Judge rules against $37 billion infrastructure DBE program

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A federal judge ruled against the Biden-Harris Administration’s “disadvantaged business enterprise” (DBE) program.

According to the Wisconsin Institute for Law & Liberty (WILL) who filed the lawsuit, the DBE program discriminates against businesses based on race and gender, doling out contracts to small businesses owned by women and minority groups.

The lawsuit was filed in federal court in the Eastern District of Kentucky.

Under this preliminary ruling, the federal government’s race and gender preferences may not be used against WILL’s clients, which WILL says is “a major legal victory” against the Biden-Harris Administration.

“Brick by brick, we will dismantle federal policies that discriminate against America’s small businesses and entrepreneurs. We started this work in 2021, and we will continue to fight until all Americans receive equal treatment,” said WILL President and General Counsel Rick Esenberg.

According to Federal Judge Gregory F. Van Tatenhove’s decision, “The court is keenly aware of the past discrimination that certain groups of people have faced in this country. And the court is sure that the federal government has nothing but good intentions in trying to remedy past wrongs. But remedying those wrongs must still pass constitutional muster. The federal government cannot classify people in such a manner that violates the principles of equal protection.”

According to WILL, the DBE program was most recently reauthorized in November 2021 when President Biden signed the Infrastructure Investment and Jobs Act. Congress mandated that 10% of all new surface transportation funding—over $37 billion—“shall be expended through small business concerns owned and controlled by socially and economically disadvantaged individuals.”

WILL noted, the federal DBE program is an affirmative action program that gives preference to certain companies based on race and gender. Through this program, the U.S. finances the American transportation system, including highway construction, with a series of race and gender quotas they call “goals,” WILL officials said.

Minority contracting representatives respond to WILL’s lawsuit

Ugo Nwagbaraocha, the president of the Wisconsin Chapter of the National Association of Minority Contractors, said the ruling is “unfortunate and not reflective of the historic or the current reality.”

Nwagbaraocha is also the vice president of NAMC’s national organization.

“DBE programs are only one method to help level the playing field in state and federal contract procurement given the substantial disparities that currently exist between non-minority owned businesses and ethnic minority owned businesses as a result of historic disenfranchisement,” he added.

Minority business represented 24% of eligible businesses for federal contract awards and made up just 3% of contracts in 2021, according to the U.S. Department of Labor.

Black DBE owners made up 38% of all the DBE firms registered with the Wisconsin Department of Transportation and only received about 8.5% of contracts awarded that year, Nwagbaroacha said.

“The notion that “federal policies have discriminated against non-minority owed businesses” is without merit based on statistics,” he added.

While the decision may not currently impact wisconsin, WILL’s lawsuit was obviously intended to dismantle DBE programs across the country, which are important to communities’ economic vitality, Nwagbaraocha said.

The president of the local NAMC chapter said it was important for his organization to work with partners to increase visibility of opportunities for minority contracting and strengthen relationship building opportunities in construction.

NAMCWI is currently working with the WisDOT to increase diverse business contracting on infrastructure projects, Nwagbaraocha said. NAMCWI is also expanding resources to advance development of diverse business contractor readiness for participation on major construction projects, he added.

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Ethan Duran, Daily Reporter staff, contributed to this report.