Affirmative reaction: studies may decide fate of race-based programs.

• Author: Best, Allen
• Position: Case Note

Daniel Muse found both vindication and disappointment last November in the U.S. Supreme Court's refusal to hear Denver's 11-year-old argument about affirmative action for minority and women contractors. In refusing to hear the case, the court left intact a lower-court decision that found the city had managed to level the playing field for businesses without resorting to unconstitutional set-asides.

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For Muse, Denver's city attorney for much of the last decade, that was a clear triumph.

"It was the most satisfying thing I've ever done as a lawyer," says Muse, who now specializes in commercial and civil litigation at the Denver law firm Pendleton, Friedberg, Wilson & Hennessey. "In point of fact, I was disappointed the Supreme Court did not accept the case, because I wanted a Supreme Court decision that would be binding over the whole country. Had the Supreme Court taken this case and ruled in favor of the city, it would have been as important to affirmative action as Brown vs. Board was to education."

Ironically, Denver's affirmative-action program was suspended several years ago after an initial adverse ruling. Whether the city once again adopts gender and race-based goals depends partly upon several studies being done during the next nine months at a cost of roughly $300,000. No decision is expected for about a year.

In the meantime, the city continues with a program that aims to get 20 percent of all city money on projects into the hands of small businesses. In fact, many of those small businesses--defined as those with revenues of less than $17 million--are owned by women and members of minority groups.

The crucial question now before the city is whether discrimination against them still exists, and if so, how that discrimination is best addressed.

Denver's affirmative-action program was adopted in 1990, under the administration of Federico Pena, after a study documented the discrimination that many had long suspected. The program, as later revised, set goals of 10 percent participation in cumulative city projects by minorities and women, in construction projects and in both professional and design services contracted by the city. General contractors were required to show that they had sought minorities and women to participate in their city contracts as subcontractors, or to prove those firms who wished to be subcontractors were either unqualified or failed to submit the lowest bids to the general contractor.

Denver's program was challenged in 1992 by Concrete Works of Colorado, a firm from Brighton owned by a white man. The case was heard twice by U.S. District Court Judge Richard Matsch, most recently in 2000. In his later decision, Matsch said that the city's program was unconstitutional and ordered that it end.

Muse remembers being "flabbergasted, shocked, disappointed" when he got Matsch's decision. The evidence from a late 1990s study clearly showed continued discrimination, he says. And Muse says he and other city staffers had carefully hewed to the delicate line laid down in previous rulings regarding affirmative-action programs by Supreme Court Justice Sandra Day O'Connor, the court's swing vote in affirmative-action cases.

In February 2003, the U.S. 10th Circuit Court of Appeals, one of the nation's more conservative judicial panels, reversed Match's opinion and ruled 3-0 that Denver's program was proper. Denver has, said the judges, a compelling interest in remedying racial discrimination within its jurisdiction--indeed, by not taking efforts to remedy it, the city would passively participate in discrimination.

It was then that the Supreme Court, which often splits 5-4 on such issues, voted 7-2 against taking the appeal of the 10th Circuit Court's decision. "It just goes to demonstrate how persuasive our evidence was," says Muse.

A key decision ahead is whether the city returns to the race- and gender-based program or sticks with a new program designed for small businesses in general. Diedra Garcia, vice president of DRG Construction Corp., wants the latter. Race and gender-based programs create perceptions that are ultimately disadvantageous to minority-owned firms, she contends. Her firm does not specifically proclaim its Hispanic ownership. "Small businesses by definition are relatively new, and that applies to all of us," she says.

But she does believe Denver has a duty to stir the pot to give small businesses work. "I believe that something like this has to be done, because if you don't, the work will not be spread out," says Garcia, whose Lakewood-based firm has 33 employees.

"That's a hard thing for me to say as a conservative Republican, but I know in commercial construction, people choose who they like and relate to and know well. Unless they have some incentive to branch out and try other firms, they won't. But once they have, they might learn there are others who are equally well qualified. So once you get in the door, they call you back."

A somewhat similar federally mandated program at Denver International Airport seeks to give more opportunities to businesses owned by groups that are defined as disadvantaged, which includes both racial minorities and women, but is not limited to just them. The program made a huge difference in the vendor corps used at DIA compared with the number of women-owned and minority-owned firms who were...