Posted on January 27, 2014

How Sandra Day O’Connor Warped Government Contracting

Roger Clegg and John Sullivan, Wall Street Journal, January 26, 2014

In a landmark case 25 years ago this month, the Supreme Court struck down a municipal contracting program that gave preferential treatment to companies owned by racial and ethnic minorities. City of Richmond v. J.A. Croson Co. was a welcome decision for equality under the law — but Justice Sandra Day O’Connor’s 1989 opinion unfortunately left the door ajar for state and local governments to justify such discrimination.

Six years later, in Adarand Constructors Inc. v. Pena, Justice O’Connor ruled against the federal government with regard to a preferential federal contracting program but again left the door ajar for the federal government. She did the same thing — that is, limiting but not ending racial preferences — for university admissions in 2003 (Grutter v. Bollinger).

The problem with this line of Supreme Court decisions is that many politicians find a racial spoils system advantageous — and if the door is left even slightly ajar they will muscle through it. And so, while race-based preferential contracting programs remain legally vulnerable when they are challenged, these programs continue. There are more than 1,400 preferential programs for government contracts in the Transportation Department alone. The overall number throughout the federal, state and local governments would no doubt total several thousand.


Courts have struck down some state and local programs — in cities (Baltimore, Chicago, Columbus, Jackson and Philadelphia), school districts (Atlanta and Memphis), counties (Cook County, Ill., Dade County, Fla., and Fulton County, Ga.), and states (Ohio and New Jersey). They also have struck down or limited the use of some preferential contract programs at the federal level. And if the violation of civil-rights laws is clear enough, courts in a few cases have held officials personally liable if they continue to enact them.

But with a single sentence in Croson, Justice O’Connor created a loophole and launched a new industry: “Where there is a significant statistical disparity between the number of qualified minority contractors willing and able to perform a particular service and the number of such contractors actually engaged by the locality or the locality’s prime contractors, an inference of discriminatory exclusion could arise.”

It did not take governments long to seize upon this language. By the early 1990s this newspaper headlined a story “Court Ruling Makes Discrimination Studies a Hot New Industry.” It reported that Miami had commissioned an accounting firm to undertake a disparity study to justify its set-aside program. When the firm concluded that the needed statistical evidence of discrimination was lacking, “angry city commissioners refused to accept the conclusion.” The vice mayor “railed at the stunned consultants: ‘The whole purpose of this study was for you to prove that there was a disparity.’ ”

In the past quarter century more than $100 million of taxpayers’ money has paid for more than 200 disparity studies, according to research conducted by John Sullivan and a colleague in the years since Croson. These disparity studies may well represent the biggest expenditure of social science research in this country’s history.

It is mostly money wasted. It is a huge leap from a statistical disparity, which can have all kinds of explanations, to a conclusion of discrimination. And it is a further leap to concluding preferences are the right — and the Supreme Court rulings indicate that they must be the only — remedy for any discrimination that does occur.

The Government Accountability Office reviewed 14 disparity studies in June 2001 and found their methodological flaws “create uncertainties about the studies’ findings.” The United States Commission on Civil Rights in May 2006 issued a report criticizing disparity studies for, among other things, using obsolete or incomplete data; failing to test for nondiscriminatory explanations for differences; and relying on anecdotal information that had not been collected scientifically or verified. Last year, Leila Atassi of the Cleveland Plain Dealer revealed — to the city’s great consternation — that Cleveland had spent $758,000 on a no-bid contract for a disparity study that was largely a cut-and-paste job from other studies.