In many respects the Supreme Court's 1989 decision, City of Richmond v. J.A. Croson Co., [FN1] was the most significant civil rights case of the nineteen eighties. It set new standards of review in equal protection cases and quickly became a decisive precedent in the areas of public employment, higher education, and voting rights laws. Ironically, for the first four years after the decision, Croson had little direct influence in the area of public contracting law where the case originated, though that has now changed dramatically. Most importantly, Croson has changed the terms of the debate on affirmative action policy in the United States. What follows is a discussion of the various impacts of Croson in the eight year period since the Supreme Court decision.
The Croson case, like so many landmark decisions, began over a mundane, almost trivial, incident. Richmond needed to install new urinals in the city jail. [FN2] The J.A. Croson firm was the only bidder at $126,530. [FN3] When it sought a minority subcontractor to comply with the 30% "goal" in the city's Minority Business Enterprise (MBE) program, the only responding subcontractor quoted a price that would have made the project unprofitable for Croson. [FN4] Croson asked the city for a waiver, and when that was refused, began the lawsuit in 1984 that resulted in victory in 1989. [FN5]
The Croson decision was the culmination of a trend in the Supreme Court and appellate courts toward tightening standards for the use of racial classifications. In Wygant v. Jackson Board of Education, [FN6] decided in 1986, the Supreme Court announced two clear principles for evaluating the use of racial classifications. [FN7] First, there had to be a compelling state purpose, and second, the remedy had to be narrowly tailored. [FN8] After the Fourth Circuit rather reluctantly upheld Richmond's MBE goals in J.A. Croson Co. v. City of Richmond, [FN9] decided in 1985, the Supreme Court remanded the case asking the circuit to take a second look at the city's MBE program "in light of Wygant." [FN10]
By 1989, when the Supreme Court considered the Croson case again, the Justices were the beneficiaries of more extensive reviews of MBE programs in circuits court decisions and in law review articles. Two years earlier, in 1987, the Sixth and Ninth Circuits had struck down MBE programs, [FN11] and the Fourth Circuit had concluded on remand of Croson that Richmond's program could not survive strict scrutiny. [FN12] That same year, Drew S. Days, III, the former Assistant Attorney General in the Carter administration, who had argued and won Fullilove v. Klutznick, [FN13] in which a deeply divided Supreme Court upheld a federal MBE program, wrote in the Yale Law Journal:
Specifically, I find myself asking whether Congress and the Supreme Court, in enacting and approving the Public Works Employment Act, established standards for the formulation and judicial review of minority set-aside programs that, constitutionality aside, fall below those we ought to employ, given our justifiable national sensitivity to racial classifications. These concerns multiply at the prospect of the proliferation of minority set-aside programs at the state and local levels even though they, too, may be fully explicable and constitutionally permissible responses to patterns of discrimination against minority contractors. [FN14]
Later in the article, Days foreshadowed the Croson decision when he wrote that, "it is essential that state and local agencies also establish the presence of discrimination in their own bailiwicks, based either upon their own fact-finding processes or upon determinations made by other competent institutions, such as courts and administrative agencies." [FN15]
Consequently, by 1989, the constitutionality of MBE programs was a mature issue, attracting not only the focused attention of the Court but scores of amicus briefs from interested parties in the legal, governmental, civil rights, and business communities. [FN16] Croson, therefore, was decided with an eye toward creating enduring legal principles. This intent was one reason the three dissenters were so biting in their criticisms. [FN17] First, the Court repeated that the standard for evaluating any use of racial classifications was strict scrutiny, whether the intended beneficiary was a member of a group in the majority or a minority. [FN18] Second, the Court addressed the obligation of a local jurisdiction to establish prior discrimination before it could employ a suspect racial classification. [FN19] Justice O'Connor, writing for the plurality, stated that it was necessary for a government to make:
[p]roper findings . . . to define both the scope of the injury and the extent of the remedy necessary to cure its effects. Such findings also serve to assure all citizens that the deviation from the norm of equal treatment of all racial and ethnic groups is a temporary matter, a measure taken in the service of the goal of equality itself. [FN20]
Justice O'Connor went on to say that the judiciary would have a responsibility to examine those findings because "[a]bsent searching judicial inquiry into the justification for such race-based measures, there is simply no way of determining what classifications are 'benign' or 'remedial' and what classifications are in fact motivated by illegitimate notions of racial inferiority or simple racial politics." [FN21]
No longer were rhetorical statements or sweeping generalizations sufficient to establish racial classifications. Croson, quoting the plurality opinion in Wygant, affirmed that "'[i]n the absence of particularized findings, a court could uphold remedies that are ageless in their reach into the past, and timeless in their ability to affect the future."' [FN22]
Croson further admonished against the use of "a generalized assertion that there has been past discrimination in an entire industry" because such a declaration "provides no guidance for a legislative body to determine the precise scope of the injury it seeks to remedy." [FN23] Again, referring to Wygant, the Croson Court reiterated "the distinction between 'societal discrimination' which is an inadequate basis for race-conscious classifications, and the type of identified discrimination that can support and define the scope of race-based relief." [FN24]
Other legal principles articulated
by the Croson Court include:
1. State and local governments may act to remedy direct as well as indirect contract discrimination for which they are responsible; [FN25]2. Evidence of general societal discrimination [FN26] or of discrimination by an entire industry in the past is not enough to justify racial classifications; [FN27]
3. Finding discrimination in one market does not permit an assumption that discrimination exists in all markets; [FN28]
4. Finding discrimination against one minority group does not permit an assumption that discrimination exists against all such groups; [FN29]
5. The proper prima facie test of contract discrimination is whether qualified, willing, and able minority firms are under-utilized statistically by state and local governments or their prime contractors; [FN30]
6. If discrimination is identified, race-neutral remedies must be utilized first; [FN31]
7. If race conscious programs are necessary in extreme cases, they must be narrowly tailored. [FN32]
These principles made it clear that not only were most of the MBE programs in the country vulnerable, but many other forms of affirmative action, if tested by Croson standards, would not survive. Few MBE or other affirmative action programs, founded as they generally were on the basis of broad generalizations about American history and contemporary societal discrimination, and implemented on the basis of political bargains, were consistent with Croson's demands for proper findings and narrow tailoring.
Nevertheless, these programs had powerful political and bureaucratic support. At least 234 MBE programs existed in state and local governments, [FN33] often interrelated with more than 100 federal programs. [FN34] No one knows how many affirmative action programs in public employment, admissions, and scholarships were in place throughout the country, but, like other entitlements, each of these programs was supported by local political coalitions and by bureaucracies whose livelihoods depended on their continuation. Groups advocating preferences often insisted that prospective organizational leaders be screened for their support of affirmative action. Indeed, the existence of racial preferences became so widespread that few incumbent politicians, administrators, or academic officers had not, at some time, at least passively supported them. Repudiating one's previous positions is always awkward. Thus, there were not many persons in the leadership class in a position to advocate dismantling the edifice of preferences.
FN1. 488 U.S. 469 (1989).
FN2. See id. at 481.
FN3. See id. at 482.
FN4. See id. at 483 (indicating that the cost of the project would have increased $7,663.16 with the use of this minority subcontractor).
FN5. See id. at 482-83 (describing the events leading up to the action brought by J.A. Croson).
FN6. 476 U.S. 267 (1986).
FN7. See id. at 274 (stating that a two-pronged examination was to be used to evaluate racial classifications).
FN8. See id.
FN9. 779 F.2d 181, 194 (4th Cir. 1985), cert. granted, vacated, 478 U.S. 1016 (1986), aff'd, 488 U.S. 469 (1989).
FN10. See J.A. Croson Co. v. City of Richmond, 478 U.S. 1016, 1016 (1986) (vacating judgment and drawing the Fourth Circuit's attention to the Wygant decision issued just a few weeks earlier), vacating 779 F.2d 181 (4th Cir. 1985), aff'd, 488 U.S. 469 (1989).
FN11. See Michigan Rd. Builders Ass'n v. Milliken, 834 F.2d 583, 594 (6th Cir. 1987) (holding unconstitutional a Michigan law providing for MBE set-asides); Associated Gen. Contractors of Cal., Inc. v. City & County of San Francisco, 813 F.2d 922, 938-39 (9th Cir. 1987) [hereinafter AGCC I] (holding unconstitutional a San Francisco ordinance giving preferences to Minority Business Enterprises [hereinafter MBEs]).
FN12. See J.A. Croson Co. v. City of Richmond, 822 F.2d 1355, 1358-60 (4th Cir. 1987) (failing to find sufficient evidence of prior discrimination and a basis for establishing a remedy), aff'd, 488 U.S. 469 (1989).
FN13. 448 U.S. 448 (1980).
FN14. Drew S. Days, III, Fullilove, 96 Yale L.J. 453, 456 (1987).
FN15. Id. at 480-81. Justice O'Connor quoted the Days article three times in Croson. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 491, 504, 506 (1989).
FN16. See Croson, 488 U.S. at 475-76 (indicating that 17 state governments alone filed amicus briefs urging the Court to uphold the Richmond MBE program and listing numerous other amicus briefs received by the Supreme Court both supporting Richmond's MBE program and urging reversal).
FN17. See id. at 528 (Marshall, J., dissenting) (supporting Richmond's set-aside plan as indistinguishable from the federal set-aside plan upheld in Fullilove); id. at 561 (Blackmun, J., dissenting) (arguing that Richmond's efforts were meant to remedy persistent discrimination).
FN18. See id. at 494 (explaining that the "standard of review...is not dependent on the race of those burdened or benefited by a particular classification"). Additionally, the Court noted that African-Americans were a majority on the Richmond City Council when the MBE plan was passed. See id. at 495 (stating that five of the nine seats on the city council were held by African-Americans).
FN19. See id. at 498-506 (holding that particularized findings are necessary before employing set-aside programs to remedy past discrimination).
FN20. Id. at 510. Compare the need for searching judicial scrutiny articulated by the majority in Croson with the words of Justice Marshall a decade earlier: "[i]t is unnecessary in 20th-century America to have individual Negroes demonstrate that they have been victims of racial discrimination; the racism of our society has been so pervasive that none, regardless of wealth or position, has managed to escape its impact." Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265, 400 (1978) (Marshall, J., concurring in part and dissenting in part).
FN21. Croson, 488 U.S. at 493.
FN22. Id. at 498 (quoting Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 276 (1986)).
FN23. Id.
FN24. Id. at 497.
FN25. See id. at 509 ("Nothing we say today precludes a state or local entity from taking action to rectify the effects of identified discrimination within its jurisdiction.").
FN26. See id. at 500 ("When a legislative body chooses to employ a suspect classification, it cannot rest upon a generalized assertion as to the classification's relevance to its goals.").
FN27. See id. at 499 ("It is sheer speculation [as to] how many minority firms...would be in Richmond absent past societal discrimination.").
FN28. See id. at 503 ("Blacks may be disproportionately attracted to industries other than construction."); see also id. at 504 ("Congress explicitly recognized that the scope of the problem would vary from market area to market area.").
FN29. See id. at 506 ("The random inclusion of racial groups that, as a practical matter, may never have suffered from discrimination in the construction industry in Richmond suggests that perhaps the city's purpose was not in fact to remedy past discrimination.").
FN30. See id. at 509 ("Where there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality's prime contractors, an inference of discriminatory exclusion could arise.").
FN31. See id. at 507 ("First, there does not appear to have been any consideration of the use of race-neutral means to increase minority business participation in city contracting."); see also United States v. Paradise, 480 U.S. 149, 171 (1987) (setting forth the factors relevant to determining whether race-conscious remedies are appropriate).
FN32. See Croson, 488 U.S. at 509 ("In the extreme case, some form of narrowly tailored racial preference might be necessary to break down patterns of deliberate exclusion.").
FN33. See Minority Business Enterprise Defense and Education Fund, Inc., The Effect of Richmond v. Croson on MBE Programs Nationwide (June 1989) (on file with author). On the basis of extrapolation from a national survey, however, Leslie A. Nay and James E. Jones, Jr. came to the conclusion that there may have been as many as 2396 MBE contracting programs at the time of the Croson decision. See Leslie A. Nay & James E. Jones, Jr., Equal Employment and Affirmative Action in Local Governments: A Profile, 8 Law & Ineq. J. 103, 126 (1989) (stating that it was plausible to assume that survey governments had identical percentages of affirmative action in contracting programs and set- aside programs as non-survey governments).
FN34. The Croson decision
exempted federally administered programs, although many of them demanded
that local governments create MBE requirements for locally administered,
federally-funded programs. See, e.g., 49 C.F.R. § 23.45 (1996) (requiring
recipients of Department of Transportation contracts to establish certain
MBE procedures). However, in Adarand Constructors, Inc. v. Pena, 515 U.S.
200 (1995), the Supreme Court required that the same strict scrutiny standard
be applied to federal programs as Croson applied to state and local programs.
Id. at 235.
The principles of equal protection embody some of the most deeply cherished ideals of Americanism - that all persons are to be treated equally under the law, entitled to the same freedoms and rights, and deserving of the same opportunities. The current clamor for strict adherence to a "colorblind" [FN1] constitution seems on first consideration to be in accord with these ideals. Surely, a society in which people are judged by the "content of their character" [FN2] rather than by the "color of their skin" [FN3] is a desired actuality. To fashion jurisprudential doctrine, however, on the premise that colorblindness is a present reality does a grave injustice to the very ends it purports to serve.
Affirmative action has been the primary tool of governmental redress of our long history of racial discrimination and its attendant harms. [FN4] The present political climate has placed this issue squarely in the forefront, as the scramble to divide what is perceived to be an ever-decreasing pie becomes more furious. [FN5] Affirmative action has come to be seen as a significant culprit in the fray, and charges of reverse discrimination have become increasingly more strident. [FN6] The United States Supreme Court has injected its voice into the debate most recently with Adarand Constructors, Inc. v. Pena, [FN7] and held that federal and state affirmative action programs must meet the most stringent standard of constitutional review, that of strict scrutiny.
This Note will examine affirmative action jurisprudence, and explore the broader implications of the Court's present narrow course. Section II [FN8] presents a brief historical background of the cases preceding Adarand, and traces the Court's fragmented approach to this issue and its deep divisiveness over the correct standard of review. Section IV [FN9] examines the tension between the colorblind approach and the requirements of equal protection within the inescapable reality of our racist society. Finally, Section V [FN10] calls for a focus by the Court on outcome, rather than a myopic fixation on process, toward the larger end of the realization of equality in fact.
Equal protection jurisprudence has haltingly developed the remedial principle that the use of racial classifications is sometimes permissible as long as race-conscious laws, passed by the majority, remedy the effects of past discrimination against a racial minority. [FN11] This benign application of race-consciousness is the direct inverse of the invidious racial discrimination of our nation's past. [FN12]
The tortured development of benign racial classification analysis can be traced through the line of cases that begins with Regents of the University of California v. Bakke, [FN13] followed by Fullilove v. Klutznick, [FN14] Wygant v. Jackson Board of Education, [FN15] City of Richmond v. J.A. Croson Co., [FN16] and Metro Broadcasting, Inc. v. FCC. [FN17] The common difficulty throughout these cases has been in the determination of which standard of judicial review [FN18] is required by the Equal Protection Clause of the Fourteenth Amendment, [FN19] and the equal protection component of the Due Process Clause of the Fifth Amendment. [FN20] Equal protection is given the same application to those similarly situated. [FN21] The practical effect of this principle is that the Court has traditionally protected the interests only of suspect classes. [FN22]
FN2. Martin Luther King, Jr., Speech at Civil Rights March on Washington (Aug. 28, 1963).
FN3. Id.
FN4. The 1968 Kerner Commission report on racial disorders, prompted by the riots of the 1960s, provided ample documentation of American institutional discrimination against blacks. Roger Wilkins, Racism Has Its Privileges: The Case For Affirmative Action, 260, 12 NATION 409 (1995). Affirmative action requires institutions to search for qualified candidates in places beyond their ordinary searches or businesses. Id. Affirmative action was first set forth in Executive Order 11,246 by Lyndon Johnson as an effectuation of the antidiscrimination requirements of the civil rights legislation of the 1960s. William L. Kandel, Affirmative Action and the Glass Ceiling: Contract Compliance and Litigation Avoidance, EMPLOYEE RELATIONS L.J., Sept. 1, 1995, at 15. Its goal is to remove nonmerit barriers to upward social and economic mobility. Id. at 15. Executive Order 11,246 requires that a federal contractor "will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin." Exec. Order No. 11,256, C.F.R. 339 (1964-1965 Comp.), reprinted as amended in 42 U.S.C. § 2000e-5(g)(1) (1993). These requirements were implemented through regulations promulgated by the Nixon-Ford administration, found at 41 C.F.R. Part 60.
FN5. Columbia University anthropologist Katherine Newman, author of DECLINING FORTUNES: THE WITHERING OF THE AMERICAN DREAM, suggests that affirmative action offers a convenient, if misguided scapegoat for the very real economic problems facing the generation of late baby boomers, regardless of their race or gender. Jonathan Tilove, Negative Attitudes on Affirmative Action: Preferences Not Needed, Opponents Say, CLEV. PLAIN DEALER, May 21, 1995, at A7. Other factors cited as contributors to the climate of economic uncertainty include warp-speed technological change that is rendering many occupations and whole industries obsolete, cutbacks in defense manufacturing resulting from the end of the Cold War, and growing competition in the global marketplace. Cecil Johnson, Affirmative Action, Negative Reaction, FORT WORTH STAR-TELEGRAM, Apr. 6, 1995, at 29. Working-class whites have been the ones most hurt by these changes. Barry Bearak & David Lauter, Series: Affirmative Action: The Paradox of Equality. Last of three parts., L.A. TIMES, Nov. 5, 1991, at 1. Further blame for unemployment can be leveled at the damaging decisions of corporations that export manufacturing operations to low-wage countries, or at the Federal Reserve, which imposes interest rate hikes that slow down the economy, or the corporate downsizing fad, which has caused the disappearance of jobs in the middle ranks of employees. Wilkins, supra note 4, at 414.
FN6. Within the past year alone, fifteen states have proposed civil rights initiatives that would repeal affirmative action, the most notable being the California effort led by academics Glynn Custred and Tom Wood. Tilove, supra note 5, at A7. See also Julian Beltrame, Attack on Affirmative Action; Republicans Feed on Backlash Against Programs Helping Minorities, OTTAWA CITIZEN, Feb. 18, 1995, at B3. Examples given of reverse discrimination include Larry Mackin, 37, who was denied a place as a Boston firefighter, despite receiving a perfect score on the civil service exam, because the city was under a consent decree to hire one minority for every white to compensate for a long history of discrimination. Mackin sued Boston for reverse discrimination and lost. Tilove, supra note 5. Politicians who have taken up the reverse discrimination battle cry include Republicans Bob Dole, Newt Gingrich, Phil Gramm, and California governor and former presidential hopeful Pete Wilson. Beltrame, supra.
FN7. 115 S. Ct. 2097 (1995).
FN8. See infra pp. 3-13.
FN9. See infra pp. 20-31.
FN10. See infra pp. 33-33.
FN11. See Laurence H. Tribe, Joint Statement: Constitutional Scholars' Statement on Affirmative Action After City of Richmond v. J. A. Croson Co., 98 YALE L.J. 711 (1989).
FN12. See id. at 1711-12.
FN13. 438 U.S. 265 (1978) (striking down an admissions program which reserved a specified number of places in each entering class for disadvantaged minority students).
FN14. 448 U.S. 448 (1980) (upholding a federal set-aside program which meant 10% of federal funds granted for local public works projects to be used to secure the services of minority-controlled business).
FN15. 476 U.S. 267 (1980) (striking down a program which provided minority teachers greater protection from lay-offs than white teachers with more seniority to achieve racial balance among the teaching staff).
FN16. 488 U.S. 469 (1989) (holding that strict scrutiny must be applied to local race-based actions, whether benign or invidious, and striking down a contractor set-aside program upon application of this standard).
FN17. 497 U.S. 547 (1990) (upholding a federal program which awarded preferences to minority-owned applicants for broadcast licenses under an intermediate scrutiny analysis).
FN18. There are three standards of judicial review in equal protection analysis: rational relationship test (extremely deferential; classification is rationally related to a legitimate governmental purpose), see, e.g., United States v. Carolene Prod., 304 U.S. 144 (1938) (holding that legislation regulating economics and commerce will be given great deference); intermediate scrutiny (classification must serve an important governmental purpose and be substantially related to that purpose), see, e.g., Craig v. Boren, 429 U.S. 190 (1976) (striking down a state law that prohibited the sale of certain alcoholic beverages to men under age 21 but permitted such sales to women the same age); and strict scrutiny (most stringent; statute must be necessary and narrowly tailored to achieve a compelling governmental interest), see, e.g., Korematsu v. United States, 323 U.S. 214 (1944) (finding that any racial classification is immediately suspect). See also Gerald Gunther, Foreword: In Search of Evolving Doctrine on a Changing Court: A Model for a Newer Equal Protection, 96 HARV. L. REV. 1, 8-24 (1972). One commentator has described strict scrutiny as "strict in theory and fatal in fact," and the rational relationship test (minimal scrutiny) as "minimal ... in theory and virtually none in fact." Id. at 8.
Strict scrutiny must be applied to those statutes that create suspect classifications or burden a fundamental right. Korematsu, 323 U.S. at 216. Any racial classification is "immediately suspect." Id. at 216. A suspect classification is created whenever a law burdens a racial minority because of its race. Id.
FN19. The Fourteenth Amendment provides, in relevant part: "... Nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws ...." U.S. CONST. amend. XIV, § 1.
FN20. The Fifth Amendment provides, in relevant part: "... No person shall ... be deprived of life, liberty, or property, without due process of law ...." U.S. CONST. amend V.
FN21. LAWRENCE TRIBE, AMERICAN CONSTITUTIONAL LAW 1438 (1988). Problems arise, however, in the imposition of value judgments which necessarily underlie determinations of what constitutes equality. GERALD GUNTHER, CASES AND MATERIALS ON CONSTITUTIONAL LAW 607 (1991). "To say that persons who are alike must be treated alike does not tell us how to determine whether persons are alike or not for the purposes of the classifications inherent in virtually all legislations." Id.
FN22. Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265 (1978). Justice Stone's footnote four of Carolene Prod., 304 U.S. at 152 n.4, gave rise to modern equal protection jurisprudence. John H. Ely, The Constitutionality of Reverse Racial Discrimination, 41 U. CHI. L. REV. 723, 729-32 (1974) [hereinafter Ely, Reverse Racial Discrimination]. Justice Stone indicated that invidious racial classifications should be reviewed at a heightened level, because the ordinary political process is not effective in preventing such invidious classifications. Carolene Prod., 304 U.S. at 152 n.4. "[P]rejudice against discrete and insular minorities may be a special condition, which tends seriously to curtail the operation of those political processes ordinarily to be relied upon to protect minorities, and which may call for a correspondingly more searching judicial inquiry." Id. A "discrete and insular minority" that has been historically relegated to a position of political powerlessness is deemed to demonstrate the traditional indicia of suspectness. Id. However, when a racial classification benefits a minority (is benign), there does not appear to be any support for judicial distrust of the political process, and therefore no need for a heightened, or strict standard of review. Ely, Reverse Racial Discrimination, supra, at 731.
The political process theory derived from the Carolene Products footnote is most notably expressed by John Ely, who posits that minorities who lack power to protect their interest in the political process, by virtue of their minority status, require a greater level of judicial protection. See JOHN H. ELY, DEMOCRACY AND DISTRUST: A THEORY OF JUDICIAL REVIEW (1980).
Racial classifications have been deemed to be suspect because a minority has been repeatedly disadvantaged, and these disadvantages can not be rationally defended. Ely, Reverse Racial Discrimination, supra, at 731. Any legislation that singles out this minority for disadvantage should make us immediately suspicious. Id. Professor Ely also argues that classifications which disadvantage racial minorities are suspicious because they are based on generalizations that traits of the dominant class are superior to traits of the minority class. Id. at 732. However, when a classification seeks to benefit minorities (benign classification), these assumptions of suspectness do not control the classification. Id. at 731. A law which favors a minority over the white majority is not suspect if it is enacted by the white majority through the political process. Id. at 736. "Whether or not it is more blessed to give than to receive, it is surely less suspicious." Id.
ONE
YEAR LATER: AFFIRMATIVE ACTION IN FEDERAL GOVERNMENT CONTRACTING AFTER
Table of Contents
Introduction ....................................................... 1905
I. The Historical Antecedents to Adarand .............................. 1907
II. The Adarand Decision ............................................... 1911
III. Federal Affirmative Action Programs ................................ 1917
A. Programs in Existence Pre-Adarand ............................. 1917
1. Executive Order 11,246 ...................................... 1917
2. Small disadvantaged business subcontracting ................. 1919
a. Federal Acquisition Regulation ............................ 1919
b. Minority business enterprise prime contracts--the 8(a)
Program .......................................................... 1920
c. Department of Defense SDB evaluation preferences .......... 1920
d. Department of Transportation SDB programs ................. 1921
3. Preferences for Native American-owned businesses ............ 1922
4. Mentor-protege program ...................................... 1923
5. Women-owned businesses ...................................... 1923
B. Changes and Proposed Changes Issued by the Federal Government
in the Wake of Adarand ........................................... 1925
1. Department of Justice proposed reforms ...................... 1925
2. President Clinton's response to Adarand ..................... 1926
a. The White House review .................................... 1926
b. The President's directive ................................. 1926
3. The Federal Acquisition Streamlining Act of 1994 ............ 1927
4. The Office of Federal Contract Compliance Programs .......... 1927
5. Department of Defense's response to Adarand ................. 1929
a. Suspension of the 'Rule of Two' Program ................... 1929
b. Defense Acquisitions Regulation changes ................... 1930
c. New DOD regulations ....................................... 1930
6. The New Justice Department Proposed Reforms ................. 1930
7. Proposed legislation ........................................ 1934
a. The Equal Opportunity Act of 1995 ......................... 1934
b. The Gramm Amendment ....................................... 1935
8. State government response ................................... 1935
9. Case law after Adarand ...................................... 1935
a. Bras v. California Public Utilities Commission ............ 1936
b. Challenges to the 8(a) Program ............................ 1938
c. Bid protests at the General Accounting Office ............. 1942
d. The Hopwood case .......................................... 1942
i. Facts of the case ....................................... 1943
ii. Analysis ............................................... 1944
IV. The Effect on the Federal Circuit .................................. 1945
Conclusion ......................................................... 1946
In the 1989 landmark decision, City of Richmond v. J.A. Croson Co., [FN1] the United States Supreme Court first applied strict scrutiny review to state and local minority set-aside programs. One year later, the Court issued its decision in Metro Broadcasting, Inc. v. Federal Communications Commission. [FN2] In this ruling, the Court upheld the Federal Communications Commission ("FCC") policies that gave preference to minority broadcasters using a rational basis standard. [FN3] In Metro Broadcasting, the Court affirmed Congress' right to require that a certain number or percentage of broadcasting licenses be set-aside for auction to minorities, stating that the requirement served the important governmental objective of "enhancing broadcast diversity." [FN4] Ten years before the Metro Broadcasting decision, the Court decided Fullilove v. Klutznick, [FN5] in which the Court upheld Congress' inclusion of a ten percent set-aside for minority-owned businesses in the Public Works Employment Act of 1977. [FN6] In Fullilove, the Court explained that "the limited use of racial and ethnic criteria, in the context presented, is a constitutionally permissible means for achieving the congressional objectives." [FN7]
Throughout the period these three decisions were rendered--and indeed up to the beginning of last year--the law regarding minority business preferences seemed quite clear. When the preference was established by state or local laws, the preference would be reviewed under a strict scrutiny standard. [FN8] Preferences established by the federal government, pursuant to a law enacted by Congress, however, were not subject to such a demanding standard, and would be upheld if the government had a rational basis for the policy establishing the preference. [FN9]
In June of 1995, however, the Court dramatically changed the legal landscape as it then existed. In Adarand Constructors, Inc. v. Pena, [FN10] the Court held that Croson's strict scrutiny standard of review applied to all federal minority set-aside programs in addition to state and local programs. [FN11] Indeed, the Court ruled that the strict scrutiny standard should be applied to all federal programs in which race is a factor. [FN12] In its holding the Court stated:
[A]ll governmental action based on race--a group classification long recognized as in most circumstances irrelevant and therefore prohibited . . . should be subjected to detailed judicial inquiry to ensure that the personal right to equal protection of the laws has not been infringed. These ideas have long been central to this Court's understanding of equal protection, and holding benign state and federal racial classifications to different standards does not square with them. [A] free people whose institutions are founded upon the doctrine of equality, should tolerate no retreat from the principle that government may treat people differently because of their race only for the most compelling reasons. Accordingly, we hold today that all racial classifications, imposed by whatever federal, state, or local governmental actor, must be analyzed by a reviewing court under strict scrutiny. In other words, such classifications are constitutional only if they are narrowly tailored measures that further compelling governmental interests. [FN13]
Adarand's immediate result was to place most of the government's set- aside programs under review; at least one has already been suspended. [FN14] In addition, all race-based programs, including affirmative action employment programs, have been or currently are under review. [FN15]
Part I of this Article discusses the historical antecedents to Adarand; Part II analyzes the decision itself. Part III examines federal programs designed to assist small disadvantaged businesses [FN16] and surveys the changes to these programs in the wake of Adarand. Finally, Part IV discusses the increase in claims concerning federal contracting likely to be brought in the Federal Circuit Court of Appeals in the wake of Adarand.
In 1980, nine years before City of Richmond v. J.A. Croson Co., [FN17] the Supreme Court addressed for the first time, in Fullilove v. Klutznick, [FN18] the constitutionality of a federal affirmative action program as a result of a lawsuit challenging the Public Works Employment Act of 1977. [FN19] This Act amended an older law, the Local Public Works Capital Development and Investment Act of 1976, [FN20] and authorized increased monetary appropriations for state and local government public work projects to minorities. [FN21] In Fullilove, [FN22] construction contractors and subcontractors, through their associations, brought suit to enjoin the implementation of section 103(f)(2) of the Public Works Employment Act, a section referred to as "the minority business enterprise" provision ("MBE"). [FN23]
The MBE provision stated that "no grant shall be made under this Act for any local public works project unless the applicant gives satisfactory assurance to the Secretary that at least 10 per centum of the amount of each grant shall be expended for minority business enterprises." [FN24] The provision defined a minority business enterprise as "a business at least 50 per centum of which is owned by minority group members or, in case of a publicly owned business, at least 51 per centum of the stock of which is owned by minority group members." [FN25] The MBE provision also defined minority group members as "citizens of the United States who are Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts." [FN26] The contractors in Fullilove argued that because they did not fall within the definition of minority group members under the MBE provision, they were excluded from certain government grants and hurt economically. [FN27] Further, the contractors argued that such exclusion violated their right to equal protection under the Equal Protection Clause of the Fourteenth Amendment of the Constitution and the equal protection component of the Due Process Clause of the Fifth Amendment. [FN28]
The Supreme Court upheld the constitutionality of the MBE provision because "the program does not mandate the allocation of federal funds according to inflexible percentages solely based on race or ethnicity." [FN29] The Court stated:
[The] program was designed to ensure that, to the extent federal funds were granted under the Public Works Employment Act of 1977, grantees who elect to participate would not employ procurement practices that Congress had decided might result in perpetuation of the effects of prior discrimination which had impaired or foreclosed access by minority businesses to public contracting opportunities. [FN30]
In analyzing the constitutionality of the MBE decision, the Fullilove Court adopted a two-part test to be used for future guidance on the issue of racial classification. [FN31] The first step inquired "whether the objectives of this legislation are within the power of Congress." [FN32] If the legislation passes this part of the test, then courts must ask "whether the limited use of racial and ethnic criteria, in the context presented, is a constitutionally permissible means for achieving the congressional objectives and does not violate the equal protection component of the Due Process Clause of the Fifth Amendment." [FN33]
Finding the Public Works Act of 1977 to be an exercise of Congress' spending power, the Court went on to state that "Congress has frequently employed the Spending Power to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives." [FN34] Further, the Court asserted that it "has repeatedly upheld against constitutional challenge the use of this technique to induce governments and private parties to cooperate voluntarily with federal policy." [FN35]
In City of Richmond v. J.A. Croson Co., the Court reviewed a plan adopted by the Richmond City Council, the purpose of which ostensibly was "to ameliorate the effects of past discrimination on the opportunities enjoyed by members of minority groups in our society." [FN36] The plan required prime contractors awarded construction contracts to set-aside thirty percent of the dollar amount of the contract to minority businesses. [FN37] Minorities were defined in the plan as blacks, Spanish-speaking, Orientals, Indians, Eskimos, or Aleuts. [FN38] The geographic scope of the plan was unlimited, allowing qualified minority businesses anywhere in the United States to benefit from the thirty percent set-aside. [FN39] The city would grant waivers of the set-aside requirement only in exceptional circumstances in which it had been shown that "every feasible attempt has been made to comply" and "sufficient, relevant, qualified Minority Business Enterprises . . . are unavailable or unwilling to participate in the contract to enable meeting the 30% MBE goal." [FN40]
In determining that remedial action was necessary, the City Council compared the percentage of blacks in Richmond with the percentage of prime construction contracts awarded to minority businesses. [FN41] In Croson, the Court rejected the minority set-aside policies of the City of Richmond, Virginia, finding the city had presented no evidence of identified discrimination, [FN42] had "failed to demonstrate a compelling interest in apportioning public contracting opportunities on the basis of race" [FN43] and that a generalized assertion of past discrimination "has no logical stopping point." [FN44] In reaching its decision, the Court held that the City's minority set-aside policies were to be subjected to "strict scrutiny," the most stringent review standard utilized by the court. [FN45]
One year after Croson, the Court revisited the issues it had addressed ten years earlier in Fullilove when it decided Metro Broadcasting, Inc. v. Federal Communications Commission. [FN46] Metro Broadcasting involved "a Fifth Amendment challenge to two race-based policies of the Federal Communications Commission." [FN47] In this 1990 decision, the Court imposed "a lesser duty on the Federal Government than it does on a State to afford equal protection of the laws." [FN48]
In Metro Broadcasting, the Court tread carefully in order to distinguish its holding from Croson. [FN49] The Court insisted that the Federal Communications Commission's ("FCC") minority ownership programs were benign race-conscious measures that had been mandated by Congress, [FN50] even though they had not been remedial in nature and had not been designed to compensate victims of past discrimination. [FN51] Indeed, the Court held that the FCC was justified in giving preferential treatment to minorities in both comparative proceedings for new licenses [FN52] and "distress sales" of radio stations that have lost the right to hold a broadcasting license. [FN53] Such policies, ruled the Court, pass constitutional muster as long as they serve an important governmental interest within the power of Congress, are substantially related to the achievement of that interest, and do not "impose undue burdens on nonminorities." [FN54]
In addressing the need for program variety and mixture, the Court held that the FCC's minority ownership policy was a justified means to the goal of achieving "broadcast diversity." [FN55] The Court went on to distinguish Croson by noting that the question of congressional action was not an issue in that case. [FN56] Instead, the Court in Metro Broadcasting upheld Congress' right to require that a percentage of broadcast licenses be set-aside for auction to minorities, holding that "benign" federal racial classifications need only satisfy intermediate scrutiny, "even if those measures are not 'remedial' in the sense of being designed to compensate victims of past governmental or societal discrimination." [FN57] Such classifications 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." [FN58]
FNaa. Janine Schollnick Benton is an associate with Epstein Becker & Green, P.C., and practices primarily in the area of government contracts. Ms. Benton received her J.D. in 1995 from George Mason University School of Law where she was a Dean's Scholar and a member and associate editor of the George Mason University Law Review. Ms. Benton is also the author of Extraterritorial Application of the Americans with Disabilities Act Under the North American Free Trade Agreement, 2 Geo. Mason Ind. L. Rev. 209 (Winter 1993), and a contributing author to Daniel B. Abrahams & Ray R. Fioravanti, Government Contracts Compliance Guide (Thompson Publishing Group, Fall 1994).
FN2. 497 U.S. 547 (1990).
FN3. Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 552 (1990).
FN4. Id. at 566-67.
FN5. 448 U.S. 448 (1980).
FN6. Fullilove v. Klutznick, 448 U.S. 448, 492 (1980).
FN7. Id. at 473 (italics omitted).
FN8. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 493-95 (1989) (announcing that state and local race-based programs are reviewed under strict scrutiny standard).
FN9. See Fullilove, 448 U.S. at 483 (holding that Congress' unique remedial power under s 5 of the Fourteenth Amendment supports use of less demanding standard, such as rational basis review, in evaluating federal minority set- aside programs); see also Metro Broadcasting, 497 U.S. at 563 (giving deference, under standard of rational basis review, to congressional programs that employ benign racial classifications).
FN10. 115 S. Ct. 2097 (1995).
FN11. Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097, 2112-13 (1995) (citing Croson in extending applicability of strict scrutiny standard to race-based federal subcontracting programs, including those programs purportedly benign or remedial).
FN12. See id. at 2113 (stating that all racial classifications, including those imposed by federal government, must be analyzed under strict scrutiny standard).
FN13. Id. at 2113-14 (citations and quotations omitted).
FN14. See infra notes 200-07 and accompanying text (summarizing Department of Defense's suspension of its "rule of two" minority set-aside program after Adarand decision).
FN15. See infra notes 173-98 and accompanying text (commenting on current and proposed changes issued by federal government in response to Adarand decision); see also infra notes 245-46 and accompanying text (noting reevaluation and suspension of affirmative action programs on state level).
FN16. In particular, this Article examines the "minority business enterprise" ("MBE") provision of the Public Works Employment Act of 1977 which requires that, absent an administrative waiver, at least 10% of federal funds granted for public works projects must be used to acquire services or supplies from businesses owned and controlled by members of minority groups. Public Works Employment Act of 1977, Pub. L. No. 95-28, 91 Stat. 116 (codified at 42 U.S.C. s 6701).
FN17. 488 U.S. 469 (1989).
FN18. 448 U.S. 448 (1980).
FN19. Pub. L. No. 95-28, 91 Stat. 116 (codified at 42 U.S.C. s 6701).
FN20. Pub. L. No. 94-369, 90 Stat. 999 (1976) (codified at 42 U.S.C. s 6701), amended by Public Works Employment Act of 1977, Pub. L. No. 95-28, 91 Stat. 116 (codified at 42 U.S.C. s 6701).
FN21. See 91 Stat. at 117-18 (codified at 42 U.S.C. s 6707) (setting forth standards for allocation of funds to state and local public works projects).
FN22. 448 U.S. 448 (1980).
FN23. See Fullilove v. Klutznick, 448 U.S. 448, 453-55 (1980) (providing summary of complaint seeking declaratory and injunctive relief to prevent enforcement of MBE provision).
FN24. Id. at 454 (quoting Public Works Employment Act of 1977).
FN25. Id. (quoting Public Works Employment Act of 1977).
FN26. Id. at 459 (quoting Public Works Employment Act of 1977).
FN27. See id. at 455 (arguing that enforcement of 10% MBE requirement caused economic injury to petitioners' businesses).
FN28. Id.
FN29. Id. at 473.
FN30. Id.
FN31. Id.
FN32. Id.
FN33. Id.
FN34. Id. at 474.
FN35. Id.
FN36. City of Richmond v. J.A. Croson Co., 488 U.S. 469, 476-77 (1989).
FN37. Id. at 477.
FN38. Id. at 478.
FN39. Id.
FN40. Id. at 478-79.
FN41. Id. at 479-80.
FN42. Id. at 505.
FN43. Id.
FN44. Id. at 498 (quoting Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 275 (1986)); see also Metro Broadcasting, Inc. v. FCC, 497 U.S. 547, 613 (1990) (O'Connor, J., dissenting) (quoting Croson, 488 U.S. at 498) (reiterating that generalized societal discrimination, without more, does not provide basis for imposing racially classified remedial measures).
FN45. Id. at 493.
FN46. 497 U.S. 547 (1990) (considering constitutionality of government minority preference policies).
FN47. See Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097, 2111-12 (1995) (identifying issues raised in Metro Broadcasting, 497 U.S. at 564- 67).
FN48. Adarand, 115 S. Ct. at 2111 (internal quotations omitted) (stating that Court in Metro Broadcasting abandoned principles enunciated in Bolling v. Sharpe, 347 U.S. 497, 500 (1954), which held federal and state governments to same constitutional standard of equal protection, by holding that benign federal racial classifications must survive only intermediate scrutiny).
FN49. See supra notes 36-45 and accompanying text (discussing Croson decision).
FN50. See Metro Broadcasting, 497 U.S. at 563 (explaining significance of congressional directive of employing and promoting benign racial classifications).
FN51. See id. at 566 (stating that primary purpose of program is to promote programming diversity rather than remedying racial inequities).
FN52. Id. at 597.
FN53. See id. at 598-600 (discussing dynamics of "distress sales" and minority ownership program's effect on such sales).
FN54. Id. at 596-97 (citing Fullilove v. Klutznick, 448 U.S. 448, 484 (1980)).
FN55. Id. at 567-68 ("[W]e conclude that the interest in enhancing broadcast diversity is, at the very least, an important governmental objective and is therefore a sufficient basis for the Commission's minority ownership policies.").
FN56. See id. at 565 (finding that Croson does not "undermine" Court's rationale in applying intermediate scrutiny to race-conscious federal programs).
FN57. Id. at 564.
FN58. Id. at 565.