RACIAL, ETHNIC AND GENDER PREFERENCES IN PUBLIC CONTRACTING: A REVIEW OF CURRENT TEXAS PROGRAMS AND THE STATUS OF CONSTITUTIONAL ATTACKS ON THEM

1. Introduction 2
2. Statutory Overlay 3
3. Operation of HUB Preference Programs 6
   1. HUB Certification 6
   2. Percentage Goals 9
   3. Good Faith Compliance 10
      1. State Requirements 11
      2. Local "Good Faith" Requirements 12
   4. Professional Procurement Contracts 13
4. Constitutional Analysis 14
   1. Equal Protection Clause 14
      1. Introduction 14
      2. Racial Classifications 14
         1. Compelling State Interest 15
            1. The Discrimination Must Be to Remedy the Harm Caused by the Government Implementing the Plan 16
            2. The Plan Must Be Directed to Remedy the Present Effects of Past Discrimination 21
         2. The Plan Must Be Narrowly Tailored to Achieve the Goal 22
            1. Consideration of Race-Neutral Means 22
            2. Flexibility 23
            3. Geographical Scope 23
            4. Realistic Goals 24
            5. Impact on the Rights of Third Parties 24
      3. Gender-Based Classifications 24
         1. United States Constitution 24
         2. Texas Equal Rights Amendment 25
   2. Due Process 26
5. Current Texas Litigation 27
6. Summary 29
7. APPENDIX: Statutory and Administrative Bases for Attacks on Preferences Under Texas Law 31
   1. Administrative Challenges 31
   2. Taxpayer Suits 32
   3. Tex. Civ. Prac. & Rem. Code 106.002 32

Abstract

During the 1960s and 1970s political subdivisions throughout the United States began enacting statutes, ordinances and regulations to implement affirmative action programs to increase the participation of women and selected minorities in public contracting. Judicial attacks were directed against some of them, primarily on United States constitutional grounds, ultimately producing the seminal Supreme Court decision in City of Richmond v. J. A. Croson Co., 109 S.Ct. 706 (1989) in which the Supreme Court struck down the City of Richmond's thirty percent minority "set aside."

Despite the Supreme Court's stated distaste for racially-based programs, Croson nevertheless was interpreted as providing a road map for the use of racial and ethnic preferences to redress prior discrimination, and countless affirmative action programs were redrafted to meet what were perceived to be the Supreme Court's requirements. These efforts met with uneven success in the lower federal courts, partly because of uncertainty as to the full import of the court's reasoning in Croson. In 1995, however, the Supreme Court revisited the issue in Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097 (1995), in which a majority of the Court struck down a federal plan, again on equal protection grounds. The plan struck down in Adarand was much more narrowly tailored than the Croson quota, however, and the Court's action made it clear that affirmative action plans based upon race and ethnicity would be subject to very strict scrutiny, indeed.

Since Adarand, several federal courts have examined affirmative action schemes in the public contracting arena, and their decisions have cast considerable doubt about the efficacy of post-Croson attempts to tailor plans to meet the Supreme Court's equal protection analysis. One of these decisions, Houston Contractors Association v. Metropolitan Transit Authority of Harris County, 945 F.Supp. 1013 (S.D. Tex. 1996), struck down the use of Houston Metro's affirmative action program, in an opinion which illustrates judicial skepticism of race and ethnic-based affirmative action programs. Additionally, gender-based programs may be subject to an increasingly strict level of scrutiny, under both the federal and Texas constitutions.

The legality of racial, ethnic and sexual preferences in public contracting is one of the fastest-changing areas of constitutional law, and one which has an immediate impact on virtually all segments of the Texas construction industry. It is far from certain as to where this entire area is headed, based as it is on an apparently narrow majority at the United States Supreme Court level, and virtually untested by the Texas Supreme Court. In any event, it likely will be a matter of considerable interest to the construction bar for the next several years.

Full Text

You must have the free Adobe Acrobat Reader 4.0 (or greater) installed in your computer in order to view or print this paper. It is available as a free download from the Adobe Web site. If you do not have Acrobat Reader installed, click the link to the left to download it. If a menu window opens before the paper, choose the "View" option.