Kevin Kissner claims the Minnesota Department of Transportation is discriminating against his small St. Cloud-based traffic signal company, costing it more than $1 million since the beginning of last year.
In a lawsuit filed last week in U.S. District Court, Kissner, the owner of Geyer Signal Inc., claims that MnDOT is discriminating in how it implements its disadvantaged business enterprises (DBE) program in public road construction projects.
DBE programs are designed by federal law to prevent bias against women- and minority-owned businesses. Government entities like MnDOT must require general contractors to hire a certain percentage of qualified DBE businesses as subcontractors for some of the specialized work involved in road construction.
A MnDOT spokesman, Kevin Gutknecht, said the agency does not comment on ongoing litigation.
“The real thing is [the DBE program is] currently being implemented by MnDOT in a very aggressive fashion and that’s causing a lot of people a lot of damages,” said Kissner’s attorney, Kyle Hart, of the Minneapolis-based law firm of Fabyanske, Westra, Hart & Thomson.
The bottom line, Hart said, is that subcontractors like Geyer “suffer a disproportionate burden for remedying past discrimination.”
In essence, the 50-year-old Kissner, who is white, claims that because his company’s specialized work does not require a big upfront investment or in-depth training, numerous DBE businesses qualify to perform it.
But other types of road construction work – paving, for example – require more training and upfront investment and so few, if any, DBE businesses in Minnesota qualify to do such work, according to the lawsuit.
As a result, when contractors look to fulfill the general DBE requirements, the lawsuit alleges, they “over-concentrate” on areas like traffic signal work – which takes jobs and money away from firms like Geyer Signal.
Under the DBE statutes, contractors can give jobs to DBE businesses even if the DBE bid is higher than the bid of a non-DBE company. In construction, contracts generally go to low bidders.
Kissner says MnDOT has been enforcing DBE requirements particularly hard the last year or so and he does not know why but it has cost Geyer more than $1 million.
“They are … really putting the clamps down,” Kissner said in an interview last week.
Kissner says that “five or six times” in 2010 and once already this year (on a road project in Stevens County), a contractor has told him that while Geyer was the low bidder for a contract, the work was being awarded to a DBE business.
“Can you imagine if you were bidding a job and I told you that you were the low bidder by $9,000 or $15,000, but I couldn’t give you the contract?” Kissner said Wednesday.
“And it’s the taxpayers that have to pay the extra.”
“Some of these firms are no more disadvantaged than we are right now, in my opinion,” said Kissner, who has a wife and four children. “The nonminority guys right now are the ones getting the brunt of this.”
Kissner estimated Geyer had lost business worth “between $1 million and $1.2 million” since the beginning of 2010.
His attorney said one of the issues is that MnDOT sets DBE goals that are for the construction industry as a whole – and that hurts specific areas like traffic signaling.
“We are not contesting that there was discrimination in the past and that remedies are needed to address that,” Hart said. “What we are saying is these few trades shouldn’t have to bear the brunt of problems that the whole industry caused.”
It does not make sense, Hart added, that “all of the [DBE] participation falls on a few select trades, and the rest get off scot-free. We feel it’s a pretty simple and straightforward issue, and we hope to get to the bottom of it quickly.”
The lawsuit names MnDOT Commissioner Tom Sorel and Mary Prescott, acting director of the department’s Office of Civil Rights. The lawsuit asks the federal court to declare MnDOT’s DBE program illegal and unconstitutional and to award Geyer unspecified monetary damages.
This article originally appeared in Finance & Commerce.