For Immediate Release

November 16, 2016

Contact: NAMC National Office

(202) 296-1600

Judge David Hamilton of Illinois finds DBE Program Constitutional BL 369308, 7th Cir., No. 15-1827

Bloomberg News

Nov. 7 — Another federal appeals court found government programs offering a leg up in highway construction work to disadvantaged businesses to be constitutional (Midwest Fence Corp. v. DOT , 2016 BL 369308, 7th Cir., No. 15-1827, 11/4/16)

The federal disadvantaged business enterprise (DBE) program sets a goal for states to spend at least 10 percent of federal highway funds in contracting with DBEs, which are small businesses owned and managed by socially and economically disadvantaged individuals, primarily racial minorities and women.The U.S. Court of Appeals for the Seventh Circuit Nov. 4 joined the Eighth, Ninth and Tenth circuits in finding the program is narrowly tailored to serve a compelling government interest in remedying a history of discrimination in highway construction contracting.

Contractor Group Heads Cite Program’s Positive Effects
The minority- and women-owned contractors that make up much of the DBE market have had a “great commitment to hiring more diverse workers,” Beth Doria, the executive director of the Federation of Women Contractors, which filed an amicus brief in support of the DBE programs, told Bloomberg BNA Nov. 7.“Because they have been disenfranchised, they know what it is to suffer that, and so they have more of a commitment to seeing more diversity within the workforce,” she said. The DBE program helps minority- and women-owned companies to expand their business and goes toward offsetting widespread discriminatory practices in the private contracting market, Doria said.

Wendell Stemley, president of the National Association of Minority Contractors, told Bloomberg BNA on November 7 that company ownership in the DBE market isn’t necessarily race- or gender-based and includes disadvantaged individuals such as veterans and  disabled veterans. The program’s purpose is “more about economic inclusion of businesses that are under a threshold capacity,” and this inclusion can help spur job growth, he said. The DBE program is a mechanism for workers who have learned skilled trades to become company owners more easily and confidently, Stemley said. “The program allows them to take that skill and turn it into an emerging business enterprise, which then falls into the DBE guidelines at the city level, state level or federal level,” he said.

Federal, State Programs Survive Strict Scrutiny
The Seventh Circuit’s decision was in response to a lawsuit by a Chicago-based, non-DBE contractor against the federal program, as well as DBE programs established by the Illinois Department of Transportation and the Illinois State Toll Highway Authority. The company argued that the programs violated its Fourteenth Amendment right to equal protection. 
The federal DBE program “provides states with ample discretion to tailor their DBE programs to the realities of their own markets and requires the use of race- and gender-neutral measures before turning to race- and gender-conscious ones,” Judge David Hamilton wrote for the Seventh Circuit.

Similar to the federal program, the state programs withstood the strictest standard of federal court review, the Seventh Circuit determined. It affirmed a district court’s grant of summary judgment for the government defendants.

Judges William Bauer and James Peterson joined Hamilton’s opinion.

Dashiell Law Offices, LLC represented Midwest Fence Corp., the contractor challenging the DBE programs.

The U.S. Department of Justice represented the USDOT and the Federal Highway Administration. The Illinois Office of the Attorney General represented the IDOT. Pugh, Jones & Johnson P.C. represented the Illinois State Toll Highway Authority.

For More Information

Text of the opinion can be found at: http://www.bloomberglaw.com/public/document

/Midwest_Fence_Corporation_v_TRAN_et_al_Docket_No_1501827_7th_Cir.

What You Can Do

Be Aware. Stay Informed. SPEAK UP!

Be aware. A concerted effort has been in motion for years to abolish the Disadvantaged Business Enterprise (DBE) Program or to weaken it to the extent that it is no longer effective. These efforts to destroy the program will surely increase. If challenges to the program are successful, the earning capacity of thousands of small, minority- and women-owned construction contractors across the country will be adversely affected to the tune of billions of dollars in lost revenue and jobs lost to local communities. The far-reaching social impact of economic disparity in our nation is too great to be calculated and should not be taken lightly.
 
Stay informed. Keep abreast of matters in your market and nationally which concern small business, the construction industry, and minority and women-owned business enterprises (MWBEs). Make an effort to stay tuned in to the decisions your local, state, and federal representatives make that impact your business.
 
Speak up. Talk about the issues with other minority- and women-owned businesses. Make sure they are aware of the challenges to the DBE Program also. Give voice to your concerns by informing your local, state, and federal representatives by email or letter that as a small business owner, you are opposed to the dismantling or weakening of the DBE program. Get involved with and support organizations that represent your interests. And if you become aware of any situations, litigation, or legislation in your local market that will negatively impact the DBE program, let NAMC know. We will follow up on these situations and reach out to the appropriate government leaders if necessary.

naTIONAL aSSOCIATION OF MINORITY contractors

(202) 296-1600

info@namcnational.org

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Founded in Oakland, California in 1969 by Raymond Dones and Joseph Debro, NAMC is the oldest minority business organization in the United States with over 50 Hall of Fame members and Legacy Builders and an annual project capacity of over one billion dollars nationally. Through a network of local chapters, and in collaboration with strategic and corporate partnerships, NAMC assists women- and minority-owned member businesses with building capacity by providing access to opportunity, advocacy, and contractor development training.

For more information or to become a member, visit: www.namcnational.org

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