O'Malley defends set-aside program; Affirmative-action foes gaining ground; cities alter approach

Mayor Martin O'Malley's vow to defend Baltimore's affirmative-action program will push the city into what some mayors are calling the "new Selma" of the civil rights struggle: black economic empowerment.

In his first State of the City address on Tuesday, the mayor pledged to appeal a federal judge's ruling last month ordering Baltimore to cease enforcing its minority set-aside law. The ordinance, passed two decades ago, requires 20 percent of the city's public works contracts to be awarded to minority companies and 3 percent to businesses owned by women.


O'Malley pledged not only to fight the court challenge but to restructure the city program to increase minority participation.

"In our city, the minority is the majority," O'Malley said. "We will promote minority business development by every means at our disposal, and we will win."


As cities such as Denver and Atlanta are learning, defending the programs is easier said than done. Across the nation, 22 groups have led a concerted legal challenge to affirmative-action contracting in cities, with great success in federal courts.

"There is not one racial preference program in America that has survived a court challenge since 1989," said Matt Glavin, president of the Southeastern Legal Foundation, which is challenging Atlanta's program. "The law is clear."

Baltimore was dragged into the battle last month when U.S. District Judge Andre M. Davis said the city had to stop enforcing its set-aside law. Ordinance 610 was drafted to give minority contractors a chance to earn some of the money the city spends on contracts each year, now about $345 million.

The Associated Utility Contractors of Maryland Inc. sued Baltimore, arguing that its members were being denied city contracts unless they were women or minorities. The Baltimore decision is expected to ripple beyond the city to the state, which has a similar Minority Business Enterprise program to set aside 14 percent of public contracts for minorities.

Davis, however, stopped short of striking down the Baltimore law. He gave the city six months to demonstrate a history of discrimination that would justify the law. With a population that is about two-thirds African-American, Baltimore ranks seventh in the nation in the number of minority-operated firms, increasing the stakes in the court battle.

"To date, only a relative handful of minority- and women-owned businesses in Baltimore have been able to flourish," O'Malley said. "Our minority- and women-owned business enterprise program has resulted in a steady but modest flow of contracts. Our city has not enjoyed the entrepreneurial growth that has flourished in places such as Atlanta and Chicago."

Cities make adjustments

Cities whose programs have been under attack have begun dismantling set-asides based on race and rebuilding them on other criteria, such as company assets, small-business participation or geography.


In 1993, a federal judge struck down Detroit's affirmative-action requirements, prompting the city to change its standards to require that 30 percent of all contracts go to city-based businesses. In a city where 76 percent of the population is black, minority firms gained $500 million in government work in the past four years.

In Madison, Wis., the set-asides were targeted for small businesses, where minority firms were more likely to exist. And in Richmond, Va., city leaders have begun awarding a portion of public contracts based on the assets of companies.

Glavin said groups such as his have no problems with the new contracting criteria, as long as race is not a factor in the set-asides. President Clinton has urged governments whose affirmative-action standards are being challenged to "mend it, don't end it."

The 'new Selma'

Yet some city leaders call the court challenges an attempt to systematically erode the civil rights gains of the past three decades. In 1989, the U.S. Supreme Court struck down Richmond's affirmative-action program.

The city watched the percentage of minority firms doing public business drop from 30 percent to 2 percent.


In pledging to fight the challenge to his city's program, Atlanta Mayor Bill Campbell called the swelling affirmative-action battle in American cities the "new Selma" of the civil rights struggle.

Denver city attorney Dan Muse agrees that the outcome of the court challenges could have a significant impact on the economic evolution of black America. Because studies have shown that minority firms have to pay up to 25 percent more to borrow capital, city programs are needed to level the playing field against what Muse calls "cultural nepotism."

"We still have racism and sexism," Muse said. "People tend to do business with people who are most like them."

The Maryland contractors group, however, said the issue is strictly a constitutional matter.

"This is not about politics," said Maury Epner, an attorney who helped represent the utility contractors group. "The contractors felt, and given the judge's ruling, rightly so, that their constitutional rights were violated."

Disparity study in works


Baltimore recently commissioned a disparity study it hopes will bolster the city set-aside law.But O'Malley said he is willing to consider the alternatives of revamping the code on the basis of small businesses, city-owned businesses or income levels to keep the program viable.

What is not an option, O'Malley said, is eliminating city efforts to boost black businesses.

While recently choosing the first developer in the city's plans to revitalize the west side of downtown, city leaders took into account the level of minority participation, O'Malley said.

"If you are going to be seeking a tax break, you sure as heck better bring significant minority participation," he said. "This is how we're going to evaluate things. This is important to us."