Dunnet Bay Construction Compan v. Erica J. Borggren , 799 F.3d 676 ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 14-1493
DUNNET BAY CONSTRUCTION COMPANY,
an Illinois Corporation,
Plaintiff-Appellant,
v.
ERICA J. BORGGREN, in her official capacity as
Acting Secretary for the Illinois
Department of Transportation, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Central District of Illinois.
No. 3:10-cv-03051-RM-SMJ — Richard Mills, Judge.
____________________
ARGUED DECEMBER 12, 2014 — DECIDED AUGUST 19, 2015
____________________
Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.
TINDER, Circuit Judge. Plaintiff-Appellant Dunnet Bay
Construction Company sued Defendants-Appellees Illinois
Department of Transportation (IDOT) and its then-Secretary
of Transportation Gary Hannig in his official capacity, alleg-
ing that IDOT’s Disadvantaged Business Enterprise (DBE)
2 No. 14-1493
Program discriminates on the basis of race. The district court
granted summary judgment to Defendants, concluding that
Dunnet Bay lacked standing to raise an equal protection
challenge based on race and that the DBE Program survived
the constitutional and other challenges. Dunnet Bay appeals.
For the reasons that follow, we affirm.
I. BACKGROUND
Dunnet Bay is a corporation that engages in general
highway construction. It is prequalified to bid and work on
IDOT projects and competes for federally assisted highway
construction contracts awarded by IDOT. Dunnet Bay is
owned and controlled by two white males. Between 2007
and 2009, its average annual gross receipts were over $52
million.
IDOT is the agency of the State of Illinois responsible for
administering, building, operating, and maintaining the
state highway system. It also is responsible for administering
federally funded highway construction contracts in accord-
ance with federal and state law, including the regulations
promulgated by the U.S. Department of Transportation
(USDOT), see 49 C.F.R. Part 26. IDOT administers a small
business initiative program, which reserves certain work on
contracts for small business enterprises. Gary Hannig was
the Secretary of IDOT from February 2009 through the end
of June 2011.
In order to receive federal-aid funds for highway con-
tracts, IDOT must have a “disadvantaged business enter-
prise” participation program that complies with federal reg-
ulations. The Transportation Equity Act for the 21st Century
(“TEA–21”), Pub. L. No. 105–178, 112 Stat. 107 (1998), as
No. 14-1493 3
amended by the Safe, Accountable, Flexible, Efficient Trans-
portation Equity Act: A Legacy for Users, 23 U.S.C. § 101
Note, Pub. L. No. 109–59, 119 Stat. 1144 (2005), and the gov-
erning regulations require state recipients of federal-aid
funds for highway contracts like IDOT to submit to the
United States Department of Transportation (USDOT) a
written plan that demonstrates, inter alia, that they are not
discriminating against minorities and women in the award
of contracts. Section 1101(b) of the TEA–21 provides that
“not less than 10 percent of the amounts made available for
any program under … [TEA–21] shall be expended with
small business concerns owned and controlled by socially
and economically disadvantaged individuals.” A DBE is de-
fined as a for-profit small business concern that is at least
51% owned and controlled by one or more socially and eco-
nomically disadvantaged individuals. 49 C.F.R. § 26.5. There
is a rebuttable presumption that women and members of ra-
cial minority groups are socially and economically disadvan-
taged, id., but an individual owner of any race or gender
may qualify as “socially and economically disadvantaged.”
See id. Under the applicable regulation, “a firm is not an eli-
gible DBE in any Federal fiscal year if the firm (including its
affiliates) has had average annual gross receipts … over the
firm’s previous three fiscal years, in excess of $22.41 mil-
lion.” 49 C.F.R. § 26.65(b) (2009).
States must set an overall goal for DBE participation in
federally assisted contracts. 49 C.F.R. § 26.45(a). That goal
“must be based on demonstrable evidence of the availability
of ready, willing and able DBEs relative to all businesses
ready, willing and able to participate on [federal]-assisted
contracts” and “must reflect [the state’s] determination of
the level of DBE participation [one] would expect absent the
4 No. 14-1493
effects of discrimination.” Id. § 26.45(b). A state is not per-
mitted to use quotas for DBEs but may use set-aside con-
tracts for DBEs in limited circumstances. Id. § 26.43. A state
“must meet the maximum feasible portion of” its overall
DBE participation goal through race-neutral means, using
contract goals to meet any portion that is not projected to be
met with race-neutral means. Id. § 26.51(a), (d). In setting
specific contract goals, a state should consider such factors
as “the type of work involved, the location of the work and
the availability of DBEs for the work of the particular con-
tract.” Id. § 26.51(e)(2).
Under the regulations, a contract may be awarded to a
bidder who demonstrates that it has obtained enough DBE
participation to meet the DBE contract goal, or demonstrates
that it made adequate good faith efforts to meet the goal
even if it did not meet the goal, id. § 26.53(a), which means
that it “took all necessary and reasonable steps to achieve a
DBE goal … which, by their scope, intensity, and appropri-
ateness to the objective, could reasonably be expected to ob-
tain sufficient DBE participation, even if they were not fully
successful.” 49 C.F.R. Pt. 26, App. A, § I. If a bidder demon-
strates that it made adequate good faith efforts, it must not
be denied award of the contract on the ground that it failed
to meet the goal. Id. § 25.53(a)(2). If the apparent successful
bidder fails to either meet the DBE contract goal or demon-
strate good faith efforts, the state “must, before awarding the
contract, provide the [bidder] an opportunity for administra-
tive reconsideration.” Id. § 26.53(d). If the state determines
that the apparent successful bidder failed to show good faith
efforts, the state must send the bidder a written explanation
of the basis for the finding. Id. § 26.53(d)(4).
No. 14-1493 5
IDOT administers the DBE program in Illinois. IDOT
prepared and submitted to USDOT for approval a DBE pro-
gram governing federally funded highway construction con-
tracts. IDOT established a statewide aspirational goal for
DBE participation of 22.77%. IDOT typically achieved
somewhere between 10% and 14% DBE participation. For
fiscal year 2009, IDOT attained 11.15% minority participation
on all construction projects. For fiscal year 2010, IDOT pro-
jected that it would achieve 4.12% DBE participation
through race-neutral means, leaving 18.65% DBE participa-
tion to be met by using contract goals. The Federal Highway
Administration (FHWA) expressed concern about states not
reaching their DBE goals and indicated to IDOT that it
would like to see the DBE participation opportunities in-
creased.
IDOT has five regions that are subdivided into a total of
nine districts. Each district is headed by a district engineer
who is responsible for the highways in his or her district.
The district engineers report to the regional engineers who
report to the Director of Highways/Chief Engineer. A district
engineer and equal employment opportunity (EEO) officer
review each construction contract to decide whether the con-
tract presents DBE participation opportunities. At all rele-
vant times, Christine Reed was IDOT’s Director of High-
ways/Chief Engineer and was responsible for goal setting.
Reed reviewed recommendations for contract goals and
small business initiatives. Contracts had been withdrawn
from bidding by Secretary Hannig’s predecessor to review
DBE goals. After the goals were reviewed, the contracts were
re-advertised with higher DBE goals.
6 No. 14-1493
Under IDOT’s DBE program, if a bidder fails to meet the
DBE contract goal, then it may request a modification of the
goal, and provide documentation of its good faith efforts to
meet the goal. These requests for modification are also
known as “waivers.” Historically, IDOT has granted goal
modification requests. In calendar year 2007, it granted 57 of
63 pre-award goal modification requests; the six other bid-
ders ultimately met the contract goal with post-bid assis-
tance from IDOT. In calendar year 2008, IDOT granted 50 of
55 pre-award goal modification requests; the other five bid-
ders ultimately met the DBE goal. And in calendar year 2009,
IDOT granted 32 of 58 goal modification requests; the other
contractors ultimately met the goals. In calendar year 2010,
IDOT received 35 goal modification requests; it granted 21 of
them and denied the rest.
Secretary Hannig became IDOT’s Secretary in February
2009. He named William Grunloh his Chief of Staff. From
the beginning of his term, Secretary Hannig told Reed that
he wanted IDOT to make a “very strong effort” in setting
and attempting to achieve DBE goals. As with prior IDOT
Secretaries, Secretary Hannig was concerned about increas-
ing DBE participation in federal contracts. Indeed, his first
directive to IDOT’s entire staff was to increase participation
for minority companies. In a March 2009 meeting with Reed,
Secretary Hannig made it “very clear that waivers would not
be a part of a common practice of his administration.” As a
result, Reed told the regional engineers that “the Secretary
was not interested in entertaining waivers as part of his ad-
ministration” and told a contracting organization that “re-
quest[s] for waivers would be closely scrutinized and would
be very difficult to get.” In an April meeting about DBE par-
ticipation for a bridge project, Secretary Hannig was “very
No. 14-1493 7
adamant that waivers were not going to be an acceptable
part of his administration unless [they were] absolutely posi-
tively appropriate.”
IDOT’s Director of the Office of Business and Workforce
Diversity (OBWD) Larry Parrish, who recommended wheth-
er waiver requests were granted or denied and sought ap-
proval of his recommendation from Secretary Hannig, ad-
vised Carol Lyle, IDOT’s Deputy Director of OBWD, that he
was under pressure not to forward waiver requests.
From time to time, Reed had discussions about DBE
goals with Kristi Lafleur, the Deputy Chief of Staff in the
Governor’s Office who was responsible for oversight of
IDOT and Darryl Harris, the Governor’s Director of Diversi-
ty Enhancement. In September 2009, Lafleur emailed Secre-
tary Hannig that “[w]e need an action plan from [IDOT] on
increasing the DBE numbers” and “we need an overhaul for
the program and need to announce a new program.” Secre-
tary Hannig responded that “an overhaul of this program is
in order” but “[t]he federal guidelines make the program
goals and not set asides.” Beginning with his appointment in
November 2009 as Director of Diversity Enhancement, Har-
ris made it clear to Secretary Hannig, Reed, and other IDOT
personnel that DBE participation was a top priority and that
goal modifications were not favored.
In early December 2009, IDOT sought bids for a highway
resurfacing project for a portion of Interstate 290, known as
the Eisenhower Expressway. There were four federally
funded contracts for construction work on the Eisenhower,
one of which was Contract No. 60I57, the contract at issue in
this case. Henry Gray, a civil engineer and EEO Officer for
District 1, set the DBE goals for the contracts. He set DBE
8 No. 14-1493
participation goals of 8% for three of the four contracts, in-
cluding Contract No. 60I57; the goal for the fourth contract
was set at 10%.
In mid-December Secretary Hannig ordered the with-
drawal of the invitation for bids for the Eisenhower projects.
Before doing so, he had been advised that the Governor’s
Office wanted a weighted average DBE participation goal of
20% for those projects. Secretary Hannig wrote Reed and
Grunloh that “we need to get the [E]isenhower up to 20%
minority participation” and back on schedule. 1 Secretary
Hannig and Reed were comfortable that the goal could be
met within the law. Reed advised Secretary Hannig that the
contract goals were “relatively low” and there was oppor-
tunity to increase the goals under federal law. IDOT ex-
panded the scope of the projects and items deemed eligible
for DBE consideration—by expanding the geographic areas
to determine DBE eligibility and by adding pavement patch-
ing, landscaping, and other work originally reserved for
small business initiatives to the existing DBE goals. These
efforts increased the weighted average of the projects to 20%.
IDOT issued a revised invitation for bids for a January 2010
letting with a new DBE participation goal on Contract No.
60I57 of 22%.
Earlier in 2009, IDOT had sought approval from USDOT
to use “split goals” on a Mississippi River Bridge Project.
USDOT rules do not allow “split goals”—separate goals for
minorities and women. On December 14, Harris sent the
Governor’s Chief of Staff and others an email indicating that
1There is no “minority participation” goal, and, as noted, DBE status is
not limited to any particular minority group.
No. 14-1493 9
the Federation of Women Contractors was “willing[] to drop
[its] opposition to split goals” on the project if IDOT imple-
ments a “no waiver policy” like that of the Capital Devel-
opment Board. Harris testified that he never agreed to have
IDOT implement a no-waiver policy, but rather agreed to
“bring it up for consideration.”
On December 23, Secretary Hannig held a mandatory
meeting with Grunloh, Reed, Parrish, and IDOT’s Chief
Counsel Ellen Schanzle-Haskins, as well as with some re-
gional engineers and district EEO officers—the persons re-
sponsible for setting contract goals in their respective dis-
tricts. Secretary Hannig made it clear that the staff needed to
be more aggressive in setting DBE goals, that is, they needed
to increase the goals. He expressed his concern about waiv-
ers and goal modifications, explaining that he did not want
to have to decide between goal attainment and waivers and
modifications. IDOT’s Regional Engineer for the Metra East
area, Mary Lamie, testified that the Secretary repeated sev-
eral times that there would be no DBE waivers. However,
she also said that based on the context of the meeting, she
was “left with the impression that Secretary Hannig wasn’t
saying no waivers under any circumstances will ever be is-
sued” but that requests for “waivers were going to be re-
viewed” at a high level, and “we needed to make sure that
the appropriate documentation was provided” in order for a
waiver to be issued.
The FHWA approved the methodology IDOT used to es-
tablish its statewide overall DBE goal of 22.77%. The FHWA
reviewed and approved the individual contract goals for
work on the Eisenhower projects for IDOT’s January 15,
2010, bid letting. It also approved the IDOT DBE program
10 No. 14-1493
amendment that required contractors to submit with their
bids their DBE utilization plans and documentation of good
faith efforts to meet DBE goals.
On January 6, 2010, IDOT held an informational meeting
for general contractors and DBE firms regarding the January
15, 2010 bid letting. IDOT discussed changes in its DBE con-
tracting procedures and requirements. The District 8 (Metra
East) EEO Officer Lee Coleman stated that Secretary Hannig
had told him that no waivers would be granted with respect
to DBE contract goals for the letting. However, IDOT’s Di-
rector of Highways Reed told Secretary Hannig that a no-
waiver policy was not possible because it violated the law.
Secretary Hannig told Harris that a no-waiver policy was
not allowed under federal law. The Secretary also advised
the Governor’s Chief Operating Officer Jack Lavin that IDOT
was doing its best to follow the law and did not appreciate
Harris trying to interject himself into IDOT’s business.
IDOT has a “Bidders’ List,” also known as the “For Bid
List of Bidders” and “For Bid List,” which identifies all ap-
proved, prequalified general contractors for each item on a
letting. DBEs rely on the For Bid List so they know to which
contractors to submit subcontracting quotes. DBEs typically
will not submit subcontracting quotes to general contractors
who are not on the For Bid List. On January 14, IDOT issued
the final For Bid List, identifying the authorized bidders on
each project in the January 15 letting. IDOT inadvertently
left Dunnet Bay off the For Bid List.
On January 15, Dunnet Bay submitted to IDOT a bid of
$10,548,873.98 for Contract No. 60I57, which was the lowest
bid on the contract. Dunnet Bay’s bid was 0.73% under the
engineer’s estimate but 16% over the program estimate, ex-
No. 14-1493 11
ceeding the latter estimate by about $1.3 million.2 Dunnet
Bay submitted its DBE utilization plan, noting that it had
planned to meet the DBE goal of 22%, but identified only
$871,582.55 of subcontracting or 8.26% of its bid for DBE par-
ticipation.3 Three other bids were submitted; each of them
met the DBE goal. The regional engineer for District 1 ad-
vised Director Reed that Dunnet Bay’s bid was within the
awardable range.
Dunnet Bay requested a goal modification, also known as
a waiver, based on its good faith efforts to obtain the DBE
goal. In December 2009, Dunnet Bay had attended a sympo-
sium where it met some DBEs. Beginning on January 4, 2010,
Dunnet Bay faxed DBE subcontractors invitations to submit
quotes and followed-up about a week later with telephone
calls. Dunnet Bay solicited 796 companies, 453 of which were
DBEs. It had contacted DBE networking organizations such
as the Black Contractors United, Chicago Minority Business
Development Council, and Chicago Urban League, and ad-
2 The engineer’s estimate is calculated by the relevant district engineer; it
is a detailed analysis of the average cost of each work item and the total
expenses. The program estimate is set by IDOT and used to allocate
available funds for the fiscal year. A bid is compared to the engineer’s
estimate to determine whether or not it is within the awardable range.
The program estimate is used to determine whether there is money in
IDOT’s budget to pay for the project. Reed stated that bids are measured
against both the engineer’s estimate (to determine if the bid is reasona-
ble) and against the program estimate (to ensure there is enough money
in the budget).
3 Prior to 2010, a successful low bidder was required to submit its DBE
utilization plan within 7 days after the letting. Effective with the January
15, 2010 letting, contractors were required to submit their DBE utilization
plans and documentation of good faith efforts with their bids.
12 No. 14-1493
vertised subcontracting opportunities on its website. In addi-
tion, Dunnet Bay’s president attended a mandatory pre-bid
meeting, which provided DBEs an opportunity to network
with prime contractors interested in bidding on the Eisen-
hower project. Dunnet Bay’s efforts were essentially the
same that it had made in the past and had proven successful
in meeting DBE goals. Dunnet Bay was not among those
contractors who often sought goal modification requests. In
fact, Dunnet Bay met the goal for 8 of the 9 bids in the Janu-
ary 15, 2010 letting. However, despite utilizing IDOT’s sup-
portive services in the past, Dunnet Bay did not contact sup-
portive services in connection with the Eisenhower project.
Its president offered the explanation that supportive services
were not of “any help.”
DBE subcontractors submitted to Dunnet Bay post-bid
quotes that would have enabled it to meet the DBE participa-
tion goal. At least one of the subcontractors indicated that its
quote would have been submitted earlier had it known that
Dunnet Bay was bidding on the project, that is, had IDOT
not left Dunnet Bay off the For Bid List.
An interview of Darryl Harris was published in the Janu-
ary 2010 issue of Capital City Courier. (Governor Quinn was
facing a formidable challenger in the Democratic primary
election to be held on February 2, 2010.) In the interview,
Harris discussed the DBE program on the Eisenhower pro-
jects:
I can tell you one of the greatest successes that
we have so far is that we have a project in the
Chicago area called the Eisenhower Highway
Project, which is a $90 billion dollar project.
Traditionally, goals in the past were set around
No. 14-1493 13
6 or 8 percent. This administration can go on
record that our goal is 20 percent, with one
stage of that project being 30 percent for minor-
ity-owned businesses. Already you can see that
the Governor is committed to providing oppor-
tunities for minorities and women … .
The Governor remains steadfast on a no-waiver poli-
cy. This has been a practice in C.D.B. [Capital Devel-
opment Board] for several years. So, now we’re en-
couraging the Department of Transportation to also
have a no waiver policy.
[O]ur no-waiver policy is just that. You have to
meet it. When we put goals on a project, we
strongly encourage that those goal[s] are being
met.
The article was not well-received by IDOT. Secretary
Hannig was upset that Harris would make such statements
that were contrary to federal law. Hannig had advised Har-
ris that a “no waiver” policy was not allowed under federal
law and that IDOT would not implement a policy “that was
clearly in violation of the federal laws.” The article drew ob-
jection from the Illinois Road & Builders Association who
wrote Governor Quinn, requesting “complete repudiation”
of Harris’s statements about a “no-waiver policy.” Secretary
Hannig and IDOT’s Chief Counsel responded by indicating
that IDOT does not violate federal law and regulations, and
that IDOT has granted and does grant waivers where ap-
propriate.
In an email dated January 20, 2010, from Secretary Han-
nig to Harris and copied to Lafleur in the Governor’s Office,
14 No. 14-1493
Hannig advised of the results of the bidding on Contract No.
60I57:
The fourth project has 4 bidders. The low bid-
der is over budget but close in dollar amounts
but is the only bidder to miss the DBE goals.
Under our rules since the lowest bidder is close
to our pre-bid estimate, he would normally be
given the award if he could show a good faith
effort to meet the DBE goals and was granted a
waiver by I.D.O.T. If I.D.O.T. rules he did not
make a good faith effort I.D.O.T. could award
the contract to the next lowest bidder or rebid
the project.
Secretary Hannig testified that the email was mistaken be-
cause the low bidder would not normally be awarded the
contract because the bid was over IDOT’s estimate. He ex-
plained, “We would have to take a look at it, and there could
be some circumstances where it would be accepted.” IDOT
Chief Counsel Schanzle-Haskins stated that “[IDOT] would
not normally award a contract that was [$1.3 million] over
the program estimate”; instead, it “normally would reject the
bid.”
IDOT held a series of meetings to decide whether to
award the Eisenhower contracts. Three of the bids were
“way over” the program estimates. It was discussed that
Dunnet Bay as the low bidder was over the program esti-
mate, but within the awardable range. Secretary Hannig ex-
pressed concern about the race, gender, and ethnicity of the
DBEs on the Eisenhower projects. Harris expressed concern
that there were not enough African American subcontractors
on the DBE list. Reed made recommendations to Secretary
No. 14-1493 15
Hannig regarding whether to rebid contracts, and he fol-
lowed her recommendations to rebid contracts for financial
concerns. Reed recommended to Secretary Hannig that Con-
tract No. 60I57 be rebid because the low bidder was 16%
over the project estimate and was left off the For Bidders
List.
In a letter dated January 22, 2010, IDOT advised Dunnet
Bay that it had made a “preliminary determination” that
Dunnet Bay had not made good faith efforts to meet the DBE
goal. Dunnet Bay’s good faith efforts were not considered at
that time, however. Rather, where the bidder failed to meet
the DBE goal despite documentation of good faith efforts,
IDOT initially rejected the bid and all bids as non-
responsive. According to Carol Lyle, IDOT had decided to
preliminarily reject any bid that did not meet the DBE goal
and allow the contractor to seek a reconsideration hearing. A
reconsideration hearing was set for January 25 to allow
Dunnet Bay to provide documentation of its good faith ef-
forts.
Secretary Hannig appointed IDOT Chief of Staff Grun-
loh, a former Democratic State Representative, to serve as
reconsideration officer. As noted, Grunloh had participated
in the December 23 meeting where Secretary Hannig made it
clear he wanted aggressive DBE goal setting and expressed
concern about goal modification requests. Dunnet Bay’s re-
consideration hearing was Grunloh’s first as a hearing of-
ficer. Before the hearing, Lyle briefed Grunloh on the issues
relevant to the reconsideration hearing, provided him with a
copy of the applicable federal regulations and standards, in-
cluding the good faith effort standards in Appendix A to
Part 26 of the Code of Federal Regulations, and advised him
16 No. 14-1493
of the resources that were available to assist contractors in
meeting DBE goals.
Grunloh, Lyle, Dunnet Bay’s owner and president Tod
Faerber, and Dunnet Bay employee Sarah Rose attended the
reconsideration hearing. Dunnet Bay presented evidence of
its good faith efforts. However, Faerber admitted that they
had not used IDOT’s supportive services. Dunnet Bay ar-
gued that it would have met the contract’s DBE goal but for
IDOT’s error in leaving it off the For Bid List, which impact-
ed the DBEs’ submission of timely subcontracting quotes to
Dunnet Bay.
After the reconsideration hearing, Faerber met with Lyle
and Grunloh. Lyle initially believed that Dunnet Bay had
demonstrated sufficient good faith efforts. She testified,
however, that a major reason for this belief was because
Dunnet Bay had been left off the For Bid List. Lyle subse-
quently expressed the opinion that Dunnet Bay could have
done more to demonstrate good faith efforts, namely, by
contacting supportive services as well as IDOT’s Bureau of
Small Business Enterprises and the district EEO officer.
Faerber also met with Secretary Hannig to express seri-
ous concern about his ability to get a fair hearing given the
Darryl Harris article, which “seemed to imply that waivers
were not going to be granted.” The Secretary responded that
he understood, but he was under pressure from Harris not
to grant waivers. Faerber candidly testified that Secretary
Hannig did not indicate whether or not IDOT would grant
waivers.
Grunloh decided that Dunnet Bay’s reconsideration re-
quest should be denied, having concluded that it had not
No. 14-1493 17
demonstrated good faith efforts to obtain DBE participation.
Although Grunloh prepared no contemporaneous writing of
his reasoning, he summarized his reasons as follows: (1)
Dunnet Bay did not utilize IDOT’s supportive services, and
(2) the second, third, and fourth next lowest bidders were
able to meet the 22% goal.
Grunloh also recommended to Secretary Hannig that the
contract be rebid instead of awarded to the second lowest
bidder because the low bidder (Dunnet Bay) had not been
included on the final For Bid List. Similarly, Chief Counsel
Schanzle-Haskins advised Secretary Hannig that IDOT
“screwed up” by leaving Dunnet Bay off the bidders list, and
so, in fairness, IDOT should not award the contract to the
second lowest bidder. Because the low bidder was 16% over
the project estimate and was left off the Final For Bid List,
Secretary Hannig decided not to award the contract to the
second lowest bidder and re-let Contract No. 60I57.
On February 2, Secretary Hannig contacted Faerber by
telephone and advised that IDOT was not going to grant
Dunnet Bay a waiver for the project and its bid was going to
be rejected because it did not meet the DBE goal. Hannig ex-
plained that IDOT “felt bad” because Dunnet Bay was left
off the For Bid List, and IDOT was going to rebid the project
rather than award it to the second lowest bidder. Secretary
Hannig sent Dunnet Bay a letter dated February 2, 2010, stat-
ing that its bid was “considered non-responsive and is here-
by rejected.” Secretary Hannig testified that Dunnet Bay’s
bid was rejected because it did not meet the DBA goal, but it
“could have been rejected because [it] was too high”; how-
ever, IDOT never reached the question of whether or not it
should award the contract based on the amount. Secretary
18 No. 14-1493
Hannig explained that had Dunnet Bay met the DBE goal,
the next question would have been whether the bid was ap-
propriate, and Reed had recommended that IDOT rebid the
contract.
Four separate Eisenhower Expressway projects were ad-
vertised for bids for the January 15, 2010 bid letting. IDOT
granted one of four goal modifications requested from that
bid letting. (Reconsideration Hearing Officer Grunloh grant-
ed modification of the DBE participation goal on March 4,
2010.) Only one of the four projects was awarded; the other
three, including Contract No. 60I57, were unacceptable to
IDOT and were rebundled and re-advertised for bids for a
February 2010 special letting. The re-bids were “much more
competitive.” Although Dunnet Bay’s bid was lower than its
first bid, it was not the lowest bid; it was the third out of five
bidders.
On February 26, 2010, Dunnet Bay sued IDOT and Secre-
tary Hannig in his official capacity, asserting race discrimi-
nation and equal protection claims under 42 U.S.C. §§ 1981
and 1983; Title VI of the Civil Rights Act of 1964, 42 U.S.C. §
2000d; and Section 5 of the Illinois Civil Rights Act of 2003,
740 ILCS 23/1–5. Dunnet Bay sought damages as well as a
declaratory judgment that the DBE Program is unconstitu-
tional and injunctive relief against its enforcement. Dunnet
Bay sought summary judgment as to liability, contending
that the Defendants exceeded the authority granted to them
in the federal rules regarding DBE programs, so that the
DBE Program was not insulated from constitutional attack
and could not withstand strict scrutiny. Defendants also
sought summary judgment, arguing that the DBE program
was not subject to attack, that Dunnet Bay was not subjected
No. 14-1493 19
to intentional race discrimination, and that Dunnet Bay
lacked standing to raise an equal protection challenge based
upon race.
In a comprehensive and well-written opinion, the district
court granted the Defendants’ motion and denied Dunnet
Bay’s motion. The court concluded “that Dunnet Bay lacks
Article III standing to raise an equal protection challenge be-
cause it has not suffered a ‘particularized’ injury that was
caused by IDOT. Dunnet Bay was not deprived of the ability
to compete on an equal basis.” Dunnet Bay Constr. Co. v.
Hannig, 3:10-cv-3051, 2014 WL 552213, at *30 (C.D. Ill. Feb.
12, 2014). The court also determined that Dunnet Bay, which
does not qualify as a small business, lacks prudential “stand-
ing to vindicate the rights of a (hypothetical) white-owned
small business.” Id.
Even if Dunnet Bay had standing to bring an equal pro-
tection claim, the court concluded that the Defendants were
entitled to summary judgment. Id. It stated that to establish
an equal protection violation, IDOT would have to show
that it was treated less favorably than another similarly situ-
ated entity. The court found that only speculation could re-
solve whether Dunnet Bay or any other contractor would
have been awarded the Contract but for IDOT’s DBE Pro-
gram. It reasoned that no one could know what the second
lowest bidder’s bid would have been if it had not met the
22% goal or what Dunnet Bay’s bid would have been had it
met the 22% goal, or whether Dunnet Bay would have been
awarded the contract had it demonstrated adequate good
faith efforts because its bid was over the program estimate.
And because Dunnet Bay was held to the same standards as
every other bidder, the court concluded that Dunnet Bay
20 No. 14-1493
could not establish that it was the victim of racial discrimina-
tion. Id. at *31.
Moreover, the court determined that IDOT had not ex-
ceeded its federal authority under the federal rules and that
Dunnet Bay’s challenge to the DBE program fails under
Northern Contracting, Inc. v. Illinois, 473 F.3d 715, 721 (7th Cir.
2007), which insulates a state DBE program from a constitu-
tional attack absent a showing that the state exceeded its
federal authority. Id. at *26-*29. The court determined that
there was no reasonable basis to find that IDOT exceeded its
federal authority by (1) setting the 22% DBE goal on the Ei-
senhower Contract; (2) imposing a “no waiver” policy by
refusing to grant waivers of DBE goals, given that a waiver
was granted in connection with the January 15, 2010 letting
at issue and waivers were granted before and after that let-
ting; (3) denying Dunnet Bay’s waiver request initially and
on reconsideration upon finding that it did not make ade-
quate good faith efforts; and (4) omitting from its denial let-
ter the reasons why its good faith efforts were inadequate,
given that the “technical” violation did not prejudice Dunnet
Bay. Furthermore, because IDOT rebid the project, the court
concluded that a reconsideration hearing was not required,
and because the contract was not awarded to the next lowest
bidder, it decided the claim was moot. Id. at *29. Dunnet Bay
appeals from the district court’s judgment.
II. DISCUSSION
Dunnet Bay contends that it was denied a state highway
construction contract because of race discrimination in
No. 14-1493 21
IDOT’s DBE Program. We review the district court’s ruling
on the cross-motions for summary judgment de novo, con-
struing all reasonable inferences from the record in favor of
the party against whom the motion under consideration is
made. Tompkins v. Cent. Laborers’ Pension Fund, 712 F.3d 995,
999 (7th Cir. 2013).
A. Dunnet Bay’s Standing to Raise an Equal Protection
Claim
The first issue we address is whether Dunnet Bay has
standing to challenge IDOT’s DBE Program on the ground
that it discriminates on the basis of race in the award of
highway construction contracts. In other words, is Dunnet
Bay a proper plaintiff to challenge the DBE program on the
basis of alleged race discrimination? If Dunnet Bay lacks
standing, then we lack jurisdiction to consider the merits of
the equal protection claim. Steel Co. v. Citizens for a Better
Env’t, 523 U.S. 83, 94 (1998).
Standing arises under Article III’s “case or controversy”
requirement. See Lujan v. Defenders of Wildlife, 504 U.S. 555,
560 (1992). Article III standing has three elements: (1) an “in-
jury in fact,” that is, ”an invasion of a legally protected inter-
est which is … concrete and particularized, and … actual or
imminent”; (2) a causal connection between the injury and
the challenged conduct, meaning that the injury is “fairly
traceable” to the challenged conduct; and (3) a likelihood
“that the injury will be redressed by a favorable decision.”
Lujan, 504 U.S. at 560–61 (citations and internal quotation
marks omitted). These are the constitutional minimum re-
quirements for standing. See id. at 560.
22 No. 14-1493
There are also prudential limitations on standing. Lujan,
504 U.S. at 560; Warth v. Seldin, 422 U.S. 490, 498–99 (1975).
One of these limitations is that “when the asserted harm is a
‘generalized grievance’ shared in substantially equal meas-
ure by all or a large class of citizens, that harm alone normal-
ly does not warrant exercise of jurisdiction.” Warth, 422 U.S.
at 499. Another prudential limitation is that a litigant “gen-
erally must assert his own legal rights and interests” and
cannot assert “the legal rights or interests of third parties.”
Id. In contrast with constitutional limitations on standing,
prudential limitations are not jurisdictional and may be dis-
regarded in certain situations. Id. at 500–01 (recognizing that
as long as constitutional standing is satisfied, a party “may
have standing to seek relief on the basis of the legal rights
and interests of others”). In addition, a litigant may forfeit
prudential standing arguments by failing to present them in
the district court. See Bd. of Educ. of Oak Park & River Forest
High Sch. Dist. No. 200 v. Kelly E., 207 F.3d 931, 934 (7th Cir.
2000) (stating that “prudential considerations … are forfeited
if not presented in a timely fashion”).
“The party invoking federal jurisdiction bears the burden
of establishing [the standing] elements[,] … [and] each ele-
ment must be supported … with the manner and degree of
evidence required at the successive stages of the litigation.”
Edgewood Manor Apart. Homes, LLC v. RSUI Indem. Co., 733
F.3d 761, 771 (7th Cir. 2013) (quoting Lujan, 504 U.S. at 561
(citations omitted)). “At the summary-judgment stage, ‘the
plaintiff can no longer rest on … mere allegations, but must
set forth by affidavit or other evidence specific facts.’” Id.
(quoting Lujan, 504 U.S. at 561 (internal quotation marks and
citations omitted)). Thus, because the district court decided
that Dunnet Bay lacked standing at the summary judgment
No. 14-1493 23
stage, mere allegations of standing are not enough; Dunnet
Bay must present evidence to establish the elements of
standing.
Dunnet Bay contends that it has standing because it has
suffered an injury in fact. First, it asserts that IDOT’s race-
conscious DBE program prevented it from competing on
equal footing with DBE contractors and prevented it from
being awarded the contract. Dunnet Bay also claims that it
was injured because the DBE program forced it to participate
in a discriminatory scheme.
The Supreme Court addressed standing to raise an equal
protection challenge to race-conscious government contract-
ing programs in Northeastern Fla. Chapter, Associated General
Contractors of America v. Jacksonville, 508 U.S. 656 (1993), and
Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). In
Northeastern Florida, an association of contractors challenged
a Jacksonville, Florida ordinance setting aside 10% of city
contracts for businesses that were minority- or women-
owned. Once a project was earmarked for minority business
enterprise bidding, it was “deemed reserved for minority
business enterprises only” and non-minority business enter-
prises could not even bid on the project. 508 U.S. at 658. The
Court concluded:
When the government erects a barrier that
makes it more difficult for members of one
group to obtain a benefit than it is for members
of another group, a member of the former
group seeking to challenge the barrier need not
allege that he would have obtained the benefit
but for the barrier in order to establish stand-
ing. The “injury in fact” in an equal protection
24 No. 14-1493
case of this variety is the denial of equal treat-
ment resulting from the imposition of the bar-
rier, not the ultimate inability to obtain the
benefit.
Id. at 666. The Court held that “in the context of a challenge
to a set-aside program, the ‘injury in fact’ is the inability to
compete on an equal footing in the bidding process, not the
loss of a contract.” Id. Therefore, to establish standing to
challenge a set-aside program, a plaintiff “need only demon-
strate that it is able and ready to bid on contracts and that a
discriminatory policy prevents it from doing so on an equal
basis.” Id.; see Gratz v. Bollinger, 539 U.S. 244, 262 (2003)
(holding that Caucasian applicant for university admission
had standing to seek prospective relief challenging universi-
ty’s use of race in its admissions policy where he was denied
admission but a minority applicant with his qualifications
would have been admitted and applicant was “able and
ready” to apply as a transfer student if the university
stopped using race in its admissions policy).
In Adarand, the Court addressed whether a subcontractor
had standing to raise an equal protection challenge to a law
that gave general contractors a direct financial incentive to
hire subcontractors controlled by “socially and economically
disadvantaged individuals.” 515 U.S. at 204. The plaintiff
submitted the low bid but was not awarded the subcontract
and submitted evidence that the general contractor would
have accepted its bid, but for the subcontractor compensa-
tion clause that provided it additional payment for hiring
the disadvantaged subcontractor. Id. at 205. The plaintiff also
established that it often competed for contracts against com-
panies certified as small disadvantaged businesses. Id. at 212.
No. 14-1493 25
The Court held that the plaintiff had standing to seek for-
ward-looking relief because the “discriminatory classifica-
tion prevent[s] the plaintiff from competing on equal foot-
ing.” Id. at 211 (citing Northeastern Fla., 508 U.S. at 667). In
other words, because the subcontractor compensation clause
made the plaintiff more expensive to hire, it could not com-
pete on equal footing with subcontractors considered disad-
vantaged because of their race. See Regents of Univ. of Cal. v.
Bakke, 438 U.S. 265, 280–81 n.14 (1978) (holding white medi-
cal school applicant had standing to challenge school’s ad-
missions program which reserved a prescribed number of
positions in the class for disadvantaged minorities because
the “injury” was the school’s “decision not to permit [him] to
compete for all 100 places in the class, simply because of his
race”); Alliant Energy Corp. v. Bie, 277 F.3d 916, 920–21 (7th
Cir. 2002) (stating that “[a] statute that deprives a firm of an
opportunity to compete for business gives standing to sue”).
In arguing that it was unable to compete on equal footing
with DBE contractors, Dunnet Bay asserts that it “need only
show that it was excluded from competition and considera-
tion for a government benefit because of race-based
measures.” Yet Dunnet Bay has not established that it was
excluded from competition or otherwise disadvantaged be-
cause of race-based measures. First, in contrast with North-
eastern Florida, nothing in IDOT’s DBE program excluded
Dunnet Bay from competition for any contract. IDOT’s DBE
program is not a “set aside program like Jacksonville’s” in
which non-minority owned businesses could not even bid
on certain contracts. Under IDOT’s DBE program, all con-
tractors—minority and non-minority contractors alike—can
bid on all contracts, subject to the DBE goals or good faith
efforts to satisfy those goals.
26 No. 14-1493
Further, Jacksonville’s ordinance favored “minority
business enterprises,” defined as a business with minority or
female ownership. IDOT’s DBE program is designed to in-
crease the participation of socially and economically disad-
vantaged businesses in construction contracts, see N. Con-
tracting, 473 F.3d at 720–24 (holding IDOT’s DBE program
constitutional), and therefore addresses a broader category
of disadvantaged businesses than that addressed in Jackson-
ville’s ordinance. The absence of complete exclusion from
competition for certain projects with minority- or women-
owned businesses also distinguishes some of the other au-
thorities cited by Dunnet Bay and amici: Eng’g Contractors
Ass’n of S. Fla. Inc. v. Metro. Dade Cnty., 122 F.3d 895, 905–06
(11th Cir. 1997) (holding trade associations whose members
regularly performed work for county had standing to chal-
lenge county’s affirmative action program that allowed con-
tracts to be set aside for bidding only among minority and
women business enterprise programs); Coral Constr. Co. v.
King Cnty., 941 F.2d 910, 929–30 (9th Cir. 1991) (holding con-
tractor had standing to challenge county’s minority- and
women-owned business enterprise program where a set-
aside method applied under which a contractor had to use
minority- or women-owned businesses for a certain percent-
age of work on the contract).
And unlike in Adarand, where the challenged law explic-
itly favored minority-owned subcontractors by providing a
direct financial incentive to contractors to hire them, Dunnet
Bay has not alleged, let alone produced evidence to show,
that it was treated less favorably than any other contractor
because of the race of its owners. The lack of an explicit pref-
erence for minority-owned businesses distinguishes other
authorities cited by Dunnet Bay. See Bras v. Cal. Pub. Utils.
No. 14-1493 27
Comm’n, 59 F.3d 869, 871 (9th Cir. 1995) (public utility pro-
vided a pre-qualification preference to minority- and wom-
en-owned businesses and plaintiff lost opportunity to nego-
tiate with utility because race and gender were considered);
Associated Gen. Contractors of Cal., Inc. v. Coalition for Econ.
Equity, 950 F.2d 1401, 1404 (9th Cir. 1991) (ordinance gave
5% bid preference to minority- and women-owned business-
es for public contracts); see also Coral Constr., 941 F.2d at 914,
930 (holding contractor had standing to challenge program
that gave minority- and women-owned businesses a prefer-
ence for public contracts if their bid was within 5% of the
lowest bid). Under IDOT’s DBE program, all contractors are
treated alike and subject to the same rules.
Still other authorities cited by Dunnet Bay or amici are
inapposite because the contractors’ standing was based in
part on the fact that they lost an award of a contract for fail-
ing to meet the disadvantage business enterprise goal or fail-
ing to show good faith efforts, despite being the low bidders
on the contract, and the second lowest bidder was awarded
the contract. See Safeco Ins. Co. of Am. v. City of White House,
Tenn., 191 F.3d 675, 689 (6th Cir. 1999) (holding contractor
and its insurer had standing to challenge the constitutionali-
ty of EPA regulations imposing a racial preference on minor-
ity subcontracts where the alleged failure to comply with the
regulations resulted in the loss of a contract which was
awarded to the second lowest bidder and the regulations
placed white subcontractors at a competitive disadvantage);
Monterey Mech. Co. v. Wilson, 125 F.3d 702, 704 (9th Cir. 1997)
(noting that plaintiff submitted the lowest bid but did not
get the contract since its “bid was disqualified because [it]
did not comply with a state statute” and the second lowest
bidder won the contract); Concrete Works of Colo., Inc. v. City
28 No. 14-1493
& Cnty. of Denver, 36 F.3d 1513, 1518 & n.5 (10th Cir. 1994)
(holding contractor demonstrated injury in fact where it
“submitted bids on three projects and the [o]rdinance pre-
vented it from competing on an equal basis with minority
and women-owned prime contractors” and noting that the
plaintiff submitted the lowest bid on one project but its bid
was not accepted because of its failure to meet the minority-
businesses enterprise goals or good faith requirements and
the bid was awarded to the second lowest bidder); Contrac-
tors Ass'n of E. Pa., Inc. v. City of Phila., 6 F.3d 990, 994–96 (3d
Cir. 1993) (concluding that associations of contractors had
standing to challenge city ordinance creating contract pref-
erences for businesses owned by minorities, women, and
disabled persons where association members presented evi-
dence they were denied contracts for failure to meet the DBE
goals despite being low bidders); but see W.H. Scott Constr.
Co. v. City of Jackson, Miss., 199 F.3d 206, 214–15 (5th Cir.
1999) (holding that non-minority contractor had standing to
bring an equal protection challenge to city’s minority partic-
ipation program because non-minority contractors were at a
competitive disadvantage with minority contractors who
could satisfy the minority-participation goals with their own
work, but relying on Monterey Mechanical and Concrete
Works).
In contrast with these cases where the plaintiffs had
standing, Dunnet Bay cannot establish that it would have
been awarded the contract on the Eisenhower project but for
its failure to meet the DBE goal or demonstrate good faith
efforts. The evidence, even when viewed in the light most
favorable to Dunnet Bay, demonstrates that although Dun-
net Bay’s bid was rejected for failing to meet the DBE goal,
its bid was 16% or about $1.3 million over the program esti-
No. 14-1493 29
mate, and Director Reed recommended that IDOT rebid the
contract because the low bid was 16% over the project esti-
mate and Dunnet Bay had been left off the For Bidders List.
The evidence further establishes that Secretary Hannig al-
ways followed Reed’s recommendations to rebid contracts
for financial concerns. Indeed, the Secretary decided to rebid
the contract because the low bidder was 16% over the project
estimate and was left off the final For Bid List.
Moreover, even assuming that Dunnet Bay could estab-
lish that it was excluded from competition with DBEs or that
it was disadvantaged as compared to DBEs, it cannot show
that any difference in treatment was because of race. The
regulations define a DBE as “a for-profit small business con-
cern” that is owned or controlled “by one or more individu-
als who are both socially and economically disadvantaged.”
49 C.F.R. § 26.5 (2009). “Socially and economically disadvan-
taged” individuals include women, “Black Americans,”
“Hispanic Americans,” and others. Id. And an individual in
any racial group or gender may qualify as “socially and eco-
nomically disadvantaged.” See id. However, “a firm is not an
eligible DBE in any Federal fiscal year if the firm (including
its affiliates) has had average annual gross receipts … over
the firm’s previous three fiscal years, in excess of $22.41 mil-
lion.” 49 C.F.R. § 26.65(b) (2009). For the three years preced-
ing 2010, the year it bid on the Eisenhower project, Dunnet
Bay’s average gross receipts were over $52 million. There-
fore, Dunnet Bay’s size makes it ineligible to qualify as a
DBE, regardless of the race of its owners. Thus, even if a
DBE general contractor can count its own work force toward
meeting the DBE participation goal without subcontracting
any work on the project, whereas a non-DBE general con-
tractor cannot, Dunnet Bay has not shown that any addition-
30 No. 14-1493
al costs or burdens that it would incur are because of race. The
additional costs and burdens are equally attributable to
Dunnet Bay’s size.
To put it differently, Dunnet Bay has not established that
the denial of equal treatment resulted from the imposition of
a racial barrier. Accordingly, this case is unlike those relied
on by Dunnet Bay where the plaintiff established that the
difference in treatment and any additional costs and burdens
imposed on it were because of race (or gender). For example,
in Monterey Mechanical, the challenged ordinance provided
that “contracts awarded by … [the state] for construction …
shall have statewide participation goals of not less than 15
percent for minority business enterprises [and] not less than
5 percent for women business enterprises” 125 F.3d at 704
(citing Cal. Pub. Contract Code § 10115(c)). The court con-
cluded that the contractor was at a competitive disadvantage
with minority- and women-owned contractors who could
use their own work toward the participation goals and be
excused from subcontracting the good faith requirements. Id.
at 706–07. Race (or gender) alone was the barrier to equal
competition. Id.
As for its second alleged injury, Dunnet Bay argues that
it was forced to participate in a discriminatory scheme and
was required to consider race in subcontracting. In Monterey
Mechanical, the court held that “[a] person required by the
government to discriminate by ethnicity or sex against oth-
ers has standing to challenge the validity of the requirement,
even though the government does not discriminate against
him.” Id. at 707. This holding was followed in Safeco Insur-
ance Co., 191 F.3d at 689, and Lutheran Church-Missouri Synod
v. FCC, 141 F.3d 344, 350 (D.C. Cir.) (noting that “forced dis-
No. 14-1493 31
crimination may itself be an injury”), reh’g denied, 154 F.3d
344 (D.C. Cir. 1998), but the latter court couched the issue in
terms of third-party standing. It seems that Monterey Me-
chanical collapsed third-party standing into Article III stand-
ing. And in each of these cases—Monterey Mechanical, Safeco
Insurance Co., and Lutheran Church-Missouri Synod—the
plaintiffs already had established injury in fact, that is, suf-
fered another direct harm because of the challenged statute
or regulation. See Safeco Ins. Co., 191 F.3d at 689 (failure to
comply with regulations resulted in the loss of a contract
and institution of the lawsuit); Lutheran Church-Mo. Synod,
141 F.3d at 348–49 (FCC order found that church violated
EEO regulations and imposed a fine and reporting require-
ments); Monterey Mech., 125 F.3d at 704 (plaintiff submitted
the low bid but did not get the job because of its failure to
comply with a state statute). As discussed above, where the
plaintiff has established injury in fact, it may assert third-
party rights.
Neither we nor the Supreme Court has adopted Monterey
Mechanical’s broad view of standing. We recognize that the
Court has held that “one form of injury under the Equal Pro-
tection Clause is being forced to compete in a race-based sys-
tem that may prejudice the plaintiff.” Parents Involved in
Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 719 (2007)
(citing Adarand and Northeastern Fla.). However, the injuries
asserted in Parents Involved were the denial of assignment to
a certain public high school based on race and the interest
“in not being forced to compete for seats at certain high
schools in a system that uses race as a deciding factor in
many of its admissions decisions.” Id. The plaintiffs’ children
were competing with minorities for assignment to high
school, and race was used as a tiebreaker to make assign-
32 No. 14-1493
ments to more popular schools. Parents Involved, 551 U.S. at
711–12. In other words, race often was the determinative fac-
tor in the assignment decisions. Similarly, non-minority con-
tractors were precluded from competing at all for certain
projects under the Jacksonville ordinance in Northeastern
Florida, and in Adarand, the government gave general con-
tractors a financial incentive to hire minority-owned busi-
nesses. Thus, as in Parents Involved, the race of the plaintiffs
in Northeastern Florida and Adarand was the deciding factor.
In contrast, the race of Dunnet Bay’s owners was not the de-
ciding factor because Dunnet Bay’s size created a barrier to
its receipt of any advantages given DBEs.
Furthermore, we agree with amicus NAACP Legal De-
fense & Educational Fund, Inc. that Monterey Mechanical’s
broad view of standing goes against the established princi-
ple that “a plaintiff raising only a generally available griev-
ance about government—claiming only harm to every citi-
zen’s interest in proper application of the Constitution and
laws” does not satisfy Article III’s requirement that the inju-
ry be concrete and particularized. See Lujan, 504 U.S. at 573–
74; see also Lance v. Coffman, 549 U.S. 437, 439 (2007) (“Our
refusal to serve as a forum for generalized grievances has a
lengthy pedigree.”); Allen v. Wright, 468 U.S. 737, 755 (1984)
(stating that racial discrimination “is sufficient in some cir-
cumstances to support standing” but only those “who are
personally denied equal treatment by the challenged dis-
criminatory conduct” have Article III standing) (quotation
omitted). Broadly speaking, not every contractor has “stand-
ing to challenge every affirmative-action program on the ba-
sis of a personal right to a government that does not deny
equal protection of the laws.” Valley Forge Christian Coll. v.
Ams. United for Separation of Church & State, Inc., 454 U.S. 464,
No. 14-1493 33
489 n.26 (1982). Dunnet Bay’s claimed injury of being forced
to participate in a discriminatory scheme amounts to “a chal-
lenge to the state’s application of a federally mandated pro-
gram,” which we have determined “must be limited to the
question of whether the state exceeded its authority.” N.
Contracting, 473 F.3d at 720–21 (holding that IDOT may rely
on federal government’s compelling interest in remedying
past discrimination in construction projects and that IDOT’s
DBE program is narrowly tailored to achieve this interest as
IDOT did not exceed its authority). Dunnet Bay was not de-
nied equal treatment because of racial discrimination; any
difference in treatment is equally attributable to Dunnet
Bay’s size.
Although Dunnet Bay suggests that the second and third
standing elements (causation and redressability) are not at
issue, as the party invoking federal court jurisdiction, it
bears the burden of establishing all three elements of stand-
ing. See Edgewood Manor Apart. Homes, 733 F.3d at 771. Ami-
cus Pacific Legal Foundation suggests that since Dunnet Bay
suffered an injury in fact under the DBE program, which we
reiterate Dunnet Bay has not established, it necessarily estab-
lished causation and redressability. Amicus cites Northeast-
ern Florida, where causation and redressability followed
from the Court’s definition of “injury in fact.” 508 U.S. at 666
n.5. Although that was true in the context of the set-aside
program where causation and redressability were readily
apparent, the Court did not hold that these other elements
are always collapsed into an injury in fact.
Dunnet Bay has not established causation or redressabil-
ity. It failed to demonstrate that the DBE program caused it
any injury during the first letting process. Although Dunnet
34 No. 14-1493
Bay submitted the low bid in the first letting, its bid was 16%
over the project estimate. Although IDOT rejected its bid be-
cause it did not meet the DBE goal, IDOT never reached the
question of whether the bid was appropriate. The evidence
establishes that Reed recommended to Secretary Hannig that
IDOT rebid Contract No. 60I57 because the low bidder was
16% over the project estimate and was left off the For Bid-
ders List, and that the Secretary always followed her rec-
ommendations to rebid contracts for financial concerns. Ac-
cordingly, IDOT did not award the contract to anyone under
the first letting and re-let the contract. Dunnet Bay suffered
no injury because of the DBE program in the first letting. Cf.
Texas v. Lesage, 528 U.S. 18, 21 (1999) (“[W]here a plaintiff
challenges a discrete governmental decision as being based
on an impermissible criterion and it is undisputed that the
government would have made the same decision regardless,
there is no cognizable injury.”).
Even assuming that Dunnet Bay could establish that the
DBE program caused it an injury in the first letting, it cannot
establish redressability: IDOT’s decision to re-let the contract
redressed any injury. As for the second letting, the evidence
does not establish that the DBE program caused Dunnet Bay
any injury. In the second letting, Dunnet Bay satisfied the
DBE goals, but its bid was not the lowest; other contractors
submitted lower bids and met the DBE participation goals.
Therefore, Dunnet Bay was not awarded the contract.
Moreover, prudential limitations preclude Dunnet Bay
from bringing its claim. A litigant “generally must assert his
own legal rights and interests, and cannot rest his claim to
relief on the legal rights or interests of third parties.” Warth,
No. 14-1493 35
422 U.S. at 499.4 Dunnet Bay acknowledges that before a liti-
gant may be permitted to assert another’s rights to establish
a claim, he must satisfy Article III standing requirements. See
Craig v. Boren, 429 U.S. 190, 194 (1976) (“[W]e conclude that
appellant … has established independently her claim to as-
sert jus tertii standing. The operation of [the challenged stat-
utes] plainly has inflicted ‘injury in fact’ upon appellant suf-
ficient … to satisfy the constitutionally based standing re-
quirements imposed by Art. III.”); Barrows v. Jackson, 346
U.S. 249, 255–56 (1953) (stating that “a person cannot chal-
lenge the constitutionality of a statute unless he shows that
he himself is injured by its operation” but “this principle has
no application to the instant case in which respondent has
been sued for damages … and … a judgment against re-
spondent would constitute a direct … injury to her”); Luther-
an Church-Mo. Synod, 141 F.3d at 349–50 (allowing the plain-
tiff to raise an equal protection challenge although it had not
suffered an equal protection injury where it was harmed by
the FCC’s order finding it in violation of equal employment
opportunity regulations); Apter v. Richardson, 510 F.2d 351,
354 (7th Cir. 1975) (stating “[t]he fact that the alleged wrong
may also have injured third parties does not deprive plaintiff
of standing so long as she as well is injured in fact.”); see also
Warth, 422 U.S. at 501 (stating that as long as constitutional
standing is satisfied, a party “may have standing to seek re-
lief on the basis of the legal rights and interests of others”).
In challenging the DBE program, Dunnet Bay is attempting
4 Although IDOT has a good argument that Dunnet Bay forfeited its
prudential standing arguments for failing to raise them in the district
court in response to its summary judgment motion, we address pruden-
tial limitations on standing.
36 No. 14-1493
to assert the equal protection rights of a non-minority-
owned small business.
City of Chicago v. Morales, 527 U.S. 41 (1999), also cited by
Dunnet Bay, is inapposite. In that case, the Supreme Court
was asked to review the Illinois Supreme Court’s determina-
tion that a Chicago gang ordinance was unconstitutionally
vague. As the Court explained, “[w]hen a state court has
reached the merits of a constitutional claim, invoking pru-
dential limitations on the respondent’s assertion of jus tertii
would serve no functional purpose” and “state courts need
not apply prudential notions of standing created by this
Court.” Id. at 55 n.22. Dunnet Bay does not ask us to review
a state court’s decision as to the constitutionality of the DBE
program.
A party is exempt from the prudential limitation on as-
serting a third party’s rights, Dunnet Bay argues, “where the
limitation’s purpose is outweighed by the need to protect
fundamental rights.” But Barrows, which was cited for this
proposition, does not help Dunnet Bay. Barrows was a state
court action to enforce a racially restrictive covenant, and the
defendant was permitted to assert the equal protection
rights of others in her defense against enforcement. Dunnet
Bay is not defending against a state enforcement proceeding,
seeking to raise the rights of others in its own defense. And
as noted, the Barrows defendant had been sued for damages
and thus could establish her own injury. Moreover, the
Court concluded that the prudential limitation on standing
was outweighed and the defendant should be allowed to as-
sert the rights of others given the “unique situation” and
“peculiar circumstances” presented where “the action of the
state court … might result in a denial of constitutional rights
No. 14-1493 37
and … it would be difficult if not impossible for the persons
whose rights are asserted to present their grievance before
any court.” Barrows, 346 U.S. at 257.
But here there is no allegation, let alone evidence, that a
non-minority-owned small business could not challenge
IDOT’s DBE program on equal protection grounds. Because
Dunnet Bay has failed to identify an injury in fact that is fair-
ly traceable to the challenged DBE program, it lacks Article
III standing. And because Dunnet Bay has not established
Article III standing, it cannot raise an equal protection chal-
lenge to the DBE program based on the rights of a non-
minority small business.
B. Whether Dunnet Bay Has Sufficient Evidence that
IDOT’s Implementation of the DBE Program Con-
stitutes Unlawful Race Discrimination
In the alternative, even if Dunnet Bay has standing to
raise an equal protection claim, IDOT is entitled to summary
judgment. The Equal Protection Clause of the Fourteenth
Amendment prohibits intentional and arbitrary discrimina-
tion. Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000).
Thus, to establish an equal protection claim under the Four-
teenth Amendment, Dunnet Bay must show that IDOT “act-
ed with discriminatory intent.” Franklin v. City of Evanston,
384 F.3d 838, 846 (7th Cir. 2004).
Racial discrimination by a recipient of federal funds that
violates the Equal Protection Clause also violates Title VI
and § 1981. Gratz, 539 U.S. at 275–76 & n.23. These statutes
require proof that the plaintiff was treated differently be-
cause of race. 42 U.S.C. § 1981 (providing all persons the
same rights to contract and benefit of laws “as is enjoyed by
38 No. 14-1493
white citizens”); id. § 2000d (prohibiting discrimination “on
the ground of race” in programs receiving federal assis-
tance). Title VI prohibits only intentional discrimination. See
Alexander v. Sandoval, 532 U.S. 275, 281 (2001). To establish
liability for an equal protection violation, a plaintiff must es-
tablish that the defendant acted with a discriminatory pur-
pose and discriminated against him because of his member-
ship in an identifiable group. Nabozny v. Podlesny, 92 F.3d
446, 453 (7th Cir. 2002). Section 5 of the Illinois Civil Rights
Act of 2003 was not intended to create new rights but merely
created a new venue—state court—for discrimination claims
under federal law. Ill. Native Am. Bar Ass’n v. Univ. of Ill., 856
N.E.2d 460, 467 (Ill. App. Ct. 2006).
Because IDOT’s DBE program employs racial classifica-
tions, we apply strict scrutiny in addressing Dunnet Bay’s
constitutional challenge. Adarand Constructors, 515 U.S. at
235 (“Federal racial classifications, like those of a State, must
serve a compelling governmental interest, and must be nar-
rowly tailored to further that interest.”); N. Contracting, 473
F.3d at 720. Under strict scrutiny, “a government program
that uses racial classifications must be narrowly tailored to
serve a compelling governmental interest.” N. Contracting,
473 F.3d at 720. In implementing its DBE program, IDOT
may properly rely on “the federal government’s compelling
interest in remedying the effects of past discrimination in the
national construction market.” Id. at 720. “[A] state is insu-
lated from [a constitutional challenge as to whether its pro-
gram is narrowly tailored to achieve this compelling inter-
est], absent a showing that the state exceeded its federal au-
thority.” Id. at 721; see also Milwaukee Cnty. Pavers Ass'n v.
Fielder, 922 F.2d 419, 423 (7th Cir. 1991) (“Insofar as the state
is merely complying with federal law it is acting as the agent
No. 14-1493 39
of the federal government and is no more subject to being
enjoined on equal protection grounds than the federal civil
servants who drafted the regulations … . If the state does ex-
actly what the statute expects it to do … we do not see how
the state can be thought to have violated the Constitution.”).
Thus, the issue is whether IDOT exceeded its authority un-
der federal law.
Dunnet Bay contends that IDOT exceeded its federal au-
thority by effectively creating racial quotas by designing the
Eisenhower project to meet a pre-determined DBE goal and
eliminating waivers. If the DBE program were effectively a
quota, it would be unconstitutional and violate the regula-
tions. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 507
(1989) (“[T]he 30% quota cannot be said to be narrowly tai-
lored to any goal, except perhaps outright racial balanc-
ing.”); 49 C.F.R. § 26.43(a) (prohibiting quotas for DBEs).
More specifically, Dunnet Bay asserts that IDOT exceeded its
authority by: (1) setting the Contract’s DBE participation
goal at 22% without the required analysis, (2) implementing
a “no-waiver” policy, (3) preliminarily denying its goal mod-
ification request without assessing its good faith efforts, (4)
denying it a meaningful reconsideration hearing, (5) deter-
mining that its good faith efforts were inadequate, and (6)
providing no written or other explanation of the basis for its
good-faith-efforts determination.
In challenging the DBE contract goal, Dunnet Bay asserts
that the issue “is not whether a 20% goal could have been
legitimately derived” but instead argues that the DBE con-
tract goal was “arbitrary” and that IDOT “manipulated the
process to justify” a preordained goal. Dunnet Bay’s real
complaint about the contract goal setting is that there were
40 No. 14-1493
political motivations in resetting the DBE participation goal.
But Dunnet Bay has not identified any regulation or other
authority that suggests that the political motivations matter,
provided IDOT did not exceed its federal authority in setting
the contract goal. More to the point, Dunnet Bay does not
actually challenge how IDOT went about setting its DBE
goal for the contract. In its reply, Dunnet Bay argues that the
factors set forth in the regulation to be used to determine
contract goals were not used but were applied to justify a
pre-ordained goal. Yet Dunnet Bay points to no evidence to
show that IDOT failed to comply with the applicable regula-
tion providing only general guidance on contract goal set-
ting, 49 C.F.R. § 26.51(e)(2) (stating that a contract goal “de-
pend[s] on such factors as the type of work involved, the lo-
cation of the work, and the availability of DBEs for the work
of the particular contract”).
FHWA approved IDOT’s methodology to establish its
statewide DBE goal of 22.77% and approved the individual
contract goals for the Eisenhower project for the January 15,
2010 bid letting. Dunnet Bay has not identified any part of
the regulations that IDOT allegedly violated by re-
evaluating and then increasing its DBE contract goal, by ex-
panding the geographic area used to determine DBE availa-
bility, by adding pavement patching and landscaping work
into the contract goal, by including items that had been set
aside for small business enterprises, or by any other means
by which it increased the DBE contract goal. Indeed, as the
district court concluded, “because the federal regulations do
not specify a procedure for arriving at contract goals, it is not
apparent how IDOT could have exceeded its federal authori-
ty,” Dunnet Bay Constr. Co., 2014 WL 552213, at *26; and this
challenge is unavailing.
No. 14-1493 41
Next, Dunnet Bay asserts that IDOT had a “no-waiver”
policy. Despite statements regarding a no-waiver policy and
pressure from the Governor’s office, including from Harris,
Dunnet Bay did not present sufficient evidence to raise a
reasonable inference that IDOT had actually implemented a
no-waiver policy. There is evidence that IDOT’s District 8
EEO Officer Coleman advised contractors at a pre-letting
meeting that Secretary Hannig said that no DBE waivers
would be granted for the January 15, 2010 letting. However,
IDOT did not have a no-waiver policy; instead, the undis-
puted evidence shows that it was IDOT’s and Secretary
Hannig’s policy that requests for waivers would be subject-
ed to high-level review and would not be granted unless
shown to be appropriate. IDOT’s Director of Highways Reed
told Secretary Hannig that a no-waiver policy was not pos-
sible because it violated the law. The Secretary told Harris
that IDOT would follow the law. So, too, IDOT’s Regional
Engineer for the Metra East area Lamie testified that alt-
hough Secretary Hannig said that there would be no DBE
waivers, in context he was not “saying no waivers under any
circumstances will ever be issued” but that waiver requests
would be reviewed at a high level and had to be supported
by appropriate documentation. Significantly, even since Sec-
retary Hannig took over, IDOT granted waivers. In 2009, it
granted 32 of 58 requested waivers, and the other 26 contrac-
tors ultimately met contract goals; in 2010, IDOT granted 21
of 35 requested waivers, that is, 60% of the waiver requests.
IDOT even granted a waiver in connection with the January
15 letting—the one at issue here—albeit after this lawsuit
was filed. IDOT’s unbroken record of granting waivers re-
futes any suggestion of a no-waiver policy. Dunnet Bay has
42 No. 14-1493
failed to raise a reasonable inference that IDOT implemented
a no-waiver policy.
Dunnet Bay also challenges IDOT’s rejection of its bid
without determining whether it had made good faith efforts
to meet the DBE goal and contests whether IDOT’s reconsid-
eration of its bid was meaningful in violation of 49 C.F.R.
§ 26.53. As an initial matter, the regulation provides that “[i]f
the bidder/offeror does document adequate good faith ef-
forts, you must not deny award of the contract on the basis
that the bidder/offeror failed to meet the goal.” Id. §
26.53(a)(2). IDOT ultimately determined that Dunnet Bay
failed to document adequate good faith efforts; thus this
provision was inapplicable and did not prevent IDOT from
rejecting Dunnet Bay’s bid.
Dunnet Bay asserts that reconsideration hearing officer
Grunloh “was not an independent official with no role in the
original determination,” but it has offered no evidence to es-
tablish that Grunloh took any part in the initial determina-
tion that Dunnet Bay failed to make the DBE goal or make
adequate good faith efforts. See id. § 26.53(d)(2). Nor has
Dunnet Bay not shown that Grunloh, even if part of the “po-
litical leadership” and involved in pre-letting discourage-
ment of waivers, was ineligible to serve as the reconsidera-
tion official.
Furthermore, Dunnet Bay argues that it made good faith
efforts to meet the DBE goal and that the reasons given for
IDOT’s decision that it did not make adequate good faith ef-
forts “do not hold up.” Dunnet Bay focuses on its efforts in
attending a pre-bid meeting, advertising with DBE network-
ing organizations, soliciting DBEs by fax, telephoning DBEs,
and posting subcontracting opportunities on its own web-
No. 14-1493 43
site. In total, Dunnet Bay solicited 796 companies for subcon-
tracting work, 453 of which were DBEs.
A bidder “must show that it took all necessary and rea-
sonable steps to achieve a DBE goal … which … could rea-
sonably be expected to obtain sufficient DBE participation,
even if they were not fully successful.” 49 C.F.R. Pt. 26, Ap-
pendix A, § I. The regulations provide guidance for state re-
cipients in deciding whether a bidder that did not meet a
contract goal has demonstrated good faith efforts to meet the
goal, instructing recipients to consider “the quality, quantity,
and intensity of the different kinds of efforts that the bidder
has made.” Id., § II. State recipients are provided a non-
mandatory, non-exclusive, and non-exhaustive list of actions
to be considered in determining whether a bidder made
good faith efforts, including the following: (1) “Soliciting
through all reasonable and available means (e.g. attendance
at pre-bid meetings, advertising and/or written notices) the
interest of all certified DBEs who have the capability to per-
form the work of the contract … [and] taking appropriate
steps to follow up initial solicitations”; (2) “Selecting por-
tions of the work to be performed by DBEs in order to in-
crease the likelihood that the DBE goals will be achieved”;
(3) “Providing interested DBEs with adequate information
about the plans, specifications, and requirements of the con-
tract”; (4) “Making efforts to assist interested DBEs in ob-
taining bonding, lines of credit, or insurance as required by
the recipient or contractor”; (5) “Making efforts to assist in-
terested DBEs in obtaining necessary equipment, supplies,
materials, or related assistance or services”; and (6) “Effec-
tively using the services of available minority/women com-
munity organizations; minority/women contractors’ groups;
local, state, and Federal minority/women business assistance
44 No. 14-1493
offices; and other organizations as allowed on a case-by-case
basis to provide assistance in the recruitment and placement
of DBEs.” Id., § IV, A–C and F–H. Further, the regulations
instruct that “[i]n determining whether a bidder has made
good faith efforts, you may take into account the perfor-
mance of other bidders in meeting the contract.” Id. § V. The
regulation gives an example: “[W]hen the apparent success-
ful bidder fails to meet the contract goal, but others meet it,
you may reasonably raise the question of whether, with ad-
ditional efforts, the apparent successful bidder could have
met the goal.” Id.
Reconsideration officer Grunloh’s determination that
Dunnet Bay failed to show good faith efforts is well-
supported in the record. Grunloh testified that the reasons
he determined Dunnet Bay failed to make good faith efforts
were because it did not utilize IDOT’s supportive services,
and because the 2nd, 3rd, and 4th bidders all met the goal,
whereas Dunnet Bay did not even come close. Grunloh also
explained that Dunnet Bay’s efforts were lacking with re-
spect to the following areas included in the Appendix’s list:
conducting market research and soliciting through all rea-
sonable and available means the interest of all certified
DBEs; providing interested DBEs with adequate information
about the contract; making efforts to assist interested DBEs
in obtaining bonding, lines of credit, etc.; making efforts to
assist interested DBEs in obtaining necessary equipment,
supplies, etc.; and effectively using services of various mi-
nority organizations to provide assistance in recruitment
and placement of DBEs.
The performance of other bidders in meeting the contract
goal is listed in the regulation as a consideration when de-
No. 14-1493 45
ciding whether a bidder has made good faith efforts to ob-
tain DBE participation goals, see 49 C.F.R. Pt. 26, App. A, § V,
and was a proper consideration. Dunnet Bay argues that this
factor should not be considered because IDOT left it off the
For Bid List. While it is true that Dunnet Bay was left off the
For Bid List, the fact that other bidders met the goal shows
that the goal was attainable. Dunnet Bay also argues that
IDOT had not previously considered contacting supportive
services as necessary to establishing good faith, and that in
Dunnet Bay’s experience, supportive services were not help-
ful. However, utilization of supportive services is nonethe-
less a proper consideration under the regulation.
Dunnet Bay asserts that it employed the same efforts for
the Eisenhower project that it successfully employed on oth-
er projects. Dunnet Bay is not among those contractors who
often seek goal modification. The fact that its efforts failed to
secure the DBE participation goal may suggest that it was
hindered by its omission from the For Bid List. But the re-
bidding of the contract remedied that oversight.
Dunnet Bay also points out that Lyle thought it had
demonstrated good faith efforts. Given the discretion in de-
termining whether a contractor made good faith efforts, the
fact that Lyle disagreed with Grunloh and initially thought
Dunnet Bay showed good faith efforts does not raise a genu-
ine issue of fact as to Grunloh’s decision. In any event, Lyle
subsequently expressed the view that Dunnet Bay could
have done more to demonstrate good faith efforts, namely,
by contacting supportive services as well as IDOT’s Bureau
of Small Business Enterprises and the district EEO officer.
Finally, it is true that IDOT failed to provide Dunnet Bay
with “a written decision on reconsideration” explaining why
46 No. 14-1493
it found that Dunnet Bay did not make adequate good faith
efforts to meet the DBE contract goal. 49 C.F.R. § 26.53(d)(4).
However, this did not harm Dunnet Bay because IDOT did
not award the contract based upon the January 15, 2010 bid
letting. IDOT decided to re-let the contract instead; and
Dunnet Bay’s second bid met the DBE goal, but it was not
the lowest bid.
III. CONCLUSION
We AFFIRM the district court’s judgment.