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Quotas are costly, notes PLF: when contracts don’t go to the low bidder, tax money, including a portion of $2.57 billion in federal money, is squandered.


Sacramento, CA; June 11, 2009: The California Department of Transportation (Caltrans) is violating the state and federal constitutions with its new program that uses race- and sex-based quotas in awarding contracts on federally funded road and highway projects. So contends a federal lawsuit filed today by Pacific Legal Foundation attorneys, representing Associated General Contractors of America, San Diego Chapter.

At issue is Caltrans’ 2009 Disadvantaged Business Enterprise (DBE) Program, which Caltrans announced to transportation-related agencies in a memo on March 4 this year. On projects that receive federal funds, Caltrans’ DBE program sets a quota of having 6.75 percent of contracts go to women or members of targeted, preferred groups – African American, Asian-Pacific American, and Native American (but not Latinos or any other group) – through the explicit use of race or sex in awarding contracts.

"Caltrans is sideswiping the important principle of equal opportunity by using race, not lowest cost by a responsible bidder, to decide who gets government road and highway contracts," said PLF Principal Attorney Sharon Browne. "Caltrans’ scheme of coding contractors by color is not only unfair and wasteful of tax dollars, it is flat-out unconstitutional. In an example of the arrogance of big government, Caltrans is violating equal rights as guaranteed by the U.S. Constitution and by California’s Proposition 209." (Proposition 209 – Article I, Section 31, of the California Constitution – was enacted by voters in 1996; it bars race- or sex-based preferences or discrimination in public contracting, employment, and education.)

• Caltrans sought a federal "permission slip" for quotas – but the "permission" doesn’t pass muster

In 2006, Caltrans abandoned a previous policy of using quotas in contracting, after PLF sent a demand letter arguing that the scheme violated Proposition 209 and federal law. However, the agency quickly began seeking a route to bring quotas back – by trying to exploit the exception to Proposition 209 for cases where federal funds would be lost if race-conscious policies are not implemented. Caltrans petitioned the federal government for permission to reinstate race-based and sex-based goals in the awarding of public works contracts funded by federal dollars. Caltrans cited a "disparity study" that it commissioned, reporting that Caltrans dollars going to minority contractors didn’t match the available minority firms.

For two years, Caltrans was unsuccessful in getting federal permission to reinstate race-based quotas. But the federal government has now complied. In letters on February 25, 2009 and April 2, 2009, the U.S. Department of Transportation (Federal Highway Administration) approved "race conscious means" in "implementation of [Caltrans’] FY 2009 Disadvantage[d] Business Enterprise (DBE) Program."

However, "this federal ‘permission slip’ to evade Proposition 209 doesn’t pass muster," said PLF’s Sharon Browne. "Caltrans has brought back discrimination and preferences without providing the justification that is mandated by both the state and the federal constitutions."

• Caltrans’ quotas are invalid under the U.S. Constitution (Fourteenth Amendment) because there is no evidence of discrimination by Caltrans to justify a race-conscious remedy

"Caltrans’ quota policy of race- and sex-based discrimination and preferences is invalid under the U.S. Constitution," said PLF’s Browne. "Caltrans has not provided sufficient evidence to justify its quota policy." Under a Ninth Circuit ruling – Western States Paving v. Washington State DOT (2006)  – the Equal Protection Clause of the Fourteenth Amendment permits race-based preferences in government contracting only if there is evidence of past or present intentional discrimination that is being remedied.

"Caltrans’ disparity study does not offer evidence of intentional discrimination by Caltrans or its contractors that would permit race-based preferences as a remedy," said Browne. As Browne wrote in an October 31, 2007 Los Angeles Times oped (coauthored by Ward Connerly and Linda Chavez), "Where federal courts have permitted race-based contracting as a remedial policy, there must be solid, specific evidence of past discrimination. Far from meeting that standard, the Caltrans [disparity] study relies on what the Supreme Court, inRichmond v. Croson, dismissed as ‘percentage disparities and generalized claims of discrimination’ – in other words, vague showings that, at most, invite inferences but clearly don’t offer facts."

As Browne says: "Caltrans is attempting to justify its quota program by claiming it engaged in discrimination that needs to be remedied. But it offers no credible evidence. If there was discrimination, why has Caltrans not identified any case where an official or contractor was disciplined for discriminating?"

In fact, Caltrans has admitted it has not discriminated in a way that would justify quotas as a response. In a February 2, 2009, letter to Associated General Contractors of California, Caltrans Director Will Kempton wrote: "Caltrans does not believe any of its officials or subrecipients has engaged in discrimination. Nor does Caltrans believe any segment of its prime contractors have engaged in discrimination."

• Caltrans’ quotas are invalid under the California Constitution (Proposition 209) because they are not "narrowly tailored" to respond to specific, identified discrimination; also, Caltrans cannot demonstrate that it will lose federal money if it does not implement quotas

Although Proposition 209 does provide an exception to its prohibition on discrimination and preferences, for situations where federal funding will be lost if race-conscious policies are not implemented, Caltrans’ quotas are not permitted under that exception, according to today’s lawsuit.

"Proposition 209’s ‘federal funding’ exception applies only to race- and sex-based preference programs that are ‘narrowly tailored’ to remedy specific, identified cases of past or current discrimination," said PLF’s Sharon Browne. "Caltrans’ quotas fall far short of this test. First, there is no evidence of discrimination by Caltrans that would justify race- and sex- based preferences and discrimination as a response. Second, Caltrans has not exhausted the race-neutral options available to it. There are better ways to broaden the pool of Caltrans contractors than through more government imposed discrimination. Caltrans does not dispute that there are many race-neutral measures that it has not even tried that would help all contractors, of all racial and ethnic backgrounds."

"Instead of turning to quotas and discrimination as a last resort, Caltrans reflexively lurched to a racial-quota scheme as its first and favored approach," said Browne.

"Also, Proposition 209’s ‘federal funding’ exception does not apply to Caltrans’ quotas because Caltrans cannot demonstrate that it will lose federal money if it does not implement quotas," Browne continued. Indeed, Nancy Singer, a spokeswoman for the highway administration, told The Associated Press in May that the race- and sex-based goal it approved for Caltrans is "an aspirational goal. It’s not a drop-dead goal that you’re losing your federal funds if you don’t meet that goal."

• Caltrans’ quotas are costly to taxpayers

"Caltrans’ race- and sex-based quotas amount to a hit and run against sound budgeting and the taxpayers’ interest," said PLF’s Sharon Browne. "When the agency is not awarding contracts based on lowest cost by a responsible bidder, expenses rise and money is wasted. This makes no sense for our fiscally strapped state. Officials could fund more road projects with the $2.57 billion in federal money that Caltrans is slated to receive this year; yet, they’re squandering it on their costly quota scheme."

• Caltrans’ quota scheme disrespects the will of the voters who enacted Proposition 209

"Caltrans' imposition of quotas is an affront to equal rights and equal opportunity," said PLF’s Browne. "By enacting Proposition 209, Californians clearly said they don’t want government playing favorites or discriminating by race or sex. Caltrans is engaged in precisely the kind of unfair discrimination and preferences that California voters outlawed. Caltrans’ quota scheme disrespects voters, the law, equal rights – and sound budgeting. Our lawsuit aims to slam the brakes on this big-government injustice."

The plaintiff – Associated General Contractors of America, San Diego Chapter

PLF attorneys represent the Associated General Contractors of America, San Diego Chapter, Inc. AGC San Diego is a nonprofit California corporation, with headquarters in San Diego, California. Since its organization in 1927, AGC San Diego has been dedicated to improving the construction industry by educating the industry to employ the finest skills, the latest technology, and advocating building the best quality projects for owners, both public and private.

"One of AGC San Diego’s primary aims is securing fair and nondiscriminatory competitive bidding practices for public construction projects," said Jim Ryan, Executive Vice President of AGC San Diego. "But Caltrans’ 2009 DBE Program is not fair and it is not nondiscriminatory. It doesn’t allow all contracts to be considered on an equal basis, without regard to race or sex."

Further, Caltrans’ 2009 DBE Program requires AGC San Diego’s members to choose subcontractors based on race or sex, and forces them to discriminate against businesses whose owners are not of the preferred groups. These members of AGC San Diego are placed at risk of liability for such discrimination.

Ward Connerly opposes Caltrans' quotas

Ward Connerly, the Sacramento businessman and former UC regent who led the campaign for Proposition 209, opposes Caltrans’ quota program.

"Caltrans is driving California in precisely the wrong direction," said Ward Connerly. "As a state and as a people we are more diverse than ever. So it is more important than ever that government should stop classifying and categorizing people by skin color, and should stop showing favoritism, or practicing discrimination, on the basis of race or ethnicity."

The complaint: at PLF’s Web site

The case is Associated General Contractors of America, San Diego Chapter, Inc., v. California Department of Transportation, et. al. It is being filed in federal court, in the Eastern District of California. Read the complaint and background material at

PLF: America’s Leading Legal Watchdog for Equal Rights and Equal Opportunity, 
and the Chief Defender of Proposition 209 in Court

Pacific Legal Foundation ( is the nation’s leading public-interest legal organization that litigates for limited government and individual rights, including in opposition to government policies that discriminate and treat people differently based on their race or sex.

In California, PLF is the chief legal defender of Proposition 209, the provision added to the California Constitution by voters in 1996, banning race- and sex-based preferences and discrimination in public contracting, employment, and education.

In the area of public contracting, PLF’s leading victories in defending Proposition 209 include:

• Hi-Voltage Wire Works, Inc. v City of San Jose (2000) – This landmark PLF case was "the most important civil rights dispute in many years to reach [California’s] high court," The Associated Press reported. In its first interpretation of the scope of Proposition 209 – and a decision binding on every public sector entity in the state – the California Supreme Court struck down San Jose’s requirement that bidders for city public works contracts either meet quotas in hiring subcontractors or undertake special recruitment aimed at minorities and women. The court interpreted Proposition 209 broadly, declaring that it outlaws not just quotas, but also race- or sex-based "outreach" and "goals and timetables," because they also give preferences because of color or sex.

• C & C Construction, Inc. v. Sacramento Municipal Utility District (2004) – PLF successfully challenged a policy of the Sacramento Municipal Utility District that gave preferences to minority- owned contractors by calculating their bids as being 5 percent lower than what they actually were. The court gave a narrow interpretation to Proposition 209’s federal-funding exception.

• Additionally, in Coral Construction v. San Francisco, a case now before the California Supreme Court, PLF attorneys are challenging San Francisco’s race- and sex-based preferences and discrimination in public-works contracts.

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