Preference Laws Won’t Go Overnight

Ending quotas, set-asides and other preferences in public contracting has long been the aim of many supporters of Proposition 209.

But despite Monday’s U.S. Supreme Court action upholding the anti-affirmative-action measure, a host of public initiatives giving minorities and women a leg up in public contracts remain intact and are likely to continue for months or years to come.

Some will be the target of lengthy court challenges that could take years to wend their way through the legal system. Others have already been reworked to focus on outreach and minority participation “goals”--which are legal--rather than hard and fast quotas--which are not.

While small-business advocates expressed concern Monday that minority- and women-owned businesses will ultimately be harmed by the high court’s action, California’s system of affirmative action in public contracting isn’t going to be dismantled overnight.

“Whether the sky is falling depends on who you talk to,” said Karen Robinson, a California State University attorney who is defending the university system in a suit over affirmative action in public contracting. “What’s clear is that some of these rulings will take a long time to sort out.”

That certainly appears to be the case at California’s giant Department of Public Services, which awarded more than $700 million in public contracts in fiscal 1996.

The agency currently is bound by a section of the California Public Contract Code, which requires bidders on public works projects to make an attempt to share 15% of their “contract dollar value” with minority-owned subcontractors, 5% with women-owned firms and 3% with disabled veteran subcontractors.

In fiscal 1996, $91.8 million, or 12.4% of the agency’s contracts, went to minority subcontractors, while women-owned business got $54.5 million, or 7.4%.

Proposition 209 supporters have sought to overturn that controversial section of the code. But Monday’s Supreme Court action in itself isn’t enough to force a change in the way contracts are awarded, said Steven Olsen, chief deputy director of the Department of General Services.

Olsen said the Legislature will need to change the Public Contract Code, or there will have to be a court challenge to the agency’s policies under Proposition 209.

“We have no choice as far as waiting is concerned,” Olsen said. “Until there is legislative action or court action that specifically strikes down the statute, we must continue to enforce it.”

The court decision “doesn’t mean anything to city contracting,” said Christopher Westhoff, assistant city attorney for Los Angeles.

Under the administration of Los Angeles Mayor Tom Bradley, the Department of Public Works established “goals” to encourage bidders on public contracts to share 18% of the work with minority subcontractors and 4% with women-owned firms.

Because those targets are part of an “outreach” program, rather than hard and fast quotas, they are not illegal, Westhoff said. The California Supreme Court upheld the practice in 1994 after it was challenged by an electrical firm that lost a city contract. The firm had a lower bid than competitors’, but failed to meet a city deadline for complying with the city’s minority outreach requirements.

“The courts have ruled that outreach is permissible,” Westhoff said. “The city remains committed to providing opportunities for businesses of all shapes, sizes and ethnicities. The [U.S.] Supreme Court decision is a nonissue in public contracting in the city of Los Angeles.”

Ditto for the county, says John Hill, affirmative action officer for Los Angeles County.

Hill says the county has established voluntary goals across most county departments to award 25% of public contracts to minority, women-owned and “disadvantaged” small businesses. In fiscal 1997, 6.9% of all county contracts were awarded to such businesses.

Hill said the county is reviewing the policy in the wake of Proposition 209 but that no immediate changes are planned.

“It’s business as usual until I hear from the board,” Hill said. “We are going to continue to reach out to all citizens of this county.”

Other public agencies have already altered their contracting policies to comply with Proposition 209--with resulting losses for minority and women-owned businesses. One of the largest is the California Department of Transportation, which awards about $1 billion in new construction contracts annually.

Before Proposition 209, Caltrans’ goal was to award 20% of all contract dollars to minority- or women-owned businesses, according to department spokesman Jim Drago. That was double the 10% goal established by the federal government for transportation projects using federal dollars.

In the wake of Proposition 209, Drago said, Caltrans eliminated its participation goals for state-funded contracts, and has reduced the target to the 10% minimum for projects containing federal dollars.

*

* PROP. 209 BACKED: The Supreme Court upholds affirmative action’s repeal. A1

* UNCERTAIN NEXT STEPS: California municipalities begin retooling their programs. A1