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.

So Pech decided to apply and see if he could destroy the DBE program from within.

Adarand was indeed certified as a DBE in June, 1998, and for just a few months all five guardrail subcontractors in Colorado qualified as disadvantaged businesses. As a result of its DBE status, Adarand got work -- especially when its bid was a few percentage points lower than the others' -- that it wouldn't have gotten before, Pech says. "Since all of us were DBEs, it was the same as none of us being DBEs," he notes.

"That was bullshit," says Cruz. "What else can I say? To me that was stooping pretty low. I'm not a minority by choice. For me to try and change my status just to benefit from something is pretty low."

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.

But the plan almost backfired on Pech. In March 1999, the Tenth Circuit Court concluded that since Adarand was now a disadvantaged business, its case against the state's DBE program was moot. The judges also vacated Kane's 1997 U.S. District Court ruling.

Pech appealed a second time to the U.S. Supreme Court, which again overturned the Tenth Circuit Court, ruling in January 2000 that Adarand's status as a disadvantaged business did not invalidate its earlier claims. The guardrail company still had standing, the court determined, because it was not clear that the U.S. Department of Transportation wouldn't revoke Adarand's DBE status, and it also wasn't clear that the "alleged wrongful behavior" of the government would not continue.

In an attempt to find legal clarity, the high court returned the dispute to the Tenth Circuit, where judges would rule on the merits of the SCC program using the strict-scrutiny standard. The Tenth Circuit found that changes to the SCC program, instituted in November 1997, made it more flexible; the court concluded that even when evaluated by the strict-scrutiny standard, the program was constitutional.

But the legal fight wasn't over yet. Lawyers at the Mountain States Legal Foundation now argued that the SCC program had not been sufficiently changed to be considered narrowly tailored and again appealed Pech's case. And the Supreme Court again agreed to hear it.

This time, legal observers think the decision of the judges on the Tenth Circuit will likely be overturned. "They applied the standard, but not in the way the Supreme Court would," says Corrada. "They used all the right language but took a broader approach."

The Tenth Circuit applied strict scrutiny "with a wink or a nod," says Mike Kennedy, an attorney for the D.C.-based Association of General Contractors, "and reached conclusions that the evidence didn't seem to support."

"It's extremely rare for the court to take a case three times," he adds. "People tell me the court has never taken a case a fourth time."

Affirmative action is a difficult, and likely tiring, subject for Rosemary Breiner, owner of Breiner Construction and president of the Hispanic Contractors of Colorado. "I can't tell you the number of meetings and task forces I've been to," she says.

Breiner doesn't think the government has been willing to sit down with the construction industry and collaborate on better programs. "It's always been at the level of lawmakers who say, 'This is the way you're going to do this,'" she says. "Many times what's been passed runs contrary to how the industry works."

Some people take unfair advantage of the programs, she acknowledges. "I can understand why someone like Adarand gets upset," Breiner says. "On the other hand, knowing that when you have tried over the years to get your foot in the door with corporations that spend big dollars on construction and they have their select list and you can't ever get into that, I say something needs to be done. These programs need to be out there. It takes a lot of money to get into this industry. You need that help from somewhere."

DBE programs never really helped Cruz Construction, Cruz insists. As a prime contractor, he says, "as far as I'm concerned, I still have to be the low bidder."

Ideal Fencing used to be owned by a woman, but is now run by her brother-in-law and is no longer certified by the state as a DBE. "We don't see any real difference in the amount of work we get, with the program or without it," says Ideal's new owner, Jim Bockelmann. "Back when we were eligible to participate, it still seemed that the bid process prevailed." Since its ownership change, Ideal has been holding steady, he adds.

"I'm not all for it," Bockelmann continues. "I'm all for programs to help companies get started, get their feet wet." Even when he was working for his sister-in-law, he had second thoughts about the program. He remembers thinking, "Is it fair? How do they really come up with this stuff?"

C&K says it has lost prime contracting bids even though it met the DBE goals. "They don't meet their goals, but they still get awarded," Lacey complains of larger, non-DBE companies.

"All that a prime contractor has to do is demonstrate he made an effort to contact DBEs," Cruz adds. "He does not have to use that DBE."

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