State Shelves MBE Set Aside Programs
Kegler Brown Construction Newsletter February 1, 1999
Ever since the U.S. Supreme Court's decision throwing out an affirmative action set aside plan in the J.A. Croson case back in 1989, minority set aside plans have come under increased attack and have been declared unconstitutional with great frequency. The City of Columbus Set Aside Plan has been declared unconstitutional by Judge Graham of the U.S. Federal Court here in Columbus. His decision is presently pending on appeal with the Sixth District Court of Appeals in Cincinnati.
Recently, AGC filed another lawsuit before Judge Graham to declare the State of Ohio's Set Aside Program as unconstitutional, in the context of the award of a sizable set aside contract on the Toledo Correctional Project. Judge Graham recently ruled from the bench that the entire State of Ohio Set Aside Program, including both the prime contractor set aside packages and the 7% subcontractor/supplier requirement, was unconstitutional and issued an injunction against the State prohibiting it from enforcing the program in the future. About that same time, the U.S. District Court for the Northern District of Ohio ruled similarly in the Buddie case.
In view of these decisions, the State of Ohio's MBE Set Aside Plan appears to be in ruins until some appellate court rules otherwise, which appears unlikely in view of the rigorous legal standards being applied to set-aside programs since the U.S. Supreme Court ruling in the J.A. Croson case.
My most recent information is that the State of Ohio, through the Attorney General's Office, is not going to seek a stay of Judge Graham's decision, which means that his decision will stand while the matter remains pending on appeal. This means, as a practical matter, that the State will not be able to insist upon MBE compliance in bidding work until further notice.
The State has recently removed all references to MBE compliance in its Contract Documents.
This abolishment of the Set Aside Program applies not only to prime contract packages, but also the 7% standard for subcontractor and supplier participation.
This decision does not change the requirements of the Federal Set Aside Program on Federal projects, which is continuing. In fact, many Federal projects are implementing a 10% preference in bidding for minority firms.