Facts
- Congress enacted the Public Works Employment Act of 1977 to fund local public works projects through federal grants.
- The Act required that at least 10% of the federal funds granted for covered projects be used to procure services or supplies from minority business enterprises (MBEs).
- The statute defined minority group members as U.S. citizens who are Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts.
- Implementing regulations required grantees and prime contractors, to the extent feasible, to seek out qualified MBEs, provide technical assistance, relax bonding requirements where feasible, help MBEs obtain capital, and assist with bid participation.
- Non-minority contractors and related associations alleged economic injury from the set-aside and challenged the provision as unconstitutional under equal protection principles applicable to the federal government through the Fifth Amendment.
- The district court dismissed the complaint and upheld the program; the Second Circuit affirmed.
- The Supreme Court affirmed in a 6–3 judgment with multiple opinions and no single majority rationale.
Issues
- Whether Congress’s 10% MBE set-aside in federal public works grants violates equal protection principles embodied in the Fifth Amendment by using a race-based classification.
- Whether Congress may use its spending power to impose race-conscious conditions on federal grants as a remedy for the effects of racial discrimination.
- Whether the set-aside was sufficiently limited and tailored, including through waiver and enforcement mechanisms, to satisfy constitutional requirements.
Decision
- The Court affirmed the judgment upholding the MBE provision.
- A plurality concluded Congress acted within its authority to adopt a limited, remedial, race-conscious measure to address the effects of past discrimination in public contracting.
- The plurality gave substantial weight to Congress’s findings and judgment that discrimination had impaired minority participation in the construction industry.
- The plurality emphasized that the 10% requirement was not absolute, citing waiver procedures and administrative safeguards to confine benefits to bona fide MBEs.
- A separate concurrence agreed the set-aside was substantially related to an important remedial objective and therefore constitutional.
- Dissenting Justices would have treated the racial classification as presumptively invalid, viewing the set-aside as an impermissible quota absent case-specific findings of illegal discrimination.
Legal Principles
- Congress may, in appropriate circumstances, employ race-conscious conditions on federal spending to remedy the effects of identified discrimination.
- In reviewing federal remedial programs using racial classifications, the Court considered whether the measure serves an important governmental objective and is appropriately limited in scope and operation.
- Tailoring considerations include flexibility (such as case-by-case waivers), mechanisms to ensure only bona fide beneficiaries participate, and limits that prevent the measure from operating as a rigid, permanent quota.
- The constitutional analysis may take account of Congress’s institutional competence and legislative factfinding when Congress acts to address discrimination in fields affected by federal funding.
Conclusion
The Court upheld Congress’s 10% minority-business set-aside for federally funded local public works projects, concluding that a limited, flexible, and administratively constrained race-conscious remedy could be a permissible means of addressing the continuing effects of past discrimination in public contracting.