Federal Court Tells Ohio to Set Aside Set-Asides

A federal court decided last Friday that an Ohio program to “set aside” 5% (by value) of state construction projects for minority-owned businesses is unconstitutional. The same court upheld Ohio’s Minority Business Enterprise Act (MBEA) in 1983, but subsequent U.S. Supreme Court decisions now require a more stringent standard of judicial review when government takes account of race.

Specifically, courts will no longer allow legislatures to use “implicit factfinding of discrimination” to justify affirmative action. Instead, courts will apply “strict scrutiny” to government use of race. Curiously, the Supreme Court has never ruled that racial classifications are inherently unconstitutional, only “suspect” under the 14th Amendment’s guarantee of “the equal protection of the laws.” As a suspect classification, race can only be used by government when there exists a “compelling governmental interest” and that interest is pursued by “narrowly tailored” means.

In Associated General Contractors of Ohio vs. Sandra A. Drabnik, a three-member panel of the 6th Circuit Court of Appeals ruled that the Ohio General Assembly did not show a “strong basis in evidence” to justify reserving a portion of state construction contracts for four “economically disadvantaged groups”—namely, “Blacks, American Indians, Hispanics, and Orientals.” The court agreed that “remedying the effects of past discrimination constitutes a compelling governmental interest,” presumably the Ohio legislature’s goal in enacting the MBEA in 1980. However, Justice Boggs ruled that the statistical evidence offered by Ohio (from the late 1970s) to prove discrimination in previous state contracts was “too remote” in time to support set-aside programs twenty years later.

He added that the state’s statistics were also “severely limited in scope” or simply “irrelevant to this case.” Without a showing of “pervasive, systematic, and obstinate discriminatory conduct” in awarding contracts for state construction projects, Ohio’s affirmative action program fails to qualify as a compelling governmental interest.

While this failure alone makes the 5% set-aside unconstitutional, Boggs went on to apply the second prong of the strict scrutiny test. He faulted the MBEA for “lumping together … Blacks, Native Americans, Hispanics, and Orientals” without establishing that each group needed special protection from discrimination. Have Hispanic and Oriental business owners suffered discrimination in their bids for state construction contracts? The 5% allotment to MBEs could be met with contracts to Hispanics and Orientals alone, exposing Blacks and Native Americans to discrimination by the state with no legal remedy for their injuries.

What is instructive about Boggs’s discussion is his concern for actual victims of discrimination: namely, justice for all, and not preferential treatment for a few. He reminds the Ohio legislature that a 5% allotment of state construction dollars to certified MBEs does not fulfill their obligation to protect all Ohio residents from racial discrimination.

This case shows how civil rights, which every citizen deserves, have been replaced by group entitlements. This welfare mentality divides Americans into separate categories, with separate entitlements from their supposedly common government. Instead of minority set-asides, where government protects the interests of some citizens while leaving others to fend for themselves, all Americans should ask simply that justice be served. Let’s put the “equal” back into the “equal protection of the laws.”

Minorities, in particular, should not expect equal treatment by their government if they continue to lobby for policies that treat them as if they were unequal to their white neighbors in pursuing employment opportunities. Make no mistake: any special allotment of state contract dollars for minority-owned construction companies reflects a poor opinion of minority ability to succeed without special government assistance.

Ironically, set-asides can also act as a ceiling on individual minority achievement. As the court noted, the set-aside law does not even protect all minority contractors from discrimination in the bidding process. It only guarantees that 5% of state’s construction dollars will go to minority-owned businesses. Once that minimum is met, the state could deny any more contracts to MBEs, no matter how qualified they are. This minimum allotment can become a maximum limitation, which affords no remedy to the qualified, minority business owner unable to land one of the state’s “set-aside” contracts.

This is no hypothetical scenario. In 1978, MBEs made up 7% of Ohio’s businesses. But as late as 1997, the Ohio state government was still spending only 7.1% with MBEs! What are the odds that these two figures would end up statistically equal? It’s bad enough that the state uses the total percentage of MBEs in 1978 to meet its minimum construction contracts in 1997—both an out-dated statistic and a comparison of apples with oranges. But to find that after almost twenty years the state has awarded MBEs the same percentage of contract dollars as there are presumably MBEs in Ohio begs credulity.

Unfortunately, Friday’s circuit court decision leaves intact a 1999 Ohio Supreme Court ruling that upheld a 15% minority set-aside for state spending on goods and services. Unless the U.S. Supreme Court rules that government use of racial classifications is categorically unconstitutional, state governments will simply fine tune their efforts to use discrimination to eliminate discrimination. A losing proposition, as the past quarter century has proven.

Lucas E. Morel is assistant professor of politics at Washington and Lee University in Lexington, Virginia and is an adjunct fellow at the Ashbrook Center for Public Affairs at Ashland University.