Minority, Women-Owned Small Businesses Seek Role in Caltrans Contracting Suit

Small business owners filed a motion today asking to intervene in a lawsuit that seeks to dismantle Caltrans’ Disadvantaged Business Enterprise Program (DBE). The group of business owners asking to intervene oppose the lawsuit and support the DBE program, which aims to give minority and women-owned businesses equal opportunity to compete for federal contracts.

“Small businesses owned by women and minorities are a vital part of our state’s economy and deserve a level playing field,” said Ingrid Merriwether, CEO of Merriwether & Williams, a small insurance services firm and a member of the Coalition for Economic Equity. “No matter how hard we work, without a fair public contracting system, small business owners will be at a tremendous disadvantage – as will the thousands of Californians we employ and the communities in which we work.”

The suit, Associated General Contractors of America v. California Department of Transportation, is pending in U.S. District Court in Sacramento.

The Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (LCCR), the American Civil Liberties Union (ACLU) Foundation of Northern California, Equal Justice Society (EJS) and the law firm Bingham McCutchen LLP filed the motion on behalf of the Coalition for Economic Equity (CEE) and the San Diego Chapter of the NAACP.

“Caltrans’ federally approved contract procedures give small businesses a fair shot at competing for contracts, including for transportation projects slated to receive millions in ‘stimulus funds,'” said Oren Sellstrom, Associate Director of Litigation at LCCR. “California must continue to make a focused and concerted effort to ensure that every business in the state has equal access to these public contracts, and that no group will be disproportionately excluded.”

“This lawsuit against Caltrans is a blatant attempt to dismantle equal opportunity in public contracting and goes against core constitutional values,” said Alan Schlosser, Legal Director at the ACLU of Northern California. “Caltrans’ framework to ensure fair participation is consistent with equal protection principles, and is in fact mandated by constitutional requirements.”

Caltrans’ Disadvantaged Business Enterprise program has established a framework for ensuring fair participation in federally funded public works projects in California, but has faced challenges. In 2006, Caltrans suspended the program’s race- and gender-conscious elements after a federal appeals court ruled that states had to document the existence of discrimination in the awarding of contracts. As a result, the number of women- and minority owned businesses awarded Caltrans projects plummeted — from nearly 11 percent in 2005 to just 2.2 percent in 2009.

In 2007, an extensive disparity study commissioned by Caltrans documented discrimination against small businesses owned by women and minorities in federally funded contracts. Caltrans then sought approval from the U.S. Department of Transportation (DOT) to reinstate the suspended elements as a necessary remedy to such discrimination. DOT granted its approval in August 2008, noting that Caltrans had a duty under federal law to reverse the steep decline in participation.

In June 2009, Caltrans’ procedures were challenged in the pending lawsuit filed by the Associated General Contractors of San Diego.

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