1. Rebuilding the Structure of MBE Programs Michael E. Kennedy General Counsel Associated General Contractors of America

2. 2 Roadmap What is the history? Going forward, what are the risks? What is the problem? Which are the seminal cases?

3. What is the problem? Contractors caught in a double-bind If you don’t push the envelop, you don’t get the job If you do push the envelop, you may be liable for overstating your participation Liquidated Damages False Claims Fraud

4. What is the problem? Goals too high Badly flawed methodology Enforcement too rigid Standards too vague No Single Source of Authority Consequences too severe

5. What is the history? Intense and divisive litigation beginning in 1986 and running into 2008 Several trips to the Supreme Court Multitude of state and local programs struck down Ended with industry exploring standards for imposing personal liability

6. What is the history? Wins for the Industry San Francisco, CA 1987 Richmond, VA 1989 District of Columbia 1992 Philadelphia, PA 1996 Columbus, OH 1996 Atlanta Public Schools 1997 Dade County, FL 1997 Fulton Country, GA 1999 Baltimore, MD 2000 Cook County, IL 2001 Chicago, IL 2004 Dade County, FL 2004 State of Michigan 1987 State of New Jersey 2000 State of Ohio 2000 State of Florida (DOT) 1998 State of Washington (DOT) 2005 U.S. Dept. of Defense 2008

7. What is the history? Losses for the Industry State of Wisconsin (DOT) 1991 State of Tennessee (DOT) 1991 U.S. Dept. of Transportation 2000 State of Minnesota (DOT) 2003 State of Nebraska (DOT) 2003 Denver, CO 2003 State of Illinois 2007

8. Which are the seminal cases? City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989).

9. Which are the seminal cases? City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989).

10. Which are the seminal cases? Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).

11. Which are the seminal cases? Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).

12. Which are the seminal cases? Rothe Development Corporation v. U.S. Department of Defense and U.S. Department of the Air Force, 545 F.3d 1023 (Fed. Cir. 2008).

13. Which are the seminal cases? Rothe Development Corporation v. U.S. Department of Defense and U.S. Department of the Air Force, 545 F.3d 1023 (Fed. Cir. 2008).

14. Going forward, what are the risks? To the industry? To the government?

15. 15 Roadmap What is the history? Going forward, what are the risks? What is the problem? Which are the seminal cases?