Full opinion text
MEMORANDUM OPINION AND ORDER MATSCH, Chief Judge. Marc Lenart, a Caucasian man, is the principal owner and operator of Concrete Works of Colorado, Inc. (“CWC”), a Colorado corporation, with its principal office in Brighton, Colorado. CWC does concrete construction work on roads, bridges and sidewalks and has submitted bids for contracts with the City and County of Denver (“City” or “Denver”) as a prime contractor on City contracts. On January 6, 1992, CWC filed this civil action, claiming the loss of three City contracts because CWC failed to comply with Ordinance No. 513 (“Ord. No. 513” or “1990 Ordinance”), enacted on September 4, 1990, requiring bidders on City construction contracts to use City certified minority business enterprises (“MBEs”) and City certified woman-owned business enterprises (“WBEs”) as suppliers or subcontractors according to project goals setting minimum percentage participation of firms fitting these categories. CWC asserted that requiring it to use such race and gender based preferences as a condition of doing business with the City violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Based on the City’s submission of statistical and anecdotal evidence in support of the ordinance, Judge Sherman G. Finesil-ver granted summary judgment for the City. Concrete Works of Colorado, Inc. v. City and County of Denver, 823 F.Supp. 821 (D.Colo.1993). The Tenth Circuit Court of Appeals reversed, finding that because of unresolved factual questions about the accuracy of Denver’s public and private discrimination data, it could not be said, under summary judgment standards, that the City had satisfied the compelling governmental interest prong of City of Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989), by demonstrating a “strong basis in evidence” that its race and gender conscious contract program was necessary to remedy past and present discrimination in the construction industry within its local area. Concrete Works of Colorado, Inc. v. City and County of Denver, 36 F.3d 1513, 1530-31 (1994). The court remanded the case with directions to permit the parties “to develop a factual record to support their competing interpretations of the empirical data.” Id. at 1531. After remand and during further pleading and discovery, Denver passed two additional ordinances, Ordinance No. 304, Series of 1996 (“Ord. No. 304” or “1996 Ordinance”) and Ordinance No. 948, Series of 1998, (“Ord. No. 948” or “1998 Ordinance”). These ordinances amended the goals program established in Ord. No. 513, based largely on consultants’ reports evaluating additional empirical data and legal advice. A complete bench trial was held in February and June 1999 on the validity of the three ordinances, reserving the question of remedy if the plaintiff prevails. Because of the large volume of evidence and the complexity of the legal and factual issues, the court’s compliance with Fed.R.Civ.P. 52(a) is in the form of this memorandum opinion. The burden of persuasion on the plaintiffs claims that these three ordinances deny CWC and other non-preferred businesses equal protection of the law is on the plaintiff. It is the City’s responsibility to show a “strong basis in evidence” supporting the stated governmental purpose that goals are necessary to prevent the City from actively or passively participating in discriminatory exclusion of the preferred groups from the local construction industry, and to demonstrate that the ordinances are narrowly tailored to accomplish that purpose. Accordingly, the order of presenting evidence at trial was reversed. Denver’s showing was (1) by direct evidence of past discriminatory conduct by employees of City agencies, (2) by commissioned studies done before and after the filing of this lawsuit, demonstrating statistical disparities and concluding that both race and gender discrimination have disadvantaged firms owned by identified racial and ethnic groups and by women trying to compete for business in the construction industry operating in the Denver geographical market and (3) by the testimony of witnesses relating their perceptions of racial and gender discrimination from their personal experiences in this industry. The extensive evidentiary record presented at the trial included a historical review of Denver’s contracting practices before the enactment of Ord. No. 513 in 1990. A summary of that history sets the context for the legislation challenged in this case. Responding to complaints of lack of access to publicly funded construction work from people and groups identifying themselves as racial and ethnic minorities in the early 1970’s, Denver created an “Affirmative Action Office” within the Department of Public Works (“DPW”), the agency responsible for most of the City’s construction contracting. A voluntary goals program to increase utilization of minority contractors in City projects, referred to as the Denver Construction Affirmative Action Program, or DCAAP, was authorized by a City Council Resolution, dated November 7,1977. (Ex. A-3). Federal agencies began to influence City policy during 1977. The United States Department of Housing and Urban Development (“HUD”) gave Denver officials a preliminary draft report of its investigation, informing them that Denver was not in compliance with Section 109 of the 1974 Housing and Community Development Act, because the City was not taking reasonable actions to overcome what HUD believed to be conditions limiting participation by minority contractors in the benefits of the Community Development Block Grant Program (CDBG). (Ex. A-4). In 1978, the United States General Accounting Office (“GAO”) issued a preliminary report of its findings of racial discrimination by the DPW in several federally funded programs. (Exhibit A-8). The City’s first response was to raise the minimum value of contracts requiring prequalification from $25,000 to $100,000, and then to $500,000 thereby reducing the effects of its prequalification policy on small firms. The GAO final report in 1978 concluded, in pertinent part, that minority contractors in Denver “may not have been provided with the full range of opportunities required by Federal affirmative action mandates,” because Denver’s DPW showed “a lack of a strong commitment to affirmative action objectives.” (Exhibit A-8, p. 1). The GAO reported that from July 1, 1975 to December 31, 1977 DPW awarded approximately $55.5 million in federally funded construction contracts and that “less than 5 percent of the total amount was awarded to minority contractors....” Id. at 5. In 1979, the U.S. Department of Transportation (“DOT”) threatened to stop federal funding of work at Stapleton International Airport if the City did not establish an affirmative action program to increase utilization of minority firms. (Ex. A-ll). That threat was made explicit in a letter to then Mayor McNichols, dated August 7, 1979, from the Acting Director of the office of Civil Rights for DOT. (Ex. A-13). The City reacted to that letter by filing suit in this court to enjoin withholding of federal funds. That action was settled in February 1980 by Denver’s adoption of an affirmative action goals program for City contracts for work financed by DOT funds. (Ex. A-18, pp. A-19 — A-21). Under further pressure from federal government officials, the City expanded its goals program to include all construction projects at Stapleton Airport, regardless of the source of funding. (Ex. A-24). Complaints about underutilization of minority firms on City contracts and increasing demands for an ordinance to establish participation goals for all City construction contracting were heard at a public hearing in 1983. Contractors appearing as witnesses at that hearing said that racial discrimination pervaded the construction industry in the Denver Metropolitan Statistical Area (“MSA”), an area consisting of six contiguous counties with Denver as the core city and county. (Ex. B-4). The City Council enacted Ordinance No. 246, Series of 1983, (Ex. B-6), setting a goal of 25% participation by MBEs in all City construction projects managed by DPW. Construction contracting by other City departments, including General Services, (amounting to approximately one-third of total City contract dollars related to construction) was not included in that goals program. Ordinance No. 246 was expressly limited to a 5-year term. Near the expiration date, some City officials expressed their concerns that “underutilization” of minority contractors would result if the ordinance expired. They cited the National Western Complex and Denver Art Museum projects as examples of such underuti-lization in construction work that was not covered by the goals program. DPW addressed those concerns by distributing questionnaires to contractors, asking about discrimination related issues in March 1988. (Ex. B-21). The Acting Deputy Manager of Public Works conducted several days of hearings on the effectiveness and necessity of continuing the goals program and prepared a written report concluding that construction contractors were continuing to use discriminatory practices and that the City should continue to use a goals program as a remedy for that discrimination. (Ex. B-22). On May 31 and June 13, 1988, the City Council conducted public hearings on a proposal to enact a replacement ordinance. (Ex. B-23). After making legislative findings that discrimination continued to be a barrier in the construction industry, the City enacted Ordinance No. 424, Series of 1988. (Ex. B-24). That ordinance set annual participation goals of 25% for MBEs and 12% for WBEs for construction and 20% MBE and 15% WBE for professional design and construction service contracts. After the Supreme Court used a strict scrutiny standard to invalidate a minority set aside program for municipal contracts in Richmond, Virginia in Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989), Denver enacted Ordinance No. 213, Series of 1989, creating a presumption of past discrimination to support its goals program. (Ex. C-l, pp. 3-4). City officials also investigated complaints of discriminatory practices by the City, itself. They found that some City officials and employees were avoiding the goals program by using change orders to existing contracts to add new work that should have been put out to bid and by characterizing some new projects as minor remodeling within the contracting authority of the General Services department which was not restricted by the goals requirements. To try to meet the Supreme Court’s mandate in Croson that a municipal race preference contracting program is constitutional only if it is shown to further a compelling government interest, Denver hired three groups of consultants— Browne, Bortz & Coddington, Inc. (“BBC”), Harding & Ogborn; and the Minority Business & Professional Directory — to do a study to assess the appropriateness of Denver’s goals program. They issued a final report on June 22, 1990 identified at trial as the 1990 BBC Disparity Study (“1990 Study” or “BBC Study”) (Ex. C-8). That study report was used to justify the enactment of Ordinance No. 513, the first of the three ordinances attacked in this lawsuit. The Ordinances. The 1990 Ordinance. On September 4, 1990, Denver passed Ordinance No. 513, series 1990, entitled “Nondiscrimination in City Contracts” (“Ord. No. 513” or the “1990 Ordinance”) (Ex. C-10). The preamble states legislative findings of the existence of discrimination against Blacks, Hispanics, Asian Americans, American Indians, and women in the City’s public works contracting practices and in the construction industry in the Denver area prior to 1990. More particularly, the City Council said that public hearings “established the existence of discrimination during the period prior to July 1, 1990, in the private and public works construction, reconstruction, and remodeling, and professional design and construction services markets in the City, both by the City itself and by the said industries in which the City had been a passive participant ....” and concluded that “it is in the best interest of the City to promote the equitable utilization of minority business enterprises and women business enterprises in City contracting in the public works construction, reconstruction, and remodeling, and professional ¡design and construction services markets in the City in order to eradicate the lingering effects of past discrimination and to prevent the City’s own spending decisions from reinforcing and perpetuating the exclusionary effects of past discrimination ....” (Ex. C-10, p. 1). The 1990 Ordinance cited the 1990 Study report as “evidence of pervasive discrimination against Blacks, Hispanics, Asian Americans and Native American Indians, and against women, in the construction, reconstruction, and remodeling, and professional design and construction services industries in the six county market area which includes the City .... ” Sec. 28-51(b)(l). Ord. No. 513 states that the 1990 Study found evidence of such discrimination by the City; by construction and professional design firms involved in DPW projects; by firms working on projects receiving City bond financing; by firms contracting with the City when they worked for private-sector clients and by private-sector firms working in the relevant market area without any connection to the City. Sec. 28-51(b)(2). Those recitals in Ord. No. 513 reveal the council’s awareness of language in the Cro-son opinions about the legitimacy of preventing “passive participation” in marketplace discrimination as well as the City’s constitutional duty to eliminate race and gender-based discrimination in conducting its own business. Sec. 28-52(b). The Ordinance was said to be necessary because race-neutral measures alone would not effectively redress such discrimination and without an affirmative goals program MBEs and WBEs would “remain unable to participate in City contracts .... ” Sec. 28-52(e). Accordingly, the City Council found that Denver had a “compelling governmental interest” to remedy discrimination in its public contracts by adopting a “limited remedial program of goals.” Sec. 28-52(f). Ord. No. 513 replaced the DPW’s Affirmative Action Office with the Mayor’s Office of Contract Compliance (“MOCC”), charging it with responsibility to implement the goals program by promulgating rules, regulations and informal guidelines necessary to effect the purposes of the 1990 Ordinance. Secs. 28-31; 28-32. The director of the MOCC, appointed by the Mayor, was authorized to hire a staff to carry out the legislatively mandated goals program. Sec. 28-31. In the 1990 Ordinance, the City Council lowered the annual affirmative action goals to 16% for MBEs and 12% for WBEs of all funds for construction, reconstruction and remodeling contracts. For professional design and construction services contracts, 10% of the value was to go to MBEs andl0% to WBEs. Sec. 28-55(a). These separate goals were aggregated. They effectively limited participation by non-preferred business firms to no more than 72% of the total funds spent on construction and 80% of the total value of design and services contracts. Ord. No. 513 expanded the scope of the preference program to include all construction work bid through the Department of General Services. Sec. 28-54(a). The 1990 Ordinance excluded contracts funded entirely or in part by the agencies of the United States government to the extent necessary to avoid any inconsistency with the terms and conditions mandated by federal law for those projects. Sec. 28-79. Contractors and subcontractors who failed to comply with the 1990 Ordinance requirements were declared to be ineligible for contracting with the City. Secs. 28-42; 28-43. The 1990 Ordinance contained provisions which were unchanged in the two succeeding ordinances and remain in effect. The powers and duties of the MOCC director include the responsibility to recommend new annual goals to the City Council each year based upon a review of the number of MBEs and WBEs doing business in the City, the type and volume of work that these businesses can perform and past utilization of such businesses by the City. Sec. 28 — 55(b). The director is also charged with examining business formation rates, growth rates, rates of minority and female employment in the construction and design trades and determining what level of minority and female participation in City contracting “would exist absent the effects of past discrimination.” Sec. 28-55(b). After considering the director’s recommendations and making such additional inquiries as it may desire, the City Council may either change the annual goals or leave them the same as the previous year. Sec. 28 — 55(c). Upon a failure to achieve the annual affirmative action goals in any year, the MOCC director must report reasons to the Mayor and the City Council and make appropriate recommendations for corrective action. Sec. 28-78. To achieve the prescribed annual goals, the MOCC director sets specific goals for each contract, according to an assessment of the availability and capacity of MBEs and WBEs for the work to be done under that contract. Sec. 28-56(a). Ord. No. 513 directs the appointment of three goals committees to assist the director in this function, naming them the General Construction Goals Committee, the Professional Services Goals Committee and the Heavy Highway Construction Goals Committee. The 1990 Ordinance mandates that membership on these committees must be balanced among MBEs, WBEs and “non-minority business enterprises.” All committee meetings and recommendations are public. Sec. 28 — 56(c). The specific project goal-setting process begins with the appropriate City contracting agency providing a “goals sheet” to an MOCC staff member who enters the information on a “Goals Committee Information Form” and sends it to the relevant committee. The information form provides the project number and name, its estimated dollar value, whether the project includes federal funds, whether it is a bond project, a description of the project, the scope of the work to be done, and any special requirements. (Ex. E-4). With that information, the assigned goals committee meets and makes recommendations for MBE and WBE participation in the project to the MOCC director who makes the final decision. (Trial Transcript at 1658-59) (hereinafter referred to as “Tr”). The committee meetings do not require any quorum. A majority of the members present, regardless of their number, makes the recommendations. (Tr. at 1668). The director’s recommendations are posted at the City permit center, where contract bidders typically attend bid openings. (Tr. at 1667). The 1990 Ordinance defined “minority” as “a person of Black, Hispanic, Asian American, or American Indian descent” and defined American-Indian descent “as a person of a minimum of 25 percent blood quantum or a person who is properly enrolled, registered, or recognized by the specific American-Indian Tribe or Nation in which membership is claimed and which Tribe or Nation is federally recognized.” Sec. 28 — 54(16). A Minority Business Enterprise was defined as an enterprise that (1) is at least 51% owned by one or more eligible minorities and has applied to be certified as such by the MOCC, and (2) is managed by and its daily business operations controlled by one or more minorities. Sec. 28-54(17). A Woman Business Enterprise was defined as an enterprise that (1) is at least 51% owned by one or more women and has applied to be certified as such by the MOCC, and (2) is managed by and its daily business operations controlled by one or more women. Sec. 28-54. A firm may be certified as both a WBE and MBE, but may not be double counted to meet the goals set for a single contract. Sec. 28-54. W/MBEs must meet four threshold requirements to be certified by the City. Sec. 28-73. First, the business entity must have been actively in business for at least three months. Second, it must provide written evidence of actual past discrimination against it unless it engaged in or attempted to engage in business in the construction industry in the City before June 1, 1990, in which case it is entitled to a rebuttable presumption that it suffered from the effects of past discrimination. The premise for that presumption was the 1990 Study that reported past discrimination in the marketplace. Third, the applicant must come within the definitions of eligible entities. Finally, the applying W/MBE must not have revenues higher than specified máximums. Certifications are renewed annually. A certified W/MBE will be decertified or “graduated” when its average annual business receipts for a three-year period exceed a prescribed level. Under the 1990 Ordinance there was a difference among bidders in meeting the goals for a bid project. If the bidder for the prime contract was a certified MBE or WBE it could credit the value of the “commercially useful function” it would self-perform. A firm meeting criteria for both certifications — e.g. a business owned or controlled by a Black woman — was not permitted to double count. The MBE or WBE could joint venture with a non certified firm and count the “commercially useful function” to be performed by the MBE or WBE in the joint venture. All other bidders could satisfy the project goals only by using MBEs and WBEs as subcontrae-tors or suppliers to perform commercially useful functions to the values prescribed for the project being bid. Sec. 28-57. The 1990 Ordinance did not compel a prime contractor to use an MBE or WBE as a subcontractor or supplier if the MBE or WBE did not submit the lowest price or was otherwise not qualified. Sec. 28-58(9). A bidder failing to demonstrate compliance with the project goals must be disqualified unless it can show that it was unable to do so despite making good faith efforts to comply. Sec. 28-58. Section 28-58 of the 1990 Ordinance sets forth the requirements for demonstrating good faith efforts to meet the goals on construction projects. The non-complying bidder must submit a statement to the MOCC director verifying each of ten items set out in that section. A bidder whose bid was declared non-responsive for failure to meet the percentage goals for the project and whose statement of good faith efforts was declared insufficient could request an informal meeting with the director to obtain an explanation of the determined deficiencies in the good faith efforts statement and then may be given an additional twenty-four hours to submit more information or to clarify its good faith efforts statement. Sec. 28-58(e). The 1990 Ordinance provides for administrative and judicial review of determinations regarding noncompliance with the Ordinance’s bid requirements. Section 28-38 of the Ordinance permits anyone adversely affected by a determination of the MOCC director to request a hearing before the director or a designated hearing officer, and the final determination of the director or designated hearing officer is subject to judicial review in the Denver District Court pursuant to Rule 106 of the Colorado Rules of Civil Procedure. That rule limits review to challenges that the decision is an abuse of discretion or the agency exceeded its jurisdiction. An MBE or WBE prime contractor was also required to comply with the project goals not satisfied by self-performance or to submit a satisfactory statement of its inability to do so after exhausting its good faith efforts. An MBE or WBE not currently certified had to meet the project goals by use of certified MBEs and WBEs or show good faith efforts in the same manner as a non-minority male business enterprise. The 1996 Ordinance. The 1996 Ordinance, Ordinance No. 304, Series of 1996 (“Ord. No. 304,” or “1996 Ordinance”) (Ex. E-16), amended the 1990 Ordinance by expanding the definition of “covered contracts” to include limited categories of privately financed projects on City-owned land; added updated information and findings to the statement of factual support for continuing the program; refined the requirements for W/MBE certification and graduation; mandated the use of MBEs and WBEs on change orders and expanded sanctions for improper behavior by MBEs, WBEs or majority owned contractors in failing to perform the affirmative action commitments made on City projects. It changed the definition of Ameri-ean-Indian descent by eliminating the provision for 25% blood quantum alternative to tribal membership. The 1998 Ordinance. On December 28, 1998, after the pretrial conference on December 18, 1998, the City Council passed Ordinance No. 948, Series of 1998 amending Ordinance No. 304 (“Ord. No. 948” or “1998 Ordinance”). The preamble states that the “ultimate intent” of the 1998 ordinance is “to utilize aspirational project and annual goals to encourage the participation in construction, reconstruction and remodeling, and professional design and construction services contracting of minority and women business enterprises primarily as subcontractors and subconsultants, but not to mandate utilization of a contractor, consultant, subcontractor, subconsultant, or supplier on such City projects.” (Ex. 0-4, pp. 1-2). The preamble also states that the City wishes to use its goals program “to promote the inclusion and participation” of MBEs and WBEs in City contracting programs. (Ex. OAl, p. 2). The 1998 Ordinance reduced the annual goals to 10% MBE and 10% WBE use on construction contracts and 10% MBE and 10% WBE use on professional design and construction services contracts. (Ex. CM, Sec.3). The other principal change from the earlier ordinances was elimination of the opportunity for MBEs and WBEs to count themselves toward meeting project goal requirements when they bid as general contractors. Section 9 amended section 28-61, to say that W/MBE prime contractors may not count their own performance, and repeated that WBE and MBE goals are “wholly separate.” Thus, all bidders now must meet the same subcontracting requirements. The 1998 ordinance eliminated all references to “joint ventures” with MBEs and WBEs. (Ex. 0-4, Secs.6, 8). Section 18 added section 28-71(b) authorizing the MOCC to collect data regarding the ongoing availability and utilization of minority and business enterprises by requiring bidders' to submit more information regarding these areas. Section 21 modified section 28-80 by authorizing the MOCC director to monitor and conduct ongoing studies of discrimination to the Denver MSA. The director can also require bidders to preregister and provide information. Operation of the Ordinances. MBEs and WBEs seeking City certification must submit written applications identifying the legal form of the enterprise, the date of its formation, whether it is certified as an SBA8(a) business and reporting any prior applications for certification by any of its principals. (Ex. F-15). The applicant then certifies that the business is at least 51% owned and controlled by a woman or a person of “Black, Hispanic, Asian American or American Indian descent.” (Ex. F-15. p. A-6). The application form does not define these minority groups and self identification is accepted. ' The City also certifies applicants seeking designation as a Disadvantaged Business Enterprise (“DBE”) entitled to preferential consideration for work as contractors or consultants on federally funded projects. The DBE certification application uses the definitions provided by Federal regulations, making the following groups “rebuttably presumed” to be socially and economically disadvantaged: • Women; • Black Americans (which includes persons having origins in any of the Black racial groups of Africa); • Hispanic Americans (which includes persons of Mexican, Puerto Rican, Cuban, Central or South American or other Spanish and Portuguese culture or origin, regardless of race); • Native Americans (which includes persons who are American Indians, Eskimos, Aeuts or Native Hawaiians); • Asian-Pacific Americans (which includes persons whose origins are from Japan, China, Taiwan, Korea, Vietnam, Laos, Cambodia, the Phillippines, Samoa, Guam, the U.S. Trust Territories of the Pacific, and the Northern Marianas); • Asian-Indian Americans (which includes persons whose origins are from India, Pakistan, Bangladesh, and Sri Lanka). (Ex. F-15, p. A 2-3). In practice, the MOCC uses these same racial and ethnic criteria for DBE and MBE certification. (Tr. at 1939). Both application forms require disclosure of the race, ethnicity and percentage of ownership and control of all proprietors, partners, officers, directors and shareholders. All applicants must give the names, sex and ethnicity of the individuals responsible for 15 types of management decisions, ranging from bank signature authority to employment decisions. The applicants must disclose their gross receipts over the preceding three years, identify any previous owners of the business and report whether any owner or management official has an ownership interest in any other firm. Information regarding surety bonding, liability and errors insurance, key person insurance, and all projects completed by the business within the last three years must be submitted. The W/MBE application asks these two questions: “.As the controlling Minority or Woman owner of this or a previous business enterprise, have you or your business enterprise suffered from discrimination while doing or attempting to do business within the City and County of Denver in the private and/or Public Works Construction and Professional Service markets?” “Did you as the controlling Minority or Woman of this or a previous business enterprise attempt to do business within the City and County of Denver in the private and/or Public Works Construction and Professional Service markets, prior to June 1,1990?” (Ex. F-12). Certification is denied if both questions are answered negatively. Affirmative answers must be accompanied by a statement describing the experience of discrimination or providing proof of the applicant’s business activity in Denver before June 1, 1990. The applications are given a “desk review” by a “certification analyst” who may ask for additional information and who customarily makes an onsite visit to interview the owners, tour the applicant’s facilities, and possibly visit a work site. The reviewing certification analyst submits a written recommendation to a certification supervisor who reviews the record with the recommendation and passes the application to the MOCC director for a final decision on certification. The director can and generally does delegate final decision authority to the certification supervisor. (Tr. at 1900-02). Beginning in approximately 1995, the entire certification staff (the supervisor and as many as four analysts) meets and reviews all certification decisions. (Tr. at 1905). Although the presumption of discrimination against minorities and women doing business in Denver before June 1, 1990, later changed to March 31, 1996, is said to be rebuttable, the trial evidence did not identify any instance of any attempt to rebut the presumption. The MOCC staff does not independently investigate to verify the applicant’s statements of past experience of discrimination. An MBE or WBE loses certification when its annual revenues average between $3 and $10 million, depending on the industry, over a three-year period. See. 28-74. When certifying MBE and WBE applicants, MOCC employees use internal “MBE/WBE Eligibility Criteria and Certification Guidelines.” (Exhibit F-l) (Tr. at 1889). With few exceptions, those guidelines have been the same for both federal DBE programs and the City’s W/MBE goals program. (Tr. at 1896-97). The guidelines relate to four areas of interest: ownership, management and control, independence, and race/ethnicity. (Tr. at 1890). Each City contracting agency gives public notice of the specific goals set for each project in the Denver daily newspapers and includes the goals in the job descriptions given to potential bidders. An MOCC representative attends pre-bid meetings to inform potential bidders of the requirements for the particular project. (Tr. at 1635-1636). At bid opening all bidders must submit lists of all MBEs and WBEs they intend to use as suppliers, subcontractors or joint venture participants. The lists include the name, address, telephone number and contact person for each MBE and WBE; the value and description of the commercially useful functions assigned to them; the percentages of the MBEs’ and WBEs’ useful functions as compared to the overall project budget; the designation of each particular utilized business enterprise as either an MBE or a WBE; a verified statement from the bidder saying that the dollar amounts of the work to be performed by the MBE or WBE were provided and accepted before bid opening, and a verified statement from the bidder acknowledging its understanding that it must submit a “Letter of Intent” to the MOCC director within five working days of acceptance of the bid, identifying the values to be provided by MBE and WBE subcontractors and suppliers. Sec. 28-60 (1990 Ordinance); Sec. 28-59 (1996 Ordinance). As previously noted, all three ordinances provide for the possibility of excusing a contractor’s failure to meet the prescribed project goals by submitting a detailed statement showing its good faith attempt. In that statement the bidder must show that knowledge of the information provided by the City at pre-bid meetings has been given to MBEs and WBEs and submit verification of advertisements soliciting bids from MBEs and WBEs for three consecutive days in either general or construction related publications approved by the MOCC director, beginning at least 15 days before the bid opening date, expressly referring to the project with a statement that the contractor is seeking MBE and WBE participation. If the City publishes its notice for project bids less than 15 days before the bid opening date, the bidder must provide verification of advertisements for four consecutive days. Sec. 28-58(b)(2). The good faith statement requires verification of the bidder’s efforts to provide timely written notice to all appropriate MBEs and WBEs on the City’s current certification list. That notice must describe the potential subcontracting categories for the particular project. The good-faith statement must also include the names, addresses and telephone numbers of all MBEs and WBEs contacted by the bidder; a description of all efforts made to contract with those businesses; a description of all contract information provided to MBEs and WBEs and, the dates and places of the bidder’s attempts to contract with or purchase from those MBEs and WBEs. Sec. 28-58(b)(4) (1990 Ordinance); Sec. 28-58(b)(3) (1996 Ordinance). To be excused from meeting the project goals, the bidder must show that it provided access and gave adequate time for MBEs and WBEs to review the project plans, drawings, specifications and other documents to enable them to prepare their subcontract bids and/or negotiate joint venture arrangements in a manner “consistent with industry practice.” Sec. 28-58(b)(6) (1990 Ordinance); Sec. 28-58(b)(3)(c)(1996 Ordinance). Additionally, the bidder must demonstrate that it considered structuring the contract into economically feasible units to facilitate MBE and WBE participation in a manner “reasonably consistent with industry practice” and its past conduct. Sec. 28-58(b)(7) (1990 Ordinance); Sec. 28-58(b)(4) (1996 Ordinance). The bidder must explain the failure to reach agreement with each MBE and WBE that contacted the bidder and verify that rejection of those MBEs and WBEs was either because they did not submit the lowest bid or because they were not qualified to do the work. Sec. 28-58(b)(8)-(9) (1990 Ordinance); Sec. 28-58(b)(5)-(6) (1996 Ordinance). Upon the award of a City contract, the contractor must submit a schedule detailing the anticipated use of MBEs and WBEs within five working days after beginning work on the project. Sec. 28-68. Compliance with the project goals set by the director is made an affirmative obligation of the contractor on each contract for construction or for professional design or services. Sec. 28-66. The MOCC director monitors performance of the contracts and upon a report of grounds for believing that a contractor is not in compliance, the DPW manager must give the contractor written notice to correct any deficiencies within a reasonable time. The manager may then hold a hearing to determine whether the contractor has complied and if not, the manager must impose appropriate sanctions, which may include suspending or terminating the contract for breach and removing the contractor from a list of prequalified contractors eligible to work on future City contracts. In addition to such sanctions, the manager may require a non-conforming business to complete the contract work in spite of the breach. Sec. 28-44. All contractor requests for payments from the City must include written partial releases from all subcontractors, subcon-sultants and suppliers documenting progress payments to each business. Sec. 28-69. A prime contractor cannot terminate the participation of a WBE or MBE without replacing it with another one performing the same commercially useful function, or without satisfying the good faith requirements. Sec. 28 — 66(b)(4) (1990 Ordinance); Sec. 28-66(c)(4) (1996 Ordinance). Under the 1990 Ordinance, if the City decertifies a WBE or MBE for reasons other than graduation or failure to renew certification annually, or if a WBE or MBE fails to perform its commercially useful function, and the prime contractor can demonstrate that it did not cause directly or indirectly, such decertification or failure to perform, the prime contractor is excused from compliance with that portion of the project goals attributed to that WBE or MBE. Sec. 28-66(e) (1990 Ordinance). The 1996 Ordinance added the requirement that the prime contractor replace the non-performing or decertified WBE or MBE with another certified WBE or MBE, or demonstrate compliance with the “modified” good faith requirements found at Section 28-66(e) and applicable only to replacing a WBE or MBE under the provisions of 28-66. Sec. 28 — 66(d)(1996 Ordinance). The Disparity Studies. The BBC Study consultants decided not to consider data that may show the influences or effects of the City’s affirmative action policies that had been in existence since the 1983 goal setting ordinance. Accordingly, they looked at projects that were not within any goals .program. They reviewed eight local bond projects from 1972 to 1976, and reported a total of $77.9 million was awarded and only one contract of an unknown dollar amount went to an Hispanic firm. They said that one contract may have gone to a WBE but neither the firm’s ownership nor the amount of the contract was known. (Ex. C-8, Table V-l, p. V-6). They also examined a $15 million dollar bond project for renovation of the Museum of Natural History in 1985 and reported that MBEs received 1.1% of the total contract dollars and WBEs received 1.7%. (Ex. C-8, p. VI-13). During 1985, the City authorized and issued tax-exempt revenue bonds yielding $87 million for development and construction of multifamily housing for low and middle-income households in five public housing projects. All contractors submitting proposals were asked to include descriptions of the methods they would use to meet the City’s equal employment objectives. On one of the five projects — the Village at Loretto Heights — the City required that at least 5% of the contract value was to go to WBEs and at least 20% to MBEs. (Ex. C-8, pp. VI-14-17). The City issued 59 building permits to contractors and subcontractors for a total gross valuation of approximately $51 million for work on the five housing projects. MBEs received permits for work totaling $8,265 and WBEs received permits for work totaling $30,000 directly from the City. The 1990 Study researchers interviewed the general contractors on three of the five housing projects, with a total bond amount of $34.5 million and a total permit value of approximately $21.73 million. Those three general contractors reported subcontracting approximately $860,000 to MBEs and $379,000 to WBEs. (Ex. C-8, Tables VI-5 and VI-6, pp. VI-18, 19). The 1990 Study report did not include any information about how many qualified MBE and WBE firms were actually available to work on those five housing projects. The authors assumed that all MBEs and WBEs then doing business in the Denver M.S.A. § were qualified, willing and able to do the work. The 1990 Study included Census Bureau data showing that in 1977 MBEs and WBEs together made up 5% of all construction firms in the Denver MSA, reporting 3% of all construction employment and gross receipts. In 1982, MBEs and WBEs comprised 6% of all construction firms and reported 3% of total employment and 2% of gross receipts. (Ex. C-^8, Table V-2, p. V-8). In compiling its data, the Census Bureau defined minority and woman-owned businesses differently from the City’s definition. Denver has consistently used 51% ownership to classify a business firm as minority-owned or woman-owned. The Census used 50% ownership. The BBC Study researchers did not attempt to account for any overstatement of WBEs by determining how many WBEs in the census data were firms owned equally by married partners. The 1990 Study presented employment data showing that, in 1977 and 1982, MBEs and WBEs employed fewer people and reported lower gross receipts than industry averages. (Ex. C-8, Table V-4, p. V-10). The employment data did not separate the numbers according to the types of work done by those firms e.g. carpentry, excavation, metal fabrication, cement, etc. The Census Bureau data included in the 1990 Study found fewer MBEs and WBEs per 100 minority and female construction employees than the industry average in 1982. (Ex. C-8, Table V-5, p. V-12). The 1990 Study reported that based on the City’s annual reports and the Study’s own surveys, DPW awarded a disproportionately large amount of construction contract dollars to MBEs from 1978 to 1982 and 1983 to 1989. Although MBEs accounted for approximately two percent of the construction business in the Denver M.S.A. § from 1978 to 1982, they received between 5 and 24 percent of DPW construction contract dollars. (Ex. C-8, Table V-3, p. V-8). The 1990 Study also said that DPW’s “predicted utilization is close to the actual cumulative utilization” of WBEs during the same period. (Ex. C-8, p. V-9). From 1983 to 1989, DPW awarded almost 30% of its professional design contract dollars to MBEs, which at that time represented approximately 7% of all Denver construction firms, and 5% to WBEs, slightly less than WBE representation in the industry. (Ex. C-8, p. VI-2). The BBC Study researchers conducted a telephone survey of firms in the professional design and construction industries in the Denver M.S.A. § using a database of 7,265 such businesses in the Denver M.S.A. § prepared by Trinet, a private company that gathers information and converts it into databases to sell to other companies. The researchers narrowed the database down to 5,735 construction and professional design firms because of the inclusion of irrelevant Standard Industrial Classification Codes (“SIC”). (Ex. C-8, Appendix C). The Standard Industrial Classification Codes have been established by the Census Bureau to classify businesses according to the type of work they perform. The BBC Study Researchers hired a private telemarketing firm to conduct the telephone survey. The telemarketers made three attempts to communicate with each business in the selected database to gather information as to the number of employees, the type of work normally done by the business, whether it was an MBE or WBE and whether the firm wanted to work on City contracts. They obtained responses from 2,514 firms, for a 59% “completion rate.” Discrepancies in the data obtained were checked by recontacting the businesses and results not verified were discarded. (Ex. C-8, Appendix C, pp. C 2 4). The reported telephone survey results showed that MBEs and WBEs comprised 18% of all firms in the construction industry in 1990, accounting for 13% of all employment and 8% of total receipts. MBEs and WBEs comprised 15% of all professional design firms in 1990 and reported 11 percent of total employment and eight percent of total receipts. (Ex. C-8, Table VI-1, p. VI-1). There was no information about the firms’ qualifications for performing any of the types of the work required in City contracts. (Ex. C-8, Table VI-2, p. VI-3). Using the data from the telephone survey and data collected by the Census Bureau, the 1990 Study team compared the number of firms with the number of employees working in the construction and professional design industries in the Denver MSA. The researchers found fewer MBEs per 100 minority construction employees than the industry average and fewer MBEs and WBEs per 100 minority and women professional design employees than the industry average. (Ex. C-8, Tables VI-3 and VI-4, pp. VI-3, 4). The 1990 Study also contains brief summaries of testimony given at hearings held by DPW in March 1988. Several people testified that discrimination does not exist in City contracting. An unreported number of minority and women business owners opined that, without Ordinance No. 246, they would not have had an opportunity to bid jobs. There was testimony from witnesses that they perceived discrimination in construction and professional design work for private owners. (Ex. C-8, pp. VI-5-9). The 1990 Study report summarized information from 38 telephone interviews of MBEs and WTBEs by members of the study team who asked questions about the interviewees’ experiences with the City’s affirmative action program, their access to bonding and financing and whether they thought that their firms had either lost work or suffered discrimination because of their minority or female ownership. Most of the respondents said that they felt they had been subjected to discrimination. (Ex. C-8, pp. VII-1, 2). Small excerpts from selected telephone interviews and summaries of reported incidents of discrimination appear in Appendix D, Part I of the report. The 1990 Study report also includes 31 “case studies,” consisting of interviews with representatives of 31 companies, including MBEs, WBEs, white male-owned firms, prime contractors, subcontractors and consultants to both prime and subcontractors. (Ex. C-8, pp. VII-2-4). Anecdotal reports of inconsistent application of the goals program by City employees to evade the program’s requirements were included in the report. (Ex. C-8, pp. VII-4-9). In 1995, the City obtained a new disparity study, “Analysis of Minority and Women-Owned Businesses in the Denver Metropolitan Area Construction and Professional Design Marketplace” from BBC Research & Consulting and Harding and Ogborn (“1995 Study or BBC Study II”). (Ex. E-15). That study also used data from the Census Bureau including the 1987 Economic Census and unpublished data from 1987. It was agreed by all witnesses with knowledge of the Census data that there are errors in the counting of the number of minority and women-owned firms with paid employees. The extent of the error is not known and estimates vary widely. (Tr. at 529). The 1995 Study equated availability with existence and utilization with average revenues in order to calculate disparities in the utilization of WBEs and MBEs as compared to the utilization of non-minority, male owned firms. Thus, if African Americans owned 5% of all construction firms in the Denver MSA, their “availability” would be 5% or 0.05, and if Hispanic firms earn, on average, $65,000 a year, their yearly “utilization” per available firm would be $65,000. Likewise if WBEs reported 9% of all industry revenues, their total percentage “utilization” would be 9% or 0.09. It is more accurate to describe the data as comparing “marketplace representation” with reported revenues. The numbers used for these statistical comparisons were eight years old at the time of this study, all taken from the 1987 Census report. The BBC Study II reported that for all industries in the Denver MSA, businesses owned by African Americans, Hispanics, Asian Americans and Native Americans reported lower mean revenues than businesses owned by whites. (Ex. E-15, Ex. II — 1, p. II — 4). WBEs also reported lower mean revenues than male-owned firms. (Ex. E-15, Ex. II — 2). Considering all industries in Denver, the ratio between percentage marketplace representation and percentage of industry revenues was lower for all four ethnic categories than white businesses, (Ex. E-15, Ex. II — 3, p. II — 6), and the ratio of representation to revenue was lower for WBEs than for male-owned firms. (Ex. E-15, Ex. II-4, p. II-7). Because the data used to make these comparisons included all industries, its relevance to the issues in this case is not apparent. For the Denver M.S.A. § construction industry, the data show that African American, Hispanic, and a combined group of Asian American and Native American enterprises reported lower mean revenues than white firms but WBEs reported higher mean revenues than male-owned firms. (Ex, E-15, Ex. II — 5, II — 6, p. II-8, 9). The ratio of percentage marketplace representation and percentage of industry revenue was lower for MBEs than white businesses both for firms with and without paid employees. (Ex. E-15, Ex. II — 7, p. II — 10). Hispanic and Asian/Native American firms reported lower revenues per employee than white firms. (Ex. E-15, Ex. II — 8, p. 11-12). The ratio between the percentage of reported gross revenues and the percentage of marketplace representation was considerably higher for WBEs with paid employees and only slightly lower for WBEs without paid employees compared to male-owned firms. (Ex. E-15, Ex. II — 9, p. II-13). In 1987, male-owned firms reported marginally higher revenues per employee compared to WBEs. (Ex. E-15, Ex. II — 10, p. 11-14). During 1994 and 1995, the study team telephoned 2,920 construction and design firms in the Denver MSA, asking them about their revenues; their length of time in business; the ethnic, racial and gender classification of the owners; the firms’ work histories with the City and their interest in doing future work with the City. These businesses included sole pro-prietorships, partnerships and Subchapter S corporations with 10 or fewer stockholders reporting a minimum of $500 of business revenue on 1987 tax returns. The survey did not include Chapter C corporations. Using this survey data, the 1995 Study report presents four tables of comparisons of the revenues of MBEs, WBEs and “majority” or white-male owned firms, grouped according to reported annual revenues as: those reporting less than one million dollars; those reporting more than one million dollars; and those reporting more than three million dollars for professional design firms and five million dollars for construction firms. MBEs and WBEs were relatively underrepresented in the higher revenue categories when compared to white male owned businesses. (Ex. E-15, Exs. 11-11, 11-12, 11-13, 11-14, pp. 11-15 to 11-18.) Only firms in business for at least three years were included and the firm size by number of employees was not given. The information collected by the telephone survey reflected differences between the percentage of available MBEs and WTBEs as measured by their responses, and the percentage annual revenues of MBEs and WBEs in the construction and design industries determined by using the broad revenue categories of more or less than $1 million, $3 million and $5 million respectively. With the exception of WBEs in the professional design industry, these differences were reported as statistically significant. (Ex. E-15,11-15,11-16, p. II-19, 20). The 1995 Study presents an “analysis of rates of business ownership” in the Denver MSA. For all industries in 1987 there were more white-owned business firms per 1000 white employees than MBEs per 1000 minority employees. There were more WBEs per 1000 women employees than business firms owned by men per 1000 men employees. (Ex. E-15, Ex. 11-18, p. 11-23). Considering only the construction industry, whites (men and women) were more likely to be self-employed than African Americans and Hispanics and men were more likely to be self-employed than women regardless of race or ethnicity. No data were presented for either Asian Americans or Native Americans. (Ex. E-15, Ex. 11-19, p. 11-25). In the professional design industry, men were more likely to be self-employed than women. (Ex. E-15, Ex. 11-20, p. 11-25). Again, the probative value of the data regarding all industries to the issues in this case is problematic. Using data from the Public Use Micro-data Sample file, U.S. Bureau of the Census, 1990 (“PUMS data”) the study team conducted a multivariate, or regression analysis to control for level of education, years of work experience, sex, and whether the person was Hispanic or African American in analyzing self-employment. Women and Hispanic people appeared to be significantly less likely to be self-employed in construction and there appeared to be a positive relationship between self-employment and the length of work experience as employees. (Ex. E-15, Ex. II-21, p. 11-28). In the professional design industry, women were less likely than men to be self-employed, and people with more employee work experience seem more likely to be self-employed. (Ex. E-15, Ex. II-23, p. 11-30). Other variables considered had no statistically significant effect on the likelihood of self-employment. Although this regression analysis tried to control for some relevant variables, there was no attempt to control such seemingly important characteristics as marital status, veteran status, availability of other sources of income and hours worked during the previous year. The 1995 Study team did attempt to control for home ownership and they found that this variable had a statistically significant effect on rates of self-employment, apparently regardless of race or gender. However, the team decided that the addition of this variable did not “substantially change” the significance of the other variables, such as race or gender, and they chose not to include it in the 1995 Study results. The study team stated they felt it was unclear whether home ownership influenced self-employment or self-employment influenced home ownership. (Ex. E-15, p. 11-27, n. 20). The 1995 Study summarized the results of telephone interviews with 49 MBEs and WBEs in the construction, construction-related and professional design industries within the Denver MSA. The researchers specifically selected those firms based on their prior participation in the 1990 Study, their responses from the 1994-95 telephone survey, recommendations received from the MOCC and inclusion of the firms in the December 1994 MOCC Certification Directory. The researchers also said they chose individual businesses to “accomplish a reasonable representation of construction, construction-related supply and professional design firms owned by Blacks, Hispanics, Asians, Native Americans and women.” (Ex. E-15, p. Ill — 1). The persons interviewed related their experience with what they felt to be discrimination against them in the construction and professional design industries. The authors of the 1995 Study refer to two earlier studies: the 1993- Disparity Study for the Denver Housing Authority (“DHA”) and a 1992 RTD study. (Ex. E-15, pp. 11-32, III — 8). On September 14, 1992, National Economic Research Associates, Inc. (“NERA”) submitted a report to the Regional Transportation District titled “The Utilization of Minority and Woman-Owned Business Enterprises by the Regional Transportation District,” (“the 1992 RTD Study”). (Ex. E-15, p. 11-32). The authors concluded that “ ‘[discrimination appears to exist in all the procurement areas which we have examined,’ ” and “ ‘[t]he statistical under-utilization is consistent with anecdotal evidence that marketplace discrimination within the Denver-Boulder CMSA limits the opportunity for M/WBEs to obtain work.’ ” (Ex. E-15, p. III-9). As recounted in the 1995 Study, the 1992 RTD Study also found disparities between African American, Hispanic, Asian American and female marketplace representation and the percentage of use by the RTD. (Ex. E-15, Ex. 11-25). The 1995 Study referred to a finding in a 1993 DHA study “of a pattern of disparities” between MBE and WBE marketplace representation and utilization by the DHA during years when it did not have an affirmative action program. (Ex. E-15, p. II-33). The DHA study also reported anecdotal information that “suggests that discrimination exists” in the Denver MSA. (Ex. E-15, p. Ill — 8) (quoting 1993 DHA study). The 1995 Study did not examine City contracting patterns and practices, did not report any information showing discrimination against minorities and women by City employees and did not attempt to assess the effects of Denver’s goals program ordinances. Combining Asian Americans with Native Americans in the 1995 Study makes it very difficult to say anything about either of these groups. This pairing is particularly problematic, given the results in the later 1997 Study showing • that Asians outperformed all other ethnic groups. (Ex. L-l, Table 7, p. 35). By 1997, the legal climate for governmental affirmative action programs had changed as shown by lower court opinions applying the strict scrutiny mandated by Croson and the remand from the Tenth Circuit in this case. Recognizing the need for additional empirical evidence to support its program at trial, Denver contracted for 'a somewhat more sophisticated disparity study by National Economic Research Associates, Inc. (“NERA”) directed by David Evans, to determine the “availability” of construction firms classified as minority and woman owned within the Denver MSA. (Ex. L-l). Using a database obtained from MOCC, the NERA researchers sought to determine what percentage of City contracting dollars went to each county in the Denver MSA, the rest of Colorado, and outside the state. That database, covering 1991 through September 1996, included the name and address of the general contractor on every City contract, the names and addresses of all subcontractors, the names of the projects, the work performed, the amounts paid to the contractors and the total value of each project. (Ex. L-l, p. 7). The researchers modified the MOCC data by excluding all federally funded projects and all projects relating to Denver International Airport (“DIA”). They divided by two the contracts related to the City’s 1990 Library Program because of the unusual scope of it. They used contractors’ ZIP codes to identify the county in which each was located and they used the four digit code from the Census Bureau’s Standard Industrial Classification system and the business code used in the Dun & Bradstreet Marketplace or Select-phone databases to classify the types of work done. (Ex. L-l, pp. 7-8). After finding that 95% of all City construction dollars went to businesses or contracts classified within 40 of the four-digit SIC codes, the researchers limited their inquiry to those 40 categories. (Ex. L-l, p. 10). The researchers estimated the number of all firms in the Denver M.S.A. § using the Dun & Bradstreet Marketplace database, estimated the number of MBEs and WBEs by using a database from BBC Research and Consulting, Inc. and conducted surveys to adjust for any over-counts or undercounts in those database