Friday, January 28, 2000
Ohio fights to reserve contracts for minorities
1980 set-aside law argued before 6th Circuit
BY BEN L. KAUFMAN
The Cincinnati Enquirer
Ohio will ask a federal appeals court today to resurrect its minority set-aside program for state construction contracts.
The state says U.S. District Judge James L. Graham mishandled the case and erred when he struck it down as unconstitutionally broad.
Ohio's 1980 Minority Business Enterprise Act requires most state agencies to set aside 5 percent of construction contracts and 15 percent of purchases of goods and services.
In fiscal years 1991-98, minority firms won $823 million or 11.5 percent of what Ohio spent on eligible supplies and services, and $913 million or 8.5 percent of the construction contracts.
Eligible bidders generally must be African-Americans, Hispanics, American Indians or Orientals.
In September 1998, Associated General Contractors of Ohio sued, saying construction set-asides violated the equal protection clause of the 14th Amendment. Further, attorney Kevin R. McDermott argued, Ohio improperly relied on “outdated, irrelevant and legally questionable evidence” of discrimination.
Five weeks later, Judge Graham announced his agreement. He said Ohio lacked proof that minority firms benefiting from the set-asides were victims of discrimination.
Since then, lawyers have been preparing for oral arguments before three judges of the U.S. Court of Appeals for the 6th Circuit in Cincinnati.
Judith L. French, an assistant attorney, will use her 15 minutes to renew Ohio's argument that the law passes strict constitutional scrutiny because it serves a compelling state interest and is narrowly tailored to undo historic discrimination.
Ms. French also will focus on procedural issues, saying Judge Graham abused his discretion and his decision was riddled with reversible errors:
• Judge Graham ignored federal procedural rules. Once Ohio showed it had a “strong basis in evidence” for adopting the law in 1980, he failed to require contractors to prove that the state's strong basis in evidence no longer existed.
Ms. French conceded that Ohio lacked recent evidence of discrimination but that did not prove its firm basis in evidence from 1980 wasn't still valid in 1998.
• After Ohio established a strong basis for its 1980 action, Judge Graham failed to require contractors to prove the act is not narrowly tailored to redress admitted discrimination.
• Finally, Judge Graham failed to give “the state an adequate opportunity to defend the program” at the 1998 hearing and he failed to support his oral ruling from the bench with written findings of fact and conclusions of law.
Facing Ms. French will be Mr. McDermott, trying to protect his clients' victory.
He will argue that Judge Graham handled the case properly and even if he also should have reduced his ruling to writing, the 6th Circuit should not overturn the ruling:
• There was no reason to shift the burden of proof about discrimination to the contractors. Because Ohio's evidence was “arbitrary numbers pulled out of thin air,” the state lacked the required strong basis in evidence to create or maintain a race-based set-aside program.
• Rather than a narrowly tailored program to remedy discrimination, Ohio's law “makes no attempt to provide a remedy to the specific racial or ethnic groups; instead, all the favored racial and ethnic groups are aggregated together under the banner of "minority' and thereby allowed to participate in the set-aside of taxpayer funds.”
• Judge Graham gave Ohio an adequate opportunity to defend the act.
• Finally, Judge Graham's oral decision at the hearing provided specific findings of fact and conclusions of law, but even if they should also have been written, that error is not reversible because the state had no trouble reaching a “full understanding of the issues.”
The entire act — purchasing and construction set-asides — was struck down by U.S. District Judge Joseph Kinneary in a similar contractor challenge in 1982.
The 6th Circuit reversed his decision in 1983. It said the General Assembly “had abundant evidence that members of the designated minority groups had suffered economically from racial discrimination in the state's contracting and procurement policies.”
The issue appeared settled until 1995, when a Lebanese-American produce seller from central Ohio challenged purchasing set-asides.
He said he qualified for minority set-asides because he was an Oriental under the 1980 law. Ohio rejected his argument and he sued.
Last April, the Ohio Supreme Court rejected his claim and upheld the constitutionality of purchasing set-asides.
After reviewing the amounts and percentages spent with minority firms during the past eight years, Catherine West, spokeswoman for the Department of Administrative Services, added one caution. She said the amounts paid to minority businesses included — but did not distinguish between — set-asides and contracts won in open bidding.
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