Simple Justice? Lawsuit Slams Calif. High Speed Rail Project for Minority Discrimination

The Lawyers Committee for Civil Rights of San Francisco Bay Area filed a suit against the California High Speed Rail Authority (CHSRA) on behalf of minority and small businesses. They charged CHSRA with unfair and unequal contracting practices regarding the massive high speed rail project, which will cover 14 regions in California and 800 miles from Sacramento to San Francisco.

De facto economic apartheid?

Of 134 prime and subcontractors participating in the ten largest program management and design contracts, only 12 are minority owned firms. And these are exceedingly low sub-consulting contracts in comparison with overall contracting dollars — such as a minority-owned business with a $100,000 contract on a $75 million prime contract.

It is de facto economic apartheid: Billions of dollars are coming into the state for the project (price tag estimate: $43 billion) and minority and small, disadvantaged businesses are iced out through boilerplate statements and what appears to be a laissez faire attitude.

For example, minority-owned business owners notified the agency that they were interested in participating as sub consultants when RFQs (request for quotations; basically, a call for bids) for northern California environmental and engineering contracts were sent out in July 2008 and asked for a list of interested prime consultants.

They wanted to offer their services to the prime consultants and discuss teaming.

CHSRA provided a list of firms who requested the RFQ from the State Contracts Register, but did little else. Minority firms asked CHRSA if they mainained some document where minority-owned firms could let primes know of their interest. The agency responded with a blunt, one-worded answer ​“No.”

According to the complaint, to date ​“there has been virtually no minority business participation in CHSRA contracts. In the face of these numbers the agency appears to fall back on the much-used and often-discredited excuse that minority businesses are simply not available to do the work.”

But minority and women-owned business are indeed qualified and available to do transportation work. A study was commissioned by CalTrans to examine this question. It found at least a minimum of 13.5 percent available in the area. Other commissioned studies have found numbers as high as 28.76 percent

In their suit, brought by Associated Professionals and Contractors (APAC), the plaintiffs claim that CHSRA has failed to meet federal regulations in hiring minority, women-owned businesses.

CHSRA spokeswoman Valerie Martinez stated ​“California’s high-speed train project is and has been in full compliance with the law. Our contracts are awarded in a very public and transparent manner by our board, in public meetings.”

This past August APAC, a nonprofit group founded to encourage, develop and support Disadvantaged Business Enterprises (DBEs) and other businesses traditionally excluded from equal opportunity, was formed to deal with the inequities of the high speed rail project. The group found that over the past six fiscal years, from 2004 to 2010, only 3.54 percent of contracting dollars have gone to small or micro businesses.

Fred Jordan is one of the officers of APAC. His engineering and construction firm FE Jordan Associates, founded in 1968, offers services from construction to completion in projects in the United States, Africa and Central America.

Jordan told In These Times about all the efforts APAC made to secure contracts and work with CHSRA:

We had a private meeting with the new director. They sat. They listened. And that was it. We set up certain demand requests and that was it. Nothing happened.

We wrote letters to all the members of the board and the general manager and got nothing.

Then we went and testified in San Francisco and in Sacramento before the Authority Board public meeting of the CHSRA. Two of the members were receptive and allies, but still, nothing happened. We just couldn’t believe it.

According to Jordan, the final straw was when professional services, which includes environmental and preliminary engineering, was contracted out and no one knew about it.

“Huge contracts were let out, from $75 million to $200 million. The agency said [the notices], were on the Internet and [that they] publicized it,” Jordan says. ​“No one saw it. Eight to ten firms, major international firms got all the work. They got all the contracts. Some got two each! In my opinion, it is atrocious.”

CHSRA is getting much of the money for the project from the American Recover and Reinvestment Act (i.e. ​“the stimulus”). The federal government is expected to award between $15-17 billion in total for the project.

APAC’s civil rights report

APACs position paper regarding the high speed project states:

There are nine major contracts, totaling $757.9 million. These account for 98.6 percent of the value of [CHSRA] contracts active as of December 31, 2009. All the major contracts defined as over $20 million, are for architectural and engineering services.

As Jordan told the Bay Citizen:

This $43 billion undertaking appears to not be for all the citizens of California, but for the middle class and a small group of large established companies. Minority owned business and small business have been almost totally left out of the planning, engineering and construction of this project.

The Civil Rights Act of 1964 and the various disparity studies conducted throughout the state clearly show there continues to be discrimination against small-, disadvantaged-, minority- and women-owned business enterprises in California.

Caltrans has not met its race-conscious or race-neutral goals in the past five years even with ample pools of qualified small, minority and women owned businesses.

It is offensive to the ethnic minorities in California (constituting 50% of the State’s demographic population) to not have a meaningful and inclusive DBE program – especially in a State where we are the majority tax payers.

In fact, according to the complaint, over the last four years, CHRSA has failed to fill in Ethnicity, Race and Gender Reports that state agencies submit to the Department of General Services to show how many small business contracting opportunities are extended to minority- and women-owned businesses.

According to the complaint, each year CHSRA simply stated:

Our agency does not have a system to track this information. However, we are developing a system to track it in future contracts if the voluntary information is reported,” or, they’ll state: ​“No information provided.”

And each year CHRSA failed to meet a 25 percent goal (to meet or exceed) in state procurements and contracts as required by state Executive Order to develop a plan for increase contracting opportunities for small and minority businesses.

The complaint states that this kind of attitude toward minority business inclusion means that ​“the contracts simply end up in the hands of large majority firms and those in their networks.”

Other public agencies routinely make efforts to ensure equity. This includes such things as:

1. Aggressive outreach to minority-owned firms to inform them of upcoming contracting opportunities to ensure the contracts are not simply funnled into the ​“old boys” network.
2. Clear and enforceable mandates to prime contractors to ensure they notify a wide range of subcontractor and sub-consultants about contracting opportunities.
3. Unbundling large contracts to facilitate a diverse pool of contractor participation.
4. Open and transparent systems that allow community members, advocates, and the media to track where contract dollars are going to monitor minority business inclusion.
5. Leadership from the top that emphasizes the importance of full inclusion; holds agency staff accountable for meeting contracting goals; monitors progress; and demands change where data shows inequities.

After the federal government redirected $624 million to the project from other states last week, Roelof van Ark, CEO of CHRSA, said: ​“This is yet another vote of confidence that California’s project is on the right track toward creating tens of thousands of jobs for our state and constructing the nation’s first true high-speed rail system.”

That remains to be seen.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Title VI of the Civil Rights Act of 1964 prohibits discrimination against minority populations as follows:

No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.