United States Court of Appeals Upholds Federal DBE Minority Participation Goals on Most Caltrans Public Works Projects in California
States which accept Federal funding for State or Local Transportation projects from the U.S. Department of Transportation are each required to design and implement a “preference program” per Federal Regulations, 49 C. F. R. § 26.1 et seq ., regarding “socially and economically disadvantaged individuals and businesses.”
This typically includes persons of African, Asian or Hispanic descent, Native Americans, and Women and business owned by them.
Recipient States much establish “goals” (sometimes referred to as “set-asides”) for participation on Federally funded projects by businesses Disadvantaged Business Enterprises, or owned or controlled by disadvantaged persons (“DBE”), based on past patterns of discrimination against such persons in that locale.
CalTrans has established such a program for D.B.E.s, which was recently approved by the U.S. Department of Transportation, after prior litigation. The CalTrans Program currently has a 12.5% goal for DBE Participation on contracts, some of which is race-based, subject to subsequent adjustment.
The San Diego Chapter of The Associated General Contractors challenged the CalTrans DBE program in Federal Court as being unconstitutional and discriminatory against non-DBE businesses or contractors.
In April 2013 the Ninth U.S. Court of Appeals strictly scrutinized the California DBE program and upheld the CalTrans DBE program, based on studies showing past discrimination in contracting against some DBEs in the State, including discrimination or a lack of DBE Participation in recent years, and also based on the fact that the AGC lacked “Standing to Sue” on behalf of its member contractors.
Thus, for the foreseeable future, it appears likely that CalTrans DBE Participation goals will apply to all State and local government transportation projects in California that are at least partially Federally funded.