Dive Brief:
- A liberal-leaning advocacy group has filed court papers to defend the DOT’s Disadvantaged Business Enterprise program in the wake of President Donald Trump’s executive orders axing DEI efforts at federal agencies.
- Democracy Forward, a legal organization that frequently challenged President Donald Trump’s first administration in court, filed a motion to intervene on Jan. 24 in a case that has already successfully blocked DBE goals for certain contracts in at least 23 states.
- “This program is a lifeline that deserves defending,” said Skye Perryman, Democracy Forward’s president and CEO, in a news release. “Especially in an industry as reliant on relationships as construction is, longstanding attempts to shut women and people of color out have persisted and can determine if a business thrives or is forced to shut down.”
Dive Insight:
The filing makes the case that Democracy Forward should be allowed to defend the DBE program in lieu of Trump’s orders to federal agencies, including the DOT.
“Recent action by the Executive Branch shows a dramatic shift in the Department’s position,” the motion, filed in U.S. District Court for the Eastern District of Kentucky, reads. “Rather than adequately representing the interests of … DBEs and countless similar companies, as it has been doing for months, the Department is now poised to support Plaintiffs’ efforts to end the DBE program altogether.”
In November, a federal judge expanded a limited preliminary injunction in the case Mid-America vs. U.S. DOT against the DBE program, which was created by an act of Congress and sets aspirational goals that at least 10% of federal contracts be awarded to women- and minority-owned firms.
The judge ruled that the program’s presumption that certain groups, including women and minorities, were disadvantaged due to their gender or race, was likely unconstitutional.
Following that ruling, the Federal Highway Administration issued a memo that brought those goals down to 0% for contracts that the plaintiffs in the case, Jeffersonville, Indiana-based Mid-America Milling Co. and Memphis, Indiana-based Bagshaw Trucking, had bid on or intended to bid on, while expanding the number of states impacted to 25.
A chilling effect
That memo, combined with Trump’s orders targeting DEI initiatives, has had a chilling effect on the program in general, according to attorney Danielle Dietrich, who specializes in DBE contracts at Washington, D.C.-based Potomac Law Group.
“At least until there’s court intervention, I don’t foresee FHA or anyone else enforcing any contract goals that require good-faith efforts for DBE,” Dietrich said.
In her view, Democracy Forward’s motion makes a viable argument for intervention now given proceedings in the case to date.
“It’s appropriate, because trial is not for another year,” Dietrich said. “There’s plenty of time and discovery doesn’t end for several months. So there’s really not a whole lot of prejudice to the plaintiffs in that case.”
Potentially moot
However, Chris Slottee, a DBE attorney at Schwabe, Williamson & Wyatt in Anchorage, Alaska, said there is a risk the group’s petition has come too late.
“The court has already issued a decision that is effectively on the merits, and so letting the intervenors come in and make arguments could be viewed by the Court as merely permitting them to reargue points already raised and decided,” Slottee wrote in an email to Construction Dive.
He also said that since DOT has effectively eliminated the presumption of discrimination from the program via its memo, there may not be a compelling reason to grant the request.
“The federal court could also view the intervenor’s request as effectively moot, given the new administration’s stated intent to remove any race-based affirmative action in government contracting,” he said.
Regardless of the outcome, more efforts to defend the DBE program are likely. On Friday, another group, DBEs of America, held a conference call with more than 175 attendees to raise funds for more litigation.
“Just tell me where to send the check,” one attendee commented.
