L.A. Affirmative Action Bidding Rule Is Upheld

The California Supreme Court ruled Wednesday that Los Angeles and other cities can require that firms seeking city business try to recruit minorities and women, even if the rule eliminates the lowest bidder from the competition.

The 6-1 decision allows Los Angeles to renew an “outreach” program begun by former Mayor Tom Bradley that requires bidders for hundreds of millions of dollars in city contracts to make a “good-faith” effort to recruit subcontracting firms owned by women and minorities.

Defenders of the affirmative action program maintain that it encourages competition, but some contractors complain it invites corruption and political favoritism by establishing vague requirements that city officials can interpret as they wish.

The court, ruling on a case brought by an electrical firm that lost a Los Angeles contract, decided that such programs do not violate City Charter provisions requiring contracts to be given to the lowest responsible bidder.

Justice Marvin Baxter, writing for the majority, said the outreach program established by Bradley in 1989 is consistent with the City Charter’s low-bid requirement because both encourage wide participation in city contracting.

“The program in effect seeks to guard against favoritism and improvidence by prime contractors and to increase opportunity and participation within the competitive bidding process,” Baxter wrote.

Los Angeles made its program voluntary after a state Court of Appeal in Los Angeles struck down the requirement in October, 1993. Since then, there has been a “moderate drop-off” of participation by minorities and women in public works projects, said Assistant City Atty. Christopher M. Westhoff.

“Now we can go back and re-implement the same program,” he said.

A spokeswoman for Mayor Richard Riordan said the mayor had not yet read the court’s ruling but was pleased that the policy of requiring efforts to include women and minorities as subcontractors was upheld.

“The mayor believes that anything that encourages all people to participate in the city’s contract process is a positive thing for the city,” Jane Galbraith said.

The case was triggered by Lake Elsinore-based Domar Electric Inc., which lost a multimillion-dollar Los Angeles city contract in 1991 even though it bid $650,000 less than its competitors. The firm failed to meet a city deadline for complying with the outreach requirements.

Barnard S. Kamine, a lawyer for the firm who also represents other contractors, said they would prefer to meet established goals for participation by minorities and women rather than the “nebulous” good-faith effort.

Although the city requires bidders to take certain steps, such as advertising, the program is “subjective,” Kamine complained, and “results in the possibility of corruption.”

“There have been some indications on city of Los Angeles jobs,” he said, “that contractors have been told after bid day that, if they would hire a particular minority firm, it would go better for them in the determination of whether they made a good-faith effort.”

Under federal court guidelines, cities must determine whether minorities and women are poorly represented before specific affirmative action goals can be set. The Los Angeles City Council rejected such a study this month as incomplete.

Baxter, writing for the court, noted that the program does not specifically require contractors to hire anyone, just to make the effort to recruit.

“Thus the program provides no incentive to a bidder to use (women- or minority-owned firms) if they are inferior in cost or ability,” Baxter said, “and the market for public contracts among subcontractors remains a level playing field.”

Justice Armand Arabian, in a dissenting opinion, argued instead that the city program is “intended to promote social policy, not competition.”

The program “potentially narrows the field of qualified bidders, undermines meaningful competition and can only lead to the city’s fiscal detriment by contributing to higher contractual costs,” Arabian wrote.

The case will now return to the Court of Appeal, which will be asked to rule on other issues including the constitutionality of the policy.

“Quite frankly,” said Assistant City Atty. Westhoff, “I don’t think our program has any chance of being overturned on those issues.”

Thirteen cities lined up with Los Angeles to defend the affirmative action program. Deputy San Francisco City Atty. Mara E. Rosales, who represented them before the court, said the Court of Appeal ruling jeopardized a variety of bidding requirements, including those aimed at hiring local companies.

“From a legal perspective,” she said, “every city in California, whether charter or not, is subject for construction contracts to a lowest-responsible-bidder standard. It is common.”

The California Supreme Court decision should encourage cities, including Los Angeles, to adopt more aggressive affirmative action programs, she said.

Los Angeles City Councilwoman Rita Walters called the ruling “wonderful, terrific.”

“I am delighted as can be,” she said. “Now we can move forward to seeing that minorities and women doing business in this city can get their fair share” of city work.

Councilman Mark Ridley-Thomas hailed the ruling as a vindication of the city’s contract policies.

“It now becomes clear that no one’s rights were being violated and no unfair advantages were being afford to those who benefited from such programs,” he said.

Staff writer Jean Merl contributed to this story from Los Angeles.

Text of Ruling

The full 36-page text of the state Supreme Court’s ruling and the dissent is available by mail from Times on Demand. Call 808-8463, press *8630 and select option 3. Order Item No. 5517. $4, plus $1 for delivery.

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