Concrete Workers v. City and County of Denver, Civ. A. No. 92-F-21.
| Decision Date | 26 February 1993 |
| Docket Number | Civ. A. No. 92-F-21. |
| Citation | 823 F. Supp. 821 |
| Parties | CONCRETE WORKS OF COLORADO, INC., a Colorado corporation, Plaintiff, v. The CITY AND COUNTY OF DENVER, COLORADO, a municipal corporation, Defendant. |
| Court | U.S. District Court — District of Colorado |
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Thomas C. Clark, Daniel M. Gross, Oviatt, Clark & Gross, Wheat Ridge, CO, William Perry Pendley, Todd S. Welch, John G. Nelson, Denver, CO, for plaintiff.
Angelina Irizarry, Irizarry & McCall, P.C., Norman R. Bangeman, Asst. City Atty., City & County of Denver, Denver, CO, for defendant.
This is a case involving a constitutional challenge to a local ordinance regarding women and minority business enterprises. The ordinance in question deals with city-funded public works projects. The instant matter comes before the Court on the motion of Defendant City and County of Denver ("Denver" or "the City") for summary judgment under Fed.R.Civ.P. 56. Jurisdiction is based on 28 U.S.C.A. §§ 1331 and 1343(a)(3) and (4). The parties have fully briefed the matter and an oral argument was held on December 8, 1992. For the reasons stated below, including our belief that the ordinance in question does not establish a quota, the motion is GRANTED.
The Court finds that the ordinance in this case is a modest, flexible, and historically supportable response to what the Denver City Council reasonably believed to be discrimination in contracting. Far from establishing quotas or set-asides, the ordinance establishes, at most, nonbinding, good-faith aspirational goals to encourage participation of minority subcontractors in public works projects funded by the City of Denver. We find the ordinance responds to a compelling and established governmental interest. The evidence upon which it is based is an exhaustive compilation of federal studies, anecdotal evidence, independent analyses, city council hearings, census data, and statistical studies on which any city council could reasonably rely to infer the presence of discrimination.
The ordinance is also narrowly tailored to address the problem of discrimination in city contracting. It follows and joins many race-and gender-neutral efforts by the City of Denver to alleviate the problem. No minority or woman is preferred for a contract on the basis of being a minority or woman, rather, all prime contractors are subject to the same race-neutral requirement that they show good faith efforts to solicit bids from subcontractors owned and controlled by minorities and women. It is not necessary that those good faith efforts succeed, and there are numerous waivers through which prime contractors may avoid the provisions of the ordinance. The City and County of Denver sets goals in only a small portion of contracts, in a flexible consideration of numerous factors, on a project-by-project basis, and rarely reaches even the goals it sets. The ordinance is therefore a constitutionally permissible means of affirmative action.
On September 4, 1990, the Denver City Council ("the Council") enacted Ordinance No. 513, Series of 1990 ("the Ordinance"). Denver, Co., Rev.Mun.Code ch. 28, art. III, § 28-31 et seq. The Ordinance states that its aim is to undertake limited remedial activities which will help certified racial minority-("MBE") and women-owned ("WBE") business enterprises to participate in the awarding of contracts for City-funded public works projects. Id. § 28-53. The Ordinance includes as racial minorities persons of Black, Hispanic, Asian-American, or American Indian descent. Id. § 28-54(16). In order to be certified as an MBE or WBE (collectively, "a W/MBE"), a business must: (1) be 51% owned by one or more eligible racial minorities or women; (2) be managed and controlled by the minority or woman seeking certification; (3) credibly demonstrate by written documentation or affidavit that it has suffered from past racial or gender discrimination in the Denver construction industry;1 (4) have been in business for at least three months; and (5) not exceed certain annual revenue or receipt levels. Id. §§ 28-73, 28-74.
The Ordinance provides for the Director of the Office of Contract Compliance ("OCC") to set goals for the level of W/MBE participation in construction contracts. The maximum allowable goal for MBE participation as a percent of annual construction dollars spent is 16%; the goal for WBEs is 12%. The maximum allowable goal for both MBE and WBE participation as a percent of dollars spent on professional design services is 10%. Id. § 28-55. The OCC is required to set the participation goals on a project-by-project basis depending upon the availability and capacity of W/MBEs with respect to each project. Id. § 28-56.
Once the goals are set for a project, all bidders, including MBEs, WBEs, noncertified minority- and woman-owned businesses, and nonminority-owned businesses, are required either to satisfy the project goals in one of several ways or to demonstrate good faith efforts to meet the project goals. Project goals can be partially satisfied by (1) the "commercially useful function" of work if the bidder is an MBE or WBE; (2) the commercially useful function of work in which the bidder forms a joint venture with an MBE or WBE; and (3) the bidder's use of MBEs or WBEs as subcontractors. Id. § 28-57.
Section 28-58 states that "if the bidder has not fully met the project goals as required in section 28-57, then the bidder shall demonstrate that it has made good-faith efforts to meet the goals." Id. § 28-58. A bidder who fails to satisfy the project goals must establish good-faith efforts toward doing so by furnishing a statement in which the bidder details its compliance with numerous good-faith requirements.2 If the OCC determines that the bidder has not fully complied with the requirements to make good faith efforts to obtain W/MBE participation and to provide documentation of those efforts, the bidder's bid will be rejected as nonresponsive. Id. §§ 28-58, 28-59. However, once the OCC determines that a bidder has failed to meet project goals and failed to demonstrate good-faith efforts to do so, the bidder may nevertheless request an informal meeting with the OCC Director. The bidder also has additional time to clarify or modify its good-faith efforts statement. Id. § 28-59(c). The Ordinance provides that if a bidder is rejected, it may seek administrative or judicial review of the OCC's decision. Id. § 28-33.
There are several aspects of the good-faith requirements and goals that deserve special mention. First, a bidder who does not enter into a contract with a qualified W/MBE that has quoted the bidder the lowest price for the subcontract work will be deemed nonresponsive. Id. § 28-58(9). However, a bidder is not required to use an MBE or WBE as a subcontractor if the MBE or WBE failed to submit the lowest bid or was otherwise unqualified to perform the work. Second, the Ordinance allows W/MBE prime contractors to use their own participation to meet a project's W/MBE goals, thereby potentially reducing the efforts which those prime contractors must undertake to show good faith attempts to obtain W/MBE participation.
Finally, since the enactment of the Ordinance, the City has not set goals on all projects and has met the goals it sets only part of the time. For example, in 1990, W/MBE participation goals were met on only 16 of the 48 construction contracts awarded (33%). In 1991, the first full year under the Ordinance, goals of 0% W/MBE participation were assigned to 18 of 75 contracts (24%). Higher goals were met on only 47 of 75 contracts (63%). Overall, despite the utilization goals of 16% for MBEs and 12% for WBEs, only 12.4% MBE and 5.9% WBE utilization was attained on City construction contracts.
On January 6, 1992, Plaintiff Concrete Works brought suit for a permanent injunction against enforcement of the Ordinance, alleging that the Ordinance was unconstitutional under the U.S. and Colorado constitutions. Concrete Works claimed that the Ordinance's "preferences" or "quotas" for W/MBE participation had caused it to be refused three construction contracts. First, Concrete Works claimed that on November 8, 1991, the City rejected its bid on Project No. W75-130A, Lakewood & Dry Gulch Storm Drainage Improvements—Phase One ("Lakewood & Dry Gulch Project") for failure to comply with either the project W/MBE participation goals or good-faith efforts. Concrete Works claimed that although its bid of $2,007,822 was the lowest bid, the City contracted with a bidder whose bid was approximately $25,000 higher than Concrete Works'.
Second, Concrete Works claims that for similar reasons, on October 28, 1991, the City rejected as nonresponsive its bid on Project No. 91-205, Colorado Boulevard Median Improvements ("Colorado Boulevard Project"). Concrete Works claimed on information and belief that the City intended to award the contract to the third-lowest bidder, Valley Crest Landscape, whose bid was $207,000 higher than the $799,955 of Concrete Works.
Finally, Concrete Works alleges that the City rejected its bid on Project No. 89-396B1, B4, and B7, Sixth and Josephine Improvements ("Sixth Avenue Project") for the same failure to comply with the good-faith requirements of the Ordinance. The contract was awarded to the second-lowest bidder, MBE Technology Constructors. Concrete Works challenged the City's determination of its nonresponsiveness in an administrative hearing under the Ordinance, but the determination was affirmed. Concrete Works claimed that it lost the contract because, unlike the MBE that won the contract, it was not able to count its own work toward fulfillment of the project goals or good-faith requirements.
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