The Ninth Circuit Court of Appeals ruled today in the case of Associated General Contractors, San Diego Chapter v. Caltrans (AGC v. Caltrans), affirming the California Department of Transportation’s outreach program to promote fairness and equity in its federal contracting.
AGC brought suit in 2009 challenging Caltrans’ Disadvantaged Business Enterprise (DBE) program, which seeks to ensure that minority and women-owned businesses are on equal footing to compete for federally-funded contracts. AGC filed the appeal after summary judgment was granted in U.S. District Court in 2011.
The Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, Bingham McCutchen LLP, ACLU-NC and Equal Justice Society (EJS) represent the Coalition for Economic Equity and the San Diego Chapter of the NAACP in the case, two groups that intervened to ensure that the perspectives of DBEs themselves would be represented in the litigation.
“We are gratified that the appeals court has held that Caltrans’ DBE outreach program is clearly within constitutional bounds. In fact, the program is much more cautious than it could be given the extent of discrimination in the transportation contracting industry,” said Oren Sellstrom, Legal Director at the Lawyers’ Committee. “As we argued in the Ninth Circuit, without a remedy, small businesses owned by women and minorities would continue to be locked out from fair competition for federally funded contracts. Caltrans’ equal opportunity program gives these businesses a fair shot at competing, which strengthens the economy as a whole,” added Sujal Shah, one of intervenors’ co-counsel from Bingham McCutchen LLP.
Jory Steele, an attorney from the ACLU-NC and another member of the legal team stated, “As the Court found, throughout years of litigation, AGC was unable to produce any evidence that any of its members has ever been harmed by the DBE program. That is because the DBE program is simply an outreach program that is designed to ensure minority- and women-owned businesses are aware of subcontracting opportunities.” Allison Elgart, co-counsel from EJS, added that the Court found that this type of outreach is necessary to break down “good ole boy” networks that particularly disadvantage minority owned firms.
Caltrans’ Disadvantaged Business Enterprise program establishes a framework for ensuring fair participation in federally funded public works projects in California. In 2006, Caltrans suspended the program’s race- and gender-conscious outreach elements after a federal appeals court ruled that states had to document the existence of discrimination in the awarding of contracts. As a result, women- and minority owned business participation on Caltrans’ federally funded projects plummeted — from nearly 11 percent in 2005 to just over two percent in 2008.
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 has a duty under federal law to ensure that taxpayer dollars are not funneled into an exclusionary contracting system. In June 2009, Caltrans’ procedures were challenged in the aforementioned lawsuit by the Associated General Contractors of San Diego. In 2011, Caltrans’ Disadvantaged Business Enterprise program was upheld by the U.S. District Court.