Contracting with an EDGE: Waivers and constitutionality of the Ohio EDGE Program Rules

Kegler Brown Construction Newsletter

In the last few years, Ohio's minority business enterprise ("MBE") program was decided by Ohio Courts to be unconstitutional as it was applied to state construction contracts. In response, the Ohio legislature enacted a program called "EDGE" (Encouraging Diversity, Growth, and Equity). EDGE was designed to further the policy objectives of the now-voided MBE program in a way that would satisfy the court's constitutional concerns.

For example, rather than mandating unconstitutional quotas or 'set-asides' for construction contracts, EDGE required the Ohio Department of Administrative Services ("Ohio DAS") to establish participation "goals." These goals were to be used by state agencies and universities to specify their desired participation in the work by EDGE-Certified socially or economically disadvantaged businesses. Consultants or contractors who hire an EDGE-certified firm (the Ohio DAS does the certifying) can use their retention of the firm toward meeting any specific EDGE "goal."

EDGE remains relatively new for contractors and untested in Ohio courts. Ohio contractors and consultants looking to bid state jobs thus typically face more questions than answers about the program. Two common questions are: (1) what happens if you agree to meet an EDGE goal but are unsuccessful?; and (2) if push comes to shove, is the EDGE program constitutional?

The short answer to the first question is that EDGE contains a waiver/modification provision. This provision allows a contractor to obtain a waiver from an EDGE goal if it is unable to comply with that goal despite making a “good faith effort” to do so. The director of Ohio DAS (or the chief officer of the state agency of the Project in question) has discretion to determine whether a “good faith effort” was made based on a list of considerations about the factual specifics and documentation for the contractor's claims. Documentation of your good faith efforts to utilize an EDGE-certified subcontractor, and the reasons for failing to do so, is critical if you hope to successfully petition for a waiver.

If your petition is unsuccessful, however, would there be grounds to challenge the constitutionality of the EDGE program? Such a challenge has not yet been made, so there is no definitive answer here. That said, without getting too much into the applicable legal standards, it is reasonable to believe that, based on prior case law, unless the State can demonstrate a compelling governmental interest to justify EDGE, the program (and its use of "goals" rather than set-asides) may be vulnerable to a constitutional challenge.