Derailing Affirmative Action

Randy Pech says the government's disadvantaged business programs discriminated against his company. This fall, the U.S. Supreme Court will decide if he's right.

Pech worries about unfairly being labeled as a racist. But that's not the word his critics use: They say he's greedy. According to the state transportation department, Colorado's five major guardrail companies have earned $84 million in state contracts since 1991, awarded either directly as prime contracts or indirectly as subcontracts. Adarand has received 30 percent of that business, or just under $26 million. Ideal and C& K have each received a little more than $20 million. Cruz, however, has received only $7.4 million. And Gonzales, whose bid inspired Adarand's suit, has earned only $3.9 million. (Gonzales president Frankie Gonzales declined to speak with Westword.)

Pech has a "vision of doing all the guardrail work in the state of Colorado," Lacey says. "He can't do it. He does not appreciate good, honest competition."

Of the last ten guardrail jobs the state bid on in 2000, Adarand received eight of them, Cruz says. Through May of this year, Adarand has been awarded $2.4 million in subcontracts; Ideal has received just over $1 million. Gonzales has earned a paltry $2,300, but that's still better than Cruz and C&K, who have gotten nothing. (Four of the guardrail companies received no prime contracts as of the end of May; Gonzales, the exception, won $133,000 worth of work.)

Brett Amole
Val Pech urged her husband to protest the unfair nature of affirmative-action programs.
Brett Amole
Val Pech urged her husband to protest the unfair nature of affirmative-action programs.

In short, Pech's competitors say, Adarand is already at the top of the heap. "Do you want to ask if the man is greedy?" says Cruz. "Yes, he is."

"That's what gets me about cases like this," comments Roberto Corrada, a law professor at the University of Denver. "It's just pure greed."

But Val Pech says she and her husband are just ordinary working people trying to make a living the same as everyone else. Their battle is not about money, the Pechs say, pointing out that they haven't sought financial damages. To them, it's simply a matter of right and wrong.

"We will never give up as long as our government is making determining decisions based on race," says Val, adding that their case "is about the core values of what it means to be an American."

Those sentiments haven't won over the skeptics, though.

"He never lost a job to me because of affirmative action," Lacey says of Pech. "I think Adarand is just out there beating their drum on the corner because they wanted the attention."

In June 1997, the U.S. District Court for Colorado again ruled on the Adarand case, this time determining that the SCC program was unconstitutional, because it was not narrowly tailored. U.S. District Court Judge John Kane said that the federal standards to become a DBE were both overinclusive and underinclusive, rewarding minorities who were not disadvantaged and penalizing whites who were.

Fresh from this triumph, Adarand sued the State of Colorado, which had used affirmative-action programs to award transportation contracts for two decades. According to MGT of America, a national management research and consulting firm that conducted disparity studies for the State of Colorado and the state transportation department, the department had operated a voluntary DBE program between 1971 and 1974, when only .3 to .9 percent of construction funds went to disadvantaged firms. In 1980, the Colorado Highway Commission, the Colorado Contractors Association and the Minority Contractors Association had agreed to a program for minority-business contracting. By 1989, the department had established a DBE goal of 10 percent for all Colorado highway work, both state and federally funded. Studies conducted in Denver and throughout Colorado during the '80s had all established that there was discrimination in the state-highway and construction industries.

Debra Gallegos, who manages the Center for Equal Opportunity at the state transportation department, is rankled at the suggestion that Colorado uses set-aside programs to boost minority participation. The DBE program the state follows is goal-oriented, she says. Unlike the federal SCCs, Colorado's program has never offered incentives for prime contractors to meet DBE goals, she explains. The state simply required prime contractors to make a good-faith effort to include minorities and women. If low-bidding contractors failed to use DBEs or were unable to prove they had made an honest effort to locate them, the state could rebid a contract.

Nevertheless, with the Adarand suit looming, state transportation department officials revamped the DBE program to head off litigation. "They broadened the definition of disadvantaged business," says law professor Corrada.

The first change simply required that all DBE applicants sign a statement saying they had been discriminated against in the past -- no need to provide any details. According to the state, this move eliminated the presumption that minorities and women were disadvantaged and that whites were not. The second was to cap the size of participating DBE businesses: An owner's net worth could not exceed $750,000.

Once these new changes were in place, the number of recognized DBEs dropped from about 350 to 280. (It has since risen to around 320.) Some contractors couldn't honestly claim past discrimination; some owners' personal net worth was too high (as in the case of Cruz Construction); still others didn't want to reveal their finances.

Judge Kane was also appointed to preside over the state case. Under the new rules, he determined that Adarand itself could possibly be a disadvantaged business.

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