Sunday, November 27, 2011

Croson Legal Services

John Sullivan, Esq.

How Croson Legal Services can help you:
Public procurement contracts usually require preferences for minorities and women as subcontractors. If you or your company is having difficulties with preferences in a public contracting program or if you are struggling to meet DBE or MWBE goals, Croson Legal Services may be of help.  
Since the Croson decision in 1989, the United States Supreme Court has held that the legal standard for determining whether an affirmative action contracting program is justified is strict scrutiny.     
Governments try to meet strict scrutiny with a disparity study. These studies are often results-driven junk science. I have completed critiques of more than a dozen disparity studies, including studies done by NERA, MGT, BBC, and Mason Tillman Associates. Here are some of the typical problems of disparity studies:  
The key to any accurate disparity study is its calculation of availability. Croson requires that only those firms which are qualified, willing and able be considered available.
Some studies use Dun & Bradstreet as their availability source; some use Census data; others use lists of firms obtained from non-government sources. None of these satisfy Croson’s qualified, willing and able standards.
Here are questions to ask about the availability measure used by the disparity study of concern to you. These are some of the issues I would cover in a disparity study critique.
QUALIFIED-- Does the data source address the qualifications needed to contract with the government? Does the data source consider which firms have the necessary bonding, licenses, equipment and experience?
WILLING -- What about the willingness of firms – the second Croson availability component – to contract with the government? Most businesses have no interest in government contracting and so should not be counted as available as available for government contracts.
ABLE -- The third part of the availability requirement set forth in Croson is a firm’s ability – its capacity – to perform the contracts the government agency awards. Capacity is particularly important in measuring the availability of construction firms. Most construction firms are to small to complete the biggest construction projects. How has the disparity study addressed capacity?
OTHER DISPARITY STUDY FLAWS – Most studies have lengthy anecdotal sections. Anecdotal accounts of discrimination are seldom persuasive since few if any accounts are investigated for their accuracy. There is almost never verification of anecdotes.
Another flaw of disparity studies is that Croson requires serious consideration be given to race neutral measures before resorting to a race conscious program. Race neutral alternatives are seldom taken seriously by either the disparity study or the DBE or MWBE program.
Finally, how recent is the study’s data? The marketplace is always changing and stale data no longer give an accurate picture of the current market. 
Disparity study analyses I did on behalf of plaintiffs played a role in successful court challenges to MWBE programs in Builders Association of Greater Chicago v. Cook County and Engineering Contractors Association of South Florida v. Metropolitan Dade County.
Strict scrutiny demands that any jurisdiction with a preferential program in public contracting demonstrate not only compelling interest (described above) but also that the program be narrowly tailored.   
There are five facets of narrow tailoring. The two narrow tailoring problems which most often prove fatal to a DBE or MWBE affirmative action program are 1) The inclusion of each MBE group benefitting from the program must be individually justified, separate from other included groups and 2) The percentage MBE or DBE goal must be linked to the percentage of available firms.          In one case I worked on as a litigation consultant, Contractors Association of Eastern Pennsylvania v. Philadelphia, the court found that the city had failed to meet either of these requirements.   
My review of a disparity study could help you in any number of ways. The critique can be shown to the procurement bureaucracy so they know about the weaknesses of the study or that MWBE or DBE goals are not supportable.
If my disparity studfy analysis doesn’t solve your problem, the critique can serve as a litigation assessment and blueprint for a court challenge to the constitutionality of a DBE or MWBE program. 
Any public agency accepting at least $250,000 of federal transportation money must implement a Disadvantaged Business Enterprises (DBE) program.  I worked on the most successful challenge to a DBE program, Western States Paving v. Washington State Department of Transportation.
In Western States the court ruled in the contractor’s favor because there was no disparity study covering the state transportation industry. Also, there was no evidence that the firms certified as Disadvantaged Business Enterprises had actually been discriminated against. Every state DOT in the country uses the Uniform Certification Application, which is the form the Ninth Circuit in Western States found deficient.    
          In the event of a lawsuit, I have served in any number of roles:
          EXPERT WITNESS -- At present I am expert witness in Associated General Contractors of America, San Diego Chapter v. California Department of Transportation. Last year I was expert witness in Kevcon v. United States. My role was to review the sufficiency of more than 50,000 pages of evidence offered by the federal government to justify the Small Business Administration 8(a) program. 
          SECOND CHAIR – In 2010 I was second chair in GEOD v. New Jersey Transit. Like the AGC v. Caltrans lawsuit, GEOD attacked a DBE program.
          LEGAL CONSULTANT – Most often I have worked as a legal consultant, aiding the lawyers bringing the suit, as well as the experts. With my years of experience in disparity study litigation and challenges to preference programs, I can save lawyers time and clients money. One case where I served as consultant was Rothe v. Department of Defense. In Rothe the appellate court ruled a federal Small Disadvantaged Business preference unconstitutional and struck down an act of Congress.
For the past year or so, the Department of Justice has been aggressively prosecuting Commercially Useful Function cases. In these prosecutions DOJ alleges that prime contractors fraudulently claimed to hire minority subs. Not to excuse fraud, but I think Commercially Useful Function problems sometimes arise when subcontracting goals have been set arbitrarily or too high. If it would be of help as a mitigating defense, I might provide an affidavit explaining the defects of the goal setting process.
 My article, “Men Need Not Apply,” about the Obama administration’s imposition of a federal set aside for women appeared in the Washington Times. Even wealthy women can participate in that setaside program, which has never been challenged in court, though it appears extremely vulnerable.

If you feel I can be of help to you or your client, do not hesitate to email me at I look forward to hearing from you.