WASHINGTON -- The Supreme Court on Monday refused to revive a reverse-discrimination challenge to a program that gives companies owned by disadvantaged people extra help in winning contracts on federal highway projects.
The justices, without comment, turned away a Utah company's arguments that the affirmative-action program adopted by Congress unlawfully discriminates against companies owned by white men.Monday's action was not a decision and cannot be read as a court endorsement of the federal program. The justices merely refused to review the dispute and thereby left intact a lower court's ruling.
The Disadvantaged Business Enterprise program requires that no fewer than 10 percent of all federally funded highway construction contracts be awarded to "small business concerns . . . owned and controlled by socially and economically disadvantaged individuals."
One of the federal laws encompassing the program defines "small business concern" as one with less than $16.6 million annual average in gross revenue for the preceding three years. The program also presumes that racial minorities and women who own small businesses are "socially and economically disadvantaged."
That presumption was challenged by CVE Construction, formerly part of Cache Valley Electrical Co., after it lost out on two 1995 contracts for traffic signal work on federally funded road projects in Sandy.
Both times the company submitted the lowest bids but contractors awarded both electrical subcontracts to an enterprise owned by a Hispanic woman.
CVE Construction of Salt Lake is owned by Jack Laub, who is white. The electrical contractor sued the Utah Department of Transportation, which was supervising the projects.
Laub said Monday he was disappointed the Supreme Court refused to reconcile conflicting rulings by appellate courts on the Disadvantaged Business Enterprise program.
"Two different general contractors said if it weren't for the DBE, we would have got the jobs," Laub said. CVE's bids, he said, were $20,000 below those of the contractor who got the jobs.
"We thought that was discriminatory," Laub said. "We are running into this every day. It's a significant problem."
U.S. District Judge David Winder had thrown out the lawsuit after ruling that the company lacked the legal standing to sue because it could not prove that the program's challenged presumptions in favor of women and racial minorities had hurt it.
Laub's company is not a "small" business because its annual gross revenues are about $41 million, the judge noted, so it could not have participated in the program even if the challenged presumptions were struck down.
The judge discounted as "too speculative" Laub's contention that striking down the presumptions would mean many fewer businesses could qualify as disadvantaged and force more waivers from the federal 10 percent set-aside requirement.
The 10th U.S. Circuit Court of Appeals upheld the lawsuit's dismissal last July.
In the appeal acted on Monday, Laub's company was represented by William Perry Pendley of Denver, the winning lawyer in a 1995 Supreme Court decision that endangered many federal affirmative action programs by curtailing the special help offered to racial minorities.
In that ruling, the justices said courts must hold Congress and the president to the same strict standards as state and local governments when determining whether they have discriminated against whites.
Justice Department lawyers urged the court to reject Laub's appeal, saying those who mounted the challenge leading to the 1995 decision could not prove they had been hurt by a federal set-aside program.
The case is Cache Valley Electrical Co. vs. Utah Department of Transportation, 98-579.