Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-14-01493/USCOURTS-ca7-14-01493-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

---

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 14-1493 

DUNNET BAY CONSTRUCTION COMPANY, 

an Illinois Corporation, 

Plaintiff-Appellant, 

v.

ERICA J. BORGGREN, in her official capacity as 

Acting Secretary for the Illinois 

Department of Transportation, et al., 

Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the 

Central District of Illinois. 

No. 3:10-cv-03051-RM-SMJ — Richard Mills, Judge. 

____________________ 

ARGUED DECEMBER 12, 2014 — DECIDED AUGUST 19, 2015 

____________________ 

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges. 

TINDER, Circuit Judge. Plaintiff-Appellant Dunnet Bay 

Construction Company sued Defendants-Appellees Illinois 

Department of Transportation (IDOT) and its then-Secretary 

of Transportation Gary Hannig in his official capacity, alleging that IDOT’s Disadvantaged Business Enterprise (DBE) 

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2 No. 14-1493 

Program discriminates on the basis of race. The district court 

granted summary judgment to Defendants, concluding that 

Dunnet Bay lacked standing to raise an equal protection 

challenge based on race and that the DBE Program survived 

the constitutional and other challenges. Dunnet Bay appeals. 

For the reasons that follow, we affirm. 

I. BACKGROUND 

Dunnet Bay is a corporation that engages in general 

highway construction. It is prequalified to bid and work on 

IDOT projects and competes for federally assisted highway 

construction contracts awarded by IDOT. Dunnet Bay is 

owned and controlled by two white males. Between 2007 

and 2009, its average annual gross receipts were over $52 

million. 

IDOT is the agency of the State of Illinois responsible for 

administering, building, operating, and maintaining the 

state highway system. It also is responsible for administering 

federally funded highway construction contracts in accordance with federal and state law, including the regulations 

promulgated by the U.S. Department of Transportation 

(USDOT), see 49 C.F.R. Part 26. IDOT administers a small 

business initiative program, which reserves certain work on 

contracts for small business enterprises. Gary Hannig was 

the Secretary of IDOT from February 2009 through the end 

of June 2011. 

In order to receive federal-aid funds for highway contracts, IDOT must have a “disadvantaged business enterprise” participation program that complies with federal regulations. The Transportation Equity Act for the 21st Century 

(“TEA–21”), Pub. L. No. 105–178, 112 Stat. 107 (1998), as 

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No. 14-1493 3

amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, 23 U.S.C. § 101 

Note, Pub. L. No. 109–59, 119 Stat. 1144 (2005), and the governing regulations require state recipients of federal-aid 

funds for highway contracts like IDOT to submit to the 

United States Department of Transportation (USDOT) a 

written plan that demonstrates, inter alia, that they are not 

discriminating against minorities and women in the award 

of contracts. Section 1101(b) of the TEA–21 provides that 

“not less than 10 percent of the amounts made available for 

any program under ... [TEA–21] shall be expended with 

small business concerns owned and controlled by socially 

and economically disadvantaged individuals.” A DBE is defined as a for-profit small business concern that is at least 

51% owned and controlled by one or more socially and economically disadvantaged individuals. 49 C.F.R. § 26.5. There 

is a rebuttable presumption that women and members of racial minority groups are socially and economically disadvantaged, id., but an individual owner of any race or gender 

may qualify as “socially and economically disadvantaged.” 

See id. Under the applicable regulation, “a firm is not an eligible DBE in any Federal fiscal year if the firm (including its 

affiliates) has had average annual gross receipts ... over the 

firm’s previous three fiscal years, in excess of $22.41 million.” 49 C.F.R. § 26.65(b) (2009). 

States must set an overall goal for DBE participation in 

federally assisted contracts. 49 C.F.R. § 26.45(a). That goal 

“must be based on demonstrable evidence of the availability 

of ready, willing and able DBEs relative to all businesses 

ready, willing and able to participate on [federal]-assisted 

contracts” and “must reflect [the state’s] determination of 

the level of DBE participation [one] would expect absent the 

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effects of discrimination.” Id. § 26.45(b). A state is not permitted to use quotas for DBEs but may use set-aside contracts for DBEs in limited circumstances. Id. § 26.43. A state 

“must meet the maximum feasible portion of” its overall 

DBE participation goal through race-neutral means, using 

contract goals to meet any portion that is not projected to be 

met with race-neutral means. Id. § 26.51(a), (d). In setting 

specific contract goals, a state should consider such factors 

as “the type of work involved, the location of the work and 

the availability of DBEs for the work of the particular contract.” Id. § 26.51(e)(2). 

Under the regulations, a contract may be awarded to a 

bidder who demonstrates that it has obtained enough DBE 

participation to meet the DBE contract goal, or demonstrates 

that it made adequate good faith efforts to meet the goal 

even if it did not meet the goal, id. § 26.53(a), which means 

that it “took all necessary and reasonable steps to achieve a 

DBE goal ... which, by their scope, intensity, and appropriateness to the objective, could reasonably be expected to obtain sufficient DBE participation, even if they were not fully 

successful.” 49 C.F.R. Pt. 26, App. A, § I. If a bidder demonstrates that it made adequate good faith efforts, it must not 

be denied award of the contract on the ground that it failed 

to meet the goal. Id. § 25.53(a)(2). If the apparent successful 

bidder fails to either meet the DBE contract goal or demonstrate good faith efforts, the state “must, before awarding the 

contract, provide the [bidder] an opportunity for administrative reconsideration.” Id. § 26.53(d). If the state determines 

that the apparent successful bidder failed to show good faith 

efforts, the state must send the bidder a written explanation 

of the basis for the finding. Id. § 26.53(d)(4). 

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IDOT administers the DBE program in Illinois. IDOT 

prepared and submitted to USDOT for approval a DBE program governing federally funded highway construction contracts. IDOT established a statewide aspirational goal for 

DBE participation of 22.77%. IDOT typically achieved 

somewhere between 10% and 14% DBE participation. For 

fiscal year 2009, IDOT attained 11.15% minority participation 

on all construction projects. For fiscal year 2010, IDOT projected that it would achieve 4.12% DBE participation 

through race-neutral means, leaving 18.65% DBE participation to be met by using contract goals. The Federal Highway 

Administration (FHWA) expressed concern about states not 

reaching their DBE goals and indicated to IDOT that it 

would like to see the DBE participation opportunities increased. 

IDOT has five regions that are subdivided into a total of 

nine districts. Each district is headed by a district engineer 

who is responsible for the highways in his or her district. 

The district engineers report to the regional engineers who 

report to the Director of Highways/Chief Engineer. A district 

engineer and equal employment opportunity (EEO) officer 

review each construction contract to decide whether the contract presents DBE participation opportunities. At all relevant times, Christine Reed was IDOT’s Director of Highways/Chief Engineer and was responsible for goal setting. 

Reed reviewed recommendations for contract goals and 

small business initiatives. Contracts had been withdrawn 

from bidding by Secretary Hannig’s predecessor to review 

DBE goals. After the goals were reviewed, the contracts were 

re-advertised with higher DBE goals. 

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Under IDOT’s DBE program, if a bidder fails to meet the 

DBE contract goal, then it may request a modification of the 

goal, and provide documentation of its good faith efforts to 

meet the goal. These requests for modification are also 

known as “waivers.” Historically, IDOT has granted goal 

modification requests. In calendar year 2007, it granted 57 of 

63 pre-award goal modification requests; the six other bidders ultimately met the contract goal with post-bid assistance from IDOT. In calendar year 2008, IDOT granted 50 of 

55 pre-award goal modification requests; the other five bidders ultimately met the DBE goal. And in calendar year 2009, 

IDOT granted 32 of 58 goal modification requests; the other 

contractors ultimately met the goals. In calendar year 2010, 

IDOT received 35 goal modification requests; it granted 21 of 

them and denied the rest. 

Secretary Hannig became IDOT’s Secretary in February 

2009. He named William Grunloh his Chief of Staff. From 

the beginning of his term, Secretary Hannig told Reed that 

he wanted IDOT to make a “very strong effort” in setting 

and attempting to achieve DBE goals. As with prior IDOT 

Secretaries, Secretary Hannig was concerned about increasing DBE participation in federal contracts. Indeed, his first 

directive to IDOT’s entire staff was to increase participation 

for minority companies. In a March 2009 meeting with Reed, 

Secretary Hannig made it “very clear that waivers would not 

be a part of a common practice of his administration.” As a 

result, Reed told the regional engineers that “the Secretary 

was not interested in entertaining waivers as part of his administration” and told a contracting organization that “request[s] for waivers would be closely scrutinized and would 

be very difficult to get.” In an April meeting about DBE participation for a bridge project, Secretary Hannig was “very 

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No. 14-1493 7

adamant that waivers were not going to be an acceptable 

part of his administration unless [they were] absolutely positively appropriate.” 

IDOT’s Director of the Office of Business and Workforce 

Diversity (OBWD) Larry Parrish, who recommended whether waiver requests were granted or denied and sought approval of his recommendation from Secretary Hannig, advised Carol Lyle, IDOT’s Deputy Director of OBWD, that he 

was under pressure not to forward waiver requests. 

From time to time, Reed had discussions about DBE 

goals with Kristi Lafleur, the Deputy Chief of Staff in the 

Governor’s Office who was responsible for oversight of 

IDOT and Darryl Harris, the Governor’s Director of Diversity Enhancement. In September 2009, Lafleur emailed Secretary Hannig that “[w]e need an action plan from [IDOT] on 

increasing the DBE numbers” and “we need an overhaul for 

the program and need to announce a new program.” Secretary Hannig responded that “an overhaul of this program is 

in order” but “[t]he federal guidelines make the program 

goals and not set asides.” Beginning with his appointment in 

November 2009 as Director of Diversity Enhancement, Harris made it clear to Secretary Hannig, Reed, and other IDOT 

personnel that DBE participation was a top priority and that 

goal modifications were not favored. 

In early December 2009, IDOT sought bids for a highway 

resurfacing project for a portion of Interstate 290, known as 

the Eisenhower Expressway. There were four federally 

funded contracts for construction work on the Eisenhower, 

one of which was Contract No. 60I57, the contract at issue in 

this case. Henry Gray, a civil engineer and EEO Officer for 

District 1, set the DBE goals for the contracts. He set DBE 

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participation goals of 8% for three of the four contracts, including Contract No. 60I57; the goal for the fourth contract 

was set at 10%. 

In mid-December Secretary Hannig ordered the withdrawal of the invitation for bids for the Eisenhower projects. 

Before doing so, he had been advised that the Governor’s 

Office wanted a weighted average DBE participation goal of 

20% for those projects. Secretary Hannig wrote Reed and 

Grunloh that “we need to get the [E]isenhower up to 20% 

minority participation” and back on schedule. 1 Secretary 

Hannig and Reed were comfortable that the goal could be 

met within the law. Reed advised Secretary Hannig that the 

contract goals were “relatively low” and there was opportunity to increase the goals under federal law. IDOT expanded the scope of the projects and items deemed eligible 

for DBE consideration—by expanding the geographic areas 

to determine DBE eligibility and by adding pavement patching, landscaping, and other work originally reserved for 

small business initiatives to the existing DBE goals. These 

efforts increased the weighted average of the projects to 20%. 

IDOT issued a revised invitation for bids for a January 2010 

letting with a new DBE participation goal on Contract No. 

60I57 of 22%. 

Earlier in 2009, IDOT had sought approval from USDOT 

to use “split goals” on a Mississippi River Bridge Project. 

USDOT rules do not allow “split goals”—separate goals for 

minorities and women. On December 14, Harris sent the 

Governor’s Chief of Staff and others an email indicating that 

 

1 There is no “minority participation” goal, and, as noted, DBE status is 

not limited to any particular minority group.

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No. 14-1493 9

the Federation of Women Contractors was “willing[] to drop 

[its] opposition to split goals” on the project if IDOT implements a “no waiver policy” like that of the Capital Development Board. Harris testified that he never agreed to have 

IDOT implement a no-waiver policy, but rather agreed to 

“bring it up for consideration.” 

On December 23, Secretary Hannig held a mandatory 

meeting with Grunloh, Reed, Parrish, and IDOT’s Chief 

Counsel Ellen Schanzle-Haskins, as well as with some regional engineers and district EEO officers—the persons responsible for setting contract goals in their respective districts. Secretary Hannig made it clear that the staff needed to 

be more aggressive in setting DBE goals, that is, they needed 

to increase the goals. He expressed his concern about waivers and goal modifications, explaining that he did not want 

to have to decide between goal attainment and waivers and 

modifications. IDOT’s Regional Engineer for the Metra East 

area, Mary Lamie, testified that the Secretary repeated several times that there would be no DBE waivers. However, 

she also said that based on the context of the meeting, she 

was “left with the impression that Secretary Hannig wasn’t 

saying no waivers under any circumstances will ever be issued” but that requests for “waivers were going to be reviewed” at a high level, and “we needed to make sure that 

the appropriate documentation was provided” in order for a 

waiver to be issued. 

The FHWA approved the methodology IDOT used to establish its statewide overall DBE goal of 22.77%. The FHWA 

reviewed and approved the individual contract goals for 

work on the Eisenhower projects for IDOT’s January 15, 

2010, bid letting. It also approved the IDOT DBE program 

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amendment that required contractors to submit with their 

bids their DBE utilization plans and documentation of good 

faith efforts to meet DBE goals. 

On January 6, 2010, IDOT held an informational meeting 

for general contractors and DBE firms regarding the January 

15, 2010 bid letting. IDOT discussed changes in its DBE contracting procedures and requirements. The District 8 (Metra 

East) EEO Officer Lee Coleman stated that Secretary Hannig 

had told him that no waivers would be granted with respect 

to DBE contract goals for the letting. However, IDOT’s Director of Highways Reed told Secretary Hannig that a nowaiver policy was not possible because it violated the law. 

Secretary Hannig told Harris that a no-waiver policy was 

not allowed under federal law. The Secretary also advised 

the Governor’s Chief Operating Officer Jack Lavin that IDOT 

was doing its best to follow the law and did not appreciate 

Harris trying to interject himself into IDOT’s business. 

IDOT has a “Bidders’ List,” also known as the “For Bid 

List of Bidders” and “For Bid List,” which identifies all approved, prequalified general contractors for each item on a 

letting. DBEs rely on the For Bid List so they know to which 

contractors to submit subcontracting quotes. DBEs typically 

will not submit subcontracting quotes to general contractors 

who are not on the For Bid List. On January 14, IDOT issued 

the final For Bid List, identifying the authorized bidders on 

each project in the January 15 letting. IDOT inadvertently 

left Dunnet Bay off the For Bid List. 

On January 15, Dunnet Bay submitted to IDOT a bid of 

$10,548,873.98 for Contract No. 60I57, which was the lowest 

bid on the contract. Dunnet Bay’s bid was 0.73% under the 

engineer’s estimate but 16% over the program estimate, exCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
No. 14-1493 11

ceeding the latter estimate by about $1.3 million.2 Dunnet 

Bay submitted its DBE utilization plan, noting that it had 

planned to meet the DBE goal of 22%, but identified only 

$871,582.55 of subcontracting or 8.26% of its bid for DBE participation.3 Three other bids were submitted; each of them 

met the DBE goal. The regional engineer for District 1 advised Director Reed that Dunnet Bay’s bid was within the 

awardable range. 

Dunnet Bay requested a goal modification, also known as 

a waiver, based on its good faith efforts to obtain the DBE 

goal. In December 2009, Dunnet Bay had attended a symposium where it met some DBEs. Beginning on January 4, 2010, 

Dunnet Bay faxed DBE subcontractors invitations to submit 

quotes and followed-up about a week later with telephone 

calls. Dunnet Bay solicited 796 companies, 453 of which were 

DBEs. It had contacted DBE networking organizations such 

as the Black Contractors United, Chicago Minority Business 

Development Council, and Chicago Urban League, and ad-

 

2 The engineer’s estimate is calculated by the relevant district engineer; it 

is a detailed analysis of the average cost of each work item and the total

expenses. The program estimate is set by IDOT and used to allocate 

available funds for the fiscal year. A bid is compared to the engineer’s 

estimate to determine whether or not it is within the awardable range. 

The program estimate is used to determine whether there is money in 

IDOT’s budget to pay for the project. Reed stated that bids are measured 

against both the engineer’s estimate (to determine if the bid is reasonable) and against the program estimate (to ensure there is enough money 

in the budget). 

3 Prior to 2010, a successful low bidder was required to submit its DBE 

utilization plan within 7 days after the letting. Effective with the January 

15, 2010 letting, contractors were required to submit their DBE utilization 

plans and documentation of good faith efforts with their bids. 

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vertised subcontracting opportunities on its website. In addition, Dunnet Bay’s president attended a mandatory pre-bid 

meeting, which provided DBEs an opportunity to network 

with prime contractors interested in bidding on the Eisenhower project. Dunnet Bay’s efforts were essentially the 

same that it had made in the past and had proven successful 

in meeting DBE goals. Dunnet Bay was not among those 

contractors who often sought goal modification requests. In 

fact, Dunnet Bay met the goal for 8 of the 9 bids in the January 15, 2010 letting. However, despite utilizing IDOT’s supportive services in the past, Dunnet Bay did not contact supportive services in connection with the Eisenhower project. 

Its president offered the explanation that supportive services 

were not of “any help.” 

DBE subcontractors submitted to Dunnet Bay post-bid 

quotes that would have enabled it to meet the DBE participation goal. At least one of the subcontractors indicated that its 

quote would have been submitted earlier had it known that 

Dunnet Bay was bidding on the project, that is, had IDOT 

not left Dunnet Bay off the For Bid List. 

An interview of Darryl Harris was published in the January 2010 issue of Capital City Courier. (Governor Quinn was 

facing a formidable challenger in the Democratic primary 

election to be held on February 2, 2010.) In the interview, 

Harris discussed the DBE program on the Eisenhower projects: 

I can tell you one of the greatest successes that 

we have so far is that we have a project in the 

Chicago area called the Eisenhower Highway 

Project, which is a $90 billion dollar project. 

Traditionally, goals in the past were set around 

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No. 14-1493 13

6 or 8 percent. This administration can go on 

record that our goal is 20 percent, with one 

stage of that project being 30 percent for minority-owned businesses. Already you can see that 

the Governor is committed to providing opportunities for minorities and women ... . 

The Governor remains steadfast on a no-waiver policy. This has been a practice in C.D.B. [Capital Development Board] for several years. So, now we’re encouraging the Department of Transportation to also 

have a no waiver policy. 

[O]ur no-waiver policy is just that. You have to 

meet it. When we put goals on a project, we 

strongly encourage that those goal[s] are being 

met. 

The article was not well-received by IDOT. Secretary 

Hannig was upset that Harris would make such statements 

that were contrary to federal law. Hannig had advised Harris that a “no waiver” policy was not allowed under federal 

law and that IDOT would not implement a policy “that was 

clearly in violation of the federal laws.” The article drew objection from the Illinois Road & Builders Association who 

wrote Governor Quinn, requesting “complete repudiation” 

of Harris’s statements about a “no-waiver policy.” Secretary 

Hannig and IDOT’s Chief Counsel responded by indicating 

that IDOT does not violate federal law and regulations, and 

that IDOT has granted and does grant waivers where appropriate. 

In an email dated January 20, 2010, from Secretary Hannig to Harris and copied to Lafleur in the Governor’s Office, 

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14 No. 14-1493 

Hannig advised of the results of the bidding on Contract No. 

60I57: 

The fourth project has 4 bidders. The low bidder is over budget but close in dollar amounts 

but is the only bidder to miss the DBE goals. 

Under our rules since the lowest bidder is close 

to our pre-bid estimate, he would normally be 

given the award if he could show a good faith 

effort to meet the DBE goals and was granted a 

waiver by I.D.O.T. If I.D.O.T. rules he did not 

make a good faith effort I.D.O.T. could award 

the contract to the next lowest bidder or rebid 

the project. 

Secretary Hannig testified that the email was mistaken because the low bidder would not normally be awarded the 

contract because the bid was over IDOT’s estimate. He explained, “We would have to take a look at it, and there could 

be some circumstances where it would be accepted.” IDOT 

Chief Counsel Schanzle-Haskins stated that “[IDOT] would 

not normally award a contract that was [$1.3 million] over 

the program estimate”; instead, it “normally would reject the 

bid.” 

IDOT held a series of meetings to decide whether to 

award the Eisenhower contracts. Three of the bids were 

“way over” the program estimates. It was discussed that 

Dunnet Bay as the low bidder was over the program estimate, but within the awardable range. Secretary Hannig expressed concern about the race, gender, and ethnicity of the 

DBEs on the Eisenhower projects. Harris expressed concern 

that there were not enough African American subcontractors 

on the DBE list. Reed made recommendations to Secretary 

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No. 14-1493 15

Hannig regarding whether to rebid contracts, and he followed her recommendations to rebid contracts for financial 

concerns. Reed recommended to Secretary Hannig that Contract No. 60I57 be rebid because the low bidder was 16% 

over the project estimate and was left off the For Bidders 

List. 

In a letter dated January 22, 2010, IDOT advised Dunnet 

Bay that it had made a “preliminary determination” that 

Dunnet Bay had not made good faith efforts to meet the DBE 

goal. Dunnet Bay’s good faith efforts were not considered at 

that time, however. Rather, where the bidder failed to meet 

the DBE goal despite documentation of good faith efforts, 

IDOT initially rejected the bid and all bids as nonresponsive. According to Carol Lyle, IDOT had decided to 

preliminarily reject any bid that did not meet the DBE goal 

and allow the contractor to seek a reconsideration hearing. A 

reconsideration hearing was set for January 25 to allow 

Dunnet Bay to provide documentation of its good faith efforts. 

Secretary Hannig appointed IDOT Chief of Staff Grunloh, a former Democratic State Representative, to serve as 

reconsideration officer. As noted, Grunloh had participated 

in the December 23 meeting where Secretary Hannig made it 

clear he wanted aggressive DBE goal setting and expressed 

concern about goal modification requests. Dunnet Bay’s reconsideration hearing was Grunloh’s first as a hearing officer. Before the hearing, Lyle briefed Grunloh on the issues 

relevant to the reconsideration hearing, provided him with a 

copy of the applicable federal regulations and standards, including the good faith effort standards in Appendix A to 

Part 26 of the Code of Federal Regulations, and advised him 

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of the resources that were available to assist contractors in 

meeting DBE goals. 

Grunloh, Lyle, Dunnet Bay’s owner and president Tod 

Faerber, and Dunnet Bay employee Sarah Rose attended the 

reconsideration hearing. Dunnet Bay presented evidence of 

its good faith efforts. However, Faerber admitted that they 

had not used IDOT’s supportive services. Dunnet Bay argued that it would have met the contract’s DBE goal but for 

IDOT’s error in leaving it off the For Bid List, which impacted the DBEs’ submission of timely subcontracting quotes to 

Dunnet Bay. 

After the reconsideration hearing, Faerber met with Lyle 

and Grunloh. Lyle initially believed that Dunnet Bay had 

demonstrated sufficient good faith efforts. She testified, 

however, that a major reason for this belief was because 

Dunnet Bay had been left off the For Bid List. Lyle subsequently expressed the opinion that Dunnet Bay could have 

done more to demonstrate good faith efforts, namely, by 

contacting supportive services as well as IDOT’s Bureau of 

Small Business Enterprises and the district EEO officer. 

Faerber also met with Secretary Hannig to express serious concern about his ability to get a fair hearing given the 

Darryl Harris article, which “seemed to imply that waivers 

were not going to be granted.” The Secretary responded that 

he understood, but he was under pressure from Harris not 

to grant waivers. Faerber candidly testified that Secretary 

Hannig did not indicate whether or not IDOT would grant 

waivers. 

Grunloh decided that Dunnet Bay’s reconsideration request should be denied, having concluded that it had not 

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No. 14-1493 17

demonstrated good faith efforts to obtain DBE participation. 

Although Grunloh prepared no contemporaneous writing of 

his reasoning, he summarized his reasons as follows: (1) 

Dunnet Bay did not utilize IDOT’s supportive services, and 

(2) the second, third, and fourth next lowest bidders were 

able to meet the 22% goal. 

Grunloh also recommended to Secretary Hannig that the 

contract be rebid instead of awarded to the second lowest 

bidder because the low bidder (Dunnet Bay) had not been 

included on the final For Bid List. Similarly, Chief Counsel 

Schanzle-Haskins advised Secretary Hannig that IDOT 

“screwed up” by leaving Dunnet Bay off the bidders list, and 

so, in fairness, IDOT should not award the contract to the 

second lowest bidder. Because the low bidder was 16% over 

the project estimate and was left off the Final For Bid List, 

Secretary Hannig decided not to award the contract to the 

second lowest bidder and re-let Contract No. 60I57. 

On February 2, Secretary Hannig contacted Faerber by 

telephone and advised that IDOT was not going to grant 

Dunnet Bay a waiver for the project and its bid was going to 

be rejected because it did not meet the DBE goal. Hannig explained that IDOT “felt bad” because Dunnet Bay was left 

off the For Bid List, and IDOT was going to rebid the project 

rather than award it to the second lowest bidder. Secretary 

Hannig sent Dunnet Bay a letter dated February 2, 2010, stating that its bid was “considered non-responsive and is hereby rejected.” Secretary Hannig testified that Dunnet Bay’s 

bid was rejected because it did not meet the DBA goal, but it 

“could have been rejected because [it] was too high”; however, IDOT never reached the question of whether or not it 

should award the contract based on the amount. Secretary 

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18 No. 14-1493 

Hannig explained that had Dunnet Bay met the DBE goal, 

the next question would have been whether the bid was appropriate, and Reed had recommended that IDOT rebid the 

contract. 

Four separate Eisenhower Expressway projects were advertised for bids for the January 15, 2010 bid letting. IDOT 

granted one of four goal modifications requested from that 

bid letting. (Reconsideration Hearing Officer Grunloh granted modification of the DBE participation goal on March 4, 

2010.) Only one of the four projects was awarded; the other 

three, including Contract No. 60I57, were unacceptable to 

IDOT and were rebundled and re-advertised for bids for a 

February 2010 special letting. The re-bids were “much more 

competitive.” Although Dunnet Bay’s bid was lower than its 

first bid, it was not the lowest bid; it was the third out of five 

bidders. 

On February 26, 2010, Dunnet Bay sued IDOT and Secretary Hannig in his official capacity, asserting race discrimination and equal protection claims under 42 U.S.C. §§ 1981 

and 1983; Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 

2000d; and Section 5 of the Illinois Civil Rights Act of 2003, 

740 ILCS 23/1–5. Dunnet Bay sought damages as well as a 

declaratory judgment that the DBE Program is unconstitutional and injunctive relief against its enforcement. Dunnet 

Bay sought summary judgment as to liability, contending 

that the Defendants exceeded the authority granted to them 

in the federal rules regarding DBE programs, so that the 

DBE Program was not insulated from constitutional attack 

and could not withstand strict scrutiny. Defendants also 

sought summary judgment, arguing that the DBE program 

was not subject to attack, that Dunnet Bay was not subjected 

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No. 14-1493 19

to intentional race discrimination, and that Dunnet Bay 

lacked standing to raise an equal protection challenge based 

upon race. 

In a comprehensive and well-written opinion, the district 

court granted the Defendants’ motion and denied Dunnet 

Bay’s motion. The court concluded “that Dunnet Bay lacks 

Article III standing to raise an equal protection challenge because it has not suffered a ‘particularized’ injury that was 

caused by IDOT. Dunnet Bay was not deprived of the ability 

to compete on an equal basis.” Dunnet Bay Constr. Co. v. 

Hannig, 3:10-cv-3051, 2014 WL 552213, at *30 (C.D. Ill. Feb. 

12, 2014). The court also determined that Dunnet Bay, which 

does not qualify as a small business, lacks prudential “standing to vindicate the rights of a (hypothetical) white-owned 

small business.” Id. 

Even if Dunnet Bay had standing to bring an equal protection claim, the court concluded that the Defendants were 

entitled to summary judgment. Id. It stated that to establish 

an equal protection violation, IDOT would have to show 

that it was treated less favorably than another similarly situated entity. The court found that only speculation could resolve whether Dunnet Bay or any other contractor would 

have been awarded the Contract but for IDOT’s DBE Program. It reasoned that no one could know what the second 

lowest bidder’s bid would have been if it had not met the 

22% goal or what Dunnet Bay’s bid would have been had it 

met the 22% goal, or whether Dunnet Bay would have been 

awarded the contract had it demonstrated adequate good 

faith efforts because its bid was over the program estimate. 

And because Dunnet Bay was held to the same standards as 

every other bidder, the court concluded that Dunnet Bay 

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20 No. 14-1493 

could not establish that it was the victim of racial discrimination. Id. at *31. 

Moreover, the court determined that IDOT had not exceeded its federal authority under the federal rules and that 

Dunnet Bay’s challenge to the DBE program fails under 

Northern Contracting, Inc. v. Illinois, 473 F.3d 715, 721 (7th Cir. 

2007), which insulates a state DBE program from a constitutional attack absent a showing that the state exceeded its 

federal authority. Id. at *26-*29. The court determined that 

there was no reasonable basis to find that IDOT exceeded its 

federal authority by (1) setting the 22% DBE goal on the Eisenhower Contract; (2) imposing a “no waiver” policy by 

refusing to grant waivers of DBE goals, given that a waiver 

was granted in connection with the January 15, 2010 letting 

at issue and waivers were granted before and after that letting; (3) denying Dunnet Bay’s waiver request initially and 

on reconsideration upon finding that it did not make adequate good faith efforts; and (4) omitting from its denial letter the reasons why its good faith efforts were inadequate, 

given that the “technical” violation did not prejudice Dunnet 

Bay. Furthermore, because IDOT rebid the project, the court 

concluded that a reconsideration hearing was not required, 

and because the contract was not awarded to the next lowest 

bidder, it decided the claim was moot. Id. at *29. Dunnet Bay 

appeals from the district court’s judgment. 

II. DISCUSSION 

Dunnet Bay contends that it was denied a state highway 

construction contract because of race discrimination in 

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No. 14-1493 21

IDOT’s DBE Program. We review the district court’s ruling 

on the cross-motions for summary judgment de novo, construing all reasonable inferences from the record in favor of 

the party against whom the motion under consideration is 

made. Tompkins v. Cent. Laborers’ Pension Fund, 712 F.3d 995, 

999 (7th Cir. 2013). 

A. Dunnet Bay’s Standing to Raise an Equal Protection 

Claim 

The first issue we address is whether Dunnet Bay has 

standing to challenge IDOT’s DBE Program on the ground 

that it discriminates on the basis of race in the award of 

highway construction contracts. In other words, is Dunnet 

Bay a proper plaintiff to challenge the DBE program on the 

basis of alleged race discrimination? If Dunnet Bay lacks 

standing, then we lack jurisdiction to consider the merits of 

the equal protection claim. Steel Co. v. Citizens for a Better 

Env’t, 523 U.S. 83, 94 (1998). 

Standing arises under Article III’s “case or controversy” 

requirement. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 

560 (1992). Article III standing has three elements: (1) an “injury in fact,” that is, ”an invasion of a legally protected interest which is ... concrete and particularized, and ... actual or 

imminent”; (2) a causal connection between the injury and 

the challenged conduct, meaning that the injury is “fairly 

traceable” to the challenged conduct; and (3) a likelihood 

“that the injury will be redressed by a favorable decision.” 

Lujan, 504 U.S. at 560–61 (citations and internal quotation 

marks omitted). These are the constitutional minimum requirements for standing. See id. at 560. 

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22 No. 14-1493 

There are also prudential limitations on standing. Lujan, 

504 U.S. at 560; Warth v. Seldin, 422 U.S. 490, 498–99 (1975). 

One of these limitations is that “when the asserted harm is a 

‘generalized grievance’ shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction.” Warth, 422 U.S. 

at 499. Another prudential limitation is that a litigant “generally must assert his own legal rights and interests” and 

cannot assert “the legal rights or interests of third parties.” 

Id. In contrast with constitutional limitations on standing, 

prudential limitations are not jurisdictional and may be disregarded in certain situations. Id. at 500–01 (recognizing that 

as long as constitutional standing is satisfied, a party “may 

have standing to seek relief on the basis of the legal rights 

and interests of others”). In addition, a litigant may forfeit 

prudential standing arguments by failing to present them in 

the district court. See Bd. of Educ. of Oak Park & River Forest 

High Sch. Dist. No. 200 v. Kelly E., 207 F.3d 931, 934 (7th Cir. 

2000) (stating that “prudential considerations ... are forfeited 

if not presented in a timely fashion”). 

“The party invoking federal jurisdiction bears the burden 

of establishing [the standing] elements[,] ... [and] each element must be supported ... with the manner and degree of 

evidence required at the successive stages of the litigation.” 

Edgewood Manor Apart. Homes, LLC v. RSUI Indem. Co., 733 

F.3d 761, 771 (7th Cir. 2013) (quoting Lujan, 504 U.S. at 561 

(citations omitted)). “At the summary-judgment stage, ‘the 

plaintiff can no longer rest on ... mere allegations, but must 

set forth by affidavit or other evidence specific facts.’” Id.

(quoting Lujan, 504 U.S. at 561 (internal quotation marks and 

citations omitted)). Thus, because the district court decided 

that Dunnet Bay lacked standing at the summary judgment 

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No. 14-1493 23

stage, mere allegations of standing are not enough; Dunnet 

Bay must present evidence to establish the elements of 

standing. 

Dunnet Bay contends that it has standing because it has 

suffered an injury in fact. First, it asserts that IDOT’s raceconscious DBE program prevented it from competing on 

equal footing with DBE contractors and prevented it from 

being awarded the contract. Dunnet Bay also claims that it 

was injured because the DBE program forced it to participate 

in a discriminatory scheme. 

The Supreme Court addressed standing to raise an equal 

protection challenge to race-conscious government contracting programs in Northeastern Fla. Chapter, Associated General 

Contractors of America v. Jacksonville, 508 U.S. 656 (1993), and 

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

Northeastern Florida, an association of contractors challenged 

a Jacksonville, Florida ordinance setting aside 10% of city 

contracts for businesses that were minority- or womenowned. Once a project was earmarked for minority business 

enterprise bidding, it was “deemed reserved for minority 

business enterprises only” and non-minority business enterprises could not even bid on the project. 508 U.S. at 658. The 

Court concluded: 

When the government erects a barrier that 

makes it more difficult for members of one 

group to obtain a benefit than it is for members 

of another group, a member of the former 

group seeking to challenge the barrier need not 

allege that he would have obtained the benefit 

but for the barrier in order to establish standing. The “injury in fact” in an equal protection 

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24 No. 14-1493 

case of this variety is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the 

benefit. 

Id. at 666. The Court held that “in the context of a challenge 

to a set-aside program, the ‘injury in fact’ is the inability to 

compete on an equal footing in the bidding process, not the 

loss of a contract.” Id. Therefore, to establish standing to 

challenge a set-aside program, a plaintiff “need only demonstrate that it is able and ready to bid on contracts and that a 

discriminatory policy prevents it from doing so on an equal 

basis.” Id.; see Gratz v. Bollinger, 539 U.S. 244, 262 (2003) 

(holding that Caucasian applicant for university admission 

had standing to seek prospective relief challenging university’s use of race in its admissions policy where he was denied 

admission but a minority applicant with his qualifications 

would have been admitted and applicant was “able and 

ready” to apply as a transfer student if the university 

stopped using race in its admissions policy). 

In Adarand, the Court addressed whether a subcontractor 

had standing to raise an equal protection challenge to a law 

that gave general contractors a direct financial incentive to 

hire subcontractors controlled by “socially and economically 

disadvantaged individuals.” 515 U.S. at 204. The plaintiff 

submitted the low bid but was not awarded the subcontract 

and submitted evidence that the general contractor would 

have accepted its bid, but for the subcontractor compensation clause that provided it additional payment for hiring 

the disadvantaged subcontractor. Id. at 205. The plaintiff also 

established that it often competed for contracts against companies certified as small disadvantaged businesses. Id. at 212. 

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No. 14-1493 25

The Court held that the plaintiff had standing to seek forward-looking relief because the “discriminatory classification prevent[s] the plaintiff from competing on equal footing.” Id. at 211 (citing Northeastern Fla., 508 U.S. at 667). In 

other words, because the subcontractor compensation clause 

made the plaintiff more expensive to hire, it could not compete on equal footing with subcontractors considered disadvantaged because of their race. See Regents of Univ. of Cal. v. 

Bakke, 438 U.S. 265, 280–81 n.14 (1978) (holding white medical school applicant had standing to challenge school’s admissions program which reserved a prescribed number of 

positions in the class for disadvantaged minorities because 

the “injury” was the school’s “decision not to permit [him] to 

compete for all 100 places in the class, simply because of his 

race”); Alliant Energy Corp. v. Bie, 277 F.3d 916, 920–21 (7th 

Cir. 2002) (stating that “[a] statute that deprives a firm of an 

opportunity to compete for business gives standing to sue”). 

In arguing that it was unable to compete on equal footing 

with DBE contractors, Dunnet Bay asserts that it “need only 

show that it was excluded from competition and consideration for a government benefit because of race-based 

measures.” Yet Dunnet Bay has not established that it was 

excluded from competition or otherwise disadvantaged because of race-based measures. First, in contrast with Northeastern Florida, nothing in IDOT’s DBE program excluded 

Dunnet Bay from competition for any contract. IDOT’s DBE 

program is not a “set aside program like Jacksonville’s” in 

which non-minority owned businesses could not even bid 

on certain contracts. Under IDOT’s DBE program, all contractors—minority and non-minority contractors alike—can 

bid on all contracts, subject to the DBE goals or good faith 

efforts to satisfy those goals. 

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26 No. 14-1493 

Further, Jacksonville’s ordinance favored “minority 

business enterprises,” defined as a business with minority or 

female ownership. IDOT’s DBE program is designed to increase the participation of socially and economically disadvantaged businesses in construction contracts, see N. Contracting, 473 F.3d at 720–24 (holding IDOT’s DBE program 

constitutional), and therefore addresses a broader category 

of disadvantaged businesses than that addressed in Jacksonville’s ordinance. The absence of complete exclusion from 

competition for certain projects with minority- or womenowned businesses also distinguishes some of the other authorities cited by Dunnet Bay and amici: Eng’g Contractors 

Ass’n of S. Fla. Inc. v. Metro. Dade Cnty., 122 F.3d 895, 905–06 

(11th Cir. 1997) (holding trade associations whose members 

regularly performed work for county had standing to challenge county’s affirmative action program that allowed contracts to be set aside for bidding only among minority and 

women business enterprise programs); Coral Constr. Co. v. 

King Cnty., 941 F.2d 910, 929–30 (9th Cir. 1991) (holding contractor had standing to challenge county’s minority- and 

women-owned business enterprise program where a setaside method applied under which a contractor had to use 

minority- or women-owned businesses for a certain percentage of work on the contract). 

And unlike in Adarand, where the challenged law explicitly favored minority-owned subcontractors by providing a 

direct financial incentive to contractors to hire them, Dunnet 

Bay has not alleged, let alone produced evidence to show, 

that it was treated less favorably than any other contractor 

because of the race of its owners. The lack of an explicit preference for minority-owned businesses distinguishes other 

authorities cited by Dunnet Bay. See Bras v. Cal. Pub. Utils. 

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No. 14-1493 27

Comm’n, 59 F.3d 869, 871 (9th Cir. 1995) (public utility provided a pre-qualification preference to minority- and women-owned businesses and plaintiff lost opportunity to negotiate with utility because race and gender were considered); 

Associated Gen. Contractors of Cal., Inc. v. Coalition for Econ. 

Equity, 950 F.2d 1401, 1404 (9th Cir. 1991) (ordinance gave 

5% bid preference to minority- and women-owned businesses for public contracts); see also Coral Constr., 941 F.2d at 914, 

930 (holding contractor had standing to challenge program 

that gave minority- and women-owned businesses a preference for public contracts if their bid was within 5% of the 

lowest bid). Under IDOT’s DBE program, all contractors are 

treated alike and subject to the same rules. 

Still other authorities cited by Dunnet Bay or amici are 

inapposite because the contractors’ standing was based in 

part on the fact that they lost an award of a contract for failing to meet the disadvantage business enterprise goal or failing to show good faith efforts, despite being the low bidders 

on the contract, and the second lowest bidder was awarded 

the contract. See Safeco Ins. Co. of Am. v. City of White House, 

Tenn., 191 F.3d 675, 689 (6th Cir. 1999) (holding contractor 

and its insurer had standing to challenge the constitutionality of EPA regulations imposing a racial preference on minority subcontracts where the alleged failure to comply with the 

regulations resulted in the loss of a contract which was 

awarded to the second lowest bidder and the regulations 

placed white subcontractors at a competitive disadvantage); 

Monterey Mech. Co. v. Wilson, 125 F.3d 702, 704 (9th Cir. 1997) 

(noting that plaintiff submitted the lowest bid but did not 

get the contract since its “bid was disqualified because [it] 

did not comply with a state statute” and the second lowest 

bidder won the contract); Concrete Works of Colo., Inc. v. City 

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28 No. 14-1493 

& Cnty. of Denver, 36 F.3d 1513, 1518 & n.5 (10th Cir. 1994) 

(holding contractor demonstrated injury in fact where it 

“submitted bids on three projects and the [o]rdinance prevented it from competing on an equal basis with minority 

and women-owned prime contractors” and noting that the 

plaintiff submitted the lowest bid on one project but its bid 

was not accepted because of its failure to meet the minoritybusinesses enterprise goals or good faith requirements and 

the bid was awarded to the second lowest bidder); Contractors Ass'n of E. Pa., Inc. v. City of Phila., 6 F.3d 990, 994–96 (3d 

Cir. 1993) (concluding that associations of contractors had 

standing to challenge city ordinance creating contract preferences for businesses owned by minorities, women, and 

disabled persons where association members presented evidence they were denied contracts for failure to meet the DBE 

goals despite being low bidders); but see W.H. Scott Constr. 

Co. v. City of Jackson, Miss., 199 F.3d 206, 214–15 (5th Cir. 

1999) (holding that non-minority contractor had standing to 

bring an equal protection challenge to city’s minority participation program because non-minority contractors were at a 

competitive disadvantage with minority contractors who 

could satisfy the minority-participation goals with their own 

work, but relying on Monterey Mechanical and Concrete 

Works). 

In contrast with these cases where the plaintiffs had 

standing, Dunnet Bay cannot establish that it would have 

been awarded the contract on the Eisenhower project but for 

its failure to meet the DBE goal or demonstrate good faith 

efforts. The evidence, even when viewed in the light most 

favorable to Dunnet Bay, demonstrates that although Dunnet Bay’s bid was rejected for failing to meet the DBE goal, 

its bid was 16% or about $1.3 million over the program estiCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
No. 14-1493 29

mate, and Director Reed recommended that IDOT rebid the 

contract because the low bid was 16% over the project estimate and Dunnet Bay had been left off the For Bidders List. 

The evidence further establishes that Secretary Hannig always followed Reed’s recommendations to rebid contracts 

for financial concerns. Indeed, the Secretary decided to rebid 

the contract because the low bidder was 16% over the project 

estimate and was left off the final For Bid List. 

Moreover, even assuming that Dunnet Bay could establish that it was excluded from competition with DBEs or that 

it was disadvantaged as compared to DBEs, it cannot show 

that any difference in treatment was because of race. The 

regulations define a DBE as “a for-profit small business concern” that is owned or controlled “by one or more individuals who are both socially and economically disadvantaged.” 

49 C.F.R. § 26.5 (2009). “Socially and economically disadvantaged” individuals include women, “Black Americans,” 

“Hispanic Americans,” and others. Id. And an individual in 

any racial group or gender may qualify as “socially and economically disadvantaged.” See id. However, “a firm is not an 

eligible DBE in any Federal fiscal year if the firm (including 

its affiliates) has had average annual gross receipts ... over 

the firm’s previous three fiscal years, in excess of $22.41 million.” 49 C.F.R. § 26.65(b) (2009). For the three years preceding 2010, the year it bid on the Eisenhower project, Dunnet 

Bay’s average gross receipts were over $52 million. Therefore, Dunnet Bay’s size makes it ineligible to qualify as a 

DBE, regardless of the race of its owners. Thus, even if a 

DBE general contractor can count its own work force toward 

meeting the DBE participation goal without subcontracting 

any work on the project, whereas a non-DBE general contractor cannot, Dunnet Bay has not shown that any additionCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
30 No. 14-1493 

al costs or burdens that it would incur are because of race. The 

additional costs and burdens are equally attributable to 

Dunnet Bay’s size. 

To put it differently, Dunnet Bay has not established that 

the denial of equal treatment resulted from the imposition of 

a racial barrier. Accordingly, this case is unlike those relied 

on by Dunnet Bay where the plaintiff established that the 

difference in treatment and any additional costs and burdens 

imposed on it were because of race (or gender). For example, 

in Monterey Mechanical, the challenged ordinance provided 

that “contracts awarded by ... [the state] for construction ... 

shall have statewide participation goals of not less than 15 

percent for minority business enterprises [and] not less than 

5 percent for women business enterprises” 125 F.3d at 704 

(citing Cal. Pub. Contract Code § 10115(c)). The court concluded that the contractor was at a competitive disadvantage 

with minority- and women-owned contractors who could 

use their own work toward the participation goals and be 

excused from subcontracting the good faith requirements. Id.

at 706–07. Race (or gender) alone was the barrier to equal 

competition. Id. 

As for its second alleged injury, Dunnet Bay argues that 

it was forced to participate in a discriminatory scheme and 

was required to consider race in subcontracting. In Monterey 

Mechanical, the court held that “[a] person required by the 

government to discriminate by ethnicity or sex against others has standing to challenge the validity of the requirement, 

even though the government does not discriminate against 

him.” Id. at 707. This holding was followed in Safeco Insurance Co., 191 F.3d at 689, and Lutheran Church-Missouri Synod 

v. FCC, 141 F.3d 344, 350 (D.C. Cir.) (noting that “forced disCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
No. 14-1493 31

crimination may itself be an injury”), reh’g denied, 154 F.3d 

344 (D.C. Cir. 1998), but the latter court couched the issue in 

terms of third-party standing. It seems that Monterey Mechanical collapsed third-party standing into Article III standing. And in each of these cases—Monterey Mechanical, Safeco 

Insurance Co., and Lutheran Church-Missouri Synod—the 

plaintiffs already had established injury in fact, that is, suffered another direct harm because of the challenged statute 

or regulation. See Safeco Ins. Co., 191 F.3d at 689 (failure to 

comply with regulations resulted in the loss of a contract 

and institution of the lawsuit); Lutheran Church-Mo. Synod, 

141 F.3d at 348–49 (FCC order found that church violated 

EEO regulations and imposed a fine and reporting requirements); Monterey Mech., 125 F.3d at 704 (plaintiff submitted 

the low bid but did not get the job because of its failure to 

comply with a state statute). As discussed above, where the 

plaintiff has established injury in fact, it may assert thirdparty rights. 

Neither we nor the Supreme Court has adopted Monterey 

Mechanical’s broad view of standing. We recognize that the 

Court has held that “one form of injury under the Equal Protection Clause is being forced to compete in a race-based system that may prejudice the plaintiff.” Parents Involved in 

Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 719 (2007) 

(citing Adarand and Northeastern Fla.). However, the injuries 

asserted in Parents Involved were the denial of assignment to 

a certain public high school based on race and the interest 

“in not being forced to compete for seats at certain high 

schools in a system that uses race as a deciding factor in 

many of its admissions decisions.” Id. The plaintiffs’ children 

were competing with minorities for assignment to high 

school, and race was used as a tiebreaker to make assignCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
32 No. 14-1493 

ments to more popular schools. Parents Involved, 551 U.S. at 

711–12. In other words, race often was the determinative factor in the assignment decisions. Similarly, non-minority contractors were precluded from competing at all for certain 

projects under the Jacksonville ordinance in Northeastern 

Florida, and in Adarand, the government gave general contractors a financial incentive to hire minority-owned businesses. Thus, as in Parents Involved, the race of the plaintiffs 

in Northeastern Florida and Adarand was the deciding factor. 

In contrast, the race of Dunnet Bay’s owners was not the deciding factor because Dunnet Bay’s size created a barrier to 

its receipt of any advantages given DBEs. 

Furthermore, we agree with amicus NAACP Legal Defense & Educational Fund, Inc. that Monterey Mechanical’s 

broad view of standing goes against the established principle that “a plaintiff raising only a generally available grievance about government—claiming only harm to every citizen’s interest in proper application of the Constitution and 

laws” does not satisfy Article III’s requirement that the injury be concrete and particularized. See Lujan, 504 U.S. at 573–

74; see also Lance v. Coffman, 549 U.S. 437, 439 (2007) (“Our 

refusal to serve as a forum for generalized grievances has a 

lengthy pedigree.”); Allen v. Wright, 468 U.S. 737, 755 (1984) 

(stating that racial discrimination “is sufficient in some circumstances to support standing” but only those “who are 

personally denied equal treatment by the challenged discriminatory conduct” have Article III standing) (quotation 

omitted). Broadly speaking, not every contractor has “standing to challenge every affirmative-action program on the basis of a personal right to a government that does not deny 

equal protection of the laws.” Valley Forge Christian Coll. v. 

Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 

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No. 14-1493 33

489 n.26 (1982). Dunnet Bay’s claimed injury of being forced 

to participate in a discriminatory scheme amounts to “a challenge to the state’s application of a federally mandated program,” which we have determined “must be limited to the 

question of whether the state exceeded its authority.” N. 

Contracting, 473 F.3d at 720–21 (holding that IDOT may rely 

on federal government’s compelling interest in remedying 

past discrimination in construction projects and that IDOT’s 

DBE program is narrowly tailored to achieve this interest as 

IDOT did not exceed its authority). Dunnet Bay was not denied equal treatment because of racial discrimination; any 

difference in treatment is equally attributable to Dunnet 

Bay’s size. 

Although Dunnet Bay suggests that the second and third 

standing elements (causation and redressability) are not at 

issue, as the party invoking federal court jurisdiction, it 

bears the burden of establishing all three elements of standing. See Edgewood Manor Apart. Homes, 733 F.3d at 771. Amicus Pacific Legal Foundation suggests that since Dunnet Bay 

suffered an injury in fact under the DBE program, which we 

reiterate Dunnet Bay has not established, it necessarily established causation and redressability. Amicus cites Northeastern Florida, where causation and redressability followed 

from the Court’s definition of “injury in fact.” 508 U.S. at 666 

n.5. Although that was true in the context of the set-aside 

program where causation and redressability were readily 

apparent, the Court did not hold that these other elements 

are always collapsed into an injury in fact. 

Dunnet Bay has not established causation or redressability. It failed to demonstrate that the DBE program caused it 

any injury during the first letting process. Although Dunnet 

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34 No. 14-1493 

Bay submitted the low bid in the first letting, its bid was 16% 

over the project estimate. Although IDOT rejected its bid because it did not meet the DBE goal, IDOT never reached the 

question of whether the bid was appropriate. The evidence 

establishes that Reed recommended to Secretary Hannig that 

IDOT rebid Contract No. 60I57 because the low bidder was 

16% over the project estimate and was left off the For Bidders List, and that the Secretary always followed her recommendations to rebid contracts for financial concerns. Accordingly, IDOT did not award the contract to anyone under 

the first letting and re-let the contract. Dunnet Bay suffered 

no injury because of the DBE program in the first letting. Cf. 

Texas v. Lesage, 528 U.S. 18, 21 (1999) (“[W]here a plaintiff 

challenges a discrete governmental decision as being based 

on an impermissible criterion and it is undisputed that the 

government would have made the same decision regardless, 

there is no cognizable injury.”). 

Even assuming that Dunnet Bay could establish that the 

DBE program caused it an injury in the first letting, it cannot 

establish redressability: IDOT’s decision to re-let the contract 

redressed any injury. As for the second letting, the evidence 

does not establish that the DBE program caused Dunnet Bay 

any injury. In the second letting, Dunnet Bay satisfied the 

DBE goals, but its bid was not the lowest; other contractors 

submitted lower bids and met the DBE participation goals. 

Therefore, Dunnet Bay was not awarded the contract. 

Moreover, prudential limitations preclude Dunnet Bay 

from bringing its claim. A litigant “generally must assert his 

own legal rights and interests, and cannot rest his claim to 

relief on the legal rights or interests of third parties.” Warth, 

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No. 14-1493 35

422 U.S. at 499.4 Dunnet Bay acknowledges that before a litigant may be permitted to assert another’s rights to establish 

a claim, he must satisfy Article III standing requirements. See 

Craig v. Boren, 429 U.S. 190, 194 (1976) (“[W]e conclude that 

appellant ... has established independently her claim to assert jus tertii standing. The operation of [the challenged statutes] plainly has inflicted ‘injury in fact’ upon appellant sufficient ... to satisfy the constitutionally based standing requirements imposed by Art. III.”); Barrows v. Jackson, 346 

U.S. 249, 255–56 (1953) (stating that “a person cannot challenge the constitutionality of a statute unless he shows that 

he himself is injured by its operation” but “this principle has 

no application to the instant case in which respondent has 

been sued for damages ... and ... a judgment against respondent would constitute a direct ... injury to her”); Lutheran Church-Mo. Synod, 141 F.3d at 349–50 (allowing the plaintiff to raise an equal protection challenge although it had not 

suffered an equal protection injury where it was harmed by 

the FCC’s order finding it in violation of equal employment 

opportunity regulations); Apter v. Richardson, 510 F.2d 351, 

354 (7th Cir. 1975) (stating “[t]he fact that the alleged wrong 

may also have injured third parties does not deprive plaintiff 

of standing so long as she as well is injured in fact.”); see also

Warth, 422 U.S. at 501 (stating that as long as constitutional 

standing is satisfied, a party “may have standing to seek relief on the basis of the legal rights and interests of others”). 

In challenging the DBE program, Dunnet Bay is attempting 

 

4 Although IDOT has a good argument that Dunnet Bay forfeited its 

prudential standing arguments for failing to raise them in the district 

court in response to its summary judgment motion, we address prudential limitations on standing. 

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36 No. 14-1493 

to assert the equal protection rights of a non-minorityowned small business. 

City of Chicago v. Morales, 527 U.S. 41 (1999), also cited by 

Dunnet Bay, is inapposite. In that case, the Supreme Court 

was asked to review the Illinois Supreme Court’s determination that a Chicago gang ordinance was unconstitutionally 

vague. As the Court explained, “[w]hen a state court has 

reached the merits of a constitutional claim, invoking prudential limitations on the respondent’s assertion of jus tertii

would serve no functional purpose” and “state courts need 

not apply prudential notions of standing created by this 

Court.” Id. at 55 n.22. Dunnet Bay does not ask us to review 

a state court’s decision as to the constitutionality of the DBE 

program. 

A party is exempt from the prudential limitation on asserting a third party’s rights, Dunnet Bay argues, “where the 

limitation’s purpose is outweighed by the need to protect 

fundamental rights.” But Barrows, which was cited for this 

proposition, does not help Dunnet Bay. Barrows was a state 

court action to enforce a racially restrictive covenant, and the 

defendant was permitted to assert the equal protection 

rights of others in her defense against enforcement. Dunnet 

Bay is not defending against a state enforcement proceeding, 

seeking to raise the rights of others in its own defense. And 

as noted, the Barrows defendant had been sued for damages 

and thus could establish her own injury. Moreover, the 

Court concluded that the prudential limitation on standing 

was outweighed and the defendant should be allowed to assert the rights of others given the “unique situation” and 

“peculiar circumstances” presented where “the action of the 

state court ... might result in a denial of constitutional rights 

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No. 14-1493 37

and ... it would be difficult if not impossible for the persons 

whose rights are asserted to present their grievance before 

any court.” Barrows, 346 U.S. at 257. 

But here there is no allegation, let alone evidence, that a 

non-minority-owned small business could not challenge 

IDOT’s DBE program on equal protection grounds. Because 

Dunnet Bay has failed to identify an injury in fact that is fairly traceable to the challenged DBE program, it lacks Article 

III standing. And because Dunnet Bay has not established 

Article III standing, it cannot raise an equal protection challenge to the DBE program based on the rights of a nonminority small business. 

B. Whether Dunnet Bay Has Sufficient Evidence that 

IDOT’s Implementation of the DBE Program Constitutes Unlawful Race Discrimination 

In the alternative, even if Dunnet Bay has standing to 

raise an equal protection claim, IDOT is entitled to summary 

judgment. The Equal Protection Clause of the Fourteenth 

Amendment prohibits intentional and arbitrary discrimination. Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). 

Thus, to establish an equal protection claim under the Fourteenth Amendment, Dunnet Bay must show that IDOT “acted with discriminatory intent.” Franklin v. City of Evanston, 

384 F.3d 838, 846 (7th Cir. 2004). 

Racial discrimination by a recipient of federal funds that 

violates the Equal Protection Clause also violates Title VI 

and § 1981. Gratz, 539 U.S. at 275–76 & n.23. These statutes 

require proof that the plaintiff was treated differently because of race. 42 U.S.C. § 1981 (providing all persons the 

same rights to contract and benefit of laws “as is enjoyed by 

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38 No. 14-1493 

white citizens”); id. § 2000d (prohibiting discrimination “on 

the ground of race” in programs receiving federal assistance). Title VI prohibits only intentional discrimination. See

Alexander v. Sandoval, 532 U.S. 275, 281 (2001). To establish 

liability for an equal protection violation, a plaintiff must establish that the defendant acted with a discriminatory purpose and discriminated against him because of his membership in an identifiable group. Nabozny v. Podlesny, 92 F.3d 

446, 453 (7th Cir. 2002). Section 5 of the Illinois Civil Rights 

Act of 2003 was not intended to create new rights but merely 

created a new venue—state court—for discrimination claims 

under federal law. Ill. Native Am. Bar Ass’n v. Univ. of Ill., 856 

N.E.2d 460, 467 (Ill. App. Ct. 2006). 

Because IDOT’s DBE program employs racial classifications, we apply strict scrutiny in addressing Dunnet Bay’s 

constitutional challenge. Adarand Constructors, 515 U.S. at 

235 (“Federal racial classifications, like those of a State, must 

serve a compelling governmental interest, and must be narrowly tailored to further that interest.”); N. Contracting, 473 

F.3d at 720. Under strict scrutiny, “a government program 

that uses racial classifications must be narrowly tailored to 

serve a compelling governmental interest.” N. Contracting, 

473 F.3d at 720. In implementing its DBE program, IDOT 

may properly rely on “the federal government’s compelling 

interest in remedying the effects of past discrimination in the 

national construction market.” Id. at 720. “[A] state is insulated from [a constitutional challenge as to whether its program is narrowly tailored to achieve this compelling interest], absent a showing that the state exceeded its federal authority.” Id. at 721; see also Milwaukee Cnty. Pavers Ass'n v. 

Fielder, 922 F.2d 419, 423 (7th Cir. 1991) (“Insofar as the state 

is merely complying with federal law it is acting as the agent 

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No. 14-1493 39

of the federal government and is no more subject to being 

enjoined on equal protection grounds than the federal civil 

servants who drafted the regulations ... . If the state does exactly what the statute expects it to do ... we do not see how 

the state can be thought to have violated the Constitution.”). 

Thus, the issue is whether IDOT exceeded its authority under federal law. 

Dunnet Bay contends that IDOT exceeded its federal authority by effectively creating racial quotas by designing the 

Eisenhower project to meet a pre-determined DBE goal and 

eliminating waivers. If the DBE program were effectively a 

quota, it would be unconstitutional and violate the regulations. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 507 

(1989) (“[T]he 30% quota cannot be said to be narrowly tailored to any goal, except perhaps outright racial balancing.”); 49 C.F.R. § 26.43(a) (prohibiting quotas for DBEs). 

More specifically, Dunnet Bay asserts that IDOT exceeded its 

authority by: (1) setting the Contract’s DBE participation 

goal at 22% without the required analysis, (2) implementing 

a “no-waiver” policy, (3) preliminarily denying its goal modification request without assessing its good faith efforts, (4) 

denying it a meaningful reconsideration hearing, (5) determining that its good faith efforts were inadequate, and (6) 

providing no written or other explanation of the basis for its 

good-faith-efforts determination. 

In challenging the DBE contract goal, Dunnet Bay asserts 

that the issue “is not whether a 20% goal could have been 

legitimately derived” but instead argues that the DBE contract goal was “arbitrary” and that IDOT “manipulated the 

process to justify” a preordained goal. Dunnet Bay’s real 

complaint about the contract goal setting is that there were 

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40 No. 14-1493 

political motivations in resetting the DBE participation goal. 

But Dunnet Bay has not identified any regulation or other 

authority that suggests that the political motivations matter, 

provided IDOT did not exceed its federal authority in setting 

the contract goal. More to the point, Dunnet Bay does not 

actually challenge how IDOT went about setting its DBE 

goal for the contract. In its reply, Dunnet Bay argues that the 

factors set forth in the regulation to be used to determine 

contract goals were not used but were applied to justify a 

pre-ordained goal. Yet Dunnet Bay points to no evidence to 

show that IDOT failed to comply with the applicable regulation providing only general guidance on contract goal setting, 49 C.F.R. § 26.51(e)(2) (stating that a contract goal “depend[s] on such factors as the type of work involved, the location of the work, and the availability of DBEs for the work 

of the particular contract”). 

FHWA approved IDOT’s methodology to establish its 

statewide DBE goal of 22.77% and approved the individual 

contract goals for the Eisenhower project for the January 15, 

2010 bid letting. Dunnet Bay has not identified any part of 

the regulations that IDOT allegedly violated by reevaluating and then increasing its DBE contract goal, by expanding the geographic area used to determine DBE availability, by adding pavement patching and landscaping work 

into the contract goal, by including items that had been set 

aside for small business enterprises, or by any other means 

by which it increased the DBE contract goal. Indeed, as the 

district court concluded, “because the federal regulations do 

not specify a procedure for arriving at contract goals, it is not 

apparent how IDOT could have exceeded its federal authority,” Dunnet Bay Constr. Co., 2014 WL 552213, at *26; and this 

challenge is unavailing. 

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No. 14-1493 41

Next, Dunnet Bay asserts that IDOT had a “no-waiver” 

policy. Despite statements regarding a no-waiver policy and 

pressure from the Governor’s office, including from Harris, 

Dunnet Bay did not present sufficient evidence to raise a 

reasonable inference that IDOT had actually implemented a 

no-waiver policy. There is evidence that IDOT’s District 8 

EEO Officer Coleman advised contractors at a pre-letting 

meeting that Secretary Hannig said that no DBE waivers 

would be granted for the January 15, 2010 letting. However, 

IDOT did not have a no-waiver policy; instead, the undisputed evidence shows that it was IDOT’s and Secretary 

Hannig’s policy that requests for waivers would be subjected to high-level review and would not be granted unless 

shown to be appropriate. IDOT’s Director of Highways Reed 

told Secretary Hannig that a no-waiver policy was not possible because it violated the law. The Secretary told Harris 

that IDOT would follow the law. So, too, IDOT’s Regional 

Engineer for the Metra East area Lamie testified that although Secretary Hannig said that there would be no DBE 

waivers, in context he was not “saying no waivers under any 

circumstances will ever be issued” but that waiver requests 

would be reviewed at a high level and had to be supported 

by appropriate documentation. Significantly, even since Secretary Hannig took over, IDOT granted waivers. In 2009, it 

granted 32 of 58 requested waivers, and the other 26 contractors ultimately met contract goals; in 2010, IDOT granted 21 

of 35 requested waivers, that is, 60% of the waiver requests. 

IDOT even granted a waiver in connection with the January 

15 letting—the one at issue here—albeit after this lawsuit 

was filed. IDOT’s unbroken record of granting waivers refutes any suggestion of a no-waiver policy. Dunnet Bay has 

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42 No. 14-1493 

failed to raise a reasonable inference that IDOT implemented 

a no-waiver policy. 

Dunnet Bay also challenges IDOT’s rejection of its bid 

without determining whether it had made good faith efforts 

to meet the DBE goal and contests whether IDOT’s reconsideration of its bid was meaningful in violation of 49 C.F.R. 

§ 26.53. As an initial matter, the regulation provides that “[i]f 

the bidder/offeror does document adequate good faith efforts, you must not deny award of the contract on the basis 

that the bidder/offeror failed to meet the goal.” Id. § 

26.53(a)(2). IDOT ultimately determined that Dunnet Bay 

failed to document adequate good faith efforts; thus this 

provision was inapplicable and did not prevent IDOT from 

rejecting Dunnet Bay’s bid. 

Dunnet Bay asserts that reconsideration hearing officer 

Grunloh “was not an independent official with no role in the 

original determination,” but it has offered no evidence to establish that Grunloh took any part in the initial determination that Dunnet Bay failed to make the DBE goal or make 

adequate good faith efforts. See id. § 26.53(d)(2). Nor has 

Dunnet Bay not shown that Grunloh, even if part of the “political leadership” and involved in pre-letting discouragement of waivers, was ineligible to serve as the reconsideration official. 

Furthermore, Dunnet Bay argues that it made good faith 

efforts to meet the DBE goal and that the reasons given for 

IDOT’s decision that it did not make adequate good faith efforts “do not hold up.” Dunnet Bay focuses on its efforts in 

attending a pre-bid meeting, advertising with DBE networking organizations, soliciting DBEs by fax, telephoning DBEs, 

and posting subcontracting opportunities on its own webCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
No. 14-1493 43

site. In total, Dunnet Bay solicited 796 companies for subcontracting work, 453 of which were DBEs. 

A bidder “must show that it took all necessary and reasonable steps to achieve a DBE goal ... which ... could reasonably be expected to obtain sufficient DBE participation, 

even if they were not fully successful.” 49 C.F.R. Pt. 26, Appendix A, § I. The regulations provide guidance for state recipients in deciding whether a bidder that did not meet a 

contract goal has demonstrated good faith efforts to meet the 

goal, instructing recipients to consider “the quality, quantity, 

and intensity of the different kinds of efforts that the bidder 

has made.” Id., § II. State recipients are provided a nonmandatory, non-exclusive, and non-exhaustive list of actions 

to be considered in determining whether a bidder made 

good faith efforts, including the following: (1) “Soliciting 

through all reasonable and available means (e.g. attendance 

at pre-bid meetings, advertising and/or written notices) the 

interest of all certified DBEs who have the capability to perform the work of the contract ... [and] taking appropriate 

steps to follow up initial solicitations”; (2) “Selecting portions of the work to be performed by DBEs in order to increase the likelihood that the DBE goals will be achieved”; 

(3) “Providing interested DBEs with adequate information 

about the plans, specifications, and requirements of the contract”; (4) “Making efforts to assist interested DBEs in obtaining bonding, lines of credit, or insurance as required by 

the recipient or contractor”; (5) “Making efforts to assist interested DBEs in obtaining necessary equipment, supplies, 

materials, or related assistance or services”; and (6) “Effectively using the services of available minority/women community organizations; minority/women contractors’ groups; 

local, state, and Federal minority/women business assistance 

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44 No. 14-1493 

offices; and other organizations as allowed on a case-by-case 

basis to provide assistance in the recruitment and placement 

of DBEs.” Id., § IV, A–C and F–H. Further, the regulations 

instruct that “[i]n determining whether a bidder has made 

good faith efforts, you may take into account the performance of other bidders in meeting the contract.” Id. § V. The 

regulation gives an example: “[W]hen the apparent successful bidder fails to meet the contract goal, but others meet it, 

you may reasonably raise the question of whether, with additional efforts, the apparent successful bidder could have 

met the goal.” Id. 

Reconsideration officer Grunloh’s determination that 

Dunnet Bay failed to show good faith efforts is wellsupported in the record. Grunloh testified that the reasons 

he determined Dunnet Bay failed to make good faith efforts 

were because it did not utilize IDOT’s supportive services, 

and because the 2nd, 3rd, and 4th bidders all met the goal, 

whereas Dunnet Bay did not even come close. Grunloh also 

explained that Dunnet Bay’s efforts were lacking with respect to the following areas included in the Appendix’s list: 

conducting market research and soliciting through all reasonable and available means the interest of all certified 

DBEs; providing interested DBEs with adequate information 

about the contract; making efforts to assist interested DBEs 

in obtaining bonding, lines of credit, etc.; making efforts to 

assist interested DBEs in obtaining necessary equipment, 

supplies, etc.; and effectively using services of various minority organizations to provide assistance in recruitment 

and placement of DBEs. 

The performance of other bidders in meeting the contract 

goal is listed in the regulation as a consideration when deCase: 14-1493 Document: 60 Filed: 08/19/2015 Pages: 46
No. 14-1493 45

ciding whether a bidder has made good faith efforts to obtain DBE participation goals, see 49 C.F.R. Pt. 26, App. A, § V, 

and was a proper consideration. Dunnet Bay argues that this 

factor should not be considered because IDOT left it off the 

For Bid List. While it is true that Dunnet Bay was left off the 

For Bid List, the fact that other bidders met the goal shows 

that the goal was attainable. Dunnet Bay also argues that 

IDOT had not previously considered contacting supportive 

services as necessary to establishing good faith, and that in 

Dunnet Bay’s experience, supportive services were not helpful. However, utilization of supportive services is nonetheless a proper consideration under the regulation.

Dunnet Bay asserts that it employed the same efforts for 

the Eisenhower project that it successfully employed on other projects. Dunnet Bay is not among those contractors who 

often seek goal modification. The fact that its efforts failed to 

secure the DBE participation goal may suggest that it was 

hindered by its omission from the For Bid List. But the rebidding of the contract remedied that oversight. 

Dunnet Bay also points out that Lyle thought it had 

demonstrated good faith efforts. Given the discretion in determining whether a contractor made good faith efforts, the 

fact that Lyle disagreed with Grunloh and initially thought 

Dunnet Bay showed good faith efforts does not raise a genuine issue of fact as to Grunloh’s decision. In any event, Lyle 

subsequently expressed the view that Dunnet Bay could 

have done more to demonstrate good faith efforts, namely, 

by contacting supportive services as well as IDOT’s Bureau 

of Small Business Enterprises and the district EEO officer. 

Finally, it is true that IDOT failed to provide Dunnet Bay 

with “a written decision on reconsideration” explaining why 

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46 No. 14-1493 

it found that Dunnet Bay did not make adequate good faith 

efforts to meet the DBE contract goal. 49 C.F.R. § 26.53(d)(4). 

However, this did not harm Dunnet Bay because IDOT did 

not award the contract based upon the January 15, 2010 bid 

letting. IDOT decided to re-let the contract instead; and 

Dunnet Bay’s second bid met the DBE goal, but it was not 

the lowest bid. 

III. CONCLUSION 

We AFFIRM the district court’s judgment. 

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