April 6, 2011
A U.S. District Court judge affirmed that the California Department of Transportation’s (Caltrans) Disadvantaged Business Enterprises (DBE) Program was “clearly constitutional” in a recent ruling.
Caltrans implements a DBE Program as a condition of receiving $3 billion in federal transportation funding annually. The program ensures a level playing field for disadvantaged and small businesses competing for public contracts.
“This decision affirms that Caltrans’ efforts to level the playing field are constitutionally sound and will ensure that billions of dollars in federal transportation funds continue flowing to California,” said Caltrans Director Cindy McKim in a written press statement. “We will continue to reach out to disadvantaged businesses and hope our program serves as a model for other states to follow.”
In 2005, the Ninth Circuit Court of Appeals provided new guidance to states on implementation of DBE programs (Western States Paving vs. Washington State Department of Transportation). In response, Caltrans conducted a study to identify the existence and scope of discrimination, if any, in the highway transportation contracting industry in California.
The study was completed in 2007 and identified significant disparities in contract dollars awarded to African-American, Asian Pacific- American, Native American, and women-owned firms. To address those disparities, Caltrans proposed the use of both race-neutral and race-conscious means in its contracting programs.
In 2009, the Federal Highway Administration (FHWA) approved the proposal, which includes an overall goal of 13.5-percent DBE involvement.
In June 2009, the Pacific Legal Foundation filed its complaint in federal court on behalf of Associated General Contractors of San Diego, asking the court to declare Caltrans’ DBE Program unconstitutional and order it halted. On March 23, 2011, Judge Mendez determined that the program satisfied constitutional requirements and denied the plaintiff’s request.