Opinion ID: 163083
Heading Depth: 2
Heading Rank: 2

Heading: Utilization of M/WBEs on City Projects

Text: 121 CWC argues that Denver cannot demonstrate a compelling interest because it overutilizes M/WBEs on City construction projects. This argument is an extension of CWC's argument that Denver can justify the ordinances only by presenting evidence of discrimination by the City itself or by contractors while working on City projects. Because we have concluded that Denver can satisfy its burden by showing that it is an indirect participant in industry discrimination, CWC's argument relating to the utilization of M/WBEs on City projects goes only to the weight of Denver's evidence. 122 In Concrete Works II, this court concluded that CWC had raised a genuine issue of material fact relating to Denver's reliance on data from City-funded construction projects not subject to the ordinances or the goals program which predated the ordinances. We noted that one set of data reveal[ed] extremely low MBE and WBE utilization. Concrete Works II, 36 F.3d at 1526 (referring to the DGS Study). Similarly, data analyzing the utilization of M/WBEs on bond projects for which goals were never set also showed underutilization of M/WBEs. See id. at 1527 (referring to the 1990 Study). In contrast to this data, however, the record also contained studies showing very strong M/WBE utilization on City projects subject to the goals program. See id. at 1525. Consistent with this court's mandate in Concrete Works II, at trial Denver sought to demonstrate that the utilization data from projects subject to the goals program was tainted by the program and reflect[ed] the intended remedial effect on MBE and WBE utilization. Id. at 1526. 123 In the pretrial order, the parties stipulated that the City's utilization of MBEs 17 exceeded their availability in 18.75 of the 20.75 years measured since 1978. CWC asserts that this indicates there is no underutilization of MBEs by the City and, thus, data on the utilization of MBEs on City projects provides no support for the race-based remedial measures. 18 Denver argues that the non-goals data is the better indicator of past discrimination in public contracting than the data on all City construction projects. 124 At trial, Denver presented evidence that the high utilization of MBEs on City projects subject to the goals program was the result of the program and not the absence of discrimination. Particularly persuasive was Denver's evidence that MBE utilization rates on City construction projects declined significantly after the goals program was amended in 1989. One amendment eliminated the minimum annual goals for MBE participation and replaced them with a system whereby goals were set for each individual project. Another amendment required MBEs seeking certification to demonstrate that they had suffered from past discrimination. The drop in utilization rates can thus be linked to a relaxation of the City's affirmative-action efforts. CWC presented no evidence that otherwise explains the decrease in utilization rates after the amendments became effective. 125 Denver also presented uncontroverted testimony that the goals and non-goals projects were similar. One of Denver's experts testified that the same pool of construction firms worked on both the goals and non-goals projects. Additional evidence indicated that projects that should have been performed by the DPW were diverted to the DGS to avoid the goals program. This demonstrates that there was at least some overlap in the character of the goals projects administered by DPW and the non-goals projects administered by the DGS. Again, CWC presented no evidence that the character of the projects was significantly different or that they involved different pools of prime contractors. Finally, CWC's argument that overutilization of MBEs on City projects rendered MBEs unavailable to work on private projects has little persuasive value in light of the extensive evidence on industry elasticity and Denver's evidence that in 1989, DPW projects accounted for less than 4% of all MBE revenues. We conclude that Denver presented ample evidence to support the conclusion that the evidence showing M/WBE utilization on City projects not subject to the ordinances or the goals programs is the better indicator of discrimination in City contracting. 126 CWC also attacks the non-goals data presented by the City and the conclusions drawn from that data. Because CWC takes the position that the City can only remedy its own discrimination or the discrimination of contractors while working on City projects, it asserts that the non-goals data is the only relevant data presented by Denver. It further argues that the data provides insufficient support for Denver's burden. We have rejected CWC's argument that the marketplace data is irrelevant but agree that the non-goals data is also relevant to Denver's burden. We note, however, that Denver did not rely heavily on the non-goals data at trial but focused primarily on the marketplace studies to support its burden. 127 CWC attempts to rebut the non-goals evidence by noting flaws in some of the disparity indices calculated on non-goals projects in the 1990 Study. CWC first criticizes the portion of the 1990 Study which examined the eight local bond projects undertaken between 1972 and 1976. CWC asserts that the disparity indices calculated for these bond projects are meaningless because they were calculated using 1977 availability figures. This valid criticism undermines the persuasive value of these disparity indices. CWC also challenges the conclusions drawn in the portion of the 1990 Study that analyzed five private housing projects constructed in 1985 with revenue bonds but not subject to the goals program. The flaws CWC notes in this study are legitimate and support its position that the minority utilization figures are inaccurate and, thus, the subject disparity indices in the 1990 Study may not be reliable. 128 CWC also asserts that Denver cannot rely on the Peat Marwick study to support the ordinances because that study found no evidence of discrimination in bonding by the City. Unfortunately, we cannot evaluate the merits of CWC's argument because it has provided no record citation directing us to this study and we were unable to locate it in the appellate record. We also note that while it was discussed in Concrete Works I, it is not referred to in Concrete Works III. After a time-consuming search of the trial transcript, unguided by any record citation, we were able to locate and review only one piece of relevant evidence: the testimony of a witness, Wesley Martin. On cross-examination the following exchange occurred between Martin and CWC's counsel, 129 Q: — you would agree that they did find there that there was no evidence of bonding discrimination in the bonding industry? 130 A: I believe they termed it a little bit differently than that, if I recall from reading that. They said that there was no immediate evidence of discrimination evident there, but I don't think they came to a conclusion that it did not exist. 131 This testimony provides no support for CWC's one-sentence argument that the Peat Marwick study found no evidence of discrimination, either by Denver or by the bonding industry. Because we cannot review the study itself, we cannot determined whether it rebuts Denver's other evidence and we conclude that CWC's argument is waived. 132 The City also relied on the DGS Study, the GAO Report, and the DOT's threat to withdraw federal funding as evidence of City discrimination on non-goals projects. CWC does not rebut or even discuss the DGS Study which showed disparity indices of 0.14 for MBEs and 0.47 for WBEs on 1989 DGS remodeling projects. On 1990 DGS remodeling projects the disparity indices were 0.19 for MBEs and 1.36 for WBEs. With respect to the GAO Report, CWC asserts that the only finding reached in that report was that the DPW's prequalification requirement had a disparate impact on minorities. CWC then summarily argues that this finding does not support the conclusion that the City was discriminating because the DPW's prequalification requirements were race neutral. The GAO Report, however, concluded that the prequalification system was applied in an inconsistent and subjective manner and that it appeared to have a greater adverse effect on small and minority contractors. The Report also concluded that the DPW's advertising procedures for bid proposals and its lack of a procedure to assure that contractors had adequate time to prepare bid proposals had a greater negative effect on smaller and/or less experienced contractors and minority contractors. Denver has already conceded that MBEs are generally smaller and less experienced than majority-owned firms and has introduced evidence indicating that both characteristics are the result of industry discrimination. See § VI.A.2.a, supra. CWC also asserts that Denver's reliance on the GAO Report is misplaced because the Report contained an incorrect minority availability figure of 11%. In the 1990 Study, BBC used census data to estimate MBE availability in 1977 19 at 2%. The GAO Report, however, did not calculate disparity indices or attempt to determine whether minority contractors were being underutilized. As CWC itself concedes, the Report concluded only that Denver's contracting practices and policies adversely affected small contractors and minority contractors more than majority contractors. CWC's criticism does nothing to rebut this finding. As the Report itself indicates, the GAO did not rely on the 11% availability figure to reach its conclusions: 133 Since Denver had not established specific goals for minority contractor participation in federally assisted construction contracts, no measure was available to determine whether the current 5-percent level of participation was reasonable. However, Denver identified about 11 percent of the construction contracting firms in the Denver metropolitan area as being owned by minorities. 134 Although the GAO Report is not particularly compelling because it contains very little analysis, the conclusions drawn in the Report do provide some support for Denver's position that it engaged in discriminatory conduct. CWC's arguments are insufficient to rebut those conclusions. 135 CWC's attempt to discredit Denver's reliance on the DOT's threats to withdraw federal funding is also unpersuasive. Like the GAO Report, the DOT found that Denver's prequalification requirements operated as a barrier to minority firms. In 1979, the DOT threatened to initiate administrative proceedings to terminate federal funding for Stapleton International Airport unless Denver modified its prequalification procedures and developed an affirmative action plan applicable to Stapleton. We again reject CWC's argument that the DOT's findings do not show discriminatory conduct by Denver because the prequalification requirements were race-neutral. CWC also asserts that the DOT's findings are flawed because the DOT erroneously determined that minority contractor utilization was 6% in 1978 and 5% in 1979. CWC again points to the 1990 Study prepared by BBC which calculated MBE availability in 1977 at 2% and argues that, based on the DOT's utilization figures, MBEs were actually overutilized on DOT-funded projects. CWC does not provide any record citation to support its assertion that the DOT determined minority utilization to be 6% in 1978 and 5% in 1979. We have reviewed all the materials in the appellate record relating to the City's dispute with the DOT and could not locate the source of CWC's information or confirm its accuracy. Thus, we are unable to consider CWC's argument. In addition, we question whether an accurate disparity index can be calculated by using availability figures from one study and utilization figures from a second study. There is simply no way to determine whether similar data-collection methods were used in the two studies. 136 In sum, Denver has demonstrated that the utilization of M/WBEs on City projects has been affected by the affirmative action programs that have been in place in one form or another since 1977. Thus, the non-goals data is the better indicator of discrimination in public contracting. CWC's criticisms of the non-goals disparity indices reported in the 1990 Study persuasively rebuts that data. CWC, however, is unable to persuasively rebut the other non-goals evidence, including the DGS Study, the GAO Report, and the DOT's threatened administrative action. We conclude that, on balance, the non-goals data provides some support for Denver's position that its belief that racial and gender discrimination existed in public contracting before the enactment of the ordinances was supported by strong evidence.