Rebuilding the Structure of MBE Programs

Michael E. KennedyGeneral Counsel

Associated General Contractors of America

2

Roadmap

What is the history?What is the history?

Going forward, what are the risks?

Going forward, what are the risks?

What is the problem?What is the problem?

Which are the seminal cases?

Which are the seminal cases?

What is the problem?

• Contractors caught in a double-bind• If you don’t push the envelop, you don’t get

the job• If you do push the envelop, you may be

liable for overstating your participation• Liquidated Damages• False Claims• Fraud

What is the problem?

• Goals too high• Badly flawed methodology

• Enforcement too rigid• Standards too vague

• No Single Source of Authority• Consequences too severe

What is the history?

• Intense and divisive litigation beginning in 1986 and running into 2008• Several trips to the Supreme Court• Multitude of state and local programs

struck down• Ended with industry exploring

standards for imposing personal liability

What is the history?• Wins for the Industry

•San Francisco, CA 1987•Richmond, VA 1989•District of Columbia 1992•Philadelphia, PA 1996•Columbus, OH 1996•Atlanta Public Schools

1997 •Dade County, FL 1997•Fulton Country, GA 1999•Baltimore, MD 2000

•Cook County, IL 2001•Chicago, IL 2004•Dade County, FL 2004•State of Michigan 1987•State of New Jersey 2000•State of Ohio 2000•State of Florida (DOT)

1998•State of Washington

(DOT) 2005•U.S. Dept. of Defense

2008

What is the history?•Losses for the Industry•State of Wisconsin (DOT) 1991•State of Tennessee (DOT) 1991•U.S. Dept. of Transportation 2000•State of Minnesota (DOT) 2003•State of Nebraska (DOT) 2003•Denver, CO 2003•State of Illinois 2007

Which are the seminal cases?

City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989).

Which are the seminal cases?

City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989).

Which are the seminal cases?

Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).

Which are the seminal cases?

Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).

Which are the seminal cases?

Rothe Development Corporation v. U.S. Department of Defense and U.S. Department of the Air Force,

545 F.3d 1023 (Fed. Cir. 2008).

Which are the seminal cases?

Rothe Development Corporation v. U.S. Department of Defense and U.S. Department of the Air Force,

545 F.3d 1023 (Fed. Cir. 2008).

Going forward, what are the risks?

• To the industry?• To the government?

15

Roadmap

What is the history?What is the history?

Going forward, what are the risks?

Going forward, what are the risks?

What is the problem?What is the problem?

Which are the seminal cases?

Which are the seminal cases?