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Dunnet Bay Construction Co. v. Hannig

United States District Court, C.D. Illinois, Springfield Division

February 12, 2014

DUNNET BAY CONSTRUCTION COMPANY, an Illinois Corporation, Plaintiff,
GARY HANNIG, in his official capacity as Secretary of Transportation for the Illinois Department of Transportation, and the ILLINOIS DEPARTMENT OF TRANSPORTATION, Defendants.


RICHARD MILLS, District Judge.

Pending are Cross-Motions for Summary Judgment.

At the end of the day, Defendants prevail.

Here is the background.


In this action, the Plaintiff seeks a declaratory judgment that the Defendant's Disadvantaged Business Enterprise ("DBE") Program discriminates on the basis of race in the award of federal-aid highway construction contracts in Illinois, is unconstitutional and further seeks injunctive relief against enforcement of the program.

The Plaintiff also seeks damages from the Defendant under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d et seq., on the grounds that it was excluded from participation in, denied the benefits of, and subjected to discrimination by the Defendant through its DBE Program in the award of federal-aid highway construction contracts. Additionally, the Plaintiff seeks damages and injunctive relief under the Illinois Civil Rights Act of 2003, 740 ILCS 23/1 et seq.

The Plaintiff has filed a Motion for Summary Judgment, asserting that Defendant has departed from federal regulations and the Defendant's own federally-approved written program to experiment with race-based means to achieve ends it thought were advisable or politically expedient. The Plaintiff alleges that Defendant's program is designed to achieve a desirable racial balance. Because it is not narrowly tailored to further a compelling governmental interest, therefore, the Defendant's actions cannot withstand strict scrutiny. Accordingly, the Plaintiff contends it is entitled to summary judgment on the issue of liability.

The Defendant has also filed a Motion for Summary Judgment, alleging that all applicable guidelines were followed with respect to the DBE program. Because it is federally mandated and the Defendant did not abuse its federal authority, it asserts the program is not subject to attack. Moreover, the Defendant claims neither the rejection of the Plaintiff's bid, nor the decision to rebid the project, was based upon the Plaintiff's race. Because the Plaintiff was not subjected to intentional discrimination based on its race and was not treated less favorably than any other contractor, the Defendant contends there is no Equal Protection violation.

The Defendant further asserts that, because the Plaintiff is relying on the rights of others and was not denied equal opportunity to compete for government contracts, the Plaintiff lacks standing to bring a claim for racial discrimination. Additionally, it contends the Plaintiff is unable to show that, even if there were a violation, it would have been awarded the contract or that an ongoing violation justifies injunctive relief. For all of these reasons, the Defendant contends it is entitled to summary judgment.


A. The Parties

Plaintiff Dunnet Bay Construction Company is a corporation organized and existing under the laws of the State of Illinois. Dunnet Bay is engaged in the business of general highway construction. It is a business which is owned by two white males-Tod Faerber and Douglas Stuart. Dunnet Bay has been qualified by the Illinois Department of Transportation ("IDOT" or "the Department") to bid work on IDOT highway construction projects.

From February 2009 through June 30, 2011, Gary Hannig was the Secretary of the IDOT.[1] In October 2011, Hannig became Special Advisor to Illinois Governor Patrick Quinn and, in December 2011, Hannig became the Director of the Governor's Office of Legislative Affairs. At all relevant times, Ellen Schanzle-Haskins was Chief Counsel at IDOT.

IDOT is an agency or department of the State of Illinois and is responsible for administering, building, operating, and maintaining the State highway system, including federal-aid highways, receiving and distributing federal financial assistance for highway construction and maintenance, and administering federally funded highway construction contracts in accordance with the laws of the United States and the State of Illinois, including those regulations promulgated by the United States Department of Transportation found in Part 26 of Title 49 of the Code of Federal Regulations. There are approximately 16, 000 miles of highways within the State of Illinois.

For purposes of highway construction and maintenance, the State of Illinois is divided into five regions, which are subdivided into nine districts. In general, the nine district engineers are responsible for the planning, design, construction, and maintenance of highways in their respective districts. In terms of organizational structure, the district engineers report to the regional engineers who in turn report to the Director of Highways, Chief Engineer. At the time of the events described herein, Christine Reed was the Director of Highways, Chief Engineer. Reed was responsible for planning, designing, constructing and maintaining approximately 16, 000 miles of highways within the State of Illinois and supporting counties and cities with the maintenance of their streets and roads.

B. Awarding Federally Funded Construction Contracts

IDOT awards highway construction contracts, including federally funded highway construction contracts to the lowest responsible and responsive bidder whose bid meets the requirements and criteria set forth in the invitation for bids. A "responsive bidder" is one who has submitted a bid that conforms in all material respects to the invitation for bids.

In general, a procurement for highway construction is initiated by IDOT with the issuance of an invitation for bids and the publication in the Illinois Procurement Bulletin of a public notice of the invitation. Prequalified construction companies interested in competing for a highway construction contract submit sealed bids to the Department. All bids are opened publicly at the designated time and place. IDOT then evaluates the bids based upon the requirements set forth in the invitation for bids and awards the highway construction contract to the lowest responsible and responsive bidder. The general or prime contractor awarded the construction contract completes the project with the use of subcontractors who perform certain phases or aspects of the construction project with the remainder of the construction "self-performed" by the general contractor. C. The DBE Program

(1) Federal requirements

With respect to federally funded highway construction projects, the Transportation Equity Act for the 21st Century ("TEA-21"), 112 Stat. 107, P.L. 105-178 (1998), as amended by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, 23 U.S.C. § 101 Note, 119 Stat. 1144, P.L. 109-59 (2005), and the regulations promulgated thereunder, viz., 49 C.F.R. §§ 26.21, 26.45, require State recipients of federal-aid funds for highway contracts, in this case, 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. Pursuant to Section 1101(b) of TEA-21, a goal of "not less than 10% 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." Each state recipient is to set an overall goal for DBE participation in accordance with methods prescribed by USDOT. 49 C.F.R. § 26.45.

After an overall goal is established, a State recipient such as IDOT may use contract goals to meet any portion of the overall goal projected not to be met by race-neutral means. 49 C.F.R. § 26.51(e). In setting individual contract jobs, the State recipient is supposed to consider such factors as the type of work involved, the location of the work and the availability of DBE's for the work of the particular contract. 49 C.F.R. § 26.51(e)(2).

In accordance with the federal regulations (49 C.F.R. §§ 26.21 and 45(f)(1)), IDOT[2] has prepared and submitted to the USDOT for approval a DBE program governing federally funded highway construction contracts.

(2) IDOT's Aspirational Goal, DBE Liaison and Unified Directory

The statewide attainment of minority participation was 11.2% while the goal was 22.7%. For fiscal year 2010, the Department established an overall aspirational DBE goal of 22.77% for DBE participation for federally assisted construction contracts and projected that 4.12% of the overall goal could be met through race neutral measures and that the remaining 18.65% would require the use of race-conscious goals. IDOT's FFY 2010 overall goal was submitted to the Federal Highway Administration ("FHWA") of USDOT on September 16, 2009. IDOT normally achieved somewhere between 10 and 14 percent participation by DBEs. The overall aspirational goal was based upon a statewide disparity study conducted on behalf of IDOT in 2004. There is often a major difference between the aspirational goal and the goal that can be supported on an individual project.

IDOT prepared and submitted to the FHWA on November 24, 2009, a DBE Program Document for FFY 2010, a copy of which is attached as an exhibit to Dunnet Bay's supporting memorandum. Among other things, the IDOT DBE Program Document provides that IDOT "will not use quotas in the administration of this DBE program."

The Department's DBE Program Document designated its Bureau Chief of the Office of Business and Workforce Diversity, Bureau of Small Business Enterprises, as the DBE Liaison officer. The Bureau's duties included: (1) making recommendations on pre and post-award goal modifications; (2) tracking final payments and approving final goal modifications; (3) approving modifications to approved DBE Utilization Plans; and (4) analyzing race-neutral program initiatives. Approval of the EEO officer's DBE goal is not a listed duty.

The IDOT DBE Program further provides for the maintenance of an Illinois Unified Certification DBE Directory which lists certified DBE firms with their name, address, and contact information by industry or category. "It is the responsibility of the prime contractor consultant to make his/her own determination regarding the capability of a DBE firm. Only those firms certified as of the letting date/bid opening may be utilized in meeting a DBE contract goal."

(3) Utilization or Contract Goals

Before advertising a construction project, IDOT generally sets goals for individual highway construction projects and estimates the cost of each project. The Program Development Engineer typically develops a general spreadsheet that helps determine the maximum allowable goal based on input from the EEO officer regarding what items could be DBE items.

From 2008 to May 2012, John Fortmann was the Program Development Engineer of the Division of Highways for Region 1 of IDOT. Fortmann wanted to be scientific about setting goals so the goals that are used can be justified.

Each highway construction contract may include a specific DBE utilization goal or contract goal established by the Department for the purpose of meeting its aspirational goal. The utilization goal is incorporated in the invitation for bids for the contract, and "[c]ompliance therewith is deemed a material bidding requirement. The failure of the bidder to comply will render the bid not responsive"

Utilization goals under the IDOT DBE Program Document are determined based upon "an assessment of the type of work, the location of the work, and the availability of DBE companies to do a part of the work." Specifically, the district's estimating engineer and the district's equal employment opportunity officer ("EEO Officer") review each construction project contract in the district to determine whether the project presents opportunities for DBE participation. Henry Gray, a civil engineer who had been with IDOT for 16 years, was the EEO Officer for District 1 from 2008 until approximately January 2010.

Each pay item for a proposed contract is analyzed to determine if there are at least two ready, willing, and able DBEs to perform the pay item. For a DBE subcontractor to be "ready, " that subcontractor must have all its paperwork submitted, it must be certified, and it must be allowed to bid and perform work on IDOT construction. The capacity of the DBEs, their willingness to perform the work in the particular district, and their possession of the necessary workforce and equipment are also factors in the overall determination. The analysis requires the exercise of discretionary judgment by an engineer in the highway district and the district's EEO officer, a knowledge of DBE prior experiences and work history, and the unified directory. Based upon the analysis, the district's estimating engineer and EEO Officer established proposed contract goals.

Henry Gray was the IDOT employee who set the DBE goals on the contract, which are then approved by the FHWA, IDOT's Bureau of Small Business Enterprises ("SBE"), the Bureau of Design and Implementation Engineer, the Bureau Chief and the IDOT District Engineer. Dunnet Bay disputes that occurred in this instance.

Initially, for the January 2010 letting, Gray calculated the DBE goal for the Eisenhower project to be 8%. When goals were first set on the Eisenhower, taking into account every item listed for work, the maximum potential goal for DBE participation for the Eisenhower project was 20.3%. Eventually, an overall goal of approximately 22% was set.

General contractors bidding on a highway construction contract are not informed of the individual pay items deemed by the Department to be DBE eligible.

(4) Contractors' Good Faith Efforts

Under the IDOT DBE Program Document, the "obligation of the bidder/offeror is to make good faith efforts" either by meeting the goal or documenting those good faith efforts. When the bid is submitted, the bidder must certify that it met the DBE goal and if it did not meet the DBE goal, the bidder must so state, ask for a modification of the goal, and provide good faith effort documents to show why the goal was not met.

In order to demonstrate good faith efforts, a bidder must show that "all necessary and reasonable" steps were taken to achieve the contract goal. IDOT has identified non-mandatory, non-exhaustive factors for this analysis, including:

a) soliciting DBE companies through attendance at pre-bid meetings, advertising, or providing written notice;
b) selecting economically feasible portions of the work for DBE performance;
c) providing information to DBE companies;
d) negotiating in good faith with interested DBE companies;
e) not rejecting DBE companies as unqualified without sound reasons based upon a thorough investigation;
f) assisting DBE companies in obtaining bonding, lines of credit, or insurance;
g) assisting DBE companies in obtaining necessary equipment, supplies or materials; and
h) using the services of available minority/women organizations.

IDOT maintains a "Bidders' List, " also known as a "For Bid List." "Prequalified prime contractors are automatically included in the list." With regard to subcontracting, DBEs typically will not submit quotes to general contractors who are not on the "For Bid List." A Bidder must submit to IDOT with the bid its Disadvantaged Business Utilization Plan indicating that the bidder has sufficient DBE participant commitments or has made good faith efforts to obtain those commitments.

If IDOT determines that a bidder has not met the goal and has not shown good faith efforts, IDOT will notify the bidder that its bid is non-responsive and explain why good faith efforts were not found. A bidder that has not met the contract goal and has been found to have failed to exert good faith efforts may request administrative reconsideration of the determination by an IDOT official who had no role in the original determination that the bidder did not make good faith efforts. A written decision by the reconsideration officer must be issued, which explains the "basis for finding that the bidder did or did not meet the goal or make adequate good faith efforts to do so." See 49 C.F.R. § 26.53(d)(4).

D. Eisenhower Expressway Project, Dunnet Bay's Bid and Rejection

(1) Eisenhower Contract

In 2009, IDOT determined that it would put out a bid for a construction project for a portion of Interstate 290, which is also known as the Eisenhower Parkway, and is located in Cook County, Illinois.

On December 4, 2009, IDOT issued invitations for bids for four federally funded contracts for construction work on the Eisenhower Expressway (also known as I-290) in Cook and DuPage Counties. One of those contracts is identified as Contract No. 60I57 (also identified as Item Letting No. 228). Using the process previously described for the establishment of utilization goals, IDOT initially established a DBE utilization goal of 8% for Contract No. 60I57.

On December 10 or 11, Hannig issued orders to withdraw the invitation for bids for Contract No. 60I57. Prior to issuing that withdrawal order, Hannig was informed that Governor Quinn's office wanted the Eisenhower Expressway construction projects held due to dissatisfaction with the DBE participation numbers.

IDOT increased the DBE utilization goals for the Eisenhower projects to a weighted average of 20%. The specific DBE utilization goal for Contract No. 60I57 was raised from 8% to 22%. The Bureau of Small Business Enterprises did not review the revised Eisenhower DBE goals.

A revised notice of letting/invitation for bids, dated January 5, 2010, was issued by IDOT. The letting date remained January 5, 2010.

(2) IDOT's Failure to Include Dunnet Bay on the For Bid List

As previously noted, IDOT maintains a "Bidders' List" or "For Bid List" identifying all approved, prequalified bidders on every item on a letting. The Department updates the For Bid List as necessary.

With respect to Contract No. 60I57, the final For Bid List was published on IDOT's website on January 14, 2010. Even though Dunnet Bay was an approved, prequalified bidder for Contract No. 60I57, IDOT failed to include Dunnet Bay on the For Bid List.

(3) Project Estimates

The program estimate of project costs is set by IDOT when it establishes its annual program, which is the list of projects that are going to be let during the fiscal year. The program estimate is based on the best information available at the time the program is established. The engineer's estimate is a very detailed analysis of all the work items, the average price of each of the work items and the total of all of those expenses.

The program estimate indicates whether there is money in IDOT's budget to pay for the construction project. The engineer's estimate should indicate if the contractor made a fair bid. Christine Reed distinguished between the program estimate and engineer's estimate because bid analysis requires a review of both. Bids are measured against the engineer's estimate to see if the contractor gave a reasonable bid. Bids are measured against the program estimate to make sure there is enough money in the budget.

(4) Small Business Initiatives

Small business initiatives are small contracts that are let by themselves to give DBEs an opportunity to submit bids to serve as their own prime contractor instead of always having to be a subcontractor. The small business initiative program is open to non-minority and minority contractors for bidding.

The Division of Highways had reserved $7 million worth of work from the four main Eisenhower contracts to create small business initiative projects and to balance the work in fiscal year 2010. If the work was added back into the prime contracts, it would increase the DBE participation goal. IDOT claims this would serve to get the DBE participation goals close to 20 percent. Dunnet Bay acknowledges it would increase participation though in a race-conscious manner. DBE participation that IDOT receives on small business initiative contracts is not counted towards IDOT's race-neutral DBE participation.

(5) Dunnet Bay's Bid and Alleged Good Faith Efforts

On January 15, 2010, Dunnet Bay submitted to IDOT its bid for Contract No 60I57. Among other things, Dunnet Bay's bid listed 158 pay items by description, quantity, and price. Dunnet Bay's total bid price for Contract No 60I57 was $10, 548, 873.198.

Dunnet Bay submitted with its bid its DBE Utilization plan, noting that it planned to meet the 22% DBE utilization goal, but identified $871, 582.55 of subcontracting, or 8.26 of its bid, for DBEs.

On January 11, 2010, IDOT convened at a Boys and Girls Club in Chicago a mandatory pre-bid meeting for all prime contractors interested in bidding on one of the Eisenhower projects. On behalf of Dunnet Bay, one of its two owners, Tod Faerber, attended the mandatory meeting. The purpose of the meeting was to give prime contractors an opportunity to discuss with DBEs subcontracting opportunities in light of the increased DBE utilization goals set by IDOT. Faerber spoke with several DBE contractors. At the mandatory meeting, political material supporting State Senator Ricky Herndon was distributed to attendees, including Faerber.

In addition to attending the mandatory meeting, Dunnet Bay undertook other good faith efforts to meet the utilization goal for Contract 60I57. As noted above, Dunnet Bay provided a description and documentation of those efforts to IDOT with its bid. Those efforts included:

a) advertising with DBE networking organizations: Black Contractors United, Chicago Minority Business Development Council, Chicago Urban league, Cosmopolitan Chamber of Commerce, Federation of Women Contractors, Hispanic Contractors, Latin American Chamber of Commerce, Small Contractors Network, the Illinois Hispanic Chamber of Commerce, and the Women's Business Development Center;
b) delivering faxes on January 4, 2010, to DBE companies;
c) following-up by telephone calls on January 11, 12, and 13, 2010, with DBE companies previously solicited; and
d) posting subcontracting opportunities on Dunnet Bay's website.

Dunnet Bay's outreach efforts included using IDOT's unified directory of certified DBEs to identify possible DBEs for certain pay items. As part of its good faith efforts, Dunnet Bay sent a fax indicating in which areas it was seeking subcontractor prices. In fact, Dunnet Bay had developed its own list of 453 DBE subcontractors from the IDOT unified directory whom Dunnet Bay routinely successfully contracted DBE goals on other objects. The methodology had been successful on past projects as Dunnet Bay was not among the contractors who often sought DBE waivers. Dunnet Bay also used its website to advertise subcontracting opportunities.

With regard to Contract No. 60I57, Dunnet Bay solicited 796 companies, 453 of which were certified DBEs listed in IDOT's unified directory, or 57% of all contacts were to DBEs. Of the 453 DBEs contacted by Dunnet Bay, 12% or 54 of them informed Dunnet Bay that they would provide a quote for Contract No. 60I57; 7% were unsure what they would do; 23% advised that they were not interested; 33% did not answer solicitations or return phone calls; 20% had no contact information or were no longer in business; and 5% asked not to be contacted again.

Although Dunnet Bay from 2007 through 2012 used IDOT's supportive services, it did not do so in preparing its bid for Contract No. 60I57. The goal of IDOT's supportive services program is to provide assistance that fosters opportunities for IDOT's DBE firms, including free services for prime contractors doing business with IDOT.

Although Dunnet Bay occasionally contacted the Bureau of Small Business Enterprises, it did not do so before submitting the bid in this case. The Bureau of Small Business Enterprises will tell a contractor what areas it used for setting the DBE goals if asked. Although it had used the Contractors Marketplace website prior to the January 15, 2010 letting, Dunnet Bay did not use that website in connection with its bid for Contract No. 60I57.

Dunnet Bay's documentation does not indicate that contractors who said they were not interested were called. For example, American Asphalt Company informed Dunnet Bay that it would not quote. In the alphabetical listing of contractors, there is no indication that a call was made to American Asphalt Company, although there are indications other contractors were called.

Tod Faerber testified that if a contractor said it bid but did not send in a quote, then Dunnet Bay might not have followed up with a phone call. Follow-up calls were made on a case-by-case basis.

Dunnet Bay's good faith efforts did not indicate any attempts to assist DBE's in obtaining bonding, lines of credit, or insurance as required by the recipient or contract. Its good faith efforts did not consist of any efforts to assist interested DBEs in obtaining necessary equipment, supplies, materials, or related assistance or services.

Dunnet Bay received no response from its outreach to minority/women community and contractor organizations, which was the typical response received. There is no indication that Dunnet Bay changed its outreach to minority/women community organizations to receive a more effective response. Dunnet Bay did not provide documents suggesting that it attempted to use the services of local, state, or federal minority/women business assistance offices as part of its documentation of good faith efforts.

Dunnet Bay did not provide documents indicating that it attempted to use any other organization to provide assistance in the recruitment and placement of DBEs as part of its documentation of good faith efforts.

The Department projected that it would be able to achieve a 4.12% DBE participation through race neutral means, leaving 18.65% DBE participation that would be met using contract goals.

Dunnet Bay's outreach to potential subcontractors, including DBEs, i.e., contacting and following-up with the subcontractors, customarily takes three employees, working full time, one week to accomplish. With respect to Contract No. 60I57, Dunnet Bay received ten quotes from DBE subcontractors shortly after 10:00 a.m. bid opening on January 15, 2010, including DBEs. If Dunnet Bay had received those DBE subcontractor quotes earlier, it would have achieved a 22.43% DBE utilization. At least one of the quotes from DBEs to Dunnet Bay arrived late as a direct result of IDOT's failure to include Dunnet Bay on the For Bid List.

Contract No. 60I57 is a federally funded contract. The invitation for bids for the January 15, 2010 letting stated that the letting is subject to and governed by the rules of IDOT adopted at 44 Illinois Administrative Code 650 and 44 Illinois Administrative Code 660, and by the provisions of the invitation. The invitation for the January 15, 2010 letting provided instructions to bidders, which directed as follows: "Read the following instructions carefully. Failure to follow these instructions carefully and the rules may result in the rejection of your bid. The Department reserves the right to reject any and all bids, to waive minor or immaterial irregularities, informalities or technicalities, to advertise for new bids, or to request confirmation or clarification from any bidder regarding a bid."

The FHWA and Ray LaHood, the United States Secretary of Transportation, expressed concern about states not reaching the DBE goals as established by the disparity studies. The FHWA indicated it would like to see participation opportunities increased.

At the bid opening on January 15, 2010, Dunnet Bay's bid was the lowest received by IDOT for Contract No. 60I57. Although its low bid was over IDOT's estimate for the project, it was within an awardable range. However, Gary Hannig testified it was not true that Dunnet Bay would normally be awarded the contract because the bid was over IDOT's estimate.

Dunnet Bay's bid on the Eisenhower was 0.73 percent below the engineer's estimate. It was 16% over the project estimate. Dunnet Bay claims its bid was rejected solely because it did not meet certain arbitrarily set goals. It alleges the amount had nothing to do with the rejection of the bid.

F.H. Paschen/S.N. Nielsen was the second low bidder for Contract No. 60I57 with a bid of $10, 634, 968.81 and projected DBE participation of 22%. Albin Carlson and Areatha Construction, a joint venture, were the fourth low bidder for Contract 60I57 with a bid of $11, 427, 873.98 and projected DBE participation of 40%.

Regional Engineer O'Keefe, whose authority included District 1, the district in which the construction was to take place, recommended the award of Contract No. 60I57 to Dunnet Bay.

IDOT alleges that no one in the Governor's office asked that IDOT hold off on advertising the Eisenhower until the Governor's office was satisfied that IDOT maxed the DBE participation numbers. Hannig decided a second look was necessary for the Eisenhower DBE goals and the Governor's office agreed with that decision. Hannig testified he did not mean to say, in an email to Reed and O'Keefe, that the Governor's office had inquired about holding off on advertising the Eisenhower. Rather, he spoke to Lafleur in the Governor's office and told her he would like to take a second look at the project.

IDOT alleges that a decision to have a weighted average of 20% for the DBE goals for the Eisenhower was made after determining that the goals could be raised to that level within the federal law. After the Director of Highways determined that the Eisenhower projects could have goals with a weighted average of 20%, the projects were going to be returned to the letting whether the Governor's office agreed with that decision or not. Hannig did not intend to go with a 20% goal notwithstanding the numbers. IDOT had to be able to support the numbers. Dunnet Bay disputes the foregoing allegations.

E. IDOT's Rejection of Dunnet Bay's Bid and Reconsideration

In a letter dated January 22, 2010, IDOT informed Dunnet Bay that it is IDOT's "preliminary determination that [Dunnet Bay has] not demonstrated a good faith effort to meet the DBE goal as required by DBE Special Provision." SBE did not consider and evaluate a bidder's good faith efforts as submitted with the bid for the January 15, 2010 letting and thereafter. SBE (not IDOT) decided to preliminarily reject as non-responsive all bids where the DBE utilization goals had not been achieved notwithstanding the demonstrated good faith efforts so those efforts could be evaluated in their totality.

Dunnet Bay alleges its bid for Contract No. 60I57 was rejected as non-responsive solely because it did not meet the DBE utilization goal and not because its bid price was over IDOT's price estimate. The Department claims the rejection was because Dunnet Bay did not utilize all good faith efforts to secure DBE participation. Moreover, Christine Reed recommended the project be rebid because it was over the project estimate, and Hannig always followed her recommendation. IDOT contends there is no evidence the recommendation would not have remained the same even if the bid was consistent with the DBE goal.

A reconsideration meeting was convened on January 25, 2010 by IDOT at Dunnet Bay's request. Hannig appointed IDOT Chief of Staff William Grunloh, a former Democratic State Representative, to serve as reconsideration officer. This was the first reconsideration meeting in which Grunloh participated. IDOT alleges that, upon his appointment as reconsideration hearing officer, Grunloh made himself aware of what the requirements were and the federal regulations and guidelines that are part of the process. Grunloh reviewed all of the guidance that USDOT published concerning good faith efforts to meet DBE goals prior to the reconsideration hearing. However, Dunnet Bay contends that Grunloh did not act in a manner consistent with federal law.

Dunnet Bay contends its reconsideration was the first to be held after Hannig directed that DBE utilization goals be increased and that waivers or goal modifications would not be granted, or at least, more difficult to obtain. IDOT disputes this allegation on the basis that Grunloh was the final decision-maker for administrative reconsideration and no one from IDOT instructed him to refuse to grant waivers of the DBE participation goals for contractors who have made good faith efforts to secure DBE participation. IDOT acknowledges Hannig did not want for waivers to be a common practice. Moreover, Christine Reed told the regional engineers to do their jobs well because the Secretary was not interested in entertaining waivers as part of his administration. At a meeting with the AGC, Hannig said that waivers were not going to be an acceptable part of his administration unless it was absolutely, positively appropriate.

Carol Lyle, Deputy Director of IDOT's Office of Business and Workforce Diversity, also attended the reconsideration meeting on behalf of IDOT. Lyle had served as the principal technical support employee for IDOT's DBE program since 1993. Lyle has personally reviewed ...

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