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CA DBE Program Update The California Department of Transportation (Caltrans) has finally released its long anticipated and highly influential Availability and Disparity Study. The report, required by the 9th Circuit Court’s 2005 decision in Western States Paving v. Washington Department of Transportation, examines California’s federally funded Disadvantaged Business Enterprise (DBE) program in order to determine whether or not discrimination is present in the state’s construction industry and if a race-conscious program is justified in light of race-neutral measures that can be taken.

Report Findings: Mixed Results from Disparity Study

After Western States Paving v. Washington, all states under the circuit’s jurisdiction were ordered to suspend their race-conscious DBE programs. The race-conscious program mandates that DBE contract goals be set on projects in order to assist socially and economically disadvantaged businesses and that prime contractors make a good faith effort to meet that goal during the contracting process. On the other hand, race-neutral refers to remedies intended to aid socially and economically disadvantaged businesses that are not classified by gender, race, or ethnicity. The study compares the changes in the DBE program before and after the court’s mandate - revealing some interesting findings. For example, overall Minority and Women Owned Business (M/WBE) utilization on federally funded projects was “relatively unchanged” after the cessation of race-conscious measures; the term M/WBE includes registered and non-registered DBEs. Conversely, the utilization of registered DBEs on federal contracts decreased when the race-conscious measures were suspended. Additionally, all African-American firms were severely underutilized in the race-conscious program and in the current race-neutral environment.

It is also important to note that California’s solely race-neutral program for state-funded projects only witnessed a mediocre 59% M/WBE utilization based on their relative availability. In past court cases, utilization based on relative availability under 80% constitutes “substantial disparity.” The discrepancies between the state and federal programs, the study warns, may indicate that the high utilization rates seen after the race-conscious program was suspended on federal projects will decline to the sub-par figures of the state-funded program. The contradictory and incomplete information in the report will make it difficult for Caltrans to come to a concrete decision on the benefits and costs of a race-conscious program.

Study Recommendations: Race- Neutral and Conscious Goals

While interviewing M/WBE firms for the qualitative section of the report, many of the businesses reported that, in addition to some instances of race and gender discrimination, a major impediment to the growth and success of their businesses was Caltrans lack of programs designed to aid small businesses. Consequently, the study recommends that Caltrans take steps to implement race-neutral measures in the realms of business outreach and communication, technical assistance, access to capital, contracting practice improvements, and data collection, tracking and reporting.

In the end, the study refrains from supporting or deriding the race-neutral DBE program. Instead, it provides the facts and figures that will allow Caltrans to make a decision regarding the future implementation of the federal DBE program. With the evidence documenting that some minority groups are still suffering severe disparity in the procurement of federal and state contracts, the report substantiates a continuation of the race-conscious program in conjunction with an increase in the institutionalization of a number of race-conscious measures. Maintaining DBE goals on contracts is essential in guaranteeing underutilized minority groups an opportunity to achieve parity with their counterparts.