California Department of Transportation's Disadvantaged Business Enterprise Program Upheld in Federal Court
SAN FRANCISCO – April 19, 2013 – In a major decision on Tuesday, the 9th Circuit Court of Appeals upheld the constitutionality of the California Department of Transportation’s (Caltrans) Disadvantaged Business Enterprise (DBE) Program, which implements the federal DBE Program seeking to ensure that businesses owned by minorities and women are on an equal footing to compete for federally-funded contracts. Caltrans' program was being challenged in court by The San Diego Chapter of Associated General Contractors.
The court’s decision was substantially based on a disparity study done by research firm BBC Research and Consulting and lead legal consultant Holland & Knight. The court held the study, which was commissioned in 2006, provided critical evidence establishing that the Caltrans DBE program complied with the Equal Protection Clause of the 14th Amendment in all respects. Holland & Knight and BBC also provided litigation support throughout the case.
The case, Associated General Contractors, San Diego Chapter v. Caltrans, is the first major case in the 9th Circuit to challenge the implementation of the federal DBE program since the landmark Western States Paving v. Washington DOT case in 2005 holding invalid the Washington DOT program. The federal DBE program requires all government recipients of federal funds from the U.S. Department of Transportation (DOT) to meet certain goals in their use of DBE contractors.
Holland & Knight partner and lead legal counsel of the Caltrans study Keith Wiener commented, "This is an important decision because the court engaged in a thorough and well-reasoned analysis and concluded that Caltrans' DBE Program, which implements the federal program and impacts all its contracts receiving federal funds, was Constitutional based in substantial part on the extensive quantitative and anecdotal evidence from the study. The analysis and reasoning of the court is applicable and provides guidance to all recipients of federal funds from the U.S. DOT in following federal regulations and any challenges to their implementation of the federal DBE program."
The result in this case is instructive to recipients of billions of dollars in federal funds from the U.S. DOT, including state DOTs, transportation and transit authorities, airports and other government agencies. It is expected that the case will be used by and cited as a major decision in pending and future cases that challenge government recipients of federal funds from the U.S. DOT in implementing the federal DBE program and their awards of transportation industry contracts.