Specialty Contractors Required to Subcontract to MBEs

Kegler Brown Construction Newsletter

The recent Franklin County Court of appeals case of J.A. Croson Company v. Ohio DAS, No. 94APE-09-1406 (unreported 6/22/95) has determined that specialty contractors still have to subcontract from a minority business enterprise (MBE). Croson had argued that the 7% MBE requirement on state specialty contracts could be satisfied by its purchase of materials or services (rather than subcontracts) from MBEs. However, the Court ruled that there must be some subcontracting to an MBE on every contract within the 7% context and that the value of services could not exceed 5% of the contract amount. Therefore, the law could be satisfied by buying MBE services of 5%, supplies of 1% and subcontracting 1% of the total contract value.