TRB Session 352
Aftermath of DBE Program Due to
Ninth Circuit Court Decision
Survey of State Transportation Agencies
that have undergone disparity studies
Introduction
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10 Questions survey conducted by phone
88% response rate to survey
Cursory Review to share: summary, lessons
learned, anecdotes
Questions
1.
2.
3.
Does DBE participation decrease after legal
challenge to the DBE program?
How do disparity study results impact DBE goals?
To what extent can Race Neutral measures address
equity in opportunity?
Outline
• Ninth Circuit Decision
• Comparison of 9th Circuit States’ Disparity Studies
– Protected class exclusions
– DBE Goals
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Pre- and Post Disparity Study Challenges
DBE Program Adjustments
Creative Strategies
Trends Across States & Studies
Lessons Learned
9th Circuit Decision
What the courts said
1.
9th Circuit panel held that 49 CFR Part 26 and the authorizing
statute for the DBE program in TEA-21 were constitutional
2.
WSDOT did not need to establish a compelling need for its DBE
program
3.
Race conscious elements of a national program must be limited
to those parts of the country where its race-based measures are
demonstrably needed to be narrowly tailored as applied,
4.
Program is narrowly tailored only if its application is limited to
specific groups that have suffered discrimination or its effects
5.
Concluded: WSDOT’s DBE program was not narrowly tailored
due the supporting evidence of discrimination was inadequate
9th Circuit Decision
What the courts said
• Supreme Court explains, “Evidence of a pattern of
individual discriminatory acts can, if supported by
appropriate statistical proof, lend support to a local
government’s determination that broader remedial
relief is justified.” City of Richmond vs. JA Croson
• “Both statistical and anecdotal evidence are relevant
in identifying the existence of discrimination.”
Adarand Constructors vs. Slater
Legal Analysis
Evidence of Discrimination
• Disparity Index or disparity ratio calculated by
dividing utilization of M/WBE by the availability of
M/WBEs
• Courts look to disparity indices in determining
Croson’s evidentiary foundation
• An index less than 100% indicates a group being
utilized less than expected based on its availability
• Measures of availability determine whether
– Discriminatory barriers depress the formation and success of
M/Ws in public and private sector
– If M/WBE utilization is below availability in un-remediated
markets, an inference of discrimination may be supportable
9th Circuit Decision
What USDOT/FHWA said
• STA’s should examine evidence on hand of
discrimination and its effects.
• If STA currently has sufficient evidence of
discrimination or its effects, STA should submit raceand gender-conscious goals where appropriate.
• If evidence of discrimination and its effects pertains
to some, but not all, then race- and gender-conscious
goals should apply for group(s) with adequate
evidence.
9th Circuit Decision
What USDOT/FHWA Waiver
• May entertain program waivers of Part 26’s
prohibition of group-specific goals.
• Without sufficient evidence of discrimination or its
effects, STA submits an all-race neutral overall goal
to include a statement concerning the absence of
adequate evidence of discrimination and its effects.
• Race-neutral submission requires a description of
plans to conduct a study or ‘evidence-gathering
process’ to determine discrimination or its effects in
STA’s market with an action plan describing the
study and time line for completion.
Comparison of Disparity Study
Format
NERA
MGT of
America
D Wilson Inc
BBC
Research
2
2
2
3
• Disparity Study,
Availability Analysis,
Relevant Market
determinants differ
between consultants
• Data gathering is STA &
Consultant effort
• Anecdotal evidence
collected by consultant
only for each
Comparison of Disparity Study
Protected Classes Excluded Per Disparity Study
STA-1
African American
Alaska Native Corporation
Asian (Subcontinent & Pacific)
Caucasian Women
Caucasian Men
Hispanic American
Native American
STA-2
STA-3
STA-4
STA-5
STA-6
STA-7
STA-8
STA-9
Impact of Disparity Study Results
to Goal Setting
• Step 1: Base figure
analysis
• Step 2: Adjustments
ratio based on
quantitative evidence
• Step 3: Divide
percentage between
Conscious and Neutral
• Example: 10% goal with
9% RN (all) and 1% RC
(2 groups)
• Overall goal required by
FHWA
• Race Neutral goals apply
to ALL certified DBE
• Race Conscious goals are
specific to DBE of the
race/gender with
evidence of discrimination
• USDOT/FHWA expects
STA to submit waiver
requesting race/gender
specific goal supported by
evidence
DBE Goal Achievement
Pre & Post Disparity Study
20
15
10
5
0
STA1 STA2 STA3 STA4 STA5 STA6 STA7 STA8 STA9
Pre Disparity Study Goal
Post Disparity Study Goal
Achievement
Achievement
Pre Disparity Study Challenges
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Bid Shopping
Bonding
Cash flow
DBE Capacity
DBE Marketing
Good old boy
network
• Lack of Business
Management skills
• Prime’s reluctance
to use New DBE’s
• Prompt Payment
• Union Affiliation
Pre- Disparity Study Challenges
Exceptions:
• Challenging to convince DBE firms to participate in
government work when private sector has greater
goals and no regulatory, paperwork requirements
• Challenging to justify the DBE program when there
is no majority population and small, M/WBEs
readily win contracts.
Post Disparity Study Challenges
Common to all surveyed states
• All Race Neutral Program takes away program’s teeth,
reduces enforcement but increases STA creativity
• DBE firm Complacency
– No formal complaints - Decreased marketing efforts
• Challenges collecting data
– prime’s perception that no goals means no paperwork
• Primes self-perform more due no race conscious goals
• FHWA waiver process may delay goal approval {8
months}
• Disparity study data  Step 1 Base figure analysis
• Reinstituting race conscious goals, corresponding
explanations
Trends
• Ethnic and STA-region specific goals to meet
narrowly tailoring and strict scrutiny tests
• DBE achievement decreased by half or less when
program shifted from RC to all RN
• States who were RN prior to 9th circuit maintained/
increased DBE achievement levels post disparity
study
• Most STA’s report that the majority of its DBE
firms are non-minority women, accounting
for 35 – 60% of participation
Required Program Adjustments
• Directories must reflect ethnicity and gender
• Data collection and tracking must be implemented
for professional service, related modes just as it is for
construction
• Focus shifts to support services and technical
assistance; creativity required to get participation
• STA’s must market/promote DBE program benefits
and realities to M/W owned firms
• Study results require stakeholder involvement,
public posting and information sessions prior to
implementation
Creative Strategies
• DBE program language should become more generic
referencing “race neutral and or race conscious
efforts” as well as small business
• Revamp of policy language for DBE Commitment,
design build, good faith waivers
• CUF reviews on all DBE’s helps maintain program
integrity and assess capacity ongoing
• Fraud hotline development and maintenance
• Small business program implementation recommended
Lessons Learned 1
• Data collection and tracking system is
necessary to track contracting participation
and dollars for related industries
• Department leads are territorial about
contracting data. Explain upfront and get
leadership involved early.
• Helpful to clarify that DBE program is
required if federal funds received;
noncompliance leads to decreased funding
Lessons Learned 2
• FHWA does not give
input on the study;
however they encourage
its incorporation in your
goal submission
• FHWA not likely to allow
creative goal plans
(denied request for
phased goals)
• Stakeholder committees
are advisable STA for
support, data, impact
analysis
Lingering Questions
• Is negative public perception or legal
challenge more detrimental to DBE program?
• Will ethnic-specific goals lead to over
concentration in the specified ethnic groups
• At what interval should Disparity studies be
redone, updated?
• Can equal opportunity be assumed when
there is no majority group?