Victoria Gilbert's story is far different these days than when she started in the electrical contracting business six years ago.
Armed with a lifetime of watching her father work in the industry, Gilbert felt she had enough knowledge to start her own firm. What she didn't have was many resources and start-up funds.Today her crews line construction corridors as her Hispanic female-owned company, High Desert Contractors Inc., succeeds in an industry dominated by what she calls an "old boy's club." And with the state's many construction projects, business is better than ever.
High Desert is the only electrical contractor classified by the state as a Disadvantaged Business Enterprise (DBE), and as such, it is eligible to receive public construction contracts reserved for businesses with this designation. Without a federal program for minority-owned, women-owned or economically disadvantaged businesses, Gilbert said her company might well have been a casualty.
Utah construction projects that receive federal funding are required to allocate an average of 10 percent of their contracts to DBEs. This percentage of the Utah Transit Authority's $230 million light-rail project and the Utah Department of Transportation's $1.5 billion I-15 reconstruction project means a big boost for companies in Gilbert's position.
"We've doubled in size since Utah's construction boom began," Gilbert said. "At least 50 percent of (our) business has come from the DBE program."
About 33 percent of Utah's small businesses are owned by women and 3 percent by minorities, but specific numbers for those in construction-related fields were unavailable. Josie Valdez, assistant district director for Minority Enterprise Development, pointed out that the percentage of female-owned businesses among construction contractors is significantly lower.
"This is the only process that gives equal access to opportunities to bid and participate in the American enterprise system," Valdez said.
But controversy and litigation has dogged the DBE program since its inception in 1983 and came to a head in 1995 with a U.S. Supreme Court ruling that stopped short of declaring it unconstitutional.
In a splintered opinion involving a Colorado case titled Adarand vs. Pena, the high court said federal minority based preferences in highway construction funding must serve a compelling government interest and must be narrowly tailored.
The ruling essentially required a showing of past discrimination and remedies that were specifically designed to address that discrimination. Proponents and opponents alike said at the time the opinion appeared to doom the DBE programs that established quotas for minority contracts.
But the Clinton administration continued to apply the 10 percent minority standard for federally funded projects, including light rail in Salt Lake City.
Last year, three of Utah's largest contractor associations filed a lawsuit contending that the Utah Transit Authority's minority-based preferences for the light-rail work violated the 1995 Supreme Court ruling. UTA had established a goal of awarding 13 percent of the entire project funding to minority-owned businesses.
However, since UTA couldn't possibly meet that goal in procurements overall, it increased the construction side of the DBE program to 25 percent, according to Salt Lake attorney Jeffrey R. Price.
The Associated Builders and Contractors of Utah, Associated General Contractors and Intermountain Utility Contractors Association argued there had been no showing of past discrimination against any minority-owned construction firm in Utah and no narrow application of a remedy.
"It's just a flat-out quota," Price said. Absent any showing of actual discrimination requiring redress, the DBE program itself becomes discriminatory, he added.
"There has been no demonstration of past discrimination here, and yet they are imposing the same rules here as in Philadelphia, Los Angeles or New York," Price said, calling it an illegal, "one-size-fits-all" approach.
Not only does the DBE program increase the cost of projects by rejecting low bids, it also creates a costly bureaucratic and regulatory burden, Price said. "There is a lot of tax money and time going into maintaining and administering this program."
And it "breeds fraud" as unscrupulous individuals manipulate the system for profit, Price said.
Sen. Orrin Hatch, R-Utah, made that point earlier this year during a Senate debate on a proposed amendment to replace the DBE program with an "emerging business enterprises" program.
He suggested that some of the disadvantaged business enterprises receiving the contract preferences are not actually dis-ad-van-taged.
"The secret about this program is that, like many racial and gender preference programs, its beneficiaries are quite often wealthy," Hatch said. "It is worse than no help for those - of all races and ethnicities - who could really use a helping hand."
Requiring that at least 10 percent of federal highways and transit funds be allocated to DBEs is a "set-aside, pure and simple," Hatch said. "If any set-aside program ought to be eliminated, this should be one."
But the proposed amendment sponsored by Sen. Mitch McConnell, R-Ky., failed on a 58 to 37 vote, leaving it to the Clinton administration to come to terms with the Supreme Court ruling.
Under growing pressure from Congress and the courts, federal officials are now working on a new policy for implementation that they hope will be ready before the end of the year.
The Utah contractor groups recently agreed to dismiss their lawsuit because of the promised federal action, but Price said they're not optimistic.
"We have grave reservations that the Clinton administration will meet the constitutional requirements," Price said. If it doesn't, the suit will be revived, he added.
And Price predicted the contractors groups would ultimately prevail because they have case law and the U.S. Supreme Court on their side.
In the meantime, the contractors and UTA have agreed to work on ways to make the DBE program more workable.
"The 25-percent quota is unacceptable because it is not real," Price said. "We've agreed to find ways to get it at 10 percent or less."
The 10th District Court issued a split opinion Tuesday that upheld the constitutionality of DBE's by debunking the presumption that women and minorities are the only disadvantaged groups. Theoretically, anyone can attain DBE status if they prove social and economic disadvantage, said Charles Larson, civil rights director for the Utah Department of Transportation. But, he added, it has been years since a nonminority male approached the office for the designation.
Valdez acknowledged that the program is constantly being challenged but feels change is not imminent.
"Right now our programs are safe," Valdez said. "Every time they're challenged, the participants have shown it's fair. We end up stronger in the end because the whole issue of equal opportunity is the right thing to do."
While three times out of four Gilbert acknowledges her business receives contracts based on her DBE status, she said the program is necessary to get her foot in the door when her company might otherwise be overlooked. In four years, she hopes to shed the DBE designation because the company has exceeded financial and size requirements.
"There's a stigma attached to a DBE contractor," Gilbert said. "But if you talk to people we are doing work for, they will say we're good contractors."