NC NC AG Advisory Opinion (1991-07-15) 1991-07-15

On a North Carolina public construction project, who has to do the work of finding and using minority businesses: the contractor, the city or county, or both?

Short answer: On all public construction contracts subject to N.C.G.S. § 143-128, both the State and any city, county, or other public body had a verifiable percentage goal for minority business participation. Under the single-prime contract system, the prime contractor had to make the good-faith recruitment effort and document it to the awarding authority; the awarding authority's job was to write the guidelines telling the prime contractor what counted as good faith. Under the separate-prime system, the separate prime contractors had to make the good-faith effort, and the awarding authority's job was to write the guidelines. Either way, the awarding public body writes the rules and the contractor does the recruitment work.

Disclaimer: This is an official North Carolina Attorney General advisory opinion. AG opinions are persuasive authority but not binding precedent like a court ruling. This summary is for informational purposes only and is not legal advice. Consult a licensed North Carolina attorney for advice on your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked at the bottom of this page) is the authoritative source for any reliance.

Plain-English summary

The Governor's Special Assistant for Minority Affairs sent the AG three pointed questions about who actually has to do the work of meeting North Carolina's minority business enterprise (MBE) goals on public construction projects. Assistant Attorney General D. David Steinbock answered each one.

Question 1: Does the separate-prime contractor system exempt public projects from the MBE goal? No. § 143-128(c) is clear that the State has a verifiable 10% goal for minority business participation in the total value of work for each project, and each city, county, or other public body must adopt its own verifiable percentage goal after notice and a public hearing. The goal applies to all projects awarded under § 143-128, whether under the single-prime system or the separate-prime system.

Question 2: Under the single-prime system, who has to make the good-faith recruitment effort? The single-prime contractor. § 143-128(c)(4) defines a "verifiable goal" for the single-prime system as one where the awarding authority has adopted written guidelines specifying actions the prime contractor must take to ensure good-faith effort, and the contractor must document those actions to the awarding authority in writing. The awarding authority's job is to write the rules; the prime contractor's job is to follow them and document compliance.

Question 3: Under the separate-prime system, who has to make the good-faith recruitment effort? The separate prime contractors. § 143-128(c)(3) parallels (c)(4) for the separate-prime system: the awarding authority adopts written guidelines specifying actions the separate prime contractors must take, and the separate prime contractors must comply.

The shape of the regime is consistent across the two delivery methods. The public body's role is rule-making (writing the guidelines, holding the public hearing on the percentage goal). The contractor's role is execution and documentation. The statute does not let public bodies hide behind the contracting method choice; whether they bid the work as a single package or as separate trade packages, the MBE goal still applies and the contractors still have to do the recruitment work.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. N.C.G.S. § 143-128 has been amended numerous times since 1991, including substantial restructuring in 2001 and again later. The statewide HUB (Historically Underutilized Business) framework, the disparity studies underlying particular goals, and case law on the constitutionality of race-conscious MBE programs (especially after Croson and Adarand) have all reshaped this area. Current MBE compliance practice depends on the specific version of § 143-128 in effect, applicable disparity studies, and federal constitutional doctrine.

Background and statutory framework

§ 143-128 governs public construction contracting in North Carolina, mainly setting out the rules for the separate-prime versus single-prime delivery methods. The MBE participation goal was added to address the documented underrepresentation of minority-owned firms in public construction, and to channel some of the State's $billion-plus annual public construction spend toward those firms.

The "verifiable goal" terminology in subsections (c)(3) and (c)(4) is the statute's way of distinguishing aspirational goals from enforceable mandates. A goal is "verifiable" when the awarding public body has reduced its expectations to written guidelines that tell contractors what concrete actions count as "good faith" effort. Without those guidelines, the goal floats: contractors do not know how to comply, the public body does not know what to demand, and the program runs on impressions rather than documentation.

The good-faith standard recognizes that an MBE goal can be missed even with sincere effort. Markets do not always have enough qualified minority subcontractors available for every project; bid timelines may be tight; particular trades may be especially scarce. The good-faith framework says: the contractor must do specified work to find and use MBEs, but does not face penalty for missing the goal if the documented effort was sincere.

The opinion's answer that the awarding authority writes the guidelines is significant because it puts the policy burden where it belongs. The State or local government chose to commit to the goal; it follows that the government should define what counts as compliance. Asking each contractor to invent good-faith procedures for itself would produce wildly inconsistent results and would make compliance review a guessing game.

The opinion did not address the constitutional questions that have since dominated MBE law (whether race-conscious goals require a strong evidentiary showing of past discrimination, what level of judicial scrutiny applies, what remedies are available). Those questions were already brewing in 1991 (Richmond v. J.A. Croson was decided in 1989) but were not what the AG was asked.

Common questions

Did the 10% goal apply to subcontracts or just to the prime contract value?

The statute set the goal as a percentage of the "total value of work for each project." That language reaches the prime and subcontract values combined. In practice, the goal was achieved primarily through subcontracts to MBEs since most public construction projects use subcontracting heavily.

What happened if a contractor missed the percentage goal despite making a good-faith effort?

A documented good-faith effort that did not yield the percentage was not, by itself, a basis to reject the bid or hold the contractor in breach. The framework was good faith, not absolute compliance. A contractor that documented its specific outreach efforts and explained why those efforts did not produce MBE participation at the target level had complied with the verifiable goal even if the percentage was not hit.

What constituted "minority business" for purposes of the goal?

The statute and regulations defined eligible minority groups. Certification typically required ownership and control by members of the specified groups. The 1991 regime had its own certification rules, which were later subsumed into the broader HUB framework.

Could a single-prime contractor delegate the good-faith effort to a subcontractor?

The statutory language put the responsibility on the prime contractor. Documentation had to come from the prime. The prime could obviously work with subcontractors to find MBEs, but the prime owned the obligation.

Did the AG's answer apply to projects below the bid-law threshold for § 143-128?

The opinion addressed only projects subject to § 143-128. Projects below the dollar threshold (informally bid or small projects) operated under different rules, which might or might not include MBE goals depending on local policy.

Citations

N.C.G.S. § 143-128 (public construction contracting)
N.C.G.S. § 143-128(c) (verifiable percentage goal)
N.C.G.S. § 143-128(c)(3) (separate-prime good faith)
N.C.G.S. § 143-128(c)(4) (single-prime good faith)

Source

Landing page: https://ncdoj.gov/opinions/minority-business-selections/

Original opinion text

Subject: Minority Business Selections Under G.S. 143-128

Requested By: James K. Polk, Special Assistant to the Governor for Minority Affairs

Questions:

(1) Under G.S. 143-128, are contracts awarded by the State, city, county, or other public body pursuant to the separate prime contractor system exempt from the "verifiable percentage goal for participation by minority businesses" requirement as set forth in G.S. 143-128(c)?

(2) Under G.S. 143-128(c)(4), who is required to make the good faith effort to recruit and select minority businesses for participation in contracts awarded under this section, the single prime contractor or the awarding authority?

(3) Under G.S. 143-128(c)(3), who is required to make the good faith effort to recruit and select minority businesses for participation in contracts awarded under this section, the separate prime contractor or the awarding authority?

Conclusions:

(1) No.
(2) Single prime contractor.
(3) The separate prime contractor is required to make the "good faith" effort, but the awarding authority is required to adopt guidelines.

(1) Contracts awarded by the State, city, county or other public body are specifically included for verifiable percentage purposes as clearly stated in G.S. 143-128(c) as follows:

(c) The State shall have a verifiable ten percent (10%) goal for participation by minority businesses in the total value of work for each project for which a contract or contracts are awarded pursuant to this section. Each city, county or other public body shall adopt, after a notice and public hearing, an appropriate verifiable percentage goal for participation by minority businesses in the total value of work for which a contract or contracts are awarded pursuant to this section.

(2) G.S. 143-128(c)(4) provides that "'verifiable goal' means for purposes of the single-prime contract system, that the awarding authority has adopted written guidelines specifying the actions that the prime contractor must take to ensure a good faith effort in the recruitment and selection of minority businesses for participation in contracts awarded under this section; the required actions must be documented in writing by the contractor to the appropriate awarding authority." This section clearly states that the single-prime contractor is the one who is required to make a good faith effort to recruit and select minority businesses for participation in contracts under this particular section. The awarding authority must adopt written guidelines which specify the actions that the prime contractor must take.

(3) G.S. 143-128(c)(3) provides that "'verifiable goal' means for purposes of the separate prime contract system, that the awarding authority has adopted written guidelines specifying the actions that will be taken to ensure a good faith effort in the recruitment and selection of minority businesses for participation in contracts awarded under this section." These written guidelines should specify actions which must be taken by the separate prime contractors to seek minority participation.

Lacy H. Thornburg, Attorney General
D. David Steinbock, Assistant Attorney General