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Sub Calls Dbe Program A Discriminatory Policy

Thursday, September 01, 2011 07:31 am

 

A sub found itself being squeezed out by disadvantaged businesses. It cried discrimination--and a court listened.

Recently, a Chicago-based guardrail and fencing contractor challenged the constitutionality of the U.S. Department of Transportation's (USDOT) Disadvantaged Business Enterprise (DBE) program. It also challenged the DBE programs implemented by the Illinois Department of Transportation (IDOT) and the Illinois State Toll Highway Authority (Tollway). In Midwest Fence Corp. v. U.S. Dept. of Transportation, et al., 2011 U.S. Dist Lexis 68784 (D. Ill. June 27, 2011), Midwest Fence Corps. (Midwest) claimed that it suffered injury because DBE programs prevented it from competing on equal footing.

The goal of the DBE program is to ensure public dollars for construction get to businesses owned by those who are socially and economically disadvantaged. The regulations define a DBE as a "for profit small business concern" that is 51-percent owned by an individual(s) both socially and economically disadvantaged. 49 C.F.R. 26.5. Socially and economically disadvantaged individuals include "women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans [and] Subcontinent Asian Americans." 49 C.F.R. 26.67(a)(1).

Midwest, a non-DBE subcontractor, contended that the economic limitations on companies qualifying as DBEs make it impossible for them to bid on any but the smallest prime contracts. As a result, DBEs monopolize subcontracting dollars. For instance, it stated that although subs receive only [...]

 
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