The Future of Minority Contracting Preferences

Kegler Brown Construction Newsletter

Many judicial decisions in recent years have eroded the legal viability of MBE "set aside" programs in government construction contracting, starting with the U.S. Supreme Court decision in the J.A. Croson case in 1989, and picking up steadily since the Adarand case decided by the high court in 1995.

Apparently the U.S. Justice Department is preparing to initiate a new plan designed to salvage affirmative action in federal contracting. The proposed plan would apply price credits of up to 10% towards bids by MBE's. For example, a MBE's bid to do a job for $100,000 would be reduced to $90,000 for bid award purposes, and awarded to the MBE over a $95,000 bid from a majority contractor, but the MBE would be paid its full $100,000 for the work.

The precise amount of the bidding price credit would be determined by statistical studies designed to determine how much discrimination allegedly exists in certain industries in certain parts of the nation.

Only time will tell whether this novel approach is ultimately implemented, and if so, passes constitutional scrutiny.