The Honorable Wayne A. Smith
House Majority Leader
Seventh District Representative
House of Representatives
State of Delaware
Dover, DE 19901
Re: Executive Order No. 70S-1O
Dear Majority Leader Smith:
You have asked whether the implementation of Executive Order Number Seventy-one (the "Order") violates the Fourteenth Amendment of the United States Constitution as well as applicable United States Supreme Court rulings such as Croson, Adarand, and their progeny. Because the implementation of the Order is subject to applicable federal and/or state statutory and case law, we believe that the Order is facially valid under the Fourteenth Amendment of the United States.
The purpose of the Order is to promote diversity in the workplace and provide equal employment opportunities to all Delawareans.(1) The Order establishes a Building and Trade Council to implement outreach programs to promote "recruitment, education and business support practices." The Council is charged to develop a statewide strategy to coordinate public and private initiatives to support and assist the "participation of qualified women and minorities in all aspects of the building trade industry." The Council is composed of several public officials, including the Secretary of the Department of Administrative Services, the Secretary of the Department of Transportation, and a representative of the Office of the Mayor of the City of Wilmington. The Council also includes representatives of various private groups such as the Latin American Community Center, the Delaware Commission for Women, the Wilmington Branch of the N.A.A.C.P., the Delaware Contractor's Association and the Association of Builders and Contractors in Delaware. The Delaware Economic Development Office supplies staff support for the Council.
The functions of the Council do not invoke the constitutional problems associated with set-aside programs that establish measurable goals. In City of Richmond v. J.A. Croson, 488 U.S. 469 (1989), the United States Supreme Court invalidated a municipal ordinance requiring that 30% of public contracts be distributed to minority-owned businesses. The Court applied a "strict scrutiny" standard of review in assessing state and local minority business enterprise programs under the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution. Id. at 493-494.
While a state or local government may initiate efforts to eliminate the effects of racial discrimination within its jurisdiction, the state or local government must have a compelling interest supported by strong evidentiary basis that remedial action is necessary to correct past discrimination. Id. at 491-492, 500. The remedial program established must be "narrowly tailored to remedy the effects of prior discrimination." Id. at 508. This Order requires that public works projects shall "in accordance with applicable federal and state law, attempt to maximize the participation of women and minorities in construction and professional service firms during the course of the project."
The holding in Croson was expanded to the federal government in Adarand Construction, Inc. v. Pena, 515 U.S. 200 (1995). That decision, interpreting the Fifth Amendment to the United States Constitution, determined that a federal highway project requiring numerical goals to provide contracts to minority-owned subcontracting companies must serve a compelling government interest. The Court reasoned that all racial classification must be analyzed under the strict scrutiny standard, irrespective of whether such classifications arise in federal, state or local programs.(2)
The method of establishing whether minority business enterprises are justified is to conduct a disparity study to provide statistical evidence which establishes that prior discrimination has worked to either prevent or inhibit minority businesses. See Contractor's Assoc. of Eastern Pennsylvania, Inc. v. City of Philadelphia, 91 F.3d 586 (3d Cir. 1996). Consequently, a disparity study is a prerequisite for a government-sponsored program that establishes numerical goals.
The power to issue executive orders must be based on either a statute or constitutional provision. Minnesota et al v. Mille Slacs Vand of Chippewa Indians, 526 U.S. 172 (1999). The executive powers of the State are delegated to the Governor. Del. Const. of 1897, Art. III, § 1 ("The supreme executive powers of the State shall be vested in a Governor"). Executive orders are presumed constitutional unless "unconstitutionality clearly appears." Strauss v. Governor, Mich. 592 N.W.2d 53 (1999).
Here, the Order is clearly subject to applicable federal and state law in its efforts to maximize the participation of women and minorities in construction and professional services. The Delaware Procurement Act, 29 Del. C. ch. 69, is silent on gender-based or minority business enterprises.(3) The Council, however, in the implementation of the Order, is required to comply with the principles of federal law established in Croson and Adarand. The language of the Order is consistent with the message of Croson:
Even in the absence of evidence of discrimination, the City has at its
disposal a whole array of race-neutral devices to increase the accessability
of city contracting opportunities to small entrepreneurs of all races.
Simplification of bidding procedures, relaxation of bonding requirements,
and training and financial aid for disadvantaged entrepreneurs of all races
would open the public contracting market to all those who have suffered
the effects of past societal discrimination or neglect. Many of the formal
barriers to new entrance may be the product of bureaucratic inertia more
than actual necessity and may have a disportionate effect of the opportunities
open to new minority firms. Their elimination or modification would have
little detrimental effect on the city's interests and would serve to increase
the opportunities available to minority business without classifying individuals
on the basis of race. The city may also act to prohibit discrimination
and the provision of credit or bonding by local suppliers and banks. Business
as usual should not mean business pursuant to the unthinking exclusion
of certain members of our society from its rewards.(4)
Croson 488 U.S. at 509, 510.
In light of the above, we conclude that the Order complies the Fourteenth Amendment of the United States Constitution on its face. Consistent with the terms of the Order that public works projects be administered in accordance with applicable federal and state law, any programs administered by the Council must comply with the applicable federal or state laws governing minority or gender-based business enterprises.
If you have any questions, please feel free to contact our office.
Very truly yours,
Lawrence W. Lewis
Deputy Attorney General
Michael J. Rich
cc: M. Jane Brady
1. The entire text of the Order is attached.
2. Unlike racially based business enterprise programs, gender based programs are subject to an intermediate level of scrutiny. Contractor's Assoc. of Eastern Pennsylvania v. City of Philadelphia, 6 F.3d 990, 1000-1001 (3rd Cir. 1993). See also California v. Webster, 430 U.S. 313 (1977) (applying intermediate scrutiny to uphold federal statute that permitted women to eliminate low-earning years from retirement benefit calculation rather than men).
3. The Act does, however, contain precatory language that it is the policy of the State "to increase mutual understanding, respect, trust, and fair and equitable treatment for all persons who deal with the state procurement process." 29 Del.C. § 6901(2).
4. Under existing law, the federal government can give preferential bid consideration to minority-, women-, and veteran-owned business enterprises in the letting of government contracts. The so-called 8A program presumes specifically that socially and economically disadvantaged individuals include minorities. 15 U.S.C.s § 637(8)(C)(ii). Justice O'Connor, referring to the program in her Croson decision, did not challenge these findings or deny "that the sorry history of both private and public discrimination in this country has contributed to a lack of opportunities" for minority businesses. Croson, 488 U.S. at 498. The 8A program also provides that "every Federal agency, . . . is hereby authorized to provide such incentives as such Federal agency may deem appropriate in order to encourage such . . . opportunities as may be commensurate with the efficient and economical performance of the contract: . . ." 15 U.S.C. § 637(8)(E). The Order stops considerably short of such measures.