimeapplying.’”[#7]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmstatedthathesuspectsthatbidshoppingandmanipulationoccur.Hesaid,“IwasatanoutreachmeetingandoneofthethingsthatIwastoldwasthatifyouwanttoparticipateinthis,youdoaboothandtheprimes[willbe]aroundand…stopandtalktoanybody.AndInoticedthatoneprimespentbasically95percentofhistimetalkingtoaparticularbusinessandthattheonlywaythatIcouldgethimtocomeoverandtalktousaboutwhatwe’redoingwasactuallytograbtheguyandstophimashewaswalkingby….Hegaveme30secondswhereashejustspentanhourwiththisothervendor.Whatdoesitallmean?Idon'tknow.”[#9]

Themalerepresentativeofawoman‐ownedspecialtyservicesfirmsaid,“Ourgeneralcommentisthatinthecommercialofficebuildingjanitorialmarket,largeofficebuildingmanagershirenationalfirmsundernationalbids.Someofthesefirmswinonpricebycheating….”Heexplained,“Weconfirmedthatabidderforoneoftheprojectshaslegal/union/regulatoryactionagainstthemin[four]differentnationalmarkets.Manybidprojectsonanationalpricestructurearewillingtolosemoneyinsomemarketswherewagesarehigher,astheyareabletomakeupforitinothercities,takingtheprofitandmoneyoutofthelocaleconomy.”[WT#1]

Whenaskedaboutbarriersordiscriminationregardingbidshopping,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Theyjusttellyou,‘Yourbidistoohigh.Thankyouverymuch,goodbye.’”[#35]

Whenaskedaboutbarriersordiscriminationrelatedtobidshopping,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Ithappensallthetimewithus.”Headded,“Ithappensmoresoinprivatework….


Evenwiththefederalgovernmenttheyhavetochoosebasedonqualifications,andsotheychoseseveralfirmstodoon‐callworkandtheybideachspecifictaskorder.Wetoldthem,‘Youcan’tdothat.Youcan’tbidusagainsteachother.’Theycomebackwith,‘We’vealreadyselectedonqualifications,butweusebestvaluebecauseoftheBrooksAct.’Buttheyalwaysgaveittothelowestbidder.”[#22]

Regardingbidshoppingandbidmanipulation,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaid,“Ithinkthatabuyerisgoingtohavepresetperceptions,anditcouldmakeadifferencewhen[choosingabidder].”Hewentontorecallasituationwhereheaskedtobidandthebuyerproceededtomakeapurchasewithouthisbid.Henoted,“Thathappensmoresowiththegovernment.”[#39]

One business assistance organization representative indicated that members may have

experienced bid manipulation.Whenaskedifmembersfaceanybarriersordiscriminationrelatedtobidshopping,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthathehasheardofmembersquittingpublicworkbecausethesamecompaniesalwaysseemtogetthecontracts.Hestated,“That’swhysomememberswon’tplayinthatspace.”[#33]

Thesamebusinessassistanceorganizationrepresentativealsosaid,“Memberssaytheyoftendon’tbidbecausetheyalreadyknowthattheCityandCounty[ofDenver]willtakethelowbid,notthebestbid.”[#33]

Another business assistance organization representative said that members have not

acknowledged the presence of bid manipulation.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatshehasnotheardfrommembersthatbidshoppingorbidmanipulationispresentintheDenvermarketplace.[#37]

Several interviewees do not perceive bid manipulation and/or bid shopping as prevalent, or

are not bothered by it.Forinstance:

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmindicatedthatshedoesnotperceivetheretobeanybidmanipulationorbidshopping.[#27]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthatheisnotawareofanyissuessurroundingbidshoppingorbidmanipulation.[#23b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatshehasnotexperienceddiscriminationorbarriersinregardstobidmanipulation.[#12]

A few interviewees discussed whether there are unfair denials of contract awards or unfair

termination of contracts in the marketplace.Whilesomesaidtheyareunawareofsuchdenials,[e.g.,#5,#11,#23b,#35]othersreportedfirsthandexperienceofunfairtreatment.Commentsinclude:


TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“TherewasoneinstancewhenwewereasubtoanengineeringfirmthatcontractswithDenverPublicWorks.Wewereontheteambecausetheyhadtomeetgoals.WewereaskedtodothedesignandtheDenverprojectmanagerdidn’tlikethedesign.Insteadofworkingwithustochangethedesignoralterit,heinstructedtheengineeringcompanytohirethisfirmoutof[LosAngeles]todothedesign.And[so]wewerekickedofftheteam.”[#22]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstatedthatunfairdenialofcontractssometimesoccursbecauseagenciesdonotenforcetheirdiversityprograms.[#36]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“AspecificexampleofwhatIbelievetobediscriminationisthatwhenwehadanon‐call…contractwithDenvermanyyearsago,wewereaskedtodo[a]short‐termprojecttoenablethethenvacant[public]buildingtobeusedasatemporaryeventvenue.”[WT#2]

Thesamebusinessownercontinued,“AfterItouredthebuilding,Igavemyprofessionalopinionthatthereweretoomanylifesafetyissuestoovercomethatitwouldrequiremuchmoretimeandmoneythan[CityandCountyofDenver]hadtospendontheproject.Eventually,alarger…firmthatalsohadanon‐callcontractwasgiventhecommissiontoupgradethebuilding.”[WT#2]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmstatedthathebelievestheretobeunfairdenialsofcontractawardsandunfairterminationofcontractsinthemarketplace.[#7]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmcommentedthatmunicipalitiessometimes“taketheroadofleastresistance”whenitcomestofactorspublicagenciesorothersusetomakecontractawards.[#39]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathehasnotexperiencedanyunfairdenialofcontractrewardsorunfairterminationofcontracts.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“No….Idon'tseediscrimination.Iseeabusinesscommunityandabusinessatmospherewhereifyoudon’tdogoodwork,you’renotgoingtogetthework.”[#21a]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatshehasnoknowledgeofanyunfairdenialsofcontractawardsorunfairterminationofcontractsinthemarketplace.[#15a]


Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatshehasneverexperiencedanyissueswithunfairterminationofcontracts.[#20]

One business assistance organization representative discussed members’ experiences with

unfair denials of contract awards and unfair termination of contracts. TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthathehadheardofunfairdenialofcontractawardsamongmembers.Regardingunfairterminationofcontracts,hesaidthathehasalsoheardofit,andnotedthatmembersfeelthereisnorecourse.HereportedthatonememberwasremovedfromaDenverprojectbecausetheprojectmanagerwantedtoworkwithacompanyoutofLosAngeles.[#33]

Treatment by prime contractors and customers during performance of the work.Anumberofbusinessownersandrepresentativesdescribedtheirexperienceswithunfairtreatmentbycontractorsandcustomersduringperformanceofwork,orwithapprovalofwork.[e.g.,#2#22]Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatwomeninconstructionareoftenquestionedabouttheirabilitiesandknowledgeofthework,andcommented,“They’llneveraskanyguyin[the]room[those]questions.”Shelatersaidthatinherexperience,younger,college‐agedwomenbecomediscouragedbecauseofthistreatment.[#13]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatshehasabsolutelyexperienceddiscriminationandbarriersregardinghowsheistreatedduringperformanceofwork.Sheexplained,“Icangoonaconstructionsite.Inowhavegrayhair.Icangooutwithmysonwho’s[inhismid‐20s]andwe’llbetalkingtosomebodyinthefieldaboutsomeconstructiontechnique,andtheireyeswillimmediatelygotowardsthatmaleeventhoughI’vebeendoingthisfor30years.Thepresumptionisthattheguyisgoingtohavesomethingmoremeaningfultosay,whichistotallynottrue.Idon’tthinkthisisparticulartotheCityofDenver.Ithinkthatsocietyingeneralisresistanttowomenbeingauthorityfiguresintheworldofconstruction.”[#12]

Whenaskedaboutanyunfairtreatmentbyprimecontractorsorcustomersduringperformanceofwork,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“ThishappenswhenIhavetofigureoutwhichemployeeIcansendtoaparticularjob.IfIwanttogetagoodreferralfromthemandgetmorework,Ihavetothink,‘Arewesending[ourwhiteemployee]or[ourHispanicemployee]?’”Hecontinued,“We[maybe]can’tsend[ourHispanicemployee]to[a]jobbecausewemightnotgetanymorebusiness.”[#7]

Thesamebusinessco‐ownercontinued,“Togetabid,wesend[theotherco‐owner’s]wifebecauseshe’sCaucasian,toturninourpaperwork.”Hewentontocomment,“We’relearningtoplaythegame.It’snotworthit,asasmallbusiness,tofightit.”[#7]

Regardinganyunfairtreatmentofthefirmduringperformanceofwork,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmstatedthatshebelievesherfirmhas


experiencedgender‐baseddiscrimination.Sheexplained,“Whenpeopleseeacorporationthat’sdoing[mylineofwork],theydon’texpecttowalkinandseethatit’sawoman‐ownedcompanyandawoman‐runcompany.Acouplecustomershavenotstayedherewhentheyrealizedthat.”[#8]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatheisawareofinstanceswheresomeprimestreatsubcontractorsunfairly.Henotedthatthefirmstrivestotreattheirsubsequitably.[#21a]

One business owner commented that some MWBE firms choose to “suffer quietly” on the

jobsite to avoid harassment.TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“Ihaveoftenhadrudecommentsandremarksmadetomewhileonlocation….Someofthefieldconstructionworkersaretheworst,andthemostignorant.Withsomefirms,ifyoucomplainoraddresstheissueshead‐on,youareviewedassensitiveandtheywillgooutoftheirwaytomakeyourlifehellthenexttimetheseeyou.That'swhymanyMWBEfirms‘sufferquietly’sotheycancontinueinbusiness.”[WT#12]

One business assistance organization representative reported on barriers faced by members

related to unfair treatment.Whenaskedifmembersfaceanybarriersordiscriminationrelatedtotreatmentbyprimesorcustomersduringperformanceofwork,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“[It’s]notonly[among]theminoritycommunity,butalsowomen.”Hecontinuedtostatethatminorityandwomenmembers“probably”alsofaceproblemswithapprovalofwork.[#33]

Many interviewees reported little or no experiences with unfair treatment by prime

contractors and customers during performance of work, or with approval of work. [e.g.,#20]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstated,“Wehaveneverhadanyissueswithprimeswe’veworkedwith.Theyjustwantthejobdonecorrectly.”[#27]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportedthathehasnotexperiencedpoortreatmentbyprimesorcustomersduringperformanceofwork.[#9]

Whenaskedaboutbarriersordiscriminationregardingtreatmentbyprimesorcustomersduringperformanceofwork,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatsheisnottreatedunfairlyorotherwisepoorly.[#35]

Regardingapprovaloftheworkbyprimesorcustomers,thesamebusinessownerstated,“SofarIhaven’thadanyproblems.AfterIcleansomething,Itendtoaskthemtowalktheprojectwithmeandapprove[of]whatIdid.Peoplehavebeenveryhonest.”[#35]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmreportedthathehasnotexperiencedunfairtreatmentbyprimecontractors


orcustomers.Headdedthatapprovalofhisfirm’sworkbyprimecontractorsandcustomershasnotbeenanissueeither.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportednoknowledgeofunfairtreatmentbyprimecontractorsorcustomersduringperformanceofwork.Headdedthatheisnotawareofdiscriminationinapprovalofworkbyprimesorcustomers.[#23b]

Whenaskedifhehaseverexperiencedanyunfairtreatmentbyaprimeorcustomerduringperformanceofwork,orwithapprovalofwork,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Oncewegetsomeoneforacustomer,Idon’tthinkthereareanyproblems.”[#36]

One business assistance organization representative indicated that members do not

experience unfair treatment by prime contractors or customers.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthatmembershavenotcomplainedaboutunfairtreatmentbyprimecontractorsorcustomers,oraboutissueswithapprovalofwork.[#37]

Unfavorable work environment for minorities or women.Businessownersandrepresentativesdiscussedwhetherthereareunfavorableworkenvironmentsspecificallyforminoritiesorwomen.

A number of businesses reported experiences with unfavorable work environments for

minorities or women. Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Ihadaguythatsaidtomysuperintendent,whowaswhite,[during]alunchbreak[while]theguyswerewalkingoff.He[said],‘Oh,itlooksliketheMexicanDayParade.’”Sheaddedthatquestionsareoftenaskedaboutwhetherornottheyarequalifiedorlegal.Shewentontosay,“Ihavetosaythatifyoureportit,thecityisverygood…they’reverysupportive.That,I’llgiveacrosstheboardinalltheagencies.”[#13]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Iwouldsaybecausewe’veworkedintheconstructionspaceforyearsteamingwithcontractorstobuildourprojects,architectsandengineersareabilliontimesmoresexistthancontractorsare.ArchitectsandengineerstomearesomeofthemostunbelievablysexistmenI’veevermet.”[#12]

Thesamebusinessowneralsosaid,“Ithinkintermsofracialharassment,mostofthepeoplewhobuildourprojects[thatfacethat]areimmigrants.Ihaveheardclientssayhorriblethings…notthatoften,butoccasionally.”Sheadded,“Withinouroffice,wearedeeplycommittedtosupportingtheworkforcethat’sinthefieldandtreatingthemwithabsoluterespect.That’sreallyimportantinourcompany.”[#12]

Shecontinued,“Intermsofsexism,I’vehadyoungfemalesworkherewhohavecomplainedaboutbeingogledoutinthefield.I’mlike,‘Well,thenjustwearmoreclothes.Cover


yourselfupmore.Ifyou’regoingtogooutonajobsiteinshortshorts,whichIdon’tcare,youcandothatifyouwantto,butpeopleareprobablygoingtolookatyourlegs….Youneedtogetoverthat.’”[#12]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthathehasbeendiscriminatedagainstbecauseofhisethnicity.Hestated,"IalwaysgetacertainlookwhenIsitinaroom….IalwaysgetthefeelingthatIneedtoprovemyself."Toavoidtensioninmeetings,hecommented,"I'veevengonetothepointwhereI'vetakenaCaucasianemployeewithmetokindofeasethatissue."Healsonoted,"Ibelieve[discrimination]ismoreofaproblemintheprivatesectorthanthepublicsector."[#4]

Thesamebusinessowneraddedthatdiscriminationhasaffectedhisinteractionswithothercontractorsandclients.Hesaid,“Ihavecomeuponjobswhere…assoonas[contractors]metme,IfeltlikeIwasbrushedoff.Iwastakenseriouslywhiletheyweretalkingtomeonthephoneandemailingme,butassoonaswe[met],IfeltlikeIwasnot[takenseriously].I'llbesittingatmydeskintheofficeandsomebodywillwalkintotalkbusinessandI'mnotthefirstpersontheywalkto,eventhoughI'matthebiggestdesk.They'llwalkuptosomebodyelseand[assume]thatthey'rethebossor…theowner…."[#4]

Hewentontosaythatheexperiencedmorediscriminationwhenheworkedasanemployeeofothercompanies.Hestated,"ItfeltlikeIwasn'tallowedtogooncertainjobsorbeincertainareasofthebuilding.Ithinkitwasmainly[tokeep]mefrombeingthefaceofthecompany….Theywanttoshowadifferentcolorinfront,andtheydon'tcarewhatyoulooklikeintheback,doingthework…."[#4]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Itsoundsbad,butalotofpeopledon’twantcertainminoritygroupsontheirproperty…mainlytheHispanicminoritygroup.WehirealotofHispanics.Igrewupin[California],soIgrewupwithalotofMexicans….And[in]thecurrent,Iguess,politicalenvironment,ifyoucometoajobsiteandit’sfiveHispanics,typicallyyou…getlookeddownonbecausetheythinkyouhavesomeillegalimmigrantsworkingforyou,and[that]you’repayingthem$2anhourorsomethingcrazylikethat.”[#7]

Thesamebusinessco‐ownercontinued,“Rather,ifIshowuptoajobsitewithfivewhiteguys,I’mtreatedcompletelydifferently.Nowit’sseenasaprofessionalenvironment.Ihaveprofessionalworkersandthehomeowners,oreventhesmallbusinesses,feelmorecomfortablewithcertainworkers.It’sastigmathat’scomingaround.Ibelieveit’srelatedtothelastyearandahalf’spoliticalenvironment.Before,Hispanicswereconsideredhardworkers.Nowpeoplethinkthey’restealingjobs.So,it’saffectedus.IliterallyhavetoknowwhatjobI’mbiddingonbecauseyougetpartofthejobandthenyougetpaidonthesecondhalfofthejob.IfIhavethewrongemployees,Iwillnotgetthesecondhalfofthejob.Ijustwon’tgetit….So,youreallyhavetoknowwhoyou’rebiddingwith,andIhavetoplaythatgame,unfortunately,ifIwanttostayinbusiness.”[#7]

Whenaskedifhehasexperiencedanydiscriminationintheformofoffensivecommentsorbehavior,hesaid,“You’llhearjokeslike,‘Theysaidyouguysarelazy,buteverytimeIturn


aroundyouguysarebiddingonsomething,’[referringto]Blackguys.They’retoldthatBlackmenarelazy….We’veheardthatoneandwesortoflaughitoff.Youwanttosaysomethingbutyoudon’t,becauseit’snotworthit.”Headdedthatthishappensinboththepublicandprivatesector,andsaidthatitistheinspectorswhomakethejokesinthepublicsector.[#7]

Whenaskedifshehasanyknowledgeofunfavorableworkenvironmentsforminoritiesorwomen,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaidthatshehasexperiencedoffensivecommentsandbehaviorbecauseofhergender.Sheaddedthatshehasreceivedmailaddressedtoasimilarmalenamebecausethesenderassumesthattheyarewritingtoaman.[#5]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Wereceivedour[certifications]andhavebeenpursuingpublicsectorworkeversince.Thishasprovedextremelychallenging,anddespitethesuccesseshighlightedonourwebsiteandonourSOQ,Ifeelthatgenderdiscriminationisrampant,notonlyintheCityofDenver,butthroughouttheFrontRangeofColoradoandmostlikelythroughoutthecountry.”[WT#11]

Apublicmeetingparticipantsaid,“Hispanicpeopleseemtobenowthefocusondoingthelowerthinginthecommunity….Imean,[it’s]true.”[PT#4]

One business assistance organization representative commented that unfavorable work

environments for minorities and women are “probably underreported.”TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthathehasheardofunfavorableworkenvironmentsforminoritiesandwomen.Headded,“Therealityisit’sprobablyunderreportedbecausecompaniesareafraidofretaliation.”[#33]

A trade association representative said that race “absolutely plays a role” when it comes to

getting work opportunities.TheBlackAmericanfemalerepresentativeofatradeassociationsaid,“Wewouldliketothinkit’sgone,butraceabsolutelyplaysaroleinopportunitiesthatareprovided….Onethingaboutracism[isthat]it’snotsomethingthatyoucanwearorsee,soyou’renotquitesurewhatresidesbehindtheeyesofeachpersonyouseeorencounter.”[#6]

Thesametradeassociationrepresentativecontinued,“It’sveryinterestingtoseehow[or]ifalotofwhatisreallyhappeningiscaptured,because[of]…thesubtletiesthroughwhichalotofthesethingsaretakingplace….There’snodoubtthatracismstillexists.Withthiscurrentadministration,there’sbeensucharesurgenceofit.Before,itseemedlikewehadsomuchmoreunity.Unfortunately,alotofpeoplehavehadtheboldnesstocomeforwardwiththeirtrueself,theirtruesetofbeliefs.”[#6]

Others reported no experience with unfavorable work environment for minorities or women. [e.g.,#11,#14,#22,#23a,#32b,#35]Forexample:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmreportedthatshehasnothadanypersonalexperienceswithbarriersrelatedto


discriminatorytreatment.Sheadded,“Ihonestlydon’tthinkthere[arebarriers]forDBEs,MBEs,andSBEsifyou[fit]yourcompanywiththebestprofessionals.”[#2]

Thesamebusinessco‐ownerwentontosaythatfinancingwasachallengewhenshestartedherbusiness,thoughshedidnotfeeldiscriminatedagainstbasedonherraceorgender.Shesaidshewasmetwithdifficultiesbecauseshewasjuststartingoutasasmallbusiness,andadded,“Whenyou’resmall,youhavealotmoredebtthanthey…probably[want]tosee….I…believethat[somebanks]have…safeguardsinplace.[Banksmaythink],‘Weseeyourgrowingpotential,butwedon’tfeelcomfortablewithyou.’”[#2]

Shelaterstatedthatshebelievesrace/ethnicityandgenderdiscriminationcancreatepotentialbarriers.However,shenotedthattheDBE,MBE,andSBEprogramsreducethediscriminatorybehaviorsignificantly.[#2]

Whenaskedifhehasexperiencedorisawareofanyunfavorableworkenvironmentsforminoritiesorwomen,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Notblatantly.Oneofmysalesguyshadmeetingswithsomelargetransportationcompanies.It’sfunnytoseehowthedynamicchangeswhenI’maround.Hejokedwithmeafteronemeetingsayinghedidn’twantmetoattendagain.”[#36]

Whenaskedaboutpotentialbarriersordiscriminationbasedonrace,ethnicity,orgender,theSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmstatedthathehasnotexperiencedanysuchbarriers.Headdedthathehasnotheardofanyothercontractorsexperiencingrelatedbarriersordiscriminationeither.[#18]

Whenaskedifrace,ethnicity,orgenderdiscriminationaffectshisbusinessopportunities,theBlackAmericanveteranmaleownerofageneralcontractingcompanystated,“Idon’tdopublicwork.AlmostallofmycustomersareBlack.Ihaven’thadanyproblemsthathaveaffectedmysuccess.”[#29]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmreportednoexperiencewithunfavorableworkenvironmentsforminoritiesorwomen.[#9]

TheHispanicAmericanmaleownerofanengineeringfirmreportedthat,tohisknowledge,hehasnotexperiencedanyrace/ethnicity‐baseddiscrimination.[#16]

Regardingunfavorableworkenvironmentsforminoritiesorwomen,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthefirmhasnotexperiencedany.[#15a]

Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstated,“Ihaven’thadanyexperiencesofdiscriminationbasedonrace,ethnicity,[or]gender.”However,hewentontocomment,“I’mnotinapositiontodiscussthatarea.”[#31]


TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Therehavebeennoinstancesexperiencedofdiscrimination,byme,oranyofmyemployees.”[#32a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatshehasneverexperiencedanyunfavorableworkenvironmentsforminoritiesorwomen.[#20]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthathehasnotheardoforexperiencedoffensivecomments,behavior,orracialorsexualharassmentofSBE/MBE/WBEoruncertifiedminority‐orwomen‐ownedfirmsinthelocalmarketplace.[#21a]

Any double standards for minority‐ or woman‐owned firms when performing work.Intervieweesdiscussedwhetherthereweredoublestandardsforminority‐andwoman‐ownedbusinesses.

A number of business owners and representatives reported double standards based on race,

ethnicity, or gender.Forexample:

Whenaskedabouthisexperiencesworkingwithminority‐ownedprimecontractors,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“Minorityprimesaretypicallysmallbusinesses,and[they]seemtotakemorecareintheirworkethicthannon‐minorityprimesbecausetheyknowyousortofgetonechancetomakeamistake.So,minorityprimesseemtoworkbetter.”[#7]

Thesamebusinessco‐ownerlatersaid,“Ican’tputmyfingeronit,butanolderCaucasianmalewillgetperceiveddifferentlyonjobsitesthana[young]Blackmale.Itjustiswhatitis.Idon'tknowifthat’sanagething.[Maybe]theythinkhe’llbemoreexperienced[just]becauseofhisage.”[#7]

Regardingdoublestandardsbasedongender,hesaid,“[On]alotofjobsiteswehaveafemaleonourteamasaleadonabatement,and…theyconstantlyquestionherqualificationssolelybecauseshe’sawoman.Therewasnootherreasontoquestionitbecausetheydon’tquestionanyoneelse’squalificationsthatthey’venevermet,buttheyquestionhers.Theywanttoseeherprojectmanagementcertificates[and]wanttoseeherlogs.Theyneveraskforlogsbecauseit’sawasteoftime,buttheydidthattoher.”[#7]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmindicatedthatdoublestandardsdoexistforminorities.Heexplained,“Ithinkitcouldbealittlebitharderifyouareapersonofcolorbecauseofpresetnotionsthatsomebodymighthave,orbeliefstheymighthave.Ithinktherearealwaysgoingtobebarriersoutthere,andthefencemightbealittlebithigherforapersonofcolorsometimes[because]you[haveto]proveyourselfmore.”[#39]


TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedconstructionservicesfirmsaid“beingawomanintheconstructionindustry”means“youarenottakenseriouslyandnotgivenopportunitiestoproveyourself.”[WT#5]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“BackinthedayafterIleft[myprevious]jobandwantedtoworkforaprestigiousdowntownfirm,theyofferedmeajobasamarketinggirl.Iwaslike,‘WellIdon’twanttowriteproposalsandbeasecretary.Iwanttolearnconstructiondetails.’So,Iturneddown[the]job.Iremembermyfatherwasfuriouswithme,butIwaslike,‘I’mgoingtobeinatightskirtandI’mgoingtogethiredfor[non‐technicalskills],nottobealandscapearchitect.’”[#12]

Thesamebusinessownercontinued,“Someoftheyoungwomenwhoworkformestated,‘Wewantedtoworkforyoubecauseweknewwe’dgetequalexposureontheconstructionside,whereasifweworkedforamale‐ownedfirmasfemalesontheconstructionside,itwouldbeharder.’”Shelateradded,“Ifyou’reapersonofcolororafemale,youhavetobetwiceasgood.Weknowthat.Awhitemalecandosomething[wrong]andpeoplearelike,‘Oh,that’sfine.’”[#12]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Thereisabiasforsurewithfolksregardingaminority‐ownedbusinessaslessqualified.Butestablishedcustomersdon’tdropmewhentheyfindoutthebusinessisminority‐owned.”[#36]

Thesamebusinessownerlateradded,“Ithinktheyshowamajoritycompanymoreleniencywhentheymakeamistake.Ifaminoritymakesamistake,it’sblownwayoutofproportion.Everybodymakesmistakes.Theyshould[just]lookatwhatyoudid[and]fixit.”[#36]

For a few business owners, double standards did not exist, or were less prevalent than before.[e.g.,#5,#21a,#23a]Forexample:

Whenaskedaboutdoublestandards,unfairtreatment,andstereotypicalattitudestowardsminoritiesandwomeninthelocalmarketplace,theBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmstated,“Idon’tthinkthey’rehappeningasmuchastheyusedto.Ithinkwe’vegottenbetter.But,I…rememberpeopleputnoosesuponajobsite.”[#13]

Thesamebusinessownercontinued,“Ithinkit’sgoodtohavechange.Ithinkit’salsobadtohavepeopleinthesamespotfor30or40years,withthesameattitude30yearsagoasthey[have]now.”Shesaidshewouldliketoseemorediversityinthecity,saying,“I’dliketoseemorediversityonthecity‐sideinthoseroles,notinthetypicalrolesofDSBO,butintheactualprocurementprojectmanagers.”[#13]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedbeingdiscriminatedagainst,particularlyintheprivatesector,butnoted,“It'snotasbadasitwas


20yearsago.Generationsgobyandpeoplearechanging.IsawitmoreasayoungeradultthanIdonow."[#4]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatdoublestandardinperformancearenotanissueforhisfirm.[#14]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatthefirmhasnotexperiencedanydoublestandardswhenperformingwork.[#15a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedthatshehasneverexperiencedanyissueswithdoublestandardsinperformance.[#20]

Some business owners discussed whether there is a fair playing field in the Denver

marketplace.Commentsinclude:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatthereisnotafairplayingfieldinthelocalmarketplace.However,shenotedthatcertifications“sortof[get]youasemi‐levelplayingfield.”[#13]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaidthatshefeelsmale‐ownedbusinesseshaveanadvantage.Sheadded,“Iknowpeoplearemoreapttorefertoamale‐basedcompany.I’veheardfromsomebodywhousedtodo[mylineofwork],anddoorsopenedforhimlikecrazywhenpeoplefoundoutwhathedid.”[#8]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaidthatwhilesheisrelativelynewtoherindustry,shenolongerseesherlackofexperienceandexpertiseasanissue.Shestated,“IrecognizeIamnewtothisindustry.Constructionisstillawhiteman’sworld.TherehavebeentimeswhenI’vegonetoapre‐conandtheyhavenotaddressedme.Justonegentleman[maybe],butitdoesn’tbothermeanymorebecauseIgetthework.Thereisstillplentyofworktobehad.I’dsay99percentofthecontractorsoutthereareveryopen.”[#19]

TheBlackAmericanmaleandveteranownerofaDBE‐,ACDBE‐,WMBE‐,SBE‐,SBEC‐,andSDVOSB‐certifiedspecialtyservicesfirmsaid,“Asownerofasmall…companyinthemetroareaIfinditamazingthat[acorporation]currentlyworkingat[DenverInternationalAirport]hasbeenthereover20years.Surelyacontractofthatsizeshouldhaveenrichedtheownerswellabovetheestablishedthresholdofgraduationeligibility.”[WT#9]

Thesamebusinessownercontinued,“ThereasonthatIwasgivenisthatnoothercompanycandosuchamassivejob.Well,Ibelievethatafewsmallcompaniesfromthisareacould.Itappearsthatforsomereasonsomecompaniesarebeingallowedtomonopolizetheirpositionswhileotherssitonthesidelines.Thisisindirectconflictwiththewaytheruleswerewritten….Greedandelitismruletheday.”[WT#9]


One trade association representative stated that minority‐ and women‐owned firms “do not

have a level playing field in today's environment.”TheHispanicAmericanmalerepresentativeofatradeassociationaddedthatcertificationgivesthesefirmsanopportunityto“getapieceofthepie”onpublicprojects.[#11]

H. Insights Regarding Race‐/Ethnicity‐ or Gender‐Based Discrimination

Thestudyteamaskedintervieweesaboutwhethertheyexperiencedorwereawareofotherpotentialformsofdiscriminationaffectingminoritiesorwomen,orminority‐andwomen‐ownedbusinesses.ThispartofAppendixJexaminestheirdiscussionof:

Anystereotypicalattitudesaboutminoritiesorwomen(orMBE/WBE/DBEs);

Anyevidenceofa“goodol’boy”networkorotherclosednetworks;

Anyotherallegationsofdiscriminatorytreatment;and

Factorsthataffectopportunitiesforminoritiesorwomentoenterandadvanceintheindustry.

Any stereotypical attitudes about minorities or women (or MBE/WBE/DBEs).Anumberofbusinessownersandrepresentativesreportedonstereotypesthatnegativelyaffectminority‐andwomen‐ownedfirms.[e.g.,#7,WT#5]Forexample:

Whenaskedaboutanystereotypicalattitudesonthepartofcustomersorbuyers,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmcommentedthatitisjustbasedon“nuance.”Sheadded,“Peoplewillsaythingslike,‘Oh,thatgirlengineer….’Noonewouldeversay,‘Oh,thatboyengineer,’[or]‘Oh,thatboydoctor.’”[#5]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“IcantrulysaythatIhaveexperiencedracialdiscriminationintheDenver,[Colorado]region.IhavehadmanysituationswhereIhavedonemarketingtoarchitectural/engineering/constructionfirmsandhaveimmediatelyfeltthenegativeracialvibeofbeinganAfricanAmericanmale.WithsomepeopleIhavecomeacross,themindsetisthistypeof…workistobedonebyawhitemanonly…notapersonofcolororawoman.”[WT#12]

Thesamebusinessownerlatersaid,“Ihaveexperiencedbarriersputinplacetoblockmefromgainingaccesstosomeofthebetterprojectsinthisregion,[both]privateandpublic.Ihavehadsituationswhereaconstructioncompanyoranarchitecturalfirmappearstobeveryinterestedinthequalityof[my]workIdoonlytodiscoverthat[it]wasdonebyatalentedAfricanAmericanmanandnotawhiteman.Atthatpoint,everythingchanges.IfIwasaskedtosubmitaproposal,suddenlyIdonotgetreturnedphonecallsoransweredemails,ortheproposalgetsstrungalongforweeksandmonths.”[WT#12]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthatshedoesbelievethereisdiscriminationinregardstostereotypicalattitudesonthepartofcustomersandbuyers.Shesaidthatoftenpeopleaskherwhat


flowerstoplant,andneverask[whatsheknows]inregardstoconcreteorotherconstructionaspects.Sheadded,“Iknowalotaboutflowers.Iknowwaymoreaboutflowersthanmostpeople,but[also]Iknowalotaboutconcreteandpavers,andregulationsaroundbuildingswimmingpools.Theexpectationisthatifyou’reagirl,you[only]planttheflowers[and]makesuretheflowersarereallypretty.”[#12]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidshelostallofhermanagerswithinamonthofhertakingoverthecompany.Shesaidtheytoldher,“Welikeyou.Wejustdon’tthinkyoucanmakeit.”Sheattributedgreatclients,generalcontractors,andtheCityofDenvertoherbeingabletopickherselfbackupandmoveforward.Sheaddedthatworkingona“keyproject”alsohelped.[#13]

Thesamebusinessownerlatersaidhadaleadershippositiononanadvisorycommitteeforaconstructioneducationproviderandsaidtherewasresistancetotheideaofawomenleadingthecommittee.[#13]

Whenaskedifheisawareofanystereotypicalattitudesinthemarketplaceregardingminoritiesorwomen,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstatedthatheisconvincedtheyexist,fromfinancingtohiringemployees.[#36]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmsaidthathehasexperiencedstereotypicalattitudesfromsomecustomersbasedonhisnamealone.Hesaidthathechangedthenameofhiscompanytosoundless“foreign”duetothis,andadded,“Therewasnothingspecificallysaid[bycustomers],Ijustfeltthatpeopledidn’tknowaboutmebecausethenamewasforeign.”Hewentontosaythathebelievestherearestill“rawfeelings”surroundingthe9/11terroristattacksthathavecausedpeopletoviewhimdifferently.[#18]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaid,“Whenpeopleaskwhodoesmy[work]andIsay,‘Ido’,Ithinktheyaresurprised.Itellthem,‘Idon’tneedabig,burlymantodoit.Icandoitmyselfbypushingabutton.’”[#8]

Thesamebusinessco‐ownerwentontosaythatstereotypicalattitudesdoexistwhenitcomestowomen‐ownedbusinesses.Sheadded,“That’swhytherearesomanywomen‐ownedgroups[workingwithotherwomen].It’seasiertotalktowomenaboutit.It’salmostcliqueytryingtoholdontoalittlepartofthemarket.”[#8]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Ioperateinaman’sworldandoftenfacecredibilityissues,evenaftermanyyearsinbusinessandagreattrackrecord.”Sheadded,“Thisistrueformanywomensmallbusinessownersintheconstructionindustry.”[#20]

Regardingdiscriminationfacedbywomenintheconstructionindustry,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“Ithinkthereismorespeculation.NotbecauseI’maminority,butmorebecause


I’mawoman….Itisdifficulttoworkintheconstructionindustryasawoman.”Sheadded,“ThemoreI’moutthere,themorecomfortableothercontractorsfeel.Theyhavelearnedmyqualityofwork.”[#19]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthathedoesbelievetherearesomestereotypicalattitudesonthepartofcustomersandbuyersregardingsmallbusinessesandminority‐ownedbusinesses.Hesaid,“Ibelievewehavereallygoodproducts,andanybodythat’sworkedwithuswouldrecommendusforotherwork.ButIalsoknowthatthere’sastigmaoutthereaboutsmallbusinessesandminoritybusinessesinparticular.”[#9]

Thesamebusinessownercontinued,“But,we’vetriedtostayabovethat.Wedon’tgointoplacessaying,‘Youshouldgiveusapieceofbusinessbecausewe’reasmallbusinessorwe’reaminority‐ownedbusiness.’Wewanttobeabletocompetewitheverybodyelsethat’scompetingonthebasisoftheproductsthatwehave,theservicesthatweprovide,thepricingthatweprovide,andwhatwecanbringtothetable.”[#9]

Some trade association and business assistance organization representatives discussed

whether members experience any stereotypical attitudes on the part of customers or buyers.Forexample:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidhehasseendiscriminationagainstwomen‐andminority‐ownedfirmsinregardstostereotypicalattitudesonthepartofcustomersandbuyers.Heexplained,“Thishappensespeciallyinindustrieswhereminority[firms]are[underrepresented].[Becauseofthatunderrepresentation],youhearcommentsthatminoritiesdonotknowwhattheyaredoing.”[#11]

Whenaskedaboutmembers’experienceswithstereotypicalattitudesonthepartofcustomersandbuyers,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthatstereotypicalattitudesarestillaproblem,especiallyforimmigrants.Headdedthatsmallbusinessesareseenasriskierduetocapitalandworkforcechallenges.[#33]

Some interviewees reported no experience with stereotypes that negatively affected minority‐

or women‐owned firms.[e.g.,#15a,#21a,#23a,#28,#32a,#32b]Forexample:

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmreportedthathewasnotawareofanydiscriminationaffectingminority‐orwomen‐ownedfirmsinthelocalmarketplace.[#3]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmstatedthathehasnotexperiencedanydiscriminationbasedonrace,ethnicity,orgenderthathasinterferedwithsmallbusinesses’success.Headded,“Ihaveneverheardofanysituationsthathaveinterferedwiththesuccessofminoritycompanies.”[#25]


TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatstereotypicalattitudesonthepartofcustomersandbuyersisnotanissueforhisfirm.[#14]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatshehasnotexperiencedanystereotypicalattitudesbyprimecontractorsorcustomersintheindustry.[#15a]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshehasnotexperiencedstereotypicalattitudesthatnegativelyaffectminority‐orwomen‐ownedfirms.[#35]

Any “good ol’ boy” network or other closed networks. Manybusinessownersandrepresentativesreportedtheexistenceofa“goodol’boy”networkorotherclosednetworks.[e.g.,WT#11,WT#12,PT#3c]Forexample:

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthathehasexperienced"goodol'boy"networks.Hestated,"Iworkedfora[different]firmandIsawdiscriminationwithintheirnetworksthere.Thatwasoneofthethingsthatpushedmeto[start]myownbusiness.IknewthattherewasapointwhereIwasn'tallowed.Ibelieveitwasbecauseofthecolorofmyskin,forobviousreasons."Hecontinued,"SinceI'vebeeninbusinessonmyownIhaven'tnoticeditasmuch,mainlybecauseI'mdealingwithitonadifferentlevel,butit'sstillthere.Thegood‐old‐boynetworksarethere,andtheymakeitprettyobviousifsomeonefromtheoutsideistryingtogetin.”[#4]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Intheprivatesectorit’sthe“goodol’boy”club.Wearenotapproachedaboutopportunities.Inthepublicsector,opportunitiesaremoretransparent.”[#22]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstatedthat“goodol’boy”networksdoexist.Headded,“Evenwhencompaniesfailtomeetgoals,theystillgetcontracts.Therearenopenalties.”[#36]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedshebelieves“100percent”thatthe“goodol’boy”networkexists.Sheexplained,“IthinkthatmyexperiencewiththeCityofDenveristhatit’sadiverseworkforce.Ithinkthatthepersonwhorunsparksandrecplanningisaprettyoldschoolsexistmale,butIthinkit’stheincumbencyoftheestablishedplayers,whichhappentobewhite,male‐owned,that’stheproblem.”[#12]

Thesamebusinessownercontinued,“[CityandCountyofDenver]likesthoseplayersbecausethey’regoingtogetareliableproduct.Iunderstandthat.Nocityemployeewantstobeatworkat11p.m.becausetheyhiredthisstart‐upcompanyandthestart‐upcompanydidacrappyjob.Igetthat.Butitseemsliketheycoulddiversifyalittlebitmore…particularlytomaketheprojectssmallenoughsothatnewercompaniescandothem.Also,tocreatemoreopportunitiesforminoritiesandwomentogetinthegameinsteadof


justtobeasubcontractoranddothe[lessdesirable]workonsomebigproject,becausethat’showthesystemworksnow.”[#12]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthatheisawareofthe“goodol’boy”networkandacknowledgeditsexistenceintheDenvermarketplace.[#39]

Whenaskedabout“goodol’boy”networksorotherclosednetworks,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthathedoesbelievetheyexist.Headded,“Basedontheproductswedo[and]theservicesweprovide,andwherewe’repricedinthemarket,wecancompeteonalevelplayingfield.[However],we[sometimes]don’tgetinvitedtothetable….Wemaynotwinaprojectalways,but…wewantto[atleast]beabletohaveaconversation.AndI’dsaytherehavebeenmanyinstanceswherewe’veneverhadthatconversation.”[#9]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Theprivatesectorisverymuchiftheyworkedwithyoubefore,they’llworkwithyouagain.It’sreallyahardmarkettogetinto….It’sreallylikeaclub.”[#13]

Regarding“goodol’boy”networks,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathehaswitnessedthemonjobsites.Hesaid,“Therearethe‘goodol’boys’thatwillgettogetherandtalkinacorner…[and]theycomebackandsay,‘We’llgiveyouthispiece,’andsomeoneelsetakestheirbiggerpiece.Wemaysay,‘Waitaminute.Wedidn’tbidonthissmallpiece.Webidon[thebigone],’butthey’llinterruptandsay,‘Well,that’swhatwehaveleft.’Andyoulook,andit’sjustyouandanotherminority[withthesmallpiece].”[#7]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmindicatedthatclosednetworksexistintheDenvermarketplace.Shesaid,“Youneverareasked[bylargeprimecontractors]toparticipate,or…askedtojoinateamwithanumberthatwillbringyouonastheymaydowithotherpartners.[It’sbecause]theyhaveotherpartnersthatthey’vebeeninbusinesswithalongtime….”[PT#3a]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedconstructionservicesfirmsaid,“Itseemsasthoughthemostdifficultpartofpenetratingthe‘goodol’boy’worldisbeingawomanintheconstructionindustry.Youarenottakenseriouslyandnotgivenopportunitiestoproveyourself.Therearealotofeventsthatpromotedoingbusinesswithwomen‐ownedandminority‐ownedbusinesses,butitneverdevelopsintoanything.”[WT#5]

Thesamebusinessownercontinued,“Mylatestexperiencewaswithanelectricalcompanythatwasawardedsomeof[a]DenverInternationalAirport…project.Supposedly,theytookasmallerpartofthetradethatweperformandhadmycompanyandavarietyofothersbidthejob.Wespentalotoftimeandmoneyontheproposal,[but]foundoutthroughthegrapevinethatitwasjusta‘mock’exercisetoseewhowouldbeacontender….Iwasveryoffendedthatitwasnotanactualbid.”[WT#5]


TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthatthereisa“goodol’boy”networkintheDenverarea.HesaidthathelostabidforaZooprojectduetoaclosednetwork,andaddedthatit’scommonforbusinessestoworkwithotherbusinessesthatthey’veworkedwithpreviously.[#18]

Regardingherexperienceswiththe“goodol’boy”network,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaid,“Inmyindustry,[the‘goodol’boy’network]isawful,awful….Iworkedwithagentlemanon[a]project.HedidtheprocessformebecausemyclientwantedsomethingIdon’tdo.Thismandidtheembroideryandhiswifedidthegraphicsandeverythingelse.WhileIwasspeakingwithhim,hiswifeleftand[wentinto]theembroideryroomandwasn’tinvolvedinthespeaking….HespokedowntomelikeIwasacharlatan,ornoviceorsomething.”[#8]

Thesamebusinessco‐ownerwentontosaythatshequitalocalchamberofcommercebecauseitwasa“testosterone‐filledgroup.”Sheexplained,“Whentheyshowup,it’sadrinkingpartyandeverybodyhastohavetheirmartinisortheirginandtonics[to]talkaboutbusiness.Ireallydidgetacceptedbythewomenatthechamber,butmostof[them]workforthechamber.”[#8]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmstatedthathehasnotexperiencedanybarriers.However,henoted,“Mostcompanies[and]ownerslikeworkingwithcompaniestheyhaveworkedwithbefore.”[#25]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatthe“goodol’boy”networkexistsandthatitcreatescredibilityissuesforherfirm.[#20]

A trade association representative stated that he believes the “good ol’ boy” network does

exist.TheHispanicAmericanmalerepresentativeofatradeassociationexplained,“Itisrelationship‐driven,andI[donot]wanttousethatterm…becauseofwhat‘goodoldboy’networktypicallymeanstomostofus,[whichis]Anglomen.Butintheconstructionworld,itcouldalsomeanaprimethatusestheexactsamecertifiedfirmseverysingletime.Andthatisa‘goodoldboy’network[too].Noonecanpenetrateintothat.”[#11]

Some interviewees said they do not encounter closed networks or think they are a thing of the

past.Forexample:

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatthe“goodol’boy”networkisnotanissueforhisfirm.[#14]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatshehasnotexperiencedany“goodol’boy”networksorotherclosednetworks.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofa“goodol’boy”networkorotherclosednetworks.[#23a]


TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshehasnotexperiencedthe“goodol’boy”networkoranyotherclosednetworks.[#35]

Any other allegations of discriminatory treatment.Someintervieweeshadcommentsrelatedtotopicsnotdiscussedabove.Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmindicatedthathisfirmsometimesfacesdiscriminationwhenpursingpublicsectorbidopportunities.Hesaid,“It’swhoyouknow,andifyouknowtherightperson,theycanwalkyouthroughtheirfrontdoorandgetyoutositdownwiththecorrectpersoninordertosubmityourbid.Ifyoudon’t,thenthegatekeeper,dependingonwhereyoubid,willlookatyouandsaythebidisclosed.[They’ll]literallylookatyouand[have]noothercriteria.”[#7]

Thesamebusinessco‐ownercontinued,“Then,someonecancomebehindyouaweeklaterandstillbidonit.Andforus,there’snorealrecourse[there].We’renotgoingtocomplainbecausewe’renotgoingtoburnabridge.We’reasmallbusiness,andunfortunately,wedon’thavetheabilitytogocomplain.Becauseifyoucomplain,theyremember[it].Therearenosecretcomplaints.”[#7]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Thiswasawhileback.ItwasaninstancewhereIhadadisputewith[a]CityofDenverarchitect.Wewereona[publicsector]projectandIdidn’tagreewithwhatthe…architectwasaskingustodo,soIaskedformediationbecauseIdidn’tthinkwewerebeingtreatedfairly.[A]managerof[Denver]PublicWorkswasthemediator.Ifeltbrowbeateninthemeetingbecausehewasn’tanindependentperson.So,itneverwentanywhereandIfeltIwaswastingmytime.”[#22]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“SomeyearsagoIattendedacommercialrealestatebusinessnetworkingbreakfastandmarketingeventandwasamazedattheextremelackofculturaldiversity….Thereweresomewomenthere.Iwaswell‐dressed…as[my]counterparts[were].Ihadnicemarketingmaterialsandbusinesscards,as[didmy]counterparts.WhenIenteredthemaindininghallatthebighoteltheeventwasheldat,IwasgreetedwithsomeveryrudestaresandpeopleignoringmeasIapproachedthemtointroducemyself.”[WT#12]

Thesamebusinessownercontinued,“AttheendoftheeventwhileIleaving,Idiscoveredthatsomeofmyhigh‐endprofessionallyprintedmarketingmaterialswereinthetrashwiththefoodremainders[of]people'splates.ThisisjustasmallexampleofwhatIhaveexperienced.Ihavehaddirectcommentsmadetomelike,‘Isthisreallyyourwork?’or…someracialcommentmadeundertheperson'sbreathastheywalkbyme.”[WT#12]

Some trade association and business assistance organization representatives had comments

regarding additional unfair or discriminatory treatment that members experience.Forexample:


TheBlackAmericanfemalerepresentativeofatradeassociationsaid,“Someofourmembershaveverbalizedtomethedifferentdiscriminatoryexperiencesthey’vehad,[and]someofthemdon’tknowhowtonavigatethroughsomeofthoseexperiences.Somehavebeeninthegamelongenoughtokindofknowhowtofinesse…andhowtomaketheirwaythrough,[but]insomeway,shape,orform,alotofthemhaveexperienceddiscrimination,overtly.”[#6]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidhebelievesachallengeinconstruction‐relatedindustriesisthattheformsarenotbilingual.Heexplained,“WehavealotofSpanish‐speakingfirmsthatareAmericancitizensseekingwork,buttheyhavetohiresomebodytofillouttheirpaperworkforthem.[It]putsthematanunfairdisadvantage.”[#11]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Ibelieveminoritiesandwomenareunfairlyheldtoahigherstandard.”[#33]

Many business owners and representatives had comments related to price discrimination

and/or discrimination in payments.Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatshehasexperiencedpayment‐relatedissuesthatshesuspectsarerootedindiscrimination.Sheexplained,“There’sonedeveloperwhoI’malwayswaitingontogetpaid…whoprobablytakesadvantageofourcompanyalittlebitmorebecausehe’slike,‘Yeah,they’regirls….’Ithinkthatoverallwithclients,societymakesitfeeleasiertotakeadvantageofwomen.”[#12]

Thesamebusinessownercontinued,“I’vehadtobereallygoodtomyemployees,butit’sdifficultwithclientswhoarealwaystryingtonickelanddimeus.Ijusttriedtogetreallytoughaboutthatbecauseitshowsthere’ssignificantwagedisparityinarchitectureandengineeringbetweenmenandwomen.Studyafterstudyshowsthat.Wealwayslookatourworkandgo,‘Ifwewereamale‐ownedfirm,howmuchwouldwehavechargedforthis?Didweundercharge?’Becausewe’rewomen,wearesocializedtobenice.”[#12]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaidthatsomeprimecontractorswill“blacklist”minority‐andwomen‐ownedfirmsthatcomplainaboutlatepayment.Heexplained,“Andifyouspeakup…[they]willdoa‘whispercampaign’totheirbuddiesatotherconstruction…orarchitecturalfirmsintheregion.”[WT#12]

Whenaskedifheisawareofpricediscriminationinobtainingfinancing,bonding,materialsandsupplies,orotherproductsorservices,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthataftermanyyearsofbusiness,heisstillforcedtogetamoreexpensiveSBAloanratherthanatraditionalloan.[#36]

Whenaskedaboutpricediscrimination,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatshehasneverhadtodealwithbondingandthatshehasexperiencednodiscriminationinfinancingwithherbank.[#8]


TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatpricediscriminationisnotanissueforhisfirm.[#14]

Whenaskedifhehaswitnessedorexperiencedanypricediscriminationinobtainingfinancing,bonding,materialsorsupplies,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathehasnot.[#7]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmstatedthatthefirmhasnotencounteredanypricediscriminationordiscriminationinpayments.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofdiscriminationintimelypaymentsbycustomersorprimes.Hewentontocomment,“Slowpaymentsarenotjustaminoritiesissue.”[#23b]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatpricediscrimination“encompasses”allsmallbusinessissues.[#20]

WhenaskedifheisawareofdiscriminationinpaymentsbeingaproblemforSBE/MBE/WBEoruncertifiedminority‐orwomen‐ownedfirmsinthelocalmarketplace,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“No.It’snotbecauseafirmisonethingoranother.Paymentsaresometimesslowforallofus.Sometimeswewaitalongtime…90[or]120days.”[#21a]


discrimination related to price or payments.Forexample:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthathehasheardmentionofdiscriminationinpaymentsfrommembersbutdoesnotbelievethatslowpaymentrelatestotherace/ethnicityofbusinessowners:“Idonotthinkthatwithslowpayment,ethnicityhas[anything]todowithit.Itisjustaprocess.”[#11]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthatwhileslowpaymentonpublicworkisanissue,shedoesnotbelieveitisduetodiscrimination.[#37]

Some interviewees commented on whether there is any governmental resistance to use of

SBE/MBE/WBE firms.Commentsinclude:

WhenaskedifheisawareofanygovernmentresistancetotheuseofDBEs,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstated,“Notoutwardly.Theyalltouttheirprogramandsaytheywanttodobusinesswithyou.Theirwebsitesevensaytheybelieveinadiversesuppliernetwork…butitdoesn’thappen.Thentheybundlecontracts,andthat’saformofexclusion.”[#36]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatheisawareofgovernmentalresistancetouseofSBE/MBE/WBE


firms.HeexplainedthathewasremovedfromaDenverPublicWorksprojectbecausetheprojectmanagerwantedtoworkwithafirmoutofLosAngeles.[#22]

WhenaskedifheisawareofgovernmentalresistancetouseofSBE/MBE/WBEsbeingaproblemforSBE/MBE/WBEoruncertifiedminority‐orwomen‐ownedfirmsinthelocalmarketplace,eitherintheprivatesectororthepublicsector,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“Nothingisfartherfromthetruth.Governmenthas[contract]goals.”[#21a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatgovernmentalresistancetouseofSBE/MWBEsisnotanissuewhenprojectshavegoals.Shesaidthatwhenprojectsdonothavegoalsitisanissuebecauseprimeshavenoincentivetousecertifiedfirms.[#20]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthatshebelievesthereisnogovernmentalresistancetotheuseofSBE/MBE/WBEs.[#12]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthatheisnotawareofanygovernmentalresistancetouseofSBE/MBE/WBEs.[#23a]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatsheisnotawareofanygovernmentalresistancetotheuseofSBE/MBE/WBEfirms.[#35]

Some trade association and business assistance organization representatives also discussed

whether there is governmental resistance to the use of DBEs.Forexample:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatsomepublicagencieswithinCityandCountyofDenverhavewantedtogetridofgoalsbecausethetechnicalskillsrequiredforsomeprojectsaretoospecificandtheavailabilityofDBE‐certifiedcontractorswiththenecessaryskillsislow.Publicagencies,hecontinued,arethenfacedwithnotreachingtheirDBEgoals.[#11]

Thesametradeassociationrepresentativeadded,“Ithinkitcomesprimarilyfromtheownershipofthedepartments.Iremember[Denver]BotanicGardensnotwantingtouseanycertifiedfirms,[and]Iremember[Denver]PublicWorksfightingonthose[too].Ithinktheresistanceisthere.”[#11]

WhenaskedifthereisgovernmentresistancetouseofDBEs,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Notovertresistance,butourminoritycommunityisgoingtobethemajorityinnottoomanyyears….Somepeopleareuncomfortablewiththat.”[#33]

One business owner said he considered changing his last name to be less ethnic‐sounding.Thenon‐Hispanicwhitemaleownerofaconstructionfirmsaid,“Iworkonprivatejobs[and]I


haven’texperiencedanybarriers,[though]theonlythingthatIhavethoughtaboutwaschangingmylastnamebecauseitis[MiddleEastern].Idon’tbelieveIhavebeendeniedwork,butit’sjustafeeling[thatitmaybepossible].Fortunately,oncepeopleworkwithmeandknowmyqualityofwork,theydon’thaveaproblem.”[#24]

Factors that affect opportunities for minorities or women to enter and advance in the industry.Someintervieweesdiscussedwhethertherearefactorsthataffecttheabilityofminoritiesandwomentoenterandadvanceintheindustry.Forexample:

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidlargeprimecontractorsinherindustryopensmalloffices“tocomplywitheverysinglebitofcategoryofmixedcodeswhichthey…couldpotentiallyhaveworktiedto”anddefinetheofficesas“theofficeofsmallbusiness,civilrights,[or]outreach,[etcetera].”[PT#3a]

Thesamebusinessownercontinued,“Whateverthebusinessis,theyhavethatinternallyandtheyendupdoingthatworkinsidetheproject.Theygatherour…competitivebidsbecauseyouhavetocompete.”Sheadded,“Youhavetogiveup[becauseyou’regiving]yourunitnumbersandyourlaborhours,andyourdollaramountsrightwhenyousitdownandmeetwiththem.Andthosearethenumbersthatthey’regonnagoinwith.”[PT#3a]

Whenaskedifanyrace,ethnicity,orgenderdiscriminationaffectsbusinessopportunitiesforminoritiesorwomen,thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmsaid,“Ihavenotexperiencedanydiscriminationintheareaoflimitedbusinessopportunities.”[#27]

Whenaskedifsheisawareofanybarriersordiscriminationbasedonrace,ethnicity,orgenderintheDenvermarketplace,thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Wehavebeeninbusinesssolonginthismetroarea,[and]wearenotawareofanydiscriminatoryobstacles.Wehaveworkedwithmanyminoritiesandhavenotheardofanyofthosepractices.”[#28]

Thesamebusinessrepresentativecontinued,“Weareallawarethatcompaniesliketoworkwithpeopleandcompaniestheyknow.Isupposetherearesomethatfeelitisdifficulttogetlargecontractsbecausetheymightbeaminority.Ihaven’theardofthatsituation,butIdoknowthatpeoplelikeworkingwithpeopletheyknow,thattheyhaveworkedwithbefore,and[that]producequalitywork.”[#28]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaid,“Ithinktheperceptionofasmallbusinessisthey’renotgoingtobeabletocompetewiththelargebusinesses…becausetheydon’thavetheinfrastructureinplacetocompete,ortheydon’thavetheexperienceorqualifications.Theymighthavethequalificationswiththeirkeypeople,butasafirmtheymaynot.Ithinkalsoasapersonofcolor,sometimesit’salittlebitharder.”[#39]

A few trade association representatives discussed whether minority‐ and women‐owned firms

face additional barriers not experienced by other firms.Forexample:


Whenaskedifmembersfaceanybarriersordiscriminationbasedonrace,ethnicity,orgender,thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“We’veheardof…somebarriersfor…minority‐andwomen‐ownedbusinesses,[suchas]obtainingfinancing,bondingrequirements,[and]insurancerequirements.”Shesaidthatobtainingfinancingandmeetinginsurancerequirementsareespeciallydifficultforminority‐andwomen‐ownedbusinessesintheDenvermarketplace,andcommented,“Iknowalotoftheprimesreallyworkwellwiththesmallfirmsbecausetheyneedthem….Theyneedthemtomeetthegoals[and]tobeagoodpartner.”[#38]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidhebelievesthereareadditionaldifficultiesandbarriersforsmallbusinessesaswellasminority‐andwoman‐ownedfirmsinthemarketplace.Heexplained,“Alotofthisworkisrelationship‐driven.Primestendtoutilizethesamefirmsthattheyhavehadrelationshipswith,anditishardfornewerfirmstobreakintothatandgetmorework.I’mabelieverthattheonlywaytobuildcapacityis…tofindawaytocreateopportunitiesfornewstartupsorfolkswhohavebeenthereforawhileandwanttoenterintothepublicarenaorprivatesector,ormovefromresidentialtocommercial.Whenthelargerguysarelimitingexposuretonewfirms,itisverydifficultforthemtogetin.”[#11]

Whenaskedifsmall,minority‐orwomen‐ownedfirmsfaceadditionalbarriersnotfacedbyotherfirms,theBlackAmericanfemalerepresentativeofatradeassociationindicatedthatadditionalbarriersdoexist.Shestated,“Withthenewadministrationandthechallengesofthecivilrightsprograms,ithasbeen…interestingtoseehowithasbeeninterpretedbyanumberofprimes,orjustdifferentpeople,period.”Shesaidthatitisdifficultto“provethereisdiscrimination,”or“bias,”andcommented,“It’sinterestingtoseehowit’sbeingrepackaged.”[#6]

ThesametradeassociationrepresentativeaddedthatherorganizationmetwithacivilrightsteamattheU.S.DOTinWashington,D.C.todiscusskeepingprogramsinplacethatbenefitminority‐andwomen‐ownedbusinesses.Shesaid,“AlotofDOTswillpulloutiftheyhavetheopportunityto[doso],andthat’swhythere’ssuchastrongappreciation[between]usandCDOT.”[#6]

I. Insights Regarding Business Assistance Programs

Thestudyteamaskedbusinessownersandrepresentativesabouttheirviewsofpotentialrace‐andgender‐neutralmeasuresthatmighthelpsmallbusinessesandminority‐andwomen‐ownedbusinesses,obtainworkintheDenvercontractingindustry.Intervieweesdiscussedvarioustypesofpotentialmeasuresand,inmanycases,maderecommendationsforspecificprogramsandprogramtopics.ThefollowingpagesofthisAppendixreviewcommentspertainingto:

Knowledgeofprogramsingeneral;

Technicalassistanceandsupportservices;

On‐the‐jobtraining;

Mentor‐protégérelationships;


Jointventurerelationships;

Financingassistance;

Bondingassistance;

Assistanceinobtainingbusinessinsurance;and

Assistanceinusingemergingtechnology.

Knowledge of programs in general. Thestudyteamreportedontheirawarenessofandexperienceswithbusinessassistanceprogram.

Most interviewees reported having knowledge of or participation in business assistance

programs.Somefoundprogramshelpfulwhileothersindicatedtheywereunimpressedbytheprograms’helpfulness.Forexample:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidsheisawareoftrainingprogramsofferedthatshefindshelpful.Shesaid,“Ibelieveatonepointtherewas…trainingregardingestimatingcontractlanguage…bonding.Itwasbackwhenwefirststarted.Justrecently,inthepasttwotothreeyears,I’vechangedwhatIneedinternallyandhavefocusedmoreonfinancialclasses.”[#2]

Thesamebusinessco‐ownerwentontosay,“Ihonestlythink[trainingprograms]arevaluable.Forme,ithasnotworkedtopursue[moretrainings]becauseofthetimingoftheworkshops.Eventhoughyoudoneedtofocusonyourbusiness,mymainfocusismy[family].Back[whenIfirststartedmybusiness],westruggledabitmorebecauseIdidn’tattendthose[trainings].”Sheaddedthatshefindsgreatvalueintheinformationofferedviaherassociationmemberships.[#2]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreported,"WhenIfirststarted[myfirm]IdidseeanSBEcounselor.TheyguidedmeonhowtogetSBEcertifiedandthingsofthatnature.ThenIwenttoanSBEconference.Ithinktheyareveryhelpful."[#4]

Regardingbusinessassistanceprograms,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“IjustattendedonerecentlyonNACIScodes.[Itfocusedon]makingsurethatyourcodesareright.Thatwasreallyagoodexamplebecausewedidfindacategorythatwemayfitinto.”[#9]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatbeforestartinghisbusinessheattendedasix‐weekcourseofferedbytheDenverMetroChamberofCommerce.Hesaidthatthecoursehelpedhimmakethefinaldecisiontomoveforwardwithstartinghisownbusiness.[#14]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmstated,“WeregularlygetnewslettersthatcomearoundfromtheBoulderandBroomfieldChambersofCommerce.Therearefrequentworkshops,soIamawareofthem.Ihaven’tattendedanyofthem,butitseemsliketherearegoodresourcesavailable.”Hecommentedonspecificeventsthathe


imaginesarehelpful,thoughhedoesnotparticipate,includinga“BoulderStartupWeek”eventthatfocusesonnetworking.Headded,“Thereareallsortsofresourcesforfindingfinancingorformeetingothermembersofthecommunity,andjustkindofhelpingtogrowthebusiness.”[#10]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreportedknowingofseveraltypesofbusinessassistancethatshedoesnottakeadvantageof.Shesaidthatsheisawareoftechnicalassistance,financingassistance,on‐the‐jobtraining,andsmallbusinessstart‐upassistance,thoughhasneverutilizedany.[#20]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmcommentedthatmanystart‐upscoulduseassistanceinbusinessfinancing,purchasing,andsafety.[#21a]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshecompletedasix‐weekprogramdesignedforMWBEcompaniesat[acorporate‐baseduniversity].Shesaidtheprogramreviewedtheessentialsofconstructionmanagement,includinghowtoreadanRFP,applyingforcredit,marketing,safety,sustainability,andmanaginginsuranceandbonding.SheaddedthatshehasattendedtheHispanicContractorsofColoradobiddingworkshop.[#35]

RegardingprogramsandresourcesthatareparticularlyhelpfultoMBE/WBEfirms,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatshehasparticipatedwithHispanicContractorsofColoradoandothertradeassociations.[#12]

Thesamebusinessowneradded,“TheotherresourcethatIfeltisareallygoodresourceisPTAC,whichIthinkisStateofColoradoorfederal,orcombined.That’sanexcellentresource.Theircounselorsarereallyhelpfulinhelpingyouunderstandthepublicsectorgame.Theladywhohelpedmethere,I’dgiveherashoutoutamilliontimesover.”[#12]

RegardingtheDenverInternationalAirportCommerceHubandSBO,apublicmeetingparticipantsaid,“Thelackofcommunicationwas[poor].I[made]anappointmentwithahigherofficialjusttoaskpublicknowledge,andIwastold,‘Wecan’ttellyouthis,wecan’ttellyouthis,wecan’ttellyouthis.’So,itseemstomethateventhoughwehaveorganizationstohelpus,theyarenotcomingforwardwiththehelp.Andsometimesmaybetheyareintimidated[to]nottogiveusthehelp.So,thatwasoneofthebiggestfrustrationsI’vehad.”[PT#4]

A few trade association and business assistance organization representatives reported on their

organizations’ offered programs.Somediscussedotherprogramsorservicesavailabletomembers.Forexample:

Whenaskedaboutthebusinessassistanceofferedtomembers,thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“Oneofthekeythingswehaveisaleadershipdevelopmentprogram,anditstartsatthepre‐supervisorylevel.”Shecontinued,


“Wejuststarted…amanagementone[thisyear],andthat[covers]alotofHRandcommunicationskills[for]thosethataredevelopingintheircareer.We’reabusinessorganization,sonotallengineersare…interestedinbeingabusiness.Theyworkforabusiness,butthey[might]not[be]interestedinmanagingabusiness.[#38]

Thesametradeassociationrepresentativeaddedthattheorganizationalsooffersmanagementeducationandlegaleducation.Shenoted,“Employmentlawisabigthing.Understandingbothsides[isimportant],andsowehavethosekindsofprograms.”[#38]

TheHispanicAmericanmalerepresentativeofatradeassociationsaid,“Becausewedoourgeneralmembershipmeetingsonamonthlybasis,wegetthebigguysin.Wealsogivepresentationsbysomeofthebiggerprojectsateachoneofourdinners,anditallowsourmembershiptohavedirectaccesswithdecision‐makersforthesebigprojects.Theprimesalsoattendthedinners,whichallowsourmemberstodeveloprelationshipswiththosefolksthatarekeyinmakingdecisionsonwhotheywanttoinvitetobidonworkthattheyaredoing….Anotherarmofourorganizationisthetrainingopportunitiesweoffer.Wehaveacontractoracademywhereweofferclasses[and]trainingsformembersandnon‐members,employees,andowners…atminimalcost.Theclassesaretaughtbyindustryexperts,whichmakesthemmoreapplicabletotheday‐to‐daybusinessofourmembers.”[#11]

Regardingpotentialmeasuresorprogramsthatcanbenefitmembers,theBlackAmericanfemalerepresentativeofatradeassociationsaidthatsheisabigproponentofbusinesseducationandtraining.ShesaidthatRegionalTransportationDistrict’sorientationregardingcontractterminationhelpssubcontractorstounderstandtheirresponsibilitiesandexpectations.[#6]

Whenaskedaboutpotentialmeasuresorprogramssheisawareofthatseemparticularlyhelpfultosmallbusinessesincluding,minority‐andwomen‐ownedfirms,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“WeencourageourmemberstogetinvolvedwiththeNationalCenterforAmericanIndianEnterpriseDevelopmentandtheAmericanIndianProcurementTechnicalAssistanceCenter,aswellastheSmallBusinessAdministrationandtheColoradoMinorityBusinessOffice.”[#37]

Whenaskedwhythesearehelpful,thesamebusinessassistanceorganizationrepresentativestatedthatNationalCenterforAmericanIndianEnterpriseDevelopment(NCAIED)andAmericanIndianProcurementTechnicalAssistanceCenter(PTAC)areculturallyattunedtomembers’needs,andthattheSBAandColoradoMinorityBusinessOffice(MBO)focuswellontheneedsofsmallbusinessesingeneral.[#37]

Shelateradded,“Therewasapersonwhocameinanddidtrainingonworkers’comp.Thereisalsoacontacton[a]humanrightscommissionwhooccasionallycomes[totheorganization]andspeakstomembers.”[#37]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthattheorganizationpromotestrainingprovidedbytheDenverMetroChamberofCommerce,SBA,SmallBusinessDevelopmentCenters,andtheMinoritySupplier


DevelopmentCouncilintheareasofmarketanalysis,businessplanning,financialplanning,marketingandsales,socialmedia,hiringandmanagingemployees,capitalformation,accountingsystems,andcommunityengagement.[#33]

A few interviewees discussed small business assistance offered by local universities and other

educational institutions.[e.g.,#33]Forexample:

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatsheparticipatedinabondingcourseatTurnerUniversity.[#35]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatsheattendedacareerfairhostedbyColoradoStateUniversity.[#12]

Others reported having little or no knowledge of assistance programs in general and/or not

participating in any programs.[e.g.,#23b,#24,#31,#34]Afewindicatedthatavailableprogramsarenothelpful.Forexample:

Whenaskedifanyassistanceprogramsareparticularlyhelpfultosmallbusinesses,theHispanicAmericanmaleownerofanarchitecturalengineeringfirmstatedthathehasnotusedanyprograms,noteventhoseofferedbytheSmallBusinessAdministration.Heexplainedthatthemosthelpfulthingsforhisfirmhavebeenseminarsconductedbytheprofessionalassociationstowhichtheyaremembers.[#16]

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthatheisunawareofanyprogramsavailabletosmallorcertifiedcompanies.Hewentontocommentthatindividualswhowanttostartabusinessneedtounderstandthatitisafull‐timejobandthathelpisn’talwaysavailable.Headded,“Igotnohelp.[I]hadtolearnitthehardway.Agoodexample[ofthat]isabidwesubmittedfor…theZoo.Itwouldhavebeennicetoknow[why]we[lost].”[#18]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanyprogramsthatareparticularlyhelpfulforsmallbusinesses.Headded,“It’sdifficulttogetinformationonhowtoapply….Yougotosmallbusinesseventsandthey’resortofawasteoftime.”[#7]

TheBlackAmericanandveteranmaleownerofageneralcontractingcompanystated,“Idon’tthinkthereareanyresourcesouttherethatcouldhelpanewbusinesstomakesureyou’redoingthingsright.It’strialanderror.You’vegottokeepworkingonittomakethebusinesssuccessful.”[#29]

Whenaskedifheisawareofpotentialmeasuresorprogramsthatbenefitsmallbusinesses,thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmstatedthatheisnotawareofspecificprograms.However,hesaid,“Ibelieve[that]ifthecitywantstoreallyassistinsmallbusinessgrowth,therearesomestepstoimplement.”[#25]


Thesamebusinessownercontinued,“Thereneedstobesomeway[for]smallbusinesses[to]networkwithbiggercompanies,[and]not[with]justanetworking[or]outreachevent.[Thecityshouldalso]assistinmakingsurethattheycanmentorthesmallbusiness.”Regardingcurrentmentor‐protégéprograms,hesaid,“Thereneedstobesomething[with]morethanfourorfivegroups.Itshouldbeaneffortinmakingsurerelationshipsareformedandkept.”[#25]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmstatedthatsheisnotawareofprogramsthatareparticularlyhelpfultosmallbusinessesasidefromthosethroughtheSBA.Sheadded,“IusedalotofcontactinformationfromtheBoulder[SmallBusinessDevelopmentCenter].Mybusinessbroker,mybusinessattorney,andmyfinanceguywereallfromtheSBA.”Shewentontosaythatshecalledthecountyforinformation,thoughnoonereachedouttoherafterwards.[#8]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatthefirmneverneededhelpfrombusinessassistanceprogramsbecausesheandtheotherownerhaveastrongbusinessbackground.[#15a]

Asurveyrespondentsaid,“Thesmallbusinessorganizationisajoke.Whenwestartedourbusiness,wewenttothemandtheytoldusweweretooyounganddidnothaveenoughexperience.”[AS#34]

Technical assistance and support services.Thestudyteamdiscusseddifferenttypesoftechnicalassistanceandotherbusinesssupportprograms.Someintervieweesreportedwhethertechnicalassistanceandsupportservicesarehelpful.

A number of business owners and representatives reported that technical assistance and

support services are helpful.[e.g.,#1c,#9,#21a,#25,#28]Forexample:

Whenaskedifsheisawareofanytechnicalassistanceandsupportservices,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“IhaveattendedworkshopsatMiCasaResourceCenter,completed…USDOTBondingEducationProgramand[a]TurnerUniversity[course].”Sheadded,“Ilearnedbookkeepingincollege,andafriendtaughtmeestimating.”[#35]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmreportedthataccountingsoftwarehasbeenhelpful,notablyinmaintainingpaymentschedules.Hedidnotethatitwouldbemorehelpfulifthesoftwareallowedbillingbylaborcategoryratherthanbyperson.[#1d]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmstatedthathelpfultrainingthroughtheCityandCountyofDenverincludedtopicsonestimating,contractlanguage,payrollprocedures,andbonding.[#2]

Apublicmeetingparticipantsaid,“In2010whentheeconomyplummeted,[I]was[in]phaseoneofthesmallbusinessentrepreneuriallearningprocess….SincethenIhavegone


throughMiCasa[andhave]takenadvantageofsomeincredibleresources[suchas]businessplanning,redevelopment,everything.”[PT#4]

Regardingtechnicalassistanceandothersupportservices,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“IthinkthatmarketingprogramsforMBE,WBE,[and]SBEbusinesses[tobetter]understandthemarketplacewouldbeveryhelpful.”[#5]

TheBlackAmericanveteranmaleownerofageneralcontractingcompanyindicatedthattechnicalassistanceandsupportserviceswouldbehelpful.Hesaid,“Havingthattypeofresource,likeabusinessconsultant,couldbehelpfulforsmallbusinessesthatarestrugglingwithallofthework,likebookkeeping,thatisnecessaryforsuccess.”[#29]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmcommentedonthebenefitsoftechnicalassistanceandsupportservices.Shesaid,“Itcouldbeveryhelpfulforbusinessesto[learn],beforetheystartabusiness,theback‐officeelementsofbookkeeping,estimating,andknowledge[ofhow]torespondtoabid.”[#19]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmsaid,“Tohaveavailableabusinesscoachthatcouldassistinallareasofsmallbusiness[wouldbehelpful].TherehavebeenquestionsIhadtofindanswerstoonmyown.Anexamplewouldbewhentostartofferingbenefitstoemployees.Acoachcouldhelpinidentifyingtherighttime.Thatcoachcouldbeespeciallyhelpfulforbrandnewcompanies.”[#27]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthattheNationalElectricalContractorsAssociation(NECA)hasahelpfulapprenticeship.Hewentontocomment,“It’sthenewpeoplecominginwhoaretechsavvy.”[#23a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Iwouldliketoseesometypeoftechnicalassistanceforsmallbusinesses,especiallystart‐ups.IhavebusinessexperienceandknowwheretogotogetwhatIneed.However,Ibelieveit’sdifficultforsmallbusinessestoknowwheretogetthehelptheyneedtosucceed.Actually,I’mreallysurprisedthatDenverdoesn’thaveadepartmentthatnot[only]certifiesyourcompany,but[also]give[s]…assistance.”[#32a]

Thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmstated,“Therewereaseriesofworkshopsnottoolongagodoing[searchengineoptimization]which[were]veryhelpful,[theyalsodiscussed]howtorefineanonlinebusinesstostayrelevantandstaycurrentwiththeconstantlychangingtechnology….”[#10]

Whenaskedabouttechnicalassistanceprograms,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Therewasaprogramthathelpedusgetintobusiness,butthoseprogramsdon’texistanymore.Theyarefocusedonbigbusinesses[now].”[#36]



the helpfulness of technical assistance and other support services for members.[e.g.,#33]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthattheNationalCenterforAmericanIndianEnterpriseDevelopment(NCAIED)andAmericanIndianProcurementTechnicalAssistanceCenter(PTAC)offermanyhelpfultechnicalassistanceandsupportservices.[#37]

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthattechnicalassistanceandsupportservicesareextremelyhelpfulforsmallbusinesses.Healsonotedthatapprenticeshipsarehelpful.[#11]

A few business owners and representatives do not find technical assistance programs useful,

or are unaware of such programs.Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanytechnicalassistanceprograms.[#7]

Thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmreportedthatheisnotawareofanytechnicalassistanceorsupportservices.[#34]

Whenaskedabouttechnicalassistanceandsupportservices,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatheisawareofsuchassistance,butnotedthatit’snotalwayshelpful.Heexplained,“Smallbusinessesaresavvyoncetheygettothepointofdoingpublicwork.IwasfairlywellestablishedbeforeImovedintopublicwork.”[#22]

On‐the‐job training programs. Intervieweesdiscussedtheirperceptionsofandexperienceswithon‐the‐jobtrainingprograms.

Some interviewees felt that on‐the‐job training programs would be useful or had participated

in such programs.[e.g.,#9,#23a,and#21a]Commentsinclude:

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmindicatedthaton‐the‐jobtrainingprogramswouldbehelpful,especiallyiftheyfocusonjobsitesafety.[#9]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmindicatedthaton‐the‐jobtrainingprogramsarehelpful.Hesaidthatheisfamiliarwithon‐the‐jobtrainingforelectricalapprenticesconductedbytheIndependentElectricalContractors(IEC)andtheNationalElectricalContractorsAssociation(NECA).[#23a]

Whenaskedabouton‐the‐jobtrainingprograms,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmreportedthatConstructionIndustryTrainingCouncil(CITC)andIndependentElectricalContractors(IEC)havebigeffortstorecruitminoritiesandwomenfortheirtrainingprograms.[#21a]


TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanyon‐the‐jobtrainingprograms.[#7]

Mentor‐protégé relationships.Businessownersandrepresentativesreportedontheirexperienceswithmentor‐protégéprograms.Manyviewedtheprogramsashelpful. [e.g.,#7,#6,#9,#22,#25,AS#40]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthatmentor‐protégérelationshipsareveryhelpful,andsaidshewishesshehadhadamentor.Sheexplained,“Ithinkthat’sprobablybeenoneofmyhardeststruggles.Therehavebeenlittlepiecesofmentorshipfromdifferentpeople,butbecauseI’mprobablyinthefirst10ofwomen‐owned[companiesinmyfield]inDenvertherereallyhasn’tbeenanyonetogoto.”[#12]

Thesamebusinessowneradded,“Ithink[OfficeofEconomicDevelopment]inDenverhasmentorshipopportunities.Idon’tthinkwe’veappliedfortheOEDone,butwewouldlovetobementoredbyanarchitecturefirmwhowouldtakeusundertheirwingandhandussomeoftheirdevelopmentwork.Eventhoughwecomplainaboutdevelopmentwork,wewoulddoit.Tohaveagoodmentorwouldbesoworthit.”[#12]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmdiscussedthebenefitsofamentor‐protégérelationshipandhoweffectiveon‐the‐jobtrainingcouldbeforsmallbusinesses.Shestated,“Iappliedforthecity’smentor‐protégéprogram,butwasnotacceptedbecauseIhadnotbeeninbusinesslongenough.Ibelievethebenefitsofamentor‐protégéprogramandon‐the‐jobtrainingcouldsavesignificanttimeinmakingsuretoconductyourbusinessthemostprofitablewaypossible.Aformalprogramorinformalprogramcouldgivethesmallbusinessowneraplacetogetassistance.IalsolookedatandappliedfortheCDOTprogramandwasunsuccessful,[but]I’llkeeptrying.”[#19]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmnotedthatamentor‐protégéprogramwouldbehelpful.Shenotedthatalthoughtheirfirmdoesnotwantto,theyoftenhelptheirsubcontractorsdoaccountingandtracktheirtime.[#1b]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmstatedthatamoreformalmentoringarrangementthatcreditsthementoringfirmwouldbehelpfulforhisbusiness.Hereportedthat,“Ifyoureallylookatthespecificsofwhomentoredandstartedafirmthatgrewandbecameasuccessfulfirmintheirownright,wedid.There’snocreditforthat.”[#1a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Itwould…behelpfultohaveamentor‐protégéprogramforthoseinthedesignfield[similartotheprogram]intheconstructionfield….”[#5]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthathehasparticipatedasboththementorandprotégéin


mentor‐protégéprograms,andindicatedthatsuchprogramsarehelpfultosmallbusinesses.[#39]

Thenon‐HispanicwhitefemaleownerofanSBE‐certifiedprofessionalservicesfirmindicatedthatmorementor‐protégéprogramsshouldbeavailabletosmallbusinessownersintheDenvermarketplace.[PT#2c]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatmentor‐protégérelationshipsareveryhelpful,buthardtofind.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatshehasonlyhad“unofficial”mentor‐protégérelationshipswiththeprimessheworkswithfrequently.Shesaidthattheserelationshipshavebeenbeneficial.[#20]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatshehasaninformalmentor‐protégérelationshipwithanotherconstructioncleanupcompany.[#35]

Thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmreportedthatthefirmhasnotparticipatedinanymentor‐protégéprograms,butindicatedthatsuchprogramsmightbehelpfultoemployees.[#34]

Some trade association and business assistance organization representatives reported on the

helpfulness of mentor‐protégé programs for members.[e.g.,#33]Onerepresentativenotedtheirorganization’seffortstorecruitfirmsfortheSBA’smentor‐protégéprogram.Commentsinclude:

WhenaskedaboutprogramsorinitiativesbyhisorganizationthatcouldbenefitSBE‐andMWBE‐certifiedmembers,thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaid,“Wetalkedabout…amentorshiptypeofasituationwhichwouldbeevenmorebeefy.Buthowcouldweputthattogetherwiththecity’sguidancesoitworked?[#40]

Thesametradeassociationrepresentativecontinued,“Rightnow,there’snoincentiveintheordinanceotherthanyouget…agoldstarifyoudoamentorship.Itdoesn’tchangethepercentage….Andthenallthewhile,youhavethe,whatI’llcallforlackofabetterterm,themajoritysubs.[They’re]thenon‐minoritysubcontractorswhocanbuildthesebuildingsandthey’resittingonthesidelines,andwe’renotemployingthemtomentorupwiththesebecause…nowhereinthesystemthatmakesthatthepathofleastresistance.”[#40]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationreportedthattheorganizationrecruitscompaniesfortheSmallBusinessAdministration’smentor‐protégéprogram.Shenotedthatone‐memberfirmisalsopartofCDOT’smentor‐protégéprogram.[#37]


TheHispanicAmericanmalerepresentativeofatradeassociationstated,“Mentor‐protégé[programs]donewellareextremelyhelpfultoemergingbusinesses.”[#11]

One business owner said private relationships are more valuable than mentor‐protégé

relationships.TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidshedoesn’tbelievementor‐protégéprogramsareashelpfulasgenuineprivaterelationships.Shesaiditwouldbemoreeffectivetoinviteageneralcontractororprojectmanagertolunchandaskthemforadviceabouttheneedsoftheorganization.Shewentontoreiteratethatitisimportanttobuildprivaterelationships,andsaidsheisconvincedthatschedulingtimeonceaquarterwithothercontractorsandtappingintotheirknowledgeismorevaluable.[#13]

Thesamebusinessowneralsosaidageneralcontractoronaprojectprovidedmanagementhelptoensurehersuccessaftershetookoverhercompany.Afterlearningwhatherfirm’scapacitywas,thegeneralcontractorhelpedtoidentifyotheropportunitiesthatcarriedherforanothercoupleofyears.[#13]

Joint venture relationships.Afewintervieweesshowedinterestinjointventurerelationships.[e.g.,#12]Morefacedchallengeswithjointventurerelationships,havenotparticipatedinthem,orfindnovalueinthem.Forexample:

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatduringtheconstructionofDenverInternationalAirportheparticipatedinajointventurewithalargeengineeringfirmthathewaspartownerof.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisfamiliarwithjointventuresbetweenlargefirms,butnotforsmallbusinessesspecifically.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatshehasneverparticipatedinajointventurerelationship.Whenaskedwhy,shesaidthatsheisnotinterestedduetotheirlegal“risk.”Shewentontocommentthatsheishappytobeasubcontractoronly.[#20]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatthefirmparticipatedinajointventureinthepast,butdidnotgetanyworkoutofit.[#15a]

One trade association representative said that joint venture relationships would benefit

smaller firms.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatjointventurescanhelpsmallfirmsbuildnecessaryexperience.However,henoted,“Theriskneedstobeinproportionto[eachfirm’s]contributiontoitandnotafifty‐fiftyagreementinorder[forthejointventure]tobe[successful].”[#11]

Financing assistance.Thestudyteamaskedintervieweesaboutfinancingassistanceandrelatedprograms.Mostindicatedthatsuchprogramsarehelpful.[e.g.,#11,#21a,#23a,#39]Forexample:


TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisawareoffinanceassistanceprograms.However,hesaidthathedidnotreceivemuchinformationafterinquiringaboutthem.[#7]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatheattendedafinancingassistancecourseattheDenverMetroChamberofCommercethatfocusedoncashflow.[#14]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Itwould[be]helpfulforusandI’msurecouldbeveryhelpfulforsomesmallbusinessorstart‐upbusinessesto…[have]aresourcelistofcompaniesthatprovidebookkeepingandfinancingassistance….Anareaourcompanystillstruggleswithiscertifiedpayroll.Regularandongoingclassesinthatareaconductedbythecity,sinceit’sarequirement,wouldbehelpfultoo.”[#28]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatfinancingassistancecanbehelpful.Shenoted,“Therearenonprofitorganizationsgivingloans,[suchas]ColoradoEnterpriseFund,Accion,[and]mpowered.”[#35]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmreportedthatmemberstakeadvantageoffinancingassistancefromtheorganization’sbanksandcreditunionmembers,usuallyintheformofbusinessloansandestablishingbusinessaccounts.[#33]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmindicatedthatfinancingassistanceishelpful,andnotedthathecurrentlyhasanSBAloan.[#36]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthathecurrentlyhasanSBAloanonhisbuilding.HenotedthatwithanSBAguaranteeontheloan,thelenderofferedlongertermsforrepayment,whichcauseshismonthlypaymentstobelower.[#22]

A business assistance organization representative discussed members’ options for financing

assistance.Whenaskedifsheisawareofanyhelpfulfinancingassistanceprograms,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Obviously[thereis]theSBA,butthereisalwaysaneedforfinancialtraining.Itwouldbehelpfultohaveanonlinedatabasewherepeoplecouldgoandfindoutwhoisdoingdifferentkindsoftraining.”Sheadded,“Thestate’sMinorityBusinessOfficeisanothergoodresource,buttheyneedmoresupport.PerhapstheycouldcollaboratewiththeCityandCounty[ofDenver].”[#37]

Bonding assistance.Businessownersandrepresentativesreportedonbondingassistanceashelpful.[e.g.,#13,PT#4]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthattheyparticipatedinabondingassistanceprogram.Regarding


thefirm’sparticipation,shesaid,“Itwasaconstruction‐orientedbondingprogram.IthinkitwasputonbytheNationalHighway[TrafficSafetyAdministration].Theyhaveiteveryyear[andit]wasavaluablewayformetolearnhowtowritepublicsectorproposalsandgoafterpublicwork….Itwas…gearedmoretowardscontractorsthanarchitects,butwe’vereallytriedtotakeadvantageofclassesandprogramsputonbyvariouspartsofthepublicsectorand…tradeorganizations,tolearnasmuchaspossible.”[#12]

Whenaskedifshehasanyknowledgeofbondingassistance,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Yearsago,oneoftheprimesIfrequentlyworkwithhelpedmewithbondingthroughtheirbondingcompany.”[#20]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatshehasutilizedtheUSDOTBondingEducationProgram,andindicatedthatitwashelpful.[#35]

A few trade association and business assistance organization representatives commented on

the helpfulness of bonding assistance for members.Forexample:

Whenaskedifshehasanyknowledgeofbondingassistance,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthattheysendmemberstotheU.S.DepartmentofTransportationBondingEducationProgramclasses.Sheadded,“Wealsohaveaguywho’saretiredformerCEOofaconstructioncompanywhocomesinanddoesbondingworkshops.”[#37]

Whenaskedaboutbondingassistance,theHispanicAmericanmalerepresentativeofatradeassociationsaid,“Ifthecitycouldcomeupwithabondingprogramwhere[firms]couldpayintoit,Ithink[it]wouldbeextremelyhelpfultoalotofoursmallfirmsthatcannotgetbondingontheirown,sinceittakesthreetofiveyearsofgoodfinancialrecordstoachievebonding.”[#11]

A business assistance organization representative noted that she is unaware of any bonding

assistance for members.TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthatassistanceinobtainingbusinessinsurancewouldbehelpfultomembers,thoughsheisnotawareofanysuchassistancecurrently.[#37]

Assistance in obtaining business insurance.Afewbusinessownersandrepresentativessaidthatassistanceobtainingbusinessinsurancewouldbehelpfultosmallbusinesses.[e.g.,#2,AS#16]Othersreportednoneedforinsurance‐relatedassistance.[e.g.,#15a]Forexample,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanyprogramsthatassistinobtainingbusinessinsurance,butindicatedthatsuchprogramswouldbehelpful.[#7]

Assistance in using emerging technology.Someintervieweessaidthatassistanceusingemergingtechnologywouldbehelpful.[e.g.,#9,#11,#37]Othersindicatedthattheyhavenoneedforemergingtechnologyassistance.[e.g.,#15a]Commentsinclude:


TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshereceivedcomputertrainingatMiCasaResourceCenterandlearnedLCPtrackeratCOMTOColorado.Sheexplained,“Theyweregivingaclassaboutitanditisgoodtoknow.When[aclient]movedtotheirnewoffice,Igotthe…contractbecausetheprimeuse[d]LCPtracker….IgotthecontractbecauseIknewhowtouseit.”[#35]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“Ourcompanyistryingtokeepupwithemergingtechnology,sowehavealotoflunchandlearnswherevendorscomeinandmakepresentations.The[CityandCountyofDenver]couldprobablypartnerwithRedRocksCommunityCollegeorothereducationalinstitutionstoprovideassistanceinusingemergingtechnology.”[#21a]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanyprogramsthatassistinusingemergingtechnology.[#7]

Thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmindicatedthatfurtherassistanceinusingemergingtechnologymaybehelpful.Hesaid,“Keepingupwithnewtechnologiesisachallenge,butwehavepeopleatthecompanywhoarestayingontopofthat….Itgivesusacompetitiveadvantage.”[#34]

J. Insights Regarding Contracting Processes

Insightsdiscussedincludethefollowingtopics:

Contractcomplianceandenforcement;

Solicitationsandprocurements;

Informationonpublicagencycontractingproceduresandbiddingopportunities;

Perceptionsofelectronicbidding,registration,andonlinedirectoryofpotentialsubcontractors;

Pre‐bidconferenceswheresubcontractorscanmeetprimecontractors;

Distributionoflistsofplanholdersorotherlistsofpossibleprimebidderstopotentialsubcontractors.

Otheragencyoutreachsuchasvendorfairsandevents;

Streamliningorsimplificationofbiddingprocedures;

Breakinguplargecontractsintosmallerpieces(unbundling);

Priceorevaluationpreferencesforsmallbusinesses;

Smallbusinessset‐asides;

Mandatorysubcontractingminimums;

Smallbusinesssubcontractinggoals;and

Formalcomplaintandgrievanceprocedures.


Contract compliance and enforcement. AfewbusinessownersandrepresentativesdiscussedcomplianceandenforcementofCityandCountyofDenvercontracts.Forexample:

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidsheoncesignedablankletterofintentforageneralcontractorthatlaterrefusedtoutilizeherfirmonaproject.Shesaidthegeneralcontractortoldher,“Ohno,wemadeamistake.Weonlyshowedyouasasubifweneededyoutomeetourgoal.”[#2]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmstatedthatthereshouldbebetterenforcementregardingprimecontractors’effortstomeetMWBErequirements.Shesaid,“Ifyou’regoingtohaveaprogramthatrequirescompliance,someoneisgoingtohavetomonitorittomakesurethebigprimesaremeetingthecompliance.Thatmeansyouneedbootsonthegroundtoactuallydothework.Thereneedstobesomesortofseriousrepercussionsfornotmeetingtherequirements.”[#5]

Solicitations and procurements. Someintervieweesreportedontheirexperienceswithsolicitationandprocurementprocesses.

Comments related to solicitations and procurements are broad. Forexample:

Regardingsolicitationsandprocurements,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaid,“It’sa‘goodol’boys’club.”Heexplained,“Theytalktoeachotheraboutupcomingbids,upcomingcontracts,andupcomingwork….That’swhyIwishthattherewasabetterplaceforthecitytohostsomething.[Thecityshould]say,‘Hey,herearethequalifications.Bid,’andthat’sit.Butbythetimeitdoesgettotheirbidprocess,thevendorsusuallyalreadyselected.”[#7]

Apublicmeetingparticipantsaid,“Ifeelalotoftimesthatthesolicitationsandtheprogramsthatwehaveestablished…feellikeit’sawelfaresystem.AndthereasonwhyIsaythatisbecausetheamountsofthecontractorthevaluesofthecontactkeepyouhere.You’renevergoingtogoandbeabig[business]here,soitprohibitsyoufromgrowing.Itjustkeepsyouatthislevel.”Sheadded,“Thebigissue…is[getting]minoritycompanies[togrow].Ithinkthat’sahugeproblembecauseyoucannevergetanopportunitytogrow.”[PT#4]

Thesamepublicmeetingparticipantcontinued,“Iknowthatwehavetheset‐asideprogramon…butthere’snotverymanycontactsinthere.And…[with]thedefinedselectionpoolfortheprofessionalservicesthisyear,theykeptthedollarvalueatthesamedollarvalueasitwaslasttime.Ithinkitwasan$11millioncontract….Butalltheprimes,becauseofthegrowthoftheairportandalltheactivitieshappening,theircontractorsquadrupled.Oneprojectmanagementcontractwentfrom$25milliontolike$45million[or]$90million.So,theircontractvaluesincrease,butthedefinedselectionpoolcontractsremainedthesame.Sothat’swhatImeanbythatwelfaresystem.We’rejustgoingtodowhatwehavetodotomeettheminimumrequirement[withoutletting]peoplegrowandbecomeeconomically…big.”[PT#4]


Regardingsolicitations,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstated,“Igetalotofsolicitationsfromprimecontractors,butthereisnofollow‐up.”[#20]

RegardingCityandCountyofDenver’snotificationandbidprocesses,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“TheywillpoststuffonRockyMountainBidNet,[but]whatIdon’talwaysseearethebidresults.They’llaskyoutoapplythroughthat,butwhenthebidtabscomeoutthey’renotposted.[Iftheyare],Ineverseethem.Youcangobackinandtryandfindthatproject,butalotoftimesthetabulationsortheawardinformationisn’tthere.Iknowtheypostthemontheirwebsites,butit’sanotherstepintheprocess,andasasmallbusinessyoudon’talwayshavethetimetolookforthatstuffintwoorthreedifferentplaces.”[#9]

Thesamebusinessownercontinued,“AnotherthingI’vediscoveredisthatthepurchasingpersonwhoworkswith[our]categoryusuallydoesnotgotothecertificationlistandsay,‘Herearethebusinessesthatarecertifiedinthiscategory.Let’ssendthemasolicitationforthisproject,’whichwouldbehelpful.You’recertifiedwiththecityalready,sowhynotusethedirectoryorlistthatthecitymaintainsalreadytosolicitresponsesforprojects?Inoneinstance,IwenttotalktotheCityofDenverpurchasingagentandIexplainedthatwearecertifiedanddidnotgetasolicitationforaproject.Shetoldmetogotoanotherdepartmentforthat,soIaskedherhowshechosetosendpeoplethesolicitation….Shesaiditwasdependentonwhosecardshehadinherdeskdrawer.”[#9]

One business owner suggested that City and County of Denver be more transparent regarding

solicitation and procurement.TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsuggestedthatCityandCountyofDenverbemoretransparentinitssolicitationandprocurementprocesses.Hesaidthatbythetimebidsareopentothepublic,“thevendors[are]usuallyalreadyselected.”[#7]

Information on public agency contracting procedures and bidding opportunities.Someintervieweesreportedonhowwellinformationisdisseminatedregardingpublicagencycontractingproceduresandbiddingopportunities.Forexample:

Whenaskedifhehadanydirectexperienceorwasawareofanyinformationonpublicagencycontractingproceduresandbiddingopportunitiesthatmightbenefitallsmallbusinesses,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthathegetsassistanceregardingfederalworkfromtheProcurementTechnicalAssistanceCenter(PTAC).[#22]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathedoesnotreceiveelectronicnoticesaboutopportunitieseventhoughheholdsseveralcertifications.[#36]

A trade association representative commented on his organization’s gathering of information

regarding contract opportunities for members.TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatreceivinginformationonpublicagencycontractingproceduresandbiddingopportunitiesisveryhelpful.Hesaidtheorganizationtriestogatherthisinformationfor


members,andexplainedthatmanysmallbusinessownersdonotunderstandallthepublicrequirementsneededtosubmitasuccessfulbid.[#11]

Perceptions of electronic bidding, registration, and online directory of potential subcontractors. Mostbusinessownersandrepresentativessaidthatonlineservicesarehelpful,or“okay.”[e.g.,#28,#37]Forexample:

Regardingonlineregistrationwithpublicagenciesasapotentialbidder,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“TheCityofDenverisreallygoodaboutthat.Theschooldistrictsareallgoodaboutthat[too].Ifyouwanttogetontheirlist,youcandothat.”[#21a]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmindicatedthatonlineregistrationasapotentialbidderishelpful.Hesaid,“Weareonlinewithalotofagencies.TheProcurementTechnicalAssistanceCenter(PTAC)willevendosearchesforcompanies.”[#22]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatelectronicbiddingandonlineregistrationasapotentialsubcontractorishelpful.ShesaidthatsheisregisteredwithRegionalTransportationDistrict,CityandCountyofDenver,andwithConnect2DOTforCDOT.[#35]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatmostagenciesnowhaveinformationonpublicagencycontractingproceduresandbiddingopportunitiesontheirwebsite.Henotedthatthissaveshisfirmalotoftime.[#14]

ThesamebusinessownerlatersaidthatheisregisteredwithallpublicagenciesinDenvertoreceivebiddinginformationelectronically.[#14]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmreportedthatthefirmmaintainsitsownsubcontractordirectory.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatshetaughtherselfhowtoregisteronlinewithpublicagenciesandthatshereceivesinformationregularly.[#20]

A few interviewees had negative experiences with registration and online directories. Forexample:

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Everyonesaystogoon‐lineandregisteryourbusiness,butIdon’tthinkthemajorcompaniesgotheretofindyou.”[#36]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedawarenessofanelectronicdirectoryofpotentialsubcontractors.Hesaid,“Wegotalistthatshowedushowtogoontothegovernmentwebsiteandfindsubs,[but]thenyouhaveto


contactthemonyourownandseeiftheywouldliketopartnerwithyou.There’sno[actual]program.There’sjustalistandaphonenumbertocall.”[#7]

Pre‐bid conferences where subcontractors can meet prime contractors.Businessownersandrepresentativesdiscussedthehelpfulnessofpre‐bidconferences.

Some saw the advantages of pre‐bid conferences.[e.g.,#25]Afewreportedonroomforimprovement.Commentsinclude:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsuggestedtherebeasysteminplacetohelpprimesandsubcontractorsidentifyeachotheratpre‐bidconferencessothattheycaneasilycommunicateregardingworkingtogether.Shewentontosay,“Thinkabouthowmucheasieritwouldbeifeveryprimehadtowearapinknametagandeverysubcontractorhadtowearabluenametag….That[way]whenIwalkin,Iknowinstantlywhomytargetsare….[Because]currently…Idon’tknowwhothesepeopleareaswegothroughthesepre‐bidmeetings.I’vebeentohundredsofpre‐bidmeetings,orpre‐proposalmeetings,andIdon’tknowwhotogoupandtalkto….”[#5]

Whenaskedaboutpre‐bidconferences,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatheattends“all”ofthem,andnotedthattheyareverybeneficialbecausetheyallowhimtomeetotherteamspursuingprojects.Hecommented,“Wegota[publicsector]contractbecauseIattendedeventsandspokewithalltheteamspursuingtheproject.”[#22]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshedoesattendpre‐bidconferencesandnotedthatherfirstpublicprojectwasawardedbyattendingone.[#35]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“Pre‐bidconferences,wheresubcontractorscanmeetprimecontractors,areheldoftenandourcompanyattendsmanyofthem.Thereisgoodinformationatthesemeetingsandthattheyarealsonetworkingopportunities.”[#21a]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathehasgonetoafewpre‐bidconferencestolearnaboutmajorprojects.However,hesaidthatifthereisnolineiteminaconstructionbudgetforhisproductsthathelpprimesmeetgoals,theyarenotinterestedinusinghisfirm.[#36]

Some business assistance organization representatives commented on the helpfulness of pre‐

bid conferences.Commentsinclude:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationindicatedthatpre‐bidconferencesarehelpful,andcommented,“Wesendoutflyerswereceivefrompublicentities.Atourexpowealsooffermatchmaking.”[#37]


TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthatpre‐bidconferencesareakeywayformemberstolearnaboutpublicsectoropportunities.[#33]

Some interviewees indicated that pre‐bid conferences are not helpful, not available, or they

choose not to attend them. Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanypre‐bidconferences.However,heindicatedthatsuchconferenceswouldbehelpfulifavailabletohisfirm.[#7]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatpre‐bidconferencesareoftenjust“lipservice.”Heexplained,“They’redoingitsotheycangetthepublicentityofftheirback.”Hewentontosaythatthevalueoftheseeventsislearningwhoisalreadyontheteamandwhattheirneedsaregoingtobe.[#14]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstated,“Iusedtoattendpre‐bidconferencesregularly,andsometimesstilldo,butthey’renotveryusefulforwhatIdosinceI’mveryspecialized.”[#20]

Distribution of lists of plan holders or other lists of possible prime bidders to potential subcontractors.Businessownersandrepresentativesdiscussedthehelpfulnessofplanholders’lists.Mostfoundthemhelpful.[e.g.,#21a]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatshedoesnotuseplanholderslistsbecausetheyarenotuseful.Sheexplained,“TheywouldbemoreusefuliftheCityandCountyofDenverand[DenverInternationalAirport]hadagoaltoutilizelocalcompanies,because[then]out‐of‐townfirmscomingintotheDenvermarketwouldhaveincentivetoknowmycompany.”[#20]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshedoesuseonlineplanholdersliststofindprimebidders.[#35]

Other agency outreach such as vendor fairs and events.Manybusinessownersandrepresentativesdiscussedthehelpfulnessofoutreacheventssuchasvendorfairs.

Many interviewees reported that they support agency outreach such as training seminars,

conferences, networking events, and vendor fairs and attend them regularly.[e.g.,#21a]Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidbecauseofthe“smallknitcommunity”whenseekingsubcontractorsforpublicsectorjobs,recruitingisoftenthroughwordofmouth.Shesaidsheattendsoutreacheventstonetworkandfindoutthestatusofvariousbusinesses,andaddedthatclientssometimeshaverecommendationsbasedonpastprojects.[#13]


TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmindicatedthathisfirmhasattendedoutreacheventsorganizedbyCityandCountyofDenverandCDOTtolearnaboutupcomingcontractingopportunities.[#14]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatagencyoutreachishelpful.Shestatedthatsheattendsallagencyoutreacheventsthatshecan.[#35]

Some trade association and business assistance organization representatives discussed the

helpfulness of agency outreach for members.[e.g.,#40]Forexample:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationindicatedthatagencyoutreachbenefitsmembers,andcommented,“Wesendoutalloftheagencyoutreachinformation,andwealsoinvitethemtoourexpototalktoourmembers.”[#37]

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatthebestwayforsubcontractorstomarketthemselvestoprimesistoattendnetworkingevents.[#38]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthattheorganizationpromotesagencyoutreachandMinoritySupplierDevelopmentCouncilevents.Hesaidtheyalsopartnerwiththeotherminoritychamberstodojobfairsandotherevents.[#33]

Others indicated that they faced challenges in attending outreach events, do not support their

usefulness, or are unaware of their existence.Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatheisnotawareofanyvendorfairsorsimilarevents.[#7]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatshehasattendedvendorfairs,butconsidersthem“forshow”becauseshebelievestheprimesalreadyknowwhotheyaregoingtouse.Shesaidthatshenolongerattendsvendorfairsforthisreason.[#20]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatheisnotawareofanyagencyoutreachsuchasvendorfairsorevents.[#23b]

Thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmsaidthatheisnotawareofagencyoutreachsuchasvendorfairs.[#34]

Streamlining or simplification of bidding procedures. Someintervieweesindicatedthatstreamliningorsimplificationofbiddingprocedureswouldbehelpful.[e.g.,#37]Otherssuggestedthatshorteningthetimeittakestobidwouldbeanimprovementforsmallbusinessestryingtomanagetheirtimeefficiently.Forexample:

Whenaskedaboutsimplifyingbiddingprocedures,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“It’smyunderstandingthatthey’vebeendoingthatintermsofbreakingthecontractsup.Iguess


theonethingthatIwouldsaybasedonwherewenormallyfitwithinthescheduleisthatourstuffisalwaysthelastpartthat’sgoingtogointoaproject.”[#9]

Thesamebusinessownercontinued,“Ifitisgoingtotaketwoorthreeyearsbeforeourpartisneeded,it’sreallydifficulttoanticipatewhatthemarket’sgoingtodothreeyearsfromnow.Asanexample,whenthePresidentannouncedthathewouldbeaddingthemarketforsteel,allmymanufacturersstartedsaying,‘Well,we’regoingtotakea5percentincrease,’or,‘We’remonitoringthesituation.’So,ifIhavetobidacontractwheremypartistwoyearsorevensixmonthsdowntheroad,IhavenoearthlyideawhatthatwillcostandI’mnotsurethatanybodyelsedoeseither.”[#9]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaidthatstreamliningbiddingprocedureswouldbehelpfulinmaneuveringagencycontracting.[#28]

Whenaskedifbiddingproceduresshouldbestreamlined,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmindicatedthattheyshould.Hesaid,“Sometimessomeofthebiddingproceduresandsomeofthebidforms,andallofthat,aresocumbersome.Youspendalotoftimedoingthatinsteadofdoingthebid.”[#21a]

Whenaskedifstreamliningorsimplifyingbiddingprocedureswouldbehelpful,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Thatwouldbegreat.Itjustseemsliketherearealotofformstobefilledout,evenintheRFQstage,thatcouldbewaiveduntilcontractnegotiation.”[#22]

Breaking up large contracts into smaller pieces (unbundling).Thesizeofcontractsandunbundlingofcontractsweretopicsofinteresttomanyinterviewees.

Most business owners and representatives indicated that breaking up large contracts into

smaller components would be helpful.[e.g.,#12,#13,#20,#25,#33,WT#9,WT#11]Afewmentionedthatitallowsforsmallerfirmstoperformasprimecontractorsratherthansubcontractors.Commentsinclude:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmindicatedthatshesupportstheunbundlingoflargecontracts.[#5]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“Whenourfirmstarted,wetookfulladvantageoftheprojectssetasideforSBE‐certifiedfirms.[However],Ihaven’tseenapoolofprojectsrecentlyforthosefirms.”[#28]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“Theonlywaysmallbusinessesaregoingtogrowistobreak‐upsomeoftheverylargeprojectsandmakethosesmallbusinessset‐asides.Thatwouldbehelpfulbecausetheywouldonlybecompetingwithanothersmallbusiness.”[#19]


TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaiditwouldbehelpfulifCityandCountyofDenverbrokeuplargecontractsintosmallerpieces,becauseitwouldallowhimtheopportunitytobidasaprimecontractorratherthanasub.[#22]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmindicatedthathesupportstheunbundlingofpublicsectorcontracts.Hesaidthatinhisindustry“publicagenciesbundleeverythingtogetherbecausetheysaythatgetsthemthebestvalueforthetaxpayer.”Hecommented,“Itmakesitimpossibleforasmallbusinesstocompete.”[#36]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatunbundlinglargecontractswouldbenefitherfirm.Shesaid,“Becausemycompanyisverysmall,findingaprojectinthepublicsectorthatissmallenoughformeisdifficult.”[#35]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedconstructionservicesfirmsaid,“Denver[should]requirethatbusinessesthathavetomeetgoals…breakdowntheworkintosmallerjobsizesforsmallercertifiedbusinessestohaveanopportunityandabilitytobid.[Forexample]$50,000to$200,000sizejobs.”[WT#5]

Some trade association and business assistance organization representatives agreed that

unbundling large contracts would benefit members.[e.g.,#6]Forexample:

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationindicatedthatunbundlinglargecontractswouldbenefitmembers.Shesaid,“Therewasoneparticularinstancewhere[apublicagency]wantedacompanytoservealargenumberofclientsatacertainlevel,anditwastoomuchforasmallcompanytotakeon.So,theydroppedout.Theymakethepackagestoobigforasmallbusiness.”[#37]

TheHispanicAmericanmalerepresentativeofatradeassociationstated,“Thebreakingdownofcontractstosmallerdollarsizesisextremelyhelpfultoourbusinessesingainingexperience.”[#11]

One interviewee discussed his firm’s efforts to unbundle contracts as a prime contractor.

Regardingunbundlingcontracts,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“Wetaketheprojectgoalandwebreakitdown.Andwetakethebudgets,andseewhatmakessense,butthenwehavetofititintothewholeschemeandkeepthesubcontractorwithintheirability.So,wedoalotofthatdownstream.”[#21a]

Price or evaluation preferences for small businesses. Someintervieweeshadcommentsonpriceorevaluationpreferences.Forexample:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatheisnotawareofanyprogramsorinitiativespertainingtopriceorevaluationpreferencesforsmallbusinesses.[#23a]


Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthatsheisnotawareofpriceorevaluationpreferences,butnotedthatshewouldliketoseepointsawardedtobidsthatincludelocalsmallbusinesses.[#20]

A business assistance organization representative noted that her organization shares

information on price/evaluation preferences with members.Whenaskedifmembersareknowledgeableofpriceorevaluationpreferences,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthattheycoverthetopicattheirexpo.[#37]

Small business set‐asides.Thestudyteamdiscussedtheconceptofsmallbusinessset‐asides,aprogramthatlimitsthebiddingofcertaincontractstofirmsqualifyingassmallbusinesses,withbusinessownersandrepresentatives.

Some business owners and representatives supported small business set‐asides.[e.g.,#5,#22,WT#11]Forexample:

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“[I’m]notsureaboutgoalsonprojects,butIhaveheardit’snotgoingwell.However,set‐asidescouldclearuptheissuesofgoalssetting.Anexamplewouldbeifaprojecthasa15percentgoalandyoumakethatportionaset‐aside.Itcouldbeanopportunityforsmallbusinessestocompetewitheachother.”[#19]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmstatedthatshe“isfor”smallbusinessset‐asides.Sheexplained,“Youdon’twanttoconcentratepowerinthehandsofafewrich,old,whitemen.Throughgenerationsthere’llalwaysbenewstart‐ups,andthosenewcompaniesneedtogetachance.Thatisparticularlytrueinasituationofwomenandpeopleofcolor,becausetheyhavelessaccesstofinancing.That’sprovenoverandoveragain.So,ifyouaretryingtostartacompanyasapersonofcolororasafemale,youhavetostartoutwithsmallcontractsbecauseyoucan’tgetthatbusinessloanforamilliondollars.”[#12]

Trade association and business assistance organization representatives generally agreed that

small business set‐asides benefit member firms.Forexample:

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationindicatedthatsmallbusinessset‐asideswouldbehelpfulformembers.Shesaid,“Itrytoencourage[theCityandCountyofDenver]tohaveanopportunityforsmallfirmstobeprimes….Thataddsvaluetothefirm.”[#38]

TheHispanicAmericanmalerepresentativeofatradeassociationindicatedthathesupportssmallbusinessset‐asides.Hesaid,“The[CityandCountyofDenver]puttheEBEprograminitsordinancefourorfiveyearsago,andnoprojectshavebeenissuedunderthatprogram.Theyweresupposedtobesmalldollars,andonlysmallguysthatwerecertifiedEBEscouldbidonitso[they]onlybid…against[their]owncompetitionfortheseprojects.Theywouldbeissued.You'dgettheopportunitytoworkfor[CityandCountyofDenverand]learnthepaperworkonasmall‐scaleproject.Ican'timaginethatnotbeing


trulysuccessfulandbeneficialtothesmallbusinesses,butwedonotknowbecausethereneverwereanyissued.”[#11]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationindicatedthatsmallbusinessset‐asidesbenefitcertifiedmembers.[#37]

Others expressed concerns regarding small business set‐asides, did not support them, or were

not familiar with them.Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“AlthoughDenverprovidesset‐asidesforDBE/WBE/MBE/SBEcontractorsandconsultants,thedeckisstillstackedagainstus….ThecontractingofficerswhowritetheRFPsstackthemheavilyinfavorofincumbents.Thelanguagetheyusetodothisis‘pastperformance’fortheexactprojecttype….Thismayberelevantforveryspecificprojecttypes,[like]playgrounds,butformostlandscapeapplicationsthisiswaylessso.Thelandscapearoundajudicialbuildingisn’tsubstantiallydifferentthan…privatesectorofficebuildings.Byspecifyingpastperformanceinasuperspecificprojecttypeashighlyimportanttobeasuccessfulcompetitor,thesame‘goodol’boys’getthework.”[WT#11]

Whenaskedaboutthehelpfulnessofsmallbusinesssetasides,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthathehasgottenon‐callcontractsthroughDenver’ssmallbusinessset‐asideprogram.However,hedescribedtheprojectsinthatpoolas“small,”andnotedthathisfirmiscapableofdoinglargerprojects.Hewentontosaythatthelargerprojectsalwaysgotobigfirms.[#22]

WhenaskedifhesolicitsSBE/MBE/WBEsubcontractorsforbidsorquotes,thenon‐Hispanicwhitemaleownerofanengineeringcompanystated,“Idon’tbelieveinthoseset‐asideprograms.IwillonlyworkwithpeopleIknow,andtheyaren’tinthatcertifiedprogram.”[#26]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatheisnotawareofanyprogramsorinitiativespertainingtosmallbusinesssetasides.[#23a]

Mandatory subcontracting minimums.Someintervieweessupportedaminimumlevelofsubcontractingonprojects,indicatingitwouldbehelpfultotheirfirm.[e.g.,WT#11]Forexample:

Whenaskedaboutmandatorysubcontractingminimums,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Theyareneeded.”[#22]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmindicatedthatmandatorysubcontractingminimumsbenefithisfirmbyensuringthatlargecompaniesdonotgetallofthework.[#14]


Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmindicatedthatmandatorysubcontractingminimumswouldbenefitherfirmandothersmall,disadvantagedbusinesses.Shesaid,“Primeconsultantsintheprofessionalservicesofdesigndon’tunderstandthereisaproblemwithdiversityorinclusivity.Manypersonallyviewthemselvesaspoliticallyprogressiveandnon‐discriminatory.[However],itdoesn’toccurtothemtoincludeSBE/MWBE/DBEfirmsonprojectteams,unlesscompelled.”[WT#3]

Thesamebusinessownercontinued,“Ihaveworkedwithseveraldesignfirmsthatcomplementmyfirm’sworkandendorseustootherfirms.However,unlessaprojecthasaspecificgoalassignedtoit,thosesamedesignfirmswillnotincludeSBE/MWBE/DBEfirmsintheirproposals.Theirgoalistosimplymeettheparticipationgoal,butnotexceedit.ManylargeprimeconsultantsvieweverydollarallocatedtoSBE/MWBE/DBEfirmsasalossofrevenueforthem.Theydonotviewitasabenefitorenrichingtheirteamorworkproduct.SomeprimeconsultingfirmsbarelyconcealtheirfrustrationoverperceivedlossesofrevenuebecausetheyhavetoworkwithSBE/MWBE/DBEfirms.”[WT#3]

Shewentontosay,“Therearediscrepanciesbetweenwhatseniormanagementatlargedesignfirmssayandtheirpractices.Atseniorlevels,mostalldesignfirmsclaimtoappreciateworkingwithdiverseteams.[But]inpractice,projectmanagersarerewardedformaximizingrevenuesintheshort‐term.Therefore,sharingscopeandfeewithSBE/MWBE/DBEfirmsconflictswiththemetricbywhichtheyareevaluated.Itdoesn’tmatterifanSBE[or]MWBE/DBEfirmissuperiorineveryway[because]itisnotintheprojectmanager’sbestinteresttoworkwithacertifiedfirm.”[WT#3]

One trade association representative stated that small business subcontracting minimums are

“absolutely necessary.”Whenaskedaboutmandatorysubcontractingminimums,theHispanicAmericanmalerepresentativeofatradeassociationsaid,“Thatiswhatgoal‐settingdoes,andIthinkitisabsolutelynecessary.[However],thecaveattothatistherearesomescopesofworkwherewehavenocertifiedfirms.”[#11]

A few interviewees were unfamiliar with mandatory subcontracting minimums, or

downplayed their helpfulness.Commentsinclude:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmsaidthatheisnotawareofanyprogramsorinitiativespertainingtomandatorysubcontractingminimums.[#23a]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatmandatorysubcontractingminimumsarenotideal,thoughtheyare“betterthannothing.”[#12]

Small business subcontracting goals.Intervieweesdiscussedtheconceptofsettingcontractgoalsforsmallbusinessparticipationinpubliccontracts.


Several business owners and representatives voiced approval for small business

subcontracting goals.Someexpressedthatgoalsshouldbesetorexpanded.[e.g.,#22]Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaidthat,asasubcontractor,herfirmhas“benefitedfromsmallbusinesssubcontractinggoals.”[#20]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthatsmallbusinesssubcontractinggoalsforDBE/MWBEfirmsarecriticalforhisbusinessbecausetheyensurethatthelargecompaniesdonotgetallofthework.[#14]

Regardingsmallbusinesscontractinggoals,apublicmeetingparticipantstated,“Everycontractshouldhaveagoal.”[PT#4]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Sothestrugglesinbeingaminoritywomanownedbusinessisthatinrealitybecause…oftheseprograms,theprimeisn’tinterestedinyouunlessthereisagoal.Thenwhenyouhavearelationshipwiththem,theywanttoutilizeyouforwork,butyou'recapped.Youknowyou'regoingtobecapped.Ontopofallofthat,youhavetohavethefinancialcapabilitiestoholdyourown.”[PT#3a]

Regardinghowsmallbusinesssubcontractinggoalsareset,thenon‐HispanicwhitefemaleownerofaWBE‐certifiedprofessionalservicesfirmsaid,“ThegoalscommitteeatDPSdoessetbothconstructionandprofessional[servicesgoals].Andyouhear…fromthebigcontractorsaswell[that]thesedisciplinesareatcapacity,andeverybodyjusttakes[them]attheirwordwhenthere'snomechanisminplacetoactuallytrackthat.”Sheadded,“Iwouldthinkinthisdayandage…thatthereshouldbetoolsouttheresothattheycantellwho’satcapacity.”[PT#3c]

Thesamebusinessrepresentativecontinued,“Andtome…it’sinsultingtohavesomebody[tell]me…everybody’satcapacity.WhenI[wantto]growmyfirm,don’tyoutellmethatI’matcapacity….That’snotadecisionthatyoucanmakeforme,becauseifIgetabigcontractandaprojectthatIreally[wantto]workon,I’mgoingtogohiresomebody,andthat’showIgrowmyfirm.”[PT#3c]

Some trade association representatives indicated that small business subcontracting goals

benefit membership.Forexample:

Regardingsmallbusinesssubcontractinggoals,theHispanicAmericanmalerepresentativeofatradeassociationsaid,“Itallowsawidergroupofsmallbusinessfolkstoparticipateandcompete.Thatisreallytrulyalevelplayingfieldforsmallbusinesses.Whenitistherequirement,there'sacapofwhatsizeyoucanbe.”[#11]

TheBlackAmericanfemalerepresentativeofatradeassociationsaid,“Ifthere’sno[DBE]goal,therewillprobablybenooutreachevent[or]preconstructionmeetings,andnoway


forthefirmstofindoutaboutopportunitiesearlyenoughtogetengagedandbuildrapport.So,ifyou’renotalreadyintheknow,[then]youdon’tknow.”[#6]

ThesametradeassociationrepresentativesaidthatsomemembersusethesameDBEsubsforbothpublicandprivatesectorprojects.Sheadded,“Therearefourthatcometomindrightaway.They’veestablishedanameforthemselvesonthesepublicprojects,[so]alotoftheteamsthathaveengagedthempulledthemintotheirprivateprojectstoo.”[#6]

Some interviewees indicated that small business subcontracting goals put their firms at a

disadvantage.Somesaidthatgoalsaresometimesabusedorusedforthewrongreasons.[e.g.,#11]Forexample:

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmdescribedhisfrustrationwithcontractorswho,whentryingtomeetunrealisticgoals,simplypassthesegoalsontosubcontractorswhomaynothavetheappropriateexperienceorexpertise.HewentontodescribetheprocessinSanFrancisco,wherethecityidentifieswhatpartsoftheprojectscanbedonebysmall,minority‐orwoman‐ownedbusinessesandspecificallycontractsthosepartstothosefirms.HenotesthattheCityofSanFranciscodoesnotleavethejobofachievingsubcontractinggoalstoprimeandsubcontractors.[#1a]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesreporteda“superhugedisconnect”betweentheDenverOfficeofSmallBusinessOpportunity(DSBO)GoalsCommitteeandtheactualworkforceavailable.Shestatedthatthereisthereisahighernumberofminority‐andwomen‐ownedfirmsonthecommitteethantheyarerepresentingintheworkforce.Thismakesherfeellike“theMWBEcommunityhasbasicallybandedtogethertotryandgetthehighestgoalpossibleonanyprojectthatcomesoutofCityandCountyofDenver,regardlessofthesizeandhowitwillbenefittheproject.”Sheaddedthattherearenorulesrestrictinggoalcommitteemembersfrombiddingonaprojecttheysetgoalsfor.[#1c]

Asurveyrespondentcommented,“Ithinkthey'reputtingextremepressuresonDBE[s]byincreasingthequotasinalreadyconstrainedmarkets.They'retakingonmoreworkthantheycanhandle.”[AS#19]

Asurveyrespondentstated,“Beingoutbidisfrustrating.Beingasmallercompany,opportunityshouldbebasedonmerit,notonthebasisofourdiversity/owner.”[AS#2]

Asurveyrespondentindicatedthatcontractgoalsputtheirfirmatadisadvantage,saying,“Notbeingwomen‐owned/minorityisadisadvantage.”[AS#22]

Formal complaint and grievance procedures.Someintervieweesdiscussedformalcomplaintandgrievanceprocedures.

Some business owners did not find complaint procedures helpful, had no experience with the

procedures, or feared retribution. Forexample:


TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaiditwouldbehelpfulifCityandCountyofDenver“weremorewillingtomeetandreallydiscuss[issues].”[#39]

Whenaskedforherthoughtsonformalcomplaintandgrievanceprocedures,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Ithinkyouhavetobereallycarefulwithprogramslikethatbecauseyoucangetblacklisted.Ithinkit’sgood,butIthinkthatwithwhistleblowers,it’sjusttough.”[#12]

Onthetopicofformalcomplaintandgrievanceprocedures,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmexplainedthathemadeacomplaintonaDenverPublicWorksprojectthatwasnotresolvedbecauseitwasnotaddressedbyanimpartialindividual.[#22]

K. Insights Regarding Minority‐ and Woman‐owned Business Programs

Interviewees,participantsinpublichearings,andotherindividualsmadeanumberofcommentsaboutrace‐andgender‐basedmeasuresthatpublicagenciesuse,includingMBE/WBEandDBEcontractgoalsandcommentsregarding:

FederalDBEProgramatCityandCountyofDenver,andotherrace‐andgender‐basedprograms;and

AnyissuesregardingCityandCountyofDenverorotherpublicagencymonitoringandenforcementofitsprograms.

Federal DBE Program in City and County of Denver, and other race‐ and gender‐based programs. BusinessownersandrepresentativesprovidedinsightsonCityandCountyofDenver’simplementationoftheFederalDBEProgramandotherrace‐andgender‐basedprograms.Forexample:

ApublicmeetingparticipantindicatedthatherexperiencewiththeSBA8(a)programhasbeenpositive.Shesaid,“Ifyou’re8(a)certified,youcangetpaidinsevendays.Andiftheyhaveadispute,theyhaveonlysevendaystotakecareofthatdispute.”[PT#4]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthatthefirmjustreceiveditsSBA8(a)certification.Henotedthatheconsiderstheprogrameffective,andsaid,“Theyatleasthaveamechanisminplacetoeventheplayingfield.Idon’tknowwhytheairportand[RegionalTransportationDistrict]aren’tforcedtousethisprogramwhentheygetfederaldollarsfortheirtransportationprojects.”[#36]

WhenaskedabouttheFederalDBEProgram,MWBE,andSBEprogramsandtheirimplementationbyCityandCountyofDenver,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“Alltheseprogramsarethesame.Ican’trecognizeanydifferences.Ididn’tevenknowIwasn’tcertifiedwiththefederalgovernmentuntilsomeonesaiditwasn’tthesame.”She


continued,“Forsmallbusinessesthataretryingtogrowtheirbusiness,theseprogramsareachallengetounderstandbecausetheyallhavedifferentrequirements.”[#19]

WhenaskedaboutCityandCountyofDenver’simplementationoftheFederalDBEProgram,thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“I’macertifiedDBEandIknowthatprogramkicksinwhenthefederalgovernmentputsmoneyintoalocalproject.[However],reciprocalcertificationofcompaniescomingtoColoradofromotherstatesshouldbemoredifficult.”[#20]

A few trade association and business assistance organization representatives commented on

topics related to the Federal DBE Program and its implementation by City and County of

Denver.Forexample:

WhenaskedifshehasanyrecommendationstoimprovetheFederalDBEProgram,theBlackAmericanfemalerepresentativeofatradeassociationsaidthatnationalandlocalbestpracticesshouldbereviewed.Sheadded,“Theyshouldseewhetherornotfolksareattendingnationalcomplianceconferencesorotherprogramsthatcouldassistinthedevelopmentofarobustprogram.Wearerightinthemiddleofbillionsofdollars’worthofprojectsrightnow,andthere’salotthatneedstobedone.”[#6]

WhenaskedaboutmembersthathaveexperiencedtheCityandCountyofDenver’simplementationoftheFederalDBEProgram,thesametradeassociationrepresentativesaidthatmembersinvolvedintheprogramspeakhighlyofaDenverDivisionofSmallBusinessOpportunity(DSBO)representative.Shewentontosay,“She’sdoneareallygoodjobintermsofconnectingwiththecommunityandbeingthefaceofthedepartment,andmakingsurethatshe’sinsertedherselfinthecommunityforustoknowthatthey’rehere,they’relistening.She’smadesomechangesonherlevelwhereshecould,soIdowanttomakesurethat’sacknowledged….She’sprovidedcommunityrepresentationfortheoffice.”[#6]

WhenaskedifmembershaveanyexperiencewiththeFederalDBEProgramanditsimplementationbyCityandCountyofDenver,andifshehasanyrecommendationsforimprovement,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Wehavemembersthathaveparticipatedinthatthrough[DenverInternationalAirport]andtheCityandCounty[ofDenver].”Sheadded,“AnythingthatcouldbedonetostreamlinethewholeDBEprogramwouldbebeneficial.”[#37]

Whenaskedifshehasanycommentsorrecommendationsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,thesamebusinessassistanceorganizationrepresentativesaid,“Theyhavebeenreallygoodaboutcomingtous,andweneedtomakesurethatcontinueswhenpeopleatagencieschange.Fromthetopdown,theyneedtomakeacommitmenttohaveapresenceinthecommunity.Peoplearemorecomfortableapproachingthemwhenthey’reonourturf.”[#37]

Whenaskedifhehasanycommentsorrecommendationsaboutanycurrentorpotentialrace/ethnicity/gender‐basedprograms,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaid,“WhatIwouldsayisthatthe[CityandCountyof


Denver]hasanopportunitytobealeaderandbeinnovative.Ihopetheyfollowthrough.”[#33]

Any issues regarding City and County of Denver or other public agency monitoring and enforcement of its programs. SomeintervieweeshadcommentsregardingtheimplementationoftheFederalDBEProgramorotherrace‐andgender‐basedprograms,includingreportingbyprimecontractorsorabuseof“goodfaithefforts”processes,“fronts”and“pass‐throughs.”

Businesses reported their insights, both positive and negative, regarding monitoring and

enforcement of race‐ and gender‐based programs. Forexample:

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmsaidheisfrustratedwiththeminority‐andgender‐basedrequirements.Henotedthatthepercentagesofprojectsthatarerequiredtobefilledbyminority‐orwoman‐ownedsubsdonotmatchupwiththenumberofminority‐orwoman‐ownedsubswhohaveeitheraninterestintheprojectortheskillsandexperiencenecessarytocompletetheproject.Hesaidthisdiscrepancymakesitdifficulttocontractoutworktominority‐orwoman‐ownedbusinessesastherearenotenoughwillingandablefirmswiththosecertifications.[#1a]

Thesamebusinessrepresentativestatedthatbeingchosenasasubcontractorinpublicsectorworkischallenging,expressingthathisfirmischosensecondtominority‐andwomen‐ownedfirmswhomeetatechnicalrequirement.[#1a]

Thefemalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmindicatedthatherfirmisfrustratedbecausetheycannot“[check]theboxes”likeaminority‐orwoman‐ownedfirm,whichshefeelsimpedestheiropportunitytosubmitabidorpricequotetoaprime.Shesaid,“Primefirmsfirstgotoanyfirmsthatmeetthoserequirements,andtheniftheyfeellikenoneofthemarecapable,thentheywillcometous.”[#1b]

TheHispanicAmericanfemalerepresentativeofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“I’vebeeneverywhereinthis[country]…doingbusinessdevelopment.[In]thelastthreeyears[inDenver]Ihave…experiencedprimesnotcallingaDBEfirmback.Ihavenevereverinallmylast20yearsexperiencedthat[previously].”[PT#3b]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmreportedthatthereshouldbebettercomplianceandenforcementofrace‐andgender‐basedprogramsonpartofCityandCountyofDenver.[#36]

A trade association representative said there needs to be better compliance monitoring.TheBlackAmericanfemalerepresentativeofatradeassociationreportedthatthereisaneedforbetterpublicagencytrainingoncompliancemonitoring,especiallyforsomeDenverDivisionofSmallBusinessOpportunity(DSBO)staff.[#6]


Many business owners and representatives commented on false reporting of MBE/WBE/DBE

participation, “fronts,” negative issues with or falsifying “good faith efforts.”Somereportednegativeperceptionsorknowledgeof“goodfaithefforts.”Forexample:

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Iunderstanditseffortstotrytomakesurethatpeoplearen’tlying,[but]Ithinkalotofpeoplewithintheprogramarelying.It’s51percentownedbythewoman,butit’sreallythehusbandbehindthescenesdoingit.IfeeltherearealotoffakeWBEsoutthere,butwe’rearealWBE.There’snomanheretellingmewhattodo.”[#12]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstatedthatpublicagenciesshouldbeverystringentwithwhotheyletintothecertificationprogram.Hecommentedthatheissuspiciousofacoupleofwoman‐ownedcompaniesthathebelievescouldbe“fronts.”[#36]

Themalerepresentativeofanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmstated,“There’sasmallcollectionoffirmsthathavedecidedthattheyarenotgoingtogrowbeyondacertainpointsothat[they]canremainMBEs,WBEsorSBEs.Ithinkthisdiscouragesotherfirmsfromsaying,‘I’mwillingtostepoutandstartmyownfirmsandwork,’becausethey’recompetingwiththisfirmthathasbeenasmallbusinessoraminoritybusinessfor20years.Andinsomecases,thatfirmis,andthemakeupofthefirmhaschangedfromitsinitialyears,andthepeoplewhooriginallyfoundeditmayormaynotevenbethereanymore.But,thefactistherewasaconsciousdecisiontostaybelowthecaptonotgraduateoutoftheprogram.”[#1a]

Thesamemalerepresentativerecommendeda“sunsetrule”andre‐applicationrequirementforDBEcertification.ThisprocesswouldincludeatimelimitsetonDBEcertification,andafterthecertificationexpirestherewouldbeadesignatedwaitingperiodbeforethefirmcouldre‐apply.Hereportsthatthisstructurewouldresultinasmallerpoolofsubcontractorsandwouldbetterincentivizesmallbusinessgrowth.[#1a]

Regardingnegativeissueswith“goodfaithefforts”processes,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Iknowforafactthattherewereseveralprojectmanagersthatdidnotwanttoworkwith[SBA]8(a)companies.Thenthereis[DenverPublicSchools].Andbytheway,wedon’tworkwithDPSanymore.Iknowaguywhousedtohavehisowncontractingfirm,andnowheworksfor[anationalcontractor]wherehe’saprojectmanager,sohe’sinapositiontohiresubconsultants.HegotintoasituationonaDPSprojectwherehewashavingtroublemeetingthegoal,andhetoldDPS[aboutit].TheDPSprojectmanagersaidnottoworryaboutitastheywouldtakecareofit.”Healsosaid,“Thereis[an]instancewherewewerekickedoffofateambecausetheDenverPublicWorksprojectmanagerwantedtoworkwithanarchitecturalfirmoutof[LosAngeles].Theyobviouslydidn’tmeettheirgoal,sosomebodydidsomething.”[#22]

Thesamebusinessownerlateradded,“Acontractorhadanon‐call[contract]at[DenverInternationalAirport].TheywerenewtoDIAandhadanoverallgoalontheirproject.They


gotdifferentdirectivesfromdifferentprojectmanagersregardinghowtomanagebidsforthatcontract,sotheyusethegoalstotheiradvantage.”[#22]

WhenaskedifhewasawareofSBE/MBE/WBEfrontsorfraudbeingaproblemforminority‐orwoman‐ownedfirmsinthelocalmarketplace,thesamebusinessownerstated,“Yes.ThereisanMWBEwhosepersonalitymakeshimverydifficulttoworkwith.Ithinkheisafront.Othersareawareofit[too],butturnablindeye.”[#22]

Asurveyrespondentsaid,“Denverseemstousesomefavoredcontractorsonsomeoftheirprojects.Oneparticularcontractorisshownasasmall,woman‐ownedbusiness,butIbelieveitisnolongerasmallbusinessasitrelatestotheirdollarvolumeofwork.”[AS#12]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmsaidthathehasbeenaskedtopartnerwithbig‐boxstoresonprojects,butdeclinedbecausehefelttheywouldusehiscompanyasa“pass‐through.”Hewentontosaythathecanbecompetitiveonhisown.[#39]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsaidthathebelievestheretobefalsereportingofSBEandMBE/WBEparticipation.Hestated,“Iknowforafactthatit’shappening.”HesaidthatheknowsofaformerCityofDenveremployeewhotriedto“exposeit,”butwasfiredfordoingso.Heexplainedthat,accordingtothisformercityemployee,bigcompaniessometimesacquireminorityfirmsand“saytheyareminority[now],orsaythatthey’re[now]thisorthat.”Hecontinued,“So,heexposedthatinDenver.Itwasinthenewspaper,actually….HesaiditwasrampantinDenver.It’sbeenthatwayforyears.”[#7]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“Someofthesefirmshaveyougothroughtheproposalexerciseknowingfullwelltheyneverhadanyintentionofprovidingyouwiththeopportunityatall.Irefertotheseas‘almostopportunities.’Someofthesebigfirmsonlywanttogothroughthemotionsandchecktheminoritybox.Ihavehadseveralsituationsofthis,onlytolaterfindoutthatanotherphotographer…wasgiventheprojectandsubmittedaproposalmuchhigherthanmine[with]qualityofwork…atthesamelevelasmineorless.Ihavealsobeengiventheopportunityto"hurryup"andsubmitadetailedproposalfora“potential”project,onlytodiscoverthat[the]firmrequestingtheproposalissecretlyshoppingmyproposalbecausetheydon'tunderstandhowtoproperlyputtogetheracompletescopeofwork.”[WT#12]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstated,“Thegoodfaitheffortprocessisasham.Igetalotofsolicitationsfromprimecontractors,butthereisnofollow‐up.Anexampleisjetbridgecontracts.Thereareonlythreemanufacturers,andtheseprojectsareveryexpensive.Thereisoftena15percentDBEgoal,buttherearenoMWBEcompaniesthatarebigenough.So,theysaytheyhavetriedtofindMWBEsknowingfullwellthatitisimpossible.”[#20]

Regarding“fronts”orfraud,thesamebusinessownersaid,“Thisdoesoccur.Acertifiedwomanrecentlygota$10millionconstructionmanagementcontractandsubbedout$8millioninHVACtoalargemajoritycontractor.”[#20]


Whenaskedaboutfalsereportingof“goodfaithefforts,”thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmindicatedthatitdoesoccur.Hesaid,“I’veheardandprobablyseenit,butwehaveneverparticipated,norwouldwedoit.”[#21a]

Trade association and business assistance organization representatives generally agreed that

“fronts” and fraud do exist in the Denver marketplace.Commentsinclude:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidhedoesbelievethatDBE“fronts”andfraudexist.Hesaid,“Therearefirmsthatgetcertifiedthatshouldneverhavebeencertifiedbecausetheylied.”Heindicatedthathehasfirsthandexperienceoffirmsattemptingtodothis.[#11]

WhenaskedifheisawareofanyfalsereportingofDBEparticipationorfalsifyingof“goodfaithefforts,”thesametradeassociationrepresentativesaid,“Iquestionpass‐throughsandtheutilizationofcertifiedfirms[forthatpurpose].Forexample,whensomeonesays,‘I’mgoingtouseyoufororderingmysupplies….’[They’rereallysaying],‘I'lluseyourname…[and]I'macceptingdelivery.I'macceptingalltheriskforalloftheproducts,andyoureallyaren'ttakinganyriskotherthanlettingmecountyouonmyparticipationlevelforthefulldollaramount.’”[#11]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationsaidthathehearsaboutDBE“fronts”andfraudfromthegeneralpublic,thoughnotfromtheorganization’smembers.[#33]

Others reported no knowledge of “fronts,” or false reporting of “good faith efforts.”Forexample:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatheisnotawareofSBE/MBE/WBE“fronts”orfalsereportingof“goodfaithefforts.”[#23a]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatsheisnotawareofany“fronts,”orfalsereportingof“goodfaithefforts.”[#35]

One business assistance organization representative indicated that members do not

experience “fronts,” or other fraud.TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationreportedthathehasnotheardmembersdiscuss“fronts,”orfalsereportingof“goodfaithefforts.”[#33]

L. Insights Regarding Certification

BusinessownersandrepresentativesdiscussedtheprocessforDBE,MBE,WBE,andSBEcertificationandothercertifications,includingcommentsrelatedto:

Knowledgeofcertificationopportunities;


Easeordifficultyofbecomingcertified;

Advantagesanddisadvantagesofcertification;and

Experienceregardingthecertificationprocessandanyrecommendationsforimprovement.

Knowledge of certification opportunities. Someintervieweesreportedawareness,orthatlearningaboutcertificationwasrelativelyeasy.Anumberoftheircommentsfollow:

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatshedidresearchabouttheavailablecertificationsbeforeshestartedhercompany.Sheaddedthatshecompletedtheapplicationsassoonasshecouldforlocalandstatecertifications,andcommented,“I’mlookingtofindoutaboutthefederalsmallbusinesscertifications.”[#19]

Regardinghisfirm’scertifications,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmcommented,“IlookedintocertificationassoonasIstartedmybusiness.WhenIwaseligible,I[pursuedcertification].”[#32a]

Whenaskedwhyshedecidedtocertifythefirm,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“IheardtheCitywasgoingtodoalotofconstructionandcontractorswouldneedcertifiedcompanies,sothat’swhyIgotcertified.”[#35]

Thefemalerepresentativefromanon‐Hispanicwhitemale‐ownedprofessionalservicesfirmindicatedthatsheisawareofsmallbusinesscertificationwithDenver,butadded,“We’reasmallbusinessfederally,butwehavenoCityandCountyofDenverdesignation.”[#1b]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“ThecompanybecameSBE‐certifiedwhenitwasmadeavailableintheCityofDenver.Thatwasabout11yearsago.Ourcompanyknewtheimportanceandthepossiblebenefitsofcertification.WorkingonDenver…projectscouldbringinalotofbusiness.Wearemajority‐owned,sowewerenoteligibleforanyoftheothercertifications.”[#28]

Thenon‐HispanicwhitemaleownerofaprofessionalservicesfirmstatedthathisfirmpreviouslyheldanSBEcertificationbut,althoughtheystillqualify,hehasnotupdatedthecertificationanditisnolongercurrent.[#3]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmnotedthatherfirmalsoholdsEBE,ESB,EDWOSB,andWOSBcertifications.[#5]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmnotedthatherfirmrecentlybecameanEmergingSmallBusiness(ESB)throughCDOT.[#2]


Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmstatedthatshehasbeencertifiedasaDBEformanyyears.Sheexplained,“Mydaughterhadthatcertificationwhenshehadherbusiness.MuchoftheworksheperformedwasforCDOT.MyhusbandandIfeltitwouldbeinthebestinteresttocontinuewiththatcertification.ThecompanydoesalotofworkforCDOT,andit’sarequirementforthatwork.”[#27]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmisnotcurrentlycertified,thoughtheyarepursuingSBA8(a)certification.Headdedthattheyareawareofothercertificationoptionsandwillpursuemoreinthenearfuture.[#7]

Whenaskedifthefirmholdsanystateorlocalagencycertification,thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmreportedthattheydonotcurrentlyholdanycertifications.However,henotedthattheyusedtobeSBE‐certifiedandchosenottorenewastheydidnotseeanybenefit.[#25]

Whenaskedifthefirmholdsanystateorlocalagencycertification,thenon‐Hispanicwhitemaleownerofanengineeringcompanyreportedthathedoesnot.Headded,“Idon’tbelieveinthoseprograms.Ibelievesomeonethathastheskillsshouldstandontheirskills[and]not[depend]onsomegovernmentprogramthatgivesthemwork.”[#26]

Thenon‐Hispanicwhitemaleownerofaconstructionservicesfirmstatedthatheisnotinterestedincertifications.Heexplained,“Ihaveheardaboutthosecertificationsandhavelookedintoapplying,[but]Idon’tthinkitwouldbethebestmoveformycompany.Weareverysmallandthatallowsmetobemoreincontrol.Idon’tthinkIwouldbesuccessfulbecause…ourcapacitytoperformistoolimitedforthosejobs.”[#31]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatshetriedtoobtainWBEcertificationbutwasdeniedbecausesheisnotalicensedarchitect.Shenotedthateventhoughsheisnotalicensedarchitect,shehasthebusinessbackgroundtorunthecompany.[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedgoodsandservicesfirmstatedthatthefirmisawareofcertificationandtheMWBEprogram,butsaidtheprocessofcertificationisirrelevanttothembecausetheyarenoteligibleanditdoesnotimpacthowtheydobusinesswithsubcontractors.[#23b]

Thenon‐HispanicwhitemaleownerofagoodsandservicesfirmindicatedthatheisinterestedinSBEcertificationbuthasnotpursueditduetotimeconstraints.[#10]

TheHispanicAmericanmaleownerofanarchitecturalengineeringfirmreportedthathehasneverpursuedcertificationbecausehestayedbusywithoutit.[#16]

Most trade association and business assistance organization representatives indicated that

members are aware of and often participate in certification programs.Forexample:


TheHispanicAmericanmalerepresentativeofatradeassociationsaidthathebelieves90percentoftheorganization’sminorityandwoman‐ownedbusinessesarecertifiedwiththestateoralocalagencyasaDBE.[#11]

TheBlackAmericanfemalerepresentativeofatradeassociationreportedthatmostoftheirmembersareDBE‐certified.Sheadded,“Theyareusuallyontheirwaytogettingcertified[ifthey’renotalready],butforthemostpartourmembershaveDBE‐[or]MWBE‐certifiedbusinessesalready.”[#6]

TheAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstatedthatcertifiedmembersareprobablycertifiedwithallagencies,alongwiththeMinoritySupplierDevelopmentCouncil.Regardingwhymemberscertify,hesaid,“Somebusinessesseetheopportunitytoprovidetheirservicesto[RegionalTransportationDistrict],theairport,or[largecorporations],butcertificationisn’taguaranteethatyou’llgetanything.Culturally,Asiansaremorereticenttopromotethemselves,[and]somemembersbelievethatcertificationistargetedtowardsacertaintypeofminority,so[forthem],thevalueisjustnotthere.”[#33]

Thenon‐HispanicwhitefemalerepresentativeofatradeassociationindicatedthatmostmemberspursuingcertificationdosoiftheyanticipateworkingforCDOT.ShesaidthatmembersnotseekingDBE,MBE,orWBEcertificationdosobecause“they’renotinterestedindoingworkforCDOT,andvice‐versa.”[#38]

Regardingnetworthlimitstostaycertifiedwithsomepublicentities,thesametradeassociationrepresentativesaid,“If[smallbusinesses]findit’stoodifficulttodobusiness,theyhavetoweigh[whether]itisworthputtingineffort[tocertify]because[theagencyis]goingtorestricthowmuchmoneytheycanmake.”Sheadded,“Iknow…someofthepublicentitiesputacaponhowmuchraisesyoucangetwithinyourcompany.”[#38]

WhenaskedifmembersarecertifiedwithastateoralocalagencyasaDBE,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“WedohavequiteafewDBEs.Whentheyjoin[us],weimmediatelyputthemintouchwiththeAmericanIndianProcurementTechnicalAssistanceCenter,whichonlyworkswithAmericanIndians.Wesetupanintroduction,[then]theywillstartthecertificationprocess.”[#37]

Thesamebusinessassistanceorganizationrepresentativecontinued,“Wedothattoensuretheyareatthetableforopportunities.Whentheygetcertified…whetherDBE,MWBE,SBE…theystartinteractingwiththeagenciesandlearnaboutthesupporttheyoffer.Thegoalistoletthemknowthey’renotouttherealone,andifthey’recertifiedwecanalsotrackhowmanyhavebeensuccessfulingettingopportunities.”[#37]

One trade association representative discussed his organization’s efforts to recruit more

minority‐ and women‐owned firms.Thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaidthatonly19oftheir565membershavecertification.Hesaidthathisorganizationstartedadiversitycommitteeinearly2018inanefforttorecruitmoreminority‐andwomen‐ownedfirms.[#40]


Thesametradeassociationrepresentativelatercommented,“Thereareminorityorwomenownedfirmsthatarenotcertifiedandthey’rejustknockingitoutoftheparkanddoinggoodwork[withoutit].Honestly,workingforapublicagencyisnotforeverybody.”[#40]

A few interviewees reported having no knowledge or not enough knowledge of certification

programs.[e.g.,#23b,#31]Forexample:

TheBlackAmericanveteranmaleownerofageneralcontractingcompanyreportedthatheisnotawareofanycertificationsavailabletohisfirm.Headded,“Ihaven’tlookedintoit,[but]Ihearditwasapainand[that]youdon’tgetanyworkanyway.IhavedecidedthisisthebestwayIcouldkeepmybusinessgoing.Idon’tbelievethereareadvantagestothatprogram.”[#29]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatthefirmholdsnocertificationsatthistime,thoughtheyareinterestedinlearningmoreaboutcertificationopportunities.[#8]

Regardingcertificationopportunities,apublicmeetingparticipantsaid,“Istillbelievethatthereisabiggapincontactingthesmallbusiness[es]thatjustmovedhere.[They]don’tunderstandwheretogoforcertification.[Theymayknow]thisothercompanyandthey’vestarteddoingsomeworkwiththem…butthey’rehavingahardtime[growing].”[PT#4]

Whenaskedifheisawareofcertificationopportunities,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Thefirmhasnocertifications,[but]Ihavelookedintothatpossibility….Myresearchindicatedthatthosecertificationswereforconstructioncompanies[and]wedon’tdoconstruction.Weprovideaproduct.”[#30]

Thesamebusinessownerlatersaid,“Ihaveheardaboutthecertificationprogramsavailabletosmallandminoritycompanies,[but]I’veneverconsideredthatcertificationformycompany.Ihavenotheardofanyassistanceprograms,likeamentor‐protégéprogram,thatwouldbeavailableformytypeofbusinessbecauseIamnotcertified.Therefore,Idon’tbelievemy…companywouldbeeligibleforbusinessassistance.”[#30]

Thenon‐Hispanicwhitemalerepresentativeofaspecialtyservicesfirmreportedthatthefirmhasnoexperiencewithanycertificationprograms.However,henotedthatthefirmisinterestedinpursuingcertificationiftheyareeligible.[#34]

Ease or difficulty of becoming certified.Anumberofintervieweescommentedonhoweasyordifficultitwastobecomecertified.

Many interviewees reported difficulties with the DBE, MBE/WBE, and SBE certification and/or

renewal process.Somebusinessownersandrepresentativesindicatedthatthecertificationprocesswasdifficult,timeconsumingorproblematic.[e.g.,#35]Forexample:

TheSubcontinentAsianAmericanmaleownerofaspecialtycontractingfirmreportedthathisfirmhasnosmallbusinesscertifications.Hecommentedthatthecertificationprocess


seemstorequiretoomucheffort,andnotedthathedoesnotpersonallyknowofanyfirmthathasprofitedfromcertification.[#18]

Whenaskedifhisfirmiscertifiedwithastateorlocalagency,thenon‐Hispanicwhitemaleownerofaconstructionfirmsaid,“Ilookedintogettingcertifiedbecauseafewothercontractorshadmentionedit.Ilookedintoitandtheamountofpaperworkthathadtobecompletedwastoomuch,soIneverhaveattemptedthecertification.”[#24]

Whenaskedifcertificationwaseasyordifficulttoachieve,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Itwasn’tdifficultbecausethereweren’tanyhardquestions.It’snotlikeIhadatesttostudyfor.Itwasjustalotofpersonalinformation,andnowthatCDOT’sbeenhackedand…theCityandCountyofDenverwashackedlastyear,[I’mconcerned].”[#5]

Thesameintervieweewentontosaythatshe’s“veryconcerned”abouttheamountofinformationthatisonfileforherfirmduetothecertificationprocess.Shestated,“Nownotonlyismypersonalinformationoutthere,[like]mySocialSecuritynumber[and]allofmyincome…[but]myhusband’sinformation…andmychildren’sSocial[Securitynumbers]areoutthere[too],andI’mveryconcernedaboutthat.Ireallyfeellike[publicagencies]putusinanexceptionallyvulnerableposition.It’sveryconcerning.Idon’tknowwhogetsthatinformation[or]howtightlycontrolledthatinformationis,andnowIknowit’sbeenhackedatleasttwice.Ifeellikemylivelihoodcouldbesweptoffthemapinaheartbeat.It’svery,veryconcerningtome.”[#5]

Regardingthecertificationprocess,apublicmeetingparticipantsaid,“Ihadtogoback[and]borrowmoneytopayforit.Andinthemeantime,myapplicationexpired.[But]withinadayIresubmittedeverything,becauseIwasprepared….So,Iamveryresilient.”[PT#4]

Thenon‐Hispanicwhitemaleownerofaconstruction‐relatedfirmsaid,“[We]hadtheSBEcertificationwiththecityforoneyearanditwasapaininthebutt….Itwasaverylongprocesstogetcertified,[andtherewere]questionsIdidn’tthinkwerenecessary.Anexamplewouldbetheproofofmoniesusedtostartyourbusiness.Whyisthatimportant?Inevergotanyworkwiththecertification.”[#25]

Thesamebusinessownercontinued,“ItwashardtofindoutabouttheSBEprojects….Ithought[there]wouldbeadatabaseofprojectsforthatcertification,butthereisnot.Afteroneyear…IreceivednotificationthatIneededtorenew,[and]Idecideditwasn’tworththeeffort.Iwasdisappointedthattherewerenobenefitstothecertificationbecauseitwassuchalongprocess.Infact,noneofmycolleaguesthatclaimtobecertifiedhavegottenbenefitfromtheprogram.”[#25]

Some trade association and business assistance organization representatives described the

certification process as a barrier.[e.g.,#11]Commentsinclude:

Whenaskedifthereareanydisadvantagestocertification,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Notsomuch[with]the


certificationitself,[but]perhapsthedisadvantageisintheprocess.Navigatingthedocuments,website,[and]bureaucracyisespeciallyhardforstart‐ups.”Henotedthattheprocessisespeciallydifficultforimmigrantsduetolanguagechallenges,andthereforetheyavoidit.[#33]

Whenaskedabouttheeaseordifficultyofthecertificationprocess,theBlackAmericanfemalerepresentativeofatradeassociationsaidthatthereisalotofpaperwork,whichcanbeverylabor‐intensiveforapplicantsnotusedtosuchdocumentation.Sheadded,“Inallfairness,theinformationtheyaskforincludesbasicbusinessdocumentsthatoneshouldalreadyhaveinplace.Andifthebusinessownerdoesnothavethatinplace,itwouldbehelpfultogetitorganizedanyway.Theprocesspreparesyouforwhatyou’regoingtoencounter,whatotherprimesaregoingtoaskfor,whattheDOTsaregoingtoaskfor,andcontractualrequirements.”[#6]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidshehadtohireanemployeeresponsibleforcompletingcertificationapplicationsandmaintainingcertificationstatus.Shecommented,“Sheliterallydoesthemall,andshedoesagreatjob.”[#13]

Ofthecertificationprocess,thesamebusinessownerwentontosay,“Youcannotfeeloffended,orbeannoyed[bythepersonalinformationrequired]….[It’sthe]priceyouhavetopaytogetafootinthedoor.”Sheaffirmedthatthecertificationshavehelpedherbusiness“immensely,”andthatmorerecognitionisachievedwiththem.Shestatedthathergoalistohavemoreprivateopportunities,andfindsthefirmisgettingclosertothatgoalasaresultoftheircertifications.[#13]

TheAsian‐PacificAmericanfemalerepresentativeofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Icompletedtheapplicationforcertification.Itwaslengthyandittooksometimetogatheralloftheinformationneededtosubmit,butIguessitwasworthwhile….Thoughwehaven’tgottenanyworkdirectlywiththecity,becauseofthecertification,[yet].”[#32b]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmexpressedhisdesiretobecomecertifiedasanMBE.Hestated,“Ihavenotcompletedallthepaperwork,butitwouldbereallynicetobeabletofindsomebodythatcanhelpmeandguidemethroughthatprocess.Unfortunately,IleanedonthepartnerItookon,[…]myaccountant,tohelpoutwiththeMBEstuff,buthispoliticalstancekepthimfrompursuingthat.So,Imadethedeterminationlastyeartoterminateourrelationship….Thisyear,I'monmyownagain…."[#4]

Thenon‐HispanicwhitefemaleownerofaDBE‐certifiedconstructionfirmsaid,“Ilookedintothecitycertificationsrecently,butdecidedagainstitbecausetheapplicationwassolengthy.Wegetplentyofworkwiththeonewehave.”[#27]

Thenon‐Hispanicwhitefemalerepresentativeofamajority‐ownedSBE‐certifiedprofessionalservicesfirmsaid,“IcanonlyspeaktotheSBEcertification,[but]itwasn’tahardprocess,justlengthy.Whenit’stimetorenew,thestaffthatworksonthatrenewal,


theaccountingdepartment,dreadsitbecauseofthepaperworkinvolved….However,itisworthitinthelong‐term.”[#28]

Whenaskedifthecertificationprocessisdifficult,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Thefirsttimeitisdifficultbecauseofthepaperwork.Renewingiseasy,Icandothaton‐linebyjustscanningthings.”[#35]

One business assistance organization representative commented that the “rigor” of the

certification process makes it “more legitimate.”WhenaskedheropiniononDBEcertifications,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“It’shardtoacquire,butwetellpeopletheyneedtorespectthefactthatitisarigorousprocess,becauseitmakestheprogrammorelegitimate.Ifit’stooeasy,anyonewouldjumpinthere.So,thefactthatitiscumbersomeshouldbelookedatinapositiveway.Itmakessuretherightpeopleareinplaceforopportunities.”[#37]

A few interviewees said that the certification process was easy, or they reported that they

received assistance with the process. [e.g.,#15a]Forexample:

Whenaskedabouttheeaseordifficultyofthecertificationprocess,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatthecertificationprocessis“good,”andnoteasyorhard.Sheadded,“Ihaven’tbeenabletoidentifyadisadvantageofcertification.Theanalystthatwasassignedtomyapplicationwasincredible,verycalming.Heaskedrelevantquestions[and]explainedeverything,andthewhybehindeverything,whichIappreciate[d].”[#19]

Whenaskedifthecertificationprocessiseasyordifficult,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Ithinkit’srelativelyeasy.However,…becauseoftheproductareathatwe’rein,it’snotaseasilydefined.”Hewentontosaythattheindustryinwhichheworksisveryspecificandcanbedifficulttocategorize.[#9]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaiditwashelpfultoaskquestionsoftheDBEcertifier,andnowsheencouragesotherfriendsthatareminoritybusinessownerstoaskquestions"rightoffthebat."Sheadded,“There’sjustsomuchoutthere,andIdon’tthinkIevertookadvantageofthatportionof[certificationbenefits]that’savailableatnocost,orminimalcost.[Certification]isanexcellenttoolforustohave.”[#2]

Thesamebusinessco‐ownerwentontosaythecertificationprocesswaseasyforherfirmbecausewhensheapplieditwasalessinvolvedprocess.However,shenotedthatafirmofhercurrentsizeapplyingforcertificationtodaywouldundergomuchmorescrutiny.[#2]

Whenaskedifacquiringandmaintainingcertificationiseasyordifficult,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthathecannotthinkofanymajorissueswiththecertificationprocessorwithcertificationrenewals.Hewentontocomment,“It’snotabigdeal.”[#14]


Whenaskedifthecertificationprocessiseasyordifficult,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“Idon’tthinkit’soverlycumbersome.Ijusthavetorenew.”Whenaskedifhehasanysuggestionstoimprovetheprocess,hestated,“No,Idon’tthinkso.Thestaffisalwaysveryhelpful.”[#22]

Advantages and disadvantages of certification.InterviewsincludedbroaddiscussionofwhetherandhowDBE,MBE/WBE,andSBEcertificationorothercertificationprogramshelpedsubcontractorsobtainworkfromprimecontractors.

Many of the owners and representatives of certified firms indicated that certification is

advantageous.Forexample:

Whenaskediftherearebenefitstobeingcertified,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmstatedthatthereare.Hesaid,“Itallowsyoutoworkthroughthemazeofacorporation…municipality,orgovernmentandlocatethecontacts.Sometimesyouaregivenopportunitiestocompete[otherwise].”Headdedthatheknowsofnodisadvantagestocertification.[#39]

Whenaskedabouthercertifications,theBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Certifications[are]goodinthesensethatitgetsmyfootinthedoorversusthebigguys,itsortsofgetsyouasemi‐levelplayingfield.”Shewentontosay,“Yourtalentkindofgetsyouwhereyouneedtobe.”[#13]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmstatedthathebecamecertifiedbecauseitprovideshisfirmwithmoreworkopportunities.Whenaskedaboutotherbenefitstocertification,hesaid“Theadvantageistheyhaveaccesstoprojectsthatyouprobablywouldhaveatoughtimegetting[otherwise],especiallywhenitcomestoinfrastructure,taxpayer‐supportedprojects.”[#14]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstatedthatshe“believesthecertificationmakesadifferenceforthejobs[they]goafter,likeCDOTandothergovernmentopportunities.”[#19]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmstated,“We’recertifiedbecausethereismoreopportunity.We’realsoabletoteamwithlargerfirmsforlargeprojects.”[#22]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmstatedthatsheattainedthefirm’scertificationsearlyonbecausetheyarekeytosecuringpublicwork.[#20]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaidthathebelievesthebenefitsofcertificationincludeopeningupnewdoorsforbusinesses,especiallywithotherorganizationsthatdoworkwiththecity.Heexplained,“Forthepeoplethatdohavecitycontractsand[who]wereonceinthesameposition[asmyfirm],youwouldhopethattheymightbealittlemoreopenaboutinviting


youintoseeifyoucanpartnerorteamtogetheronacityproject…andsupport[eachother].”[#9]

Whenaskedaboutthecertificationprocess,theAsian‐PacificAmericanfemalerepresentativeofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmstated,“Ibelieveitaddscredibilitytoyourcompanywhenyouhavethosecertifications.”[#32b]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmreportedthatshehasnotexperiencedanydisadvantagesofcertification.Shesaid,“Certificationshavegiven[myfirm]morevisibilitywithlargerbusinessesandhashelpedtoprovidetrainingresourcesatminimalcosts.”Sheaddedthatthecertificationshavealsogiventhefirmanadvantageinthemarket,specificallybyallowingtheirproposalstostandout.Shewentontosay,"[Certification]givesyouthecapabilityofgetting[arole]withinalargemultimillion‐dollarproject."[#2]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“FornineyearsIneversawacontractthathadaWBE[requirement],withoneexception,andthatwastheColoradoSpringsAirport.Wedida[projectthere].Iwouldsayuptothispoint,for99percentofmybusiness…certifications[havebeen]useless.However,thathaschanged.”[#5]

Thesamebusinessownerwentontosaythatherfirm’scertificationshavebecomeveryhelpfulinrecentyearsbecausepublicsectorcontractsrequireMWBEparticipation.Shenotedthatthiscauseshercompanytobesoughtafterasasubcontractor,andsaid,“ThislastyearIhavewonfourproposals.IwasonwinningteamsoffourproposalsbecauseIwasaWBE.Two[were]with[Denver]andtwo[were]withCDOT.”[#5]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreportedthatprimecontractorssometimesexpressinterestinhiringhisfirmasasubcontractor,thoughtheyloseinterestafterrealizingheisnotMBEcertified.[#4]

Many trade association and business assistance organization representatives discussed the

advantages of DBE/MBE/WBE/SBE certification.Commentsinclude:

Whenaskediftherearebenefitstocertification,theHispanicAmericanmalerepresentativeofatradeassociationstated,“Becausewedonothavealevelplayingfieldintoday'senvironment,certificationgrantsourfolksanopportunitytogetapieceofthepieofpublicdollarsonpublicprojects.”[#11]

Thesametradeassociationrepresentativelatersaid,“Ihaveheardsomecompaniesdonotlikethelabelingthatcomeswithit,butIdonotseeanydisadvantages….ThewayIlookatitisifyouareseekingprivatework,yourworkspeaksforitselfwhetheryouarecertifiedornot.Andifyouareseekingpublicwork,certificationallowsyoutheopportunitytomakesurethatmorefolksaregettingapartinsomeofthatwork.”[#11]

Whenaskedifthereareanybenefitstocertification,thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaid,“Thefirmsthatarecertifiedcertainlysaythatit


hashelpedthem.Ifyouarecertifiedandyouhavegoodexperienceinconstruction,yourphoneisringing.Theyaresayingitisapositiveexperiencebecausetheygetseriousconsiderationfromgeneralcontractors….The[certified]specialtycontractorsdeliveringwork[are]gettingalotofseriousconsideration….”[#40]

Thesametradeassociationrepresentativecontinued,“[Certification]isagoodwaytomakesurethattheygetattractiveprojectsthatareoutthere,[but]theystillneedtoknowhowtodothebusiness.Theystillneedtobeableto[manage]cashflow[and]thepayroll.Theystillneedtobeabletodoallthosethings,butitcertainlyhasbeenafootinthedoortogetthemgoing.Now,ifthey’renotgoodatconstruction,thenitwon’tlastverylong.”[#40]

TheBlackAmericanfemalerepresentativeofatradeassociationsaidthatcertificationisadvantageousbecauseitallowsbusinessestoparticipateinspacestheyotherwisewouldnothavebeenabletoparticipatein.Sheaddedthatsomeoftheresourcesincludeavailabilityfromtransportation‐relatedagenciesaswellasotherlocaltradeassociations,whichallprovideconnectivityresourcesandpartnershipsformemberstoget“pluggedin.”[#6]

Whenaskedifthereareanybenefitstocertification,thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaid,“Ithinkitdoeshavethepotentialtogetpeopletoseethesefirms[and]recognizethey’rethere….There’sapoolofpeoplethatthoseprimescangotoandsay,‘Thecityor[otheragencyhas]lookedatthem,[so]thereforetheymaybeaviablecompany.’”[#38]

TheNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaidthatcertificationallowsfirmsto“[interface]withtheagenciesand[take]advantageoftheirresources.”Sheadded,“Also,[there’s]theadvantageoftheDBEgoalswhenpursuingaproject.”[#37]

Some expressed mixed feelings, indicated that there are limited advantages, or even

disadvantages, to certification.Othersreportedonstereotypingofcertifiedbusinessesorthe“stigma”associatedwithcertification.Forexample:

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“IperhapshaveadifferentpointofviewthanmostinthatIbelievethattheremaybeastigmaattachedtoabusinessthat’scertified….Ithinkperhapsthere’safeelingouttherethatyou’rebeinggivensomething.But,myexperiencebothonthefederalsideandonthissideisthatyou[give]probablymore[effort]asacertifiedbusinessbecausethebusinessdoesn’tcometoyou.You[may]havetheknowledgeandexpertise,butyou’llalsohavetobeabletomarketandhavetherightproductandbeintherightplaceforthingstohappenforyou.”[#9]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“IhavehadsituationswhereIhavebeenaskedtolowermyfeetogetaproject,onlytofindoutotherswereabletoincreasetheirfeesorproposal.Thejustificationisthatyouare


asmallDBE/MWBEfirmandthatyoumaynothavethesamequalityasa‘regular’firm,wheninfactyourproductissuperiortothe‘regular’firm.”[WT#12]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaidthathehopedcertificationwouldcreatebusinessopportunitiesforhisfirm,thoughithasn’tbeenashelpfulashehoped;hehasonlyreceivedonepublicsectorcontract.Hecommentedthatpublicagenciesareunwillingtocreateopportunitiessmallenoughforcertifiedfirmstocompetitivelybid.[#36]

Thesamebusinessownercontinued,“Ireallyhavemixedfeelingsabout[certification].Yougothroughallthehoopstogetcertified,andthennotmuchhappens.AsaBlackmale,whydoIhavetogothroughthebackdoorwhileeveryoneelsegoesthroughthefrontdoortogetbusiness?Theydon’tgiveyouanyrealassistance,justtechnicalassistancelikewedon’tknowwhatwe’redoing.Yougothroughallofthat,andyoustillhavetocompetedollarfordollar.Weneedtheseprogramsbecausetheeconomyneedsdiversity.”[#36]

Headded,“Youcan’tjustleavepeoplebehind.Thereshouldbeawaytohelpusgettotherightlevel,butitdoesn’tseemtobethere.TheonlytimecertificationworkedformewaswhenIhadthecontractwith[RegionalTransportationDistrict].Andthen[when]you’resuccessful[you]gooverthesizestandard.It’sacrazyprocessthattheysendusthrough.”Insum,hesaid,“Thedisadvantageisthatyouhavetogothroughthewholeprocessanddiscloseeverythinginordertogetintotheprogram,anditmayormaynothelpyou.”[#36]

Whenaskedaboutthebenefitsofcertification,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“It’sbeenabout10percenteffective.I’veonlyhadoneprojectthatusedmycertification.”[#35]

Asurveyrespondentindicatedthattheircertificationhasyettobenefitthefirm,saying,“Ihavebeenin[the]MWBE[program]andhavevirtuallynocontracts.”[AS#15]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatcertificationhasneverledtonewworkforthefirm.Sheexplained,“Ithinkit’sjustawasteoftimeandmoney…fillingoutallthoseforms,preparingallthosefinancialstatements.We’vegottenputonprojectteamsacoupletimesbecausetheywantfillthatslot,butwe’venevergottenanyworkoutofit.”[#12]

Whenaskedifthereareanydisadvantagestocertification,theHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatonedisadvantageisthatyouhavetoconstantlyrenewcertifications.Healsosaid,“[Certification]kindofdevaluesthecompany,becauseifyouwanttosellittosaysomebodyinternallywho’scomingupthroughtheranks,ifthey’renotminoritythentheylosethosecontracts….Andthat’sabignegative.”[#14]

Thenon‐Hispanicwhitemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmindicatedthatthefirm’sSBEcertificationisnotashelpfulastheyhadhoped.HesaidthatDenverPublicSchoolsis“verybig”onSBEutilization,thoughtheymostoftenuse


engineeringfirms.HewentontosaythattheyhavenotbeensuccessfulatobtainingworkwithDenverPublicSchools.[#15b]

Regardingdisadvantagestocertification,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmsaid,“Thereareonlydisadvantageswhenaprimemakesasweepingjudgmentthatafirmonlyholdsacertificationbecausetheycan’tgetwork[otherwise].”[#5]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedconstructionservicesfirmreportedthatshereceivedhercertificationslastyear.However,shesaid,“IhavenotbeenawardedanyworkfromtheCityandCountyofDenvertothispoint.Ihavespentalotoftimeandmoneytryingtolearnthesystemofdoingbusinesswithgovernmentagencies,[but]thusfarhavenotsucceeded.”[WT#5]

Whenaskedifthereareanydisadvantagestocertification,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatthereare.Heexplained,“Inthearchitecture[and]engineeringworld,thereisstilldiscriminationagainstminorityfirms.Therewerecertainagenciesthatwereveryfriendlyin[SBA]8(a)andDBEprograms,buttherewereotheragenciesthatfeltlikeitwasamandatethattheyhadtodo,andtheyfeltminority[architectureandengineering]firmswerelesscapableofdoingthework.TheissueIhavewith[the]Denvercertificationprocessisthatit’sdesignedasasmallbusinessprogram,[and]thecurrentordinancesizelimitishalfoftheSBAsizestandard.”[#22]

Some trade association and business assistance organization representatives discussed

whether there are disadvantages to certification.Mostindicatedthatthereare.[e.g.,#40]Forexample:

Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatonedisadvantageofcertificationisthatcertifiedfirmsoftenfeelthattheydonothavetomarketanymore.SheaddedthatifaDBEdoesnotknowthetimelineonalargeproject,theyshouldatleastknowthatitiscomingandwhotheprimaryprimeswillbe,andcommented,“Ithink[DBEs]waittoolateforsomeofthose[conversationswithprimes]tohappen.”[#38]

Whenaskedifthereareanydisadvantagestocertification,theBlackAmericanfemalerepresentativeofatradeassociationsaid,“Personally,formyownbusinessIgrappledwithbecomingaDBEbecauseIdidnotwanttolabelmyselfasdisadvantagedinanyway,shape,orform.Butinlearningmore,Icametounderstandmoreoftheadvantages,andthat’swhathelpedtoswaymydecision.”[#6]

Thesametradeassociationrepresentativeadded,“Therecanbedisadvantagesifyou’reenteringintocertificationwiththeideathatyou’regoingtobecoddled.Atsomepoint,you’vegottotakethetrainingwheelsoff.Itcanbetoughwhenyou’renotintheDBEspacebecausetheprivatesectordoesnotallowforasmuchparticipation,orasmuchmeaningfulparticipation[as]inthe[public]world….Theyoughttobelookingatbuildingtheirnetworkoutsideofthepublicspacesothatwhentheydogettothepointofgraduation,it’s


amoreseamlesstransition….[If]theydon’thavethatintheirstrategicplanorintheirtransitionalplan,itmakesforatoughtransition.”[#6]

One trade association representative indicated that certification can stunt a firm’s growth.Thenon‐Hispanicwhitemalerepresentativeofatradeassociationsaidthathebelievestheprocessofgettingcertifiedcan“slowpeopledown.”Heexplained,“It’sagovernmentprocess,sosomepeoplesay,‘IfI’mgettingenoughworkoverhereintheprivatesector,whywouldIwanttogotocityhallandgetonthewebsiteandfigureouthowto…gothroughtheapplicationprocess?’[#40]

Thesametradeassociationrepresentativecontinued,“Then…therearesizelimits.Ifyouwanttobeacertainsizetobecertified,youhavetostayunderacertainamountofassetsorrevenuelevel.So,ifmygoalistogethere,whywouldIgodosomethingthatsaysIhavetostay[belowlimits]?”[#40]

Experience regarding the certification process and any recommendations for improvement. Intervieweesmaderecommendationsforanumberofimprovementstothecertificationprocess.Afewindicatedthattheprocessisfineasitis.Forexample:

Whenaskedhowthecertificationprocesscanbeimproved,theHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidthatthecertificationprocesshasalreadyimprovedduetotheonlinefacilitationofforms.[#2]

Whenaskedaboutthecertificationprocess,theNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmreportedthattherequesteddocumentationisnecessary,andthathehasnoproblemswiththeinformationrequiredoramountoftimeittakestocompletetheapplication.Hecommented,“Ifyouwanttogetcertified,youworkthroughtheprocess.”[#39]

Whenaskedifhehasanyrecommendationsonhowtoimprovethecertificationprocess,thesamebusinessownersaid,“Itwouldbeniceifthereweremorepeopleinvolvedintheinfrastructuretoassistwithprocessingcertificationapplications.Whetheritisamunicipalityorstate,orcorporation,sometimestheydon’thaveanadequatenumberofemployeestoanswerquestionsandworkthroughtheapplications.”[#39]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmindicatedthatthecertificationprocessshouldbestreamlined.Shesaidthattheprocesstakestoolong,andnotedthatshemissedoutonopportunitiesduetocertificationdelays.[#35]

Whenaskedifthecertificationprocessiseasyordifficult,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmdescribedtheprocessastime‐consuming,butnoteditwouldfeel“worthit”ifitproducedwork.[#12]

Regardingwaystoimprovethecertificationprocess,theHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmstated,“Iamintherenewalperiod.Everyonehasbeenamazingtosendmeextensionlettersautomatically,but


wehavebeenextendedforawhile.So,it’sbeenalongprocessandnothinghaschanged.Iamthesamestructure,exactsamefinancials,so…Ithoughtitwouldbealittlefaster.[#19]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidsheappreciatestheonlineaspectofthecertificationprocessandtheabilitytouploaddocuments.Shesaid,“Ithinkit’sgreatthatit’smostlyonlinenow,andwecanuploadstuff.Thatissomuchbetterthanbeforewhenitwasjustallpaper.Thatwasawful.So,themoreyoucandoelectronically,thebetteroffweare.”[#13]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsaid,“[My]recommendationwouldbetoprovideassistancetomakesuresmallbusinessesunderstandhowtheprocessworks.Theassistancedependsonthelevelofunderstandingthatsmallbusinesshasaboutdoingworkwithpublicentities.”[#19]

Whenaskedifhehasanyrecommendationsonhowtoimprovethecertificationprocess,theBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Ithinktheprocessisprettystraightforward.Ithinkintermsofbecomingcertified,theprocessisprobablythewayitneedstobe.Ican’tthinkofanythingthatwouldbedonedifferently.”[#9]

TheHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatCityandCountyofDenvershouldaddarchitecturalprojectstotheSBEselectionpool.ShealsosaidthatthecityshouldrecognizehercompanyasaWBEbecauseshehasmajorityownership,runsthefinancialrisk,andhasthemanagementbackgroundtorunthebusiness.Sheexplainedthatallshelacksisanarchitecturallicense.[#15a]

Thenon‐Hispanicwhitemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatCityandCountyofDenvershouldmodifytheSBEdesignationtobemoreexclusivetosmallbusinesses.Hesaid,“Thewayitstandsrightnow,Ithinkifyoubill$4millionorlessyou'reanSBE,andthat’sprettymuch80percentofthearchitectsinDenver.”[#15b]

TheAsian‐PacificAmericanfemalerepresentativeofaDBE‐,MWBE‐,SBE‐,andEBE‐certifiedconstructionfirmsaid,“Iamtheoneatthecompanythatcompletesthecertificationrenewals.Ibelievetherehastobesomewaytoshortenthatapplication.Theinformationwesubmitisreallythesamethatwesubmittedtheyearbefore,andtheyearbeforethat.Forsmallcompanies,itisverytime‐consuming.”[#32b]

Thenon‐HispanicwhitemaleownerofagoodsandservicesfirmsuggestedthattheSBEprogrambebetterpromotedtocreatemoreawarenessofitandhowtocertify.[#10]

Thenon‐HispanicwhitemalerepresentativeofaspecialtyservicesfirmreportedthatCityandCountyofDenvershoulddoabetterjobofgettingthewordoutaboutcertificationopportunities.[#34]

WhenaskedabouthisexperiencewiththeDBE,MWBE,andSBEprograms,andifhehasanycommentsorrecommendationstoimprovethem,theBlackAmericanmaleownerofa


DBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“It’salotofeffort,butyougetnodirectbenefit.I’vecertifiedwith[CityandCountyofDenver]sinceIfirststartedthebusiness[almost20yearsago].Everyyearyouhavetosubmityourfinancialandaffidavits,butIdon’tgetanything.”[#36]

Thesamebusinessownercontinued,“IwantedtogetintotheACDBEprogramattheairportbecauseofmyretailexperience.Atonetimethatprogramwasprettysuccessful,butrightnowallthebigconcessionairesarecontrollingtheairport.Sonow,I’mjustmanagingwhatIhave.”[#36]

Many trade association and business assistance organization representatives indicated that

there is room for improvement in the certification process.Afewsuggestedmeansofimprovement.Commentsinclude:

RegardingwaystoimprovetheDBEcertificationprocess,theHispanicAmericanmalerepresentativeofatradeassociationsaidthatCityandCountyofDenvershouldofferworkshopstoassistsmallbusinessesthroughoutthecertificationprocess.Hecommented,“Whydoesasmallbusinesshavetopayaconsultanttohelpthemlearnhowtogetcertifiedwhenalotofitcanbedonethroughthecityprovidingworkshopstohelpfirmsdothat?”[#11]

Thesametradeassociationrepresentativelatersaid,“Havingtutorialworkshopswouldbeextremelybeneficialtoourbusinesses.Onceyouareonajob,what[is]require[d]?What'sthepaperwork?Howisitfilledout?Informationonprevailingwage[and]allofthosethingscanbesohelpfulandwouldcutalotoftheangstthatgoesonbetweenthebusinessesandtheownersinthosearenas….”[#11]

Whenaskedifshehasanyrecommendationstoimprovethecertificationprocess,theBlackAmericanfemalerepresentativeofatradeassociationsaiditwouldbehelpfultogivefirmsbetternoticeonwhattoexpectfromtheprocess.Sheexplained,“Allowingsmallbusinessesto[better]knowwhattheirrolesandresponsibilitiesare,whattheirrightsareasaDBE,andgivingthem…educationasfarastheordinance,ortheCFR…wouldbeagreatadditiontotheprocess.”[#6]

Regardingwaystoimprovethecertificationprocess,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Iwouldnotclassifyitaseasyordifficult.[It’s]justcumbersome.[Isuggestto]speeduptheprocess,makeitquickerbecauseittakestoomuchtimeforasmallbusinessownerwhoiswearingmanyhats….[Itcan]take90daystohearbackfromthemtofindoutifyouweresuccessful.”[#37]

Thesamebusinessassistanceorganizationrepresentativecontinued,“Domoreonline,thatwouldcertainlyhelp.Atthe[organization]Iamtheonlystaffperson,andIdon’tworkfull‐time.So,wehadtoautomatemanyofourprocessesandthathasallowedustodomore.I’veheardthat[CityandCountyofDenver]cutbackonstaffinvolvedwithcertification,andthat’swhyittakessolong.Automationcouldreallyhelpwithcertification.Thosewhodogetcertifiedalwayssaythey’regladtheydidit.”[#37]


Thenon‐Hispanicwhitefemalerepresentativeofatradeassociationsaidthatthecertificationprocessshouldrequirelesspaperwork.Shecommented,“Istheinformation[asked]fortrulyimportant?”Shewentontosay,“Sometimesit’san[incredible]amountofinformation,andthenyoukindof…wonder[if]somebodyisreallylookingthrougheverysinglepage[ofthethickpacket].Youknow,that’sprobablynotthecase.So[intheend],they’resubmittingalotmoreinformationthantheyreallymightneed[to].”[#38]

Whenaskedifhehasanyrecommendationstoimprovethecertificationprocess,theAsian‐PacificAmericanmalerepresentativeofabusinessassistanceorganizationstated,“Iappreciatethattheprocessisinplacebecauseitverifiesthatcompaniesaretrulyminority‐orwoman‐owned.Perhaps[itcanbe]streamline[d].AlotofAsianbusinessesarecash‐base[d]anddon’tkeepbooksliketheyshould.IthinkIwouldarguethatcertificationfolksshouldmakesomeaccommodationregardingthedocumentationtheyrequire.”Hewentontocomment,“DBEcertificationcanbeveryonerousanddoesnotguaranteework.”[#33]

M. Other Insights and Recommendations Regarding City Contracting and Programs

BusinessownersandrepresentativesprovidedothersuggestionsforCityandCountyofDenverandotherpublicagenciestoimprovetheirsmallbusinessorDBE,MBE/WBE,andSBEprograms,oranyotherinsightsorrecommendations.Forexample:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthathiscompanyhashadagreatdealofexperiencewithSBE/MBE/WBEprograms.Whenaskedifhehasanysuggestionsonhowtoimprovetheprograms,hesaid,“Iwouldreviewtheprogram,evaluatethecompaniesthathavegraduated,andwhathelpedthemgraduate….Thewholepremiseofthisprogramistogetpeopletobecomebusinessesthatdon'tneedtobeonagoallist,right?”Hecontinued,“Thenevaluatethat,andtrytousethatfortheothercompanies.Usethemasexamples.”[#21a]

TheHispanicAmericanmaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedengineeringservicesfirmsaidthatitwouldbehelpfulifpublicagenciesensuredthatprimesaresincereintheiroutreachefforts.Heexplained,“Telluswhatyouneed,whatyouwantinthebidorproposal.It’sfrustratingtogotoanevent,betoldthatthey’relookingforfolkstodoacertainscope,thenrunintoacompetitorattheeventwhotellsyoutheyalreadyhaveacontractforthatscope.”[#14]

WhenaskedifhehadanycommentsorrecommendationsregardinghisexperiencewithSBE/MBE/WBEoranyotherstateprogram,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaidhewouldliketoseeDenvergobacktothefullSBAsizestandardsforarchitectsbecausesomuchmoreworkissubcontractedouttoengineers,leavingaverysmallpercentageforarchitects.[#22]

Thesamebusinessownerwentontosay,“[DenverPublicSchools]recentlywentthroughtheMWBEprocess,butIthinkthey’rewhereDenverwasinthe90s.Projectmanagersareresistingittoothandnail.TheylikeworkingwiththeirpreferredfirmsandarenotgoingtolookatanMWBE.Theircultureneedstochange.”[#22]


Heconcluded,“[CityandCountyofDenver]needstotalktoothermunicipalitiesaboutthesuccessoftheMWBEprogram,[like]Aurora,Lakewood,Arvada,[because]noneofthemhaveprograms.Theyjustsaydisadvantagedbusinessesareencouragedtoapply,butthat’sit.”[#22]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Wehavegonesofarbackwards….Andit’snot[because]thesmallbusinessofficeisn’tattemptingtodoajob.It’sthat…theyareattemptingtodoajob,butit’snotcomingtogether.It’snotconnecting….”[PT#3a]

TheBlackAmericanmaleownerofaDBE‐andSBE‐certifiedprofessionalservicesfirmsaid,“WithallofthegrowthandCityofDenverprojectsthatwillbeginconstructionin2018andbeyond,itwillbeimperativeforthisregiontolookforwaystocreatetrueopportunitiesforallofthefirmsinthisregion,regardlessofgenderorrace….Ifthenew[ConstructionEmpowermentInitiativeordinances]becomelaw,itwilldefinitelyhelp.”[WT#12]

Thesamebusinessowneradded,“However,ifmanyofthemajorprimesinthisregioncontinuetheircurrentbusinesspractices,itisgoingtobeverydifficultformanyoftheseprojectstomeettheirsmallbusinessgoals,letaloneexceedthem.IfeeltheMWBEprogramshouldstayinplacebecauseitgivesminority‐andwomen‐ownedfirmsaccesstoopportunitytheyotherwisewouldnothaveaccessto.”[WT#12]

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmrecommendedthatMBE/WBEfirmstrytonotgetaheadofthemselves.Shesaid,“You’renotgonnagetthatmillion‐dollarcontractifallyou’vedoneis$10,000.Butwhatyoucandoisgetten$25,000contracts,anditcouldbeonthesameprojectifthingsaresplitapart.”Shesaidshewouldliketoseethecityunbundlelargecontractstohelpthemachievethatgoal,andmentionedthatlargersubsdonotoftencaretoperformcertainworkthatcouldbeofferedtoanMBEorWBE.[#13]

TheHispanicAmericanfemaleco‐ownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionfirmsaidminorityanddisadvantagedfirmsshould“notuse[their]statusasadisadvantage,”andadded,“Therearesomanypeoplewhocanhelp.It’sjustamatterofaskingandgettingyourfootouttherewhereyouwanttodowork.IfyouwanttodoworkwiththeCityandCountyofDenver,gotothecitybuildingsandaskquestions….”[#2]

Whenaskedifshehasanycommentsorrecommendationsaboutanyothercurrentorpotentialrace/ethnicity/gender‐basedprograms,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“MiCasaResourceCenterishelpingtheSpanish‐speakingcommunity.WhenIwastakingclasses,Inoticedtherearealotmorewomentryingtostartbusinesses,but[CityandCountyofDenver]isnotgivingthemtheopportunitytobid.Documentationisabigissue[too],[because]someofthemdon’thaveSocialSecuritynumbers.Theyworkandpaytaxes,sotheyshouldhaveopportunities.”[#35]


Thesamebusinessownerwentontocomment,“IhavearelationshipwithanMWBEcompanythatsellscleaningsupplies.Wewanttolearnhowwecanpartnerandbidonprojectstogetherbecausewedidthaton[apublicsectorproject],anditwasgoodforbothofus.Whocanhelpuswiththat?”[#35]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmimpliedalackofknowledgeabouttheprogramandthecertificationprocess.Healsonotedthathedoesnotknowhowtheminority‐businessrequirementsareenforced.Forpublicsectorprojectswithgoals,hecommented,"Ithinkthepublicsectorisutilizingtheleast[numberofSBE/WBE/MBEfirms]theycangetawaywith….Anditmaynotevenbepoliced."[#4]

Whenaskedifshehasanyotherinsightsorrecommendations,thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmreiteratedthatlargepubliccontractsshouldbeunbundled.Shesaid,“MybiggestcomplaintabouthowtheCityofDenverdoesbusinessisthattheyhaveallthisworkandratherthangothroughandsay,‘Wecanbreakthisupintosmallerpiecesthatmorefirmscanhandle,’they[instead]putthewholeturkeyoutandthentheywantsomebodywhocanswallowaturkeywhole.Smallbusinessescanonlydoagoodjobontheportionoftheprojectthattheycandountiltheygetbigger.Mybiggestcomplaintaboutpublicprojectsistheydon’tbreakthemupintosmallenoughpieces.”[#5]

RegardinghowMWBEfirmsareperceivedvalue‐wise,thenon‐HispanicwhitefemaleownerofanSBE‐certifiedprofessionalservicesfirmsaid,“[If]theMWBE[owner]isretiring,thevalueoftheirfirmgoesoutthedoorwiththemunless[they]canbereplacedbyanotherminorityorwomenowner.”[PT#2c]

Thesamebusinessownercontinued,“Bybeingaprime,youincreaseyourvalueof…expertise.So…theamountthatyou'regoingtoloseifyouselltosomeonewho’snotanMWBEisnotasgreatifyoucandemonstrateyou'reaprime.”Sheadded,“That’sbeenmyhangup[and]that’swhyI’mstressingsomuchwiththecity.Weneedtoprovidemoreopportunitiesforsmallbusinessownerstohavevalueintheirfirm.Notonlyfortheexistingowner,butwhenthey'rereadytoretireandmoveon.”[PT#2c]

Thesamebusinessownerwentontosay,“Nowgranted,makingajumpfromasubconsultanttoaprimeishuge,andthereneedstobesomeguidanceandmentors….But,weneedtohavethoseopportunities,andthecityhasnotrespondedinthatwaythistimearoundatall.”[PT#2c]

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmstatedthathewouldliketoseemoretransparencyinthecityandstateagenciesofDenver.Hesaid,“Wewanttoknowwho,what,when,where,andhow….Just[be]transparent.Thatway,itgivesyoutheabilitytoseewhatyouneed[and]whatyou’relacking.Alotofminoritiesdon’twantahandout.Theyjustwanttoknow…what[they]needtodotogetthere.”[#7]

TheHispanicAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,SBE‐,andEBE‐certifiedgeneralcontractingfirmsuggestedthatapublicentity,perhapsCityandCountyofDenver,


“developadatabaseofavailableequipment.”Sheexplained,“Ifacompanyhasa$1millionwaterblasterandisnotusingit,andthereisasmallcompanythatcouldusetheequipment,thatcompanycouldgotothedatabaseandcontacttheownerofthatequipmentandcontractwiththemtouseit.[Or],maybeitwouldbeanopportunitytosubwiththecompanytodosomeoftheworkwiththemachine.”[#19]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Myrecommendationwouldbetolookatwhentheproductisgoingtogetusedintheproject,andallowforadjustmentsbasedonthecurrentmarketconditions….I’mguessingifIwouldhavetobidaprojectwheremypartcomesintoplaytwotothreeyearsbeforetheyneedit…I’mgoingtopriceitwayuptotryandtakecareofwhatI’mhearingmayhappeninthemarket,whichmaymakemenon‐competitiveagainstthosepeoplethatdon’tdothat.”[#9]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmsaid,“Monitoringthegoodfaitheffortsisreallyimportantas[abuse]isoftenusedtoeliminatesmallbusinesses.Andcertificationshouldbekeptstringentastherearecompanieswhogamethesystembyhidingassets.”[#20]

ThesamebusinessowneralsosaidthatshehasheardrumorsthatCityandCountyofDenverandDenverInternationalAirportmight“split”theMWBEprogramintoseparateMBEandWBEcertifications.ShesaidthatitshouldremainMWBE.[#20]

Whenaskedforanyotherinsightsorrecommendations,thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmsaiditwouldbehelpfulifbusinessesknewwhichmailinglisttobeon.Heexplained,“Itwouldbehelpfulifeverythingwereinawell‐curatedlistofwhatiscurrentandwhat’swhere.Ifit’sfragmentedintoabunchofdifferentsites,thenit’salwayshardtonavigate.Itwouldbehelpfulifthoseresourceswereallinonecentralizedlocation,likeahubwherewegotoforallthemostcurrentinfo.”[#10]

Thesamebusinessowneralsosaidthathewouldbemorelikelytotakepartinbusinessassistanceprogramsandworkshopsiftheywereofferedmoreoften.Heexplained,“Iknowtheyhavesomethatareonceaquarter,somethatareonceayear,andifyoumissit,yougottacatchthenextone.Also,sometimestheclassesfillup.Capsontheprogramcanalsolimititsometimes.”Regardingthedisseminationofinformationregardingbusinessassistanceprogramsandevents,hesaid,“Twitterisusefulintoday’ssociety….Ifyou’repushingbyemail,thenyoumayaswellpushbysocialmedia.”[#10]

TheAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Professionalserviceengineeringfirmshaveprospered,grown,andgraduatedfromDenver’sMWBEprogram.WBEarchitecturalfirmshavealsoprosperedandgraduated.NotsomuchforMBEarchitecturalfirms.”[WT#2]

TheNativeAmericanmaleownerofaDBE‐,SDB‐,SDVOSB‐,andHUBZone‐certifiedgoodsandservicesfirmcommented,“Ithinkasagroup…ifaBlackpersonweretowalkuptocorporateAmericaandknockonthedoorandnobodyanswered,Ithinktheyarealittlemoreaggressiveasanethnicgrouptofindawaytogetin.HispanicsandAsiansarethe


sameway,whereas[if]anIndianorNativeAmericanwalksupandknocksonthedoorandnobodyanswers,they’llturnaroundandwalkaway….Ithinkitstartsbacktowhenyouisolateanethnicgrouponareservationlikethegovernmentdid,andyou’reusedtothewelfareandplacedonanislandwheretheywilltakecareofyou,youdon’thavethatpushandarenotusedtocompetingasotherethnicgroupsareusedtocompeting….”[#39]

A trade association representative commented on the importance of work opportunities for

minority companies, especially Black American‐owned firms. TheBlackAmericanfemalerepresentativeofatradeassociationsaid,“It’sverycriticalrightnowfortheowneragencies,municipalities,etcetera,toreallytakealookattheirprogramsandprojectstoensurethat,alongwiththeincreaseinopportunitiesorcontractsandprojects,there’salsoanincreaseinopportunitiesforminorities.”[#6]

Thesametradeassociationrepresentativelatersaid,“Iwasatameetingrecentlywithanotherminoritygroup.Theyaskedmetocomeandspeakbeforesomefolksattheairport,andinthemeeting,theypresentedsomefindings.Onefinding,whichwasprettyastonishingtome,wasthattherewaslessthan1percentAfricanAmericanparticipationoutoftheairport….Soyes,there’sahugedisparity,andthere’salsoahugeneedfortheseprogramsforcapacity‐buildingandsupportiveservices,etcetera.”[#6]

Another trade association representative suggested that City and County of Denver offer a

“minority business recruiter” to assist minority companies with securing quality labor.Thenon‐Hispanicwhitemalerepresentativeofatradeassociationreiteratedthatthereisalackofqualifiedworkersintheconstructionindustry,andsaid,“We’vesaidto…the[CityandCountyofDenver],‘Ifyou’dinvestalongwithus,wecouldhelptheminorityfirmsgetalotmoreemployees.’Wehaven’theardbackonthat,andIjustthinkthathelpingthosefirmsbeeffectiveinfindingmoreemployeesthatarepartiallytrainedisgoingtobesuperimportantnomatterwhat’sdone.”[#40]

Thesametradeassociationrepresentativeadded,“Weputinaproposaltothecitytopotentiallygetaminoritybusinessrecruiterthatwouldspecificallystartrecruitingfortheseminorityfirmstohelpthembeefuptheircompaniesaswell.Wewoulddiscountourtraining,butalsotherewouldbesomemoneyinthereforthesefirmstobeabletotakea201‐leveltraining[course].”[#40]

Some interviewees discussed what should be done to enhance the availability or participation

of small and disadvantaged businesses in City and County of Denver’s contracting.Forexample:

TheBlackAmericanfemaleownerofaDBE‐,MBE‐,WBE‐,andSBE‐certifiedconstructionservicesfirmsaidthatduringthenextroundofbigjobs,theconsiderationshouldbegiventothefirmsthathavethecapacitytoperformwork.SheaddedthatshewouldliketoseemoreoutreachtotheMBE/WBEcommunitytodetermineiftheycanmeettherequirements.[#13]

WhenaskedifhehasanyotherrecommendationsforCityandCountyofDenverorotherstateagenciesintheDenverarea,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Someofthegoalsontheseprojectsareso


small,andtheysaythey’resmallbecausetherearenoqualifiedbusinessesoutthere.So,theycontinuetoshrinkgoalsontheprojectsbecauseofthat.And[therefore]theyareshrinkingsmallbusinessesoutofexistence.”[#36]

Thesamebusinessowneralsosaid,“Youhavetoenforcecompliance.Youneedtoexpandgoalsandgivemorecompaniesanopportunitytogetwork.Ittakestimeandmoneytogetcertified,andnotbeinggivenanopportunityiscriminal.”[#36]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“Gettingmyfirstopportunitywas…slow.I’vebeencertifiedforsixyearsandhaveoneproject.”Shereiterated,“[CityandCountyofDenver]need[s]tobreak‐upcontracts.Rightnow,theprimesjustlookforonebigcompanytodoeverything.Iftheywouldbreak‐upthecontracts,morecompaniescouldgetwork.”[#35]

Thesamebusinessownerwentontosay,“[Thereshouldbe]moretrainingofcertifiedbusiness[es].Wegoinblind.Wedon’tknoweverythingthebigcontractorswillrequire,[and]wedon’tknowwhattoask.SomeofthetrainingshouldalsobeinSpanish.”[#35]

Whenaskedwhatelse,ifanything,shouldbedonetoenhancetheavailabilityandparticipationofallsmallbusinessesintheDenvermarketplace,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“Theredoesneedtobeaculturechangeattheagencies,[but]Idon’tknowhowtodothat…Therewasaplanningprojectattheairport.Theplannerfor[aDenveragency]wasaskedaboutthepreviousgoalforanon‐callplanningproject,andshesaidshedidn’tthinkithadagoal.Well,thereasonitdidn’thaveagoalwasbecauseplanningwasn’tpartofthelastdisparitystudy…itwasjustdesignandconstruction.So,becausetherewasnogoalbefore,shethoughtthegoalshouldbelow.Iwasshockedatthatstatement.Ithinkthepeoplewhomakethesedecisionsdon’tknowwhattheMWBEprogramisabout.Theyhaveanegativepreconception.IknowthereareMWBEsouttherethatcandowhattheagencieswanttodo.”[#22]

Thenon‐Hispanicwhitemaleownerofaprofessionalservicesfirmsaid,"Ithinkthatitwouldbenicetohavesomeprogramorsomerecognitionforfirmsthathaveminoritiesorwomenemployees….Ithinkitwouldhelpmoreminoritiesultimatelydeveloptheirownfirms."Henotedthatmostbusinessfoundershaveexperienceintheirfieldbeforestartingtheirownbusiness,andsaidhethoughtthistypeofprogramwouldmakeiteasierforminoritiesandwomentogainexpertiseinafield.[#3]

Thesamefirmowneralsorecommendedamentoringprogramconnectingstudentsandfirms.Hesaid,"IthinkthatitwouldbeniceifentitiessuchastheCityofDenvercouldteamupwith[localuniversities]toencourageminoritiestogetintotheeducationtheyneedforthecareerthey'dliketoenter."Henotedthatthereislingeringsexismandracisminschoolsandthoughtaprogramconnectingstudentswiththesefirmswouldhelpto"counteractsomeoftheobviousarchaicattitudesthatexist."[#3]

TheHispanicAmericanmaleownerofaspecialtycontractingfirmreported,"IthinktherequirementsforpublicworktoutilizeentitieswithSBE/MBE/WBEcertificationsisabig


factor[inincreasingprogramparticipation].Ifthere'snotarequirement,then[participation]willgoaway…nobody'sgoingtotakethatextrastepanddothatextrapaperworkifthere'snorequirement."[#4]

Thenon‐HispanicwhitefemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstruction‐relatedfirmreiterated,“TheCityandCountyofDenverand[DenverInternationalAirport]needtohavealocalrequirementontheircontracts.Ithinktheyshouldaddincentivestocontractorsthatutilizelocalsubcontractors.”[#20]

RegardingwaystoenhancetheavailabilityandparticipationofsmallbusinessesintheDenvermarketplace,thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsaid,“Itwouldbehelpfuliftheinformationwasjustmorereadilyavailable.[Forexample],theSBAcouldhavesaid,‘Hey,bytheway,you’reawoman‐ownedcompany.Here’salist.Seeifyoucangetonthislist….’WhenItalktowomenwhoowncompanies,theytellmetochatwithotherwomen‐ownedbusinessesbecauseitwillhelpmegetbusiness.”[#8]

Thesamebusinessco‐ownercontinued,“AndIwouldlikethat,butIwouldalsoliketogetpublicsectorbusinesswithcontractsthatarerepetitiveand[that]Icanrelyon[for]constantincome.IknewaboutgoingtoSBAbecauseofmybusinessknowledge,butnoonetoldmeIshouldgetonalistandbecertified.Iwanttoserveeverybody,notjustthepeoplethatareinmygenderorinmyrace.Iwanttobeabletoserveeverybodyandhavetheopportunitytobidforwork.”[#8]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedengineeringfirmindicatedthatdisadvantagedbusinessprogramsshouldreceivemorefunding.Shewentontocomment,“[CityandCountyofDenvershould]takeMWBE[and]SBEparticipationseriously.Putyourmoneywhereyourmouthis.It’sanimportantprogram.Ithinkit’salmostasimportantasschoollunchprograms….Ifwecanjusthelpeverybodybecomethebestthatindividualcanbebyeducation,byprogramslikethisMWBE[program],weareallgoingtoliveinabetterworld.”[#5]

Thesamebusinessownerwentontosay,“IthinktheCityandCounty[ofDenver]coulddomoretoadvertisetheneedforsmallbusinessparticipationandtheneedforwomen‐ownedbusinessesandeducation.Weneedmorewomeninsmallbusinessestostart,tobeawareofwhattheycando,andtobeawareoftheservicesthatareavailabletothem.Thathastocomethrough.Ihadnoidea[of]alltheservicesthatwereavailabletome.”[#5]

WhenaskedwhatshouldbedonetoenhancetheavailabilityandparticipationofsmallbusinessesintheDenvermarketplace,theBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthatthereshouldbeadditional,centrallocationswherepre‐bidscanbesubmitted.Healsosaidthatprequalificationsshouldbeclearlydefinedsothatcontractorsknowwhatqualificationstheyneedtopursueiftheywanttobid.Hewentontosay,“Theycould[also]keepup…alistofawardedbidsandwhotheywereawardedto,sortoflikehowthefederalgovernmentdoesit.”[#7]

WhenaskedifhehasanysuggestionsonhowtoenhancetheavailabilityandparticipationofsmallbusinessesinCityandCountyofDenver’scontracting,thenon‐Hispanicwhite


maleownerofaconstruction‐relatedfirmstated,“Atrueliaisonthatcouldguidebusinessestoopportunitieswouldbeveryhelpful.”[#25]

RegardinghisnegativeexperiencewithSBEcertification,thesamebusinessowneralsosaid,“Ibelievethereshouldbeaneffortforthosecertifiedbusinessestogetprojects,oratleast[forthemtobe]taughthowtosubmitbidsthatcouldleadtowinningaproject.”[#25]

TheBlackAmericanveteranmaleownerofageneralcontractingcompanysaid,“Ifthecityreallywantstohelpsmallbusinessesgrow,theyneedtoputtogetheradepartmentthat[specializesin]answer[ing]smallbusinessquestions.”[#29]

Whenaskedwhatshouldbedonetoenhancetheavailabilityandparticipationofsmallbusinesses,includingSBE/MBE/WBEs,intheDenvermarketplace,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaidthatanewsletteraboutavailablecontractingopportunitieswouldbehelpful.[#15a]

RegardingwhatshouldbedonetoenhancetheavailabilityandparticipationofsmallbusinessesintheDenvermarketplace,thenon‐Hispanicwhitemaleownerofagoodsandservicesfirmsuggestedthatsmallbusinesseshaveaccessto“hackerspaces.”Heexplained,“Hackerspacesareessentiallycommunityworkshopsandyoupayamonthlysubscriptionfee….It’sabunchofpooledtools[available],sothatmightbelasercuttersand3Dprinterswheretheoldbloodandthenewbloodgettogetherandkindofmingleandmakethings.”[#10]

Thesamebusinessownercontinued,“It’sjustagoodcommunityspaceforwhateversortofprojectsyouwanttoworkon.UpinLongmont,forinstance,theyhavetheTinkerMill.It’soneofthebest‐fundedinColorado.It’soneofthebiggest[too]….Theyhaveallkindsoffacilitiesthere,includingahamradiotowerupontheroofofthebuilding.Longmont’sbeenveryaccommodatingforthem,buttheyhavealloftheengineersfromIBMandfrom,youknow,LockheedMartinandBoeingwhogointheretoworkontheircarbonfiberbicyclesthattheybuiltthemselves,or…theirwindkayaksthatthey’vebeenfiber‐glassingthemselves.Thenyouhavepeoplecomingintothesamespacewhohavenevertouchedatoolofanykindintheirlife.They[mightsay],‘Iwanttolearnhowtosolder.Iwanttolearnhowtomakestainedglass.’Andso,it’sjustthisgreatfusionofnewideasandoldideascombinedwithallthetechnologythat…thecommunityhasbeenabletoputtogether.”[#10]

Hewentontosay,“Hackerspacesarekindoftheupcomingandtrendything.It’sagreatplacebecauseyouhavealotofwould‐beentrepreneursjumpingintothescenethereandgettingtheirstart.Andthat’swhereyoucanreally,reallymakeadifference.Itcouldbe[aresourcetodistribute]aflieroflocalworkshopscomingupfortheCityofDenver[on]howtofileyourpaperwork[or]howtodoaccounting….Evenbasicstuffwouldhelpthosepeopletremendously.”[#10]

RegardingwaystoimprovetheavailabilityandparticipationofsmallanddisadvantagedbusinessesintheDenvermarketplace,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstated,“Therearealotofcontractorsthatuse


Subguard,wheretheytakeoutthebondratherthanthesubcontractor.Andthereasonthattheydoitisbecausetheycanactfasterontheirbondthantheycanonthesubcontractor’sbond.So,theyconsideritabetterprocessforthem,becausetheycouldfireyouquickerthanifyouhaveyourownbond.”[#21a]

Thesamebusinessrepresentativecontinued,“Ifthe[CityandCountyofDenver]movedforwardwithsomethinglikethat,itmighthelptheminoritycommunitybeabletodobigger,broaderwork.[However],itstilldoesn'tkeepthemorkeepusfrombeingcarefulaboutbringingsomebodyonboard,eventhoughtheycanpostabond.Thatdoesn'tmeanthattheycandothework.So,it'smoreimportanttomakesuretheycandothework,becauseiftheycan’t,it'sonlygoingtohurtthemandus.”[#21a]

Some trade association and business assistance organization representatives discussed ways

to enhance the availability or participation of small and disadvantaged businesses in Denver

contracting.Forexample:

Whenaskedwhat,ifanything,shouldbedonetoenhancetheavailabilityandparticipationofallsmallbusinessesintheDenvermarketplace,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Maketheprocessquickertogetthrough.Anythingthat’sautomatedonline[wouldhelp]so[smallbusinesses]canaccessiteveningsandweekends…onoff‐hours.TheyneedtocheckaroundthecountryandfindbestpracticesinNewYork,Chicago,etcetera.”[#37]

WhenaskedifhehasanysuggestionsonhowtoenhancetheavailabilityandparticipationofsmallbusinessesintheDenvermarketplace,theHispanicAmericanmalerepresentativeofatradeassociationsaid,“Mystrongestrecommendationfor[CityandCountyofDenver]isauniformoutreacheffortacross[allpublicagencies].Thiswouldhelpalotofourcertifiedbusinessesbecausedoingworkwith[Denver]Zooisalotdifferentthandoing[Denver]PublicWorks,orDenverWastewaterManagementbecauseofthedifferentoutreachefforts….[This]createsahindranceasfarassmallbusinessesthataretryingtogrowandnotjustconstantlydoingworkwithoneentitythewholetime.”[#11]

Thesametradeassociationrepresentativecontinued,“The[EmergingBusinessEnterprise]programseriouslyneedstobelookedatandputinplace,andthedepartmentsandowners[shouldbe]heldaccountabletodoit…[and]heldaccountablefornotdoingit.Itissadwhen[CityandCountyofDenver]putsareportoutandthere'szeroparticipation[byEBEs]onit.”[#11]

A few interviewees shared comments related to outreach efforts and procurement

notifications from the City and County of Denver.Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmsuggestedthatCityandCountyofDenverandotherstateagenciesestablishacentralweblocationforpre‐bidandtraininginformation.Heexplained,“Itwouldbegreattologonandseeupcomingsmallbusinessevents.[Weneed]acentrallocationwhereyoucanlogon,look,read,understand,andmaybeapplyonline,andthenattend[an]eventtogetthetraining.”[#7]


Thesamebusinessco‐ownercontinued,“Rightnow,youreallyhavetogosearch.Yougotothiswebsiteanditgivesyouthelinktoanotherwebsite.Thenyouhavetogotoadifferentwebsiteorgodowntothecity[and]fillout[a]formandsomeonewillcontactyoulater.[Or],youcall[a]numberandyouhavetoleaveavoicemailandsomeonewillcallyouback.Andifyoudon’tansweryourphonerightthenandthere,that’sit.[You]startbackoveragain.”[#7]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmsuggestedthatCityandCountyofDenverandotherpublicagenciesbetternotifysmallbusinessesofupcomingjobandcontractopportunities.Sheexplained,“Ifthere’salistthatsaysinordertoreceiveabid,youhavetohavethiskindofcertification,thatwouldbehelpful.Whenyour[publicsector]contractis[ending]intwomonthsandyouneedtogetanewcontract,[anotification]wouldbehelpful.”[#8]

TheBlackAmericanmaleco‐ownerofaDBE‐,MBE‐,WBE‐,SBE‐,andESB‐certifiedgoodsandservicesfirmsaid,“Iwouldliketoseethemintegratewithinthepurchasingandprocurementareawiththesmallbusinessandeconomicdevelopmentpeoplesothattheyareusingtheresourcesthattheyhavewhenthey’resolicitingforprojects.”[#9]

Thesamebusinessownerexplained,“They’veaskedustofilloutallthisinformationtogetcertified,butthentheydon’tusetheinformation.Thatseemslikealotofmissedopportunities.Myexperienceinworkingwithfederalagenciesisthattheyusethatstuff.Theyusethoselistsandwillsay,‘We’vegot15people,sowe’llsenditoutto10peoplethistimeandthenexttimewe’lltakethose10offorfiveoffandsendouttothatnextgroup,andkeeprotatingthrough.’”[#9]

Whenaskedwhatcanbedonetoimprovetheparticipationofsmallbusinessesinthelocalmarketplace,thenon‐Hispanicwhitemaleownerofaspecialtyservicesfirmsaid,“Ibelieveifthecitywantstohelpsmallbusinesses,theyneedtoreachouttootherbusinesses,beyondtheirpreferredvendorlist,forproductsandsupplies.Idon’tbelievetheagencieswithinthecitygovernmentdoalltheycantoreachouttoothersmallbusinessesoutsideoftheircurrentvendorlist.Ibelievemycompanycouldbeverycompetitiveinpriceformany…jobs.”[#30]

A few public meeting participants shared comments regarding the disparity study.Forexample:

Amalepublicmeetingparticipantstatedthatotherbusinessownersareskepticalofthedisparitystudy.Hesaid,"AlotofpeoplethatIknow,theydon’trespondbecausetheydon’ttrusttheprocess….Theydon’thaveanyconfidenceinthesystem."Headdedthathehopesthedisparitystudy'sfindingswillholdcompaniesaccountabletomeetingDBEparticipationgoals.[PT#1a]

Thenon‐HispanicwhitefemaleownerofaWBE‐certifiedprofessionalservicesfirmsaid,“Ireallyhopeasaproductofthisprocessthatwebecome…collective,[and]webecomecreativeandvisionarysothatothercitieslooktousandsay,‘Youknowwhat?Denvertriedthisandthiswassuccessful,andnowDenversetsthebar.’”Sheadded,“Andlet’s…setthe


barforwhatisgoodandrightandwhatpromotessmallbusiness,andletSanFranciscoandLosAngelesandWashingtonlooktous.”[PT#3c]

Apublicmeetingparticipantsaid,“Whenthestatedidoneof[theirdisparitystudies],theyhadagovernor’sdisparityresolutionoversightcommittee.Andunlessthemayorengageswith[thedisparity]committee,it’sgoingtogonowhere.Isatonthatcommitteeforthegovernorandheappointedtheindividualsonit,andtheyhadpowerbecausetheytalkedtohimdirectlytomakerealchanges.Andoneoftherealchangeswasthatiftheemployeesweren’tincentivizedtomeetthosegoals,itisn’tgoingtohappen.”[PT#4]

Some trade association and business assistance organization representatives shared

comments regarding the disparity study.Commentsinclude:

Regardingapastdisparitystudy,theBlackAmericanfemalerepresentativeofatradeassociationsaid,“Oneofthethingsthatconcernsme…isthefactthatwehaveanordinance,andwe’vehadsomeactionitemsfromthelastdisparitystudy,[but]there’sbeennocomplianceorreportingmechanismattachedtothemtoensurethatthey’retakingplace.So,we’reonthesametrajectory…asaresult.”[#6]

Thesametradeassociationrepresentativecontinued,“Fortheitemsthatmayhavebeenrecommendedinthelastdisparitystudy,therereallyhastobesomestrongfollow‐up,becauseastheysay,ifyou’renotpartofthesolutionyouarepartoftheproblem.So,eveniftheCityandCounty[ofDenver]werenotdoingegregiousthings,thelackoffollow‐upandimplementationofprocessimprovementscancertainlybehurtingmorethanhelping.”[#6]

WhenaskedifshehasanyotherrecommendationsforCityandCountyofDenverorotherpublicagencies,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“IthinkDenverhasdoneagreatjobofallocatingresourcestotheirdiversityprogram.It’snotjustlipservicelikeI’veseeninotherpartsofthecountry,wheretheysaytheycareaboutdiversitybutdon’tputanyresourcesbehindit.Thedisparitystudyaloneisatestamenttotheircommitment.Andlastweektheybroughtdepartmentheadstotalktothe[organization].Thatwasreallygreat.”[#37]

Access to capital and obtaining financing. Somebusinessownersandrepresentativesreportedchallengessecuringfinancing,andcommentedonhowitimpactstheirabilitytosecurework.[e.g.,#23b]Forexample:

Whenaskedaboutbarriersordiscriminationinobtainingfinancing,theHispanicAmericanfemaleco‐ownerofanSBE‐certifiedprofessionalservicesfirmsaid,“Earlyon,wetriedtogetanSBAloan.Itwashorrible,sowefinallywentconventional,andstilldo.”[#15a]

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmstatedthatobtainingfinancingisaproblemforalotofcontractors,notjustMWBEs.[#21a]

TheBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmsaid,“Whenwegotintothebusinessitwasn’tcheap,but[wewere]guaranteedthe


loan,so[that]wasprettyeasy.Sincethen,ithasbeenverydifficultwhenyou’retryingtofinancethingsthataren’trealestate.EventhoughI’vebeeninbusinessalongtime,youwouldthinkI’dbereadyforaregularbankingloan,buttheyinsistIgothroughtheSBA.Andofcourse,that’sexpensive.IfeelI’mreadyforprimetime,buttheregularbankerstieyourhandswithexpensivefinancing.”[#36]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmsaidthatshehas“absolutely”facedbarrierswithfinancing.Sheexplained,“IwentthroughaperiodwhereIwasgoingtotrytobuyabuilding.Iwaslookingforfinancing,[and]IthinkIwouldhavegottenbetteroptionsifIweremale.IthinkIwaslookeddownupon.Peopleweren’tblatantlyrudetomeandturningmeaway,butIfelttherewasjustalittlebitofweirdredlininggoingon.”[#12]

A few trade association and business assistance organization representatives discussed access

to capital as a barrier for members.[e.g.,#38]Commentsinclude:

TheHispanicAmericanmalerepresentativeofatradeassociationsaidthatmembersexperiencebarriersinobtainingfinancing,specificallywithaccesstocapital.Heexplained,“[Somemembers]justdonothavethesame[opportunity]tobeabletoaccesscapitalintheconstructionindustry.SomeofthatIthinkisjustinherited,[and]someofitisjusttrulythebanksorfinancialinstitutionfeelingthattheyareatgreaterriskbasedonthemember’sethnicity.Someofthatis[also]thefirmjust…notyet[having]afinancialtrackrecord.”[#11]

Whenaskedifsheisawareofobtainingfinancingasbeingabarrierformembers,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationsaid,“Accesstocapitalisalwaysatopic,especiallyforsmallbusinesses.WereferthemtotheSBA,theNativeAmericanBank,andotherresourcesforsmallbusinesses.”[#37]

Other firms stated that access to capital has not been a barrier.[e.g.,#5,#35]Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthataccesstocapitalandobtainingfinancingisnotabarrierforhisfirm.[#7]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatsheisnotawareofanypotentialbarrierstoobtainingfinancingforherfirmorotherfirmsinthelocalmarketplace.[#8]

TheHispanicAmericanmaleownerofanengineeringfirmstatedthathehasneverhadproblemsobtainingfinancing.[#16]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatshehasnotexperienceddiscriminationinregardstoobtainingfinancing,bonding,materialsandsupplies,orotherproductsorservices.[#12]


Whenaskedifhehasfacedanybarriersordiscriminationinobtainingfinancing,theAsian‐PacificAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedprofessionalservicesfirmsaid,“It’snotaproblemformyfirm,[and]I’vebeeninbusinessmanyyears.”[#22]

Bonding requirements and obtaining bonds.Somebusinessownersandrepresentativesreportedchallengeswithsecuringbonds.Forexample,thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaid,“Idon'twanttocallitdiscrimination.Iknowthattherearelimitations,especiallyunderbonding.It’safactthat[certifiedfirms]can’tgetabond,whichlimitsusandourabilitytohirethatsub.It'snotbecausethecityrequiresustobondit,it'sbecauseourpoliciesrequirethatwebondpeoplesothattheycan'thurtus.So,ourfinancialpeoplealsodictatewhatwe'reallowedtodo.”[#21a]

Some trade association and business assistance organization representatives described

bonding requirements and obtaining bonds as barriers for member firms.[e.g.,#38]Commentsinclude:

Whenaskedifsheisawareofbondingrequirementsorobtainingbondsasbarrierstomembers’success,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Itisanissue,butIdon’tthinkit’sbecauseofdiscrimination.Theyjustdon’thavetheeducation.”Shewentontosay,“WehaveamemberwhodoesbondingworkshopswiththeU.S.DepartmentofTransportation,andtheyareverygood.”[#37]

TheHispanicAmericanmalerepresentativeofatradeassociationreportedthatsomemembershavementionedthatbondingrequirementsandobtainingbondsareabarrier.[#11]

For some business owners, bonding requirements and obtaining bonds is not a barrier.[e.g.,#16,#23b]Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmhasnoissuesmeetingbondingrequirementsorobtainingbonds.[#7]

Whenaskedaboutbarriersordiscriminationregardingbondingrequirementsandobtainingbonds,theHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmsaid,“FormanyyearsIdidn’tneedabond,butwhenItalkedto[alargeprime]aboutaproject,theysaidIneededabond.So,IattendedtheUSDOTBondingEducation[Program]andthat’swhereImet[someoneto]helpmegetabond.”However,sheadded,“Ididn’tneeditbecause[thelargeprime]didn’tgivemethecontract,butnowIknowwhotogotoifIneedabond.”[#35]

Insurance requirements and obtaining insurance.Anumberofbusinessesreportedontheirdifficultiessecuringinsurance.Commentsinclude:

Thenon‐Hispanicwhitemalerepresentativeofamajority‐ownedconstructionservicesfirmsaidthatobtainingworkers’compinsuranceissometimesachallengeforsmallcontractorsiftheydon’thavetherightsafetyprocessesinplace.[#21a]


Whenaskedaboutbarriersordiscriminationregardinginsurancerequirementsandobtaininginsurance,theBlackAmericanmaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionsupplyfirmstated,“It’sexpensive,butthat’smoreafunctionoftheindustrythandiscrimination.”[#36]

Thesamebusinessownerlatersaid,“Ifyou’regoingtodobusinessat[DenverInternationalAirport],theywantyoutohavea$10millioninsurancepolicy,andthat’sexpensive.Youneedasizeablecontracttocoverthecost.”[#36]

Regardingbarriersordifficultiesinthelocalmarketplaceforthefirm,asurveyrespondentcommented,“Insurancepremiumsarehigh.”[AS#29]

One business assistance organization representative reported that insurance requirements can

be a barrier for members.Whenaskedifsheisawareofinsurancerequirementsorobtaininginsuranceasbarriersformembers,theNativeAmericanfemalerepresentativeofabusinessassistanceorganizationstated,“Thisisanissue.Thepremiumsaretoohigh,soit’snotworthgoingafterthework.[Forexample]the$10millionumbrellaat[DenverInternationalAirport].”[#37]

For some, insurance requirements and obtaining insurance is not a barrier.[e.g.,#23b,#36]Forexample:

TheBlackAmericanmaleco‐ownerofaveteran‐ownedspecialtycontractingfirmreportedthathisfirmhasnoissueswithinsurancerequirementsorobtaininginsurance.[#7]

Thenon‐Hispanicwhitefemaleco‐ownerofaspecialtyservicesfirmreportedthatsheisnotawareofanypotentialbarrierstoobtaininginsuranceforherfirmorotherfirmsinthelocalmarketplace.[#8]

TheHispanicAmericanfemaleownerofaDBE‐,MWBE‐,andSBE‐certifiedconstructionservicesfirmreportedthatshehasnoproblemsobtainingtheinsurancesheneeds.[#35]

Thenon‐HispanicwhitefemaleownerofaDBE‐,WBE‐,andSBE‐certifiedprofessionalservicesfirmreportedthatinsurancerequirementsandobtaininginsurancehaveneverbeenbarriersforherfirm.Shewentontosaythatshehasagoodrelationshipwithherinsuranceagent.[#12]

A trade association representative indicated that members do not face insurance‐related

barriers.TheHispanicAmericanmalerepresentativeofatradeassociationreportedthathehasnotheardofinsurancerequirementsandobtaininginsuranceasbarriersformembers.[#11]

APPENDIX E.

Availability Analysis Approach

BBC RESEARCH & CONSULTING—FINAL REPORT APPENDIX E, PAGE 1

APPENDIX E. Availability Analysis Approach

BBCResearch&Consulting(BBC)usedacustomcensusapproachtoanalyzetheavailabilityofminority‐andwoman‐ownedforconstruction;professionalservices;andgoodsandservicesprimecontractsandsubcontractsthattheCityandCountyofDenver(theCity)awards.AppendixEexpandsontheinformationpresentedinChapter5todescribe:

A. Availabilitydata;

B. Representativebusinesses;

C. Availabilitysurveyinstrument;

D. Surveyexecution;and

E. Additionalconsiderations.

A. Availability Data

BBCcontractedwithCustomerResearchInternational(CRI)toconducttelephonesurveyswiththousandsofbusinessestablishmentsthroughouttherelevantgeographicmarketareaforCitycontracting,whichBBCidentifiedasAdams,Arapahoe,Boulder,Broomfield,Denver,Douglas,andJeffersonCountiesinColorado.BusinessestablishmentsthatCRIsurveyedwerebusinesseswithlocationsintherelevantgeographicmarketareathatthestudyteamidentifiedasdoingworkinfieldscloselyrelatedtothetypesofcontractsandprocurementsthattheCityawardedbetweenJuly1,2011andJune30,2016(i.e.,thestudyperiod).Thestudyteambeganthesurveyprocessbydeterminingtheworkspecializations,orsubindustries,foreachrelevantCityprimecontractandsubcontractandidentifying8‐digitDun&Bradstreet(D&B)workspecializationcodesthatbestcorrespondedtothosesubindustries.ThestudyteamthencollectedinformationaboutlocalbusinessestablishmentsthatD&Blistedashavingtheirprimarylinesofbusinesswithinthoseworkspecializations.1

Aspartofthetelephonesurveyeffort,thestudyteamattemptedtocontact7,320localbusinessestablishmentsthatperformworkthatisrelevanttoCitycontracting.Thattotalincluded3,578constructionestablishments,2,346professionalservicesestablishments,and1,396goodsandservicesestablishments.Thestudyteamwasabletosuccessfullycontact2,635ofthosebusinessestablishments(1,168businessestablishmentsdidnothavevalidphonelistings).Ofbusinessestablishmentsthatthestudyteamcontactedsuccessfully,897establishmentscompletedavailabilitysurveys.

1Inmanycases,BBCpurchasedinformationaboutmultiplelocationsofasinglebusinessandcalledallofthoselocations.BBC’smethodforconsolidatinginformationfordifferentestablishmentsthatwereassociatedwiththesamebusinessisdescribedlaterinAppendixE.


B. Representative Businesses

TheobjectiveofBBC’savailabilityapproachwasnottocollectinformationabouteachandeverybusinessthatisoperatingintherelevantgeographicmarketarea.Instead,itwastocollectinformationfromalarge,unbiasedsubsetoflocalbusinessesthatappropriatelyrepresentstheentirerelevantbusinesspopulation.ThatapproachallowedBBCtoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesinanaccurate,statistically‐validmanner.Inaddition,BBCdidnotdesigntheresearcheffortsothatthestudyteamwouldcontacteverylocalbusinesspossiblyperformingconstruction;professionalservices;andgoodsandserviceswork.Instead,BBCdeterminedthetypesofworkthatweremostrelevanttoCitycontractingbyassessingprimecontractandsubcontractdollarsthatwenttodifferenttypesofbusinessesduringthestudyperiod.

FigureE‐1liststhe8‐digitworkspecializationcodeswithinconstruction;professionalservices;andgoodsandservicesthatweremostrelatedtothecontractandprocurementdollarsthattheCityawardedduringthestudyperiod,andthatBBCincludedaspartoftheavailabilityanalysis.Thestudyteamgroupedthosespecializationsintodistinctsubindustries,whicharepresentedasheadingsinFigureE‐1.

C. Availability Survey Instrument

BBCcreatedanavailabilitysurveyinstrumenttocollectinformationfromrelevantbusinessestablishmentslocatedintherelevantgeographicmarketarea.Asanexample,thesurveyinstrumentthatthestudyteamusedwithconstructionestablishmentsispresentedattheendofAppendixE.Thestudyteammodifiedtheconstructionsurveyinstrumentslightlyforusewithestablishmentsworkinginotherindustriesinordertoreflecttermsmorecommonlyusedinthoseindustries(e.g.,thestudyteamsubstitutedthewords“primecontractor”and“subcontractor”with“primeconsultant”and“subconsultant”whensurveyingprofessionalservicesestablishments).2

Survey structure.Theavailabilitysurveyincluded15sections,andCRIattemptedtocoverallsectionswitheachbusinessestablishmentthatthestudyteamsuccessfullycontactedandthatwaswillingtocompleteasurvey.

1. Identification of purpose.ThesurveysbeganbyidentifyingtheCityasthesurveysponsoranddescribingthepurposeofthestudy.(e.g.,“TheCityisconductingasurveytodevelopalistofcompaniesinterestedinprovidingconstruction‐relatedservicestotheCityandCountyofDenver.”)

2BBCalsodevelopedafaxande‐mailversionofthesurveyinstrumentforbusinessestablishmentsthatpreferredtocompletethesurveyinthoseformats.


Figure E‐1. Subindustries included in the availability analysis

Industry Code Industry Description Industry Code Industry Description

Construction

Bridge construction Electrical equipment and supplies (continued)16229901 Bridge construction 50630104 Transformers, electric

16220000 Bridge, tunnel, and elevated highway construction 50840701 Controlling instruments and accessories

50630000 Electrical apparatus and equipment

Building construction15420000 Nonresidential construction, nec Electrical work

15410000 Industrial buildings and warehouses 17319903 General electrical contractor

76992500 Miscellaneous building item repair services 76290200 Electrical equipment repair services

15419909 Renovation, remodeling and repairs: industrial buildings

15420101 Commercial and office building, new construction Elevators and conveyors15420103 Commercial and office buildings, renovation and repair 76992501 Elevators: inspection, service, and repair

15420400 Specialized public building contractors 17969901 Elevator installation and conversion

15420100 Commercial and office building contractors 35340100 Elevators and equipment

Carpet and floors Environmental cleaning

17520000 Floor laying and floor work, nec 17990801 Asbestos removal and encapsulation

17990800 Decontamination services

Concrete and related products 73499901 Chemical cleaning services

14420102 Construction sand mining 49590302 Environmental cleanup services

32720303 Concrete products, precast, nec

14230000 Crushed and broken granite Fencing, guardrails and signs29510201 Asphalt and asphaltic paving mixtures (not from refineries) 16110100 Highway signs and guardrails

50320000 Brick, stone, and related material

32720000 Concrete products, nec Heavy construction

50320101 Asphalt mixture 16110000 Highway and street construction

50320503 Concrete building products 16290000 Heavy construction, nec

14420000 Construction sand and gravel

29510000 Asphalt paving mixtures and blocks Heavy construction equipment73530000 Heavy construction equipment rental

Electrical equipment and supplies 50820303 Cranes, construction

36340110 Heating units, for electric appliances 50820102 Road construction and maintenance machinery

50630103 Power transmission equipment, electric 73539901 Cranes and aerial lift equipment, rental or leasing

76290201 Electrical equipment repair, high voltage 35310000 Construction machinery

50840703 Measuring and testing equipment, electrical 73539902 Earth moving equipment, rental or leasing

50630205 Electrical construction materials


Figure E‐1. Subindustries included in the availability analysis (continued)


Construction (continued)

Highway and street construction Lawn, garden, and irrigation supplies (continued)49590100 Road, airport, and parking lot maintenance service 50830308 Irrigation equipment

16110206 Sidewalk construction 35240200 Lawn and garden mowers and accessories

17710202 Sidewalk contractor 50830203 Lawn machinery and equipment

16110202 Concrete construction: roads, highways, sidewalks, etc.

16110204 Highway and street paving contractor Masonry, drywall and stonework17710201 Curb construction 17419903 Concrete block masonry laying

16119901 General contractor, highway and street construction 17420101 Drywall

16110201 Airport runway construction 17420201 Acoustical and ceiling work

16110200 Surfacing and paving 17420104 Plastering, plain or ornamental

17710200 Curb and sidewalk contractors

17719902 Concrete repair Other construction materials16110205 Resurfacing contractor 28510105 Paints, asphalt or bituminous

17410102 Retaining wall construction

Other construction services

Industrial equipment and machinery 34490000 Miscellaneous metalwork

35190000 Internal combustion engines, nec 16230200 Communication line and transmission tower construction

50849914 Recycling machinery and equipment

50840700 Instruments and control equipment Painting50849905 Hydraulic systems equipment and supplies 17210303 Pavement marking contractor

35699914 Robots, assembly line: industrial and commercial 17210100 Residential painting

17210200 Commercial painting

Landscape architecture07810000 Landscape counseling and planning Parking services

75210200 Indoor parking services

Landscape services 75210100 Outdoor parking services

07829903 Landscape contractors 75210202 Parking garage

07829902 Highway lawn and garden maintenance services 75210101 Parking lots

Lawn, garden, and irrigation supplies Plumbing and HVAC35230500 Turf and grounds equipment 17110000 Plumbing, heating, air‐conditioning

50870501 Sprinkler systems 35850000 Refrigeration and heating equipment

50830201 Garden machinery and equipment, nec 35850300 Heating equipment, complete

35240000 Lawn and garden equipment 35850200 Refrigeration equipment, complete




Construction (continued)

Plumbing and HVAC (continued) Water, sewer, and utility lines (continued)17110301 Fire sprinkler system installation 16239906 Underground utilities contractor

17110401 Mechanical contractor 16239903 Pipe laying construction

16230300 Water and sewer line construction

Roofing 16290505 Waste water and sewage treatment plant construction

17610000 Roofing, siding, and sheetmetal work 16230000 Water, sewer, and utility lines

Street cleaning Windows and doors49590101 Snowplowing 52110201 Doors, storm: wood or metal

34420402 Garage doors, overhead: metal

Structural metals 50310300 Doors and windows

34490101 Bars, concrete reinforcing: fabricated steel 52110200 Door and window products

52110203 Garage doors, sale and installation

Traffic flagging and safety 17930000 Glass and glazing work

73899921 Flagging service (traffic control)

Wrecking, demolition, excavation, drilling

Trucking, hauling and storage 17950000 Wrecking and demolition work

42139904 Heavy hauling, nec 17959902 Demolition, buildings and other structures

42129905 Dump truck haulage 73530102 Oil well drilling equipment, rental or leasing

42129912 Steel hauling, local 16110203 Grading

42120000 Local trucking, without storage 16290401 Land leveling

17999906 Core drilling and cutting

Water, sewer, and utility lines 17949901 Excavation and grading, building construction

16239904 Pipeline construction, nsk 16290400 Land preparation construction

16290500 Industrial plant construction

Professional Services

Advertising, marketing and public relations Business services and consulting73119901 Advertising consultant 87420107 Quality assurance consultant

87480302 Telecommunications consultant

Architectural and design services 87210200 Accounting services, except auditing

87120000 Architectural services

73891801 Design, commercial and industrial Construction management87120101 Architectural engineering 87420402 Construction project management consultant

87120100 Architectural engineering 87419902 Construction management




Professional Services (continued)

Engineering Human resources and job training services87110402 Civil engineering 73630101 Employee leasing service

87110404 Structural engineering 73630000 Help supply services

87119909 Professional engineer 73630100 Labor resource services

87110400 Construction and civil engineering

87110000 Engineering services Medical testing, laboratories, and pharmaceutical services80710100 Testing laboratories

Environmental services and transportation planning87480204 Traffic consultant Surveying and mapmaking87480200 Urban planning and consulting services 87130000 Surveying services

87420410 Transportation consultant

Testing services

Finance and accounting 73890200 Inspection and testing services

73229901 Adjustment bureau, except insurance 73890203 Building inspection service

87420401 Banking and finance consultant

87489903 Employee programs administration

Goods

Automobiles Food50120208 Trucks, commercial 51410000 Groceries, general line

50120200 Commercial vehicles

55119901 Automobiles, new and used Furniture57129904 Office furniture

Cleaning and janitorial supplies 50210100 Office and public building furniture

51690400 Specialty cleaning and sanitation preparations 50210106 Office furniture, nec

39910302 Brushes, household or industrial 25310000 Public building and related furniture

35890200 Commercial cleaning equipment

50870304 Janitors' supplies Office equipment and supplies26770000 Envelopes

Communications equipment 51120000 Stationery and office supplies

38120000 Search and navigation equipment 25990203 Carts, restaurant equipment

59990602 Communication equipment 59991402 Photocopy machines

50650409 Video equipment, electronic 26210600 Stationary, envelope and tablet papers

36630000 Radio and t.v. communications equipment

48130101 Data telephone communications



Source: BBC Research & Consulting.


Goods (continued)

Other goods Uniforms (continued)76992000 Customizing services 23260100 Work uniforms

56990103 Work clothing

Petroleum and petroleum products 56990100 Uniforms and work clothing

59840000 Liquefied petroleum gas dealers29110000 Petroleum refining Vehicle parts and supplies51719901 Petroleum bulk stations 37130100 Truck bodies and parts

51720000 Petroleum products, nec 50149901 Automobile tires and tubes

50140000 Tires and tubes

Uniforms 50130119 Truck parts and accessories

56990102 Uniforms 50630100 Transformers and transmission equipment

23110300 Men's and boys' uniforms 37140000 Motor vehicle parts and accessories

Services

Cleaning and janitorial services Security systems73490104 Janitorial service, contract basis 17310400 Safety and security specialization

73829901 Burglar alarm maintenance and monitoring

Communication services 36990502 Security control equipment and systems

76220100 Communication equipment repair 17310403 Fire detection and burglar alarm systems specialization17310402 Closed circuit television installation

Computer and IT services 17310401 Access control systems specialization

73790203 Online services technology consultants 73829904

73790201 Computer hardware requirements analysis

Towing servicesOther services 75490301 Towing service, automotive

79229902 Concert management service

Vehicle repair shops

Printing and copying 75380104 Truck engine repair, except industrial

35790107 Mailing machines 75390102 Automotive springs, rebuilding and repair

27310203 Pamphlets: publishing and printing 75320402 Body shop, trucks

27590000 Commercial printing, nec

Security guard services73810100 Guard services

Confinement surveillance systems maintenance and

monitoring


2. Verification of correct business name.Thesurveyorverifiedthatheorshehadreachedthecorrectbusiness.Ifthebusinessnamewasnotcorrect,surveyorsaskediftherespondentknewhowtocontactthecorrectbusiness.CRIthenfollowedupwiththecorrectbusinessbasedonthenewcontactinformation(seeareas“X”and“Y”oftheavailabilitysurveyinstrumentattheendofAppendixE).

3. Verification of work related to relevant projects.Thesurveyoraskedconstructionbusinesseswhethertheorganizationdoesworkorprovidesmaterialsrelatedtoconstruction,maintenance,ordesign(QuestionA1).Surveyorscontinuedthesurveywithbusinessesthatresponded“yes”tothatquestion.

4. Verification of for‐profit business status.Thesurveyoraskedwhethertheorganizationwasafor‐profitbusinessasopposedtoagovernmentornonprofitorganization(QuestionA2).Surveyorscontinuedthesurveywithbusinessesthatresponded“yes”tothatquestion.

5. Confirmation of main lines of business.BusinessesconfirmedtheirmainlinesofbusinessaccordingtoD&B(QuestionA3a).IfD&B’sworkspecializationcodeswereincorrect,businessesdescribedtheirmainlinesofbusiness(QuestionsA3b).Businesseswerealsoaskedtoidentifytheothertypesofworkthattheyperformbeyondtheirmainlinesofbusiness(QuestionA3c).BBCcodedinformationonmainlinesofbusinessandadditionaltypesofworkintoappropriate8‐digitD&Bworkspecializationcodes.

6. Locations and affiliations.Thesurveyoraskedbusinessownersormanagersiftheirbusinesseshadotherlocations(QuestionA4).Thestudyteamalsoaskedbusinessownersormanagersiftheirbusinessesweresubsidiariesoraffiliatesofotherbusinesses(QuestionsA5andA6).

7. Past bids or work with government agencies and private sector organizations.Thesurveyoraskedaboutbidsandworkonpastgovernmentandprivatesectorcontracts.CRIaskedthosequestionsinconnectionwithprimecontractsandsubcontracts(QuestionsB1andB2).3

8. Interest in future work.Thesurveyoraskedaboutbusinesses’interestinfutureworkwiththeCityandtheDenverInternationalAirport.CRIaskedthosequestionsinconnectionwithbothprimecontractsandsubcontracts(QuestionsB3throughB6).4

9. Geographic area.ThesurveyoraskedwhetherbusinessesperformworkorservecustomersthroughoutDenver.(QuestionC1).

10. Year established.Thesurveyoraskedbusinessestoidentifytheapproximateyearinwhichtheywereestablished(QuestionD1).

11. Largest contracts.Thestudyteamaskedbusinessestoidentifythevalueofthelargestprimecontractsandsubcontractsonwhichtheyhadbidorhadbeenawardedduringthepastfiveyears.(QuestionD2).5

3Goodsandservicesproviderswereaskedquestionsaboutsubcontractwork.4Goodsandservicesproviderswereaskedquestionsaboutsubcontractwork.5Goodsandservicesproviderswereaskedquestionsaboutsubcontractwork.


12. Ownership.Thesurveyoraskedwhetherbusinesseswereatleast51percentownedandcontrolledbyminoritiesorwomen(QuestionsE1andE2).Ifbusinessesindicatedthattheywereminority‐owned,theywerealsoaskedabouttherace/ethnicityofthebusiness’sownership(QuestionE3).Thestudyteamconfirmedthatinformationthroughseveralotherdatasourcesincluding:

Cityvendordata;

Citycertificationdata;

Cityreview;and

InformationfromD&Bandothersources.

13. Business revenue.Thesurveyoraskedseveralquestionsaboutbusinesses’sizeintermsoftheirrevenues.Forbusinesseswithmultiplelocations,thebusinessrevenuesectionofthesurveyalsoaskedabouttheirrevenuesandnumberofemployeesacrossalllocations(QuestionsF1throughF3).

14. Potential barriers in the marketplace.Thesurveyoraskedanopen‐endedquestionconcerninggeneralinsightsaboutconditionsinthelocalmarketplace(QuestionG1).Inaddition,thesurveyincludedaquestionaskingwhetherrespondentswouldbewillingtoparticipateinafollow‐upinterviewaboutconditionsinthelocalmarketplace(QuestionG2).

15. Contact information.Thesurveyconcludedwithquestionsabouttheparticipant’snameandpositionwiththeorganization(QuestionsH1andH2).

D. Survey Execution

CRIconductedallsurveysin2017and2018.Tominimizenon‐response,CRImadeuptofiveattemptsduringdifferenttimesofthedayandondifferentdaysoftheweektoreacheachbusinessestablishment.CRIattemptedtosurveyanavailablecompanyrepresentativesuchastheowner,manager,orotherofficerwhocouldprovideaccurateanddetailedresponsestosurveyquestions.

Establishments that the study team successfully contacted.FigureE‐2presentsthedispositionofthe7,320businessestablishmentsthatthestudyteamattemptedtocontactforavailabilitysurveysandhowthatnumberresultedinthe2,644establishmentsthatthestudyteamwasabletosuccessfullycontact.

Non‐working or wrong phone numbers.SomeofthebusinesslistingsthatthestudyteampurchasedfromD&BandthatCRIattemptedtocontactwere:

Duplicatephonenumbers(77listings);

Non‐workingphonenumbers(920listings);or

Wrongnumbersforthedesiredbusinesses(162listings).


Somenon‐workingphonenumbersandwrongnumbersresultedfrombusinessesgoingoutofbusinessorchangingtheirnamesandphonenumbersbetweenthetimethatD&Blistedthemandthetimethatthestudyteamattemptedtocontactthem.

Figure E‐2. Disposition of attempts to survey business establishments

Note:

Availability analysis results are based on a representative, unbiased, and statistically‐valid subset of the relevant business population.

Source:

2017‐18 availability surveys.

Working phone numbers.AsshowninFigureE‐2,therewere6,161businessestablishmentswithworkingphonenumbersthatCRIattemptedtocontact.CRIwasunsuccessfulincontactingmanyofthosebusinessesforvariousreasons:

CRIcouldnotreachanyoneafterfiveattemptsatdifferenttimesofthedayandondifferentdaysoftheweekfor3,130establishments.

CRIcouldnotreacharesponsiblestaffmemberafterfiveattemptsatdifferenttimesofthedayondifferentdaysoftheweekfor333establishments.

CRIcouldnotconducttheavailabilitysurveyduetolanguagebarriersfor54establishments.

Aftertakingthoseunsuccessfulattemptsintoaccount,CRIwasabletosuccessfullycontact2,644businessestablishments.

Establishments included in the availability database. FigureE‐3presentsthedispositionofthe2,644businessestablishmentsthatCRIsuccessfullycontactedandhowthatnumberresultedinthe597businessesthatthestudyteamincludedintheavailabilitydatabaseandthatthestudyteamconsideredpotentiallyavailableforCitywork.

Establishments not interested in discussing availability for City work.Ofthe2,644businessestablishmentsthatthestudyteamsuccessfullycontacted,1,637establishmentswerenotinterestedindiscussingtheiravailabilityforCitywork.Inaddition,thestudyteamsentfaxore‐mailavailabilitysurveysuponrequestbutdidnotreceivecompletedsurveysfrom101establishments.Intotal,906successfully‐contactedbusinessestablishmentscompletedavailabilitysurveys.

Establishments available for City work.ThestudyteamonlydeemedaportionofthebusinessestablishmentsthatcompletedavailabilitysurveysasavailablefortheprimecontractsandsubcontractsthattheCityawardedduringthestudyperiod.Thestudyteamexcludedmanyofthebusinessestablishmentsthatcompletedsurveysfromtheavailabilitydatabaseforvariousreasons:

Beginning list 7,320

Less duplicate phone numbers 77

Less non‐working phone numbers 920

Less wrong number/business 171

Unique business listings with working phone numbers 6,152

Less no answer 3,130

Less could not reach responsible staff member 333

Less language barrier 54

Establishments successfully contacted 2,635

Number of

businesses


BBCexcluded38establishmentsthatindicatedthattheirbusinesseswerenotinvolvedinrelevantcontractingwork.

BBCexcluded12establishmentsthatindicatedthattheirorganizationswerenotfor‐profitbusinesses.

BBCexcluded23establishmentsthatindicatedthattheirbusinesseswereinvolvedinrelevantworkbutreportedthattheirmainlinesofbusinesswereoutsideofthestudyscope.

BBCexcluded203establishmentsthatreportednotbeinginterestedineitherprimecontractingorsubcontractingopportunitieswiththeCity.

BBCexcluded14businessestablishmentthatreportedbeingestablishedin2017orlater.ThatbusinessestablishmentwouldnothavebeenavailableforcontractelementsthattheCityawardedduringthestudyperiod.

Nineteenestablishmentsrepresenteddifferentlocationsofthesamebusinesses.Priortoanalyzingresults,BBCcombinedresponsesfrommultiplelocationsofthesamebusinessintoasingledatarecord.

Afterthoseexclusions,BBCcompiledadatabaseof597businessesthatwereconsideredpotentiallyavailableforCitywork.

Figure E‐3. Disposition of successfully contacted business establishments

Note:

Availability analysis results are based on a representative, unbiased, and statistically‐valid subset of the relevant business population.

Source:

2017‐18 availability surveys.

Coding responses from multi‐location businesses.Responsesfromdifferentlocationsofthesamebusinesswerecombinedintoasinglesummarydatarecordaccordingtoseveralrules:

Ifanyoftheestablishmentsreportedbiddingorworkingonacontractwithinaparticularsubindustry,thestudyteamconsideredthebusinesstohavebidorworkedonacontractinthatsubindustry.

Thestudyteamcombinedthedifferentrolesofwork(i.e.,primecontractororsubcontractor)thatestablishmentsofthesamebusinessreportedintoasingleresponse.Forexample,ifoneestablishmentreportedthatitworksasaprimecontractorandanotherestablishmentreportedthatitworksasasubcontractor,thenthestudyteamconsidered

Establishments successfully contacted 2,635

Less establishments not interested in discussing availability for work 1,637

Less unreturned fax/email surveys 101

Establishments that completed interviews about firm characteristics 897

Less no relevant work 38

Less not a for‐profit business 12

Less line of work outside scope 23

Less no interest in future work 194

Less established after study period 14

Less multiple establishments 19

Establishments potentially available for City work 597

Number of

Establishments


thebusinessasavailableforbothprimecontractsandsubcontractswithintherelevantsubindustry.

Exceptwhentherewerelargediscrepanciesamongindividualresponsesregardingestablishmentdates,BBCusedtheearliestfoundingdatethatestablishmentsofthesamebusinessprovided.Incasesoflargediscrepancies,BBCfollowedupwiththebusinessestablishmentstoobtainaccurateestablishmentdateinformation.

BBCconsideredthelargestcontractthatanyestablishmentsofthesamebusinessreportedhavingbidorworkedonasthebusiness’relativecapacity(i.e.,thelargestcontractforwhichthebusinesscouldbeconsideredavailable).

BBCdeterminedthenumberofemployeesforbusinessesbycalculatingthemodeorthemeanofresponsesfromitsestablishments.

BBCconsideredthelargestrevenuetotalthatanyestablishmentsofthesamebusinessreportedasthebusiness’srevenuecap(forpurposesofdeterminingstatusasapotentialDisadvantagedBusinessEnterprise).

BBCcodedbusinessesasminority‐orwoman‐ownedifthemajorityofitsestablishmentsreportedsuchstatus.

E. Additional Considerations

BBCmadeseveraladditionalconsiderationsrelatedtoitsapproachtomeasuringavailabilitytoensurethatestimatesoftheavailabilityofminority‐andwoman‐ownedbusinessesforCityworkwereaccurateandappropriate.

Not providing a count of all businesses available for City work.ThepurposeoftheavailabilityanalysiswastoprovidepreciseandrepresentativeestimatesofthepercentageofCitycontractingdollarsforwhichminority‐andwoman‐ownedbusinessesareready,willing,andabletoperform.TheavailabilityanalysisdidnotprovideacomprehensivelistingofeverybusinessthatcouldbeavailableforCityworkandshouldnotbeusedinthatway.FederalcourtshaveapprovedBBC’sapproachtomeasuringavailability.Inaddition,federalregulationsaroundminority‐andwoman‐ownedbusinessprogramsrecommendsimilarapproachestomeasuringavailabilityfororganizationsimplementingbusinessassistanceprograms.

Not basing the availability analysis on certification directories, prequalification lists, or bidders lists. Federalguidancearoundmeasuringtheavailabilityofminority‐andwoman‐ownedbusinessesrecommendsdividingthenumberofminority‐andwoman‐ownedbusinessesinanorganization’scertificationdirectorybythetotalnumberofbusinessesinthemarketplace(forexample,asreportedinUnitedStatesCensusdata).Asanotheroption,organizationscouldusealistofprequalifiedbusinessesorabidderslisttoestimatetheavailabilityofminority‐andwoman‐ownedbusinessesforitsprimecontractsandsubcontracts.TheprimaryreasonwhyBBCrejectedsuchapproacheswhenmeasuringtheavailabilityofminority‐andwoman‐ownedbusinessesforCityworkisthatdividingasimpleheadcountofcertifiedbusinessesbythetotalnumberofbusinessesdoesnotaccountforbusinesscharacteristicsthatarecrucialtoestimatingavailabilityaccurately.ThemethodologythatBBCusedinthisstudytakesacustomcensusapproachtomeasuringavailabilityandaddsseverallayersofrefinementtoasimpleheadcountapproach.Forexample,theavailabilitysurveysthat


thestudyteamconductedprovideddataonqualifications,relativecapacity,andinterestinCityworkforeachbusiness,whichallowedBBCtotakeamoredetailedapproachtomeasuringavailability.Courtcasesinvolvingimplementationsofminority‐andwoman‐ownedbusinessprogramshaveapprovedtheuseofsuchapproachestomeasuringavailability.

Selection of specific subindustries.Definingsubindustriesbasedonspecificworkspecializationcodes(e.g.,D&Bindustrycodes)isastandardstepinanalyzingbusinessesinaneconomicsector.Governmentandprivatesectoreconomicdataaretypicallyorganizedaccordingtosuchcodes.Aswithanysuchresearch,therearelimitationswhenchoosingspecificD&Bworkspecializationcodestodefinesetsofestablishmentstobesurveyed.Forexample,someindustrycodesareimpreciseandoverlapwithotherbusinessspecialties.Somebusinessesspanseveraltypesofwork,evenataverydetailedlevelofspecificity.Thatoverlapcanmakeclassifyingbusinessesintosinglemainlinesofbusinessdifficultandimprecise.Whenthestudyteamaskedbusinessownersandmanagerstoidentifytheirmainlinesofbusiness,theyoftengavebroadanswers.Forthoseandotherreasons,BBCcollapsedworkspecializationcodesintobroadersubindustriestomoreaccuratelyclassifybusinessesintheavailabilitydatabase.

Non‐response. Ananalysisofnon‐responseconsiderswhetherbusinessesthatwerenotsuccessfullysurveyedaresystematicallydifferentfromthosethatweresuccessfullysurveyedandincludedinthefinaldataset.Thereareopportunitiesfornon‐responsebiasinanysurveyeffort.Thestudyteamconsideredthepotentialfornon‐responsedueto:

Researchsponsorship;

Workspecializations;and

Languagebarriers.

Research sponsorship.SurveyorsintroducedthemselvesbyidentifyingtheCityasthesurveysponsor,becausebusinessesmaybelesslikelytoanswersomewhatsensitivebusinessquestionsifthesurveyorwasunabletoidentifythesponsor.Inpastsurveyefforts—particularlythoserelatedtoavailabilityanalyses—BBChasfoundthatidentifyingthesponsorsubstantiallyincreasesresponserates.

Work specializations.Businessesinhighlymobilefields,suchastrucking,maybemoredifficulttoreachforavailabilitysurveysthanbusinessesmorelikelytoworkoutoffixedoffices(e.g.,engineeringbusinesses).Thatassertionsuggeststhatresponseratesmaydifferbyworkspecialization.Simplycountingallsurveyedbusinessesacrossworkspecializationstoestimatetheavailabilityofminority‐andwoman‐ownedbusinesseswouldleadtoestimatesthatwerebiasedinfavorofbusinessesthatcouldbeeasilycontactedbytelephone.However,workspecializationasapotentialsourceofnon‐responsebiasintheBBCavailabilityanalysisisminimized,becausetheavailabilityanalysisexaminesbusinesseswithinparticularworkfieldsbeforecalculatingoverallavailabilityestimates.Thus,thepotentialforbusinessesinhighlymobilefieldstobelesslikelytocompleteasurveyislessimportant,becausethestudyteamcalculatedavailabilityestimateswithinthosefieldsbeforecombiningtheminadollar‐weightedfashionwithavailabilityestimatesfromotherfields.Workspecializationwouldbeagreatersourceofnon‐responsebiasifparticularsubsetsofbusinesseswithinaparticularfieldwerelesslikelythanothersubsetstobeeasilycontactedbytelephone.


Language barriers.ThestudyteammadethedecisiontoonlyincludebusinessesabletocompletetheavailabilitysurveyinEnglishintheavailabilityanalysis.Businessesunabletocompletethesurveyduetolanguagebarriersrepresentedlessthanonepercentofcontactedbusinesses.

Response reliability.Businessownersandmanagerswereaskedquestionsthatmaybedifficulttoanswerincludingquestionsabouttheirrevenues.Forthatreason,thestudyteamcollectedcorrespondingD&Binformationfortheirestablishmentsandaskedrespondentstoconfirmthatinformationorprovidemoreaccurateestimates.Further,respondentswerenottypicallyaskedtogiveabsolutefiguresfordifficultquestionssuchasrevenueandcapacity.Rather,theyweregivenrangesofdollarfigures.BBCexploredthereliabilityofsurveyresponsesinanumberofways.

Certification lists.BBCrevieweddatafromtheavailabilitysurveysinlightofinformationfromothersourcessuchasvendorinformationthatthestudyteamcollectedfromtheCity.Forexample,certificationdatabasesincludedataontherace/ethnicityandgenderofbusinessowners.Thestudyteamcomparedsurveyresponsesconcerningbusinessownershipwithsuchinformation.

Contract data.BBCexaminedCitycontractdatatofurtherexplorethelargestcontractsandsubcontractsawardedtobusinessesthatparticipatedintheavailabilitysurveysforthepurposesofassessingcapacity.BBCcomparedsurveyresponsesaboutthelargestcontractsthatbusinesseswonduringthepastfiveyearswithactualCitycontractdata.

City review.TheCityreviewedcontractandvendordatathatthestudyteamcollectedandcompiledaspartoftheavailabilityanalysisandprovidedfeedbackregardingitsaccuracy.


Availability Survey Instrument [Construction]

Hello. My name is [interviewer name] from Customer Research International. We are calling on behalf of the City and County of Denver. This is not a sales call. The City is conducting a survey to develop a list of companies interested in providing construction-related services to the City and County of Denver. The survey should take between 10 and 15 minutes to complete. Who can I speak with to get the information that we need from your firm?

[AFTER REACHING AN APPROPRIATELY SENIOR STAFF MEMBER, THE INTERVIEWER SHOULD RE-INTRODUCE THE PURPOSE OF THE SURVEY AND BEGIN WITH QUESTIONS]

[IF ASKED, THE INFORMATION DEVELOPED IN THESE INTERVIEWS WILL ADD TO EXISTING DATA ON COMPANIES INTERESTED IN WORKING WITH THE AGENCY]

X1. I have a few basic questions about your company and the type of work you do. Can you confirm that this is [firm name]?

1=RIGHT COMPANY – SKIP TO A1

2=NOT RIGHT COMPANY

99=REFUSE TO GIVE INFORMATION – TERMINATE

Y1. What is the name of this firm?

1=VERBATIM

Y2. Can you give me any information about [new firm name]?

1=Yes, same owner doing business under a different name – SKIP TO Y4

2=Yes, can give information about named company

3=Company bought/sold/changed ownership – SKIP TO Y4

98=No, does not have information – TERMINATE

99=Refused to give information – TERMINATE


Y3. Can you give me the complete address or city for [new firm name]?

[NOTE TO INTERVIEWER - RECORD IN THE FOLLOWING FORMAT]:

. STREET ADDRESS

. CITY

. STATE

. ZIP

1=VERBATIM

Y4. Can you give me the name of the owner or manager of [new firm name]?

[ENTER UPDATED NAME]

1=VERBATIM

Y5. Can I have a telephone number for him/her?

[ENTER UPDATED PHONE]

1=VERBATIM

Y6. Do you work for this new company?

1=YES

2=NO – TERMINATE

A1. First, I want to confirm that your firm does work or provides materials related to construction, maintenance, or design. Is that correct?

[NOTE TO INTERVIEWER – INCLUDES ANY WORK RELATED TO CONSTRUCTION, MAINTENENCE OR DESIGN SUCH AS BUILDING FACILITIES, PAVING AND CONCRETE, TUNNELS, BRIDGES AND ROADS AND OTHER CONSTRUCTION-RELATED PROJECTS. IT ALSO INCLUDES TRUCKING AND HAULING]

[NOTE TO INTERVIEWER – INCLUDES HAVING DONE WORK, TRYING TO SELL THIS WORK, OR PROVIDING MATERIALS]

1=Yes

2=No – TERMINATE


A2. Let me confirm that [firm name/new firm name] is a for-profit business, as opposed to a non-profit organization, a foundation, or a government office. Is that correct?

1=Yes, a business

2=No, other – TERMINATE

A3a. Let me also confirm what kind of business this is. The information we have from Dun & Bradstreet indicates that your main line of business is [SIC Code description]. Is that correct?

[NOTE TO INTERVIEWER – IF ASKED, DUN & BRADSTREET OR D&B, IS A COMPANY THAT COMPILES INFORMATION ON BUSINESSES THROUGHOUT THE COUNTRY]

1=Yes – SKIP TO A3c

2=No

98=(DON'T KNOW)

99=(REFUSED)

A3b. What would you say is the main line of business at [firm name/new firm name]?

[NOTE TO INTERVIEWER – IF RESPONDENT INDICATES THAT FIRM’S MAIN LINE OF BUSINESS IS “GENERAL CONSTRUCTION” OR GENERAL CONTRACTOR,” PROBE TO FIND OUT IF MAIN LINE OF BUSINESS IS CLOSER TO BUILDING CONSTRUCTION OR HIGHWAY AND ROAD CONSTRUCTION.]

1=VERBATIM

A3c. What other types of work, if any, does your business perform?

(ENTER VERBATIM RESPONSE)

1=VERBATIM

A4. Is this the sole location for your business, or do you have offices in other locations?

1=Sole location

2=Have other locations

98=(DON'T KNOW)

99=(REFUSED)


A5. Is your company a subsidiary or affiliate of another firm?

1=Independent – SKIP TO B1

2=Subsidiary or affiliate of another firm

98=(DON'T KNOW) – SKIP TO B1

99=(REFUSED) – SKIP TO B1

A6. What is the name of your parent company?

1=VERBATIM

98=(DON'T KNOW)

99=(REFUSED)

B1. Next, I have a few questions about your company’s role in doing work or providing materials related to construction, maintenance, or design. During the past five years, has your company submitted a bid or received an award for any part of a contract as either a prime contractor or subcontractor?

1=Yes

2=No – SKIP TO B3

98=(DON'T KNOW) – SKIP TO B3

99=(REFUSED) – SKIP TO B3

B2. Were those bids or awards to work as a prime contractor, a subcontractor, a trucker/hauler, a supplier, or any other roles?

[MULTIPUNCH]

1=Prime contractor

2=Subcontractor

3=Trucker/hauler

4=Supplier (or manufacturer)

5= Other - SPECIFY ___________________

98=(DON'T KNOW)

99=(REFUSED)

Documents

DENVER 2018 DISPARITY STUDY...1) DSBO Ordinance Extension – the DSBO ordinance will be extended for eight months, through December 1, 2019, to finalize changes to the ordinance,