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As previously discussed, the federal district court deciding Christian Bruckner’s lawsuit to enjoin the Infrastructure Investment and Jobs Act’s set-aside of 10% (around $37 billion) of transportation funding for “small business concerns” owned and controlled by “socially and economically disadvantaged individuals” issued an order directing (1) the parties to submit supplemental briefing describing the “administrative and implementation of the DBE program,” referring to the Department of Transportation’s (DOT’s) Disadvantaged Business Enterprise (DBE) program, (2) Bruckner to clarify whether his complaint challenges the federal DBE program “as it applies to direct contracting with the federal government,” and (3) the federal government to “certify whether there are localities or federal agencies receiving funding from the Infrastructure Act that have set a DBE goal of 0%.”

On December 2, 2022, the federal government and Bruckner filed the supplemental briefing requested by the court.

Bruckner filed a statement asserting that his complaint “challenges a single sentence in federal law: Section 11101(e)(3) of the Infrastructure Investment and Jobs Act, P.L. 117-58” and that his “requested remedy is therefore narrow and precise: an injunction preventing Defendants from enforcing and implementing this one sentence.”

Notably, despite making broad arguments and claims in his complaint and motion for a preliminary injunction, Bruckner disclaims any broader attack on the DBE program, or on federal government contract set-asides:

While Defendants have offered a broad defense of a federal “Disadvantaged Business Enterprise” program, Plaintiffs’ Verified Complaint only challenges Section 11101(e)(3), which contains a $37 billion race-and-gender preference. An injunction—and ultimately a declaration—will place Plaintiffs and Defendants in the same position as they were before November 15, 2021, when that Act became law.

Bruckner also clarified that his challenge to Section 11101(e)(3) “applies to all contracts impacted by the classifications, including those contracts awarded directly by the federal government.”

The federal government’s supplemental briefing addresses the structure of the DBE program and how it is administered. The federal government’s brief focuses on the “aspirational” nature of the DBE program in that it, as described by the federal government:

establishes a national aspirational goal of spending at least 10% of authorized funds for specified federally-funded highway and transit programs “through small business concerns owned and controlled by socially and economically disadvantaged individuals.” Notwithstanding the national aspirational goal, DOT “does not authorize or require recipients to set overall or contract goals at the 10 percent level, or any other particular level, or to take any special administrative steps if their goals are above or below 10 percent.” Instead, each recipient’s overall 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” such contracts. Contract goals are set as necessary to enable a recipient to meet its overall goal to the extent it is unable to do so through race- and gender-neutral means.

The federal government also submitted a declaration from a DOT official. The declaration, responding to a specific request from the federal district court, states that recipients of DOT funding may set DBE participation goals of 0%, provided that they follow the analysis in 49 C.F.R. § 26.45, and that for FY2023, 15 out of 518 recipients of DOT funding have set DBE participation goals of 0%.

The statement from Bruckner that his complaint, and request for a preliminary injunction, is limited to Section 11101(e)(3) of the Infrastructure Investment and Jobs Act and is not a broader attack on government contracting set-asides is helpful in clarifying the scope of this particular lawsuit. However, Alaska Native Corporations and other Tribal entities that participate in the DBE program, or in the Small Business Administration’s Section 8(a) Business Development Program, may wish to monitor this case because an adverse ruling against the federal government in this matter could be used as the basis for a collateral attack on those programs.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

 

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