Wilson Abolishes Affirmative Action in State Contracts

In what he called a historic event, Gov. Pete Wilson on Wednesday abolished an affirmative action program that has funneled billions of dollars in state contracts to companies owned by minorities and women.

The action marks the first time Wilson has been legally free to dismantle state programs that he believes give an unfair advantage to some Californians based on gender and race.

The governor’s executive order follows a federal court ruling last fall that declared unconstitutional a law requiring state contractors to give part of their work to female and minority subcontractors--or make a good-faith effort to do so.

On Monday, the U.S. 9th Circuit Court of Appeals rejected a request that it reconsider its ruling. That paved the way for Wilson’s executive order, which ends a decade-long effort to boost the participation of women and minorities in state contracting.

“From now on, the state will award contracts--contracts financed by taxpayers’ dollars--based solely on the basis of merit,” Wilson said at a briefing for reporters. Also terminated, he said, will be all programs and regulations that promote opportunities in state contracting specifically for female and minority business owners.

Despite the passage of the anti-affirmative action Proposition 209 in 1996 and its subsequent legal validation in court, Wilson was barred from abolishing the contracting preferences until Monday because of a quirk in the state Constitution. Essentially, the Constitution requires state agencies to enforce each individual affirmative action program until it is invalidated by an appellate court decision.

Unaffected by the order are contracting preferences for disabled veterans, which Wilson said were not covered by the court’s decision and will continue. Under the law, state contractors must try to channel 3% of their work to businesses owned by disabled veterans.

Also exempt are contracts for any projects that include federal funding, because federal law still sets minimum participation levels for minority- and woman-owned companies. In this state, such projects primarily involve roadway construction authorized by the California Department of Transportation.

Even with those exemptions, Wilson’s order will have a sweeping impact.

California’s government spends an immense amount on contracting for everything from the clothes prison inmates wear to the computers bureaucrats type on. Also contracted out are certain specialty health services, public works projects such as construction of bridges and office buildings, and telecommunications systems.

The total value of state contracts was $2.7 billion in 1994-95, the most recent year for which a governmentwide tally is available. Of that, 11% of the business--or about $310 million--went to minorities and 7.5%--about $210 million--to women.

One of the biggest contracting agencies is the Department of General Services, which spent $591 million on contracts in the 1996-97 fiscal year. Of that, minority-owned companies received 11.4%, or $67.5 million, and women business owners received 7.9%, or $46.5 million.

Reaction From Foes Is Swift and Angry

Wilson’s executive order covers all contracts awarded as of Tuesday. For contracts that have received bids but remain open, state agencies will have to restart the bid process under the new rules, administration officials said.

Reaction to the change from those who may be hurt by it was swift and angry. At the Black Business Assn. of Los Angeles, officials said the governor was devastating the ability of minority communities to help themselves.

“If we have the business, the work, we can help our own communities, we can hire people within our communities, we can train people within our communities,” said the association’s vice chairman, Stephen McGlover. “But if we can’t get to the table to get the jobs, what can we do?”

McGlover said the association receives several dozen faxes each day from the state requesting the names of minority subcontractors. Such requests often lead to work, and without them minority-owned businesses “won’t have access or even know there are projects they can be a part of,” he said.

Ava Domer, president of her own engineering firm in Commerce, echoed those comments and declared herself “heartbroken” by Wilson’s action.

“Next will go our right to vote,” said Domer, a member of the National Assn. of Women Business Owners’ Los Angeles chapter. “There is still discrimination against women business owners [so] many of us use our initials instead of our first name. But under the previous program, they had to send us information about bids, and that truly helped. Now that’s gone.”

In response to such arguments, Wilson said that racial and gender preferences are “flatly illegal” and that the U.S. Constitution “demands that government treat its citizens equally, that they not play favorites.”

The governor said his administration will attempt to “empower people” so they can win “a fair and honest competition [for contracts] on the merits.” He added that his staff is devising a legislative package to include “an aggressive outreach effort to assure a fair and open competition for state business.”

Wednesday’s order abolishes a 1988 statute in the California Public Contract Code. The statute required that bidders on state projects make a good-faith attempt to share at least 15% of their “contract dollar value” with minority-owned businesses, 5% with woman-owned companies and 3% with disabled veteran subcontractors.

The 1988 law was written by Maxine Waters of Los Angeles, then an assemblywoman. On Wednesday, Waters--now a congresswoman--called the law one of the most important achievements of her legislative career.

Wilson’s action is “a real setback,” she said. The law “opened up areas of opportunity that many people never think about, like pension fund management. Wilson is turning back the clock and closing the door on people who had been systematically excluded.”

Not all observers were unhappy, however. At the American Civil Liberties Institute, founded by supporters of Proposition 209, Executive Director Jennifer Nelson applauded the order as in line with voters’ passage of Proposition 209.

“This really is the first step--outside of education--that the state is taking to implement the voters’ will [as exhibited] in 209,” she said.

Wilson has filed a lawsuit targeting four more state affirmative action programs, a case scheduled to be heard in June in Sacramento County Superior Court.

Among other things, the challenged programs cover affirmative action in hiring by community colleges, racial and gender preferences in contracting by the California Lottery, and minimum participation levels for minorities and women in contracts for professional bond services.

Case May Be Appealed to U.S. High Court

Wilson’s Wednesday order was made possible by a case involving a contractor whose low bid on a state university construction project was rejected because he had not properly sought to share a percentage of the job with female or minority subcontractors.

Monterey Mechanical Co. argued that it had made a good-faith effort when it offered a low bid of $21.7 million for a two-year project to install heating and air conditioning equipment at Cal Poly San Luis Obispo. But university officials said the effort wasn’t properly documented.

The bid went to another company that also failed to meet the goals of participation by minority and female business owners. But the university said the bid winner--which received a contract award $318,000 higher than the Monterey Mechanical bid--had made a good-faith attempt.

A three-judge panel of the 9th Circuit Court found in September that the state statute violates the U.S. Constitution’s equal protection clause, which requires states to justify different treatment of similarly situated individuals.

One judge sought to have the decision reviewed by a larger panel of judges; that was the request rejected Monday.

The case may still be appealed to the U.S. Supreme Court. And at the American Civil Liberties Union of Southern California, Executive Director Ramona Ripston said the organization is examining Wilson’s order and considering whether a legal challenge to it is possible.

Times staff writer Dave Lesher contributed to this story.

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BACKGROUND

A businessman accomplished what Proposition 209 had yet to achieve. He convinced a federal appellate court that it is unconstitutional for the state to require him to hire minority or female subcontractors on a state-paid job. Although voters passed Proposition 209 in 1996 and the measure was upheld all the way to the U.S. Supreme Court, the state Constitution requires court decisions on each program that state officials select for elimination under Proposition 209. Lawsuits seeking those rulings on other programs are pending in Superior Court.