“Small businesses owned by women and minorities are a vital part of our state’s economy and deserve a level playing field,” said Ingrid Merriwether, CEO of Merriwether & Williams, a small insurance services firm and a member of the Coalition for Economic Equity. “No matter how hard we work, without a fair public contracting system, small business owners will be at a tremendous disadvantage – as will the thousands of Californians we employ and the communities in which we work.”

The suit, Associated General Contractors of America v. California Department of Transportation, is pending in U.S. District Court in Sacramento.

The Lawyers’ Committee for Civil Rights of the San Francisco Bay Area (LCCR), the American Civil Liberties Union (ACLU) Foundation of Northern California, Equal Justice Society (EJS) and the law firm Bingham McCutchen LLP filed the motion on behalf of the Coalition for Economic Equity (CEE) and the San Diego Chapter of the NAACP.

“Caltrans’ federally approved contract procedures give small businesses a fair shot at competing for contracts, including for transportation projects slated to receive millions in ‘stimulus funds,’” said Oren Sellstrom, Associate Director of Litigation at LCCR. “California must continue to make a focused and concerted effort to ensure that every business in the state has equal access to these public contracts, and that no group will be disproportionately excluded.”

“This lawsuit against Caltrans is a blatant attempt to dismantle equal opportunity in public contracting and goes against core constitutional values,” said Alan Schlosser, Legal Director at the ACLU of Northern California. “Caltrans’ framework to ensure fair participation is consistent with equal protection principles, and is in fact mandated by constitutional requirements.”

Caltrans’ Disadvantaged Business Enterprise program has established a framework for ensuring fair participation in federally funded public works projects in California, but has faced challenges. In 2006, Caltrans suspended the program’s race- and gender-conscious elements after a federal appeals court ruled that states had to document the existence of discrimination in the awarding of contracts. As a result, the number of women- and minority owned businesses awarded Caltrans projects plummeted — from nearly 11 percent in 2005 to just 2.2 percent in 2009.

In 2007, an extensive disparity study commissioned by Caltrans documented discrimination against small businesses owned by women and minorities in federally funded contracts. Caltrans then sought approval from the U.S. Department of Transportation (DOT) to reinstate the suspended elements as a necessary remedy to such discrimination. DOT granted its approval in August 2008, noting that Caltrans had a duty under federal law to reverse the steep decline in participation.

In June 2009, Caltrans’ procedures were challenged in the pending lawsuit filed by the Associated General Contractors of San Diego.

CEE is an umbrella coalition of associations serving diverse minority- and women-owned businesses that was first formed in 1982 in response to an almost total exclusion of MBEs and WBEs from San Francisco’s public contracting system. In 1984, the Coalition succeeded in securing enactment of San Francisco’s first contracting equity ordinance introduced by Supervisors Doris M. Ward and Willie B. Kennedy. Since that time, the Coalition has worked to strengthen and defend contracting equity programs throughout the Bay Area, as well as at the state and federal levels.

CEE has confirmed with the Federal Highway Administration that the Caltrans’ Disadvantaged Business Enterprise (DBE) program needs no further approvals to set goals for improving the awarding of these contracts.

“In these tough economic times, inclusion in these federally funded projects is a critical opportunity for California’s small minority- and women-owned businesses.,” said Aileen Hernandez, Chair of the Coalition for Economic Equity. “We need to see immediate implementation of these contract goals to ensure that California small businesses will not miss out on transportation projects slated to receive millions in ‘stimulus funds’ allocated under the recently-authorized American Recovery and Reinvestment Act.”

CEE has been a moving force behind efforts to maintain race-conscious goals for all federal projects. CEE aggressively pursued both the Federal Highway Administration and Caltrans to clear the bureaucratic red-tape that was blocking re-instatement of Caltrans’ Disadvantaged Business Enterprise Goal and Methodology program.

According to Oren Sellstrom, Associate Director of the Lawyers’ Committee for Civil Rights and legal counsel for the Coalition, “Without race-conscious contracting goals, minority- and women-owned businesses are often left out of the loop entirely and given no chance to compete. Setting goals helps open opportunities for previously excluded groups, provides employment in communities most often devastated by economic downturns and ultimately means savings for taxpayers as well.”

In the years since Caltrans suspended its DBE program, DBE participation on federal transportation contracts in California has decreased from 10.9 percent in 2005 to 2.2 percent in 2008.

“Reinstatement of the Caltrans DBE program is a must,” Hernandez and Sellstrom agree, “and it is crucial to update the data to ensure that all “significant disparities” groups have access to the program. It is also urgent that government, at all levels, move swiftly and creatively to identify, recruit and support America’s small businesses as a vital part of a healthy domestic and global economy. The Coalition will continue its efforts to eliminate discrimination from the public contracting process for as long as necessary to achieve a fair, efficient and transparent process.”