Did the Supreme Court's Croson decision strike down Maryland's minority business set-aside program for state contracts too?

Plain-English summary

In February 1989, a member of the Maryland House of Delegates, writing on behalf of the Maryland Legislative Black Caucus, asked the Attorney General whether the Supreme Court's newly decided City of Richmond v. J. A. Croson Co. threatened Maryland's Minority Business Enterprise ("MBE") program, which directed certain state agencies to try to steer at least 10 percent of their contract dollars to certified minority-owned businesses. Croson had just struck down Richmond's own minority contracting set-aside as an unconstitutional racial classification that failed strict scrutiny. The Attorney General concluded that Maryland's program was different enough from Richmond's to survive: the General Assembly had before it a 1977-78 legislative record showing that minority-owned firms held a share of the pool of available state contractors many times larger than the share of contract dollars they actually received, and Maryland's program used flexible participation goals with a waiver for unreasonably priced MBE bids rather than Richmond's rigid, waiver-free quota. The opinion still called its own conclusion "not entirely free from doubt" and recommended that the General Assembly commission an updated study to keep the program's evidentiary foundation current.

Currency note

This opinion was issued in February 1989, one month after the Supreme Court decided City of Richmond v. J. A. Croson Co., and analyzed Maryland's Minority Business Enterprise program, Title 14, Subtitle 3 of the State Finance and Procurement Article, as it existed at that time. The opinion's own editor's note records that the General Assembly did not simply leave the program as analyzed here: following a further study of the continuing effects of discrimination against minority contractors, it reenacted Maryland's MBE program with amendments the following year, Chapter 708 (House Bill 1540) of the Laws of Maryland 1990. Equal protection doctrine governing race-conscious government contracting programs has continued to develop in the decades since 1989, and the specific statutory provisions, participation goals, and legislative record discussed in this opinion may no longer describe Maryland's current MBE program. This page is a historical record of how the Attorney General analyzed the Croson decision's effect on Maryland's program at the time. It describes what the opinion concluded then and is not a statement of current Maryland procurement law or current equal protection doctrine. Verify current law directly before relying on anything here.

Common questions

Did the Supreme Court's Croson decision strike down Maryland's minority contracting program too?
No, according to the opinion. It concluded that Maryland's MBE program, unlike Richmond's set-aside struck down in Croson, could survive the strict scrutiny that the Supreme Court applied to race-conscious contracting programs.

Why did the opinion think Maryland's program was different from the Richmond set-aside the Supreme Court struck down?
The opinion pointed to two differences: Maryland's General Assembly had a documented 1977-78 legislative record showing minority firms received far less than their proportional share of state contract dollars, something Richmond's city council had lacked, and Maryland's program set flexible participation goals rather than Richmond's rigid, no-waiver quota.

Was Maryland's 10 percent minority-contracting goal a strict quota like Richmond's?
No, the opinion said. It described SF §14-302 as directing agencies to "try to achieve" a 10 percent goal, not a fixed set-aside, and noted that regulations let a contractor obtain a waiver if certified MBE participation was unavailable or only available at an unreasonable price.

What kind of evidence did the opinion say the General Assembly relied on when it enacted the MBE program in 1978?
The opinion cited 1977-78 legislative testimony and agency data showing that minority-owned firms made up roughly 0.25 percent of active bidders on state contracts but received well under 1 percent of the dollar value of state contracts awarded during that period, a disparity the opinion treated as evidence of discriminatory exclusion.

Did the Attorney General say Maryland's minority contracting program was completely safe from future legal challenge?
Not unconditionally. The opinion called its conclusion "not entirely free from doubt" given how much time had passed since the 1978 legislative record was compiled, and it recommended that the General Assembly or an executive agency conduct an updated study of the continuing need for the program.

Background and statutory framework

Maryland's MBE program, enacted in 1978 and codified at SF §14-302 and §14-303 of the State Finance and Procurement Article, directed state agencies to structure procurement so that certified minority business enterprises received a fair share of contracting opportunities, with certain agencies and the Department of Transportation directed to try to achieve a goal of at least 10 percent of relevant contract dollars going to certified MBEs. An MBE was defined by SF §14-301(e) as a business at least 51 percent owned by a member of a group considered "disadvantaged socially or economically," a category that by statute automatically included Blacks, Hispanics, and several other listed minority groups alongside women and people with disabilities. Board of Public Works regulations under SF §14-303(b) required each contract solicitation to state its MBE participation goal and allowed a bidder to obtain a waiver of that goal if certified MBE participation was unobtainable, or unobtainable at a reasonable price, and the contracting agency found a waiver would serve the public interest.

The opinion analyzed this program against the two-part strict scrutiny test the Supreme Court applied in Croson to strike down Richmond's minority contracting set-aside: a compelling governmental interest supported by a strong evidentiary basis, and a remedy narrowly tailored to that interest. On the first prong, the opinion found that the General Assembly had before it, when it enacted the program in 1978, testimony and agency data showing minority-owned firms represented about 0.25 percent of active bidders on state contracts but received a far smaller share of contract dollars, a disparity the opinion treated as sufficient evidentiary support for an inference of discriminatory exclusion under Croson's reasoning. On the second prong, the opinion found Maryland's program narrowly tailored because the General Assembly had considered and rejected race-neutral alternatives (financing and bonding assistance for small businesses) before adopting the MBE program, and because the program used a flexible goal with a price-based waiver rather than Richmond's rigid, waiver-free set-aside. The opinion concluded that, measured against Croson's standards, Maryland's program satisfied both prongs and did not violate the Equal Protection Clause, while recommending that the General Assembly commission a current study to keep the program's evidentiary foundation up to date and that Congress consider legislation supporting state and local affirmative action efforts.

Citations and references

Statutes:

• SF §14-302, establishing Maryland's three-part MBE program and the 10 percent participation goals
• SF §14-302(a) and (b), the specific goal-setting directives for state agencies and the Department of Transportation
• SF §14-301(e), defining which groups are considered "disadvantaged socially or economically" for MBE certification
• SF §14-301(e)(1)(ii)1-6, the specific listed minority groups automatically covered by that definition
• SF §14-303(b), directing the Board of Public Works to adopt implementing regulations
• SF §14-303(b)(1) and (6), the specific mandates to set per-contract goals and provide for waivers
• COMAR 21.11.03.09, the regulation setting the factors used to establish an MBE participation goal for each contract
• COMAR 21.05.08.04, requiring contract solicitations to state the MBE participation goal
• COMAR 21.05.02.14 and COMAR 21.05.03.03F, the tie-breaking and proposal-evaluation regulations favoring greater MBE participation
• COMAR 21.11.03.11B, the regulation governing waiver of a contract's MBE participation goal
• SF §10-308, a separate statute establishing a minority preference in leases of State-owned property, cited as an example of other minority-preference provisions the opinion did not analyze

Cases:

• City of Richmond v. J. A. Croson Co., 109 S.Ct. 706 (1989), the Supreme Court decision striking down Richmond's minority contracting set-aside and the central case the opinion analyzed
• J. A. Croson Co. v. Richmond, 822 F.2d 1355 (4th Cir. 1987), the Fourth Circuit decision the Supreme Court affirmed in Croson
• Regents of University of California v. Bakke, 438 U.S. 265 (1978), cited for the diversity of views among the Justices on race-conscious remedial programs before Croson
• Fullilove v. Klutznick, 448 U.S. 448 (1980), the case upholding a federal MBE requirement that Croson distinguished
• Wygant v. Jackson Board of Education, 476 U.S. 267 [106 S.Ct. 1842] (1986), the case whose plurality view on strict scrutiny the Croson majority adopted
• United States v. Paradise, 480 U.S. 149, 171 (1987), cited for the factors relevant to whether a race-conscious remedy is appropriate
• Johnson v. Transportation Agency, 480 U.S. 616 (1987), the affirmative action hiring plan the Fourth Circuit contrasted favorably with Richmond's rigid set-aside
• City of Cleburne v. Cleburne Living Center, 473 U.S. 432 (1985), cited for the standard of review applicable to the program's gender and disability classifications
• Hazelwood School District v. United States, 433 U.S. 299, 307-08 (1977), Teamsters v. United States, 431 U.S. 324, 337-38 (1977), and Mayor v. Educational Equality League, 415 U.S. 605, 620 (1974), the Title VII cases the Croson majority relied on for the kind of statistical evidence needed to support a race-conscious remedy
• Smith v. Harvey, 648 F.Supp. 1103, 1113 (M.D. Fla. 1986), and Valentine v. Smith, 654 F.2d 503, 510 (8th Cir. 1981), cited for the principle that an affirmative action plan cannot maintain quotas once racial balance is met
• United Steelworkers of America v. Weber, 443 U.S. 193, 207 n.7 (1979), cited on the same point regarding temporary versus permanent racial balancing measures
• Ohio Contractors Ass'n v. Keip, 713 F.2d 167, 171 (6th Cir. 1983), cited favorably by the Croson Court for its use of comparative minority-business statistics
• Killingsworth v. Dep't of Health & Human Serv., 602 F. Supp. 640, 645 (N.D. Cal. 1985), cited for the meaning of "qualified" businesses in a Title VII statistical analysis
• Group Health Ass'n v. Blumenthal, 295 Md. 104, 111, 453 A.2d 1198 (1983), the Maryland Court of Appeals decision cited for the rule that the word "including" in a statute illustrates rather than limits

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1989/Volume74_1989.pdf (this opinion appears at printed pages 76-98 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

Constitutional Law - Equal Protection - Procurement Law - Minority
Business Enterprise ("MBE") Program - State's MBE Program Is
Constitutional, Applying Supreme Court's Decision in City of
Richmond v. J. A. Croson Co.

February 22, 1989

The Honorable Curtis S. Anderson
House of Delegates

On behalf of the Maryland Legislative Black Caucus, you have

requested our opinion concerning the Supreme Court's recent decision
in City of Richmond v. J. A. Croson Co., 109 S.Ct. 706 (1989). This
decision held that Richmond's minority set-aside requirement for public
contracts was invalid under the Equal Protection Clause.1
Specifically, you ask us to assess the impact of Croson on Maryland's
Minority Business Enterprise ("MBE") program, Title 14, Subtitle 3 of
the State Finance and Procurement Article ("SF" Article).

 In one major respect, we point out at the outset, Maryland's MBE

program is unaffected by Croson. The basic objective of the statute is
to assist businesses owned by those who are "disadvantaged socially or
economically." Nothing in Croson prevents the State from seeking to
have a reasonable share of its contracting dollars go to these
businesses. This goal does not itself involve race-based
classifications.2

But in important respects the Maryland MBE program does take

account of race or ethnicity. The General Assembly has provided that
those who belong to certain specified groups - blacks, Hispanics, and
other minorities - are, by virtue of this characteristic alone, to be
defined as "disadvantaged socially or economically." SF §14-
301(e)(1)(ii)1-6. In order to obtain the benefits of the MBE program,

 1
   The Equal Protection Clause of the Fourteenth Amendment provides that "[n]o

State shall ... deny to any person within its jurisdiction the equal protection of the
laws."
2
Moreover, nothing in Croson affects the State's compliance with federal
affirmative action requirements. See note 7 below and accompanying text.

a black or Hispanic or other minority group member need make no
further showing of social or economic disadvantage. This aspect of the
State's MBE program is subject to strict scrutiny review under Croson.

 To survive strict scrutiny, the race-based remedial aspect of the

program must be linked to evidence enabling the General Assembly to
have inferred that members of these minority groups had suffered past
discrimination in State procurement. Under Croson, the General
Assembly may use race as a component of its MBE program only if it
had before it concrete evidence that qualified minority businesses
received a disproportionately low share of State contract dollars. That
is, the General Assembly is permitted to infer discrimination from
evidence that qualified minority businesses represented x percent of all
qualified businesses but received significantly less than x percent of
State contract dollars.

If the General Assembly had sufficient evidence of past

discrimination against minority-owned business, it then could fashion
a remedy to rectify the discrimination. This remedy may entail race-
conscious classifications only if the General Assembly considered race-
neutral remedies, judged them to be inadequate, and adopted only those
racial classifications necessary to remedy the identified discrimination.

This State's current MBE law was first enacted in 1978. It is not

easy to reconstruct a complete picture of what was before the General
Assembly when it considered and enacted this law.

Nevertheless, we have identified the key elements of the legislative

record. On the basis of this record, and applying what we understand
Croson to be mandating, we conclude as follows:

1. The General Assembly had sufficient probative evidence to

infer that minority-owned businesses in Maryland, able and willing to
participate in State contracts, had been denied the opportunity to do so
as a result of racial discrimination. Therefore, the General Assembly
served a compelling State interest when it determined to include these
businesses within the scope of the remedial program.

 2. The General Assembly properly tailored the remedy to

overcome this discrimination. It considered, but rejected, the argument
that race-neutral remedies alone were sufficient to correct the problem.
The particular remedy chosen - a flexible goal applicable to the entire
category of those "disadvantaged socially or economically," including
but not limited to specified minority groups - is no more stringent than
is necessary.

 3. Accordingly, although we cannot predict the ultimate result of

litigation, we can and will defend the constitutionality of the current
MBE statute.

 4. Nevertheless, we strongly recommend that the General

Assembly itself superintend - or, if it is more practicable, delegate to
an Executive Branch agency the task of superintending - a detailed
study of the current need for racial classifications in the MBE program.
If a current and more sophisticated analysis of minority participation
in State contracting showed a continuing need for this particular race-
based remedy, the State's decision to use such remedies could be
defended more easily.

                                I

                    Background Of Croson

The MBE program at issue in Croson required each nonminority

prime contractor to whom the City of Richmond awarded a
construction contract to subcontract at least 30 percent of the contract's
dollar amount to one or more MBEs. A waiver of the requirement
would be granted only if the prime contractor had made every feasible
attempt to comply and a sufficient number of qualified MBEs to meet
the requirement were unavailable or unwilling to participate in the
contract. For the purpose of this requirement, an MBE was defined as
a business at least 51 percent owned and controlled by black, Spanish-
speaking, Oriental, Indian, Eskimo, or Aleut citizens of the United
States. 109 S.Ct. at 707.

 The J. A. Croson Company, a nonminority prime contractor,

challenged the constitutionality of Richmond's MBE requirement after
Croson lost a contract on which it had been the sole bidder. Croson
had found only one local MBE interested in supplying the plumbing
fixtures specified by the contract - the participation Croson had
determined would be necessary to meet the MBE requirement.
Apparently because of the manufacturers' unfamiliarity with the

minority firm, that firm's price for the fixtures was seven percent
above the market price. Croson requested that the city either waive the
MBE requirement or allow Croson to raise the overall contract price
to reflect the additional cost of using the minority firm. The city
denied both requests and determined to rebid the contract. 109 S.Ct.
at 715.

 After extended litigation, a divided panel of the Fourth Circuit

struck down the Richmond set-aside program. J. A. Croson Co. v.
Richmond, 822 F.2d 1355 (4th Cir. 1987). The Supreme Court
affirmed the Fourth Circuit in the decision that we analyze below.

                                 II

                     Supreme Court Opinion

The Supreme Court's decisions in previous cases dealing with

governmental minority-preference programs intended to remedy the
present effects of past discrimination have been marked by considerable
diversity of opinion among the justices. See Regents of University of
California v. Bakke, 438 U.S. 265 (1978); Fullilove v. Klutznick, 448
U.S. 448 (1980); Wygant v. Jackson Board of Education, 476 U.S. 267
[106 S.Ct. 1842] (1986). In Croson, however, a clear majority of the
Court agreed on the major points.3

A. Standard of Review

 As in any case raising an equal protection challenge to a law, the

first question to be decided by the Court in Croson was the standard by
which the Court should assess the law's constitutionality. The Court
held that race-conscious remedial legislation is subject to strict scrutiny

 3
    The lead opinion was written Justice O'Connor, and the analysis of the

Richmond ordinance contained in Parts III-B and IV was joined by Chief Justice
Rehnquist and Justices White, Stevens, and Kennedy. Part III-A of Justice
O'Connor's opinion, which held that race-conscious remedies are subject to strict
judicial scrutiny, was joined only by Chief Justice Rehnquist and Justices White and
Kennedy. However, Justice Scalia's separate concurrence explicitly agreed with that
conclusion. Opinion of Scalia, J., at 735. Consequently, this opinion treats Parts III-
A, III-B, and IV of Justice O'Connor's opinion as the majority opinion of the Court.

review, just as strict scrutiny has always been applied to all other race-
based classifications.

In the majority's view, strict scrutiny is necessary to ensure that

classifications based on race are reserved for genuinely remedial use:

          Absent searching judicial inquiry into the
      justification for such race-based measures, there is
      simply no way of determining what classifications are
       "benign" or "remedial" and what classifications are in
      fact motivated by illegitimate notions of racial
      inferiority or simple racial politics. Indeed, the
      purpose of strict scrutiny is to "smoke out"
      illegitimate uses of race by assuring that the legislative
      body is pursuing a goal important enough to warrant
      use of a highly suspect tool.

109 S.Ct. at 721. The Court thus expressly adopted the view of the
plurality in Wygant v. Jackson Board of Education, 476 U.S. 267, 273
[106 S.Ct. 1842, 1846] (1986) that "the level of scrutiny does not
change merely because the challenged classification operates against a
group that historically has not been subject to governmental
discrimination." Croson, 109 S.Ct. at 721.4 Thus, "for the first time,
a majority of [the Supreme] Court has adopted strict scrutiny as its
standard of Equal Protection Clause review of race-conscious remedial
measures." Dissenting opinion of Marshall, J., at 752.

 It is particularly important to note in this regard that none of the

justices who concurred in this part of the judgment drew any distinction
between programs, like that of the City of Richmond, that embody
rigid minority set-aside requirements for all contracts and programs that
embody flexible requirements that state contracting authorities strive to
achieve stated goals of minority participation. As the dissent pointed
out, "the majority has gone beyond the facts of this case to announce

  4
    Justice Stevens did not directly join this part of the opinion written by Justice

O'Connor. However, Justice Scalia, in his concurrence, explicitly agreed with the
plurality "that strict scrutiny must be applied to all governmental classification by
race, whether or not its asserted purpose is 'remedial' or 'benign.'" Opinion of
Scalia, J., at 735. Justice Scalia would have gone further than the plurality, to hold
that a state may adopt race-based measures only when that is necessary to eliminate
the State's own maintenance of a system of racial discrimination. Opinion of Scalia,
J. at 737.

a set of principles which unnecessarily restrict the power of
governmental entities to take race-conscious measures to redress the
effects of prior discrimination." Dissenting opinion of Marshall, J., at
752.

 Strict scrutiny review has been said to be "'strict' in theory and

fatal in fact," while laws subjected to "rational basis" review have been
seen as receiving "minimal scrutiny in theory and virtually none in
fact." Gunther, The Supreme Court, 1971 Term - Forward: In Search
of Evolving Doctrine on a Changing Court: A Model For a Newer
Equal Protection, 86 Harv. L. Rev. 1, 8 (1972). See also Regents of
University of California v. Bakke, 438 U.S. 265, 361-62 (1978)
(Brennan, J. concurring and dissenting). However, the Croson opinion
sets out guidance about the kind of evidentiary underpinning needed to
sustain a race-conscious MBE program. Slip op. at 729. Hence,
unless the Court's majority was disingenuous, some programs that take
race into account will survive even strict scrutiny review.5

 There are two prongs to strict scrutiny analysis. "First, any racial

classification 'must be justified by a compelling governmental interest.'
... Second, the means chosen by the State to effectuate its purpose must
be 'narrowly tailored to the achievement of that goal.'" Wygant, 476
U.S. at 274 [106 S.Ct. at 1846] (citations omitted).

B. Compelling State Interest

 To justify the enactment of a race-conscious remedy, the

government must have a "strong basis" in evidence for its conclusion
that "identified discrimination" makes the remedy necessary. 109 S.Ct.
at 724 (internal quotations omitted).

At the outset, the majority rejected any claim that an MBE

program may be justified by a desire to remedy the effects of
generalized past discrimination against minorities in the construction

    Indeed, as Croson is applied in future cases, "strict scrutiny" might turn out

to be a label for review that, in practice, is proportional to the remedial device in
question. Programs with rigid, race-determinative quotas, like Richmond's, will face
traditionally rigorous strict scrutiny. Programs with flexible, race-conscious but not
race-determinative goals, like Maryland's, might face slightly less rigorous review.
See Bakke, 438 U.S. at 320 n.5 (Powell, J.); Schwartz, The 1986 and 1987
Affirmative Action Cases: It's All Over but the Shouting, 86 Mich. L. Rev. 524, 550
(1987).

industry as a whole. 109 S.Ct. at 723-24. An assertion of
discrimination in an entire industry, in the majority's view, differs little
in substance from a generalized claim of a need to alleviate the effects
of societal discrimination. That claim had previously been rejected by
the plurality in Wygant.6 Such a claim "provides no guidance for a
legislative body to determine the precise scope of the injury it seeks to
remedy.... 'Relief for such an ill-defined wrong could extend until the
percentage of public contracts awarded to MBEs in Richmond mirrored
the percentage of minorities in the population as a whole." 109 S.Ct.
at 723. Additionally, the Court discussed and rejected each of the
more particular justifications proposed for the Richmond plan.

  First, the Court held that the legislative body's declaration of a

legitimate purpose for its racial classification is entitled to be given
little or no weight by a reviewing court. "Racial classifications are
suspect, and that means that simple legislative assurances of good
intention cannot suffice." 109 S.Ct. at 724. Similarly, the Court held
that statements by proponents of the legislation that there had been
discrimination in the construction industry in the local area, the state,
and the nation had little probative value in establishing the "identified
discrimination" necessary to justify an MBE law. "A governmental
actor cannot render race a legitimate proxy for a particular condition
merely by declaring that the condition exists." 109 S.Ct. at 725.

 In adopting its MBE program, the Richmond City Council relied

in part on a study indicating that less than one percent of the city's
prime construction contracts had been awarded to minority businesses
in the preceding five years, although minorities constituted 50 percent
of the city's population. 109 S.Ct. at 714. The Court, however, held
that this evidence failed to demonstrate the existence of discrimination
because it compared the number of prime contracts awarded to MBEs
to the wrong statistical pool. "[W]here special qualifications are
necessary, the relevant statistical pool for purposes of demonstrating
discriminatory exclusion must be the number of minorities qualified to
undertake the particular task." 109 S.Ct. at 725. The Court
particularly criticized the city's lack of information on "how many

    Wygant involved an equal protection challenge by white public school teachers

to an affirmative action plan under which nonminority teachers were laid off before
minority teachers with less seniority, if necessary to maintain the proportions of
minority and nonminority teachers on the faculty. Five members of the Court agreed
that the plan violated the Equal Protection Clause, although no opinion commanded
a majority for its analysis.

MBEs in the relevant market are qualified to undertake prime or
subcontracting work in public construction projects" and the lack of
information on the percentage of total construction dollars being
received by MBEs as subcontractors. 109 S.Ct. at 725. Thus, the
Court regarded Richmond's set-aside of contracting dollars as resting
largely on "the unsupported assumption that white prime contractors
simply will not hire minority firms." 109 S.Ct. 725.

  Similarly, the Court held that the low membership of MBEs in

local contractors' associations was not probative evidence by itself. In
the Court's view, that low membership might have been explained by
a number of factors, including career and entrepreneurial choices:
"Blacks may be disproportionately attracted to industries other than
construction." 109 S.Ct. at 726.

 In enacting its MBE program, the City of Richmond had relied in

part on a congressional finding that discrimination had stifled minority
participation in the construction industry nationally. That finding had
been regarded by the plurality in Fullilove v. Klutznick, 448 U.S. 448,
477-78 (1980), as sufficient to justify the enactment of an MBE
provision in a federal law.7 However, the Croson majority regarded
that finding as of extremely limited probative value in determining the
existence of discrimination in a particular area. "By its inclusion of a
waiver procedure in the national program addressed in Fullilove,
Congress explicitly recognized that the scope of the problem would
vary from market area to market area." 109 S.Ct. at 726. Moreover,
the Court held that the existence of discrimination in one jurisdiction
or field may not be extrapolated from its existence in another. Instead,
the legislative body must identify with particularity the discrimination
that it seeks to remedy. 109 S.Ct. at 727.

 Finally, the Court took special notice of the lack of any evidence

of discrimination against nonblack racial minorities who were included
in the groups benefited by the Richmond MBE requirement. Some of

7
    Various federal grant programs condition the receipt of federal funds on the

recipients' compliance with affirmative action programs. See, e.g., 49 C.F.R.
§§23.41 through 23.69 (required participation by MBEs in Department of
Transportation Financial Assistance programs). The Supreme Court's decision in
Croson reaffirmed the holding in Fullilove that Congress has power to adopt race-
conscious legislation to remedy the effects of past discrimination. See 109 S.Ct. at
732 [57 U.S.L.W. at 4126-21. Accordingly, those federal requirements, and the
State's implementation of them, unquestionably remain fully effective.

those groups may never, in actuality, have been represented in the
city's population. That overinclusiveness "suggests that perhaps the
city's purpose was not in fact to remedy past discrimination." 109
S.Ct. at 728.8

 The Court's discussion of the flaws in Richmond's evidentiary

record included some guidance as to what kind of evidence would
demonstrate a compelling state interest justifying race-conscious
remedial legislation. The Court clearly indicated that a disparity
between the proportions of MBEs in the relevant market who are
qualified to undertake prime or subcontract work on public projects and
the percentage of total public contract dollars going to MBEs is
probative of discrimination. 109 S.Ct. at 725. Similarly, low MBE
membership in local trade associations would be probative if it were
linked to the number of local MBEs eligible for membership: "If the
statistical disparity between eligible MBEs and MBE membership were
great enough, an inference of discriminatory exclusion could arise."
109 S.Ct. at 726.

 In reaching these conclusions as to the nature of the statistical

evidence that will support the enactment of an MBE program, the
majority relied on cases discussing the evidence necessary for a prima
facie showing of discrimination in violation of Title VII. See
Hazelwood School District v. United States, 433 U.S. 299, 307-08
(1977); Teamsters v. United States, 431 U.S. 324, 337-38 (1977);
Mayor v. Educational Equality League, 415 U.S. 605, 620 (1974).
Thus, the general holding of Croson in this regard is that a state may
adopt race-based preferences to remedy past discrimination only if the
decisionmaking body has before it evidence roughly analogous to that
which would support a prima facie claim of a pattern or practice of
discrimination in employment. Cf. Wygant, 476 U.S. at 292 [106
S.Ct. at 1856] (evidence sufficient to support prima facie Title VII
pattern or practice of discrimination claim "would lend a compelling
basis for" affirmative action plan) (O'Connor, J., concurring).

 In her concurrence in Wygant, Justice O'Connor took pains to

enunciate her view that a governmental employer's adoption of an
affirmative action plan need not be supported by a contemporaneous or

8
   The Court also suggested that the inclusion of groups who may never have

experienced discrimination in the construction industry in Richmond prevented the
MBE program from being narrowly tailored. See Part IIC below.

antecedent finding of actual discrimination. 476 U.S. at 290-91 [106
S.Ct. at 1855-56]. In Justice O'Connor's view, states have the "ability
to take voluntary race-conscious action to achieve compliance with the
law even in the absence of a specific finding of past discrimination."
476 U.S. at 291 [106 S.Ct. at 1856], The public body "must have a
firm basis for determining that affirmative action is warranted," but
that basis may be found in an inference of past discrimination arising
from statistical evidence, rather than from specific findings of actual
discrimination. 476 U.S. at 292 [106 S.Ct. at 1856].

 We think that it is appropriate to read the majority opinion in

Croson, written as it was by Justice O'Connor, as consistent with the
Justice's views previously expressed in Wygant. Thus, Croson holds
that the compelling state interest necessary to justify a race-based MBE
program must be supported by probative evidence of past
discrimination in the particular jurisdiction covered against minority
businesses qualified to engage in public contracting work. That
evidence need not amount to proof of specific discrimination. But at
the same time, the legislative finding of past discrimination cannot be
merely conclusory. It must be supported by concrete evidence roughly
analogous to that needed to make a prima facie Title VII "pattern or
practice" claim.

C. Narrowly Tailored Remedy

The second prong of strict judicial scrutiny of an MBE program is

an inquiry into whether the program is narrowly tailored to the
achievement of its goal of remedying the present effects of past
discrimination. Wygant, 476 U.S. at 279-80 [106 S.Ct. at 1849-50]
(plurality); Fullilove, 448 U.S. at 480 (opinion of Burger, C. J.).

The Croson majority questioned whether Richmond's MBE

program could be narrowly tailored to compensate black contractors for
past discrimination when "they are forced to share this 'remedial relief
with an Aleut citizen who moves to Richmond tomorrow[.]" 109 S.Ct.
at 728. However, the Croson majority directly cited two grounds for
concluding that was not narrowly tailored.

First, the city did not appear to have considered the use of race-

neutral means to increase minority business participation in public
contracting. In support of its plan, the city had cited various factors

that limited the ability of MBEs to participate in public contracting,
including deficiencies in working capital, inability to meet bonding
requirements, unfamiliarity with bidding procedures, and disability
caused by an adequate track record. 109 S.Ct. at 723-24. In the
Court's view, many of those problems would be amenable to race-
neutral remedies. For example, "[i]f MBEs disproportionately lack
capital or cannot meet bonding requirements, a race-neutral program
of city financing for small firms would, a fortiori, lead to greater to
minority participation." 109 S.Ct. at 728.

 In United States v. Paradise, 480 U.S. 149, 171 (1987), the

Supreme Court had held that, "[i]n determining whether race-conscious
remedies are appropriate, we look to several factors, including the
necessity for the relief and the efficacy of alternative remedies." The
availability of alternatives to Richmond's MBE plan, and the city's
failure to consider their use, therefore indicated to the Croson majority
that the race-conscious remedy was not narrowly tailored to its goal.

Second, the Court indicated that a rigid quota "cannot be said to be

narrowly tailored to any goal, except perhaps outright racial
balancing." 109 S.Ct. at 728. In light of the requirement that the city
consider bids and applications for waivers on a case-by-case basis, the
Court viewed the city's interest in a quota system as "simple
administrative convenience." 109 S.Ct. at 729. Moreover, the
quota's appropriateness was further diminished by the lack of a
provision for waiver of the requirement for any reason other than the
unavailability of an MBE.

In this regard, the Court particularly noted that the federal statute

upheld in Fullilove expressly provided for a waiver when the MBE's
price was unreasonably high. Under the federal provision, the
reasonableness of the MBE's price was to be determined by objective
factors bearing on the MBE's expenses and the market value of the
goods or services; the MBE's price was not to be considered to be
unreasonable if it resulted from disadvantages affecting the MBE's cost

  9
    The MBE program under consideration in Croson consisted solely of a preset

quota of minority participation on all city construction contracts. Thus, Richmond's
MBE program differed significantly in its nature and administration from MBE
programs, like Maryland's, that seek to achieve flexible goals of minority
participation in appropriate contracts. Nonetheless, only in this portion of the opinion
did the Court rest its holding on the rigidity of the Richmond plan. But see note 5
above.

of doing business or from discrimination. Fullilove, 448 U.S. at 470.
Thus, the waiver provision of the federal law was designed to prevent
an MBE from exploiting the set-aside requirement without penalizing
an MBE whose higher prices are genuinely dictated by the effects of
discrimination. 448 U.S. at 488. Because the Richmond plan made no
similar provision for a waiver when the MBE's price was
unreasonable, it failed to "tailor remedial relief to those who truly have
suffered the effects of prior discrimination ...." 109 S.Ct. at 729.

Hence, an MBE program may be adopted only after race-neutral

remedies have been considered and reasonably determined to be
ineffective. Moreover, an MBE program must be flexible, with a
provision for waiver of its requirements when MBEs' prices are
unjustifiably inflated.

                                III

       Maryland's Minority Business Preference Program

A. Statutory and Regulatory Provisions

 SF §14-302 sets up a three-part MBE program: (i) All units of

State government must structure their procurement procedures to
encourage participation by certified MBEs and to "try to provide a fair
share of procurement contracts" to certified MBEs; (ii) certain agencies
must structure their procurement procedures to try to achieve the result
that at least 10% of the total dollar value of their procurement contracts
is procured directly or indirectly from MBEs;10 and (iii) the
Department of Transportation must structure its procurements for
construction to try to achieve the result that at least 10% of the dollar
value of contracts exceeding $100,000 is procured from certified
MBEs. SF §14-302(a) and (b).

 For the purposes of these requirements, an MBE is a legal entity

that is at least 51% owned and controlled by one or more "members of
a group that is disadvantaged socially or economically," including

 10
    Those agencies are the Department of General Services; the Interagency

Committee on School Construction; the Maryland Food Center Authority; the
Maryland Stadium Authority; the University of Maryland System; and the Department
of Budget and Fiscal Planning, with regard to procurements of information processing
equipment or services.

Alaskan natives, American Indians, Asians, blacks, Hispanics, Pacific
islanders, women, or physically or mentally disabled individuals. SF
§14-301(e). Thus, on its face, the statute contemplates a broadly
inclusive MBE program. A business owned by a member of any group
that is "disadvantaged socially or economically" would fit within the
definition of SF §14-301(e).11 Of course, under the definition, a
member of a listed group is automatically to be considered
"disadvantaged socially or economically." In the administration of the
program to date, as far as we are aware, only businesses owned by
members of the listed groups have been certified as MBEs.

SF §14-303(b) requires the Board of Public Works to adopt

regulations addressing designated matters. Those include requiring that
each contract solicitation specify the amount of minority participation
and providing for the circumstances under which a contractor's
minority business participation obligations may be waived. SF §14-
303(b)(1) and (6).

 Regulations adopted in accordance with the mandate of SF §14-

303(b)(1) require that an MBE participation goal be set for each
contract by taking into account (i) the number of certified MBEs
available to provide the subject matter of the procurement; (ii) the
geographic proximity of available certified MBEs to the location of the
work to be performed; (iii) the feasibility of subcontracting, in light of
the nature and extent of the proposed contract; and (iv) any applicable
statutory participation goals. COMAR 21.11.03.09. All contract
solicitations that provide MBE subcontract opportunities must contain
a provision specifying the percentage goal for MBE participation in the
project and notifying prospective bidders or offerors that a response
constitutes agreement "that this amount of the contract will be
performed by minority business enterprises." COMAR 21.05.08.04.
Other regulations require that, all else being equal, a State contract be
awarded to the bidder or offeror including the greatest degree of MBE
participation. See COMAR 21.05.02.14 (selecting between tying bids)
and 21.05.03.03F (evaluating competitive sealed proposals).

      The term "including" generally indicates that what follows is an illustration,

not a limitation. Since 1986, this principle of construction has been codified in
Article 1, §30 of the Maryland Code. However, the codified section merely reflects
the common law rule: "Ordinarily the word 'including' means comprising by
illustration and not by way of limitation." Group Health Ass'n v. Blumenthal, 295
Md. 104, 111, 453 A.2d 1198 (1983).

 As required by SF §14-303(b)(6), the regulations also include

provisions for waiver of the contract goal. To receive a waiver, the
bidder or offeror must make a reasonable demonstration that certified
MBE participation is unobtainable or is unobtainable at a reasonable
price, and the contracting agency must determine that the public
interest would be served by a waiver. In determining whether to grant
the waiver, the agency may consider:

        [E]ngineering estimates, catalogue prices, general
      market availability, and availability of certified MBEs
      in the area in which the work is to be performed,
      other bids or offers and subcontract bids or offers
      substantiating significant variances between certified
      MBE and non-MBE cost of participation, and their
      impact on the overall cost of the contract to the State
      and any other relevant factor.

COMAR 21.11.03.11B.

B. Constitutionality Of Maryland's MBE Preference

 1.   Introduction

If Maryland's MBE program were simply a way of channeling

State procurement dollars to members of groups that are
"disadvantaged socially or economically," without regard to race, it
would patently be constitutional. Nothing in Croson prevents such a
preference program, even if most of the beneficiaries of the program
were of a particular race. 109 S.Ct. at 727.12

Our statute comes into question, however, because it is not wholly

race-neutral. Members of the racial and ethnic groups listed in SF
§14-301(e)(1)(ii)1-6 are, by virtue of that fact alone, considered to be
"disadvantaged socially or economically"; hence, the businesses that
they own are the beneficiaries of the State's remedial measures. This
one factor - the automatic inclusion within the MBE program of blacks

 12 As Justice Scalia put it in his concurrence: "Since blacks have been

disproportionately disadvantaged by racial discrimination, any race-neutral remedial
program aimed at the disadvantaged as such will have a disproportionately beneficial
impact on blacks." Opinion of Scalia, J., at 739 (emphasis in original).

and other listed racial or ethnic minorities - triggers strict scrutiny
review.13

 2. Compelling State Interest

In our view, the General Assembly had before it evidence sufficient

to permit it to infer the existence of identified discrimination against
qualified minority-owned businesses. In 1977, the General Assembly
considered but did not enact House Bill 403. Evidence offered during
the deliberations on that bill (and, of course, available to the General
Assembly when it took up the same issue the next year) showed a
significant disparity between the percentage of minority-owned
businesses among "active bidders" and the percentage of contract
dollars awarded to minority bidders.

 According to testimony by then-Delegate Trotter, 20 of the more

than 7,900 bidders on active bidder lists were minority-owned firms;
thus, MBEs represented 0.25% of the active bidders on State contracts.
Out of $53 million spent by the State, less than $10,000 went to
MBEs; thus, MBEs received but 0.01% of State contract dollars.
Minutes, House Committee on Appropriations (March 29, 1977).
While the raw numbers of MBE bidders and MBE contract dollars
were both low, a comparison of MBEs' proportional representation
among bidders with their proportional share of State contract dollars
reveals a great disparity: MBEs' representation in the pool of available
contractors was 25 times the share of contract dollars they received.
The Supreme Court clearly stated that such a gross disparity may give
rise to an inference of discriminatory exclusion. See 109 S.Ct. at
726.14

 13 Strict scrutiny is not applicable to the other classifications used in the MBE

program, gender and disability. A gender classification must be "substantially related
to a sufficiently important governmental interest." City of Cleburne v. Cleburne
Living Center, 473 U.S. 432, 441 (1985). A classification based on handicap must
be "rationally related to a legitimate governmental purpose." 473 U.S. at 446.
Rectifying the effects of probable past discrimination satisfies these tests, in our view.

     The Supreme Court's insistence on statistics involving "qualified" MBEs

would be especially troublesome if the State had to make some kind of individual
judgment about the actual competence of potential contractors. The State does not
prequalify the firms, minority-owned or not, that might receive its contract dollars.
(continued...)

 The next year, then-Delegate Trotter bolstered the record about the

dearth of awards to minority businesses. In a memorandum to the
members of the House Appropriations Committee, he quoted a
statement from the then Department of Economic and Community
Development ("DECD") that, from June 1975 to December 1977, the
Department of General Services ("DGS") awarded an estimated $230
million in construction contracts, of which $835,000 went to minority
businesses, and contracts for goods and commodities totaling an
estimated $250 million, of which $95,905 was awarded to minority
businesses. Thus, MBEs received 0.36% of the dollar value of DGS
construction contracts and 0.04% of the dollar value of commodities
contracts, or 0.19% of total contract dollars spent by DGS during that
30-month period. At the same time, more than 800 minority firms
were then listed in the Directory of Minority Business Enterprises
compiled by DECD. Memorandum from Delegate Decatur W. Trotter
to Members, House Appropriations Committee (January 26, 1978) (file
on House Bill 64 (1978).

 In our view, this directory, issued in February of 1977, particularly

contributed to the probative value of the evidence of discrimination
then before the General Assembly. The directory, to which the
General Assembly's attention was directed, necessarily reflected the
number of MBEs in the total pool of available contractors during the
time when then-Delegate Trotter's testimony on House Bill 403 (1978)
demonstrated that only 20 MBEs were on active bidder lists. In light
of the large number of MBEs interested enough in obtaining contracts

14
  (...continued)
 However, we take it that the Court used "qualified" in the broader sense of a

business' holding itself out as available for work in the relevant market. Cf.
Killingsworth v. Dep't of Health & Human Serv., 602 F. Supp. 640, 645 (N.D. Cal.
1985) (for Title VII purposes, "qualified" means meeting basic eligibility requirements
for job). The Court cited favorably the use in one case of statistics comparing the
percentage of minority businesses in Ohio with the percentage of Ohio purchase
contracts awarded to minority businesses. 109 S.Ct. at 726. See Ohio Contractors
Ass'n v. Keip, 713 F.2d 167, 171 (6th Cir. 1983).

  A report issued by the Bureau of the Census in July of 1979 showed that

47,781 firms had been doing business in the state in 1977 in the areas for which State
contracts are most commonly awarded - manufacturing; wholesale and retail trade;
contract construction; finance, insurance, and real estate; and transportation and
public utilities. Bureau of the Census, U.S. Dep't of Commerce, County Business
Patterson 1977-Maryland 1 (July 1979). Thus, the 800 MBEs listed in the directory
represented 1.8% of the total number of firms then available to do business with the
State. Accordingly, MBEs' representation in the available market was approximately
ten times the share of DGS contract dollars they received.

to provide the information necessary for their inclusion in the
directory, the low number of MBEs bidding on State contracts cannot
be attributed to lack of interest among minorities. Cf. Croson, 109
S.Ct. at 725-26. Rather, we think that the disparity between the
number of MBEs in existence and the number actively bidding on State
contracts was additional evidence of discriminatory exclusion of
minorities from State contracting opportunities.

 The legislative file on the MBE program also contains a letter from

the Department of General Services dated February 6, 1978, stating
that the Department's Purchasing Bureau had made 6,781 awards since
September 1, 1977, of which 55 were to minority businesses. Those
awards totaled $25 million, of which $20,700, or 0.08%, went to
minority businesses. Letter from Robin J. Zee, Director, Office of
Central Services, to Delegate John R. Hargreaves (February 6, 1978).
Given that the General Assembly was aware of the proportion of
minority-owned firms qualified to perform those contracts, this letter
is additionally probative of discrimination.

 The Department of Transportation ("DOT"), which adopted an

MBE program in early 1978, provided the General Assembly with a
more detailed summary of MBEs' participation in its contracts during
fiscal year 1977. The summary showed that 4.84% of DOT's totaling
contracting dollars had gone to MBEs; however, a breakdown showed
that only three of DOT's seven major units had made any purchases
from MBEs. Nor did those purchases generally represent a significant
proportion of those units' total purchases: Only 0.56% of State
Aviation Administration contract dollars and only 0.17% of State
Highway Administration contract dollars went to MBEs. The Mass
Transit Administration, which had previously put an MBE program into
effect, had directed 9.91% of its contract dollars to MBEs. Letters
from James J. O'Donnell, Deputy Secretary, DOT, to Delegate John
R. Hargreaves (February 10, 1978).

  In short, the General Assembly was able to "ascertain[] how many

minority enterprises are present in the local ... market" and "the level
of their participation" in State contracts. Croson, 109 S.Ct. at 730.
It also obtained "evidence that qualified minority contractors have been

passed over for [State] contracts or subcontracts, either as a group or
in ... individual case[s]." Id.16

 The significance of this evidence is not undercut by the General

Assembly's failure to find that there actually had been discrimination
against those minority businesses that sought to participate in public
contracting in Maryland.17 As Justice O'Connor indicated in her
concurrence in Wygant v. Jackson Board of Education, 476 U.S. 267
[106 S.Ct. 1842] (1986), a State need not support its adoption of an
affirmative action program by proof of specific discrimination.
See Part IIB above. There only must have been evidence before the

     Moreover, the evidence available to the General Assembly, unlike that

presented to the Richmond City Council, did not pertain to blacks alone. The
Directory of Minority Businesses compiled by the Department of Economic and
Community Development, while not directly identifying the race or ethnicity of the
businesses' principals, nonetheless indicates that those principals were members of
various Hispanic, Oriental, and other ethnic groups. The Department of General
Services, apparently as part of its review of the MBE bill, compiled statistics on the
minority-owned firms known to it, which indicated that 6.9% of these firms were
owned by "American Indian, Aleut, etc.," persons, while 3.9% were owned by
Hispanics and 17.2% by blacks. Memorandum to Jerome W. Klasmeier, Deputy
Secretary, Department of General Services, from Paul T. Harris (March 27, 1978).
Hence, those who testified before the General Assembly were aware - as the General
Assembly presumably was also - that the minorities whose representation in the pool
of contractors and share of contract dollars were under discussion included all the
groups designated in the MBE program. And, the testimony offered by those persons
consistently referred to "minorities," rather than specifically to "blacks."
17 The General Assembly adopted a preamble to the MBE bill that expressed
concern about possible past discrimination:
Whereas, The General Assembly is concerned that minority
businesses may have experienced the effect of past discrimination
in the awarding or letting of contracts or subcontracts ... for the
benefit of the State; and
Whereas, Such discrimination, although contrary to State
policy, may have been based solely on the minority status of such
businesses, and not on their competency; and
Whereas, The economic development and expansion of
minority enterprises, may have been impeded thereby; and
Whereas, The General Assembly deems it necessary that
certain departments shall structure their contract procedures so as
to facilitate and encourage the award or letting of at least 10% of
their contracts and the subcontracts which flow therefrom to
competent minority businesses

Chapter 575, Laws of Maryland 1978, Preamble (emphasis added).

General Assembly from which it could infer that there had been
apparent discrimination. Wygant, 476 U.S. at 291 [106 S.Ct. at 1856],
As outlined above, we think there was that evidence. Neither Wygant
nor Croson requires the State to have actually leveled specific
accusations of discrimination against anyone.

 3. Narrowly Tailored Remedy

Maryland's program, unlike Richmond's, is narrowly tailored. It

thus meets the second prong of the strict scrutiny test.

 We have found evidence that the General Assembly did consider

the use of race-neutral remedies before adopting the MBE program.
In testimony before the House Appropriations Committee, the
representative of the Department of General Services urged just such
a remedy in preference to the MBE program: "[T]he real need of
small businesses including minority businesses, is training in finance
and management matters in order to place them in a stronger
competitive position in the market place." Memorandum to Max
Millstone from Robin J. Zee, Director, Office of Central Services
(February 2, 1978) (recounting testimony given in bill hearing on
January 12, 1978). Additionally, the same session of the General
Assembly considered but did not enact a bill that would have
established a State program to issue bid and performance bonds to
small businesses unable to obtain those bonds in the private market.
Senate Bill 1217 (1978). The General Assembly's decision not to
adopt either of these proposals evidences its conclusion that these race-
neutral remedies would not be effective.

 Unlike the Richmond plan, moreover, Maryland's MBE program

is not statutorily expressed as a rigid quota, but as a flexible system of
goals. Further, the regulations governing waivers clearly permit a
prime contractor to obtain a waiver if the prices charged by MBEs
wishing to participate are unreasonable. COMAR 21.11.03.11B.
Thus, our plan does not suffer from the degree of rigidity that
constituted the Court's second criticism of the "tailoring" of
Richmond's plan.

 Richmond's program involved an especially rigorous remedy - a

fixed percentage set-aside. To justify that remedy, Richmond must
satisfy a demanding burden of proof. The evidence that it offered in
support of that remedy was not nearly good enough to provide "an

adequate basis for the 30% quota." 109 S.Ct. at 724. Too general
a body of evidence, in the Court's view, "does little to define the scope
of any injury to minority contractors in Richmond or the necessary
remedy. The factors relied upon by [Richmond and] the dissent could
justify a preference of any size or duration." 109 S.Ct. at 727.

 The Supreme Court did not hold that the same evidence would be

required if a state or local government were seeking to justify a more
flexible remedy. The Court's general direction to state and local
governments recognizes that the "extent" of the remedy and its
supporting evidence will vary from case to case: "Proper findings ...
are necessary to define both the scope of the injury and the extent of
the remedy necessary to cure its effects." 109 S.Ct. at 730. For
affirmative action in employment, Justice O'Connor pointed out, the
required statistical evidence can vary depending upon the precise
remedy chosen. 109 S.Ct. at 725. The same proportional
relationship between evidence and remedy ought to be true of
affirmative action in procurement as well. Thus, in criticizing the
Richmond plan, the Fourth Circuit contrasted favorably the affirmative
action hiring plan approved (on statutory grounds) by the Supreme
Court in Johnson v. Transportation Agency, 480 U.S. 616 (1987):

       The plan upheld in Johnson made race or gender "but
       one of numerous factors" considered by the
       government agency in its employment decisions. The
       race or gender was merely a "plus"; no rigid quotas
       or set-asides were used .... None of the factors
       emphasized by the Court in Johnson apply to
       Richmond's plan, which features the combination of
       an inadequate foundation for remedial action plus a
       "reflexive adherence to a numerical standard" which
       the Supreme Court in Johnson disavowed.

       "[W]e have recognized that for certain entry level positions or positions

requiring minimal training, statistical comparisons of the racial composition of an
employer's workforce to the racial composition of the relevant population may be
probative of a pattern of discrimination. But where special qualifications are
necessary, the relevant statistical pool for purposes of demonstrating discriminatory
exclusion must be the number of minorities qualified to undertake the particular task."
Id. (citations omitted).

Croson, 822 F.2d at 1362 (citations omitted). In its flexibility and its
avoidance of "rigid quotas or set-asides," Maryland's MBE program is
more akin to that approved in Johnson than to that condemned in
Croson.19

 4. Conclusion

We conclude that, even measured by the stringent standards of

Croson, Maryland's MBE program is supported by evidence sufficient
to demonstrate a compelling State interest in eliminating the identified
discrimination against minority-owned businesses. Moreover, the
program is narrowly tailored to the goal of remedying the effects of
identified discrimination. Therefore, the MBE program does not
violate the Equal Protection Clause.20

  19 To be sure, the General Assembly chose to use a particular percentage figure,

10 percent, that itself is not linked to specific evidence. However, SF §14-302 uses
this intrinsically reasonable figure as a goal, not a set-aside; defines the goal in terms
of all businesses owned by those who are "disadvantaged socially or economically,"
not in terms of minority-owned businesses alone; and provides for a flexibly
administered waiver procedure, not a rigid waiver that ignores price considerations.
Finally, the General Assembly had before it specific evidence underlying its decision
to include nonblack minorities within the program's goal. See note 16 above.
Therefore, we do not think that the General Assembly's choice of a 10 percent goal
is precluded by Croson.
20 Other provisions of State law also establish various minority preferences
designed to increase the participation of minorities in public contracting and public
programs. See Article 29, §3T02(d) (Washington Suburban Sanitary Commission
contracts); Article 41, §13-105(3)(ii) (Maryland Food Center Authority contracting
and market development); Education Article §5-110(d) (Montgomery County Board
of Education contracts) and §16-408(d) (Montgomery Community College contracts);
Financial Institutions Article, §13-138(d) (Maryland Industrial Development Financing
Authority facilities); Financial Institutions Article, §13-231(b)(4) (qualifications of
applicants for assistance from Maryland Small Business Development Financing
Authority); Financial Institutions Article, §§13-802(4) and 13-806 (Department of
Economic and Employment Development allocation of private activity bond
authority); and SF §10-308 (leases of State-owned property to business enterprises).
We do not know what statistical or other evidence may have been adduced to support
the adoption of any of those programs. And, because Croson requires a case-by-case
assessment of the basis for each program, we cannot undertake in this opinion to
determine the validity of each.
For the same reason, we do not attempt to assess the constitutionality of any local
program. It may well be that many local jurisdictions have also adduced sufficient
evidence to satisfy the Croson standards. For example, we understand that Baltimore
City's MBE program was adopted after consideration of an especially detailed and
pertinent body of evidence.

                                IV

                           Conclusion

 For the reasons stated above, it is our opinion that the race-

conscious remedies contained in Maryland's MBE program are
constitutional. Nonetheless, we must candidly say that, given the
questions that Croson leaves unanswered and the difficulty of looking
back more than a decade at the legislative record, this conclusion is not
entirely free from doubt.

In any event, future legislative action is far more important than

what happened in the past. We strongly recommend that the General
Assembly undertake, itself or by delegation, a reexamination of the
need for the MBE program.21 Such a study would yield current
information about the extent of discrimination and the identity of the
groups affected by it. Properly conducted, this study would afford a
surer basis for an MBE program than now exists. Moreover, the
General Assembly cannot rely indefinitely on evidence of a decade
ago.22

 We also recommend that Congress consider action to vindicate state

and local affirmative action efforts. Congress, in the exercise of its
unique constitutional authority to enforce the Fourteenth Amendment
through appropriate legislation, may well be able to empower state and
local governments to enact race-based remedial programs.
See Fullilove, 448 U.S. at 483-84. Viewed realistically, local
discrimination against minority contractors largely reflects a national
problem that Congress should address. This office will be happy to
assist in any effort to encourage congressional action.

 21 The General Assembly is free, should it so choose, to empower an Executive

Branch agency - for example, the Board of Public Works, which has supervisory
power over procurement matters - to make the requisite findings and apply
appropriate remedies, within the confines of proper delegation. See Croson, 109
S.Ct. at 720.
22 "It is clear that affirmative action plans that seek to maintain quotas once
racial balances are met are invalid." Smith v. Harvey, 648 F.Supp. 1103, 1113
(M.D. Fla. 1986). Accord Valentine v. Smith, 654 F.2d 503, 510 (8th Cir. 1981).
See also United Steelworkers of America v. Weber, 443 U.S. 193, 207 n.7 (1979)
(legislative history indicates Title VII does not permit establishment of systems to
maintain racial balance, but only temporary measures to eliminate manifest racial
imbalance).

Maryland is committed to fairness in the allocation of its contracts.

The General Assembly should lose no time in developing an updated
record that would point the way to the MBE program of the future.

                                         J. Joseph Curran, Jr.
                                         Attorney General

                                         Judson P. Garrett, Jr.
                                         Deputy Attorney General

                                         Illona Sheffey-Rawlings
                                         Special Assistant to the
                                         Attorney General

                                         C. J. Messerschmidt
                                         Assistant Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

Editor's Note:

 Following a detailed study that identified the continuing effects of

discrimination against minority contractors, the General Assembly
reenacted Maryland's MBE program with certain amendments.
Chapter 708 (House Bill 1540) of the Laws of Maryland 1990.