January 31, 2022

In today’s Federal Register, the Department of Justice (DOJ) announced the availability of an updated report regarding the legal and evidentiary frameworks that justify the continued use of race or sex, in appropriate circumstances, by federal agencies to remedy the effects of past discrimination in federal contracting programs. DOJ states that a “substantial body of evidence” demonstrates the continued pervasiveness of discriminatory barriers that impede the full and fair participation of businesses owned by women and people of color in government contracting. The agency adds that the evidence in the new report (available here in its entirety) builds on prior reports issued in 1996 and 2010 and supports the continued use of federal programs that contain remedial measures to eliminate discriminatory barriers to contracting opportunities.

The report is divided into six sections and related appendices. Section I provides an overview of the legal landscape surrounding constitutional challenges to the use of race and sex in contracting programs, including a discussion of recent cases challenging various federal and state contracting programs. 

Section II reviews a substantial body of statistical evidence published in the last decade demonstrating the existence of significant disparities in the amount of public contracting dollars going to businesses owned by women and people of color as compared to their availability for such contracts. For example, the study cites a 2021 disparity report prepared for the California Department of Transportation (Caltrans) finding that women- and minority-owned businesses were substantially underutilized, receiving only 20.3 percent of Caltrans contracts despite being available to perform 27.6 percent of the construction and professional services contracts funded by the U.S. Department of Transportation. 

Section III explores the various ways that discriminatory barriers can limit access to contracting markets, resulting in the statistical disparities identified in Section II. These include: (1) race and sex discrimination by procurement agencies and prime contractors, whether overt or subtle; (2) exclusion from business networks crucial to making the connections necessary to learn about and compete effectively for contracting opportunities; and (3) discrimination by bonding companies and suppliers. Section IV discusses disparities in the formation and success of businesses owned by women and people of color as compared to other businesses.  Section V addresses discriminatory barriers that impose significant burdens on businesses owned by women and people of color, affecting both their ability to access capital to form and grow businesses in the first instance as well as their ability to compete effectively for contracts. 

Finally, Section VI addresses how the economic downturn that began in 2020 as a result of the COVID-19 pandemic has disproportionately affected businesses owned by women and people of color. The evidence discussed in the report is listed in Appendices A, B, and C to the report.

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