How should local governments establish legally enforceable goals under 143-128.2?

Programs designed to increase the use of minority-owned businesses on public projects have been subject to challenges in state and federal courts since the United States Supreme Court’s decision in 1989 invalidating the City of Richmond’s program. (City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)). The Court held in that case that programs that create preferences or otherwise use race as a factor in the award of public contracts are subject to strict scrutiny and must be supported by a compelling justification by the government in order to satisfy the constitution’s equal protection requirement. To meet that requirement, many jurisdictions, including several North Carolina local governments and the State of North Carolina, have conducted disparity studies to document the history of discrimination in the construction industry as well as the underutilization of minority businesses by the public agencies themselves. Many local governments in North Carolina, however, have not conducted such inquiries and do not have documentation to support the goals programs that have been in effect pursuant to the requirements of G.S. 143-128(f). While many have argued that the “good faith efforts” requirements under the statute do not create a preference and are thus race neutral, a review of cases decided around the country suggests that if challenged, a decision to reject a bid for failure to meet the good faith efforts requirement would probably be subject to strict scrutiny.

Local government officials are advised to develop or obtain information about the availability and local utilization of minority contractors in their particular areas in order to establish supportable goals. Public agencies should consider developing separate goals for the different categories of minority firms, as defined under the statute, and for different types of work, since the availability of minority firms varies according to the type of contract involved. Information from statewide or other local government disparity studies may help support a particular jurisdiction’s goal.