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Sometime in the next month, the Supreme Court will decide whether to grant review in two related cases challenging the federal government’s use of preferences based on race, ethnicity, and gender in its highway contracting. The Court should take the case and rule against the preferences. The political branches need a strong reminder that this sort of discrimination is illegal. For years, federal, state, and local governments have frequently discriminated — and required private contractors to discriminate — in favor of some racial and ethnic groups and against others. In a number of decisions over the past decade and a half, the Supreme Court and most lower courts have made clear that this kind of discrimination violates the Constitution. Just last month a federal court in Florida struck down part of that state’s system of contracting preferences. The court ruled that there is “absolutely no evidence in the record” that the state even tried race-neutral alternatives to its race-conscious program, such as better policing its contract awards to ensure that no discrimination occurred. On Dec. 29, another federal district court found unconstitutional the city of Chicago’s preferences in public construction contracting. Under the Chicago program as it had previously operated, at least 5 percent of contracting dollars had to be awarded to women-owned firms, and at least 25 percent were to go to minority businesses. The District Court found Chicago’s program unacceptable because it was not a “narrowly tailored” remedy for past discrimination. There was, for example, no “meaningful individualized review” to establish which firms should benefit from the program, a standard indicated by the Supreme Court in its rulings on preferences in public education last summer in the University of Michigan cases. In the District Court’s words, “Race and ethnicity do matter — but remedies must be more akin to a laser beam than a baseball bat. The equal protection clause means what it says, we are one nation, indivisible.” The judge further offered this hypothetical to illustrate the inequity of Chicago’s selection system: “A third generation Japanese-American from a wealthy family, and with a graduate degree from MIT, qualifies (and an Iraqi immigrant does not).” PRECEDENT AGAINST PREFERENCE Rulings like this one are quite typical, because the weight of the case law so strongly supports them. In City of Richmond v. J.A. Croson Co. (1989), the Supreme Court made clear that state and local governments had to meet the most demanding scrutiny when they engaged in contract discrimination. And in Adarand Constructors Inc. v. Pe�a (1995), the Court added that the federal government would be held to that same high standard. So it is not surprising that, in the past few years, judges appointed by both Democrats and Republicans have struck down preferential programs in public contracting. The trend spans cities — including Cleveland and Columbus, Ohio; Memphis; Baltimore; and Jackson, Miss. — and states — from Oklahoma to New Jersey. Nonetheless, the use of contracting preferences continues. Why? The short answer is: politics. Making appeals to this or that racial or ethnic constituency has a long and unfortunate history in the United States, and old habits die hard. In just the last few months, for example, politicians in Missouri, Tennessee, and Michigan have all made noises about wanting to improve the percentages of contract dollars going to some racial and ethnic groups — and, thus, to lower the percentages going to others — in government contracting. The politics can be particularly unseemly. A recent Associated Press news story out of Philadelphia discussed how a contracting preference program there “has been a cash cow for a small group of people close to Mayor John F. Street.” The program has channeled business to “startup companies owned by Street backers or their relatives. In several cases, the companies selected for the work had no employees and no prior experience.” Philadelphia is not alone in suffering abuse of its preferential contracting programs. The Atlanta Journal-Constitution reviewed 100 contracts that had been awarded at the city’s airport under the municipal program of racial preferences there, and reported that 80 of the companies getting the work had a relationship with the mayor. Many were campaign contributors. And here’s a recent headline from a Baltimore paper: “City admits going overboard helping minority firm win bid.” For anyone wondering about the public-integrity costs of this sort of government action, listen to this white owner of the supply company that had held the contract for the past 25 years: “The fix was in from the start.” And there are financial costs, too: The city paid $7.45 per incandescent bulb under the race-based contract, rather than the previous 85 cents per bulb. Even in the absence of corruption, these programs inevitably generate unnecessary costs to the taxpayer. If the government awards contracts to someone other than the lowest bidder, then there’s no getting around the fact that the taxpayers will be footing a higher bill. Look at, for example, one of the cases that the Supreme Court has been asked to hear, Gross Seed Co. v. Nebraska Department of Roads. There, Nebraska highway contractors could not simply refuse to hire minority or female subcontractors who were more expensive than their white, male competitors. In fact, in the Nebraska program under challenge, the prime contractors had to accept bids by minorities and women that were up to 50 percent higher than those by white males. This added expense is, of course, passed on to the taxpayer. There is no figure available for the total amount of all such costs under federal, state, and local preference programs. But it is probably safe to say that it adds hundreds of millions of dollars annually to the price tag for government contracting work. Unfortunately, proponents of these financially ruinous and grossly unfair programs will likely seize on a couple of recent, badly decided cases from federal courts of appeals. The U.S. Court of Appeals for the 8th Circuit, for instance, decided both Gross Seed and Sherbrooke Turf Inc. v. Minnesota Department of Transportation, the other case now pending before the Supreme Court. The program challenged in both cases conditions receipt of federal funding assistance for highway projects upon each state’s establishment of a “Disadvantaged Business Enterprise” program. Under federal regulations, those programs must presume that members of certain racial and ethnic groups (and women) are “socially and economically disadvantaged,” and thus eligible, while members of other groups are not. The 8th Circuit upheld the programs in both cases. In its single opinion for both cases, the court declared that the plaintiffs failed to prove “that no remedial action was necessary” and similarly “failed to prove that the [challenged] program is not narrowly tailored.” Another case involved a Denver contracting preference upheld by the 10th Circuit in February 2003. It likewise put the burden of proof on the plaintiffs to show that the city did not have a history of past discrimination that would justify its current discrimination. The Supreme Court recently had its chance to grant review there, too. But — after a lot of agonizing — it decided not to, though the justices seemed sorely tempted to take the case. Six conferences, an unusually large number, were needed to decide whether to hear Concrete Works of Colorado v. City and County of Denver. Justice Antonin Scalia, joined by Chief Justice William Rehnquist, wrote a blistering dissent from the denials. They blasted the lower court for upholding a preferential program: “With regard to the burden of proof, then, the Tenth Circuit got it exactly backwards.” The two justices ended their dissent by arguing that the Supreme Court needed to hear Concrete Works because the Court should “make clear” that racial preferences remained suspect. On this issue of the need for greater clarity, the two justices are, unfortunately, very much correct. EDUCATION VS. POTHOLES Proponents of racial preferences in contracting are also likely to cite the Supreme Court’s decisions last summer that upheld one, but struck down another, racially preferential admissions program at the University of Michigan. Those decisions ought to have only limited applicability to the area of government contracting. Justice Sandra Day O’Connor very carefully limited her ruling to education, with the phrases “the context of higher education” and “the context of public higher education” each appearing several times. Indeed, while the elements of “narrow tailoring” can logically be transferred from higher education to contracting, the recognition of “diversity” as a “compelling interest” cannot. Universities can cite an interest in ensuring a variety of viewpoints, but there is no uniquely African-American perspective on how to fill a pothole. One last thing: The Bush administration will undoubtedly urge the Court not to take the two pending federal highway cases, and will argue to conservative critics that the executive branch is obliged to defend the laws Congress has passed, no matter how distasteful. If we accept this excuse, however, it is all the more important that the administration urge Congress not to pass such dubious laws in the first place. As it happens, the federal highway bill is up for reauthorization this year, and the pending versions still have preferences in them. It’s the perfect time, then, for the administration to urge Congress to take the preferences out. Roger Clegg is general counsel at the Center for Equal Opportunity in Sterling, Va. John Sullivan is associate director of the Project on Civil Rights and Public Contracts at the University of Maryland Baltimore County. Sullivan has worked as a consulting expert on several of the cases mentioned in this article. They can be reached respectively at [email protected] and [email protected].

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