WSDOT Concludes DBE Availability Study - Resumes Setting DBE Contracting Goals
Published on 12/22/2006
What is the impact and what does this mean for contractors?
On October 9 2006, Washington State DOT completed its DBE availability study and has concluded that sufficient evidence of discrimination exists in transportation contracts in that state. Effective immediately, Washington State will begin implementing DBE race-conscious goals on all federally assisted highway and transportation contracts.
A DBE goal represents a percentage of the value of a federally assisted contract for which disadvantaged business enterprises should ordinarily participate. In 2005, the Court of Appeals for the 9th Circuit determined that WSDOT did not have adequate evidence of discrimination and thus, had improperly set DBE contract goals on three highway construction contracts. An availability or disparity study was ordered to be conducted by all state DOT agencies and all transportation contract goals were to be met through race-neutral measures in all states under the jurisdiction of the 9th Circuit (Washington, Oregon, California, Idaho, Montana, Nevada, Arizona, and Hawaii). All race-conscious goals were suspended by each state until individual studies could be completed. Race-conscious goals stipulate that contractors bidding on federally funded public works projects are required to solicit state and agency certified DBE firms to participate in their projects. [See Federal Register Document 06-7053 for more information on the federal order].
The DBE availability study concluded that DBE participation in federally-funded contracts declined precipitously over the past 8 years from 19.45% in 1999 to 5.92% in 2006. Single-digit percentages in participation have been observed every year since 2002. Evidence of disparities in earnings for women and minorities were found, and that business failure rates are higher for these groups. Anecdotal evidence showed that many DBEs experienced significant racial, ethnic and gender barriers to their full and fair participation in WSDOT transportation contracts. Based on the study’s findings, WSDOT concluded that “discrimination still limits the opportunities for DBEs of all racial and ethnic groups and white women to perform on its prime contracts and subcontracts.” To create a level playing field for all firms, WSDOT must apply contract goals on all appropriate solicitations to meet its overall annual goal. As a result, the state of Washington has set its race-conscious goal at 18.77% for Federal Highway Administration Assisted projects.
The significance of the results of this study is clear. The State of Washington, where the challenge to the viability of the DBE program was initiated with the Western States Paving lawsuit against the state, has concluded that race and sex-based discrimination does indeed exist in the construction industry. If these are the findings in Washington State, which has a relatively low minority population, what does this say for the State of California, which has a much higher minority population? It means that it is likely that the results of the California disparity study will yield similar results and Caltrans will need to restore race-conscious goals for its DBE program. Other Western States may find similar results in their studies as well. If the result of these studies overturn the suspension of the DBE program in California, we may see the political will to apply the 9th Circuit ruling in New York, Massachusetts, Texas and other states dissipate quickly.
We will see where things go in May of 2007 when the Caltrans availability and disparity study results are announced.
