Fullilove v. Kreps Brief for the Lawyers' Committee for Civil Rights Under Law as Amicus Curiae

    Supreme (Emtrt nf tlje llwteit States
October T eem , 1979

No. 78-1007

H. EARL FULLILOVE, et al.,
PE T ITIO N ER S,

V.

JUANITA KREPS, S ecretary of Commerce of the  
U nited S tates of A merica, et al.,

R ESPONDENTS.

On Writ of Certiorari to the United States 
Court of Appeals For the Second Circuit

BRIEF FOR THE LAWYERS’ COMMITTEE FOR 
CIVIL RIGHTS UNDER LAW AS AMICUS CURIAE

Mark Aaeonson 
San Francisco 
Lawyers’ Committee 
for Urban Affairs

Of Counsel

J ohn B. J ones, J r.
Norman Redlich 

Co-Chairmen 
W illiam L. Robinson 
Richard T. Seymour 
Norman J . Chachkin 

Staff Attorneys
Lawyers’ Committee for

Civil Rights Under Law 
733-15th Street, N.W. 
Washington, D.C. 20005

Laurence S. F ordham 
H enry P. Monaghan 
R ichard W. Benka 
Robert D. Goldstein 

Foley, Hoag & Eliot
10 Post Office Square 
Boston, Massachusetts 02109 

Attorneys for Amicus Curiae
Blanchard Press, Inc., Boston, Mass. — Law Printers



INDEX

TABLE OF AUTHORITIES.................. V

INTEREST OF AMICUS CURIAE............. 1

STATEMENT OF THE CASE................. 4

SUMMARY OF ARGUMENT................... 8

ARGUMENT............................. 10

I. ONLY THE POWER OF CONGRESS TO
REMEDY PAST AND PRESENT DISCRIM­
INATION BY MEANS OF A CIRCUM­
SCRIBED MINORITY SET-ASIDE 
PROVISION IS AT ISSUE...........10

II. CONGRESS EXERCISED ITS POWER 
ONLY AFTER LONG AND DETAILED 
INVESTIGATION, DEBATE AND 
REMEDIAL EXPERIMENTATION,
DURING WHICH IT HAD FOUND 
THAT WIDESPREAD DISCRIMINA­
TION AGAINST MINORITIES 
EXISTED IN THE CONSTRUCTION 
INDUSTRY AND IN THE LETTING 
OF GOVERNMENT CONTRACTS, AND 
THAT THE SET-ASIDE PROVISION 
WOULD ENHANCE THE WELL-BEING
OF THE ECONOMY..................12

A. The Floor Debates On The 
1977 MBE Provision Cap- 
sulized The Facts Which 
Justified Its Passage......12

I



B. It Is Appropriate To Look 
To Prior Legislative In­
quiries And Acts Of 
Congress, And To Consider 
All The Evidence Available 
To Congress, In Reviewing 
The 1977 MBE Provision.....19

1. In amending and
enforcing the Small 
Business Act, Congress 
and the Executive 
have made studies of 
minority businesses, 
the discrimination 
they have suffered, 
and the effectiveness 
of various remedial 
strategies............27

2. In enforcing fifth 
and fourteenth amend­
ment prohibitions, 
Congress has found 
widespread discrimina­
tion in the distribu­
tion of federal funds 
by state and local 
governments and wide­
spread discrimina­
tion by construction 
industry recipients
of federal funds, 
and it has reviewed 
and accepted the use 
of race-sensitive 
goals as a remedy for 
that discrimination....56

II



(a) Discrimination
in state and 
local use of 
federal revenue­
sharing funds....56

(b) Discrimination
in the con­
struction in­
dustry...........61

(c) Discrimination 
in letting rail­
road construc­
tion contracts....65

C. Congress Recognized That, 
Because Of Racial Discrim­
ination In The Construc­
tion Industry, The 1977 
MBE Provision Significantly 
Advanced The Racially 
Neutral Anti-recessionary 
Purposes Of The Public 
Works Employment Acts Of 
1976 and 1977..............69

III. ACTING ON THE BASIS OF THIS 
HISTORY, CONGRESS WAS CLOTHED 
WITH ABUNDANT CONSTITUTIONAL 
AUTHORITY, UNDER ITS SPENDING 
POWER, UNDER ITS THIRTEENTH 
AMENDMENT §2 POWER, AND UNDER 
ITS FOURTEENTH AMENDMENT §5 
POWER, TO ENACT THE 1977 MBE 
PROVISION.......................76

III



IV. THE 1977 MBE PROVISION DOES 
NOT VIOLATE THE DUE PROCESS 
CLAUSE OF THE FIFTH AMENDMENT___85

CONCLUSION...........................99

IV



TABLE OF AUTHORITIES

Cases

Araya v. McLelland, 525 F.2d 1194
(5th Cir. 1976)..................... 85n.

Bulova Watch Co. v. United States,
365 U.S. 753 (1961)................. 85n.

Burton v. Wilmington Parking 
Authority, 365 U.S. 715 (1961)........ 81

Califano v. Webster, 430 U.S. 313 
(1977)............................... 78

Charles C. Steward Machine Co. v.
Davis, 301 U.S. 548 (1937)........77,78

Contractors Association of Eastern 
Pa. v. Secretary of Labor, 442 F.2d 
159 (3d Cir.), cert, denied, 404 U.S.
854 (1971)........................... 62

First National Bank of Boston v.
Bellotti, 435 U.S. 765 (1978).......lln.

Fullilove v. Kreps, 47 U.S.L.W. 3760 
(May 21, 1979)........................ 7

Fullilove v. Kreps, 584 F.2d 600
(2d. Cir. 1978).................... 7,92

Fullilove v. Kreps, 443 F. Supp 253 
(S.D.N.Y. 1977)...................7,63n.



Geduldig v. Aiello, 417 U.S. 484 
(1974)......................... 93

General Electric Co. v. Gilbert,
429 U.S. 125 (1976).....   93

Gilmore v. City of Montgomery,
417 U.S. 556 (1974)...................81

Helvering v. Davis, 301 U.S. 619 
(1937)............................ 77,78

International Union of Electrical,
Radio and Machine Workers v.
N.L.R.B., 289 F.2d 757 (D.C.Cir.
I960)...............................85n.

Jones v. Alfred H. Mayer Co., 392 
U.S. 409 (1969)............... .82,83,84

Katzenbach v. McLung, 379 U.S. 294 
(1964)......................... . .23,87n.

Katzenbach v. Morgan, 384 U.S. 641 
(1966)....................2In. ,24,79,80

Keyes v. School District No. 1, 413 
U.S. 189 (1973).....................58n.

Lau v. Nichols, 414 U.S. 563 (1974)...79

Morton v. Mancari, 417 U.S. 535
(1974).........................84n. ,85n.

Oregon v. Mitchell, 400 U.S. 112 
(1970)............21n. ,23,79,80,87n. ,91

VI



Perkins v. Lukens Steel Co., 310 U.S.
113 (1940)..........................77n.

Posadas v. National City Bank,
296 U.S. 497 (1936).................85n.

Rhode Island Chapter, Associated 
General Contractors v. Kreps,
450 F. Supp. 338 (D.R.I.
1978)........................64n. ,81,82

Runyon v. McCrary, 427 U.S. 160
(1976)............................... 83

Securities and Exchange Comm'n
v. Chenery Corp., 318 U.S. 80
(1943)............................... 23

South Carolina v. Katzenbach,
383 U.S. 301 (1966).........20,21n.,87n.

United Jewish Organizations v. Carey,
430 U.S. 144 (1977)..................87n.

United States v. Georgia Power Co.,
474 F .2d 906 (5th Cir. 1973)..........89n.

United States v. Guest, 383 U.S. 745 
(1966)............................... 81

United States v. Price, 383 U.S.787 
(1966)............................... 81

United Steelworkers v. Weber, 99 
S.Ct. 2721 (1979).........63n. ,88,91,92

VII



Universal Interpretative Shuttle 
Corp. v. Washington Metropolitan 
Area Transit Commission, 393 U.S.
186 (1968)......................... 85n.

University of California 
Regents v. Bakke, 438 U.S.
265 (1978)...11,57,63n.,86,90n.,92,98n.

Wood v. United States, 41 U.S.(16 Pet.) 
342 (1842)......................... 85n.

Constitution and Statutes

U.S. Constitution
article I, §8, cl.l............ 77
article I, §8, cl.3............84n.
thirteenth amendment §2....78,80,82,

83,86n.,94n.
fourteenth amendment §5....78,79,80,

81,86n.,94n.

5 U.S.C. §§553(c), 557(c)(3)(A).....23n.

Small Business Act, and amendments,
15 U.S.C. §§631 et seq...26,28,29-31,37n.,

49-56 and passim

Act of October 27, 1972, Pub. L.
No. 92-595, 86 Stat. 1314 (codified 
at 15 U.S.C. §681(d)), and amend­
ment................................37n.

5731 U.S.C. §1221 et seq 

31 U.S.C. §1242......

VIII

58



42 U.S.C. §§1981, 1982...............83

Title VI of the Civil Rights
Act of 1964, 42 U.S.C. §§2000d
et seq........................ 7,57,85n.

Title VII of the Civil Rights Act 
of 1964, 42 U.S.C. §§2000e et se^....62

Economic Opportunity Amendments of 
1967, Pub. L. No. 90-222, title II,
81 Stat. 710 (codified at 42 U.S.C. 
§§2901 et seq.)...................31-32

Public Works Employment Act 
of 1976, Pub. L. No. 94-369, 
title I, July 22, 1976, 90 Stat.
999 (codified at 42 U.S.C.
§§6701 et seq.)............4 and passim

Public Works Employment Act of 
1977, Pub. L. No. 95-28, title 
I, May 13, 1977, 91 Stat.
116........................4 and passim

Railroad Revitalization and 
Regulatory Reform Act of 1976,
45 U.S.C. §803, 49 U.S.C. §1657a.....66

Executive Orders and Regulations

Executive Order 11246, 3CFR,
1964-1965 Comp. p. 339...............62

Executive Order 11458, 3 CFR,
1966-1970 Comp., p. 779 (March
1969)...............................33n.

IX



Executive Order 11518, 3 CFR, 1966- 
1970 Comp., p. 907 (March 1970)..34n.,35

Executive Order 11625, 3 CFR, 1971- 
1975 Comp., p. 616 (Oct. 1971)......34n

35 Fed. Reg. 17833 (Nov. 20, 1970) 
(codified at 13 CFR §124.8-1)........36

36 Fed. Reg. 17509 (Sept. 1, 1971) 
(codified at 41 CFR §§1-1.1303,
1.1310)..............................36

42 Fed. Reg. 4286 (Jan. 24, 1977) 
(codified at 49 CFR Part 265)........66

44 Fed. Reg. 30673 (May 29, 1979)....95n

49 CFR §265.13(c)(3) (vi).............66

49 CFR §265.19(a) (2).................67

Legislative Materials

H.R. Rep. No. 92-238, 92d Cong.,
1st Sess., reprinted in 2 Subcomm. 
on Labor of Senate Comm, on Labor 
and Public Welfare, 92d Cong., 2d 
Sess., Legislative History of the 
Equal Employment Opportunity Act of 
1972 at 77 (Comm. Print 1972).......58n

Minority Enterprise and Allied 
Problems of Small Business,
H.R. Rep. No. 94-468, 94th 
Cong., 1st Sess. (Sept.
1975)............34n. ,38,39,40,41,43,44

X



Effects of New York City's Fiscal 
Crisis on Small Business, H.R. Rep.
No. 94-659, 94th Cong., 1st Sess.
(Nov. 1975).............. . . .44n. ,75,87n.

H.R. Rep. No. 94-1077, 94th Cong.,
2d Sess. (1976), reprinted in
[1976] U.S. Code Cong. & Ad. News
1746............................5,69,70

Summary of Activities, A Report by 
the House Committee on Small 
Business, H.R. Rep. No. 94-1791,
94th Cong., 2d Sess. (Jan. 3,
1977)..........................44n. ,45n.

H.R. Rep. No. 95-20, 95th Cong.,
1st Sess. (1977), reprinted in
[1977] U.S. Code Cong. & Ad'. News
150.................................70n.

H.R. Rep. No. 95-230, 95th Cong.,
1st Sess., reprinted in [1977]
U.S. Code Cong. & Ad. News 168........7

H. Conf. Rep. No. 95-1714, 95th 
Cong., 2d Sess., reprinted in
[1978] U.S. Code Cong. & Ad. News
3879...........................52n. ,53n.

Hearings on Civil Rights Aspects 
of General Revenue Sharing Before 
the Subcomm. on Civil and Consti­
tutional Rights of the House Comm, 
on the Judiciary, 94th Cong., 1st 
Sess., ser. 21 (1975)..........58,59,60

XI



Subcomm, on Civil and Constitutional 
Rights of the House Comm, on the 
Judiciary, 94th Cong., 1st Sess.
(Comm. Print Nov. 1975)........61n. ,87n

Summary of Activities of the 
Comm, on Small Business, House 
of Representatives, 94th Cong.,
2d Sess. (Comm. Print Nov. 1976)....46

S. Rep. No. 92-415, 92d Cong., 1st 
Sess. (1971), reprinted in 2 Subcomm. 
on Labor of Senate Comm, on Labor 
and Public Welfare, 92d Cong., 2d 
Sess., Legislative History of the 
Equal Employment Opportunity Act 
of 1972 at 418 (Comm. Print 1972)....58n

S. Rep. No. 94-499, 94th Cong., 2d 
Sess., reprinted in [1976] U.S.
Code Cong. & Ad. News 14.............66

S. Rep. No. 95-1070, 95th Cong.,
2d Sess., reprinted in [1978]
U.S.Code Cong. & Ad. News
3835...............35n. ,37n. ,50,53n. ,54

Hearings on the Philadelphia Plan 
and S931 Before the Subcomm. on 
Separation of Powers of the Senate 
Judiciary Comm., 91st Cong., 1st 
Sess. (1969)........................63n

Hearings on Small Business Adminis­
tration 8(a) Contract Procurement 
Program Before the Senate Select 
Comm, on Small Business, 94th 
Cong., 2d Sess. (Jan. 21,
1976)..................... 47,48,75,87n.

XII



Special Joint Session Hearings 
on Purchase and Revitalization 
of Northeast Corridor Properties 
(Amtrak), Before the Senate Corrans. 
on Appropriations, Budget and 
Commerce, 94th Cong., 2d Sess.
(1976)............................67,68

Hearings on H.R. 7557, Department
of Transportation and Related
Agencies Appropriations for Fiscal
Year 1978, Part IV, Before the
Subcomm, of the Senate Comm, on
Appropriations, 95th Cong., 1st
Sess. (1977)........................ 68n.

Senate Select Comm, on Small 
Business, 95th Cong., 1st Sess.,
Report on Small Business Adminis­
tration 8(a) Contract Procurement 
Program (Comm. Print Feb. 16,
1977)......................... 48,49,87n.

7C /V
123 Cong. Rec. H1436-40 (daily ed.
Feb. 24, 1977)....6,13,14,15,16,20n.,74,

97 and passim

123 Cong. Rec. S3909-10 (daily ed.
March 10, 1977)...6,18,19,20n.,72,74,75

and passim

Executive Branch Publications

U.S. Bureau of Census, Special 
Report, Minority-Owned Businesses,
1972 Survey of Minority-Owned 
Business Enterprises, MB72-4,
(May 1975)......................28n. ,73

XIII



U.S. Bureau of Census, Statis­
tical Abstract of the United 
States: 1978........................ 74

U.S. Commission on Civil Rights,
Report, The Federal Civil Rights 
Enforcement Effort - 1974, Vol. IV,
To Provide Fiscal Assistance (Feb.
1975).............................59,60

U.S. Commission on Civil Rights,
Report, Minorities and Women as
Government Contractors (May
1975)...........20n. ,28n. ,41n. ,42n. ,43n.

U.S. Commission on Civil Rights,
The Federal Civil Rights Enforce­
ment Effort - 1974, Vol. VI, To 
Extend Federal Financial Assis­
tance (Nov. 1975)...................60n.

U.S. Commission on Civil Rights, The 
Unfinished Business, Twenty Years 
Later...A report submitted to the 
U.S. Commission on Civil Rights by
its Fifty-one State Advisory 
Committees (Sept. 1977).............87n.

Comptroller General of the U.S., 
Questionable Effectiveness of 
the 8(a) Procurement Program,
GGD-75-57 (April 1975)..............41n.

Comptroller General of the U.S.,
Report, Department of Defense 
Program To Help Minority-run 
Businesses Get Subcontracts Not 
Working Well (Feb. 28, 1977)........45n.

XIV



Department of Housing and Urban 
Development, A Survey of Minority 
Construction Contractors............64n

Department of Labor, Bureau of 
Labor Statistics, Consumer 
Expenditure Survey Series, Report 
455-4, Consumer Expenditure Survey 
Series, Interview Survey (1977).....71n

Executive Office of the President
and Office of Management and
Budget, Interagency Report on
the Federal Minority Business
Development Programs (March
1976)...........................65n. ,73

Report of the National Advisory
Commission on Civil Disorders
(March 1, 1968)...................32,33

Office of Minority Business 
Enterprise, Minority Business 
Opportunity Committee Handbook 
(Aug. 1976)...................64n.,65n.

Books and Articles

A. Andreasen, Inner City Business:
A Case Study of Buffalo, New York 
(1971).............................. 73n

C. Black, Structure and Relationship 
in Constitutional Law (1969)......... 23

J. Chamberlain, Legislative Processes, 
National and State (1936)............ 25

XV



Cox, The Supreme Court, 1965 Term-- 
Foreward: Constitutional Adjudica­
tion and the Promotion of Human 
Rights, 80 Harv. L. Rev. 91 
(1966)....    21,24

Cox, The Role of Congress in Con­
stitutional Determinations, 40 
U. Cin. L. Rev. 199 (1971)............ 24

K. Davis, Administrative Law Treatise 
(1958; 1970 Supp .).................. 23n

The Federalist Nos. 52, 57............26

R. Glover, Minority Enterprise in 
Construction (1977)................. 73n

B. Gross, The Legislative Struggle 
(1953)............................... 24

Linde, Book Review, 66 Yale L. J.
973 (1957)........................ 24,25

H. Linde & G. Bunn, Legislative and 
Administrative Processes (1976)........26

Sandalow, Racial Preferences in 
Higher Education: Political
Responsibility and the Judicial 
Role, 42 U. Chi. L. Rev. 653 
(1975)............................... 26

Comment, The Philadelphia Plan: A
Study in the Dynamics of Executive 
Power, 39 U. Chi. L. Rev. 723 
(1972).............................. 63n

XVI



Miscellaneous

Brief for the American Civil Liber­
ties Union and the Society of 
American Law Teachers Board of 
Governors, Amici Curiae, United 
Steelworkers v. Weber............... 63n

Brief for the Lawyers' Committee 
for Civil Rights Under Law as 
Amicus Curiae, United Steelworkers 
v. Weber............................ 63n

Brief of the NAACP Legal Defense 
and Educational Fund, Inc., as 
Amicus Curiae, University of 
California Regents v. Bakke.......... 84

Supplemental Brief for the United 
States as Amicus Curiae, University 
of California Regents v. Bakke.......63n

XVII



INTEREST OF AMICUS CURIAE

The Lawyers' Committee for Civil 
Rights Under Law was organized in 1963 
at the request of President John F. 
Kennedy to involve private attorneys 
throughout the country in the national 
effort to assure civil rights to all 
Americans. The Committee's membership 
today includes former Attorneys General, 
past Presidents of the American Bar 
Association, a number of law school 
deans, and many of the nation's leading 
lawyers. Through its national office in 
Washington, D.C., and its offices in 
Jackson, Mississippi, and eight other 
cities, the Lawyers' Committee over the 
past sixteen years has enlisted the 
services of over a thousand members of 
the private bar in addressing the legal 
problems of minorities and the poor in 
education, employment, voting, housing, 
municipal services, access to government 
services, the administration of justice, 
and law enforcement.

* The parties' letters of consent to the 
filing of this brief are being filed with the 
clerk pursuant to Sup. Ct. Rule 42(2).



The Lawyers' Committee and its 
local committees, affiliates, including 
the San Francisco Lawyers' Committee for 
Urban Affairs, and volunteer lawyers 
have been actively engaged in providing 
legal representation to those seeking 
relief from private and public discri­
mination. In this case, Congress itself 
has come to grips with the effects of 
such discrimination, manifested by 
insignificant minority business enterprise 
(hereinafter at times "MBE") participa­
tion in federally funded construction 
work, by setting aside for MBE's ten 
percent of the funds allocated to one 
short-term federal program. The Lawyers' 
Committee, over the years, has strongly 
endorsed vigorous action by the executive 
and legislative branches to remedy 
discrimination and its effects. We 
believe that the MBE set-aside at issue 
in this case was a reasonable congres­
sional response to the historic exclusion 
of MBE's from federally funded construction 
contracts, and we believe it important 
for this Court to affirm the power of 
Congress to respond as it did to this 
discrimination.

-2-



The Lawyers' Committee has previously 
addressed the issue of race-conscious 
affirmative action programs in its 
amicus briefs in Defunis v. Odegaard,
416 U.S. 312 (1974), University of 
California Regents v. Bakke, 438 U.S.
265 (1978), and United Steelworkers v.
Weber, 99 S.Ct. 2721 (1979). Because 
the issues presented by this case are 
vitally important to the realization of 
the goal of equal opportunity for minori­
ties, and to the power of Congress to 
deal with discrimination against minorities, 
the Committee files this brief amicus 
curiae for the assistance of the Court.

-3-



STATEMENT OF THE CASE

Section 42 U.S.C. §6705(f)(2)-/ 
established a 10 percent set-aside for 
minority businesses in funds allocated 
pursuant to the Public Works Employment 
Act of 1977, Pub. L. No. 95-28, title I, 
May 13, 1977, 91 Stat. 116 (hereinafter 
"1977 PWEA"), amending Public Works 
Employment Act of 1976, Pub. L. No. 
94-369, title I, July 22, 1976, 90 Stat. 
999 (hereinafter "1976 PWEA"). These 
anti-recessionary Acts funded the con­
struction of public buildings and other

1/ The 1977 MBE provision reads:

Except to the extent that the Secretary 
determines otherwise, no grant shall be 
made under this chapter for any local 
public works project unless the applicant 
gives satisfactory assurance to the Secre­
tary that at least 10 per centum of the 
amount of each grant shall be expended for 
minority business enterprises. For pur­
poses of this paragraph, the term "minority 
business enterprise" means a business at 
least 50 per centum of which is owned by 
minority group members or, in case of a 
publicly owned business, at least 51 per 
centum of the stock of which is owned by 
minority group members. For the purposes of 
the preceding sentence, minority group 
members are citizens of the United States 
who are Negroes, Spanish-speaking, Orientals, 
Indians, Eskimos, and Aleuts. 42 U.S.C.
§6705(f)(2) (1976 & Supp. I 1977).

-4-



public works on the basis of grant 
applications submitted by state and 
local governments, in order to stimulate 
the economy through public spending and 
alleviate unemployment, particularly in 
the hard-pressed construction industry, 
H.R. Rep. No. 94-1077, 94th Cong., 2d 
Sess. 1-2 (1976), reprinted in [1976]
U.S. Code Cong. & Ad. News 1746, 1746-47.

The challenged provision (hereinafter 
at times "1977 MBE provision") mandated 
the Secretary of Commerce, unless she 
determined otherwise, to require from 
government recipients of these funds 
satisfactory assurance that 10 percent 
of each public works grant would be 
spent for minority business enterprises. 
MBE1s were defined as businesses at 
least 50 percent of which were owned (or 
publicly owned businesses the stock of 
which was at least 51 percent owned) by 
United States citizens who were Negroes, 
Spanish-speaking, Orientals, Indians, 
Eskimos or Aleuts.

This provision was one of several 
refinements in the funding requirements

-5-



which Congress made when, in the 1977 
PWEA, it extended the 1976 PWEA public 
works program for another year and added 
an additional 4 billion dollars in 
program funding to the 2 billion dollars 
originally authorized.

Versions of the 1977 MBE provision 
were introduced as floor amendments to 
the 1977 PWEA by Congressman Parren 
Mitchell of Maryland in the House of 
Representatives, 123 Cong. Rec. H1436 
(daily ed. Feb. 24, 1977), and by Senator 
Edward Brooke of Massachusetts, and 
others, in the Senate, 123 Cong. Rec. 
S3909-10 (daily ed. March 10, 1977).
After debate, versions of the MBE provi­
sion were accepted by both Houses.

The House version included a clari­
fying amendment offered by Representative 
Roe, 123 Cong. Rec. H1438 (daily ed.
Feb. 24, 1977), which established that 
the 10 percent requirement was to be 
waived where the unavailability of MBE's 
made the 10 percent requirement infeasible. 
The Conference Report adopted the House 
version, emphasizing that "[t]his provision 
shall be dependent on the availability 
of minority business enterprises located

-6-



in the project area." H.R. Rep. No.
95-230, 95th Cong., 1st Sess. 11, 
reprinted in [1977] U.S. Code Cong. &
Ad. News 168, 170. The 1977 PWEA, as 
amended, was enacted into law on May 13, 
1977.

Petitioners brought suit for declara­
tory and injunctive relief in the United 
States District Court for the Southern 
District of New York on November 30,
1977, on the grounds that the 1977 MBE 
provision employed a racial classification 
in violation of the fifth and fourteenth 
amendments of the United States Constitution 
and of various statutes, including Title 
VI of the Civil Rights Act of 1964, 42 
U.S.C. §§2000d et se^. (1976). The 
district court consolidated for hearing 
petitioners' motion for a preliminary 
injunction and the trial on the merits, 
and held that hearing on December 2,
1977. The court found the 1977 MBE 
provision constitutional and therefore 
dismissed the complaint. 443 F. Supp.
253 (S.D.N.Y. Dec. 19, 1977). The court 
of appeals affirmed on the merits. 584 
F.2d 600 (2d Cir. 1978). This Court 
granted certiorari on May 21, 1979. 47
U.S.L.W. 3760.

-7-



SUMMARY OF ARGUMENT

In enacting the 1977 MBE provision, 
Congress built on foundations it had laid 
over a period of decades, and the provision 
cannot be fairly considered in isolation 
from those foundations. In the course of 
its oversight of various government pro­
grams, including the Small Business Act, 
federal revenue-sharing, federal assistance 
to construction projects, and the Railroad 
Revitalization and Regulatory Reform 
Act, Congress had been fully informed of 
conditions which justified the 1977 MBE 
provision. For Congress had learned of 
the existence of discrimination against 
minorities in the construction industry 
and in state and local government procure­
ment programs. It had learned that 
minority businesses had, as a result, 
been excluded in dramatic fashion from 
participation in government contracts. 
Congress was, furthermore, aware of the 
particularly severe effects of the 
recession in 1977 on minority individuals 
and minority businesses, and was aware 
that these problems had to be addressed 
quickly and decisively.

Congress' accumulated experience 
with the problems of minority businesses

-8-



also made it aware that methods other 
than a minority set-aside would be 
ineffective in responding to this historic 
discrimination and to the plight of 
minorities during the 1977 recessionary 
period.

Because the 1977 MBE provision was 
limited to federally assisted state and 
local construction projects, it would be 
disingenuous to argue that the reasons 
for the provision are obscure. The 
historic discrimination against minorities 
in the construction industry, which is 
so notorious that it is an appropriate 
subject for judicial notice, and the 
exclusion of minorities from government 
contract work provide a substantial founda­
tion for the provision. Congress has 
broad constitutional authority to respond 
to such conditions in the exercise of 
its spending power, and by virtue of the 
enforcement clauses of the thirteenth 
and fourteenth amendments. Congress' 
response was temperate and rational: 
the 1977 MBE provision was limited to a 
small portion of government contract 
work, could be waived where infeasible, 
and lasted for only a limited period of 
time. Congress did not abuse its authority.

-9-



ARGUMENT

I. ONLY THE POWER OF CONGRESS TO
REMEDY PAST AND PRESENT DISCRIMINA­
TION BY MEANS OF A CIRCUMSCRIBED 
MINORITY SET-ASIDE PROVISION IS AT 
ISSUE.
It is essential to state clearly 

what this case involves. It does not 
involve the authority of a federal or 
state administrative agency, or of a 
state legislative body, to promulgate a 
minority set-aside provision. It calls 
into question only the authority of 
Congress, the body explicitly charged 
with enforcement of the thirteenth and 
fourteenth amendments. This case also 
does not involve a set-aside provision 
relating to an area of economic activity 
as to which evidence of discrimination 
and exclusion of minorities was lacking.
To the contrary, Congress was fully 
informed of the specific problems addressed 
by the 1977 MBE provision. This case 
also does not involve a federal program 
depriving white contractors of existing 
federal benefits. Although some public 
works funds were set aside for MBE1s, as 
part and parcel of the same program, 3.6 
billion additional dollars were made

-10-



fully available to all contractors. 
Finally, this case does not involve a 
permanent minority set-aside, or even 
one which would continue in the absence 
of further congressional action. This 
particular set aside was limited to the 
term of the 1977 PWEA.—^

Since racial classifications pre­
ferring minorities are not per se uncon­
stitutional, University of California 
Regents v. Bakke, 438 U.S. 265, 272, 320 
(1978) (Powell, J.); id. at 324-25 
(Brennan, J.), the question posed by 
this case is narrower and significantly 
less difficult than any questions future 
cases may pose.

2/ Because the 1977 MBE provision was 
limited in this fashion, because petitioners 
chose not to seek damages, and because Congress 
in 1978 enacted a different set-aside provision, 
see pp. 49 to 56 infra, so that there is no 
"reasonable expectation" to believe that peti­
tioners will again be subject to terms like 
those contained in the 1977 MBE provision, cf. 
First National Bank of Boston v. Bellotti, 435 
U.S. 765, 774-75 (1978), there is a substantial 
question of mootness. This brief does not 
address that issue, which we believe will be 
discussed at length in Respondent Secretary 
of Commerce's brief.

-11-



II. CONGRESS EXERCISED ITS POWER ONLY
AFTER LONG AND DETAILED INVESTIGATION, 
DEBATE AND REMEDIAL EXPERIMENTATION, 
DURING WHICH IT HAD FOUND THAT 
WIDESPREAD DISCRIMINATION AGAINST 
MINORITIES EXISTED IN THE CONSTRUCTION 
INDUSTRY AND IN THE LETTING OF 
GOVERNMENT CONTRACTS, AND THAT THE 
SET-ASIDE PROVISION WOULD ENHANCE 
THE WELL-BEING OF THE ECONOMY.
A. The Floor Debates On The 1977 

MBE Provision Capsulized The 
Facts Which Justified Its Passage.

Petitioners' description of the 
1977 MBE provision ignores many of the 
statements made in the congressional 
debate on the provision, as well as 
other very substantial evidence supporting 
the need for such a provision. Petitioners 
argue that the "legislative history of 
the PWEA is completely devoid of any 
legislative findings or any other material 
sufficient" to sustain the MBE provision. 
They characterize the MBE provision as 
nothing more than an unreasoned "after­
thought" to give MBE's a "'share of the 
action'" without justification. Brief 
for Petitioners at 15; see Brief for 
Petitioner, General Building Contractors 
of New York State, Inc., The New York 
State Building Chapter, Associated

-12-



General Contractors of America, Inc. 
("Building Contractors' Brief") at 13.

Representative Mitchell in fact 
directed Congress' attention to the 
dismal history of federal programs 
designed to create and support minority 
businesses, and to the historical denial 
of government contracts to minority 
businesses. He did not, as petitioners 
suggest, blatantly urge without justifi­
cation that minority businesses should 
receive a "share of the action". Mitchell 
argued that the woeful record of all of 
these existing federal programs, of 
which Congress was well aware, see pp.
27 to 56 infra, would continue unless 
Congress mandated the disbursement of 
federal monies to minority enterprises. 
Unless that were done, MBE's would be 
unable to enter the economic mainstream, 
and "support survival" programs would 
continue to be a way of life for many 
segments of our economy:

Let me tell the Members how 
ridiculous it is not to target for 
minority enterprises. We spend a 
great deal of Federal money under 
the SBA program creating, strengthen­
ing and supporting minority businesses 
and yet when it comes down to 
giving those minority businesses a

-13-



piece of the action, the Federal 
Government is absolutely remiss.
All it does is say that, "We will 
create you on the one hand and, on 
the other hand, we will deny you." 
That denial is made absolutely 
clear when one looks at the amount 
of contracts let in any given 
fiscal year and then one looks at 
the percentage of minority contracts. 
The average percentage of minority 
contracts, of all Government 
contracts, in any given fiscal 
year, is 1 percent--l percent.
That is all we give them. On the 
other hand we approve a budget for 
OMBE, we approve a budget for the 
SBA and we approve other budgets, 
to run those minority enterprises, 
to make them become viable entities 
in our system but then on the other 
hand we say no, they are cut off 
from contracts.

In the present legislation 
before us it seems to me that we 
have an excellent opportunity to 
begin to remedy this situation.

...[Sjetting aside contracts 
for minorities... is the only way 
we are going to get the minority 
enterprises into our system.

...This is the only sensible 
way for us to begin to develop a 
viable economic system for minorities 
in this country, with the ultimate 
result being that we are going to 
eventually be able to pull down 
deficits in spending; we are going 
to be able to end certain programs 
which are merely support survival 
programs for people which do not

-14-



contribute to the economy. I 
support those programs because at 
present we have nothing else to 
offer. 123 Cong. Rec. H1436-37 
(daily ed. Feb. 24, 1977).

Representative Mitchell ascribed the 
problems of minority businesses not only 
to their relative newness and small 
size, attributable to prior discrimina­
tion, see, e.g., pp. 32 to 64 infra, but 
also to the resistance of government 
contracting agencies which made it 
necessary to mandate a minority enterprise 
set-aside:

[MBE's] are so new on the 
scene, we are so relatively small 
that every time we go out for a 
competitive bid, the larger, older, 
more established companies are 
always going to be successful in 
underbidding us. Id. at H1437.

...[E]very agency of the 
Government has tried to figure out 
a way to avoid doing this very 
thing [of letting contracts to 
MBE's]. Believe me, these bureau­
cracies can come up with 10,000 
ways to avoid doing it. That is 
why I am insisting it be mandated.
Id. at H1438.

...1 think we must look at 
other States and cities around this 
country that have not really addressed 
the problem at all and do not have 
any lever on which to hang an 
operation designed to begin to 
redress this grievance [of not

-15-



letting contracts to MBE's] that 
has been extant for so long.

...By setting the tone at the 
Federal level,...what we do in 
terms of these local political 
subdivisions is to give them the 
added impetus to do those things 
which are right and fair. Id. at 
H1440.
Other congressmen recognized the 

fundamental fairness of the amendment, 
stating that it would mitigate the 
latent inequities of the 1977 PWEA for 
minority businesses and workers. Minori­
ties had suffered disproportionately 
in the recessionary period which continued 
into 1977. They had gotten "the 'works' 
almost every time" by being denied 
participation in public works projects.
One reason was the governmental bidding 
process, which was structured in a 
manner effectively excluding minorities. 
This was true in the experience of two 
congressmen:

This Nation's record with 
respect to providing opportunities 
for minority businesses is a sorry 
one. Unemployment among minority 
groups is running as high as 35 
percent. Approximately 20 percent 
of minority businesses have been 
dissolved in a period of economic 
recession. The consequences have 
been felt in millions of minority 
homes across the Nation.

-16-



...Yet without adoption of 
this amendment, this legislation 
may be potentially inequitable to 
minority businesses and workers.
It is time that the thousands of 
minority businessmen enjoyed a 
sense of economic parity. Id.
(remarks of Rep. Biaggi).

...[M]inority contractors and 
businessmen who are trying to enter 
in on the bidding process... get the 
"works" almost every time. The 
bidding process is one whose intri­
cacies defy the imaginations of 
most of us here. The sad fact of 
the matter is that minority enter­
prises usually lose out... Id. 
(remarks of Rep. Conyers).

In the end, the House, by passing the 
MBE amendment, attempted to change this 
past history of minority exclusion from 
public works contracts, by assuring 
nothing more than an "equitable relation­
ship for minority contractors and suppliers 
to be able to participate, which...is 
right and is proper." Id. at H1437 
(remarks of Rep. Roe).

Like the House debate, the Senate 
debate stressed the historical fact that 
other federal efforts had failed to 
overcome gross inequalities in the 
letting of government contracts. In

-17-



debate, Senator Brooke also emphasized 
the special anti-recessionary impact of 
the MBE provision in reducing chronic 
minority unemployment:

[I]t is important that we 
focus on the unemployment experiences 
of different ethnic and racial 
groups in designing a sensitive and 
responsive jobs program. For 
example, among minority citizens, 
the average rate of unemployment 
runs double that among white citizens.

Our most recent experience 
with...[administering the 1976 PWEA] 
was marred by projects which were 
inappropriate in light of the 
strong congressional intent that 
the public works funds be spent 
where they are most needed.

...It is necessary because 
minority businesses have received 
only 1 percent of the Federal 
contract dollar, despite repeated 
legislation, Executive orders and 
regulations mandating affirmative 
efforts to include minority contrac­
tors ....

...[T]he Federal Government, 
for the last 10 years in programs 
like SBA's 8(a) set-asides, and the 
Railroad Revitalization Act's 
minority resources centers, to name 
a few, has accepted the set-aside 
concept as a legitimate tool to 
insure participation by hitherto 
excluded or unrepresented groups.

It is an appropriate concept, 
because minority businesses' work 
forces are principally drawn from

-18-



residents of communities with 
severe and chronic unemployment.
With more business, these firms can 
hire even more minority citizens.

...This amendment provides a 
rule-of-thumb which requires much 
more than the vague "good-faith 
efforts" language which currently 
hampers our efforts to insure 
minority participation. Id. at 
S3910. ~
Thus, contrary to petitioners'

suggestion that the 1977 MBE provision
was an unreasoned effort to spread the
"action" of federal contracts, the
congressmen who spoke in favor of the
provision articulated the historical
exclusion of minorities from government
contract work, and the inadequacy of
alternative efforts to establish minority
businesses as viable participants in the
governmental contract process.

B. It Is Appropriate To Look To 
Prior Legislative Inquiries 
And Acts Of Congress, And To 
Consider All The Evidence 
Available To Congress, In 
Reviewing The 1977 MBE Provision.

Although petitioners attempt to 
narrow this Court's attention to the 
specific floor debates on the 1977 MBE 
provision, these debates need not and

-19-



should not be the limit of inquiry, for
the "constitutional propriety...[of a
statute] must be judged with reference
to the historical experience which it
reflects." South Carolina v. Katzenbach,
383 U.S. 301, 308 (1966). The ready
acceptance of the MBE provision by both

3 /houses of Congress— demonstrates that 
Representative Mitchell's proposal did 
not arise in a factual vacuum; it was, 
in fact, considered "right and proper" 
in view of two decades of legislative 
and executive experience which had 
preceeded it.—^ Congress need not

3/ Debate focused almost exclusively on 
the feasibility of the ten percent figure in 
areas with few minority individuals, with most 
legislators otherwise accepting the appropriate­
ness and fairness of the 1977 MBE provision. See 
123 Cong. Rec. H1436-40 (daily ed. Feb. 24, 1977); 
123 Cong. Rec. S3910 (daily ed. March 10, 1977).

4/ Petitioners, for example, claim that 
Representative Mitchell's remarks "concerning 
the rate of underutilization of MBE's were 
merely naked assertions on his part." Brief for 
Petitioners at 16. Mitchell stated that minorities 
received one percent of government contracts in 
an average fiscal year. 123 Cong. Rec. H1436-37 
(daily ed. Feb. 24, 1977). Petitioners ignore 
the fact that the Subcommittee on SBA Oversight 
and Minority Enterprise of the House Committee 
on Small Business had before it in 1975 a report 
of the U.S. Commission on Civil Rights, Minorities 
and Woman as Government Contractors (May 1975), 
which found that in 1972 minorities and women 
received less than one percent of federal contracts. 
See p. 41 n.14 infra.

- 2 0 -



re-invent the wheel by restating evidence 
on the record whenever it passes yet 
another bill in an evolutionary legis­
lative program.-^ Indeed, the

fundamental basis for legislative 
action is the knowledge, experience, 
and judgment of the people’s rep­
resentatives only a small part, or 
even none, of which may come from 
the hearings and reports of commit­
tees or debates upon the floor.
Cox, The Supreme Court, 1965 Term -- 
Foreword: Constitutional Adjudica­
tion and the Promotion of Human 
Rights, 80 Harv. L. Rev. 91, 105 
(1966) (footnote omitted).

Congress, in short, must be able to rely 
on its accumulated knowledge and experience.

In addition to looking myopically 
only at the debates immediately preceding 
enactment of the 1977 MBE provision, and 
thereby conveniently avoiding the eviden­
tiary weight of years of congressional

5/ See, e.g., Katzenbach v. Morgan, 384 
U.S. 641, 654 & n.14, 646 n.5 (1966) (relying on 
hearings before prior Congress and on "understand­
ing of the cultural milieu" existing in past);
South Carolina v. Katzenbach, 383 U.S. 301, 330 
(1966) ("In identifying past evils, Congress 
obviously may avail itself of information from 
any probative source."); Oregon v. Mitchell, 400 
U.S. 112, 235 & n.10 (1970) (Brennan, J.) (reliance 
on census data).

- 2 1 -



experience, see pp. 27 to 75 infra, 
petitioners assert that Congress did not 
make adequate formal "findings" of 
discrimination in the construction 
industry. Building Contractors' Brief 
at 11-15; Brief for Petitioners at 
14-17. Petitioners make much of the 
fact that the MBE provision arose as a 
floor amendment, and appear to suggest 
that legislative action such as the MBE 
provision should be found defective 
unless it is supported by an independent 
congressional "study", perhaps in the 
form of committee consideration, and 
unless it is specifically addressed by 
"findings" in House and Senate reports 
generated at the time of legislative 
action. See Brief for Petitioners at 16 
n.7; Building Contractors' Brief at 
1 1 - 1 2 .

Of course, congressional committees 
had previously made findings relevant to 
the 1977 MBE provision. See, e.g., pp. 
37 to 69 infra. Moreover, it is unsound 
to demand that Congress proceed in so 
formalized a fashion. Petitioners' 
argument fails to recognize the signi-

- 2 2 -



ficance of the fact that this case 
involves action by Congress, and there­
fore fails to consider any distinction 
between Congress and other bodies with 
respect to the need for formal "findings" 
as a prerequisite to decision-making.
See C. Black, Structure and Relationship 
in Constitutional Law 67-98 (1969).

This Court has explicitly stated 
that Congress is not required to make 
formal "findings" in order to justify 
the constitutionality of legislation. 
Katzenbach v. MeLung, 379 U.S. 294, 299 
(1964). See also Oregon v. Mitchell,
400 U.S. 112, 147 (1970) (Douglas, J.).
In conformity with the presumption of 
constitutionality given Congress' actions, 
this Court has recognized that legislation 
should be found constitutional if there 
is a basis on which Congress could

6/ Congress, of course, is not required 
by custom, statute or rule to make findings 
before it can act, unlike administrative agencies. 
See 5 U.S.C. §§ 553(c); 557(c)(3)(A) (1976); 
Securities and Exchange Comm1n v. Chenery Corp., 
318 U.S. 80, 94 (1943). See generally K. Davis, 
Administrative Law Treatise, §§16.01 et seq.
(1958 and 1970 Supp.)

23-



rationally have acted. See Cox, supra,
80 Harv. L. Rev. at 104-05 & cases cited 
in nn. 82-83.

Petitioners' argument could have 
disastrous practical ramifications for 
Congress. Legislation is frequently 
accomplished through floor amendments, 
see B. Gross, The Legislative Struggle 
218 (1953), where "findings" are not and 
need not be made. See Katzenbach v.
Morgan, 384 U.S. 641, 653, 654 (1966) 
(reviewing amendment introduced on floor 
of Congress without committee hearings 
or reports); Cox, The Role of Congress 
in Constitutional Determinations, 40 U. 
Cin. L. Rev. 199 (1971). To impose the 
formal requirement that "findings" be 
made by the Congress would be unreasonable

...[D]ifferences from accus­
tomed legal patterns merely reflect 
faithfully the different logic and 
discipline of the legislative 
process, within which the legisla­
tive counselor or representative 
must work.

...[T]he business of a legis­
lator is not to adjudicate, but to
legislate___ [H]is policy choices,
whether statesmanlike or deplorable, 
are not limited to any pleadings or 
points raised in argument. If it

-24-



were otherwise, the legislative 
process in our particular form of 
representative government would 
choke in a hopeless tangle of 
formal procedures within a few 
weeks. During the Eighty-fourth 
Congress 19,039 bills and resolu­
tions were introduced in the two 
houses, 5,753 were reported out by 
the committees, and 1,028 public 
bills were enacted into law.
Linde, Book Review, 66 Yale L.J. 973, 
975 (1957) (footnote omitted).

See also J. Chamberlain, Legislative 
Processes, National and State 7 (1936).

In addition to these practical 
considerations, "findings" are not the 
source of Congress' legitimacy. Unlike 
a university faculty, or the commis­
sioners of an administrative agency, the 
members of Congress are directly answer- 
able to their constituents, a majority 
of whom are white, when they establish a 
remedial program such as the 1977 MBE 
provision. The political accountability 
inherent in our representative form of 
government, and not formalized procedures 
and fact-finding, is the mainspring of 
Congress' legitimacy and an effective 
check on its authority in a case where

-25-



racial minorities are favored. Cf. The 
Federalist Nos. 52, 57; H. Linde &
G. Bunn, Legislative and Administrative 
Processes 736 (1976). This political 
accountability also permits greater 
judicial deference to Congress. "[A]s 
the most broadly representative, poli­
tically responsible institution of 
government," Congress is most likely to 
reach "a focused judgment about the 
appropriate balance to be struck between 
competing values." Sandalow, Racial 
Preferences in Higher Education: Political 
Responsibility and the Judicial Role, 42 
U. Chi. L. Rev. 653, 701 (1975) (footnote 
omitted).

Knowing that Congress does not act 
in isolation from its past experience, 
the congressional proponents of the 1977 
MBE provision explicitly recognized its 
relationship to several ongoing federal 
legislative programs with which Congress 
was familiar, and against which the 
provision must be judged. These include:
(1) The Small Business Act, adopted in 
1953 and repeatedly amended, in response 
to additional evidence, with increasing

-26-



focus on minority business enterprises;
(2) legislation designed to use the 
federal government's spending power to 
remedy discrimination and to prevent the 
federal government from being implicated 
in discrimination practiced by recipients 
of federal aid; and (3) the anti-reces­
sionary Public Works Employment Act of 
1976, and its 1977 amendments, which 
required the swift spreading of money 
throughout the country to those most 
likely to spend, so as to maximize the 
anti-recessionary effect of each federal 
dollar. It is to these legislative 
programs that analysis of the 1977 MBE 
provision must turn.

1. In amending and enforcing the 
Small Business Act, Congress 
and the Executive have made 
studies of minority businesses, 
the discrimination they have 
suffered, and the effectiveness 
of various remedial strategies.

Both Congressman Mitchell and 
Senator Brooke recognized that the 1977 
MBE provision at issue in this case was 
the next step in an evolving series of 
Small Business Administration (hereinafter 
"SBA") programs designed to aid minority

*

-27-



businesses. This recognition reflects 
the fact that Congress had focused on the 
problems of minority business enterprises 
on numerous occasions during its oversight 
of the Small Business Act.—^ Congress' 
overall knowledge of, and concern with, 
the problems of minority-owned businesses 
is fully understood best by reference to 
that Act.

Congress and the Executive have 
repeatedly found a history of discrimination 
against minorities which has resulted in 
their exclusion from the mainstream of 
the American economy and, in particular, 
from government contracts, which represent 
a sizeable amount of contracting dollars. 
This exclusion has been found to result 
not only from the debilitating effects 
of discrimination which impair the 
inherent ability of MBE's to compete

7/ Minority persons own few businesses, 
and the businesses they own are small. See, 
e-g., U.S. Commission on Civil Rights, Report, 
Minorities and Women as Government Contractors 
11 (May 1975) (Respondent Kreps' Ex. No. 1, App. 
124a); Bureau of Census, Special Report, Minority- 
Owned Businesses, 1972 Survey of Minority-Owned 
Business Enterprises, MB72-4, Table 1 at 16 (May 
1975).

-28-



successfully, but also from the attitudes 
of government procurement officers who 
have resisted giving contracts to minority 
enterprises. In response to this dis­
crimination, a variety of remedial 
programs have been tried, including 
contract set-aside provisions. The MBE 
provision involved in this case is an 
evolutionary step, necessitated in 
Congress' judgment by the failure of 
existing programs.

For at least 26 years Congress has 
sought to foster small businesses and 
assure them their fair share of government 
contracts, and specifically subcontracts 
for construction. In the Small Business 
Act of 1953, Pub. L. No. 163, title II,
67 Stat. 232, amended by Act of July 18, 
1958, Pub. L. No. 85-536, 72 Stat. 384 
(codified at 15 U.S.C. §§631 et seq.), 
Congress declared that the entry of 
individuals and small business enterprises 
into the market and the fair distri­
bution of government contracts to them 
was essential to a strong economy, an 
efficient government procurement program, 
and fairness to the individual small

-29-



business person. Id. §2(a) (codified at 
15 U.S.C. §631(a)).

In addition to providing for direct 
loans and technical advice, the Small 
Business Act from the beginning created 
a government contract set-aside program 
for small businesses. Id. §8(a) (codi­
fied at 15 U.S.C. §637(a)). This program, 
known as "the 8(a) program", was discussed 
by Senator Brooke during debate on the 
1977 MBE provision. It originally 
authorized the SBA to enter into contracts 
with federal procurement officers for 
the acquisition of government supplies 
and equipment, and to subcontract, in 
turn, to small businesses for the per­
formance of such contracts. From the 
start, also, the SBA was expressly 
charged with taking government-wide 
"action to encourage the letting of 
subcontracts by [private] prime contractors 
[on federal projects] to small-business
concerns," not on strictly competitive 

8 /terms,—7 but "at prices and on conditions

8/ The Small Business Act, as amended, 
provides for a variety of non-racial special 
preferences to small businesses, and thus deviates 
repeatedly from the principle of strict market 
competition. See, e.g., 15 U.S.C.A. §§636(b),
(i), (j) (3) (1979).

-30-



and terms which are fair and equitable." 
Id. §8(b)(5) (codified at 15 U.S.C.
§637(b)(5)).-7

By 1967, Congress perceived the 
need to go one step further and to 
emphasize the needs of a specific portion 
of small businesses; it required the SBA 
to assure that federal funds would 
benefit low-income persons and the areas 
in which they lived. The Economic 
Opportunity Amendments of 1967, Pub. L.
No. 90-222, title II, 81 Stat. 710 
(codified at 42 U.S.C. §§2901 et seq.), 
provided that the SBA should give "special 
attention to small business concerns 
(1) located in...areas with high propor­
tions of unemployed or low-income indivi­
duals, or (2) owned by low-income indivi­
duals." Id. §406(a). It authorized the

9/ In 1961, another small business subcon­
tracting program was added to the SBA to further 
assure that small businesses would be "considered 
fairly as subcontractors" for government contracts. 
Small Business Act Amendments of 1961, Pub.
L. No. 87-305, §7, 75 Stat. 667 (codified at 15 
U.S.C. §637(d)). This amendment provided that 
"the extensive use of subcontractors by a proposed 
contractor" would be a "favorable factor" in 
"evaluating bids or selecting contractors for 
negotiated contracts...."

-31-



SBA to assure "that contracts, [and] 
subcontracts ...[made] in connection with 
programs aided with Federal funds are 
placed in such a way as to further the 
purposes of this title." Id. §407(a).

Following widespread urban unrest 
in 1967, President Johnson appointed the 
National Advisory Commission on Civil 
Disorders (the Kerner Commission) to 
investigate the civil disorders in black 
ghettos throughout the nation. Its 
report found discrimination rampant in 
American life. One of its "Recommenda­
tions for National Action" was "[e]n- 
couraging business ownership in the 
ghetto" by minority individuals. Report 
of The National Advisory Commission on 
Civil Disorders 236 (March 1, 1968). 
Despite the decade-old mandate of the 
SBA to encourage small business, the 
Commission found that the benefits of 
SBA programs had not adequately reached 
minority enterprises:

We believe it is important to 
give special encouragement to Negro 
ownership of business in ghetto 
areas. The disadvantaged need help 
in obtaining managerial experience 
and in creating for themselves a

-32-



stake in the economic community.
The advantages of Negro entrepre­
neurship also include self-employment 
and jobs for others.

Existing Small Business Adminis­
tration equity and operating loan 
programs, under which almost 3,500 
loans were made during fiscal year 
1967, should be substantially 
expanded in amount, extended to 
higher risk ventures, and promoted 
widely through offices in the 
ghetto. Loans under Small Business 
Administration guarantees, which 
are now authorized, should be 
actively encouraged among local 
lending institutions. Id.
A response to the Kerner Commission's 

recommendation (and the discrimination 
which it described) required focusing 
long-standing SBA programs still more 
narrowly on minority business enter­
prises, the segment of small business 
most beset with difficulties.

Three presidential orders— ^ followed 
in the ensuing three years, premised on

10/ Executive Order 11458, Prescribing 
Arrangements for Developing and Coordinating a 
National Program for Minority Business Enterprise, 
3 CFR, 1966-1970 Comp., p. 779 (March 1969) 
(ordering Secretary of Commerce to develop 
"comprehensive plans of Federal action" to 
promote the "growth of minority1 business enter­
prises"); Executive Order 11518, Providing for

(footnote continued)

-33-



the Increased Representation of the Interests of 
Small Business Concerns Before Departments and 
Agencies of the United States Government, 3 CFR, 
1966-1970 Comp., p. 907 (March 1970) (ordering 
that the SBA "shall particularly consider the 
needs and interests of minority-owned small 
business concerns and of members of minority 
groups seeking entry into the business community"); 
Executive Order 11625, Prescribing Additional 
Arrangements for Developing and Coordinating a 
National Program for Minority Business Enterprise,
3 CFR, 1971-1975 Comp., p. 616 (October 1971) 
(noting that "social and economic justice" 
required the "opportunity for full participation 
in our free enterprise system by socially and 
economically disadvantaged persons," who include 
without limitation "Negroes, Puerto Ricans, 
Spanish-speaking Americans, American Indians, 
Eskimos, and Aleuts"; and requiring the Secretary 
of Commerce to coordinate "an increased minority 
enterprise effort," to develop "specific program 
goals for the minority enterprise program...[and] 
establish regular performance monitoring and 
reporting systems to assure that goals are being 
achieved.").

In response to the first Order, the Office 
of Minority Business Enterprise ("OMBE"), mentioned 
by Representative Mitchell during debate on the 
1977 MBE provision, was established at the 
Department of Commerce. It funds organizations 
to "provide assistance to minority firms in 
obtaining procurements from...State and local 
governments, and the Federal Government.... A 
construction firm for example may be assisted in 
bidding and securing bonding for public or 
private sector contracts...." Minority Enterprise 
and Allied Problems of Small Business, H.R. Rep.
No. 94-468, 94th Cong., 1st Sess. 8 (Sept.
1975).

(footnote continued)

-34-



the finding that "members of certain 
minority groups through no fault of 
their own have been denied the full 
opportunity" to "own their own busi­
nesses and thereby to participate in our 
free enterprise system". Executive 
Order 11518, 3 CFR, 1966-1970 Comp., p.
907. The Secretary of Commerce was 
required to establish a coordinated 
federal program with specific goals and 
monitoring systems and to encourage 
state, local and private programs to 
strengthen minority business enterprises.

As a result of the Kerner Commission 
Report and the three Executive Orders,— ^ 
a regulation was promulgated further 
narrowing the 8(a) program by specifically 
limiting eligibility for that program to

11/ See S. Rep. No. 95-1070, 95th Cong., 2d 
Sess. 14, reprinted in [1978] U.S. Code Cong. & 
Ad. News 3835, 3849 ("The 8(a) program simply 
evolved as a result of Executive orders issued 
by Presidents Johnson and Nixon in response to 
the 1967 Report of the Commission on Civil 
Disorders ...[based on its] finding that... disad­
vantaged individuals did not play an integral 
role in America's free enterprise system, in 
that they enjoyed no appreciable ownership of 
small businesses....").

-35-



"disadvantaged persons. This category 
often includes, but is not restricted 
to, Black Americans, American Indians, 
Spanish Americans, Oriental Americans, 
Eskimos and Aleuts." 35 Fed. Reg. 17833 
(Nov. 20, 1970) (codified at 13 CFR 
§124.8-1). General government procurement 
regulations were also promulgated, 
requiring that "the maximum practicable 
opportunity to participate in the perfor­
mance of government contracts be provided 
to minority business enterprises as 
subcontractors." 36 Fed. Reg. 17509 
(Sept. 1, 1971) (codified at 41 CFR 
§1-1.1310-1) .— ^ They required clauses in 
government procurement contracts com­
mitting private contractors to use their 
"best efforts" to maximize the partici-

12/ "For the purposes of this definition, 
minority group members are Negroes, Spanish­
speaking American persons, American-Orientals, 
American-Indians, American-Eskimos, and American- 
Aleuts." 36 Fed. Reg. 17509 (Sept. 1, 1971)
(codified at 41 CFR §§1-1.1303, 1-1.1310-2).

-36-



pation of minority businesses as subcon­
tractors . — ^

Examination of MBE's by Congress 
and administrative agencies became 
exhaustive in 1975, only two years 
before the passage of the MBE provision

13/ In addition to these Executive actions, 
the Ninety-second Congress authorized the SBA to 
create minority enterprise small business invest­
ment companies (MESBIC's). Act of October 27,
1972, Pub. L. No. 92-595, §2(b), 86 Stat. 1314 
(codified at 15 U.S.C. §681(d)). Their task was 
to contribute to a "well-balanced national 
economy by facilitating ownership in such concerns 
by persons whose participation in the free 
enterprise system is hampered because of social 
or economic disadvantages...." Id. An amendment, 
Act of October 24, 1978, Pub. L. No. 95-507, 
title I, §104, 92 Stat. 1758, increased the 
level of funding in order to reinvigorate these 
MESBIC's, so as to compensate for the "[hjistori- 
cally... acute shortage of equity capital and 
long-term debt" for small concerns owned and 
operated by socially and economically disadvantaged 
individuals. S. Rep. No. 95-1070, 95th Cong.,
2d Sess. 3, reprinted in [1978] U.S. Code Cong.
& Ad. News 3835, 3838.

The Ninety-third Congress recognized and 
confirmed the new emphasis in SBA policy by 
creating the position of Associate Administrator 
for Minority Small Business. Small Business 
Amendments of 1974, Pub. L. No. 93-386, §6, 88 
Stat. 748 (codified at 15 U.S.C. §633).

-37-



at issue in this case. In that year,
the Subcommittee on SBA Oversight and
Minority Enterprise of the House Committee
on Small Business held hearings to
review the foregoing existing "efforts
designed to assist the development of
minority business." Minority Enterprise
and Allied Problems of Small Business,
H.R. Rep. No. 94-468, 94th Cong., 1st
Sess. 1 (Sept. 1975) (summarized in
Summary of Activities of the Committee
on Small Business, H.R. Rep. No. 94-1791,
94th Cong., 2d Sess. 183 (Nov. 1976)
(Respondent Kreps1 Ex. No. 4, App.
123a)). Subcommittee Chairman Addabbo
noted the need for

effective remedial action...to 
guarantee opportunities for full 
economic participation to those 
members of our society who have 
traditionally encountered impediments 
or obstacles to entering the mainstream 
of business resulting from discrimina­
tion or similar circumstances. Id. 
^emphasis supplied).
In its report, the Subcommittee 

found that the dearth of minority-owned 
businesses was the result of racial 
discrimination and that the Government1s

-38-



MBE programs had not cured the effects 
of such discrimination. It stated:

The subcommittee is acutely 
aware that the economic policies of 
this Nation must function within 
and be guided by our constitutional 
system which guarantees "equal 
protection of the laws." The 
effects of past inequities stemming 
from racial prejudice have not 
remained in the past. The Congress 
has recognized the reality that 
past discriminatory practices have, 
to some degree, adversely affected 
our present economic system.

While minority persons comprise 
about 16 percent of the Nation’s 
population, of the 13 million 
businesses in the United States, 
only 382,000, or approximately 3.0 
percent, are owned by minority 
individuals. The most recent data 
from the Department of Commerce 
also indicates that the gross 
receipts of all businesses in this 
country totals about $2,540.8 
billion, and of this amount only 
$16.6 billion, or about 0.65 percent 
was realized by minority business 
concerns.

These statistics are not the 
result of random chance. The presumption 
must be made that past discriminatory 
systems have resulted in present 
economic inequities.... Id! at 1-2 
(emphasis supplied).

The report reaffirmed the need for 
remedial programs to assure equal oppor-

-39-



tunity, and concluded that they would be
proper if tempered by an equitable
balance between those minorities injured
by discrimination and those white persons
innocent of discriminatory acts:

In order to right this situation, 
the Congress has formulated certain 
remedial programs designed to 
uplift those socially or economic­
ally disadvantaged persons to a 
level where they may effectively 
participate in the business main­
stream of our economy.

It is, of course, hoped that 
some day remedial programs will be 
unnecessary and that all people 
will have the same economic oppor­
tunities. However, until that time 
remedial action must be considered 
as a necessary and proper accom­
modation for our Nation's socially 
or economically disadvantaged 
person....

The subcommittee is mindful 
that remedial programs should not 
be used in such manner as to unjustly 
sacrifice the rights and privileges 
of the majority.... A balance must 
be struck and equity must be the 
keynote. Id.
In its report, the Subcommittee 

also related testimony about the inade­
quacy of the 8(a) program from various 
persons, including Representative Mitchell.

-40-



This testimony identified existing1 4 /

14/ The Subcommittee also had as evidence, 
Minority Enterprise and Allied Problems of Small 
Business, H.R. Rep. No. 94-468, 94th Cong., 1st 
Sess. 11 (Sept. 1975), two government reports: a 
GAO report, Questionable Effectiveness of the 
8(a) Procurement Program, GGD-75-57 (April 
1975), and a U.S. Commission on Civil Rights 
Report, Minorities and Women as Government 
Contractors (May 1975). It was found that 
minority businesses are beset with, among other 
handicaps, unwarranted resistance from government 
contracting officers and that existing federal 
programs are failures; both of these considera­
tions were expressed in the floor debate in 
support of the 1977 MBE provision.

On the basis of a wide-ranging survey of 
federal, state and local agencies and procure­
ment officers and of minority business persons, 
id. at 142-175, the U.S. Commission on Civil 
Rights Report concluded that minority firms 
encounter "staggering" problems in bidding, in 
obtaining capital and in obtaining contracting 
information, id. at i. Moreover they are sub­
jected to a great deal of unwarranted "skepticism" 
about their competency by government contracting 
officers. Id. Federal MBE programs have achieved 
only "limited success", and there is only "limited" 
compliance by state and local governments with 
federal efforts to increase minority subcontracting. 
Id. at ii. As a result, in 1972 minorities and 
women received only 0.7 percent of federal 
contracts, despite the fact that they represented 
4 percent of all American business. Id. at 6, 111.

The U.S. Commission on Civil Rights also 
found that the MBE 8(a) program represents only 
0.25 percent of all federal procurement spending, 
and that the program is only a limited success.

(footnote continued)

-41-



Id. at 41-42. In particular, the Report noted 
its slowness and lack of staff. Id. at 37-40, 
46-47, 114. Finally, it found that the program 
suffers from the unsupported belief of some 
federal contracting officials, mostly white 
males, that MBE firms are less competent than 
others. Id. at 48-49, 112.

The Report found that the government-wide 
minority subcontracting program has had little 
impact; that federal contracting officers seldom 
monitor or enforce subcontracting requirements, 
id. at 78, 81-82, 84, 120-121; and that "from 
all indications,...[the subcontracting program] 
has failed to substantially increase either the 
number or dollar amounts of subcontracts...," 
id. at 79.

The Report made similar findings with 
respect to local and state government contracting 
programs. Because state and local governments 
spend more money on goods and services than the 
federal government, and spend more on smaller 
contracts for which small businesses are especially 
suitable, and spend significantly more of their 
dollars on construction contracts than the 
federal government, the Report found that "the 
volume and nature of State and local contracting 
is sufficent to provide extensive contracting 
opportunities to" minority and female firms.
Id. at 87. Nonetheless in the Commission's 
survey, minority and female firms also were 
found to receive only 0.7 percent of state and 
local contracting dollars. Id. at 86, 122.
Federal regulatory efforts dcTnot appear to have 
resulted in a significant increase in local and 
state MBE programs. Id. at 89-93. The Commis­
sion's survey data reported only ten jurisdictions, 
of which New York was not one, which had estab­
lished compliance programs under these regulations. 
Id. at 87. Federal and state enforcement or

(footnote continued)

(footnote continued)

-42-



resistance of public and private parties
to minority contractors:

[T]here is a great deal of resistance, 
particularly by the middle management 
level of Federal procuring agencies, 
to implement this [8(a)] program. 
Private industry is likewise hesitant 
to accept minority concerns... because 
of an established mode of business 
which has traditionally excluded 
minority-owned businesses. This is 
one reason...for the apparent 
inability of 8(a) firms to secure 
more commercial contracts. Id. at 
1 1 .

As a result of its study, the Subcommittee 
recommended an increase in the number of 
8(a) contracts and the adoption of 
specific criteria defining which con­
tracts were to be set aside for minority 
businesses. Id. at 34.

(footnote continued)

monitoring of "minority affirmative action 
subcontracting programs is virtually nonexistent." 
Id. at 91. In addition, the Report found that 
"[n]egative attitudes among State and local 
procurement officers also present a barrier to 
the participation of minorities . . .  as contrac­
tors"; in general, these white male officials 
believe that such minority firms could not be 
relied upon to perform. Ld. at 106-107. It 
noted that other contracting officials who were 
interviewed believed that a contract set-aside 
program was the most effective method for MBE 
aid. Id. at 107.

-43-



With respect to government-wide 
subcontracting regulations for minority 
businesses, the Subcommittee found that 
the "best efforts" regulations in 41 
CFR Subpart 1-1.13 were "totally inadequate" 
because of "a glaring lack of specific 
objectives which each prime contractor 
should be required to achieve," a "lack 
of enforcement" and a lack of "meaningful 
monitoring." Id. at 32. The Subcommittee 
recommended that bidders on government 
contracts be required to include a "plan 
specifically designed to recruit minority 
subcontractors" and that sanctions be 
imposed for non-compliance. Id. at 36.— ^

15/ The Subcommittee on SBA Oversight and 
Minority Enterprise considered other relevant 
matters during the two years immediately preceding 
passage of the 1977 MBE provision. It held 
hearings on the effect of New York City's fiscal 
crisis on small business, especially on MBE's. 
Effects of New York City's Fiscal Crisis on 
Small Business, H.R. Rep. No. 94-659, 94th 
Cong., 1st Sess. (Nov. 1975), summarized in 
Summary of Activities, A Report by the House 
Committee on Small Business, H.R. Rep. No.
94-1791, 94th Cong., 2d Sess. 150-63 (Jan. 3, 
1977). The Subcommittee heard testimony that 
any change in the lending policies of New York 
banks would have a very detrimental impact on 
MBE's because economically and socially disad­
vantaged firms are especially affected by tight

(footnote continued)

-44-



credit conditions. Ld. at 162. Testimony also 
focused on the detrimental impact of the City's 
diminished spending for construction. Id. at 
153. The Subcommittee heard repeated testimony 
that in case of a default, MBE's would be the 
worst hit of all, id. at 152-55, because "[tradi­
tionally, such businesses have been the first to 
be affected by the lack of credit, the shortened 
cash flow, and the lack of access to capital 
funding.... 'For these people, default could be 
a death knell.'" Id. at 152.

In addition, the Subcommittee, on March 25, 
1976, requested the Comptroller General to 
conduct a study of the Department of Defense's 
Minority Business Enterprise Subcontracting 
Program. Comptroller General of the United 
States, Report, Department of Defense Program To 
Help Minority-run Businesses Get Subcontracts 
Not Working Well (Feb. 28, 1977) (Respondent 
Kreps' Ex. No. 3, App. 122a-123a). The Report 
found in general that the program was inadequate, 
id. at 5, 19-20; and specifically that the DOD 
lacked standards for the appropriate utilization 
of an MBE subcontracting clause, resulting in 
its wrongful omission from some contracts, that 
the subcontracting plans failed to establish 
specific contracting goals, and that the DOD did 
not monitor compliance, id. at 6-8. As a result 
the MBE subcontracting plans adopted by prime 
contractors were often inadequate. Id. at 
12-14. Prime contractors usually relied on 
their previous suppliers or subcontractors and 
would not risk alienating these companies in 
order to use an MBE, id. at 16; as a result 
MBE's had a difficult time breaking-into estab­
lished markets.

(footnote continued)

-45-



The next year, the Subcommittee 
provided detailed conclusions of dis­
crimination against minority business, 
including a specific reference to con­
struction .

The very basic problem disclosed by 
the testimony is that, over the 
years, there has developed a business 
system which has traditionally 
excluded measurable minority parti­
cipation . In”the past more than 
the present, this system of conducting 
business transactions overtly 
precluded minority input. Currently, 
we more often encounter a business 
system which is racially neutral on 
its face, but because of past overt 
social and economic discrimination 
is presently operating, TrT~eTfect, 
to perpetuate these past inequities. 
Minorities, until recently, have 
not participated to any measurable 
extent, in our total business 
system generally, or in the con­
struction industry, in particular. 
However, inroads are now being made 
and minority contractors are attempt­
ing to "break-into" a mode of doing 
things, a system, with which they 
are empirically unfamiliar and 
which is historically unfamiliar 
with them. Summary of Activities 
of the House Comm, on Small Business, 
94th Cong., 2d Sess. 182-83 (Comm. 
Print Nov. 1976) (emphasis supplied.)

-46-



During this same period, a Senate 
committee was also holding hearings on 
the SBA's MBE program. Hearings on 
Small Business Administration 8(a)
Contract Procurement Program Before the 
Senate Select Comm, on Small Business,
94th Cong., 2nd Sess. (Jan. 21, 1976). 
Senator Javits opened these hearings 
with the following remarks:

This policy of promoting and 
advocating the integration of the 
disadvantaged into the U.S. free 
enterprise system and economic 
mainstream has been continuously 
restated in legislation enacted by 
the Congress and in Executive 
orders....

In 1971, this committee recognized 
that businesses owned and controlled 
by disadvantaged persons receive 
less than one-twentieth of 1 percent 
of the total Federal procurement 
market. This committee is concerned 
that 4 years later, a 1975 survey 
by the Commission on Civil Rights 
indicates that firms owned by 
minorities and women still receive 
less than 1 percent of the total 
Government contracts.

Our focus is particularly 
timely today in view of the extremely 
detrimental effects of the current 
economic recession on the minority 
business community.... Id. at 1.

-47-



The Committee then heard testimony that 
minority enterprises have difficulty 
obtaining contracts in part because 
government procurement policies are so 
complex, id. at 169, and because private 
subcontracting is based as much on 
kinship and friendship as on low bids, 
id. at 57.— ^ In addition, one witness 
indicated that procurement officers in 
the 8(a) program deliberately let contracts 
involving non-technical and lower status 
jobs to minorities, and that this may 
arise out of resentment against MBE's.
Id. at 151.

The Senate Committee's report, 
issued one week before Parren Mitchell 
introduced the MBE provision here at 
issue, also noted testimony that the 
long standing exclusion of MBE's from 
participation in the economy has its 
roots in slavery. Senate Select Committee 
on Small Business, 95th Cong., 1st 
Sess., Report on Small Business Adminis­
tration 8(a) Contract Procurement Program 
3 (Comm. Print Feb. 16, 1977). The

16/ Limiting the availability of subcon­
tracts in this fashion can effectively discriminate 
against minorities. See p . 89 n.39 infra.

-48-



report also noted testimony recommending 
that Congress establish a set-aside 
program in all major pieces of spending 
legislation, so as to overcome the 
unresponsiveness and hostility to existing 
MBE programs of government officials and 
private contractors. Id. at 7-8.— ^

Within weeks, Congress adopted the 
short-term MBE provision at issue in 
this litigation.

In its second session in 1978, the 
same Congress turned to the task of 
greatly strengthening the long-term MBE 
provisions of the Small Business Act.
Act of October 24, 1978, Pub. L. No. 
95-507, title II, 92*Stat. 1760. The 
accompanying Senate Report established 
that legislative and executive investi­
gations had found that the SBA "had 
fallen far short of its goal to develop

17/ The appendix to the Senate Select 
Committee report included an investigative 
report, prepared for the Committee, concerning 
the New York and San Francisco offices of the 
SBA's 8(a) program. The investigation found 
that the offices were not serving "the management 
and technical assistance needs of 8(a) contractors," 
id. at 36, and were unable regularly and reliably 
to deliver contracts to 8(a) recipients, id. at 
13, 37.

-49-



strong and growing disadvantaged small 
businesses," and that further changes 
were needed to rectify "the pattern of 
social and economic discrimination that 
continues to deprive racial and ethnic 
minorities, and others, of the opportunity 
to participate fully in the free enterprise 
system." S. Rep. No. 95-1070, 95th 
Cong., 2d. Sess. 14, reprinted in [1978] 
U.S. Code Cong. &Ad. News 3835, 3848-49.

Based on its knowledge of a decade 
of prior MBE programs, as confirmed by 
House and Senate hearings and adminis­
trative reports, Congress made several 
express findings of fact, including the 
finding that Black Americans, Hispanic 
Americans, Native Americans and other 
minorities have suffered from discrimina­
tory practices with the result that such 
persons have been deprived of their 
right to full participation in the 
economy. Congress found:

(A) that the opportunity for full 
participation in our free enterprise 
system by socially and economically 
disadvantaged persons is essential 
if we are to obtain social and 
economic equality for such persons 
and improve the functioning of our 
national economy;

-50-



(B) that many such persons are 
socially disadvantaged because of 
their identification as members of 
certain groups that have suffered 
the effects of discriminatory 
practices or similar invidious 
circumstances over which they have 
no control;
(C) that such groups include, but 
are not limited to, Black Americans, 
Hispanic Americans, Native Americans, 
and other minorities;
(D) that it is in the national 
interest to expeditiously ameliorate 
the conditions of socially and 
economically disadvantaged groups;
(E) that such conditions can be 
improved by providing the maximum 
practicable opportunity for the 
development of small business 
concerns owned by members of socially 
and economically disadvantaged 
groups;
(F) that such development can be 
materially advanced through the 
procurement by the United States of 
articles, equipment, supplies, 
services, materials, and con­
struction work from such concerns; 
and
(G) that such procurements also 
benefit the United States by encourag­
ing the expansion of suppliers for 
such procurements, thereby encouraging 
competition among such suppliers
and promoting economy in such 
procurements. 15 U.S.C.A. §631(e)(l) 
(1979) (emphasis supplied).
On the basis of these findings, Congress 

strengthened prior practice by giving the

-51-



SBA statutory authorization to arrange 
for the performance of 8(a) set-aside 
contracts through "negotiating or other­
wise letting subcontracts to socially 
and economically disadvantaged small 
business concerns for construction 
work [et cetera].... " Id. §637(a)(1)( C ) ^

18/ "Socially disadvantaged persons are 
those who have been subjected to racial or 
ethnic prejudice or cultural bias because of 
their identity as a member of a group without 
regard to their individual qualities." 15 U.S.C.A. 
§637(a)(5) (1979). This includes the group of 
"Black Americans, Hispanic Americans, Native 
Americans, and other minorities." Id. §631(e)(1)(C). 
The House Conference Report noted that "in many, 
but not all, cases status as a minority can be 
directly and unequivocally correlated with 
social disadvantagement." H. Conf. Rep. No.
95-1714, 95th Cong., 2d Sess. 21, reprinted in 
[1978] U.S. Code Cong. & Ad. News 3879, 3882.

"Economically disadvantaged individuals are 
those socially disadvantaged individuals whose 
ability to compete in the free enterprise system 
has been impaired due to diminished capital and 
credit opportunities as compared to others in 
the same business area who are not socially 
disadvantaged." 15 U.S.C.A. §637(a)(6) (1979).
With regard to economic disadvantage, the House 
Conference Report mandated that regulations 
"recognize the historic past discrimination of 
minorities in their efforts to participate in 
the free enterprise system." H. Conf. Rep. No.

(footnote continued)

-52-



Although it did not require a particular 
percentage of set-aside contracts,
Congress authorized the SBA to appeal a 
procurement officer's refusal to set 
aside a contract for SBA subcontracting.— ^ 
Id. §637(a)(1)(A).

(footnote continued)

95-1714, supra, at 22, reprinted in [1978]
U.S. Code Cong. & Ad. News at 3883. The Report 
in summary stated that the "Conferees intend 
that the primary beneficiaries of this program 
will be minorities," but that economic disadvantage 
is imposed (with regard to the 8(a) set-aside 
requirements) as a further limitation in order 
to focus on the 8(a) goal of furthering economic 
and business development only of those MBE's 
which require aid. Id.

A socially and economically disadvantaged 
small business concern is defined as one which 
is 51 percent owned by socially and economically 
disadvantaged individuals and the management and 
daily business operations of which are controlled 
by at least one such individual. 15 U.S.C.A.
§637(a)(4) (1979).

19/ The Senate Report noted that the 8(a) 
program should use "Federal contracts as a means 
for the development of minority businesses in 
the more sophisticated kinds of industries such 
as ... construction," rather than for janitorial 
services which now predominate. S. Rep. No. 
95-1070, 95th Cong., 2d Sess. 11, reprinted in 
[1978] U.S. Code Cong. & Ad. News 3835, 3845.

-53-



With respect to general government-wide
subcontracting, the accompanying committee
report found that the SBA has "generally
ignored" the authority it has to encourage
private sector subcontracting to minority
businesses, although "this authority is
potentially among the most important in
the Small Business Act for developing
strong disadvantaged firms." S. Rep.
No. 95-1070, supra, at 13, reprinted in
[1978] U.S. Code Cong. & Ad. News at
3847. In response to this failure of
the SBA, Congress established that

It is the policy of the United 
States that small business concerns, 
and small business concerns owned 
and controlled by socially and 
economically disadvantaged indivi­
duals, shall have the maximum 
practicable opportunity to parti­
cipate in the performance of contracts 
let by any Federal agency. 15 
U.S.C.A. §637(d)(1) (1979).

It therefore required that in large 
procurement contracts each contractor 
adopt a strictly enforced MBE subcontract­
ing plan, establishing "percentage goals 
for the utilization as subcontractors 
of...small business concerns owned and 
controlled by socially and economically

-54-



disadvantaged individuals,"^^ id. §637 (d) ( 6) (A) , 
whom the contractor "shall presume... 
include Black Americans, Hispanic Americans,

20/ In large negotiated procurement contracts, 
Congress required that an apparently successful 
offeror would have to negotiate "a subcontracting 
plan", 15 U.S.C.A. §§637(d)(4)(A), (B)(1979), 
providing for the use of small businesses and 
small businesses owned by socially and economically 
disadvantaged persons. Each such plan would be 
required to include "percentage goals for the 
utilization as subcontractors" of such businesses. 
Id. §637(d)(6)(A). The SBA was authorized to 
consider, in granting or denying a contract, the 
offeror's "prior compliance" with subcontracting 
plans, id. §637(d)(4)(C), and the likelihood 
that the current plan would result in "the 
maximum practicable" use of such small businesses, 
id. §637(d)( 4 ) (D). Breach of the plan would 
constitute a material breach of the contract.
Id. §637(d)(8). Congress required similar 
provisions in contracts let by formal competitive 
bidding. Id. §637(d)(5).

In addition, Congress required that all 
federal agencies, in consultation with the SBA, 
"establish goals for the participation... by 
small business concerns owned and controlled by 
socially and economically disadvantaged individ­
uals ..." in the agency's procurement contracts 
worth over $10,000. Id. §644(g). To further 
these goals, an Office of Small and Disadvantaged 
Business Utilization was established in each 
agency with procurement powers. Id. §644(k).

-55-



Native Americans, and other minorities," 
id. §637(d)(3)(C).^/

2. In enforcing fifth and fourteenth 
amendment prohibitions, Congress 
has found widespread discrimina­
tion in the distribution of 
federal funds by state and 
local governments and widespread 
discrimination by construction 
industry recipients of federal 
funds, and it has reviewed and 
accepted the use of race-sensitive 
goals as a remedy for that 
discrimination.
(a) Discrimination in state and

local use of federal revenue­
sharing funds.

During Congress' debates on the 
1977 MBE provision, its proponents could 
draw not only on Congress' experience 
with the Small Business Act, but also on 
Congress' exposure to evidence of state 
and local discrimination obtained in its 
oversight of general revenue-sharing.
In its review of this program, Congress 
considered ample evidence of discrimination 
prevalent among state and local governments

21/ With respect to the general subcontract­
ing program, socially and economically disadvan­
taged individuals could also include "any other 
individual found to be disadvantaged by the 
[SBA] pursuant to section 8(a) of the Small 
Business Act." Id. §637(d)(3)(C).

-56-



in disbursing benefits, including federal 
funds.

Congress recognized the constitu­
tional problem inherent in discrimination 
by state and local recipients of federal 
funds when it adopted Title VI of the 
Civil Rights Act of 1964, 42 U.S.C. §§2000d 
et seq. (1976). Based upon evidence of 
widespread discrimination, Title VI was 
enacted, in the words of one congressman, 
to "enable the Federal Government itself 
to live up to the mandate of the Consti­
tution and to require States and local 
government entities to live up to the 
Constitution...." Quoted in University 
of California Regents v. Bakke, 438 U.S. 
at 331-32 (Brennan, J.). See generally 
id. at 284-87 (Powell, J.); id. at 
328-340 (Brennan, J.).

The problems which Title VI addresses 
were exacerbated in 1972 by the passage 
of general revenue-sharing. 31 U.S.C.
§§1221 et seq. (1976). Despite its 
general policy that revenue-sharing 
monies were to be disbursed "without 
strings", Congress deemed it necessary 
to adopt a provision to assure the equal 
protection of the laws by barring the

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discriminatory use of these funds and 
establishing enforcement procedures 
beyond those of Title VI.— ^ Id. §1242.

The evidence of governmental dis­
crimination which Congress had from its 
study of the SBA programs, see, e.g., pp. 
15, 41-43 n.14, p. 48 supra, received ad­
ditional support from a 1975 congressional 
hearing. That hearing provided clear 
evidence of continuing local and state 
discriminatory practices in the use of 
revenue-sharing funds. Hearings on 
Civil Rights Aspects of General Revenue 
Sharing Before the Subcomm. on Civil and 
Constitutional Rights of the House Comm.

22/ Also during this period, Congress 
found state and local governments guilty of 
widespread intentional discriminatory employment 
practices, as well as ostensibly neutral in­
stitutional practices having a discriminatory 
impact. Finding these practices even more 
widespread than in the private sector, Congress 
concluded that it was necessary to strip state 
and local governments of their prior exemption 
from Title VII coverage. H.R. Rep. No. 92-238, 
92d Cong., 1st Sess. 17-19 (1971), and S. Rep. 
No. 92-415, 92d Cong., 1st Sess. 9-11 (1971), 
reprinted in 2 Subcomm. on Labor of Senate Comm, 
on Labor and Public Welfare, 92d Cong., 2d 
Sess., Legislative History of the Equal Em­
ployment Opportunity Act of 1972 at 77-79,
418-20 (Comm. Print 1972). It is proper to 
presume that discriminatory attitudes which find 
expression in employment decisions could also 
find expression in other areas, such as the 
letting of contracts. Cf. Keyes v. School 
District No. 1, 413 U.S. 189 (1973).

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on the Judiciary, 94th Cong., 1st Sess., 
ser. 21 (1975). The Chairman of the 
U.S. Commission on Civil Rights, Arthur 
S. Flemming, testified, for example, 
that the Commission had found "[ajbundant 
evidence... that discrimination in the 
employment practices and in the delivery 
of benefits of State and local government 
programs is far-reaching, often extending 
to activities funded by general revenue 
sharing."— ^ Id. at 154. Before the 
Subcommittee, also, was a report of the 
U.S. Commission on Civil Rights, The 
Federal Civil Rights Enforcement Effort - 
1974, Vol. IV, To Provide Fiscal Assistance 
(Feb. 1975), which described the enforcement 
efforts of the Office of Revenue Sharing 
as highly inadequate, see, e.g., id. at 
63-64, in the face of this prevailing 
discrimination, see, e.g., id. at 31-34,

23/ Flemming also noted that other studies, 
including one by the Comptroller General, confirmed 
this finding. Hearings on Civil Rights Aspects 
of General Revenue Sharing Before the Subcomm. 
on Civil and Constitutional Rights of the House 
Comm, on the Judiciary, 94th Cong., 1st Sess., 
ser. 21, at pp. 155-56 (1975). See also id. at 
109-10 (exchange between Undersecretary of the 
Treasury and Representative Drinan).

-59-



64 n.162.— ^ Testimony before the Sub-
26/committee supported this judgment.— 7

24/ Another report, U.S. Commission on 
Civil Rights, The Federal Civil Rights Enforcement 
Effort - 1974, Vol. VI, To Extend Federal Financial 
Assistance (Nov. 1975), reviewed Title VI enforce­
ment efforts of several federal agencies and 
concluded that "Federal Title VI responsibilities 
have not been effectively discharged," id. at 
756, because government-wide leadership is 
lacking, federal agencies engage in too little 
monitoring, and findings of violations rarely 
lead to enforcement proceedings, id. at 756-58.
For example: the Federal Highway Administration 
has apparently never "required a State to set 
goals and timetables for increasing the number 
of minority or female contractors although in 
several cases the number of minority contractors 
used by States appeared inadequate," id. at 
512-13; the Department of Transportation's 
adoption of a percentage goal for minority 
contractors apparently focused primarily on 
federal agency contracts and not on contracts 
awarded by state recipients of federal funds, 
id. at 514; and the wastewater treatment plant 
construction program of the Environmental Protec­
tion Agency was often of little benefit to 
minority contractors because the EPA's civil 
rights staff usually learned of contracts only 
after they had been awarded, id. at 621 n.1647.

25/ With five full time enforcement 
officers to police 39,000 recipient jurisdictions, 
the Office of Revenue Sharing could resolve few 
complaints. Hearings on Civil Rights Aspects of 
General Revenue Sharing, supra, at 97, 106-07,
125. Testimony showed the Office's inability to 
monitor and its hesitation to assure compliance 
with the law when violations were suspected.
Id. at 157-64.

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Accordingly, the Subcommittee's report 
expressly found discrimination in state 
and local governments' use of revenue­
sharing funds coupled with inadequate 
federal enforcement efforts.—

(b) Discrimination in the con­
struction industry.

As a result of the Executive's 
efforts to prevent the discriminatory 
use of federal funds in federally assisted 
construction contracts, both the Executive 
and Congress had occasion to review 
evidence of the discriminatory practices 
of the construction industry and to 
sanction the use of affirmative goals as 
a remedy to that discrimination. The 
focus of executive efforts has been 
regulations promulgated pursuant to

26/ See Subcomm. on Civil and Constitutional 
Rights of the House Comm, on the Judiciary, 94th 
Cong., 1st Sess. 5-8 (Comm. Print Nov. 1975) 
(finding widespread discrimination in local and 
state government activities, including in distri­
bution of benefits and in employment); id. at 
8-26 (finding federal efforts to monitor and 
enforce anti-discrimination provisions "grossly 
inadequate"); id. at 30 (suggesting that fifth 
and fourteenth amendments require more vigorous 
anti-discrimination enforcement than had previously 
existed).

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Executive Order 11246, parts II, III, 3 
CFR, 1964-1965 Comp., pp. 339, 340-47, 
which, in part, forbids the denial of 
equal employment opportunities in federal 
and federally assisted construction 
contracts. As a result of administrative 
findings of discriminatory employment 
practices, the regulations have established, 
as part of such government contracts, 
affirmative racial hiring plans. See, 
e.g., Contractors Association of Eastern 
Pa. v. Secretary of Labor, 442 F.2d 159,
163 (3d Cir.), cert. denied, 404 U.S.
854 (1971). Although superimposed on 
the prohibition of discrimination found 
in Title VII of the Civil Rights Act of 
1964, these affirmative goals were 
deemed necessary by the Executive to 
assure non-discriminatory employment 
practices in the construction industry.

Congress has extensively and vigorously 
reviewed these affirmative goals and its 
repeated rejection of bills forbidding 
such goals, in 1969, and in 1971 and 
1972, as well as in 1978, has constituted

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27 /ratification of them.— '

Congress’ awareness of this evidence 
of discrimination— ^ has special signifi-

27/ The history of this congressional 
debate and action has been repeatedly set before 
this Court and need not be recited once again.
See University of California Regents v. Bakke,
438 U.S. at 341-47 (Brennan, J.); Supplemental 
Brief for the United States as Amicus Curiae 
19-23, University of California Regents v.
Bakke, supra; Brief for the American Civil 
Liberties Union and the Society of American Law 
Teachers Board of Governors, Amici Curiae 74-95, 
United Steelworkers v. Weber, 99 S.Ct. 2721 
(1979); Brief for the Lawyers' Committee for 
Civil Rights Under Law as Amicus Curiae 7-15, 
United Steelworkers v. Weber, supra; Comment, The 
Philadelphia Plan: A Study in the Dynamics of 
Executive Power, 39 U. Chi. L. Rev. 723 (1972). 
See also Hearings on the Philadelphia Plan and 
S931 Before the Subcomm. on Separation of Powers 
of the Senate Judiciary Comm., 91st Cong., 1st 
Sess. (1969).

28/ The existence of widespread discri­
minatory practices among the construction trade 
unions are well known; indeed they are so notori­
ous that they may be the subject of judicial 
notice. United Steelworkers v. Weber, 99 S.Ct. 
at 2725 n.l; see id. at 2735 (Burger, C.J. 
dissenting). Cf. Fullilove v. Kreps, 443 F.Supp 
253, 260 n.17 (S.D.N.Y. 1977) (citing New York 
cases on discrimination in the building trades). 
If this discrimination is a subject of which the 
judiciary may take notice, it is certainly a 
subject of which the Congress may take notice.

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cance to the 1977 MBE provision. The 
open and notorious discrimination in the 
building trades has a direct impact on 
the number and the capacity and skill of 
minority contractors. It is established 
that the route to becoming a contractor 
is usually through the building trades 
where important experience is acquired.
For example, the ability to bid rationally 
and correctly and to manage the perfor­
mance of a contract effectively can be 
hampered by exclusion from actual perfor­
mance of similar work as a tradesman.
Thus, even past job discrimination 
continues to undermine the capacity of 
minority enterprises to compete success­
fully for construction contracts^

29/ See Department of Housing and Urban 
Development, A Survey of Minority Construction 
Contractors 29 ("with virtually no exceptions, 
the route to entrepreneurship as a general or 
specialty contractor begins with entry into a 
skilled occupation. Examples of persons who 
become contractors without ever having worked in 
a skilled construction trade are extremely 
rare."); Rhode Island Chapter, Associated General 
Contractors v. Kreps, 450 F.Supp. 338, 356 
(D.R.I 1978). The well-documented difficulties 
which MBE's have because of a lack of skills may 
be traced directly to this discrimination in the 
building trades. Cf. Office of Minority Business 
Enterprise, Minority Business Opportunity Committee

(footnote continued)

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c) Discrimination in letting 
railroad construction 
contracts.

A congressional committee has also 
directly reviewed the specific need for 
quotas to prevent the discriminatory use 
of federal funds in the letting of 
railroad construction contracts, a fact 
which Senator Brooke called to Congress' 
attention in the 1977 MBE provision 
debate, see p. 18 supra. Because the 
revitalization of the railroads with 
federal funds provided a particularly 
significant source of contracts, and 
because it wished to further "an estab­
lished national policy...to encourage 
and assist in the development of minority 
business enterprise," the Ninety-fourth 
Congress legislated to assure that MBE's 
would have an equal opportunity to

(footnote continued)

Handbook 1-2 (Aug. 1976) (minority entrepreneurs 
deprived of skills by their historic exclusion 
from the mainstream economy); Executive Office 
of the President and Office of Management and 
Budget, Interagency Report on the Federal Minority 
Business Development Programs 29 (March 1976)
(lack of management skills is a leading cause of 
minority business failure).

-65-



compete for such railroad contracts.
See S. Rep. No. 94-499, 94th Cong., 2d 
Sess. 44-45 (1976), reprinted in [1976] 
U.S. Code Cong. & Ad. News 14, 58-59.
The Railroad Revitalization and Regulatory 
Reform Act of 1976 required a non-dis­
crimination clause in certain federally 
funded railroad construction contracts, 
and a mandatory fund cut-off procedure 
for violations thereof, 45 U.S.C. §803 
(1976), and also special affirmative 
assistance to minority businesses in the 
form of a Minority Resource Center, 49 
U.S.C. §1657a (1976).

Pursuant to the non-discrimination 
provision, the Secretary of Transporta­
tion promulgated regulations, 42 Fed.
Reg. 4286 (Jan. 24, 1977) (codified at 
49 CFR Part 265), which require, as a 
condition for receiving contracts worth 
$50,000 or more, that contractors "[w]here 
appropriate because of prior underutili­
zation of minority businesses, establish 
specific goals and timetables to utilize 
minority businesses...." 49 CFR §265.13(c)
(3)(vi). The regulat ions provide that 
compliance will be evaluated partially

- 6 6 -



in terms of "[s]pecific efforts to...award 
contracts to" MBE's. Id. §265.19(a)(2).

In subsequent hearings on railroad 
revitalization, congressmen have repeatedly 
scrutinized the success of this MBE ef­
fort. In one hearing, Congressman 
Mitchell expressed his grave concern 
that Amtrak's record on MBE contracting 
was so dismal that providing information 
and technical assistance through the 
Minority Resource Center would be useless 
if Congress did not regulate, in some 
mandatory fashion, Amtrak's letting of 
construction contracts. Special Joint 
Session Hearings on Purchase and Revitali­
zation of Northeast Corridor Properties 
(Amtrak) Before the Senate Comms. on 
Appropriations, Budget and Commerce,
94th Cong., 2d Sess. 2-6 (1976).— ^

30/ Mitchell stated "how absolutely frustrat­
ing it is" for him as a black congressman to 
vote for billions of dollars in appropriations, 
"knowing that minority businesses will not even 
get an infinitessimal share of the money that's 
spent." Special Joint Session Hearings, supra, 
at 2.

In further hearings on April 26, 1977, 
during which Amtrak's record on MBE subcontracting

(footnote continued)

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Senator Bayh concurred in this concern. 
Id. at 11. In response, the Secretary 
of Transportation indicated that he had 
taken steps to assure that there would 
be ample MBE subcontracting, id. at 13, 
and the Chairman of the Board of Amtrak 
assured the Committees that a 10 percent 
small business and MBE set-aside on 
Amtrak construction contracts would 
protect MBE's, id. at 45-47.

Thus, before the passage of the 1977 
MBE provision, Congress, in fulfilling 
its constitutional duty to assure that 
federal funds would be spent in a non- 
discriminatory way, had investigated and 
debated the widespread discrimination 
in the letting of public contracts

(footnote continued)

was reviewed, Mitchell expressed further doubts 
about the effectiveness of the Minority Resource 
Center and noted that, as of October 30, 1976, 
Amtrak, Conrail and the U.S.R.A. had let only 
0.6 percent of their contracts to MBE's. Hearings 
on H.R. 7557, Department of Transportation and 
Related Agencies Appropriations for Fiscal Year 
1978, Part IV, Before the Subcomm. of the Senate 
Comm, on Appropriations, 95th Cong., 1st Sess.
1285 (1977). See also id. at 1282-95, 1956-65, 
1971-77, 2006-09.

- 6 8 -



generally and in the construction industry 
specifically and the necessity of affir­
mative goals to prevent discrimination 
in publicly funded construction.

C. Congress Recognized That,
Because Of Racial Discrim­
ination In The Construction 
Industry, The 1977 MBE Provision 
Significantly Advanced The 
Racially Neutral Anti-reces­
sionary Purposes Of The Public 
Works Employment Acts of 1976 
and 1977._____________________

The Public Works Employment Act of 
1976 was designed to fight the "worst 
recession" since the Great Depression by 
increased spending for state and local 
public works projects and services. H.R. 
Rep. No. 94-1077, 94th Cong., 2d Sess. 1 
(1976), reprinted in [1976] U.S. Code 
Cong. & Ad. News 1746. This antireces­
sionary statute manifested two qualities 
traditionally thought to be essential to 
effective counter-cyclical spending: 
money was provided quickly to those with 
the least propensity to save it.

-69-



Because time is of the essence in 
an anti-recessionary spending program,—  
the Act was "carefully and expressly 
designed," id. at 3, [1976] U.S. Code 
Cong. & Ad. News at 1748, to provide 
that a grant application would be deemed 
approved if the Secretary failed to act 
on it within 60 days, 42 U.S.C. §6706 
(1976), and that projects would be 
required to commence work within 90 days 
after approval, id. §6705(d).

Furthermore, because spreading 
funds to those most likely to use the 
money for consumption purposes, that is

31/ Time is of the essence, in part, 
because increased spending must be counter­
cyclical: it must not continue once the economy
is in an upswing, lest inflation be fueled.
H.R. Rep. No. 95-20, 95th Cong., 1st Sess. 2 
(1977), reprinted in [1977] U.S. Code Cong. &
Ad. News 151; id. at 23, [1977] U.S. Code Cong.
& Ad. News at 168 (supplemental views of Mr. Myers).

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to poor persons,— 7 is of the essence, 
the Act directed the Secretary of Commerce, 
in allocating funds among projects and 
geographic areas, to take into account 
the severity and duration of each area's 
unemployment and under-employment, the 
income level of the area, and the effect 
of a proposed project on employment. Id. 
§§6706, 6707(c), 6707(d).

When Congress amended this Act in 
1977, it left untouched the earlier 
provisions requiring speedy dispersal of 
funds, but amended other provisions to 
assure that each federal dollar spent 
would have the maximum multiplier effect 
on the economy by directing funds to 
poor persons who are likely to spend.

32/ Poorer persons spend a significantly 
greater percentage of their income on consumption, 
as the following table shows. U.S. Department 
of Labor, Bureau of Labor Statistics, Report 
455-4, Consumer Expenditure Survey Series, Inter-
view Survey, Table I (1977) (n of families

Before Tax $0- $4,000- $6,000-
Income 2,999 $4,999 $6,999
Total
Current

$3,039 $4,531 $5,725

Consumption
Expenditures $8,000- $12,000- $20,000-

$9,999 $14,999 $24,999
$6,921 $8,890 $12,591

-71-



One of these,— 7 as Senator Brooke 
recognized, was the 1977 MBE provision 
which directed public works funds to 
areas "where they are most needed", 
"because minority businesses' work 
forces are principally drawn from resi­
dents of communities with severe and 
chronic unemployment." 123 Cong. Rec. 
S3910 (daily ed. March 10, 1977).
Without this provision, such poor persons 
could be excluded from the benefits of 
the public works program by the discri­
minatory practices of the building 
trades. See, e.g., pp. 61 to 64 supra.
By contrast with white-owned construction 
companies, minority businesses are much

33/ Three other amendments also heightened 
the multiplier effect of the federal funds. Two 
of these sought to prevent the multiplier effect 
from being dissipated by spending outside the 
United States. See 42 U.S.C. §§6705(e)(2) ,
(f)(1)(A) (in public works contracts, forbid­
ding the employ of illegal alien labor and 
minimizing use of foreign made materials). In 
addition, the Act required that construction 
projects be built in those neighborhoods of 
highest unemployment or lowest income, should a 
local government derive its unemployment statistics, 
for purposes of its project application, from 
those areas. Id. §6707(e).

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more likely to hire minority employees.
In addition, because most minority 
construction firms have few if any 
regular employees, U.S. Bureau of the 
Census, Special Report, Minority-Owned 
Businesses, MB72-4, 1972 Survey of 
Minority-Owned Business Enterprises,
Table I at 16 (1972), an increase in 
contracts to them would undoubtedly 
result in new hires, see Executive 
Office of the President and Office of 
Management and Budget, Interagency 
Report on the Federal Minority Business 
Development Programs 51 (March 1976)
(SBA finding that 81.4 percent of sampled 
MBE1s increased their employment after 
receiving an 8(a) contract).

The proponents of the MBE provision 
recognized explicitly that the minority 
unemployment rate was double that of 
white citizens, and as high as 35 percent.

34/ See, e.g., A. Andreasen, Inner City 
Business: A Case Study of Buffalo, New York 147 
(1971) (black-owned firms in Buffalo N.Y. hire 
much higher percentage of black employees than 
did white-owned firms); R. Glover, Minority 
Enterprise in Construction 27-28 (1977) (small 
minority construction firms have a significantly 
higher percentage of minority employees than 
white firms).

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123 Cong. Rec. S3910 (daily ed. March 
10, 1977) (remarks of Senator Brooke); 
123 Cong. Rec. H1440 (daily ed. Feb. 24, 
1977) (remarks of Rep. Biaggi). In 
1977, the median income of minority 
families was approximately 61 percent 
that of white families, and a signifi­
cantly greater percentage of minority 
persons than white persons were below 
the poverty line. See U.S. Bureau of 
the Census, Statistical Abstract of the 
United States: 1978, Tables 729, 756. 
There was thus good reason for Congress 
to believe that the MBE provision would 
utilize federal funds for a maximum 
anti-recessionary effect, since, as 
Senator Brooke noted, it directed those 
funds to minority persons, who are among 
the poorest members of society and who, 
but for the provision, would be excluded 
from those funds by discrimination.

In addition, the 1977 MBE provision 
served as equitable direct aid to those 
who suffered from the differential 
impact a recession has on minority 
groups. Just as Senator Brooke noted,

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the recession had brought severe unem­
ployment to minority persons; in fact, 
their unemployment rate was double that 
of others. 123 Cong. Rec. S3910 (daily 
ed. March 10, 1977). The MBE provision 
sought to diminish that differential in 
unemployment rates, a purpose which 
could otherwise be frustrated by the 
effects of discrimination in the building 
trades.

Moreover, the recession had a 
particularly destructive impact on 
minority businesses. See id. (remarks 
of Senator Brooke); p. 47 supra (remarks 
of Senator Javits); p. 44 n.15 supra 
(H.R. Rep. No. 94-659). Like minority 
employees who suffer the "last hired, 
first fired" syndrome, MBE's (in many 
cases only newly formed due to past 
discrimination) had suffered heavily 
during the recession, see 123 Cong. Rec. 
H1440 (daily ed. Feb. 24, 1977) (remarks 
of Rep. Biaggi). Through the MBE provi­
sion, contracts would be available to 
minority businesses, including those in 
which the SBA had already made investment, 
which might otherwise have failed.

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III. ACTING ON THE BASIS OF THIS HISTORY, 
CONGRESS WAS CLOTHED WITH ABUNDANT 
CONSTITUTIONAL AUTHORITY, UNDER ITS 
SPENDING POWER, UNDER ITS THIRTEENTH 
AMENDMENT §2 POWER, AND UNDER ITS 
FOURTEENTH AMENDMENT §5 POWER, TO 
ENACT THE 1977 MBE PROVISION.
There are, then, a multitude of 

factors which provide the historical 
context of the 1977 MBE provision: the 
exclusion of minorities from government 
contracts, the opposition of government 
contracting officers to minority businesses, 
the recognized inadequacies of existing 
programs designed to aid minority businesses, 
the historic discrimination against 
minorities in the construction industry, 
and the particularly severe economic 
plight of minorities during recessionary 
periods. Of all the branches of government, 
Congress is charged with special authority 
and discretion to deal with such problems, 
under its spending power and under the 
enforcement clauses of the thirteenth 
and fourteenth amendments. With these 
sources of authority, Congress possesses 
broad discretion to eliminate racial 
discrimination. Its judgment is measured 
by the standard of the "Necessary and 
Proper" clause; the Court should overturn

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Congress' judgment only if there is no 
reasonable basis on which it could be 
sustained.

The MBE provision did not restrict
the conduct of private or public parties
without concurrently providing benefits.
Congress, rather, disbursed substantial
federal funds in a new program, on the
condition that a small portion of them
be set aside for minorities, thereby
implicating the spending power, U.S.
Const, art. I, §8, cl. 1. Because it is
Congress' duty to determine how the
needs of the nation will be served
Congress' discretion in the exercise of
the spending power is b r o a d /

The discretion [in exercise of the 
spending power]...is not confided 
to the courts. The discretion 
belongs to Congress, unless the 
choice is clearly wrong, a display 
of arbitrary power, not an exercise 
of judgment. This is now familiar 
law. Helvering v. Davis, 301 U.S. 
619, 6 W  (1937).-------

Clearly the relief of unemployment, id. 
at 641; Charles C. Steward Machine Co. v.

35/ Its authority to set the terms of 
government contracts is, if anything, even 
broader. See Perkins v. Lukens Steel Co. 310 
U.S. 113 (1940).

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Davis, 301 U.S. 548, 586-87 (1937), and 
the remedying of economic disparities 
among groups, Califano v. Webster, 430 
U.S. 313, 318 (1977) (per curiam), are 
legitimate objects of the spending 
power. Congress' choices in spending 
can be successfully challenged only if 
"'by no reasonable possibility can the 
challenged legislation fall within the 
wide range of discretion permitted to 
the Congress.'" Helvering v. Davis, 301 
U.S. at 641. The question is whether 
Congress "had a basis for" its choice: 
"Whether wisdom or unwisdom resides in 
the scheme of benefits...it is not for 
us to say. The answer to such inquiries 
must come from Congress, not the courts." 
Id. at 644.

This is particularly true, in a 
case such as this one, where Congress 
could perceive the inequitable disburse­
ment of federal monies in the past to be 
the result of discrimination by govern­
mental contract officers and of discri­
mination in the construction industry.

'Simple justice requires that 
public funds, to which all taxpayers 
of all races contribute, not be

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spent in any fashion which encourages, 
entrenches, subsidizes, or results 
in racial discrimination.1 Lau v. 
Nichols, 414 U.S. 563, 569 TT374) 
(quoting Senator Humphrey).

Congress, of all branches of the federal
government, is uniquely charged with the
authority to prevent the "entrenchment"
of racial discrimination by the enforcement
clauses of the thirteenth and fourteenth
amendments. Its exercise of the spending
power is informed and directed by its
responsibility under those clauses:

Where Congress attempts to remedy 
racial discrimination under its 
enforcement powers, its authority 
is enhanced by the avowed intention 
of the framers of the Thirteenth, 
Fourteenth, and Fifteenth Amendments. 
Oregon v. Mitchell, 400 U.S. at 129 
(Black, J.T.
In section 5 of the fourteenth

amendment, Congress is granted "by a
specific provision," "the same broad
powers expressed in the Necessary and
Proper Clause...." Katzenbach v. Morgan,
384 U.S. at 650. Section 5

is a positive grant of legislative 
power authorizing Congress to 
exercise its discretion in deter­
mining whether and what legislation

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is needed to secure the guarantees 
of the Fourteenth Amendment. Id. 
at 651.

See also Oregon v. Mitchell, 400 U.S. at 
127-28, 131 n.12 (Black, J.); id. at 
145, 150 (Douglas, J.); .id. at 231, 240 
(Brennan, J.); id. at 284, 296 (Stewart,
J.). Wide congressional latitude in 
exercising the authority granted by 
section 5 of the fourteenth amendment is 
recognized, lest the Court "depreciate 
both congressional resourcefulness and 
congressional responsibility for imple­
menting the Amendment." Katzenbach v .
Morgan, 384 U.S. at 648 (footnote omitted):

It is not for us to review the 
congressional resolution of these 
factors. It is enough that we be 
able to perceive a basis upon which 
the Congress might resolve the 
conflict as it did. Id. at 653.
Here, Congress had before it evidence 

of discrimination by state and local 
governments in a variety of areas including 
the awarding of federal monies. See, 
e.g., pp. 56 to 61 supra. There is 
also evidence that discrimination was 
notorious in the construction industry, 
so that even if local government officials

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did not originally contribute to the 
racially exclusionary nature of the 
industry, they would necessarily become 
implicated in such discrimination by 
awarding contracts for the construction 
of public works and public buildings in 
a manner which openly preserved and 
rewarded private discrimination. Cf.
Burton v. Wilmington Parking Authority,
365 U.S. 715, 724-26 (1961); Gilmore v. 
City of Montgomery, 417 U.S. 556, 582 
(1974) (White, J., concurring); United 
States v. Guest, 383 U.S. 745, 755-57 
(1966); United States v. Price, 383 
U.S. 787, 794, 798 (1966). Because both 
the discriminatory practices of local 
and state officials and the entanglement 
of government with the discriminatory 
practices of the construction industry 
directly implicated the fourteenth 
amendment, Congress appropriately acted 
to forestall an unconstitutional exclusion 
of minority businesses from access to 
these federal funds. Rhode Island 
Chapter, Associated General Contractors 
v. Kreps, 450 F. Supp. 338, 349-51 
(D.R.I. 1978).

Even if the fourteenth amendment 
were not implicated in this case by the

-81-



involvement and entanglement of state 
and local governments in discriminatory 
action, Congress' judgment in enacting 
the MBE provision would be supported by 
the enforcement clause of the thirteenth 
amendment. Id. at 360-66. That clause 
"clothed 'Congress with power to pass 
all laws necessary and proper for abolishing 
all badges and incidents of slavery in 
the United States.'" Jones v. Alfred H.
Mayer Co., 392 U.S. 409, 439 (1968).
That power to redress societal and 
historic group-based discrimination, 
even by private parties, continues in 
force to this day. See generally id.

Again, Congress' discretion is 
broad:

"...Who is to decide what that 
appropriate legislation is to be?
The Congress of the United States; 
and it is for Congress to adopt 
such appropriate legislation as it 
may think proper...."

...Surely Congress has the 
power under the Thirteenth Amendment 
rationally to determine what are 
the badges and the incidents of 
slavery, and the authority to 
translate that determination into 
effective legislation. Id. at 440 
(footnote omitted).

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It cannot be deemed "irrational" to view 
the exclusion of minorities from parti­
cipation in the construction industry 
and from government contracts as a badge 
and incident of slavery, any less than 
the refusal of white planters to hire 
freed slaves for pay after the Civil 
War. Id. at 427. It is cl early estab­
lished that Congress can, under this 
amendment, enforce the right of minor­
ities to enter into contracts, whether 
individual employment contracts in the 
building trades, or MBE subcontracts 
with white businesses, or MBE primary 
contracts with local governments. See 
id. at 439 (Congress "plainly" possesses 
"the power to eliminate all racial 
barriers to the acquisition of real and 
personal property"); Runyon v. McCrary,
427 U.S. 160, 170-72 (1976).

It is open to Congress under the 
enforcement clause not simply to pro­
hibit discrimination, as it has in 42 
U.S.C. §§1981, 1982 (1976), but also to 
employ affirmative aid where simple 
prohibitory statutes are inadequate, as 
it now does in the MBE set-aside provision,

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and in other special affirmative programs, 
and as it did over 100 years ago in 
legislation aiding ex-slaves, including 
the Freedmen's Bureau Acts, see Brief of 
the NAACP Legal Defense and Educational 
Fund, Inc., as Amicus Curiae 10-53, 
University of California Regents v.
Bakke, supra. "If Congress cannot say 
that being a free man means at least 
this much, then the Thirteenth Amendment 
made a promise the Nation cannot keep." 
Jones v. Alfred H. Mayer, 392 U.S. at 
4 4 3.^/

36/ The power of Congress to include 
groups of Native Americans in the 1977 MBE 
provision, at least with regard to construction 
in and around their traditional lands, also 
derives from its plenary power to regulate the 
dealings of the United States with Indian tribes, 
and, in particular, its power to "regulate 
Commerce...with the Indian Tribes," U.S. Const, 
art. I, §8, cl. 3. On this basis, this Court 
has unanimously affirmed analogous legislation 
establishing a benign classification which 
prefers Indians for employment in the Bureau of 
Indian Affairs. Morton v. Mancari, 417 U.S.
535, 551-55 (1974).

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IV. THE 1977 MBE PROVISION DOES NOT 
VIOLATE THE DUE PROCESS CLAUSE OF 
THE FIFTH AMENDMENT.
Congress did not abuse its special 

authority and competence when it enacted 
the 1977 MBE provision.— / That pro­
vision was a reasonable response to

37/ Petitioners' argument that the 1977 
MBE provision violates Title VI of the Civil 
Rights Act of 1964 and should therefore be 
struck down is absolutely frivolous. Because 
repeals by implication are not favored, Morton 
v. Mancari, 417 U.S. 535, 549-51 (1974); Universal 
Interpretative Shuttle Corp. v. Washington 
Metropolitan Area Transit Commission, 393 U.S. 186, 
193 (1968); Posadas v. National City Bank, 296 
U.S. 497, 503 (1936); Wood v. United States, 41 
U.S.(16 Pet.) 342, 362-63 (1842); because the 
very idea of repeal of a later statute by an 
earlier statute borders on the ludicrous, see 
Araya v. McLelland, 525 F.2d 1194, 1196 (5th- 
Cir. 1976); International Union of Electrical,
Radio and Machine Workers v. N.L.R.B., 289 F.2d 
757, 761 (D.C.Cir. I960); and because the MBE 
provision is the more specific of the two statutes, 
regardless of the date of passage, Morton v. 
Mancari, 417 U.S. at 550-551; Bulova Watch Co. 
v. United States, 365 U.S. 753, 758 (1961), the 
MBE provision is not rendered inoperative by 
Title VI. As this Court has said, "[t]he courts 
are not at liberty to pick and choose among con­
gressional enactments, and when two statutes are 
capable of co-existence, it is the duty of the 
courts, absent a clearly expressed congressional 
intention to the contrary, to regard each as 
effective." Morton v. Mancari, 417 U.S. at 551.

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existing conditions, including the 
exclusion of minorities from government 
contracts and the notorious discrimina­
tion in the construction industry.

The MBE provision at issue in this 
case is not subject to the criticism 
that it is an "amorphous" response to 
social problems. University of California 
Regents v. Bakke, 438 U.S. at 307 (Powell, 
J.). To the contrary, the provision was 
"far more focused than the remedying of 
the effects of 1 societal discrimination.... '"

38/ It is the position of the Lawyers' 
Committee that societal discrimination would by 
itself provide a sound basis for the limited 
preference of the 1977 MBE provision. See, 
e.g., University of California Regents v. Bakke, 
438 U.S. at 362-73 (Brennan, J.); id. at 387-98 
(Marshall, J.); id. at 402 (Blackmun, J.). This 
question need not be resolved in this case, 
however, in view of the specific past discrimina­
tion in government funded construction work 
which is addressed by the 1977 MBE provision.

It is, of course, not necessary for Congress 
to find discrimination on a case-by-case basis 
on the part of each private individual and 
government affected by the 1977 MBE provision.
In utilizing the constitutional authority vested 
in it by the thirteenth and fourteenth amendments 
and the spending power, Congress, as this Court

(footnote continued)

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(footnote continued)

has recognized, does not and cannot function as 
would a trial court or administrative agency in 
an adjudicatory proceeding. See, e.g., Katzen- 
bach v. McClung, 379 U.S. 294, 302-05 (1964);
South Carolina v. Katzenbach, 383 U.S. 301,
328-29 (1966); Oregon v. Mitchell, 400 U.S. 112, 
133-34 (1970) (Black, J.); id. at 146-47 (Douglas, 
J.); id. at 216-17 (Harlan, J.); id. at 232-34 
(Brennan, J.); id. at 283-84 (Stewart, J.).
United Jewish Organizations v. Carey, 430 U.S.
144, 156-57, 161 (1977).

While Congress need not respond to discri­
mination on a state-by-state basis, it in fact 
had evidence concerning MBE's in New York State 
when it enacted the 1977 MBE provision. See p.
44 n.15 supra (effect of New York City fiscal 
crisis on MBE's); p. 49 n.17 supra (inadequacies 
of New York City SBA 8(a) office); Hearings on 
Small Business Administration 8(a) Contract 
Procurement Program Before the Senate Select 
Comm, on Small Business, 94th Cong., 2d Sess.
141 (Jan. 21, 1976) (testimony that New York 
State and City MBE contracting program was 
lacking); Subcoram. on Civil and Constitutional 
Rights of the House Comm, on the Judiciary,
Civil Rights Aspects of General Revenue Sharing 
6 (Comm. Print Nov. 1975) (New York City guilty 
of discriminatory employment practices). Cf.
U.S. Commission on Civil Rights, The Unfinished 
Business, Twenty Years Later...A report submitted 
to the U.S. Commission on Civil Rights by its 
Fifty-One State Advisory Committees 142 (Sept. 
1977) (implementation of New York State MBE 
subcontracting program ineffective despite high 
number of minorities in state; furthermore, "New 
York City's contract compliance program has been 
left in shambles by the State courts").

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The 1977 MBE provision was directed 
at a specific segment of society's 
activities where past discrimination was 
notorious. It dealt with the construction 
industry, where past discrimination has 
been rife. See pp. 61 to 64 supra;
United Steelworkers v. Weber, 99 S.Ct. 
at 2725 n.l; id. at 2732 n.* (Blackmun,
J., concurring); id-, at 2735 (Burger,
C.J., dissenting). Employment discri­
mination in the building trades has 
prevented and delayed the creation of 
minority construction businesses, since 
contractors have traditionally gained 
necessary familiarity with construction 
practices as tradesmen-employees. See 
p. 64 & n.29 supra. Such discriminatory 
inhibition of the formation of minority 
construction enterprises means that they 
are presently hampered by inexperience 
and small size, so that even a facially 
"neutral" system would operate to "perpetu­
ate...past inequities." See p. 46 
supra. These problems are exacerbated 
by the present unwillingness of white 
contractors to deal with minority

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enterprises. — ^ See, e^. , p. 45 n.15,
P- supra. Letting contracts to such 
white contractors would also exacerbate 
and perpetuate the effects of discrimina­
tion on the employment of minorities as 
construction workers; white firms, even 
years after the passage of Title VII, 
are far less likely than MBE’s to have 
minority employees. See, e.g., pp.
18-19, p. 63 n.28, p. 73 n.34 supra.

39/ The reasonableness of Congress' concerns 
is buttressed by petitioners' evidence in this 
case, which indicates the existence of an "old 
boy" network effectively excluding minority 
businesses from participation in construction 
work. One general contractor testified that he 
did not even solicit MBE's to bid on subcontracts: 
there were four non-minority firms which he 
"generally contacted] with respect to getting a 
price for performance of" certain work. App. 
65a-66a. An affidavit submitted by an industry 
official in support of petitioners' request for 
injunctive relief claimed that irreparable 
injury occurred when petitioners were required 
to "enter into subcontracts with subcontractors 
...other than those with whom a long standing 
relationship of trust and confidence has been 
established." App. 29a.

Such thinking reflects a system operating 
to exclude minority enterprises, where contrac­
tors deem it irreparable harm to deal with a new 
enterprise and where MBE's are not even requested 
to submit bids. See United States v. Georgia 
Power Co., 474 F.2d 906, 925-26 (5th Cir. 1973) 
(word-of-mouth hiring violates Title VII by 
isolating blacks from 'web of information' in 
the company) .

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The 1977 MBE provision, moreover, 
was not directed at the construction 
industry at large, but only at a specific 
and limited portion of that industry's 
activities: the performance of public 
works contracts. Congress had evidence 
of the effective exclusion of minorities 
from government contracting. There was 
evidence of discrimination by government 
contracting officers, including, in 
particular, discrimination by state and 
local contracting officers in the dis­
bursement of federal funds. See pp.
41-43 n.14, pp. 43, 48, 49, 56-61 supra. 
All of this evidence, and more, was 
before Congress when it enacted the 1977 
MBE provision.— ^

Congress' response to the conditions 
it perceived was temperate and reasonable.

40/ Because of the substantial evidence 
that the 1977 MBE provision was necessitated by 
past and present discrimination in the construc­
tion industry and in the awarding of government 
contracts, it cannot be said that the provision 
"stigmatizes" minorities. It is a response to 
perceived discrimination in a narrowly circum­
scribed arena, and not a response to any presump­
tion that minorities are "inferior" or incapable 
of succeeding in a nondiscriminatory environment. 
See University of California Regents v. Bakke,
438 U.S. at 357-58, 360, 375-76 (Brennan, J.).

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The MBE provision applied only to the 
1977 PWEA amendments, not to all government 
projects. It was therefore temporary 
and self-limiting, with the result that 
its impact on white contractors was 
transitory. See United Steelworkers v. 
Weber, 99 S.Ct. at 2730; id. at 2734 
(Blackmun, J., concurring). Moreover, 
the short term nature of the 1977 set-aside 
meant that its effects on both whites 
and minorities could be evaluated before 
similar provisions were considered. See 
Oregon v. Mitchell, 400 U.S. at 216-17 
(Harlan, J.). The MBE provision was, 
moreover, reasonable in that it was 
limited to a maximum of ten percent of
1977 PWEA funds, less than the percentage
„ . . . . . . 41/of minority citizens m  our nation.— /

41/ See United Steelworkers v. Weber, 99 
S.Ct. at 2732 n.* (Blackmun, J . , concurring) 
(black population alone is 11.7 percent in 
1970).

The 10 percent figure is, of course, greater 
than the percentage of construction enterprises 
owned by minorities. This fact does not undercut 
the reasonableness of the MBE provision, because 
the number of minority construction firms has 
been impaired by discrimination. See, e.g., 
pp. 39, 46, 64 & n.29 supra.

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Cf. University of California Regents v.
Bakke, 438 U.S. at 374 n.58 (Brennan,
J.). Even this ten percent figure was 
not cast in stone; it could be waived 
when the low percentage of minority 
contractors in a trade area made the 10 
percent figure infeasible. Indeed, the 
ten percent of 1977 PWEA funds in fact 
set aside amounted to only one quarter 
of one percent (.25 percent) of annual 
construction expenditures in the United 
States. Fullilove v. Kreps, 584 F.2d 
600, 607 (2d Cir. 1978). Thus, the im­
pact on white contractors was minimal in 
view of the goals of the provision.

The 1977 MBE provision did not 
"unnecessarily trammel the interests of" 
white contractors. United Steelworkers 
v. Weber, 99 S.Ct. at 2730. It did not 
mandate the displacement of white con­
tractors from projects previously available 
to them, or otherwise frustrate their 
existing expectations. See id. Congress 
did not impose a new minority business 
requirement on existing federal programs; 
it merely set aside ten percent of 
entirely new federal funds which would 
otherwise not have been available.

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After passage of the 1977 PWEA amendments, 
white contractors found themselves not 
with less than they previously had but 
rather with more, access to 3.6 billion 
new federal dollars. These benefits 
were perhaps not as great as they could 
have been, absent the 1977 MBE provision, 
but they were still substantial,— ^ 
cf. Geduldig v. Aiello, 417 U.S. 484 
(1974); General Electric Co. v. Gilbert, 
429 U.S. 125 (1976), and Congress’ 
allocation of funds was not unreason­
able.

Petitioners' criticisms of the 
1977 MBE provision are, in essence, 
policy arguments more properly directed

42/ Moreover, since the 1977 MBE provision 
affected only one-quarter of one percent of this 
Nation's construction work, for only a single 
year, it did not prevent white contractors from 
pursuing their chosen professions. White contrac­
tors had complete access to 99.75 percent of the 
work available during the term of the MBE provision, 
and to all work thereafter. In contrast to 
exclusion from a program leading to a medical 
degree, see University of California Regents v. 
Bakke, supra, the MBE program had no residual 
effect on succeeding years for white contractors.

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Peti-to Congress than to this Court.— / 
tioners argue that Congress erred in 
adopting the 1977 MBE provision because 
it was "non-effective", Building Contrac­
tors' Brief at 19, while they simultaneously 
urge other "less drastic" means, including 
tax incentives to encourage joint ventures 
between minority enterprises and estab­
lished contractors; technical, financial 
and educational assistance programs; the 
provision of retired or other experienced 
construction industry executives to 
MBE's in the manner of Junior Achievement; 
assistance to MBE's in securing bonding, 
and so on, id. at 24-31. See also Brief 
for Petitioners at 26-27 (recommending 
that Commerce Department ensure that 
business in high unemployment areas be­
come "aware of" federal projects, and 
assist such businesses in "familiarizing

43/ The evidence on which the 1977 MBE 
provision was premised would enable it to survive 
"strict scrutiny", were the Court to analyze the 
provision in those terms. However, since this 
case involves an appropriate response to discrim­
ination by Congress acting pursuant to its 
express mandate under the thirteenth and fourteenth 
amendments, the MBE provision need not be analyzed 
in such terms. See pp. 76 to 84 supra.

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themselves" with general contractors who 
bid on federal projects).

Congress has in fact already adopted 
various of these proposals.^/ But it 
had ample reason not to rely exclusively 
on these alternatives to reverse the 
historic exclusion of minorities from 
government contracts. Petitioners' 
recommendations, first of all, ignore

44/ It was also rational to conclude that 
the stringent time limits necessarily imposed on 
1977 PWEA expenditures made impossible the 
broader categorization of beneficiaries used in 
the 1978 Small Business Act amendments, which 
petitioners apparently approve. Brief for 
Petitioners at 27-28; Building Contractors'
Brief at 29-30.

The 1978 Small Business Act amendments, as 
petitioners point out, favor "socially and 
economically disadvantaged individuals", and not 
exclusively minorities. While this broader 
category of beneficiaries may be politic for an 
ongoing program such as the Small Business Act, 
it would not have been reasonable for a short­
term program operating under severe time con­
straints. This is apparent from the SBA procedure 
now necessary to determine which individuals 
other than minorities are "socially and economi­
cally disadvantaged", 44 Fed. Reg. 30673 (May 29, 
1979)(to be codified in 13 CFR Part 124), a 
procedure clearly impracticable in the context 
of the 1977 PWEA program.

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the fundamental fact that rapid disbursement 
of federal monies was integral to the 
1977 PWEA amendments. See pp. 69 to 71 
supra. Congress could have readily 
found that none of the recommended al­
ternatives, such as tax incentives and 
assistance programs, would have had any 
effect at all within the stringent time 
limits required by the Act.

Moreover, even were the 1977 MBE 
provision not compelled by temporal 
constraints, Congress could still have 
readily determined that it was necessary. 
Petitioners' recomendations are strikingly 
similar to the SBA programs which had 
been tried in the past and which had 
been ineffective in curing the effects 
of discrimination against MBE's seeking 
access to government contracts. The SBA 
and OMBE had long been charged with the 
obligation of providing MBE assistance, 
MESBIC's had been charged with the 
responsibility of encouraging investment 
in minority enterprises, private contractors 
had been required to use "good faith" 
efforts to subcontract to MBE's, and 
"goals" for MBE utilization had been

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mandated. Yet, as was made clear during 
the debates on the 1977 MBE provision, 
see, e.g., pp. 13 to 15, 18 to 19 supra, 
and was amply supported by Congress' 
experience, see, e.g., pp. 41-43 n.14, 
p. 45 n.15, p. 48, p. 49 n.17, p. 53 
n.19 supra, the net effect of all these 
programs on minority access to government 
contracts had been minimal. While each 
of petitioners' suggestions may be 
helpful, and while each may address a 
portion of the problems faced by MBE's, 
Congress had ample reason to conclude 
that none of them would have effectively 
remedied the effects of past discrimina­
tion against MBE's in the construction 
industry or the unwarranted reluctance 
of government contracting officers and 
established white contractors to deal 
with minority enterprises. See 123 
Cong. Rec. H1436-37, 1438 (daily ed.
Feb. 24, 1977) (remarks of Rep. Mitchell). 
It is reasonable to conclude that peti­
tioners' recommendations could be called 
"less drastic" than the 1977 MBE provision 
for only two reasons: they would be not

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only too slow but also ultimately ineffec-
45/tive.— '

45/ It is the position of the Lawyers' 
Committee that Congress could proceed on an 
industry-wide basis, that the facts before 
Congress amply justified its nationwide approach, 
and that these same facts are appropriate for 
judicial notice. But if, on the facts of the 
record, this Court were to entertain doubts 
about the constitutionality of the 1977 MBE 
provision, as it has affected the particular 
Petitioners before this Court, then it should 
remand this case to the district court with 
instructions to allow Respondent Secretary of 
Commerce an opportunity for a full trial on the 
merits.

For if, despite the presumption of consti­
tutionality, Respondent is required to place on 
the record facts supporting the 1977 MBE provision, 
extant when Congress adopted it, then that 
opportunity was denied Respondent when the 
district judge consolidated the hearing on a 
preliminary injunction with a trial on the 
merits, and held both on December 2, 1977, two 
days after the complaint was filed. See App. 
47A-49A.

A remand would permit Respondent Secretary 
of Commerce to put on the record the abundant 
evidence, some of which has been cited in this 
Brief, which was before Congress. Then Peti­
tioners would be unable to make a claim that 
Respondent had failed to give them "a demonstra­
tion that the challenged classification is 
necessary to promote a substantial state interest." 
University of California Regents v. Bakke, 438 
U.S. at 320 (Powell, J.).

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CONCLUSION

For the foregoing reasons, amicus respectfully 
submits that the judgment below should be 
affirmed.

Mark Aaronson 
San Francisco 
Lawyers' Committee 
for Urban Affairs
Of Counsel

Respectfully submitted,
John B. Jones, Jr.
Norman Redlich 

Co-Chairmen
William L. Robinson 
Richard T. Seymour 
Norman J. Chachkin 

Staff Attorneys
Lawyers' Committee for 
Civil Rights Under Law 

733-15th Street, N.W. 
Washington, D.C. 20005

Laurence S. Fordham 
Henry P. Monaghan 
Richard W. Benka 
Robert D. Goldstein 

Foley, Hoag & Eliot 
10 Post Office Square 
Boston, Massachusetts 02109

Attorneys for Amicus Curiae

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