September 27, 2024

By Lane Kimble

A federal judge this week ruled against the federal government’s Disadvantaged Business Enterprise (DBE) program following a lawsuit by a conservative Wisconsin-based organization.

The Wisconsin Institute for Law and Liberty (WILL) lawsuit in the Eastern District of Kentucky claims the DBE rule unfairly makes business decisions related to contractors and construction based on race and gender, violating the U.S. Constitution.

Judge Gregory Van Tatenhove wrote “the Court is sure that the federal government has nothing but good intentions in trying to remedy past wrongs. But remedying those wrongs must still pass constitutional muster. The federal government cannot classify people in such a manner that violates the principles of equal protection.”

WILL President Rick Esenberg called the ruling a “major legal victory.”

The organization’s news release specifically pointed to the Biden-Harris Administration reauthorizing the DBE program through the 2021 Bipartisan Infrastructure Law, however WILL failed to mention the DBE program dates back more than 40 years, having first been signed into law by President Ronald Reagan in 1983.

“DBE programs are only one method to help level the playing field in state and federal contract procurement given the substantial disparities that currently exist between non-minority owned businesses and ethnic minority owned businesses as a result of historic disenfranchisement,” National Association of Minority Contractors Wisconsin Chapter President Ugo Nwagbarachoa told The Daily Reporter.  The ruling is “unfortunate and not reflective of the historic or current reality,” he added.

WisDOT routinely sets DBE goals on federally funded highway contracts.  The Department’s current goal is 12.42% on such projects between Oct. 2023 and Sept. 2026.

It’s unclear what impact, if any, the federal district court’s ruling would have on Wisconsin’s or any other state’s DBE programs and is almost certain to face appeals.