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Court rules against minority set asides.

Court rules against minority set asides

The Supreme Court followed its precedent in a case involving the City of Richmond, VA, and invalidated a Michigan law requiring that a percentage of State contracts be awarded to minority-owned or female-owned companies. The law, enacted in 1980, had specified that by 1985 each of Michigan's departments must award at least 7 percent of construction, purchasing, and service contracts to minority-owned businesses and 5 percent of contracts to female-owned businesses. In the Michigan case, the Court did not hear oral arguments or issue a written opinion.

In the Richmond case, the justices held that "equal protection of the law's" guarantee of the 14th Amendment to the U.S. Constitution restricts the right of government to establish programs favoring one race or sex over another. According to this stricture, "set aside" corrective awards of contracts are permitted only when the government unit possesses precise statistics demonstrating the extent of any discrimination that has occurred.

In a decision issued at the time of the Michigan ruling, the Supreme Court ordered the Federal Court of Appeals in Atlanta to reconsider its 1987 decision upholding a U.S. Department of Transportation requirement that local governments must allocate 5 percent of Federally funded contracts to minority-owned firms. The case at issue centered on whether Dade County, FL, acted properly in bypassing the low bidder on work for the Federally subsidized local transit system because the company's plans did not call for allocating some of the work to minority-owned contractors.

At the time of this decision, the Department of Transportation had revised its rules to require that 10 percent of contracts be awarded to "socially and economically disadvantaged" companies, which meant that minority-owned and female-owned businesses would be aided only if they met that requirement. This approach is being tested in the courts.
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Title Annotation:Developments in Industrial Relations; Supreme Court rules against law requiring a percentage of state contracts be awarded to minority-owned or female-owned companies
Author:Ruben, George
Publication:Monthly Labor Review
Date:May 1, 1989
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