Avoiding Those MBE/WBE Certification Boobytraps

In company formation process, astute business owners secure legal advice when forming the company. However, corporate counsel unfamiliar with certification standards can accidentally set an applicant up for Minority / Women Business Enterprise (MBE/DBE) certification failure. The following article addresses the major booby traps which pertain to certification standards.

1. Size: Are You Chicken Little or Really Big Daddy?

The first threshold for Minority or Woman Business Enterprise (M/WBE) certification is proof your business qualifies as “small” under Small Business Administration (SBA) standards. These standards vary by industry and are reflected either in gross revenue dollars (i.e. for construction and sales), or in total number of full time employees (i.e. for manufacturing), averaged over a three year period. Current size standards may be found on the internet through Google, “NAICS Size Standards”.

While this sounds straightforward, the certification guidelines permit the reviewing agency to look at all of your ownership interests and pool that information. Thus if an applicant owner holds an ownership interest in several companies, the gross revenues or total employees of all companies are added together to determine size. Similarly, if your company is partially owned by a much larger corporation, under certain circumstances the gross revenues or total employees of the larger company are lumped in. This determination is based on an “affiliation” analysis, which reviews whether the larger company: (a) owns a significant interest in the smaller one, (b) shares mutual directors, officers or key employees; (c) shares office space or management duties; and/or (d) whether the smaller company is captive to the larger by virtue of its total book of business.

2. Capitalization: Show Me The Money!

The second element requires proof that the minority or woman applicant truly “owns” 51% or more of the business. Ownership is more than just the certificate of ownership shares. Proof requires evidence that the applicant paid a “fair market” value to acquire those shares from the applicant’s individually owned funds. Thus capitalization from a joint checking account, without proof of the fund origins into that account, is viewed as only a pro-rata investment by the applicant. Acquisition by gift, or through trust funds, can also present major obstacles. The best avenue is to evidence the capitalization through clearly established records showing funds solely belonging and originating through the applicant/owner.

3. Don’t Trust in Trusts

While trust ownership is common in normal business settings, trust ownership in the MBE/WBE context can be problematic. The primary issue is who controls the trust? If multiple individuals have decision making authority in the trust, you most likely have “control” problems for purposes of MBE/WBE certification compliance.

4. Control: Who’s Pulling The Strings?

The final element – and the one which poses the major obstacles to most applicants – is proof of control over major business decisions of the company. This runs the gamut from analyzing the applicant’s qualifications in their particular industry, to who holds applicable required licenses, to knowledge about sales and estimating, equipment, etc. At a minimum, the applicant must possess sufficient knowledge to make meaningful hiring decisions and to exercise intelligent oversight over their employees.

More problematic, most businesses are established with a standard model appointing a group of directors, who then appoint a group of officers to control the company’s day to day management decisions. Each director and officer typically has one vote, meaning they can theoretically outvote an owner/director or officer in certain circumstances. This may immediately disqualify an applicant. Instead, a potential M/WBE candidate is encouraged to set up company by-laws or operating agreements with cumulative voting; i.e. giving the 51% or more owner the right to always control the votes based on voting power commensurate with ownership shares.

Finally, the M/WBE applicant must consider implementing check writing limitations for key employees not to exceed certain defined limits without securing the M/WBE owner’s written authorization.

5. Side Agreements – Are You Crazy?

In some instances, potential owners have agreed to verbal or side agreements which modify those factors showing compliance with the above ownership and control factors. In a single word, this constitutes “FRAUD”. If you misrepresent facts in the application process, the government retains a powerful legal right to punish you under contract, ordinance, state and federal False Claims Acts or clauses. Penalties under these clauses and/or contracts range from forfeiture of all monies paid to your company under any contract awarded under the false representation, to disbarment from doing further government business, to jail time. Thus the advice is: No Side Agreements. Either you legitimately qualify, or face the consequences!


© Denise E. Farris. Esq. Farris Law Firm LLC. 20355 Nall Avenue, Stilwell, KS 66085 Email: dfarris@farrislawfirm.com. (August 3, 2017). All rights reserved. This article may not be reprinted nor reproduced in any manner without prior written permission by the authors

This article provides general coverage of its subject area. It is provided free, with the understanding that the authors, sponsors and/or publishers do not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional should be sought. The authors, sponsors and/or publishers shall not be responsible for any damages resulting from any error, inaccuracy or omission contained in this publication.

Missouri Affirmative Action Programs Under Attack!

In the recent case of Behavioral Interventions Inc v Mo Office of Administration pending in the U.S. District Court, Western District of Missouri, the State of Missouri’s affirmative action program was challenged as unconstitutional where the program allegedly:

  1. Employed goals irrelevant to availability of qualified MBE/WBE firms;
  2. Did not utilize a fair waiver system;
  3. Was based on stale data, where the state’s underlying disparity study was 15 years old;
  4. Did not contain size standards or graduation requirements;
  5. Contained no race-neutral measures.

Following several months of briefing, the court issued an injunctive order temporarily suspending the State’s program until trial in May 2005. The case was ultimately settled in May by the State’s revision of the program.

Impact of Challenges

Although prejudice still exists, the above challenge reflects a growing frustration by white male business owners who feel they can no longer effectively compete against incentives favoring minority and women owned businesses. This frustration has resulted in a growing number of legal challenges raised throughout the country. The challenges serve as a wake-up call to governmental entities and MBE/WBE participants that its time to review the local program and, where necessary, bolster its constitutional safeguards.

Constitutional Parameters for Valid Affirmative Action Programs
The 1989 Supreme Court case of City of Richmond versus J.A. Croson, identified the parameters for a constitutionally valid affirmative action program at the local and state level. Specifically, to pass muster, the government must prove:

  1. It has a compelling interest in creating the program, AND
  2. The program as designed and implemented is narrowly tailored to address that interest.

The same standard for federal programs was adopted in the recent 2000 – 2002 three-part series of challenges known as Adarand Constructors v. Pena.

Proof of “Compelling Government Interest”

A “compelling government interest” is established through statistical proof of past discrimination against specific groups. These studies, now known as Croson Studies, analyze: (1) specific identification of MBE/WBE firms in that particular region; (2) the scopes and magnitudes of work they can perform; and (3) the forms of discrimination they have earlier encountered in terms of educational opportunities; business formation; credit and finance; bonding; and job procurement. The Croson Studies, thus become the underpinning for any constitutionally valid program.

Many local and state governments implemented these studies in the years following the 1989 Croson decision. The studies identified many instances of past discrimination. However significant, recent decisions hold that these early Croson studies cannot perpetually justify the programs – in other words, the statistical studies must be repeated at regular intervals to ensure the data is fresh. While there is no litmus test on how long studies are deemed valid, the cases suggest the study should be updated on a regular basis every seven to ten years, at a minimum. This suggests that many local and state governments should implement steps now to review and update their older Croson studies.

Proof that a Program is “Narrowly Tailored”

The government must additionally prove the program is “narrowly tailored” to remedy past discrimination. Croson and Adarand identify “narrow tailoring” as requiring analysis of whether the program:

  1. Is more than mere “racial balancing”
  2. Is based on the number of local qualified minorities and women owned firms, in that region, who are capable of performing the work required in each particular contract;
  3. Is not over inclusive by presuming discrimination against certain minorities;
  4. Is not under inclusive by omitting race neutral measures designed to assist small business in general;
  5. Does not implement mandatory quotas.

What do these challenges mean? Local governments should be reviewing their disparity studies to ensure the data is fresh. If not, the studies should be immediately updated. Local minority and women owned firms who have not previously certified as such, should do so. Otherwise the government cannot rely on accurate “availability” data. Certifications should detail ALL scopes of work that firm is capable of performing. Women minorities should double certify both as minority-owned firms as well as women-owned firms. Small businesses who are not MBE/WBE should also be involved in reviewing and familiarizing themselves with the race neutral business assistance services these programs typically have. Bottom line is, affirmative action will continue to be around. By all parties’ active participation, the programs can and should operate in a fair manner.


This article provides general coverage of its subject area. It is provided with the understanding that the author, publisher and/or publication do not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional licensed in your state should be sought. The author and the publisher shall not be liable for any damages resulting from any error, inaccuracy or omission contained in this publication.


© Denise E. Farris (May 2005). All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.

SBA Reauthorization Act Addresses Shortfalls in Women Owned Business Procurement

Efforts on Capitol Hill to increase the number of federal contracts awarded to women continue to fall short, according to Denise Farris, managing member of the Farris Law Firm, LLC and Public Policy Chairperson of the Kansas City Chapter of National Association of Women Business Owners (NAWBO).

A recent three day conference in Washington, DC jointly sponsored by NAWBO and WIPP (Women Impacting Public Policy), focused on this and other legislative issues impacting women owned businesses. “The conference presented an excellent opportunity for education about the importance of exercising a strong voice for small business”, said Farris. “It is extremely difficult to speak out on a shared social agenda, where we each have widely varying stances. However, nearly everyone recognizes the importance of legislation supporting small business. The success of our businesses translates to disposable income we can then use to support the social policies important to us”.

One of the most important pieces of legislation pending this session is the Small Business Administration (SBA) Reauthorization Bill, Senate 3778.   A history of the bill is revealing. In 2000, Congress passed Public Law 106-554 which recognized an under-utilization of women owned businesses by the Federal Government. The 2000 law called for a 5% WBE goal to be achieved by federal agencies. Despite the enactment of this law in 2000, and a 2002 presidential initiative to implement the program, the government to date is struggling to achieve just under a 3% utilization.

“The current Senate bill specifically addresses this underutilization and contains procurement regulations increasing small business opportunities”, said Farris. Similar legislation is additionally being considered at the House level.   “While the pending Senate bill addresses the WBE statistics, it also contains measures which benefit all small businesses”, she added.

The initiatives include recognition and reduction of the negative effects of federal contract bundling, whereby two or more contracts are combined into a single large scale agreement whose requirements are typically too large for small business to bid.   Testimony from Government Affairs Officer Anne Sullivan, who serves as lobbyist for WIPP and NAWBO, stated: “Despite strong evidence that bundling is not good for small business or the government, a 2004 Government Accounting Office report showed that federal agencies are confused (about) what constitutes contract bundling,” Sullivan said. A 2002 report by the Office of Management and Budget found that for every $100 awarded on a bundled contract, there is a $33 decrease for small businesses. The report also said that competition is reduced in terms of the frequency and number of opportunities for small businesses. “The new legislation will hopefully clarify the definition of “bundling” while increasing procurement opportunities for small businesses nationally”, said Farris.

Additional Hill testimony was given by WIPP co-founder and President Barbara Kasoff. “Women business owners believe they should have a larger stake in government contracting,” said Kasoff, who noted that 48 percent of all privately held companies in the United States are owned by women. Kasoff noted that in annual WIPP surveys, access to government contracts is “one of the top challenges facing women business owners, who are losing billions of dollars in potential sales to the government.”

A summary of the key provisions of pending Senate Bill 3778 include:

  • Reauthorization of all SBA programs for a three-year period through September 2009 with
  • a 90 day requirement to implement the Women-Owned Small Business Contracting program designed to achieve the 5% procurement goal;
  • provisions that direct the SBA to accept certification from state, local and national certifying entities for both women and minority owned firms;
  • comprehensive legislative changes defining and limiting contract bundling; and
  • rules strengthening subcontracting requirements.

As the majority of these provisions benefit small, women owned and minority owned businesses alike, individual business owners are encouraged to contact their state senators to request specific support of this bill.

Denise E. Farris is the managing member of the Farris Law Firm LLC, 20355 Nall, Stilwell, KS 66085 (913-685-3192). Farris currently serves as the local Public Policy Chairperson of NAWBO-KC (National Association Women Business Owners) and is a National Partner with WIPP (Women Impacting Public Policy). The two national bipartisan organizations cumulatively represent 10.6 million women business owners, with WIPP currently recognized as the preeminent voice for women business owners on the Hill and NAWBO being one of the few women business organizations with an organized PAC (Political Action Committee).For the specific wording of the bill, go to: http://thomas.loc.gov/cgi-bin/query/D?c109:1:./temp/~c109oxyQpS::. To contact your state senators, go to: http://www.congress.org/congressorg/directory/congdir.tt.


© Denise E. Farris (September 2005). All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.

An Affirmative Action Prognosis

Recent shakeups in the make-up of the United States Supreme Court have left many groups wondering about the future of affirmative action. Since the 1989 seminal decision of City of Richmond v. J. A. Croson, affirmative action policies at the local, county, state and federal levels have been under constant constitutional attack.

The Croson decision, authored by Justice Sandra Day O’Connor, established the principal that affirmative action goals could no longer be quotas unrelated to the actual availability of minority and women contractors in an area. Programs were thereafter required to be more narrow in their focus, and to specifically address and remedy past discrimination against those groups. The Croson decision was thereafter adopted in subsequent litigation impacting state and federal programs.

Croson was a key constitutional decision which, while it narrowed the boundaries of affirmative action, nonetheless kept those programs alive. Croson author and Supreme Court Justice Sandra Day O’Connor, the fifth and therefore swing vote on all recent affirmative action cases, later admitted in interviews that her support of affirmative action was based in part upon her recognition that discrimination continues to exist and must be addressed in some form. This view was most likely influenced by O’Connor’s early inability to secure work as an attorney following her graduation as a top student from an Ivy League law school, where she was actually a classmate of Chief Justice William Rehnquist.

In those cases challenging affirmative action programs after Croson, the dissenting votes were typically cast by conservative Justices Antonin Scalia and Clarence Thomas, the only minority Justice on the Court. Both Justices wield tremendous influence on the court and per the esteem from the White House. Both Scalia and Thomas denounce affirmative action programs as creating the concept of a “creditor/debtor race”. They claim the programs do not benefit women and minorities but in fact exacerbate an appearance of inferiority where the programs foster dependence and prohibit the program recipients from reaching their full potential.

With the recent death of Chief Justice Rehnquist and his replacement with conservative Chief Justice John Roberts, it is expected that Roberts will continue to view affirmative action programs with strong skepticism. However, the key swing vote will be the individual who ultimately fills Sandra Day O’Connor’s shoes. Nominee Harriett Myers, strongly opposed by conservatives from President Bush’s own party, would likely be close to the moderate voice that Justice O’Connor brought to the court. For this very reason, current legal and political watchdogs speculate that Myers’ nomination will either be withdrawn or she will be pressured to withdraw, thus allowing Bush’s appointment of a strong conservative. Should this happen, all groups should prepare to see swift and significant changes in affirmative action.

But what to expect? In nearly every dissenting opinion authored by Justices Scalia or Thomas, they identify their support for race neutral small business incentive programs which, by their nature, have a disproportionate beneficial impact on women and minorities while still allowing white men to participate. To withstand constitutional challenges under a more conservative court, the following race neutral measures for all small business owners should be developed and expanded in all current affirmative action programs, including:

  1. Special training programs
  2. Technical and business assistance programs
  3. Bonding assistance programs
  4. Mentor/protégé programs and incentives for further development of same
  5. Anti-bundling measures (ie breaking up government contracts into smaller components capable of small business performance), and
  6. More stringent prompt payment mechanisms

The more race neutral measures within a program, the less susceptible that program will be to subsequent legal challenge by what appears to be Bush’s legacy of a substantially more conservative United States Supreme Court.

© Denise E. Farris (October 2005). All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.

Is Certification Worth the Hassle?

Seeking certification for your minority- or woman-owned business may even be your civic duty!

The certification process for minority, woman or disadvantaged business enterprise status is detailed and time-consuming. To ensure against potential program abuse, the process requires an applicant to submit detailed information concerning company ownership, bylaws, financing arrangements, purchase agreements, customer lists and other confidential information. If an applicant has a non-minority or non-woman partner or relative involved in the business, the interview process evaluating “ownership and control” can be offensive. In addition, being classified a “disadvantaged business” makes the business owner appear—well—disadvantaged. Many small business owners wonder if certification is really worth the hassle. The answer is “yes,” for a number of reasons:

Government Clients are Large and Consistent Clients.

In times of economic boom or bust, government clients, whether federal, state or local, can be the largest purchasers of goods and services, cumulatively representing purchasing power in the multi-billion dollar range.

Higher Certification Numbers Create Additional Opportunities for all Small Businesses

Recognizing that small business is an important element to a strong economy, government procurement tracks and then attempts to create special opportunities for small business. As most minority and women-owned businesses are small businesses, the recognized increased growth of these businesses justifies higher budgets for overall small business development. Higher budgets, in turn, mean more government programs and/or incentives providing all small business owners with greater loan, investment and training programs.

Certification Provides Constitutionally Required Proof

To withstand legal challenge, any affirmative action program must show: a) a compelling government interest (i.e., the remediation of past discrimination against specific groups), and b) a program “narrowly tailored” to address that compelling government interest (i.e., that it defeats discrimination against the identified group without being overbroad or under-inclusive in its application). The certification process provides data to show that these two tests are being met.

Certification Provides Statistical Data

The certification application performs many functions necessary to sustaining not only affirmative action programs, but also small business programs in general. The certification application:

  • Identifies a specific company as either minority, woman-owned or disadvantaged.

The application first requires you to establish your status as either a minority, woman-owned, and/or disadvantaged business. Standard registration with the Secretary of State’s office does not accomplish this same task. Proof of status often is vital in producing the statistical information necessary to justify the program. The application also educates the applicant concerning the distinction between minority and woman-owned businesses from “disadvantaged” businesses.

Specifically, the application explains that minority and woman-owned business certification is based only on proof that minorities or women own and control 51 percent of the business. In contrast, the disadvantaged business enterprise must additionally prove that it is under a certain size threshold as measured either by number of employees or gross annual receipts based on its industry; and also that its 51 percent owner has a personal net worth below an established range.

  • Identifies “availability” to provide a certain product or work scope.

Following recent U.S. Supreme Court decisions, a governmental procurement may not identify a goal for certain certified business products or services unless it can prove availability of companies capable of providing those goods or services. Thus, if a municipality wishes to create a goal for certified business participation in building a nuclear power plant, it must identify scopes of work in which two or more companies are capable of performing. Thus, certification is especially important in those areas in which few minority or woman-owned businesses operate.

In many instances, a city, county or state’s directory of registered certified companies per product or scope of work performed is available online, enabling companies immediately to see and identify areas where additional certification is required.

  • Creates visibility and places your company in the information pipeline.

Once you’ve been certified, your company is entered into a government database, which enables prompt communication regarding procurement opportunities. In addition, your company typically is listed on a government online directory, which enables other companies and contractors seeking certified companies to identify you, according either to your company’s name, or the product or scope of work you provide. This advertising element of certification can often be invaluable.

  • Enables the government to identify and regularly update vital statistics.

The statistical underpinnings of any affirmative action program are its most vital defense against legal challenges. If you have not certified, how can a government justify programs aimed at assisting small minority or women-owned businesses? How can it determine how many of those businesses exist within its jurisdiction? How can it determine what percent of government businesses those minority and woman-owned or disadvantaged companies are securing? Certification provides an efficient method enabling the government to answer these important questions on a quarterly and annual basis.

For all of these reasons, certification certainly is worth the hassle. And, when you look at it in terms of justifying additional funding for small business development programs, you might even say it should be viewed as a small business owner’s civic duty. And well, it’s just good business!

Denise Farris practices commercial construction, business and equine law. She has served as the past chairperson of the Missouri Bar Construction Law Committee and the Kansas City Metropolitan Bar Committee. She is a member of the national steering committee of the American Bar Association’s Forum on the Construction Industry. She can be reached at (913) 685-3192 or dfarris@farrislawfirm.com.

© Denise E. Farris (September 2005). All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.

Learning the ABC’S of MBE Certifications

Learning the alphabet seemed a daunting business when we were small. Small business owners often find minority or women business enterprise applications similarly daunting. Like the alphabet, learning the ABC’s of certification can provide a worthwhile competitive business tool for the small business. Further, given affirmative action’s survival of various recent legal challenges, the programs are likely to remain with us for some time.

  1. What Agencies Provide Certification?

Minority or women business enterprise (MBE/WBE) certifications are typically provided by each of the federal, state and local government contracting authorities. Many of the certification requirements are similar. Many of the agencies recognize certifications already issued by other agencies. The certifications can substantially increase the business visibility of a small business. For instance, the business is listed in an MBE/WBE directory provided to companies doing business with the government. The companies rely on this directory in finding qualified MBE/WBE companies to meet the government’s utilization goals, often listed on a contract specific basis.

  1. What is Required for MBE/WBE Certification?

While varying from agency to agency, the MBE/WBE certifications require:

    1. That the company be owned and controlled by a minority or woman.
    2. That the controlling minority or woman be capable of performing the daily business management of the company.

Ownership is established through proof that the minority or woman owns at least 51% of the stock of the corporation, or hold a 51% interest in any partnership. The “control” factor requires proof that the minority or woman holds 51% control of the voting power of the business.

The owner must also prove that he or she controls the daily management of the company. This inquiry is established to eliminate “front” companies, or those companies where a minority or woman owns 51% of the company but does not manage the business. For certification purposes, the minority or woman must be capable of running most, if not all, aspects of the business. This requires more than just performing accounting functions. The certifying agency will examine whether the minority or woman has taken out personally guaranteed loans for business purposes, the professional certifications or licenses held, the technical training received, and the owner’s ability to trouble-shoot all aspects of the day to day business. If the owner does not have these full management capabilities, the owner must be prepared to show that the owners in other like or similar businesses typically do not hold all of these capabilities. In addition, if either a minority or woman owned business has strong non-minority management personnel involved in the business, the company should expect a much higher level of scrutiny from the certifying agency. For example, in the construction field, this heightened scrutiny sometimes requires the minority or woman to hold technical trade licenses, and/or to be capable of running all equipment, small and heavy, used by the business.

If the MBE/WBE owner is not present on a daily basis, or merely performs nominal management of the company, the business will not be certified. If already certified, the business will lose its certification. In addition, if it’s determined the business is not controlled by a minority or woman, the business may find itself subject to administrative, civil and even criminal penalties for fraud and/or making false claims to a government entity!

  1. What is the DBE Certification?

 Certain agencies, including the City of Kansas City, Missouri, the Missouri and Kansas Departments of Transportation, and most federal agencies, also include a Disadvantaged Business Entity (DBE) certification. The DBE certification, in addition to requiring proof of the Minority/Women ownership and control of the company, also requires proof of the owner’s social and economic disadvantage. “Social disadvantage” is presumed for any recognized minority, including African-Americans, Indians, Aleutians, Asians, and Hispanics, although this presumption is subject to third party challenge. Non-minorities can also prove “social disadvantage” through documentation of special circumstances in their lives creating the disadvantage. “Economic disadvantage” is established through the owner submitting an affidavit and backup documentation showing their personal net worth to be less than $750,000.00. Even if DBE status is granted, the certification is cancelled when the owner’s personal net worth exceeds the $750,000 threshold.

  1. What is 8(a) Certification?

The 8A certification is offered by the U.S. Small Business Administration. Similar to the local and state DBE certification, the 8A certification requires proof that:

  1. The company is 51% owned or controlled by a minority or woman, and
  2. That the minority or woman owner was socially and economically disadvantaged

Involving a more stringent evaluation process, the 8A certification is still one of the most valuable certifications available given its utilization in many large dollar federal government contracts. If the small business owner provides a product or service in large demand by the federal government, the 8a certification is a worthwhile goal to explore.

  1. Additional Agency Assistance

While it may seem overwhelming at first, the certification process can be simplified by early assistance from the certifying agency. The web pages of most government authorities now link to their MBE/WBE certification requirements. They also typically provide the name and phone number of agency personnel available to assist and answer your questions. Forms can also be downloaded from most of these sites.


This article provides general coverage of its subject area. It is provided free, with the understanding that the author, publisher and/or publication does not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional licensed in your state should be sought.

© Denise E. Farris, Esq. January 2002. All rights reserved.     Ms. Farris is a member with Husch & Eppenberger, L.L.C., in the firm’s Construction Law Group. Her expertise includes MBE/WBE/DBE certification and affirmative action issues.

Stronger Contracts

Make sure your company documents have a strict business purpose and are clearly written.

Contract litigation is often document driven. Judges and juries typically measure a case against documents that were created by parties before litigation commenced. Despite this fact, many business owners fail to address documentation policies with their employees. Many owners are appalled when they review content in documents produced in litigation; but by then, it’s too late. For this reason, all business owners should educate employees about drafting contracts which are clear and concise, and keeping all communications fact-oriented, businesslike and to the point. Educate your employees on the following rules.

Rule 1: Contracts Should Clearly Express the Intent of the Parties
In contract disputes, the judge will examine the entire contract for a clear indication of each side’s commitments and expectations.

It’s important, then, that every contract be carefully worded to: clearly and unambiguously identify the intent of the parties, with all-important terms and conditions, in clear and simple language or industry terms. If you’re not sure your contract meets these conditions, have someone else read it. If they can’t understand all or part of the document, it’s likely a judge wouldn’t, either.

Rule 2: The Contract Stands Alone
All material terms and conditions of the contract should be contained within the contract itself. Your contract cannot simply refer to a separate document, even if that document is stapled to the contract. To incorporate a separate document into a contract, it must be identified specifically in the contract by date and title, and incorporated by reference into the main contract. Failing these two criteria, the separate document will not be viewed as a contractual term and may be unenforceable.

Rule 3:  Prior Verbal Agreements are Unenforceable

What happens when key conditions material to the contract’s execution do not make it into the contract? Without inclusion into the contract, those terms typically will be unenforceable. Most contracts contain language that specifically states the “contract supersedes any prior verbal or written representations and represents the full and complete agreement of the parties.” Such language recognizes that if a term is material, it is the duty of the parties to ensure that it is included in the contract draft before signing.

Rule 4: Prior Representations Are Considered Only When the Contract is Ambiguous
The only time prior verbal representations come into play is when a contract term is ambiguous, that is, susceptible to two different interpretations by two reasonable persons within that industry.

When a term or condition is ambiguous, a court is allowed to consider “parol,” or extrinsic evidence, as well as the conduct of the parties to try to ascertain their intent. However, when a term is found to be ambiguous, two important factors come into play. First, as a matter of law, any ambiguity within a contract is construed against the drafter of the clause and in favor of the other party. Thus, any party who drafts or provides the contract document must strive to make its terms clear and understandable.

Second, ambiguities are considered “questions of fact;” that is, a matter for a jury’s consideration instead of the judge. Ask yourself—do you want your contract interpreted by a jury of people who may have no idea of the intent, meaning or even industry customs underlying the contract? Also, how revealing would other documents be concerning the parties’ intent? That’s why all documents created in a business should stay focused on business purposes, without editorializing, sarcasm, unsubstantiated facts, or derogatory comments that might distract from the real issues (particularly to a bored jury).

Rule 5: “Deleted” Doesn’t Necessarily Mean “Gone”
Remind your employees that anything generated on a computer is never permanently deleted. Even deleted files retain a “shadow file,” which possibly can be retrieved from the computer’s hard drive. Thus, employees should be warned against the use of derogatory, unprofessional, unsubstantiated or non-business comments in written letters, memos, voice mail messages, e-mail messages, or other communication created on a computer. Likewise, unauthorized use of a computer for non-business related purposes or Internet downloads should be prohibited, not only for business reasons but also where such usage can be used to attack the credibility or character of an employee, should such practices come to light in litigation (and they will).

Rule 5: Business E-mails are for Business Only.
For similar reasons, every company should have an e-mail policy, which specifically prohibits the use of company Internet access and/or e-mail for non-business purposes.

Business documentation should always be subject to a common-sense approach: create clear and understandable documents; keep them limited to business purpose; and draft, review and finalize documents as if they are to be reviewed by a jury. By following these rules, your contracts and documents will be stronger, and you’ll avoid unintentional or offensive results—and litigation time bombs.

Denise Farris practices commercial construction, business and equine law. She has served as the past chairperson of the Missouri Bar Construction Law Committee and the Kansas City Metropolitan Bar Committee. She is a member of the national steering committee of the American Bar Association’s Forum on the Construction Industry. She can be reached at (913) 685-3192 or dfarris@kc.rr.com.

This article provides general coverage of its subject area. It is provided with the understanding that the author, publisher and/or publication do not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional licensed in your state should be sought. The author and the publisher shall not be liable for any damages resulting from any error, inaccuracy or omission contained in this publication.

© Denise E. Farris (October 2004). All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax:913-685-3292. Email: dfarris@farrislawfirm.com.

Diagnosing Your Business Formation Requirements

You recognize the importance of careful deliberation when diagnosing a patient. A hurried approach may result in serious consequences and potential legal exposure. Responsible veterinarian practice requires deliberate contemplation of the symptoms, the desired result, and development of the corresponding treatment plan.

Yet how often have you devoted this same analytical time to review of your business goals and anticipated or existing operations? Whether you are contemplating creation of a new veterinarian practice, or simply want better control of your existing business, the use of a business plan, coupled with an effective business structure, strengthens your chance of growing a strong and thriving long-term business.

  1. The Business Plan

Your business plan should be the first step taken towards creation of any business endeavor. According to statistics published by the Small Business Administration, nine out of ten businesses close within their first year. A carefully created and annually maintained business plan ensures your business will not be one of those statistics.

What’s in a business plan? At a minimum, the plan should include:

  • A summary of the business;
  • A key executive summary;
  • A market strategy;
  • Major obstacle resolutions;
  • An operations analysis;
  • Preliminary budget for start-up costs;
  • Anticipated cash flow analysis
  • A 1 year, 5 year and 10 year plan

A. A summary of the business
The business summary encapsulates your vision of the business. At a minimum, it should address:

  • The business purpose
  • Its geographical range
  • Its clientele
  • Its practice emphasis
  • Strategic objectives for Years 1, 5 and 10


B. A “key executive” summary
The key executive summary is your chance to honestly assess and define the strengths you bring to the business. The identity of a start-up business is the identity of its key executives. This is not the time or place to be humble! At a minimum, include for yourself and any other key executives the following:


  • Educational background
  • Business / Work background
  • Recognitions and awards
  • Additional information reflecting particular strengths

C. Market strategy
Your market strategy requires YOU to identify and then develop a comfort level with your ability to cover overhead, loans and salaries, INCLUDING YOURS. Your market strategy identifies and defines the methods you’ll use to secure and maintain your client base. Ideally, your market strategy will:

  • Identify your practice niche
  • Identify how local demographics play to that niche
  • List comparable market prices for similar services
  • Identify the competitive advantages you bring to this market
  • Identify what mechanisms you’ll employ to communicate the above to your prospective clients.

While sounding technical, much of this analysis can be secured, at no cost, through working with your local Small Business Administration office. You can locate the nearest office, as well as other valuable management information, at http://www.sbaonline.sba.gov/index.html.   Be sure to ask about the SBA’s many business assistance programs, including SBA’s SCORE program. In SCORE, the SBA matches you with retired executive volunteers who can assist with your business formation and on-going management decisions. These SCORE volunteers can be an invaluable resource as you map out the elements of your new or ongoing business plan.

D. Major obstacle resolutions
As if securing your degree and license wasn’t bad enough, here you need to identify and address your anticipated major obstacles. You may want to keep this section confidential and separate from your business plan, but its importance is critical. Sometimes major obstacles indicate that business formation is premature at this stage of your life or career. If you do elect to include it in the business plan, this section should identify not only your anticipated hurdles, but also resolutions to each. Sample elements may include how much capital you’ll require to fund:

  • An office
  • Professional legal and accounting services
  • Staff
  • Phone and computer hardware and software
  • Examination, diagnostic and surgical equipment
  • Professional liability and other insurance coverages
  • Professional dues and subscriptions

Perhaps your major obstacle is more elemental, including your business experience (or lack thereof), or discomfort with sales and marketing. Perhaps the major obstacles are balancing lifestyle considerations. In other words, this section should identify any factor which represents a draw on your professional, educational, personal, or financial reserves.

E. Operations Analysis
This analysis reviews your anticipated daily practice. Keep it basic – you’ll be amazed at the issues that arise in considering even the simplest factors. This includes:

  • How will appointments be made and scheduled
  • What kind of staffing will you require
  • Will you employ an office manager
  • Will you handle payroll or outsource it
  • How will you keep examination records
  • What about patient follow-up
  • What kind of billing system should you be using
  • What type of collection issues might you face

This is a time to brainstorm – ask yourself as many questions as possible, and then summarize your answers. This analysis also presents some easy due diligence – review professional resources like this magazine to see what’s hot in day-to-day office management resources.

F. Preliminary Budget for Start-up Costs
To a large extent, this section encapsulates in spread sheet form the financial factors identified in the “obstacle” analysis above. This section of your business plan should include anticipated “up-front” costs of creating the business. It will identify the amount of capital required, and allow you to analyze how to raise that capital through personal investment or loans or partnership contributions.

G. Monthly Cash-Flow Analysis
The monthly cash flow analysis interprets, in spread sheet form, your monthly and annual anticipated and categorized revenue resources as measured against expenditures. The goal is to generate sufficient monthly revenue to cover expenses and compensation.

Whether this is your original business plan, or a plan tackling an existing business, the business plan forces you to evaluate your business goals and management practices. Perhaps you will review it for strategic decision-making, or for loan purposes, or for new partner solicitations. Regardless of its use, the business plan often permits you to avoid costly errors in judgment. As such, your business plan may be the most valuable strategic investment you make in the business.



In creating the business plan, you’ve drafted a description of your business vision. Your next step is choosing the legal structure best suited to bring that vision to life in terms of formation, management flexibility, business continuity, liability protection, and tax impact. There are various business forms recognized in each state, including:

  • Sole proprietorship
  • General partnership
  • Limited partnership
  • Limited liability corporation or partnership
  • S-Corporation, or
  • C Corporation

Each has certain elements which make it attractive for some uses, and not attractive for others. Only you can determine which format best suits your business vision.

A. Sole Proprietorship (Individuals)

  1. Formation

A sole proprietorship is equal to you starting your business without any formal business structure. There is no separate legal entity formed. Thus a sole proprietorship offers no liability protection and is not recommended for ANY business owner.

On the other hand, start-up costs are minimal as there are no formation requirements. Instead the sole proprietor typically segregates a portion of his or her personal assets and dedicates them to a specific business purpose. In many states, a sole proprietor who does business under a fictitious name (i.e., John Doe, d/b/a Thunderbird Clinic), must register the name with the Secretary of State’s office. Failure to do so constitutes a misdemeanor.

  1. Management

A sole proprietor has total flexibility in managing and controlling the business and is thus free to make business decisions without any formal restraints.

  1. Limited Liability

The personal liability of the sole proprietor is unlimited. If you receive a judgment against the business, that judgment can attach business assets as well as personal assets. In addition, liability for debts incurred in the business is not limited to the amount of capital set aside for the business. Finally, existing liabilities of the sole proprietor will not be extinguished upon the dissolution or sale of the sole proprietorship business.

  1. Transferability of Interest and Continuity of Life

A sole proprietor may sell or transfer any portion of his or her business interest at will.

  1. Continuity of Life

The death, withdrawal, or bankruptcy of a sole proprietor will terminate the business.

  1. Taxation

The income of the business is treated as personal income of the sole proprietor, who is taxed at the higher IRS “self-employment” rate.

B. General Partnerships

  1. Formation

Under common law, partnerships were not separate legal entities and had to be legally identified through the listing of each partner’s name. However, most states have now enacted statutes that permit partnerships to sue or be sued in their own names. A general partnership is typically formed by means of a formal agreement (i.e. partnership agreement) between the parties and does not require any filing with the State. Although a general partnership can be formed without any formal documentation, for definition and clarity of rights and duties this agreement should always be in writing, preferably drafted by an attorney.

  1. Management

The management of a general partnership is according to the terms of the partnership agreement. Absent a provision to the contrary, the partnership is controlled through the vote of all general partners. All the partners are agents of the partnership for the purpose of carrying on its business, and the conduct of each partner may legally bind the other partners. Profits and losses of the partnership are to be shared equally, unless the partnership agreement provides otherwise. Thus the general partnership form can be cumbersome relative to day-to-day management responsibilities and substantial exposure to partners unless otherwise limited by the partnership agreement.

  1. Limited Liability

Unless a limited liability partnership (LLP) application is filed with the secretary of state, general partners are jointly and severally liable for all partnership liabilities. This means that a judgment against the partnership may be collected against one partner, or all partners. Both the business assets as well as the personal assets of the general partners are subject to the claims of creditors. A registered limited liability partnership (LLP) is a general partnership, which by satisfying certain statutory requirements, limits the liability of the general partners similar to that of a limited liability company (LLC). In contrast to an LLC, however, the LLP allows for voluntary disassociation.

  1. Transferability of Interest

Absent an agreement to the contrary, a general partner is required to obtain the consent of all of the other partners prior to the transfer of a partnership interest and the grant to the transferee of all of the rights to which the transferor-partner had been entitled.

  1. Continuity of Life

Unless otherwise provided in the partnership agreement, the death, withdrawal, or bankruptcy of a partner in a general partnership will result in the dissolution of the partnership.

  1. Taxation

The business taxes of the partnership, including income and expenses, are allocated to each partner according to the partnership agreement or, lacking an agreement, pro-rata to the partners’ respective partnership interests.  The partner’s income tax is treated at the higher “self employment” rate.

C. Limited Partnerships

  1. Formation

Limited partnerships are distinct legal entities which may sue or be sued in their own names. Limited partnerships (LP) are created under state law and generally require the filing of a certificate of limited partnership with the Secretary of State. Every limited partnership must have at least one limited partner and at least one general partner.

  1. Management

Typically, the management of a limited partnership is vested in its general partners. Limited partners will generally not participate in the management of the limited partnership because, under most state laws, to do so would cause the limited partner to be reclassified as a general partner and subject to partnership liabilities. The LP typically is used to allow passive involvement of investors who trade voting rights for liability limits not otherwise available to the general partners.

  1. Limited Liability

Provided that the limited partners do not participate in the actual control or management of the limited partnership, limited partners in a limited partnership are not liable for the debts and liabilities of the limited partnership in excess of their capital contributions to the limited partnership. General partners of a limited partnership, however, are generally jointly and severally liable for all partnership liabilities (i.e., the same as a general partnership).

In certain states, a limited partnership may register with the secretary of state to become a limited liability limited partnership (LLLP), which limits the liability of the general partners similar to that of its limited partners.

  1. Transferability of Interest

General partners in a limited partnership are treated like partners in a general partnership. Limited partners may freely assign their limited partnership interests, except that, absent the consent of all of the other members of the limited partnership, the assignee will have only the assignor’s right to share in the profits of the limited partnership and will not be a full substitute limited partner.

  1. Continuity of Life

A limited partnership will be terminated upon the death, withdrawal, or bankruptcy of all of the general partners or the sole general partner.

  1. Taxation

The business taxes of the partnership are allocated according to the partnership agreement, or lacking such an agreement in a pro-rata form to each partner, subject to special rules which apply to the interests of the limited partners. The partner’s income tax is computed at the higher “self employment” rate.

D. Limited Liability Companies

  1. Formation

A limited liability company (LLC) is a distinct legal entity created under state law that requires the filing of articles of organization with the Secretary of State’s Office. Some partnerships may qualify to register as Limited Liability Partnerships.

LLCs may have one or more members. Members may be individuals, partnerships, domestic or foreign limited partnerships, domestic or foreign limited liability companies, domestic or foreign corporations, trusts, business trusts, employee stock ownership trusts, real estate investment trusts, estates, associations, and other business or not-for-profit entities. (NOTE: This flexibility in membership is unlike an S corporation, which only permits a maximum of 75 shareholders and limits the type of shareholders.)

Under the regulations of the Internal Revenue Service, an LLC with two or more members can elect to be classified as either a partnership or as a corporation for tax purposes. An LLC with a single member can elect to be classified as a corporation or as a disregarded entity separate from its owner (i.e., be treated as a “tax nothing”). The default tax classification of an LLC with at least two members is a partnership. The default tax classification for an LLC with a single member is a disregarded entity.

  1. Management

LLCs are managed by either a single member manager or through the votes of all of its members. When vested in members, unless agreed otherwise in the operating agreement the management power of each member is in proportion to his or her capital contribution. Like general partnerships, all members may bind the other members, provided that the members are carrying on the business of the LLC in the “usual way” and acting in good faith.

If management is vested in one or more managers, then the manager’s power is defined within the operating agreement.

  1. Limited Liability

Generally, the member’s personal liability is limited to his or her investment. However, members can be held personally liable for any company debt or obligations, including contract or tort liability, if the member acted beyond his or her authority and/or acted in bad faith. To compare with a partnership, LLC liability is limited to the business assets where general partnership liability extends to both business and personal assets.

  1. Transferability of Interest

Unless otherwise permitted in the operating agreement, a member of an LLC/LLP is entitled to transfer only his or her financial interest without the consent of the other members; however, a member cannot transfer his or her entire rights as a member, including voting rights in the LLC/LLP, without the unanimous written consent (or as agreed to in the operating agreement) of all other members.

  1. Continuity of Life

Under most limited liability company statutes, an LLC/LLP will be dissolved upon the death, withdrawal, or bankruptcy of a member unless the business of the company is continued by the consent of all the remaining members under a right to do so, as stated in the articles of organization of the company.

  1. Taxation

In a one member LLC, taxation is as if to the individual owner. In a two member LLC, taxation typically follows that established in a partnership. Again, the income tax is figured at the higher self-employment rate.

E. Corporations (both C corporations and S corporations)

  1. Formation

Corporations are distinct legal entitles that are created under and regulated by state law, which vary from state to state. A corporation is formed by filing Articles of Incorporation with the Secretary of State. Corporations may be classified, for tax purposes, as either a small business corporation (“S corporation”) or as a C corporation.

The formation of an S corporation requires that the corporate officer file Form 2553 with the Internal Revenue Service in order to elect S status. In order to qualify as a subchapter S corporation, the corporation cannot (1) have more than seventy-five shareholders; (2) have anyone other than an individual, an estate or certain trusts, or certain tax exempt entities (including pension plans) as shareholders (Note: C corporations and partnerships are ineligible shareholders); (3) have a non-resident alien as a shareholder; (4) have more than one class of stock (difference in voting rights are permitted); (5) be a financial institution; (6) be an insurance company; (7) be a Domestic International Sales Corporation (DISC); or (8) have an I.R.C. § 936 election in effect (involving Puerto and Possession tax credit). See, Code § 1361.            Failure to continue to meet the requirements of an S corporation causes a termination of the S status and a reclassification as a C corporation.

  1. Management

Generally, the management of the business of a corporation is divided among the directors, the shareholders and the corporate officers. Management duties are set forth in the corporation’s by-laws. In the absence of specific by-law provisions, some management aspects are controlled by state statute. Of all the business forms, corporations require the most formality in the management of the business. The officers generally carry out the policies set forth by the directors in the ordinary conduct of the business. Officers generally have express, implied and inherent authority to bind the corporation within the range of usual activities of their offices. Shareholders elect the board of directors and vote their shares on matters that require their approval (e.g., mergers, acquisitions, or dissolution).

Generally, state corporation laws require that corporations and their directors and officers follow many formalities in the operation of its business affairs. For example, a corporation must follow rules outlined in its articles of incorporation and by-laws and they must hold annual meetings and keep certain records and minutes.

  1. Limited Liability

Although a corporation is generally liable for its debts and losses, the officers, directors and shareholders of a corporation generally do not have personal liability for any of the corporation’s liabilities. However, officers, directors and shareholders can become liable for the corporation’s liabilities (called “piercing the corporate veil”) if: (i) The corporate formalities are not observed; (ii) The corporation is thinly capitalized; (iii) they fail to treat the corporation as an independent entity; or (iv) they personally guarantee the corporate debt (or any portion thereof).

  1. Transferability of Interest

In the absence of a buy-sell agreement, stock is freely transferable without the consent of the corporation or other shareholders. This could be a negative factor if you wish to control who joins as a voting shareholder in the corporation, and should be controlled through the buy-sell agreement.

  1. Continuity of Life

Unless otherwise specified in its articles of incorporation, a corporation enjoys an indefinite or perpetual existence that permits a business to avoid legal dissolution or termination upon the sale or exchange of stock, or the death, incompetence or insolvency of a shareholder. However, a corporation may terminate under state law for failure to file required information or to pay taxes or fees.

  1. Taxation

C Corporations are subject to double taxation; once at the corporate level and again at the individual employee level.

A summary chart of the various business forms follows. This chart enables you to consider and choose the form best suited to your business vision.

The questions posed in your business plan process, compounded by the decisions necessary to choose the right business form, can be overwhelming. However, by addressing these factors now, you form your business fully aware of the potential benefits and risks. You’ve identified the best case scenarios, considered the worst case scenarios, and chosen the business form which best allows you to carry out your vision. As such, you should be well positioned to beat the statistics, with YOUR business positioned to grow and prosper long into the future.


This article provides general coverage of its subject area. It is provided free, with the understanding that the author, publisher and/or publication does not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional should be sought. The publisher shall not be responsible for any damages resulting from any error, inaccuracy or omission contained in this publication.

© Denise E. Farris, Esq. October 2004. All rights reserved. This article may not be reprinted or reproduced in any manner without prior written permission by the author. Contact: The Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Telephone: 913-685-3192. Telefax: 913-685-3292. Email: dfarris@farrislawfirm.com.


About the author: Denise Farris is a litigator practicing equine, business and construction law in the Kansas City area. A 1991 honors graduate of the University of Missouri –Kansas City School of Law, Denise is an avid equestrian who owns Arabians and competes in endurance and long distance competitive trail competitions. She is a nationally known equine law attorney and in addition to her extensive articles, has been a featured speaker at various local, state and national symposiums, including the National Equine Law Practitioner’s Conference, the National Farrier’s Convention, the National Multiple Trail Users Conflict Symposium, and the National Association of Trail Riders Conference.

Appendix B: Major Federal OSDBU Offices

Agriculture Department
14th & Independence Avenue, SW
1566 South Building
Washington, DC 20250-9501
Director: James House
Women Business Rep.: Sherry Cohen
Veteran Business Rep.: Stella Hughes
Phone: (202) 720-7117
Fax: (202) 720-3001
Air Force Department
The Pentagon
SASSB 1060 Air Force
Washington, DC 20330-1060
Director: Joseph Diamond
Women Business Rep.: Judy Schlott
Phone: (703) 696-1103
Fax: (703) 696-1170
Army Department
The Pentagon
Room 2A712
Washington, DC 20310-0106
Director: Tracey L. Pinson
Women Business Rep.: Judy Shifflett
Phone: (703) 697-2868
Fax: (703) 693-3898
Commerce Department
14th & Constitution Avenue, NW
Room H6411
Washington, DC 20230
Director: Tlaloc J. Garcia
Women Business Rep.: Brenda Black
Veteran Business Rep: Ramona Jones
Phone: (202) 482-1472
Fax: (202) 482-0501 

This mechanism is a price evaluation adjustment of up to ten percent in certain Standard Industrial Classification (SIC) Major Groups as determined by the Department of Commerce. This price evaluation adjustment conforms to the Department of Justice proposal to reform affirmative action in Federal procurement and to regulations issued by the Small Business Administration regarding small disadvantaged business programs. This price evaluation adjustment is mandatory for those competitive procurements to which it applies. It does not, however, apply to several major categories of acquisition, including, for example, acquisitions within the simplified acquisition threshold, acquisitions set aside for small business, and acquisitions conducted pursuant to the 8(a) program.


Defense Department
1777 North Kent Street
Suite 9100
Washington, DC 22209
Director: Frank Ramos
Deputy Director: Linda Oliver
Women Business Rep.: Janet Koch
Phone: (703) 588-8620
Fax: (703) 588-7561 

Goal that 5 percent of the total combined Department of Defense (DoD) obligations (i.e., procurement; research, development, test and evaluation; construction; and, operation and maintenance) for contracts and subcontracts awarded during fiscal years 1987, 1988 and 1989 be entered into with (1) small disadvantaged business (SDB) concerns, (2) historically Black colleges and universities, and (3) minority institutions. It defines SDBs in accordance with the provisions of section 8(d) of the Small Business Act [15 U.S.C. 636(d)]. For the purpose of achieving the 5 percent goal, section 1207 of Pub. L. 99-661 authorizes the use of SDB set-asides and SDB price preferences, which permit an SDB to receive a contract as the low bidder if its bid price is up to 10 percent higher than the next non-SDB bidder’s price.


Defense Logistics Agency
8725 John J. Kingman Road
DB Room 1127
Ft. Belvoir, VA 22060-6221
Director: Thomas D. Ray (703) 767-1662
Deputy Dir: Anthony Kudders (703) 767-1664
Women Business Rep.: Patricia A. Cleveland
Phone: (703) 767-1652
Fax: (703) 767-1670
Education Department
400 Maryland Avenue, SW
Room 3120 (ROB#3)
Washington, DC 20202-0521
Director: Viola Jaramillo
Women Business Rep.: Marcella Coverson
Phone: (202) 708-9820
Fax: (202) 401-6477
Energy Department
1000 Independence Avenue, SW, Room 148
Washington, DC 20585
Acting Director: Teresa Speake
Women Business Rep.: Marcia Haynes
Phone: (202) 586-7377
Fax: (202) 586-5488
Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Code 1230-A
Washington, DC 20460
Director: Jeanette L. Brown
Phone: (202) 564-4100
Fax: (202) 501-0756
Women Business Rep.: Trina Porter
Phone: (202) 564-4322
Fax: 202/501-0756
General Services Administration
Office of Enterprise Development
18th & F Street, NW, Room 6029
Washington, DC 20405
Associate Administrator:
Boyd K. Rutherford
Women Business Rep.: Elizabeth Ivey
Phone: (202) 501-1021
Fax: (202) 208-5938
Health and Human Services Department
200 Independence Avenue, SW, Room 517D
Washington, DC 20201
Director: Debbie Ridgely (202) 690-7235
Women Business Rep.: Angel Graves
Phone: (202) 690-6670
Fax: (202) 260-4872
Housing and Urban Development Department
451 7th Street, SW, Room 3130
Washington, DC 20410
Acting Director: A. Jo Baylor
Women Business Rep.: B.J. Douglass
Phone: (202) 708-1428
Fax: (202) 708-7642
Interior Department
1849 C Street, NW, Room 5524
Washington, DC 20240
Director: Robert Faithful
Women Business Rep.: Doris Sanford
Phone: (202) 208-3493
Fax: (202) 219-2131
Justice Department
1331 Pennsylvania Avenue, NW
Room 1010 National Place (The Shops)
Washington, DC 20530
Director: J. Kenneth Bryan
Women Business Rep.: Eleanor Geary
Phone: (202) 616-0521
Fax: (202) 616-1717
Labor Department
200 Constitution Avenue, NW, Room C2318
Washington, DC 20210
Director: Vacant
Women Business Rep.: Elaine Murrell
Phone: (202) 693-6460
Fax: (202) 693-6485
National Aeronautics and Space Administration
300 E Street, SW
Room 9K70, Code K
Washington, DC 20546
Associate Administrator: Ralph C. Thomas III
Women Business Rep.: Vernell Jackson
Phone: (202) 358-2088
Fax: (202) 358-3261
Navy Department
Washington Navy Yard, Building 36
901 M Street, S.E.
Washington, DC 20374-5015
Director: Nancy Tarrant
Women Business Rep.: Helena Brown
Phone: (202) 685-6485
Fax: (202) 685-6865
State Department
SA-6, Room L500
Washington, DC 20522
Director: Durie White
Women Business Rep.: Patricia Culbreth
Phone: (703) 875-6824
Fax: (703) 875-6825
Transportation Department
400 7th Street, SW, Room 9414
Washington, DC 20590
Director: Sean M. Moss
Women Business Rep.: Ms. Pat Hodge
Phone: (202) 366-1930
Fax: (202) 366-7228
Treasury Department
1310 G Street, NW, Room 400 West
Washington, DC 20220
Director: Kevin Boshears
Women Business Rep.: Mary Ellen Dorsey
Phone: (202) 622-0376
Fax: (202) 622-4963
Veterans Affairs Department
801 I Street, NW
OSDBU 00SB – Room 1221
Washington, DC 20420
Director: Scott Denniston
Deputy Dir: Wayne Simpson
Deputy Dir: Gail Wegner, Ctr for Vet Enterprises
Women Business Rep.: Ilene Waggoner
Phone: (202) 565-8124
Fax: (202) 565-8156
U.S. Agency for International Development
Ronald Reagan Building
1300 Pennsylvania Ave., NW
Room 7.8E
Washington, DC 20523-7800
Director: Marilyn Marton
Phone: (202) 712-1500, Fax: (202) 216-3056 Women Business Rep.: Rhoda Isaac
Phone: (202) 712-1500
Fax: (202) 216-3056


© Denise E. Farris, Esq. (2004). All rights reserved. All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.


Socio-Economic Issues in Government Contracting: The A B C’s of Affirmative Action Compliance

  1. A: The “A”dvent of Affirmative Action

“Affirmative Action” remains one of the most divisive issues in public contracting today. However, where most government contracts require adherence to minority and women-owned business (MBE/WBE) utilization goals, the government contractor and legal practitioner alike must understand both the policy reasons underlying the programs, and the legal parameters in which those programs operate.

Broadly defined as a “formal effort to provide increased opportunities for women and ethnic minorities to overcome past patterns of discrimination,”[i] affirmative action dates back to the passage of Title VII, Civil Rights Act of 1964, which prohibited discrimination by private employers on the basis of race, color, religion, sex or national origin.[ii]

Executive orders subsequently issued in the 1960s, including Executive Order 11246,[iii] required federal government contractors’ compliance with implementation of affirmative action plans for recruitment, employment and promotion. In the early 1970s, regulations promulgated by the Nixon administration required preparation of written affirmative action plans, including goals and timetables, by those entities wishing to do business with government agencies.[iv] Additional programs, including the Section 8 program of the Small Business Administration, identified government contracts to be set aside specifically for small businesses owned and controlled by socially and economically disadvantaged individuals.[v] Accordingly, from the 1960s through the mid-1980s, affirmative action preferences and set-asides were treated as the accepted law of the land.

This landscape changed dramatically with the 1989 U.S. Supreme Court decision in City of Richmond v. J.A. Croson. Co.[vi] Issued in a political climate weary of unthinking set-asides, and in the face of a nation restlessly threatening a “reverse discrimination” backlash, the Croson decision identified an arsenal of Fourteenth Amendment Equal Protection challenges that in turn spelled the immediate demise of many state and municipal programs as they existed at the time. Thus the 1990s ushered in a decade of significant cases in which many affirmative action programs were either legally prohibited as violating the Fourteenth Amendment’s Equal Protection clause, or, in the alternative, were significantly modified to meet and survive the constitutional “strict scrutiny” requirements set out in Croson.

While Croson addressed municipal and state programs, the U.S. Supreme Court also took on federal affirmative action programs in the 1995 pivotal decision of Adarand Constructors, Inc. v. Pena [vii]. In Adarand, Congress, previously enjoying only “intermediate scrutiny”[viii] review of its federal affirmative action programs, was now judicially required to submit those programs to the same “strict scrutiny” review used under Croson for evaluating municipal and state affirmative action programs.

The years following these critical cases have been devoted to a detailed and painful reexamination of affirmative action, the underlying statistical studies establishing the basis for affirmative action programs, and the political ramifications of attacks against, or support of, continued affirmative action programs. Just as the Adarand case has now experienced three trips to the U.S. Supreme Court, so the public debate on affirmative action rages on. The issue generates intense interest from the construction associations as well as minority and women- owned businesses which face abandonment of more than one hundred sixty federal programs, statutes, regulations and executive orders granting some measure of “preference” to women or minorities in the areas of hiring, federal contracts, educational opportunities and grants.[ix]

This chapter examines the legal parameters for establishing constitutionally valid affirmative action programs; contains a brief summary of existing municipal, state and federal programs still in place; provides a prognosis as to affirmative action’s expected future status in light of the current makeup of the Supreme Court as well as the current presidential administration; and provides summaries of cases applying the Croson and Adarand standard. This chapter will also address potential consequences should contractors fail to comply with existing programs.


Affirmative action” is typically defined as those programs that “attempt to equalize the opportunity for women and racial minorities by explicitly taking into account their defining characteristics – sex or race – which have been the basis for discrimination.”[x] Thus, “affirmative action” is expressly based upon those race- and gender-specific classifications that are “inherently suspect” under the concept of a gender-neutral and color-blind Constitution.[xi]

  1. Development of the Standard of Review

To understand Adarand and Croson, the reader must understand the factual parameters of those cases developing the intermediate and strict scrutiny standards of constitutional review as applied to race or gender based programs.

The Court’s 1978 decision in Regents of the University of California v. Bakke[xii] is generally viewed as one of the first constitutional cases identifying the appropriate level of review for equal protection challenges to non-federal affirmative action programs.[xiii] In Bakke, the court reviewed the constitutional complaints of a white male applicant denied admission to the university’s medical school. Mr. Bakke alleged his denial resulted from the university’s minority admissions program, which was developed to increase racial diversity and mandated reservation of sixteen positions exclusively for disadvantaged minority applicants.[xiv] Justice Powell, author of the Court’s decision, recognized that a “strict scrutiny” standard should apply whenever classifications deny individual opportunities or benefits enjoyed by others because of race or ethnicity.[xv] Specifically, the Bakke decision stands for the proposition that “[r]acial and ethnic distinctions of any sort are inherently suspect, and thus call for the most exacting judicial examination.”[xvi] In a six to three decision, [xvii] the court determined the university’s benign racial preference, while potentially compelling, was not narrowly tailored to achieve racial diversity. The program was thus declared unconstitutional.[xviii]

Two years after Bakke, the Court in Fullilove v. Klutznick,[xix] used an “intermediate” or middle level of scrutiny to review the constitutionality of a federal minority set-aside program included in The Public Works and Employment Act of 1977. The Act contained an affirmative action provision which, while authorizing grants to state and local entities to use in local public works projects, simultaneously required ten percent of those funds to be awarded to minority-owned businesses. The ten percent goal was based on Congressional findings of past discrimination on a national basis.[xx]

Chief Justice Burger, writing for the majority, acknowledged judicial deference to Congress’ attempts to remedy past discrimination, identifying Congress as “a co-equal branch charged by the Constitution with the power … to enforce … the equal protection guarantees of the Fourteenth Amendment.”[xxi] Thus deferring to Congress’ “inherent authority”, the Court utilized a new “intermediate” level of scrutiny. The Court found the Act constitutional where the Act was deemed “substantially necessary to advance a compelling governmental interest.”[xxii]

In 1986, in Wygant v. Jackson Board of Education,[xxiii] the Court was asked to review a local board of education’s minority hiring preference set out in its collective bargaining agreement. Applying strict scrutiny to this non-federal program, the Court declared the program unconstitutional. Justice Powell, joined by Chief Justice Burger and Justices Rehnquist and O’Connor, held that the interest of providing minority role models as teachers was not a “sufficiently compelling governmental interest”. The court further found the program was not “narrowly tailored” to achieve that interest, even were it deemed compelling.[xxiv]

  1. Clarifying the Standard: City of Richmond v. J.A. Croson

In 1989, in the landmark case of City of Richmond v. J.A. Croson,[xxv] the Supreme Court prepared to delineate a universal standard of review for local and state affirmative action programs. The Croson Court was asked to review the constitutionality of a Richmond, Virginia municipal ordinance requiring prime contractors with city construction contracts to subcontract 30 percent of the dollar amount of each contract to minority-owned companies. The Richmond program was adopted after public hearing evidence which revealed that although the population of the city was approximately 50 percent African American and other minorities, less than one percent of the prime contracts awarded by the city over the preceding five years had gone to minorities. The city council, declaring its plan “remedial,” relied heavily on national data concerning discrimination in the construction industry. This data included information indicating that contractors’ associations in Richmond had few minorities; testimony of a city councilman that he was aware of widespread discrimination in the Richmond construction industry, and the Supreme Court’s deference to congressional findings of national discrimination in Fullilove v. Klutznick.[xxvi]

Under this factual backdrop, the J.A. Croson Company was low bidder on a city contract requiring installation of plumbing fixtures at the city jail. The Company attempted to meet the contract’s set-aside requirements by hiring a minority firm to supply the fixtures. When it could not find a minority supplier, it requested a waiver from the city.[xxvii] After a minority supplier was subsequently located, the City denied Croson’s waiver request. Because the bid by the minority firm for fixtures was substantially higher than the market price utilized in Croson’s initial bid, Croson asked the city to increase the contract price. The city refused and the project was put up for rebid.[xxviii]

Croson challenged the ordinance as unconstitutional both on its face and as applied, claiming the set-aside program violated his right to equal protection under the Fourteenth Amendment.[xxix] The U.S. Court of Appeals, Fourth Circuit, found the ordinance constitutional under an intermediate level of review. [xxx] Croson appealed. The Supreme Court vacated and remanded the Fourth Circuit decision for reconsideration under the strict scrutiny standard set forth in Wygant.[xxxi] The Fourth Circuit reversed its earlier decision and held the Richmond ordinance unconstitutional.[xxxii]   Richmond then appealed the Fourth’s Circuit’s holding, and the Supreme Court granted certiorari to review the case.

Justice O’Connor, writing for Croson’s five-member plurality, analyzed the ordinance under Wygant’s strict scrutiny standard of review.[xxxiii] Struggling with the different standards of review previously used by the Court, Justice O’Connor noted: “That Congress may identify and redress the effects of society-wide discrimination does not mean that, a fortiori, the States and their political subdivisions are free to decide that such remedies are appropriate.”[xxxiv] She further noted that where racial classifications are considered inherently suspect under the Constitution, the constitutional validity of any local, municipal or state affirmative action program must be analyzed under strict scrutiny.[xxxv] Accordingly, racial classification would be deemed constitutional only when justified by a “compelling government interest”, and “narrowly tailored” to accomplish that interest.[xxxvi] While the Croson decision addressed only municipal and state programs, it nonetheless suggested that this same standard of review would be applicable to any race-remedial program.[xxxvii]

The Croson decision was additionally instrumental in identifying specific factors used in evaluating whether a program was “narrowly tailored”. Specifically, the Court suggested that a “narrowly tailored” remedial program should:

  • be more than a mere promotion of racial balancing,
  • be based on the number of qualified minorities in the area capable of performing the scope of work identified in the set-aside plan;
  • not be over-inclusive by presuming discrimination against certain minorities,
  • consider race-neutral alternatives to set-aside programs, and
  • not require numerical quotas.[xxxviii]


Under this factual inquiry, the court found Richmond’s ordinance unconstitutional, where the City failed to identify specific acceptable evidence of past discrimination against blacks; based its program on inappropriate consideration of societal discrimination; relied on national Congressional findings of discrimination that were not directly applicable to the Richmond area; and implemented a plan that was not narrowly tailored to remedy discrimination, contained no race neutral alternatives and contained an inflexible waiver process.[xxxix]

Despite Croson’s seemingly clear guidelines, one year later in Metro Broadcasting, Inc. v. FCC,[xl] the Court again reverted to an intermediate level of scrutiny, [xli] surprisingly failing to follow its previous suggestion in Croson that all race remedial programs should be subject to strict scrutiny review. The conflict is explained as follows.

In Metro Broadcasting, the Court was asked to review the constitutionality of an FCC program that (1) awarded extra credit to minority-owned businesses in comparative proceedings for new licenses, and (2) provided station owners in danger of losing their FCC licenses the means to transfer those licenses to approved minority enterprises under a “distress sale.”[xlii] Writing for the majority, Justice Brennan noted the Court’s deference to Congress, and its decision to utilize intermediate scrutiny, because the FCC’s minority ownership programs had not only been specifically approved, but also mandated by Congress.[xliii] Moreover, the court noted that both Congress and the President ratified the program through appropriation bills that specifically barred the FCC from using federal funds to re-examine that policy.[xliv] The Court thus found the program constitutional, noting the difference between the standard of review used for local and state programs on the one hand, and federal programs on the other. Specifically the Court noted:

[B] enign race-conscious measures mandated by Congress – even if those measures are not “remedial” in the sense of being designed to compensate victims of past governmental or societal discrimination – are constitutionally permissible to the extent that they serve important governmental objectives within the power of Congress and are substantially related to achievement of those objectives…Much of the language and reasoning in Croson reaffirmed the lesson of Fullilove, that race-conscious classifications adopted by Congress to address racial and ethnic discrimination are subject to a different standard than such classifications prescribed by state and local governments…[xlv]



Against this mottled background, the Court in the 1995 decision Adarand Constructors, Inc. v. Pena, [xlvi] was forced to confront the legal inconsistencies it had created over the previous 20 years. The Court appeared clearly troubled with the notion that race-remedial programs implemented by local, municipal and state governments were subjected to a much more exacting review than similar programs implemented by Congress. Adarand presented the right facts for the Court to reexamine and conclusively resolve the conflict.

In Adarand, the court examined a 1989 award of a prime highway construction contract by the Central Federal Lands Highway Division to Mountain Gravel & Construction Company.[xlvii] The contract provided that Mountain Gravel would receive additional compensation if it hired subcontractors that were small business certified and controlled by “socially and economically disadvantaged individuals.” This provision was incorporated into the contract pursuant to a separate federal statutory subcontracting clause that required such incentives to be inserted into most federal agency contracts.[xlviii] The federal contracting clause also identified specific categories of individuals presumed to be “socially and economically disadvantaged”.[xlix]

Pursuant to this incentive clause, Mountain Gravel awarded a subcontract to Gonzales Construction, a certified disadvantaged small business enterprise, even though competing majority-owned subcontractor Adarand Constructors, Inc. had submitted a lower bid.[l] Adarand challenged the constitutionality of the subcontractor’s clause in the federal district court on equal protection grounds.[li] At the District Court level, Adarand lost on summary judgment where the district court deemed the program constitutional under the intermediate scrutiny test established in Fullilove and Metro Broadcasting.   Adarand appealed to the U.S. Court of Appeals for the Tenth Circuit, which affirmed the district court’s grant of summary judgment against Adarand.[lii] The Supreme Court granted certiorari.[liii] The issue before the Court was whether the trial court and Tenth Circuit erred in reviewing the federal construction program under an intermediate scrutiny standard.

The Court, in a 5-4 split decision common in affirmative action rulings, held that the Tenth Circuit had erred, even though the Tenth Circuit’s decision had followed judicial precedent from Fullilove and Metro Broadcasting. The Adarand majority opinion, written by Croson author Justice O’Connor, held that strict scrutiny is the appropriate standard of review for any program, federal or non-federal, which uses racial or ethnic classifications as the basis for decision making.[liv]

Forced to explain its decision in Metro Broadcasting, Justice O’Connor noted the Court’s prior failure to produce majority opinions in Fullilove and Wygant. This “left unresolved the proper analysis for remedial race-based governmental action.”[lv]   Justice O’Connor reasoned that equal protection analysis under both the Fifth and Fourteenth Amendments were essentially the same,[lvi] thus arguably destroying those policy arguments that previously supported deference to Congress. Justice O’Connor criticized the Court’s earlier decision in Metro Broadcasting both as a departure from the legal principles set forth in Croson, and for ignoring the Court’s proposition in Croson which espoused application of similar standards to review of both federal and state racial classifications.[lvii]

In a strong concurring opinion, Justice Scalia wrote “the government can never have a ‘compelling interest’ in discriminating on the basis of race in order to ‘make up’ for past racial discrimination in the opposite direction … There can be no such thing as either a creditor or a debtor race.”[lviii] Justice Thomas submitted a separate concurring opinion, noting that while the program may have been motivated by good intentions, that fact alone “cannot provide refuge from the principle that under our Constitution, the government may not make distinctions on the basis of race.”[lix] Adopting Justice Powell’s sentiments from the 1978 decision of Bakke, Justice Thomas reasoned that set-aside programs caused minorities “to adopt an attitude that they are ‘entitled’ to preferences,” which in turn stamps a badge of inferiority on minorities to their detriment.[lx]

Justices Stevens, Souter and Ginsberg filed dissenting opinions, the latter joined by Justice Breyer. Justice Stevens, the author of the court’s 1978 majority opinion in Bakke, criticized the Court for not differentiating between federal and state affirmative action programs in accordance with precedent and the concept of congressional deference.[lxi] Justice Stevens stated “[a] n attempt by the majority to exclude members of a minority race from a regulated market is fundamentally different from a [race-based] subsidy that enables a relatively small group of [minorities] to enter that market.”[lxii] Stevens also criticized the majority’s analysis of the doctrine of stare decisis, noting the court failed to follow Fullilove yet did not expressly overrule it.[lxiii] The presence of strong concurring and/or dissenting opinions on each of the major affirmative action decisions emphasizes the divisive nature of this complex legal issue.

In a separate dissent, Justice Souter argued that Fullilove established judicial precedent that simply could not be ignored by the court.[lxiv]   Agreeing with Justices Stevens and Souter, Justice Ginsburg also argued that the Court’s prior judicial deference to Congress was appropriate when reviewing federal affirmative action programs.[lxv] However, Justice Ginsburg also advocated “close review” of affirmative action programs, so that preferences do not “trammel unduly upon the opportunities of others.”[lxvi]

The ultimate holding in Adarand I, applicable to federal as well as non-federal remedial programs, is that under a strict scrutiny level of review, racial classifications will survive constitutional review “only if they are narrowly tailored measures that further compelling governmental interests.”[lxvii] The case was thus remanded back to the District Court for a factual determination of whether the government had proven its compelling interest, and if so, whether the program was “narrowly tailored” to address that interest.[lxviii]

  1. Subsequent Adarand History

Adarand took a complicated path following its first remand to the trial court, and ultimately found its way to the U.S. Supreme Court two additional times.[lxix] The facts and legal issues framed in Adarand I were significantly altered in Adarand II .[lxx] Among the changed circumstances were changes in the plaintiff’s legal standing, changes in the details of the challenged federal program, and regulatory reforms instituted under the Clinton Administration’s “Mend It—Don’t End It” policy.[lxxi]

On Adarand’s first remand, the district court addressed the proper scope of Congressional authority in finding evidence of “national” discrimination. [lxxii] Adopting through dicta the deference to Congress earlier expressed in Fullilove, the court ruled that the “congruence” factor cited by Justice O’Connor did not mean that federal affirmative action programs must be supported by the same “particularized” showing of past discrimination required in state and local programs.[lxxiii] Instead, the district court opined that “Congress’ constitutionally imposed role as … guardian against racial discrimination” under §5 of the Fourteenth Amendment more broadly empowered the national legislature to enact remedies for discrimination nationwide. Thus under the district court’s ruling, findings of nationwide discrimination derived from congressional hearings and statements of federal lawmakers were entitled to greater weight than the “conclusory statements” of state or local legislators rejected by Croson. Congress was thus able to “recognize a nationwide evil and act accordingly provided the chosen remedy is narrowly tailored so as to preclude the application of a race-conscious measure where it is not warranted.” [lxxiv] The court additionally found that although Congress had proven a “compelling interest”, the challenged program was not sufficiently “narrowly tailored” to pass constitutional scrutiny.

The district court’s finding rested on a very detailed analysis of the federal contract program being challenged. However, legal scholars and others reviewing the decision were disturbed by the district court’s definition of factors constituting a “narrowly tailored” program, fearing that the decision would relate unfavorably to existing federal small disadvantaged business programs. As one commentator noted:

First, the optional or voluntary nature of the SCC program was not enough to save it, notwithstanding the fact that prime contractors were free to accept bid proposals from any subcontractor, regardless of race or ethnicity. The government’s failure to prevail on this issue was deemed to cast a long shadow over other federal minority contracting efforts … which, under Judge Kane’s reasoning, could generally be viewed as imposing a “choice based only on race” at least as “mandatory” and “absolute” as the incentive payment to prime contractors in Adarand. … [Second,] the fact that the SCC program did not expressly incorporate any “goals, quotas or set-asides” was not sufficient to divorce it, in the district court’s view, from the percentage goal requirements imposed by statutes the program was designed to implement. Those statutory provisions … were deemed invalid for lack of narrow tailoring. If left standing, the district court ruling would have placed in question much of the federal government’s current effort to advance minority small business participation in the procurement process by race-conscious means”.[lxxv]


The government appealed this second district court opinion. However, before the 10th Circuit could hear the appeal, the State of Colorado voluntarily modified its racial presumptions as set forth in the challenged program. The State additionally certified the non-minority owner of Adarand Constructors, Inc. as “disadvantaged.” As a result of these two significant factual changes, the Tenth Circuit dismissed the pending appeal as “moot,” and vacated the judgment against the Government.[lxxvi] The Tenth Circuit’s order was then appealed to the U.S. Supreme Court, who on January 20, 2000 rejected the 10th Circuit’s argument that the matter was moot. Specifically, the Supreme Court in Adarand II held that where there was nothing to prevent the government from reviving the abandoned policy, the matter was not yet moot. The Supreme Court thus remanded the case to the Tenth Circuit Court of Appeals for further legal findings.[lxxvii]

On September 25, 2000, the Tenth Circuit Court of Appeals issued its ruling in Adarand Constructors v. Slater.[lxxviii] The appellate court held that while the challenged federal highway program’s use of financial incentives to promote use of minority and “disadvantaged” small businesses was unconstitutional as it existed at the time of Adarand I, as revised and amended in 1997 under Adarand II, it was now sufficiently narrowly tailored to address a compelling interest. The program was thus found constitutional as it currently stood. [lxxix]

The Tenth Circuit’s opinion contains a number of significant holdings, many of which were not earlier considered by the Supreme Court. The Tenth Circuit agreed that the federal government had a “compelling interest” in preventing and remedying the effects of past discrimination in government contracting. However, it also held that the scope of Congress’ authority to act was not limited geographically, or to specific instances of discrimination – as in the case of states and localities under Croson – but extended “society-wide and therefore nationwide.”[lxxx]   The appellate court further found that the evidence relied upon by Congress, as derived in large part from national, state and municipal disparity studies generated over a twenty year period, sufficiently identified barriers to minorities in construction in the form of “old boy networks,” racism in construction trade unions, and denial of access to bonding, credit and capital faced by small and disadvantaged businesses and, predominantly, minority businesses.[lxxxi] Accordingly, the 10th Circuit found that Congress had a “compelling interest,” or a “strong basis in evidence,” in concluding that passive federal complicity with private discrimination in the construction industry contributed to discriminatory barriers in federal contracting.[lxxxii]

Next addressing whether the program was “narrowly tailored”, the Tenth Circuit adopted a two-tiered analysis. First, the Tenth Circuit concluded that many of the constitutional flaws identified in the district court’s remand decision had been eliminated and/or remedied through the program’s subsequent modifications. Specifically, the revised program implemented a variety of race-neutral measures, which were previously identified in the 1958 enactment of the Small Business Act but had never subsequently been considered by the Department of Transportation in earlier versions of its program. These included bonding, financing and technical assistance services made uniformly available to minorities and small businesses alike, regardless of race or gender.[lxxxiii] Second, the revised regulations incorporated the time limits and graduation requirements for participation of disadvantaged businesses in the §§8(a) and 8(d) programs, which ensured the programs’ limited duration.[lxxxiv] The revised program’s financial incentives were found to be more flexible than any mandatory set-asides where they were voluntary on the part of prime contractors, and where the post-1996 revisions included express waiver and exemption procedures.[lxxxv]

Despite its careful and scholarly wording, the Tenth Circuit’s decision was again appealed. In November of 2001, the Adarand case made its third trip to the Supreme Court. In granting the writ for certiorari, the Court anticipated addressing only two discrete issues:

  1. Whether the Court of Appeals misapplied the strict scrutiny standard in determining if Congress had a compelling interest to enact legislation designed to remedy the effects of racial discrimination; and


  1. Whether the United States Department of Transportation’s current Disadvantaged Business Enterprise program is narrowly tailored to serve a compelling governmental interest.[lxxxvi]


The nation awaited this final appeal in hopes that Adarand III would provide the end-all, be-all definition as to the legality of affirmative action. However, the Court’s ultimate opinion was a vast disappointment to all, where a short summary disposition was issued on the basis of various procedural issues which negated any substantive analysis. Specifically, the legal issues framed in the 10th Circuit decision were altered by subsequent developments in the program and the parties’ standing. After reviewing the briefs, the Supreme Court concluded that Adarand was now, on its third visit to the Court, asking the Court to determine issues that had not previously been reviewed by the Tenth Circuit. Originally, the Tenth Circuit “confined its opinion to the constitutionality of the DOT’s DBE program as it pertains to procurement of federal funds for highway projects let by States and localities.”[lxxxvii] However, when the case came before the Supreme Court for the third time, Adarand modified its challenge from the DOT’s state and local procurement program to “only the statutes and regulations that pertain to direct procurement of DOT funds for highway construction on federal land”. The court found this inquiry substantially different from those reviewed by the Tenth Circuit and certified for appeal.[lxxxviii]   The court noted that the procurement of federal funds for highway projects let by states and localities were governed by regulations issued by the Secretary of Transportation under the TEA-21 legislation, while the Small Business Act governed federal procurement.[lxxxix] Accordingly, the Court dismissed the case for two reasons, the first being that the Court of Appeals did not consider or rule on the new challenge raised by the petitioner (i.e., whether race-based programs applicable to direct federal contracting could satisfy strict scrutiny) and thus precluded the Supreme Court from deciding the issue,[xc] and the second being that the Court of Appeals had already determined that the subcontractor did not have standing to challenge other race-based programs. Although the Court noted its obligation to examine standing sua sponte where standing has been erroneously assumed, the Court did not agree to examine standing to reach an issue for which standing had already been denied. Although finding the issues asserted in the briefs of “fundamental national importance”, the Court did not want to usurp the adjudicatory process.[xci]

Lacking Supreme Court guidance as to the 10th Circuit’s definition of “narrowly tailored”, there again remains elements of uncertainty regarding affirmative action challenges at the state and federal level. However, certain principles have emerged from the Croson and Adarand decisions. Lower courts addressing the constitutional validity of local affirmative action programs have found evidence of local past discrimination to constitute a “compelling governmental interest.” However, the same courts have reached varied results as to whether the resulting program was “narrowly tailored” so as to pass strict scrutiny examination.[xcii]

  1. Requisite “Croson” Statistical Studies

Perhaps the most significant result of Croson and Adarand is the development of case law requiring programs asserting a “compelling interest” to be backed by targeted and statistically valid discriminatory impact studies. Accordingly, the vast majority of failed municipal, state and federal programs result from constitutional challenges based upon the program’s lack of valid statistical support. Referred to generically as “Croson Studies,” these studies are a crucial element in applying, and then legally defending, any form of government race based programs.

  1. “The Compelling Government Interest”

Under Croson and Adarand, to be constitutionally valid, an affirmative action program must first serve a “compelling governmental interest”.[xciii] Remedying a governmental entity’s own past discrimination constitutes this “compelling government interest.”[xciv] However, governments must have a “strong basis in evidence for its conclusion that remedial action [is] necessary.”[xcv]

Given what Justice O’Connor determined to be the gross inadequacy of the record in Croson, the Court did not fully address what showing was required to demonstrate a compelling government interest. However, in Wygant, the Court stated that a local or state public employer need not “convinc[e] the court of its liability for prior unlawful discrimination; nor does it mean that the court must make an actual finding of prior discrimination based on [the government’s] proof before the [the government’s] affirmative action plan will be upheld.”[xcvi] Rather, the courts should follow a flexible approach in determining whether there exists a “firm basis” for determining that affirmative action is warranted.[xcvii] The government’s burden of establishing a compelling governmental interest is thus satisfied by establishing reliable statistical proof of past discrimination against specifically identified minority or gender-based groups.

The Croson decision provides generic guidance as to the requirements of a valid study. Justice O’Connor suggested that “[w]here gross statistical disparities can be shown, they alone in a proper case may constitute prima facie proof of a pattern or practice of discrimination under Title VII.”[xcviii] By implication, this same standard would apply to set-aside plans. However, as evidenced in Coral Constr. Co. v. King County,[xcix] lower courts prefer to rely on a combination of both statistical as well as testimonial or anecdotal evidence. In addition, where testimonial evidence is given, that evidence must first be reliable, and must moreover relate to specific instances of discrimination versus the generalized allegations of discrimination rejected in Croson.

Challenges to existing programs rely heavily on the lack of reliable statistical studies to refute proof of a “compelling government interest”.[c]   These challenges demonstrate that courts will not accept conclusory or anecdotal allegations of discrimination, but instead require proof of the compelling interest via detailed and statistically sound disparity impact studies which are probative, regionally relevant, and analyzed as to discriminatory versus non-discriminatory factors such as company size versus race or gender of owners. [ci] The cases additionally suggest that the statistical studies must be current, which in turn implies an affirmative duty upon governmental owners to update the studies on a regular basis.[cii] This duty, while largely unexplored in a legal context, may in fact prove a pointed weapon against certain affirmative action programs where it is certain that years of affirmative action program implementation and government record keeping since Croson may have the unintended consequence of statistically proving that past discrimination has effectively been “remedied” during that period.

  1. “Narrowly Tailored”

In addition to proof of “compelling interest” (i.e. evidence of past discrimination), the affirmative action program must also be “narrowly tailored” to address and remedy that discrimination. This analysis looks to whether the program, on its face or as applied, is overbroad or under inclusive, as well as whether it contains race neutral factors. As recalled, the Croson decision tells us that a “narrowly tailored” analysis must examine whether the program is:

  • More than a mere promotion of racial balancing,
  • Based on the number of qualified minorities in the area capable of performing the scope of work identified in the set-aside plan;
  • Not over-inclusive by presuming discrimination against certain minorities,
  • Complete with race-neutral alternatives to set-aside programs, and
  • Not based upon numerical quotas.[ciii]

In other words, for a program to be constitutionally valid, it must identify remedial steps to remedy past discrimination against those specifically identified groups, and not to all identified minority groups where such groups do not have a statistical presence in the affected region. Thus if an affirmative action program includes groups that have not been subject to past discrimination, the entire program may be declared overbroad and thus constitutionally invalid. For example, the affirmative action plan in Croson was declared invalid where it provided set-asides not only for African Americans, but also for persons of Hispanic, Oriental, Indian, Eskimo and Aleutian heritage. [civ] The program was declared overbroad where there was no evidence proving a statistical presence of either Eskimo or Aleutian contractors in the Richmond area. [cv]

In Croson, the Court also suggested that Richmond’s program was unconstitutional where it did not consider “race neutral” means to increase minority participation in contracting before adopting its race-based measure.[cvi] The Court reasoned that because minority businesses tend to be smaller and less-established, providing race-neutral financial and technical assistance to small and/or new firms and relaxing bonding requirements might achieve the desired remedial results in public contracting by increasing opportunities for minority businesses.[cvii]

Justice Scalia suggested a more aggressive idea, namely to “adopt a preference for small businesses, or even for new businesses – which would make it easier for those previously excluded by discrimination to enter the field. Such programs may well have a racially disproportionate impact, but they are not based on race.”[cviii] Where such programs would be race-neutral in their entirety, they would not be subjected to strict scrutiny review. [cix]

Other race neutral factors include, but are not limited to, advertising contracting opportunities in publications and media targeted to minorities, women and small business; providing written notice to small companies in sufficient time to allow them to bid; educating small businesses on how to do business with the governmental entity; encouraging the formation of joint ventures between majority/minority and/or small business firms; assisting small contractors in obtaining bonds, lines of credit and insurance; segmenting larger contracts into smaller jobs capable of performance by small contractors; and utilizing the resources of business development organizations to assist small contractors in the growth of their business.[cx]

  2. Internal Agency Directives

The government confusion engendered by the Adarand cases was immediately apparent through review of numerous internal directives issued fast on the tail of Adarand I. First, the Department of Justice issued a thirty-seven-page memorandum to federal agencies providing guidance in light of the Adarand I decision. Briefly summarized, the Memorandum advised:

  • All federal programs that used race or ethnicity as a basis for decision-making had to be re-evaluated to determine if they complied with the strict scrutiny standard set forth in Adarand and
  • Such evaluations had to take place before the suspension of any program.
  • The programs were to be evaluated under a list of questions provided by the Department of Justice.

–           The agencies were to further look to the affirmative action program and agenda as propounded by the Clinton Administration.[cxi]

Many agencies relying on federal programs for funding decided to simply put their affirmative action programs on hold pending further clarification from the courts. For example, the Missouri Highway and Transportation Commission issued a memorandum to its contractors that advised:

“After discussions with our legal counsel and with the Federal Highway Administration, we believe it is necessary to put our DBE set-aside program on hold until we have further information concerning the legality and possible problems involved with programs such as our DBE Set-Aside Program.”

In contrast, many of the funding agencies adopted a divergent approach. For example, soon after Adarand I was issued, the Federal Highway Administration issued a memorandum discussing Adarand’s effect on the Department of Transportation programs. The memo concluded that because the Court in Adarand did not declare any federal law unconstitutional, the current laws and regulations encouraging minority contracting would remain in effect as a condition of receiving federal monies “until further notice”. This conclusion reflected the general sentiment among governmental agencies that until the district court issued a decision in Adarand on remand, or a binding legal decision was rendered that actually found that the government’s existing program was unconstitutional, federal agencies should proceed with their existing MBE/WBE programs on a “business as usual” basis. This approach appeared justified by Justice O’Connor’s opinion in Adarand, as noted in the syllabus:

“Requiring strict scrutiny is the best way to ensure that courts will consistently give racial classifications a detailed examination, as to both ends and means. It is not true that strict scrutiny is strict in theory, but fatal in fact. Government is not disqualified from acting in response to the unhappy persistence of both the practice and the lingering effects of racial discrimination against minority groups in this country. When race-based action is necessary to further a compelling interest, such action is within constitutional constraints if it satisfies the “narrow tailoring” test set out in this Court’s previous cases.[cxii]

Many of the fact-based inquiries identified in Adarand I were thus addressed and subsequently remedied by the State of Colorado’s modified program, discussed and held constitutionally valid by the 10th Circuit in Adarand v. Slater.[cxiii]

  1. Regulatory Reforms

While some confusion remains, most government contracting programs still employ various affirmative action measures. In reaction to the Adarand decisions, the government is continually evaluating and modifying its programs in light of the Adarand “strict scrutiny” standards. Some of the effects of the Adarand decisions are summarized below.

  1. 1. Existing Programs

Existing federal programs affected by affirmative action regulatory reforms include:

–   The National Defense Authorization Act,[cxiv] for the Department of Defense, Coast Guard and NASA, which contains a 5% SDB (Small Disadvantaged Business) utilization goal;

–     The Small Business Act,[cxv] which sets forth SDB qualifications; and

  • The Federal Acquisition Streamlining Act[cxvi], which provides set-aside programs for SDB’s.[cxvii]

In addition, various other agency programs funded through federal dollars honor the Small Business Administration’s §8(a) certifications to meet their internal affirmative action goals. These include affirmative action programs under the Department of Transportation Airport and Airway Trust Fund;[cxviii] section 105(f) of the Surface Transportation Assistance Act of 1982;[cxix] the Surface Transportation and Uniform Relocation Assistance Act of 1987;[cxx] and the Intermodal Surface Transportation Efficiency Act of 1991.[cxxi] These programs identify a 10% minority or disadvantaged business participation goal, as well as other financial assistance programs that are administered by the Department of Transportation, and adopt the Small Business Act’s definition of disadvantaged business entity (DBE).[cxxii]

Also affected are various Department of Transportation grant programs that require recipients of financial assistance to ensure that Minority Business Enterprises (MBE’s) or Small Disadvantaged Businesses (SDB’s) “have the maximum opportunity to participate in the performance of contracts and subcontracts financed in whole or in part with federal funds provided under this agreement.”[cxxiii]

  1. Administrative Policy Changes

In addition, the administration responded with formal policy changes that implemented additional modifications in response to the Adarand decisions:

  1. Suspension of DOD’s “Rule of Two”

The Clinton Administration’s initial post-Adarand focus was to suspend the use of the Department of Defense program known as the “Rule of Two.” Under the “Rule of Two,” whenever a contract officer could identify two or more qualified disadvantaged firms to bid on a project within a specified cost range, the officer was required to set the contract aside for bidding exclusively by those disadvantaged entities. [cxxiv] In addition to the Department of Defense, the Federal Acquisition Streamlining Act of 1994 extended the “Rule of Two” to all agencies of the federal government.[cxxv] Due to Adarand, the use of the “Rule of Two” was suspended.[cxxvi]

  1. Justice Department Affirmative Action Reform Proposals

Beginning in May of 1996, the Justice Department began reforming affirmative action policies in federal procurement. The changes implemented by the Justice Department set stricter certification and eligibility requirements for minority contractors claiming “socially and economically disadvantaged” status under §8(a) and §8(d) of the Small Business Act, while somewhat loosening standards for similar certification for non-minority applicants.[cxxvii]

The Justice Department reforms also required the Commerce Department to establish statistical benchmarks that estimated the expected disadvantaged business participation in federal contracts, in the absence of discrimination, for nearly 80 different industries. Under the Justice Department reforms, actual minority participation would be measured against the estimated benchmarks. Where the actual minority participation in an industry falls below the benchmark, bid and evaluation credits or incentives are authorized for economically disadvantaged firms and prime contractors who commit to subcontract with such firms. Conversely, when such participation exceeds an industry benchmark, the credits and incentives would be lowered or suspended in that industry for the following year. The new programs also rely more heavily on “outreach and technical assistance” to avoid potential constitutional problems. The new system is monitored by the Commerce Department, using data collected to evaluate the percentage of federal contracting dollars awarded to minority-owned businesses.[cxxviii]

Under the Justice Department’s proposals, three procurement mechanisms now interact with the benchmarks to promote contracting by disadvantaged contractors:

  • A “price evaluation adjustment,” not to exceed fair market value by more than 10%, as authorized by current law, available to disadvantaged firms bidding on competitive procurement;
  • An “evaluation” credit applied to bids by nonminority prime contractors participating in joint ventures, teaming arrangements, or subcontracts with disadvantaged firms; and
  • Contracting officers may employ “monetary incentives” to increase subcontracting opportunities for disadvantaged firms in negotiated procurements.[cxxix]

The “benchmarking” by the Commerce Department is the key feature of the new program. This aspect of the program is designed to narrowly tailor the government’s use of race-conscious subcontracting in line with Adarand.[cxxx] An interim rule incorporating the Department of Justice revisions to the FAR regulation became effective October 1, 1998.[cxxxi] It is this author’s opinion that the next round of legal challenges may well require the implementation of this type of “benchmarking” system at the local and state levels as well as federal levels, in order to meet on a continued basis proof of a “compelling” government interest.

  1. SBA §8(a) Modifications

The Small Business Administration (SBA) issued final regulations implementing the Justice Department recommendations with respect to the §8(a) business development and small disadvantaged business (SDB) programs on June 30, 1998.[cxxxii] The reforms included a new process for certifying firms as small disadvantaged businesses, and replaced set-asides with a price evaluation adjustment program administratively tied to the Commerce Department benchmarks.

  1. New Certification Regulations

Under the new procedure, 51% ownership by a disadvantaged individual or individuals is still required in order for a business to qualify as an SDB. However, the SBA, or an SBA-approved state agency or private certifier, must make a threshold determination as to whether a firm is actually owned or controlled by specified individuals claiming to be disadvantaged before the business will qualify as an SDB.[cxxxiii]

In addition to certifying ownership, the SBA will examine a contractor to determine whether the contractor is disadvantaged. The definition of social and economic disadvantage has been modified somewhat but remains largely intact under the new SBA regulations. Under the new regulations, designated minority groups still enjoy a statutory presumption of social disadvantage. However, such minorities are required to meet certification criteria for economic disadvantage. Individuals who are not within the minority groups that enjoy the statutory presumption may still qualify by proving that they are socially and economically disadvantaged under SBA standards. The revised SBA regulations ease the burden on non-minority applicants by adopting a “preponderance of the evidence” rule rather than the previous “clear and convincing evidence” standard. Certification of minority status is subject to third-party challenge under current administrative mechanisms. [cxxxiv]

  1. New Price Evaluation Adjustment Program

A second key reform is the establishment of an SBA price evaluation adjustment program, enacted pursuant to authority in the 1994 Federal Acquisition Streamlining Act.[cxxxv]   Under this new program, which is separate from the §8(a) business development program, disadvantaged firms submitting bids on competitively awarded federal contracts may qualify for a price evaluation credit of up to 10%. Credits are available only to businesses that have been certified as socially and economically disadvantaged by the SBA. Only if price credits, over a sustained period, fail to achieve full benchmark utilization of disadvantaged entrepreneurs may agencies consider the use of set-asides in awarding contracts.[cxxxvi]

  1. Agency Information and Assistance

The ever-changing nature of the above regulatory requirements can be intimidating at best. While this chapter gives a thumbnail sketch of each agency’s current requirements, additional interpretative assistance can be obtained through various information centers, including:

–     The Defense Contract Management Command Area Operation Centers, which provides information about government contracting opportunities to businesspersons;

–     The Department of Commerce Minority Business Development Agency, which promotes the formation and expansion of minority owned firms and market development opportunities for such firms; and

–     The General Services Administration Enterprise Development Center, which provides information regarding MBE/WBE/SDB utilization in the GSA’s “Simplified Threshold Plan.”

In addition, each federal agency has an Office of Small and Disadvantaged Business Utilization, as required under the 1978 amendment of the Small Business Act of 1953.[cxxxvii] OSDBU staffs provide technical assistance and information to small and disadvantaged businesses seeking contracting opportunities. The staff includes Small and Disadvantaged Business Utilization Specialists and Small Business Technical Advisors. These advisors have the specific purpose of ensuring that small SDB/DBE/MBE, veteran, or WBE actively participate in contracts let by the agency as well as in subcontracts awarded by the agency’s prime contractors. These offices do not, however, control any contract awards.[cxxxviii] Addresses and phone numbers for these offices are included in Appendix B.


Adarand established that Croson’s statistical proof of past discrimination is required to establish a constitutionally valid affirmative action program, at all levels. In order to comply with the Croson requirements, by March of 1991 twenty-nine state and local jurisdictions had completed some sort of post-Croson discrimination study at an estimated cost of over $5.5 million dollars. [cxxxix] Despite the investment in such statistical studies, there have been more than two hundred successful challenges asserted against state and local minority contractor programs after Croson. [cxl] Each successful challenge was based on governmental failure either to establish statistical evidence of past discrimination or to design a plan narrowly tailored to remedy that discrimination.[cxli]

Even with the current limitations placed on affirmative action programs, opponents argue that these programs should be completely eliminated because they are unconstitutional, create reverse discrimination and create a bias in the award of government contracts.[cxlii] Opponents also broadly construe the recent demise of most affirmative action programs as evidence that affirmative action as a policy is one step towards the door.

Conversely, proponents of affirmative action argue that evidence of racial discrimination continues through today, as recognized by Justice O’Connor in Adarand I.[cxliii] Affirmative action proponents thus blame the recent demise of affirmative action programs as merely reflecting poor statistical studies, rather than as a refutation of the validity of the programs themselves.

Prior to the 1996 election, analysts predicted an aggressive political attack against affirmative action programs if Bob Dole brought a Republican administration to the White House and was supported by a Republican majority in Congress.[cxliv] However, the 1996 election results temporarily arrested the anti-affirmative action ground swell. While the Republicans maintained control of Congress, President Clinton’s reelection, and his administration’s commitment to a “newer, improved” form of affirmative action, sustained the nation’s affirmative action programs in their new and “mended” style. President Clinton’s judicial appointments, totaling three hundred seventy four, also bear significant relation to the potential outcome of affirmative action challenges at the lower court levels.[cxlv]

The current Bush administration now brings significant conservative influence upon the future of affirmative action. The most controversial of Bush’s cabinet appointees, John Ashcroft, was confirmed as the United States Attorney General despite significant public concerns over perceived anti-minority positions. To date, however, Attorney General Ashcroft through the Department of Justice has supported the government’s affirmative action programs, albeit modified to pass Adarand’s strict scrutiny standards.

In similar fashion, Bush’s Secretary of Labor, Asian-American Elaine Chao, entered her cabinet post generally opposed to racial preference programs, even having challenged President Clinton in a PBS “Newshour” debate on race.[cxlvi]   Similarly to Ashcroft, Secretary Chao has also remained supportive of existing government programs in their modified, more restricted applications.

  • However, the cardinal issue most likely lies with the status of the sitting Justices of the state, federal and United States Supreme Court.   As it stands, those Supreme Court Justices broadly supporting affirmative action (including recognition and deference to Congressional power to devise remedial measures based upon national evidence of past discrimination) include Justices Stevens, Ginsburg, Beyers, and Souter. While loosely referred to as the “liberal bloc,” these justices remain far to the right of prior Justices Brennan and Marshall, strong proponents of early affirmative action decisions. Justice Stevens, the oldest sitting member of the court, has suffered from prostate cancer as well as open-heart surgery, and is expected to step down during this presidential term, leaving his position most likely open for appointment of a more conservative Bush appointee.

Those Justices supporting affirmative action only as it passes the strict scrutiny test are Chief Justice Rehnquist, Justice O’Connor, and Justice Kennedy. Justices Scalia and Thomas, while supporting the majority opinion in Croson and Adarand, remain the most outspoken critics of affirmative action programs, calling the programs “unnecessarily paternalistic” and thus an impediment to minority development.[cxlvii]

News accounts already imply the retirement wishes of Supreme Court Chief Justice William Rehnquist and Justice Sandra Day O’Connor. Justice O’Connor is the swing vote on most affirmative action decisions and the author of both the Croson and Adarand decisions.[cxlviii] The retirement of Justice O’Connor could prove to be the most significant change in the Court. Although she has exhibited a conservative approach, believing government should have a limited role in solving society’s problems, Justice O’Connor personally experienced the sting of gender bias after graduating from Stanford Law School in 1952, only to be offered a position as secretary when she applied to a prestigious law firm. Thus her decisions consistently recognize the remaining existence of prejudice, while questioning the appropriate mechanisms used to identify and remedy the problem.[cxlix]

Should any or all of these three Justices be replaced with conservative appointments in this next term, the public should expect even stronger judicial scrutiny and limitations on race-based remedial programs. In addition, in the event of Chief Justice Rehnquist’s retirement, recent newspaper accounts have identified President Bush’s interest in appointing a conservative constitutionalist as his replacement, mentioning Justices Scalia and Thomas as representative models. As the two most vocal critics of affirmative action, such an appointment could dramatically alter the court’s philosophical makeup, and change the judicial temperament relative to the review of race remedial programs. Conversely, since his inauguration, President Bush has elicited strong criticism from his right wing constituents for tracking a more moderate application of his programs and policies while in office, thus leaving the door open to potential moderate versus conservative appointment possibilities.

In addition, following the public outcry and criticism concerning the 2000 elections, members of the Court are rumored to be particularly sensitive about public perception. Therefore, continued judicial support of affirmative action programs may depend in some small part on political sentiment, for “[i]n truth, the Supreme Court has seldom, if ever, flatly and for very long, resisted a really unmistakable wave of public sentiment.”[cl] While public sentiment appears to be in support of applying these programs in a more limited yet fair and statistically validated manner, it is likely that affirmative action programs will continue to be present for quite some time. Economic statistics reveal a strong growth in successful minority and women-owned businesses. These businesses represent an ever-increasing voting bloc, sufficiently strong to exert enough political and economic pressure to keep affirmative action programs alive and well. Additionally, the general sentiment among governmental agencies is that federal agencies will proceed with their existing MBE/WBE programs on a “business as usual” basis, utilizing the various program modifications following Croson and Adarand. This approach appears to be the centrist method of appeasing affirmative action proponents and opponents alike, and complies with the court’s majority philosophy as expressed by the Court’s opinions in the Croson and Adarand cases, which state:

“Requiring strict scrutiny is the best way to ensure that courts will consistently give racial classifications a detailed examination, as to both ends and means. It is not true that strict scrutiny is strict in theory, but fatal in fact. Government is not disqualified from acting in response to the unhappy persistence of both the practice and the lingering effects of racial discrimination against minority groups in this country. When race-based action is necessary to further a compelling interest, such action is within constitutional constraints if it satisfies the “narrow tailoring” test set out in this Court’s previous cases.”[cli]

Thus local and state governments will proceed with their “Croson” studies, while federal programs will be measured by the Department of Commerce “Benchmark Study,” reviewing race remedial programs on an ongoing basis. The programs and statistical studies supporting those programs will continue to be challenged in the courts.[clii] These court challenges will further develop the principles set forth in Croson and Adarand and address issues such as the standard of review for gender remedial programs. Both the judicial decisions and regulatory measures concerning affirmative action will be impacted and refined according to the political sentiments of the nation at large.


While the programs remain subject to various legal challenges, most federal, state and local government construction and/or professional service projects contain MBE/WBE utilization goals which are components of the bid evaluation and award mechanicsm. Thus government bid specifications typically identify the respective goals for projects, while additionally requiring contractors to show in their bid documents how these goals will be met. Typically, the Request for Proposal issued by the government owner will require bidders to identify intended MBE/WBE subcontractors, as well as the scope of work and estimated percent of the dollar amount of the contract to be performed by each MBE/WBE subcontractor.

These bid documents also typically contain signed certifications warranting the truth of the information submitted by the bidder. Thus deviations from stated MBE/WBE performance criteria can, and has, subjected contractors to substantial and sometimes severe consequences.

In most situations, false information submitted in the bid document, and later warranted in subsequent government pay applications, creates contractor liability under the False Claims Act and similar state legislation.[cliii] The False Claims Act, established to protect the federal government from fraud, has experienced increasing usage in the last decade as a vehicle for punishment of those who knowingly present false claims for payment to the government.[cliv] The Act imposes potentially dire remedies against those who seek to collect payment from governmental owners under false pretenses, including contract fund forfeiture, disbarment, and in extreme situations, criminal penalties and imprisonment.[clv] These actions may be enforced by the government, or by third parties seeking a bounty under qui tam actions.[clvi] Consequently, even a contractor who innocently lists certain MBE/WBE subcontractors with the intention of later securing the requisite MBE/WBE participation, is subject to dire penalties if the representations are later proven to be “false”.

The severity of these penalties is demonstrated in various cases. For example, in 1995, two employees of a Kentucky construction firm received one year sentences in federal prison for receiving a contract award based upon their representations that their construction company was a woman owned business enterprise.[clvii] One employee’s wife owned 51% of the firm’s stock, but had no role in running the company. The government construed this bid misrepresentation as a false representation violative of the state’s False Claims Act, and the two men were convicted of government fraud. The company was simultaneously disbarred from doing further business with the government.

Similarly, in January 2002, the owner of a research and development company received a sentence of six-month’s home confinement and a fine of $2.9 Million for defrauding the government by falsely representing that work in a contract between his company and the government was performed by a MBE/WBE subcontractor.[clviii]   In yet another case, an MBE contractor was disbarred from further government work based upon a determination that his company was essentially controlled by a majority owned general contractor based on the size and extent of several large unsecured loans made by the general contractor to the minority sub.[clix]

Each of these cases demonstrates that one cannot lightly disregard MBE/WBE requirements and/or deviations in government contracts. In addition, recent developments in False Claims Act litigation suggest that innocent mistakes are no defense. For instance, in one case a government contractor was held liable under the False Claims Act for submitting a series of invoices based on incorrect unit price calculations.[clx] Therefore contractors doing business with the government are STRONGLY encouraged to keep the government owner advised with respect to any change in the utilization of MBE/WBE’s on the project, and to familiarize themselves with, and aggressively use, any waiver process implemented by the government owner. In most cases, the contractor should conscientiously record and prove it informed the government owner about utilization and/or certification deviations. Any such changes should be recorded via the government’s contractually designed waiver process.

Thus it is extremely important that contractors recognize and understand use of the waiver process. For example, in a 1998 Kansas City, Missouri case, the city awarded a $24.2 million contract to a contractor who was significantly below the MBE/WBE targets for the project and who made no showing of good faith efforts to meet the goals. The successful bidder was $549,630 lower than the second lowest bidder who did substantially meet the MBE/WBE goals for the project. The affirmative action ordinance in place at that time did not carry as stringent “good faith” requirements as a more current ordinance, and also outlined the ability of the City to waive noncompliance if deemed in the “best interests” of the city.

Rather than dismissing the lowest bid as non-responsive, the city chose to accept the lowest bid as in the “best interest” of the public. The Eighth Circuit affirmed this reasoning in a similar case where it held that governments could waive MBE/WBE requirements where the cost savings are clearly in the best interest of the public.[clxi] These cases demonstrate the uneven playing field often associated with government contracts, where in one instance disregard of the MBE/WBE goals can result in a non-responsive bid, while in another situation the same facts can result in an award of the contract for the same reasons. As a precaution, the contractor is advised to err on the side of strict compliance with the bid specifications, or in the alternative to ensure strict compliance with the owner’s waiver procedures.


At some point, the courts, governments and public at large may finally agree that affirmative action has served its purpose in opening previously closed doors. However, until that time, affirmative action programs will continue to be present, albeit in a more highly scrutinized and more limited manner.[clxii] Substantial civil and criminal penalties can lie against those who either intentionally or negligently misrepresent their affirmative action compliance to government owners. Therefore, the programs must continue to be taken seriously, with contractors and practitioners alike strictly adhering to the program parameters so long as they remain a viable element of public contracting.

© Denise E. Farris, Esq. (2004). All rights reserved. All rights reserved. This article may not be reprinted nor reproduced in any manner without the express permission of the author, who can be contacted at: Denise Farris, Farris Law Firm, L.L.C., 20355 Nall, Stilwell, KS 66085. Tel: 913-685-3192. Fax: 913-685-3292. Email: dfarris@farrislawfirm.com.

[i]Academic American Encyclopedia, 1995,vol.1, p.132; vol. 7, p.223-224.

[ii] P.L. 88-352, July 2,1964; 78 Stat. 241,253. Title VII is codified at 42 U.S.C.2000e ET. Seq.

[iii] U.S. President (L. Johnson) Executive Order 11246, Reassignment of Civil Rights Functions, September 24, 1965. Weekly Compilation of Presidential Documents, v.1, September 27, 1965, p. 305.

[iv] Bruno, Andorra, CRS Report 98-992, Affirmative Action in Employment: Background and Current Debate.

[v] 15 U.S.C. 631 et. seq.

[vi] 488 U.S. 469 (1989).

[vii] 515 U.S. 200 (1995).

[viii] Where the program does not include invidious discrimination based on race or ethnic background, the government need show only (a) an important governmental interest, and (b) a program substantially related to achievement of that interest. Korematsu v. United States, 323 U.S. 214 (1944); Kiyoshi Hirabayashi v. United States, 320 U.S. 81 (1943).

[ix] Congressional Research Service, Library of Congress, American Law Division Memorandum (3/8/95).

[x] T. Mullen, Affirmative Action in the Legal Relevance of Gender, 244-266 (S. McLean & N. Burrows 1988).

[xi] Regents of the University of California v. Bakke, 438 U.S. 265, 318-320 (1978); U.S. CONST. Amend. V (1791); U.S. CONST. Amend. XIV (1868).

[xii]   438 U.S. 265 (1978)

[xiii] Barron, Dienes, McCormack, Redish, The Meaning of Equal Protection, in Constitutional Law: Principles and Policy 564-587 (The Michie Company 3d ed. 1987).

[xiv]   Bakke, 438 U.S. at 291.

[xv]   Note, supra n. 12, at 944-945. See also, Bakke, 438 U.S. at 291.

[xvi]   Bakke, 438 U.S. at 318-320.

[xvii]   The 6-3 split in Bakke is representative of the sharply divided stance the Court often takes on affirmative action decisions. As will be discussed on a case-by-case basis, the decisions are often rendered in a 6-3 or 5-4 vote. The prevalence of concurring and dissenting opinions is believed to significantly contribute to the uncertainty surrounding and sometimes-inconsistent legal doctrines applied to affirmative action program challenges.

[xviii] 438 U.S. at 320. Many of Justice Powell’s opinions in Bakke form the philosophical context of current Supreme Court opinions. For example, note the following excerpt from Bakke: “Moreover, there are serious problems of justice connected with the idea of preference itself. First, it may not always be clear that a so-called preference is in fact benign. Courts may be asked to validate burdens imposed upon individual members of particular groups in order to advance the groups’ general interest. Nothing in the Constitution supports the notion that individuals may be asked to suffer otherwise impermissible burdens in order to enhance the societal standing of their ethnic groups. Second, preferential programs may only reinforce common stereotypes holding that certain groups are unable to achieve success without special protection based on a factor having no relationship to individual worth. Third, there is a measure of inequity in forcing innocent persons in respondent’s position to bear the burdens of redressing grievances not of their making.” Id.; cf. Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995)(Thomas, J., concurring).

[xix] 448 U.S. 448 (1980).

[xx] 448 U.S. at 468-470.

[xxi] 448 U.S. at 472.

[xxii] 448 U.S. at 495-496 (J. Powell, concurring).

[xxiii] 476 U.S. 267 (1986).

[xxiv] 476 U.S. at 274-76.

[xxv] 488 U.S. 469 (1989)

[xxvi] 488 U.S. at 499-504. See also S. Oliver, 1991 Minority Law Teachers Conference: A Survey of Post-Croson Developments, 38 Loyola L. Rev. 7 (Spring 1992).

[xxvii] 488 at 481-82.

[xxviii] 488 U.S. at 483.

[xxix] 488 U.S. at 483.

[xxx] J.A. Croson v. City of Richmond, 779 F.2d 181, 194 (4th Cir. 1985), vacated, 478 U.S. 1016 (1986), after remand, 822 F.2d 1355 (4th Cir. 1987), aff’d. 488 U.S. 469 (1989)(holding the ordinance failed the Wygant test).

[xxxi] 478 U.S. 1016 (1986).

[xxxii] 822 F.2d 1355 (4th Cir. 1987).

[xxxiii] 488 U.S. at 493. Justice Antonin Scalia went one step further, analyzing the ordinance under a standard even more stringent than strict scrutiny. Id. at 524.

[xxxiv] 488 U.S. at 490.

[xxxv] 488 U.S. at 493-94.

[xxxvi] 488 U.S. at 491-92.

[xxxvii]   Id.

[xxxviii] 488 U.S. at 507-08.

[xxxix] 488 U.S. at 499-500.

[xl] 497 U.S. 597 (1990).

[xli] See also   Astroline Communications Co. v. Shurberg Broadcasting, 110 S. Ct. 1316 (1990), the companion case to Metro Broadcasting.

[xlii] 497 U.S. at 566-567.

[xliii] 497 U.S. at 563.

[xliv] 497 U.S. at 560, n. 9.

[xlv] 497 U.S. at 564-68.

[xlvi] 115 S. Ct. 2097 (1995).

[xlvii] Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097, 2102-2105 (1995). See also, Note, supra n. 12.

[xlviii]   115 S.Ct. at 2102-05; see also 15 U.S.C. Section 637 (d)(2), (3).

[xlix]   115 S.Ct. at 2102-05. The Small Business Act establishes a government-wide goal of “not less than 5 percent of the total value of all prime contracts and subcontract awards for each fiscal year” to be awarded to socially and economically disadvantaged small business concerns. 15 U.S.C. Section 644 (g)(1). Members of designated racial and ethnic minority groups presumed to be socially and economically disadvantaged include African American, Hispanic, Asian Pacific, subcontinent Asian, and Native American. 15 U.S.C. Section 637(a)(5); 13 C.F.R. Sect. 124.105(b)(1). The presumption is rebuttable. 13 C.F.R. Sect. 124.111(c),(d); 1245.601-124.609.

[l] 115 S.Ct. at 2102-05.

[li] Adarand Constructors, Inc. v. Skinner, 790 F. Supp. 240, 241 (D. Colo. 1992), aff’d sub nom. Adarand Constructors, Inc. v. Pena, 16 F.3d 1537 (10th Cir. 1994), vacated, 115 S. Ct. 297 (1995).

[lii] Adarand Constructors, Inc. v. Pena 16 F.3d 1537, 1539 (10th Cir. 1994), vacated, 115 S. Ct. 2097 (1995).

[liii] 115 S.Ct. 41 (1994).

[liv] 115 S. Ct. at 2113.

[lv] 115 S.Ct. at 2108-2109; Note, supra n. 12, at 942.

[lvi] 115 S. Ct. at 2105-2113

[lvii] Id.; Note, supra n. 12, at 943.

[lviii] 115 S.Ct. at 2118 (J. Scalia, concurring in part and concurring in the judgment).

[lix] 115 S.Ct. at 2119 (J. Thomas, concurring in part and concurring in the judgment).

[lx] Id.

[lxi] 115 S. Ct. at 2125 (J. Stevens, dissenting).

[lxii] Id.

[lxiii] 115 S.Ct. at 2126-2128.

[lxiv] 115 S.Ct. at 2132. (J. Souter, dissenting).

[lxv] 115 S.Ct. at 2134-2136. (J. Ginsburg, dissenting).

[lxvi] Id. T he Adarand dissenters strongly criticized the Court’s departure from stare decisis. For an excellent discussion of the evolution and governing principles of stare decisis, and its relevance to the decision in Adarand, see Note, supra n.12.

[lxvii] 115 S. Ct. at 2113.

[lxviii] Id.

[lxix] Adarand Constructors, Inc. v. Mineta, 122 S.Ct. 511 (2001).

[lxx] Adarand Constructors, Inc. v. Pena, 965 F. Supp. 1556(D. Colo. 1997)

[lxxi] Id.

[lxxii] 965 F. Supp. 1556(D. Colo. 1997)

[lxxiii] Dale, Charles V., and CRS Report for Congress, Affirmative Action Revisited: A Legal History and Prospectus, Report No. RL30470, (10-12-00) (hereafter Dale, Affirmative Action Revisited), at p. 12.

[lxxiv] Id. (citing Adarand II, 965 F.Supp. at 1575 ).

[lxxv] Dale, Affirmative Action Revisited, supra, at p. 13.

[lxxvi] Adarand Constructors, Inc. v. Slater, 169 F.3d 292 (10th Cir. 1999).

[lxxvii] Adarand Constructors, Inc. v. Slater, No. 99-295, 120 S.Ct. 722 (1-12-2000).

[lxxviii] 228 F.3d 1147 (10th Cir. (Colo.) 2000).

[lxxix] Id.

[lxxx] 228 F.3d at 1165.

[lxxxi] 228 F.3d at 1168-70.

[lxxxii] 228 F.3d at 1147; see also Dale, Affirmative Action Revisited, supra, at p. 14.

[lxxxiii] 49 C.F.R. §26.51(a),(b)(2000).

[lxxxiv] Participation in the §8a program is limited by statute and regulation to ten and one-half years. Each DBE is re-evaluated and may be graduated from the program, based on the submission of financial and other information required annually.

[lxxxv] 49 C.F.R. §2615 (2000)(allowing recipients to seek waivers and exemptions despite the already non-mandatory nature of the program).

[lxxxvi] Adarand Constructors, Inc. v. Mineta, 532 U.S. 967 (2001).

[lxxxvii] Adarand Constr. Inc. v. Mineta, 122 S.Ct. 511, 513, 534 U.S. 103 (2001).

[lxxxviii] Id.

[lxxxix] Id.

[xc] Id. at 513-14.

[xci] Id. at 514.

[xcii] See e.g. Christian v. United States, 2000 WL 760521(Fed.Cl.); Rothe Development Corp. v. U.S. Department of Defense, 49 F.Supp.2d 937 (W.D. Tex. 1999); In Re Sherbrooke Sodding Co., 17 F.Supp.2d 1026 (D. Minn.1998); Cortez III Serv. Corp. v. National Aeronautics & Space Administration, 950 F.Supp. 357 (D.D.C.1996). See also Appendix A for detailed summary of various cases addressing program challenges.

[xciii] Adarand, 115 S. Ct. at 2113; Croson, 488 U.S. at 492.

[xciv] Croson, 488 U.S. at 492.

[xcv] Id. at 500 (quoting Wygant v. Jackson Board of Education, 476 U.S. 267, 277 (1986)).

[xcvi] Wygant, 476 U.S. at 292-293 (O’Connor, J., concurring).

[xcvii] Id. at 293. See also Associated General Contractors v. Coalition for Economic Equity, 950 F.2d 1401 (4th Cir. 1991).

[xcviii] Croson, 488 U.S. at 501 (quoting Hazelwood Sch. Dist. v. United States, 433 U.S. 299, 307-08 (1977)).

[xcix] 941 F.2d 910, 929 (9th Cir. 1991), cert. denied 112 S.Ct. 875 (1992).

[c] See Associated General Contractors of America v. City of Columbus, 936 F. Supp. 1363 (S.D. E. D. Ohio 1996)(challenging the validity of the city’s statistical study), vacated by 172 F.3d 411 (6th Cir. 1999).

[ci] Monterey Mechanical Co v. Wilson,125 F.3d 702 (9th Cir. 1997); L. Tarango Trucking v. County of Contra Costa, 181 F.Supp. 2d 1017 (N.D. Cal. 2001); Concrete Works of Colorado, Inc. v. City and County of Denver, 86 F. Supp. 2d 1042 (D. Colo. 2000); Cortez III Serv. Corp. v. National Aeronautics & Space Administration, 950 F. Supp. 357 (D.C. 1996); Engineering Contractors Assoc. of South Florida, Inc. v. Metropolitan Dade County, 122 F.3d 895 (11th Cir. 1997).

[cii] Id. See also Appendix A.

[ciii] 488 U.S. at 507-08.

[civ] Croson, 488 U.S. at 478, 506.

[cv] Id.

[cvi] 488 U.S. at 507, 510.

[cvii] Id.

[cviii] Id. at 526 (Scalia, J., concurring).

[cix] Id.

[cx] See generally, City of Kansas City, Missouri Disparity Study, pg. E15, E40 (1994).

[cxi] Memorandum to General Counsels from Walter Dellinger, Assistant Attorney General (June 28, 1995).

[cxii] Adarand, 515 U.S. at 202 (syllabus).

[cxiii] 228 F.3d 1147 (10th Cir. (Colo.) 2000).

[cxiv] P.L. 99-661, codified at 10 U.S.C. § 2323.

[cxv] 15 U.S.C. § 637 et. seq.

[cxvi] 15 U.S.C. § 644 (g).

[cxvii] Susan McGreevy, Construction Contract Assistance Programs Available to Minorities and Women, p. A21, fn11, MBE/WBE/DBE Construction and Design Seminar, (Missouri Bar 1997).

[cxviii] 49 U.S.C. § 48103.

[cxix] P.L. 97-424, §05(f), 96 Stat. 2097 (1982).

[cxx] P.L. 100-17, §106(c), 101 Stat. 132 (1987)

[cxxi] P.L. 102-240, §1003, 105 Stat. 1914.

[cxxii] Dale, Affirmative Action Revisited, supra.

[cxxiii] 49 C.F.R. §23.43(a)(l).

[cxxiv] Dale, Affirmative Action Revisited, p. 20.

[cxxv] Id.; P.L. 103-355, §7102, 108 Stat. 3243 (1994). FASA states that in order to achieve goals for DBE participation in SBA procurements, an “agency may enter into contracts using – (A) less than full and open competition by restricting the competition for such awards to small business concerns owned and controlled by socially and economically disadvantaged individuals described in subsection (d)(3)(c) of section 8 of the Small Business Act (15 U.S.C. §637); and (b) a price evaluation preference not in excess of 10 percent when evaluating an offer received from such a small business concern as the result of an unrestricted solicitation.”

[cxxvi] Dale, Affirmative Action Revisited, p. 20.

[cxxvii] 61 Fed. Reg. 26042, Notices, Department of Justice, Proposed Reforms to Affirmative Action in Federal Procurement.

[cxxviii] Dale, Affirmative Action Revisited, p. 21.

[cxxix] Id.; See Response to Comments to Department of Justice Proposed Reforms to Affirmative Action in Federal Procurement, 62 Fed.Reg. 25649 (1997).

[cxxx] Dale, Affirmative Action Revisited, p. 21.

[cxxxi] Federal Acquisition Regulation; Reform of Affirmative Action in Federal Procurement; Interim Rule with request for comment, 63 Fed. Reg. 52546 (1998).

[cxxxii] 63 Fed. Reg. 35726, 35767 (1998).

[cxxxiii] Id.; Dale, Affirmative Action Revisited, p. 22.

[cxxxiv] Dale, Affirmative Action Revisited, p. 22; 63 Fed. Reg. 35726, 35767 (1998).

[cxxxv] 10 U.S.C. §2323.

[cxxxvi] See Response to Comments to Department of Justice Proposed Reforms to Affirmative Action in Federal Procurement, 62 Fed. Reg. 25649 (1997).

[cxxxvii]P.L. 95-507, 15 U.S.C. §644(k).

[cxxxviii] McGreevy, Construction Contract Assistance Programs.

[cxxxix] G. LaNoue & J. Sullivan, But For Discrimination: How Many Minority Businesses Would There Be, 24 Colum. Hum. Rts. L. Rev. 93 (1993).

[cxl] A representative sampling of these cases are included in Appendix A.

[cxli] Kenneth Martin, Craig Holman and Kurt Rylander, Is This the End of Federal Minority Contracting?, 42 Federal Lawyer 44, 48 (Feb. 1995).

[cxlii] Id.

[cxliii]515 U.S. at 235-239.

[cxliv] Id. Affirmative action opponents in Congress include Senator Phil Gramm of Texas. (See, H. Idelson, Ruling Rocks Foundation of Affirmative Action, Cong.Q.Wkly.Rep. (June 19 1995 at 1743)(Senator Gramm proposes using “must-pass” appropriations bills to preclude affirmative action programs)). Other opponents include House Representative Charles Canady, who plans to introduce “a major bill outlawing virtually all federal affirmative action programs.” Id.

[cxlv] See www.4judicialrestraint.org.

[cxlvi] Elaine Chao – An American Success Story, (Heritage Foundation, Fall 1999)( “I believe most Americans don’t care for preferential treatment based on race…. We’re a country based on merit, built by immigrants of all ethnic backgrounds who worked hard and took risks”.)

[cxlvii] Justices Scalia and Thomas constitute a tight voting bloc on the court, statistically voting the same in over 80% of the court’s cases. Joan Biskupic, Justice O’Connor and Affirmative Action, Washington Post (10/5/97).

[cxlviii] Id.

[cxlix] Id.

[cl] Note, The Supreme Court’s Step in the Trend Toward Eliminating Affirmative Action Programs in Adarand, Inc. v. Pena, 33 Houston L. Rev. 939, 962 (citing R. McCloskey, The American Supreme Court 23 (1960)).

[cli] Adarand, 515 U.S. at 202 (case synopsis).

[clii]   See also Houston Contractors Chapter Association v. Metropolitan Transit Authority of Harris County, 993 F. Supp. 1027 (S.D. Tx. 1996)(issuing preliminary injunction upon finding that Metro’s affirmative action program unconstitutional under Croson and Adarand).

[cliii] 31 U.S.C. § 3729 et seq.

[cliv] Id.

[clv] Id.

[clvi] Id.§3730.

[clvii] Botts, Sherman and Farris,Denise, “Beware of Front Companies”, Modern Builder Vol. ___ Issue ____ (1994);

[clviii] “Contractor Fined $2.9 Million for Minority Preference Fraud”, 19 Andrews Gov’t Cont. Litig. Rep. 4.

[clix] Missouri Department of Transportation vs. Mabin Construction Company

[clx] (Insert)

[clxi] Bash, Roy, “Lowest and Best Bidder: Clarification or Muddying the Waters?”, Modern Builder Vol.   Issue     (     )

[clxii] For a detailed analysis of cases addressing constitutional validity of municipal, state and federal cases, refer to Appendix A. For a detailed listing of federal assistance offices, refer to Appendix B.

A detailed analysis of cases addressing constitutional validity of municipal, state and federal cases

A detailed listing of federal assistance offices