Dunnet Bay Construction Compan v. Erica J. Borggren

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 14-1493

DUNNET BAY CONSTRUCTION COMPANY,

an Illinois Corporation,

Plaintiff-Appellant,

v.

ERICA J. BORGGREN, in her official capacity as

Acting Secretary for the Illinois

Department of Transportation, et al.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Central District of Illinois.

No. 3:10-cv-03051-RM-SMJ — Richard Mills, Judge.

____________________

ARGUED DECEMBER 12, 2014 — DECIDED AUGUST 19, 2015

____________________

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

TINDER, Circuit Judge. Plaintiff-Appellant Dunnet Bay

Construction Company sued Defendants-Appellees Illinois

Department of Transportation (IDOT) and its then-Secretary

of Transportation Gary Hannig in his official capacity, alleg-

ing that IDOT’s Disadvantaged Business Enterprise (DBE)

2 No. 14-1493

Program discriminates on the basis of race. The district court

granted summary judgment to Defendants, concluding that

Dunnet Bay lacked standing to raise an equal protection

challenge based on race and that the DBE Program survived

the constitutional and other challenges. Dunnet Bay appeals.

For the reasons that follow, we affirm.

I. BACKGROUND

Dunnet Bay is a corporation that engages in general

highway construction. It is prequalified to bid and work on

IDOT projects and competes for federally assisted highway

construction contracts awarded by IDOT. Dunnet Bay is

owned and controlled by two white males. Between 2007

and 2009, its average annual gross receipts were over $52

million.

IDOT is the agency of the State of Illinois responsible for

administering, building, operating, and maintaining the

state highway system. It also is responsible for administering

federally funded highway construction contracts in accord-

ance with federal and state law, including the regulations

promulgated by the U.S. Department of Transportation

(USDOT), see 49 C.F.R. Part 26. IDOT administers a small

business initiative program, which reserves certain work on

contracts for small business enterprises. Gary Hannig was

the Secretary of IDOT from February 2009 through the end

of June 2011.

In order to receive federal-aid funds for highway con-

tracts, IDOT must have a “disadvantaged business enter-

prise” participation program that complies with federal reg-

ulations. The Transportation Equity Act for the 21st Century

(“TEA–21”), Pub. L. No. 105–178, 112 Stat. 107 (1998), as

No. 14-1493 3

amended by the Safe, Accountable, Flexible, Efficient Trans-

portation Equity Act: A Legacy for Users, 23 U.S.C. § 101

Note, Pub. L. No. 109–59, 119 Stat. 1144 (2005), and the gov-

erning regulations require state recipients of federal-aid

funds for highway contracts like IDOT to submit to the

United States Department of Transportation (USDOT) a

written plan that demonstrates, inter alia, that they are not

discriminating against minorities and women in the award

of contracts. Section 1101(b) of the TEA–21 provides that

“not less than 10 percent of the amounts made available for

any program under … [TEA–21] shall be expended with

small business concerns owned and controlled by socially

and economically disadvantaged individuals.” A DBE is de-

fined as a for-profit small business concern that is at least

51% owned and controlled by one or more socially and eco-

nomically disadvantaged individuals. 49 C.F.R. § 26.5. There

is a rebuttable presumption that women and members of ra-

cial minority groups are socially and economically disadvan-

taged, id., but an individual owner of any race or gender

may qualify as “socially and economically disadvantaged.”

See id. Under the applicable regulation, “a firm is not an eli-

gible DBE in any Federal fiscal year if the firm (including its

affiliates) has had average annual gross receipts … over the

firm’s previous three fiscal years, in excess of $22.41 mil-

lion.” 49 C.F.R. § 26.65(b) (2009).

States must set an overall goal for DBE participation in

federally assisted contracts. 49 C.F.R. § 26.45(a). That goal

“must be based on demonstrable evidence of the availability

of ready, willing and able DBEs relative to all businesses

ready, willing and able to participate on [federal]-assisted

contracts” and “must reflect [the state’s] determination of

the level of DBE participation [one] would expect absent the

4 No. 14-1493

effects of discrimination.” Id. § 26.45(b). A state is not per-

mitted to use quotas for DBEs but may use set-aside con-

tracts for DBEs in limited circumstances. Id. § 26.43. A state

“must meet the maximum feasible portion of” its overall

DBE participation goal through race-neutral means, using

contract goals to meet any portion that is not projected to be

met with race-neutral means. Id. § 26.51(a), (d). In setting

specific contract goals, a state should consider such factors

as “the type of work involved, the location of the work and

the availability of DBEs for the work of the particular con-

tract.” Id. § 26.51(e)(2).

Under the regulations, a contract may be awarded to a

bidder who demonstrates that it has obtained enough DBE

participation to meet the DBE contract goal, or demonstrates

that it made adequate good faith efforts to meet the goal

even if it did not meet the goal, id. § 26.53(a), which means

that it “took all necessary and reasonable steps to achieve a

DBE goal … which, by their scope, intensity, and appropri-

ateness to the objective, could reasonably be expected to ob-

tain sufficient DBE participation, even if they were not fully

successful.” 49 C.F.R. Pt. 26, App. A, § I. If a bidder demon-

strates that it made adequate good faith efforts, it must not

be denied award of the contract on the ground that it failed

to meet the goal. Id. § 25.53(a)(2). If the apparent successful

bidder fails to either meet the DBE contract goal or demon-

strate good faith efforts, the state “must, before awarding the

contract, provide the [bidder] an opportunity for administra-

tive reconsideration.” Id. § 26.53(d). If the state determines

that the apparent successful bidder failed to show good faith

efforts, the state must send the bidder a written explanation

of the basis for the finding. Id. § 26.53(d)(4).

No. 14-1493 5

IDOT administers the DBE program in Illinois. IDOT

prepared and submitted to USDOT for approval a DBE pro-

gram governing federally funded highway construction con-

tracts. IDOT established a statewide aspirational goal for

DBE participation of 22.77%. IDOT typically achieved

somewhere between 10% and 14% DBE participation. For

fiscal year 2009, IDOT attained 11.15% minority participation

on all construction projects. For fiscal year 2010, IDOT pro-

jected that it would achieve 4.12% DBE participation

through race-neutral means, leaving 18.65% DBE participa-

tion to be met by using contract goals. The Federal Highway

Administration (FHWA) expressed concern about states not

reaching their DBE goals and indicated to IDOT that it

would like to see the DBE participation opportunities in-

creased.

IDOT has five regions that are subdivided into a total of

nine districts. Each district is headed by a district engineer

who is responsible for the highways in his or her district.

The district engineers report to the regional engineers who

report to the Director of Highways/Chief Engineer. A district

engineer and equal employment opportunity (EEO) officer

review each construction contract to decide whether the con-

tract presents DBE participation opportunities. At all rele-

vant times, Christine Reed was IDOT’s Director of High-

ways/Chief Engineer and was responsible for goal setting.

Reed reviewed recommendations for contract goals and

small business initiatives. Contracts had been withdrawn

from bidding by Secretary Hannig’s predecessor to review

DBE goals. After the goals were reviewed, the contracts were

re-advertised with higher DBE goals.

6 No. 14-1493

Under IDOT’s DBE program, if a bidder fails to meet the

DBE contract goal, then it may request a modification of the

goal, and provide documentation of its good faith efforts to

meet the goal. These requests for modification are also

known as “waivers.” Historically, IDOT has granted goal

modification requests. In calendar year 2007, it granted 57 of

63 pre-award goal modification requests; the six other bid-

ders ultimately met the contract goal with post-bid assis-

tance from IDOT. In calendar year 2008, IDOT granted 50 of

55 pre-award goal modification requests; the other five bid-

ders ultimately met the DBE goal. And in calendar year 2009,

IDOT granted 32 of 58 goal modification requests; the other

contractors ultimately met the goals. In calendar year 2010,

IDOT received 35 goal modification requests; it granted 21 of

them and denied the rest.

Secretary Hannig became IDOT’s Secretary in February

2009. He named William Grunloh his Chief of Staff. From

the beginning of his term, Secretary Hannig told Reed that

he wanted IDOT to make a “very strong effort” in setting

and attempting to achieve DBE goals. As with prior IDOT

Secretaries, Secretary Hannig was concerned about increas-

ing DBE participation in federal contracts. Indeed, his first

directive to IDOT’s entire staff was to increase participation

for minority companies. In a March 2009 meeting with Reed,

Secretary Hannig made it “very clear that waivers would not

be a part of a common practice of his administration.” As a

result, Reed told the regional engineers that “the Secretary

was not interested in entertaining waivers as part of his ad-

ministration” and told a contracting organization that “re-

quest[s] for waivers would be closely scrutinized and would

be very difficult to get.” In an April meeting about DBE par-

ticipation for a bridge project, Secretary Hannig was “very

No. 14-1493 7

adamant that waivers were not going to be an acceptable

part of his administration unless [they were] absolutely posi-

tively appropriate.”

IDOT’s Director of the Office of Business and Workforce

Diversity (OBWD) Larry Parrish, who recommended wheth-

er waiver requests were granted or denied and sought ap-

proval of his recommendation from Secretary Hannig, ad-

vised Carol Lyle, IDOT’s Deputy Director of OBWD, that he

was under pressure not to forward waiver requests.

From time to time, Reed had discussions about DBE

goals with Kristi Lafleur, the Deputy Chief of Staff in the

Governor’s Office who was responsible for oversight of

IDOT and Darryl Harris, the Governor’s Director of Diversi-

ty Enhancement. In September 2009, Lafleur emailed Secre-

tary Hannig that “[w]e need an action plan from [IDOT] on

increasing the DBE numbers” and “we need an overhaul for

the program and need to announce a new program.” Secre-

tary Hannig responded that “an overhaul of this program is

in order” but “[t]he federal guidelines make the program

goals and not set asides.” Beginning with his appointment in

November 2009 as Director of Diversity Enhancement, Har-

ris made it clear to Secretary Hannig, Reed, and other IDOT

personnel that DBE participation was a top priority and that

goal modifications were not favored.

In early December 2009, IDOT sought bids for a highway

resurfacing project for a portion of Interstate 290, known as

the Eisenhower Expressway. There were four federally

funded contracts for construction work on the Eisenhower,

one of which was Contract No. 60I57, the contract at issue in

this case. Henry Gray, a civil engineer and EEO Officer for

District 1, set the DBE goals for the contracts. He set DBE

8 No. 14-1493

participation goals of 8% for three of the four contracts, in-

cluding Contract No. 60I57; the goal for the fourth contract

was set at 10%.

In mid-December Secretary Hannig ordered the with-

drawal of the invitation for bids for the Eisenhower projects.

Before doing so, he had been advised that the Governor’s

Office wanted a weighted average DBE participation goal of

20% for those projects. Secretary Hannig wrote Reed and

Grunloh that “we need to get the [E]isenhower up to 20%

minority participation” and back on schedule. 1 Secretary

Hannig and Reed were comfortable that the goal could be

met within the law. Reed advised Secretary Hannig that the

contract goals were “relatively low” and there was oppor-

tunity to increase the goals under federal law. IDOT ex-

panded the scope of the projects and items deemed eligible

for DBE consideration—by expanding the geographic areas

to determine DBE eligibility and by adding pavement patch-

ing, landscaping, and other work originally reserved for

small business initiatives to the existing DBE goals. These

efforts increased the weighted average of the projects to 20%.

IDOT issued a revised invitation for bids for a January 2010

letting with a new DBE participation goal on Contract No.

60I57 of 22%.

Earlier in 2009, IDOT had sought approval from USDOT

to use “split goals” on a Mississippi River Bridge Project.

USDOT rules do not allow “split goals”—separate goals for

minorities and women. On December 14, Harris sent the

Governor’s Chief of Staff and others an email indicating that

1There is no “minority participation” goal, and, as noted, DBE status is

not limited to any particular minority group.

No. 14-1493 9

the Federation of Women Contractors was “willing[] to drop

[its] opposition to split goals” on the project if IDOT imple-

ments a “no waiver policy” like that of the Capital Devel-

opment Board. Harris testified that he never agreed to have

IDOT implement a no-waiver policy, but rather agreed to

“bring it up for consideration.”

On December 23, Secretary Hannig held a mandatory

meeting with Grunloh, Reed, Parrish, and IDOT’s Chief

Counsel Ellen Schanzle-Haskins, as well as with some re-

gional engineers and district EEO officers—the persons re-

sponsible for setting contract goals in their respective dis-

tricts. Secretary Hannig made it clear that the staff needed to

be more aggressive in setting DBE goals, that is, they needed

to increase the goals. He expressed his concern about waiv-

ers and goal modifications, explaining that he did not want

to have to decide between goal attainment and waivers and

modifications. IDOT’s Regional Engineer for the Metra East

area, Mary Lamie, testified that the Secretary repeated sev-

eral times that there would be no DBE waivers. However,

she also said that based on the context of the meeting, she

was “left with the impression that Secretary Hannig wasn’t

saying no waivers under any circumstances will ever be is-

sued” but that requests for “waivers were going to be re-

viewed” at a high level, and “we needed to make sure that

the appropriate documentation was provided” in order for a

waiver to be issued.

The FHWA approved the methodology IDOT used to es-

tablish its statewide overall DBE goal of 22.77%. The FHWA

reviewed and approved the individual contract goals for

work on the Eisenhower projects for IDOT’s January 15,

2010, bid letting. It also approved the IDOT DBE program

10 No. 14-1493

amendment that required contractors to submit with their

bids their DBE utilization plans and documentation of good

faith efforts to meet DBE goals.

On January 6, 2010, IDOT held an informational meeting

for general contractors and DBE firms regarding the January

15, 2010 bid letting. IDOT discussed changes in its DBE con-

tracting procedures and requirements. The District 8 (Metra

East) EEO Officer Lee Coleman stated that Secretary Hannig

had told him that no waivers would be granted with respect

to DBE contract goals for the letting. However, IDOT’s Di-

rector of Highways Reed told Secretary Hannig that a no-

waiver policy was not possible because it violated the law.

Secretary Hannig told Harris that a no-waiver policy was

not allowed under federal law. The Secretary also advised

the Governor’s Chief Operating Officer Jack Lavin that IDOT

was doing its best to follow the law and did not appreciate

Harris trying to interject himself into IDOT’s business.

IDOT has a “Bidders’ List,” also known as the “For Bid

List of Bidders” and “For Bid List,” which identifies all ap-

proved, prequalified general contractors for each item on a

letting. DBEs rely on the For Bid List so they know to which

contractors to submit subcontracting quotes. DBEs typically

will not submit subcontracting quotes to general contractors

who are not on the For Bid List. On January 14, IDOT issued

the final For Bid List, identifying the authorized bidders on

each project in the January 15 letting. IDOT inadvertently

left Dunnet Bay off the For Bid List.

On January 15, Dunnet Bay submitted to IDOT a bid of

$10,548,873.98 for Contract No. 60I57, which was the lowest

bid on the contract. Dunnet Bay’s bid was 0.73% under the

engineer’s estimate but 16% over the program estimate, ex-

No. 14-1493 11

ceeding the latter estimate by about $1.3 million.2 Dunnet

Bay submitted its DBE utilization plan, noting that it had

planned to meet the DBE goal of 22%, but identified only

$871,582.55 of subcontracting or 8.26% of its bid for DBE par-

ticipation.3 Three other bids were submitted; each of them

met the DBE goal. The regional engineer for District 1 ad-

vised Director Reed that Dunnet Bay’s bid was within the

awardable range.

Dunnet Bay requested a goal modification, also known as

a waiver, based on its good faith efforts to obtain the DBE

goal. In December 2009, Dunnet Bay had attended a sympo-

sium where it met some DBEs. Beginning on January 4, 2010,

Dunnet Bay faxed DBE subcontractors invitations to submit

quotes and followed-up about a week later with telephone

calls. Dunnet Bay solicited 796 companies, 453 of which were

DBEs. It had contacted DBE networking organizations such

as the Black Contractors United, Chicago Minority Business

Development Council, and Chicago Urban League, and ad-

2 The engineer’s estimate is calculated by the relevant district engineer; it

is a detailed analysis of the average cost of each work item and the total

expenses. The program estimate is set by IDOT and used to allocate

available funds for the fiscal year. A bid is compared to the engineer’s

estimate to determine whether or not it is within the awardable range.

The program estimate is used to determine whether there is money in

IDOT’s budget to pay for the project. Reed stated that bids are measured

against both the engineer’s estimate (to determine if the bid is reasona-

ble) and against the program estimate (to ensure there is enough money

in the budget).

3 Prior to 2010, a successful low bidder was required to submit its DBE

utilization plan within 7 days after the letting. Effective with the January

15, 2010 letting, contractors were required to submit their DBE utilization

plans and documentation of good faith efforts with their bids.

12 No. 14-1493

vertised subcontracting opportunities on its website. In addi-

tion, Dunnet Bay’s president attended a mandatory pre-bid

meeting, which provided DBEs an opportunity to network

with prime contractors interested in bidding on the Eisen-

hower project. Dunnet Bay’s efforts were essentially the

same that it had made in the past and had proven successful

in meeting DBE goals. Dunnet Bay was not among those

contractors who often sought goal modification requests. In

fact, Dunnet Bay met the goal for 8 of the 9 bids in the Janu-

ary 15, 2010 letting. However, despite utilizing IDOT’s sup-

portive services in the past, Dunnet Bay did not contact sup-

portive services in connection with the Eisenhower project.

Its president offered the explanation that supportive services

were not of “any help.”

DBE subcontractors submitted to Dunnet Bay post-bid

quotes that would have enabled it to meet the DBE participa-

tion goal. At least one of the subcontractors indicated that its

quote would have been submitted earlier had it known that

Dunnet Bay was bidding on the project, that is, had IDOT

not left Dunnet Bay off the For Bid List.

An interview of Darryl Harris was published in the Janu-

ary 2010 issue of Capital City Courier. (Governor Quinn was

facing a formidable challenger in the Democratic primary

election to be held on February 2, 2010.) In the interview,

Harris discussed the DBE program on the Eisenhower pro-

jects:

I can tell you one of the greatest successes that

we have so far is that we have a project in the

Chicago area called the Eisenhower Highway

Project, which is a $90 billion dollar project.

Traditionally, goals in the past were set around

No. 14-1493 13

6 or 8 percent. This administration can go on

record that our goal is 20 percent, with one

stage of that project being 30 percent for minor-

ity-owned businesses. Already you can see that

the Governor is committed to providing oppor-

tunities for minorities and women … .

The Governor remains steadfast on a no-waiver poli-

cy. This has been a practice in C.D.B. [Capital Devel-

opment Board] for several years. So, now we’re en-

couraging the Department of Transportation to also

have a no waiver policy.

[O]ur no-waiver policy is just that. You have to

meet it. When we put goals on a project, we

strongly encourage that those goal[s] are being

met.

The article was not well-received by IDOT. Secretary

Hannig was upset that Harris would make such statements

that were contrary to federal law. Hannig had advised Har-

ris that a “no waiver” policy was not allowed under federal

law and that IDOT would not implement a policy “that was

clearly in violation of the federal laws.” The article drew ob-

jection from the Illinois Road & Builders Association who

wrote Governor Quinn, requesting “complete repudiation”

of Harris’s statements about a “no-waiver policy.” Secretary

Hannig and IDOT’s Chief Counsel responded by indicating

that IDOT does not violate federal law and regulations, and

that IDOT has granted and does grant waivers where ap-

propriate.

In an email dated January 20, 2010, from Secretary Han-

nig to Harris and copied to Lafleur in the Governor’s Office,

14 No. 14-1493

Hannig advised of the results of the bidding on Contract No.

60I57:

The fourth project has 4 bidders. The low bid-

der is over budget but close in dollar amounts

but is the only bidder to miss the DBE goals.

Under our rules since the lowest bidder is close

to our pre-bid estimate, he would normally be

given the award if he could show a good faith

effort to meet the DBE goals and was granted a

waiver by I.D.O.T. If I.D.O.T. rules he did not

make a good faith effort I.D.O.T. could award

the contract to the next lowest bidder or rebid

the project.

Secretary Hannig testified that the email was mistaken be-

cause the low bidder would not normally be awarded the

contract because the bid was over IDOT’s estimate. He ex-

plained, “We would have to take a look at it, and there could

be some circumstances where it would be accepted.” IDOT

Chief Counsel Schanzle-Haskins stated that “[IDOT] would

not normally award a contract that was [$1.3 million] over

the program estimate”; instead, it “normally would reject the

bid.”

IDOT held a series of meetings to decide whether to

award the Eisenhower contracts. Three of the bids were

“way over” the program estimates. It was discussed that

Dunnet Bay as the low bidder was over the program esti-

mate, but within the awardable range. Secretary Hannig ex-

pressed concern about the race, gender, and ethnicity of the

DBEs on the Eisenhower projects. Harris expressed concern

that there were not enough African American subcontractors

on the DBE list. Reed made recommendations to Secretary

No. 14-1493 15

Hannig regarding whether to rebid contracts, and he fol-

lowed her recommendations to rebid contracts for financial

concerns. Reed recommended to Secretary Hannig that Con-

tract No. 60I57 be rebid because the low bidder was 16%

over the project estimate and was left off the For Bidders

List.

In a letter dated January 22, 2010, IDOT advised Dunnet

Bay that it had made a “preliminary determination” that

Dunnet Bay had not made good faith efforts to meet the DBE

goal. Dunnet Bay’s good faith efforts were not considered at

that time, however. Rather, where the bidder failed to meet

the DBE goal despite documentation of good faith efforts,

IDOT initially rejected the bid and all bids as non-

responsive. According to Carol Lyle, IDOT had decided to

preliminarily reject any bid that did not meet the DBE goal

and allow the contractor to seek a reconsideration hearing. A

reconsideration hearing was set for January 25 to allow

Dunnet Bay to provide documentation of its good faith ef-

forts.

Secretary Hannig appointed IDOT Chief of Staff Grun-

loh, a former Democratic State Representative, to serve as

reconsideration officer. As noted, Grunloh had participated

in the December 23 meeting where Secretary Hannig made it

clear he wanted aggressive DBE goal setting and expressed

concern about goal modification requests. Dunnet Bay’s re-

consideration hearing was Grunloh’s first as a hearing of-

ficer. Before the hearing, Lyle briefed Grunloh on the issues

relevant to the reconsideration hearing, provided him with a

copy of the applicable federal regulations and standards, in-

cluding the good faith effort standards in Appendix A to

Part 26 of the Code of Federal Regulations, and advised him

16 No. 14-1493

of the resources that were available to assist contractors in

meeting DBE goals.

Grunloh, Lyle, Dunnet Bay’s owner and president Tod

Faerber, and Dunnet Bay employee Sarah Rose attended the

reconsideration hearing. Dunnet Bay presented evidence of

its good faith efforts. However, Faerber admitted that they

had not used IDOT’s supportive services. Dunnet Bay ar-

gued that it would have met the contract’s DBE goal but for

IDOT’s error in leaving it off the For Bid List, which impact-

ed the DBEs’ submission of timely subcontracting quotes to

Dunnet Bay.

After the reconsideration hearing, Faerber met with Lyle

and Grunloh. Lyle initially believed that Dunnet Bay had

demonstrated sufficient good faith efforts. She testified,

however, that a major reason for this belief was because

Dunnet Bay had been left off the For Bid List. Lyle subse-

quently expressed the opinion that Dunnet Bay could have

done more to demonstrate good faith efforts, namely, by

contacting supportive services as well as IDOT’s Bureau of

Small Business Enterprises and the district EEO officer.

Faerber also met with Secretary Hannig to express seri-

ous concern about his ability to get a fair hearing given the

Darryl Harris article, which “seemed to imply that waivers

were not going to be granted.” The Secretary responded that

he understood, but he was under pressure from Harris not

to grant waivers. Faerber candidly testified that Secretary

Hannig did not indicate whether or not IDOT would grant

waivers.

Grunloh decided that Dunnet Bay’s reconsideration re-

quest should be denied, having concluded that it had not

No. 14-1493 17

demonstrated good faith efforts to obtain DBE participation.

Although Grunloh prepared no contemporaneous writing of

his reasoning, he summarized his reasons as follows: (1)

Dunnet Bay did not utilize IDOT’s supportive services, and

(2) the second, third, and fourth next lowest bidders were

able to meet the 22% goal.

Grunloh also recommended to Secretary Hannig that the

contract be rebid instead of awarded to the second lowest

bidder because the low bidder (Dunnet Bay) had not been

included on the final For Bid List. Similarly, Chief Counsel

Schanzle-Haskins advised Secretary Hannig that IDOT

“screwed up” by leaving Dunnet Bay off the bidders list, and

so, in fairness, IDOT should not award the contract to the

second lowest bidder. Because the low bidder was 16% over

the project estimate and was left off the Final For Bid List,

Secretary Hannig decided not to award the contract to the

second lowest bidder and re-let Contract No. 60I57.

On February 2, Secretary Hannig contacted Faerber by

telephone and advised that IDOT was not going to grant

Dunnet Bay a waiver for the project and its bid was going to

be rejected because it did not meet the DBE goal. Hannig ex-

plained that IDOT “felt bad” because Dunnet Bay was left

off the For Bid List, and IDOT was going to rebid the project

rather than award it to the second lowest bidder. Secretary

Hannig sent Dunnet Bay a letter dated February 2, 2010, stat-

ing that its bid was “considered non-responsive and is here-

by rejected.” Secretary Hannig testified that Dunnet Bay’s

bid was rejected because it did not meet the DBA goal, but it

“could have been rejected because [it] was too high”; how-

ever, IDOT never reached the question of whether or not it

should award the contract based on the amount. Secretary

18 No. 14-1493

Hannig explained that had Dunnet Bay met the DBE goal,

the next question would have been whether the bid was ap-

propriate, and Reed had recommended that IDOT rebid the

contract.

Four separate Eisenhower Expressway projects were ad-

vertised for bids for the January 15, 2010 bid letting. IDOT

granted one of four goal modifications requested from that

bid letting. (Reconsideration Hearing Officer Grunloh grant-

ed modification of the DBE participation goal on March 4,

2010.) Only one of the four projects was awarded; the other

three, including Contract No. 60I57, were unacceptable to

IDOT and were rebundled and re-advertised for bids for a

February 2010 special letting. The re-bids were “much more

competitive.” Although Dunnet Bay’s bid was lower than its

first bid, it was not the lowest bid; it was the third out of five

bidders.

On February 26, 2010, Dunnet Bay sued IDOT and Secre-

tary Hannig in his official capacity, asserting race discrimi-

nation and equal protection claims under 42 U.S.C. §§ 1981

and 1983; Title VI of the Civil Rights Act of 1964, 42 U.S.C. §

2000d; and Section 5 of the Illinois Civil Rights Act of 2003,

740 ILCS 23/1–5. Dunnet Bay sought damages as well as a

declaratory judgment that the DBE Program is unconstitu-

tional and injunctive relief against its enforcement. Dunnet

Bay sought summary judgment as to liability, contending

that the Defendants exceeded the authority granted to them

in the federal rules regarding DBE programs, so that the

DBE Program was not insulated from constitutional attack

and could not withstand strict scrutiny. Defendants also

sought summary judgment, arguing that the DBE program

was not subject to attack, that Dunnet Bay was not subjected

No. 14-1493 19

to intentional race discrimination, and that Dunnet Bay

lacked standing to raise an equal protection challenge based

upon race.

In a comprehensive and well-written opinion, the district

court granted the Defendants’ motion and denied Dunnet

Bay’s motion. The court concluded “that Dunnet Bay lacks

Article III standing to raise an equal protection challenge be-

cause it has not suffered a ‘particularized’ injury that was

caused by IDOT. Dunnet Bay was not deprived of the ability

to compete on an equal basis.” Dunnet Bay Constr. Co. v.

Hannig, 3:10-cv-3051, 2014 WL 552213, at *30 (C.D. Ill. Feb.

12, 2014). The court also determined that Dunnet Bay, which

does not qualify as a small business, lacks prudential “stand-

ing to vindicate the rights of a (hypothetical) white-owned

small business.” Id.

Even if Dunnet Bay had standing to bring an equal pro-

tection claim, the court concluded that the Defendants were

entitled to summary judgment. Id. It stated that to establish

an equal protection violation, IDOT would have to show

that it was treated less favorably than another similarly situ-

ated entity. The court found that only speculation could re-

solve whether Dunnet Bay or any other contractor would

have been awarded the Contract but for IDOT’s DBE Pro-

gram. It reasoned that no one could know what the second

lowest bidder’s bid would have been if it had not met the

22% goal or what Dunnet Bay’s bid would have been had it

met the 22% goal, or whether Dunnet Bay would have been

awarded the contract had it demonstrated adequate good

faith efforts because its bid was over the program estimate.

And because Dunnet Bay was held to the same standards as

every other bidder, the court concluded that Dunnet Bay

20 No. 14-1493

could not establish that it was the victim of racial discrimina-

tion. Id. at *31.

Moreover, the court determined that IDOT had not ex-

ceeded its federal authority under the federal rules and that

Dunnet Bay’s challenge to the DBE program fails under

Northern Contracting, Inc. v. Illinois, 473 F.3d 715, 721 (7th Cir.

2007), which insulates a state DBE program from a constitu-

tional attack absent a showing that the state exceeded its

federal authority. Id. at *26-*29. The court determined that

there was no reasonable basis to find that IDOT exceeded its

federal authority by (1) setting the 22% DBE goal on the Ei-

senhower Contract; (2) imposing a “no waiver” policy by

refusing to grant waivers of DBE goals, given that a waiver

was granted in connection with the January 15, 2010 letting

at issue and waivers were granted before and after that let-

ting; (3) denying Dunnet Bay’s waiver request initially and

on reconsideration upon finding that it did not make ade-

quate good faith efforts; and (4) omitting from its denial let-

ter the reasons why its good faith efforts were inadequate,

given that the “technical” violation did not prejudice Dunnet

Bay. Furthermore, because IDOT rebid the project, the court

concluded that a reconsideration hearing was not required,

and because the contract was not awarded to the next lowest

bidder, it decided the claim was moot. Id. at *29. Dunnet Bay

appeals from the district court’s judgment.

II. DISCUSSION

Dunnet Bay contends that it was denied a state highway

construction contract because of race discrimination in

No. 14-1493 21

IDOT’s DBE Program. We review the district court’s ruling

on the cross-motions for summary judgment de novo, con-

struing all reasonable inferences from the record in favor of

the party against whom the motion under consideration is

made. Tompkins v. Cent. Laborers’ Pension Fund, 712 F.3d 995,

999 (7th Cir. 2013).

A. Dunnet Bay’s Standing to Raise an Equal Protection

Claim

The first issue we address is whether Dunnet Bay has

standing to challenge IDOT’s DBE Program on the ground

that it discriminates on the basis of race in the award of

highway construction contracts. In other words, is Dunnet

Bay a proper plaintiff to challenge the DBE program on the

basis of alleged race discrimination? If Dunnet Bay lacks

standing, then we lack jurisdiction to consider the merits of

the equal protection claim. Steel Co. v. Citizens for a Better

Env’t, 523 U.S. 83, 94 (1998).

Standing arises under Article III’s “case or controversy”

requirement. See Lujan v. Defenders of Wildlife, 504 U.S. 555,

560 (1992). Article III standing has three elements: (1) an “in-

jury in fact,” that is, ”an invasion of a legally protected inter-

est which is … concrete and particularized, and … actual or

imminent”; (2) a causal connection between the injury and

the challenged conduct, meaning that the injury is “fairly

traceable” to the challenged conduct; and (3) a likelihood

“that the injury will be redressed by a favorable decision.”

Lujan, 504 U.S. at 560–61 (citations and internal quotation

marks omitted). These are the constitutional minimum re-

quirements for standing. See id. at 560.

22 No. 14-1493

There are also prudential limitations on standing. Lujan,

504 U.S. at 560; Warth v. Seldin, 422 U.S. 490, 498–99 (1975).

One of these limitations is that “when the asserted harm is a

‘generalized grievance’ shared in substantially equal meas-

ure by all or a large class of citizens, that harm alone normal-

ly does not warrant exercise of jurisdiction.” Warth, 422 U.S.

at 499. Another prudential limitation is that a litigant “gen-

erally must assert his own legal rights and interests” and

cannot assert “the legal rights or interests of third parties.”

Id. In contrast with constitutional limitations on standing,

prudential limitations are not jurisdictional and may be dis-

regarded in certain situations. Id. at 500–01 (recognizing that

as long as constitutional standing is satisfied, a party “may

have standing to seek relief on the basis of the legal rights

and interests of others”). In addition, a litigant may forfeit

prudential standing arguments by failing to present them in

the district court. See Bd. of Educ. of Oak Park & River Forest

High Sch. Dist. No. 200 v. Kelly E., 207 F.3d 931, 934 (7th Cir.

2000) (stating that “prudential considerations … are forfeited

if not presented in a timely fashion”).

“The party invoking federal jurisdiction bears the burden

of establishing [the standing] elements[,] … [and] each ele-

ment must be supported … with the manner and degree of

evidence required at the successive stages of the litigation.”

Edgewood Manor Apart. Homes, LLC v. RSUI Indem. Co., 733

F.3d 761, 771 (7th Cir. 2013) (quoting Lujan, 504 U.S. at 561

(citations omitted)). “At the summary-judgment stage, ‘the

plaintiff can no longer rest on … mere allegations, but must

set forth by affidavit or other evidence specific facts.’” Id.

(quoting Lujan, 504 U.S. at 561 (internal quotation marks and

citations omitted)). Thus, because the district court decided

that Dunnet Bay lacked standing at the summary judgment

No. 14-1493 23

stage, mere allegations of standing are not enough; Dunnet

Bay must present evidence to establish the elements of

standing.

Dunnet Bay contends that it has standing because it has

suffered an injury in fact. First, it asserts that IDOT’s race-

conscious DBE program prevented it from competing on

equal footing with DBE contractors and prevented it from

being awarded the contract. Dunnet Bay also claims that it

was injured because the DBE program forced it to participate

in a discriminatory scheme.

The Supreme Court addressed standing to raise an equal

protection challenge to race-conscious government contract-

ing programs in Northeastern Fla. Chapter, Associated General

Contractors of America v. Jacksonville, 508 U.S. 656 (1993), and

Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). In

Northeastern Florida, an association of contractors challenged

a Jacksonville, Florida ordinance setting aside 10% of city

contracts for businesses that were minority- or women-

owned. Once a project was earmarked for minority business

enterprise bidding, it was “deemed reserved for minority

business enterprises only” and non-minority business enter-

prises could not even bid on the project. 508 U.S. at 658. The

Court concluded:

When the government erects a barrier that

makes it more difficult for members of one

group to obtain a benefit than it is for members

of another group, a member of the former

group seeking to challenge the barrier need not

allege that he would have obtained the benefit

but for the barrier in order to establish stand-

ing. The “injury in fact” in an equal protection

24 No. 14-1493

case of this variety is the denial of equal treat-

ment resulting from the imposition of the bar-

rier, not the ultimate inability to obtain the

benefit.

Id. at 666. The Court held that “in the context of a challenge

to a set-aside program, the ‘injury in fact’ is the inability to

compete on an equal footing in the bidding process, not the

loss of a contract.” Id. Therefore, to establish standing to

challenge a set-aside program, a plaintiff “need only demon-

strate that it is able and ready to bid on contracts and that a

discriminatory policy prevents it from doing so on an equal

basis.” Id.; see Gratz v. Bollinger, 539 U.S. 244, 262 (2003)

(holding that Caucasian applicant for university admission

had standing to seek prospective relief challenging universi-

ty’s use of race in its admissions policy where he was denied

admission but a minority applicant with his qualifications

would have been admitted and applicant was “able and

ready” to apply as a transfer student if the university

stopped using race in its admissions policy).

In Adarand, the Court addressed whether a subcontractor

had standing to raise an equal protection challenge to a law

that gave general contractors a direct financial incentive to

hire subcontractors controlled by “socially and economically

disadvantaged individuals.” 515 U.S. at 204. The plaintiff

submitted the low bid but was not awarded the subcontract

and submitted evidence that the general contractor would

have accepted its bid, but for the subcontractor compensa-

tion clause that provided it additional payment for hiring

the disadvantaged subcontractor. Id. at 205. The plaintiff also

established that it often competed for contracts against com-

panies certified as small disadvantaged businesses. Id. at 212.

No. 14-1493 25

The Court held that the plaintiff had standing to seek for-

ward-looking relief because the “discriminatory classifica-

tion prevent[s] the plaintiff from competing on equal foot-

ing.” Id. at 211 (citing Northeastern Fla., 508 U.S. at 667). In

other words, because the subcontractor compensation clause

made the plaintiff more expensive to hire, it could not com-

pete on equal footing with subcontractors considered disad-

vantaged because of their race. See Regents of Univ. of Cal. v.

Bakke, 438 U.S. 265, 280–81 n.14 (1978) (holding white medi-

cal school applicant had standing to challenge school’s ad-

missions program which reserved a prescribed number of

positions in the class for disadvantaged minorities because

the “injury” was the school’s “decision not to permit [him] to

compete for all 100 places in the class, simply because of his

race”); Alliant Energy Corp. v. Bie, 277 F.3d 916, 920–21 (7th

Cir. 2002) (stating that “[a] statute that deprives a firm of an

opportunity to compete for business gives standing to sue”).

In arguing that it was unable to compete on equal footing

with DBE contractors, Dunnet Bay asserts that it “need only

show that it was excluded from competition and considera-

tion for a government benefit because of race-based

measures.” Yet Dunnet Bay has not established that it was

excluded from competition or otherwise disadvantaged be-

cause of race-based measures. First, in contrast with North-

eastern Florida, nothing in IDOT’s DBE program excluded

Dunnet Bay from competition for any contract. IDOT’s DBE

program is not a “set aside program like Jacksonville’s” in

which non-minority owned businesses could not even bid

on certain contracts. Under IDOT’s DBE program, all con-

tractors—minority and non-minority contractors alike—can

bid on all contracts, subject to the DBE goals or good faith

efforts to satisfy those goals.

26 No. 14-1493

Further, Jacksonville’s ordinance favored “minority

business enterprises,” defined as a business with minority or

female ownership. IDOT’s DBE program is designed to in-

crease the participation of socially and economically disad-

vantaged businesses in construction contracts, see N. Con-

tracting, 473 F.3d at 720–24 (holding IDOT’s DBE program

constitutional), and therefore addresses a broader category

of disadvantaged businesses than that addressed in Jackson-

ville’s ordinance. The absence of complete exclusion from

competition for certain projects with minority- or women-

owned businesses also distinguishes some of the other au-

thorities cited by Dunnet Bay and amici: Eng’g Contractors

Ass’n of S. Fla. Inc. v. Metro. Dade Cnty., 122 F.3d 895, 905–06

(11th Cir. 1997) (holding trade associations whose members

regularly performed work for county had standing to chal-

lenge county’s affirmative action program that allowed con-

tracts to be set aside for bidding only among minority and

women business enterprise programs); Coral Constr. Co. v.

King Cnty., 941 F.2d 910, 929–30 (9th Cir. 1991) (holding con-

tractor had standing to challenge county’s minority- and

women-owned business enterprise program where a set-

aside method applied under which a contractor had to use

minority- or women-owned businesses for a certain percent-

age of work on the contract).

And unlike in Adarand, where the challenged law explic-

itly favored minority-owned subcontractors by providing a

direct financial incentive to contractors to hire them, Dunnet

Bay has not alleged, let alone produced evidence to show,

that it was treated less favorably than any other contractor

because of the race of its owners. The lack of an explicit pref-

erence for minority-owned businesses distinguishes other

authorities cited by Dunnet Bay. See Bras v. Cal. Pub. Utils.

No. 14-1493 27

Comm’n, 59 F.3d 869, 871 (9th Cir. 1995) (public utility pro-

vided a pre-qualification preference to minority- and wom-

en-owned businesses and plaintiff lost opportunity to nego-

tiate with utility because race and gender were considered);

Associated Gen. Contractors of Cal., Inc. v. Coalition for Econ.

Equity, 950 F.2d 1401, 1404 (9th Cir. 1991) (ordinance gave

5% bid preference to minority- and women-owned business-

es for public contracts); see also Coral Constr., 941 F.2d at 914,

930 (holding contractor had standing to challenge program

that gave minority- and women-owned businesses a prefer-

ence for public contracts if their bid was within 5% of the

lowest bid). Under IDOT’s DBE program, all contractors are

treated alike and subject to the same rules.

Still other authorities cited by Dunnet Bay or amici are

inapposite because the contractors’ standing was based in

part on the fact that they lost an award of a contract for fail-

ing to meet the disadvantage business enterprise goal or fail-

ing to show good faith efforts, despite being the low bidders

on the contract, and the second lowest bidder was awarded

the contract. See Safeco Ins. Co. of Am. v. City of White House,

Tenn., 191 F.3d 675, 689 (6th Cir. 1999) (holding contractor

and its insurer had standing to challenge the constitutionali-

ty of EPA regulations imposing a racial preference on minor-

ity subcontracts where the alleged failure to comply with the

regulations resulted in the loss of a contract which was

awarded to the second lowest bidder and the regulations

placed white subcontractors at a competitive disadvantage);

Monterey Mech. Co. v. Wilson, 125 F.3d 702, 704 (9th Cir. 1997)

(noting that plaintiff submitted the lowest bid but did not

get the contract since its “bid was disqualified because [it]

did not comply with a state statute” and the second lowest

bidder won the contract); Concrete Works of Colo., Inc. v. City

28 No. 14-1493

& Cnty. of Denver, 36 F.3d 1513, 1518 & n.5 (10th Cir. 1994)

(holding contractor demonstrated injury in fact where it

“submitted bids on three projects and the [o]rdinance pre-

vented it from competing on an equal basis with minority

and women-owned prime contractors” and noting that the

plaintiff submitted the lowest bid on one project but its bid

was not accepted because of its failure to meet the minority-

businesses enterprise goals or good faith requirements and

the bid was awarded to the second lowest bidder); Contrac-

tors Ass'n of E. Pa., Inc. v. City of Phila., 6 F.3d 990, 994–96 (3d

Cir. 1993) (concluding that associations of contractors had

standing to challenge city ordinance creating contract pref-

erences for businesses owned by minorities, women, and

disabled persons where association members presented evi-

dence they were denied contracts for failure to meet the DBE

goals despite being low bidders); but see W.H. Scott Constr.

Co. v. City of Jackson, Miss., 199 F.3d 206, 214–15 (5th Cir.

1999) (holding that non-minority contractor had standing to

bring an equal protection challenge to city’s minority partic-

ipation program because non-minority contractors were at a

competitive disadvantage with minority contractors who

could satisfy the minority-participation goals with their own

work, but relying on Monterey Mechanical and Concrete

Works).

In contrast with these cases where the plaintiffs had

standing, Dunnet Bay cannot establish that it would have

been awarded the contract on the Eisenhower project but for

its failure to meet the DBE goal or demonstrate good faith

efforts. The evidence, even when viewed in the light most

favorable to Dunnet Bay, demonstrates that although Dun-

net Bay’s bid was rejected for failing to meet the DBE goal,

its bid was 16% or about $1.3 million over the program esti-

No. 14-1493 29

mate, and Director Reed recommended that IDOT rebid the

contract because the low bid was 16% over the project esti-

mate and Dunnet Bay had been left off the For Bidders List.

The evidence further establishes that Secretary Hannig al-

ways followed Reed’s recommendations to rebid contracts

for financial concerns. Indeed, the Secretary decided to rebid

the contract because the low bidder was 16% over the project

estimate and was left off the final For Bid List.

Moreover, even assuming that Dunnet Bay could estab-

lish that it was excluded from competition with DBEs or that

it was disadvantaged as compared to DBEs, it cannot show

that any difference in treatment was because of race. The

regulations define a DBE as “a for-profit small business con-

cern” that is owned or controlled “by one or more individu-

als who are both socially and economically disadvantaged.”

49 C.F.R. § 26.5 (2009). “Socially and economically disadvan-

taged” individuals include women, “Black Americans,”

“Hispanic Americans,” and others. Id. And an individual in

any racial group or gender may qualify as “socially and eco-

nomically disadvantaged.” See id. However, “a firm is not an

eligible DBE in any Federal fiscal year if the firm (including

its affiliates) has had average annual gross receipts … over

the firm’s previous three fiscal years, in excess of $22.41 mil-

lion.” 49 C.F.R. § 26.65(b) (2009). For the three years preced-

ing 2010, the year it bid on the Eisenhower project, Dunnet

Bay’s average gross receipts were over $52 million. There-

fore, Dunnet Bay’s size makes it ineligible to qualify as a

DBE, regardless of the race of its owners. Thus, even if a

DBE general contractor can count its own work force toward

meeting the DBE participation goal without subcontracting

any work on the project, whereas a non-DBE general con-

tractor cannot, Dunnet Bay has not shown that any addition-

30 No. 14-1493

al costs or burdens that it would incur are because of race. The

additional costs and burdens are equally attributable to

Dunnet Bay’s size.

To put it differently, Dunnet Bay has not established that

the denial of equal treatment resulted from the imposition of

a racial barrier. Accordingly, this case is unlike those relied

on by Dunnet Bay where the plaintiff established that the

difference in treatment and any additional costs and burdens

imposed on it were because of race (or gender). For example,

in Monterey Mechanical, the challenged ordinance provided

that “contracts awarded by … [the state] for construction …

shall have statewide participation goals of not less than 15

percent for minority business enterprises [and] not less than

5 percent for women business enterprises” 125 F.3d at 704

(citing Cal. Pub. Contract Code § 10115(c)). The court con-

cluded that the contractor was at a competitive disadvantage

with minority- and women-owned contractors who could

use their own work toward the participation goals and be

excused from subcontracting the good faith requirements. Id.

at 706–07. Race (or gender) alone was the barrier to equal

competition. Id.

As for its second alleged injury, Dunnet Bay argues that

it was forced to participate in a discriminatory scheme and

was required to consider race in subcontracting. In Monterey

Mechanical, the court held that “[a] person required by the

government to discriminate by ethnicity or sex against oth-

ers has standing to challenge the validity of the requirement,

even though the government does not discriminate against

him.” Id. at 707. This holding was followed in Safeco Insur-

ance Co., 191 F.3d at 689, and Lutheran Church-Missouri Synod

v. FCC, 141 F.3d 344, 350 (D.C. Cir.) (noting that “forced dis-

No. 14-1493 31

crimination may itself be an injury”), reh’g denied, 154 F.3d

344 (D.C. Cir. 1998), but the latter court couched the issue in

terms of third-party standing. It seems that Monterey Me-

chanical collapsed third-party standing into Article III stand-

ing. And in each of these cases—Monterey Mechanical, Safeco

Insurance Co., and Lutheran Church-Missouri Synod—the

plaintiffs already had established injury in fact, that is, suf-

fered another direct harm because of the challenged statute

or regulation. See Safeco Ins. Co., 191 F.3d at 689 (failure to

comply with regulations resulted in the loss of a contract

and institution of the lawsuit); Lutheran Church-Mo. Synod,

141 F.3d at 348–49 (FCC order found that church violated

EEO regulations and imposed a fine and reporting require-

ments); Monterey Mech., 125 F.3d at 704 (plaintiff submitted

the low bid but did not get the job because of its failure to

comply with a state statute). As discussed above, where the

plaintiff has established injury in fact, it may assert third-

party rights.

Neither we nor the Supreme Court has adopted Monterey

Mechanical’s broad view of standing. We recognize that the

Court has held that “one form of injury under the Equal Pro-

tection Clause is being forced to compete in a race-based sys-

tem that may prejudice the plaintiff.” Parents Involved in

Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 719 (2007)

(citing Adarand and Northeastern Fla.). However, the injuries

asserted in Parents Involved were the denial of assignment to

a certain public high school based on race and the interest

“in not being forced to compete for seats at certain high

schools in a system that uses race as a deciding factor in

many of its admissions decisions.” Id. The plaintiffs’ children

were competing with minorities for assignment to high

school, and race was used as a tiebreaker to make assign-

32 No. 14-1493

ments to more popular schools. Parents Involved, 551 U.S. at

711–12. In other words, race often was the determinative fac-

tor in the assignment decisions. Similarly, non-minority con-

tractors were precluded from competing at all for certain

projects under the Jacksonville ordinance in Northeastern

Florida, and in Adarand, the government gave general con-

tractors a financial incentive to hire minority-owned busi-

nesses. Thus, as in Parents Involved, the race of the plaintiffs

in Northeastern Florida and Adarand was the deciding factor.

In contrast, the race of Dunnet Bay’s owners was not the de-

ciding factor because Dunnet Bay’s size created a barrier to

its receipt of any advantages given DBEs.

Furthermore, we agree with amicus NAACP Legal De-

fense & Educational Fund, Inc. that Monterey Mechanical’s

broad view of standing goes against the established princi-

ple that “a plaintiff raising only a generally available griev-

ance about government—claiming only harm to every citi-

zen’s interest in proper application of the Constitution and

laws” does not satisfy Article III’s requirement that the inju-

ry be concrete and particularized. See Lujan, 504 U.S. at 573–

74; see also Lance v. Coffman, 549 U.S. 437, 439 (2007) (“Our

refusal to serve as a forum for generalized grievances has a

lengthy pedigree.”); Allen v. Wright, 468 U.S. 737, 755 (1984)

(stating that racial discrimination “is sufficient in some cir-

cumstances to support standing” but only those “who are

personally denied equal treatment by the challenged dis-

criminatory conduct” have Article III standing) (quotation

omitted). Broadly speaking, not every contractor has “stand-

ing to challenge every affirmative-action program on the ba-

sis of a personal right to a government that does not deny

equal protection of the laws.” Valley Forge Christian Coll. v.

Ams. United for Separation of Church & State, Inc., 454 U.S. 464,

No. 14-1493 33

489 n.26 (1982). Dunnet Bay’s claimed injury of being forced

to participate in a discriminatory scheme amounts to “a chal-

lenge to the state’s application of a federally mandated pro-

gram,” which we have determined “must be limited to the

question of whether the state exceeded its authority.” N.

Contracting, 473 F.3d at 720–21 (holding that IDOT may rely

on federal government’s compelling interest in remedying

past discrimination in construction projects and that IDOT’s

DBE program is narrowly tailored to achieve this interest as

IDOT did not exceed its authority). Dunnet Bay was not de-

nied equal treatment because of racial discrimination; any

difference in treatment is equally attributable to Dunnet

Bay’s size.

Although Dunnet Bay suggests that the second and third

standing elements (causation and redressability) are not at

issue, as the party invoking federal court jurisdiction, it

bears the burden of establishing all three elements of stand-

ing. See Edgewood Manor Apart. Homes, 733 F.3d at 771. Ami-

cus Pacific Legal Foundation suggests that since Dunnet Bay

suffered an injury in fact under the DBE program, which we

reiterate Dunnet Bay has not established, it necessarily estab-

lished causation and redressability. Amicus cites Northeast-

ern Florida, where causation and redressability followed

from the Court’s definition of “injury in fact.” 508 U.S. at 666

n.5. Although that was true in the context of the set-aside

program where causation and redressability were readily

apparent, the Court did not hold that these other elements

are always collapsed into an injury in fact.

Dunnet Bay has not established causation or redressabil-

ity. It failed to demonstrate that the DBE program caused it

any injury during the first letting process. Although Dunnet

34 No. 14-1493

Bay submitted the low bid in the first letting, its bid was 16%

over the project estimate. Although IDOT rejected its bid be-

cause it did not meet the DBE goal, IDOT never reached the

question of whether the bid was appropriate. The evidence

establishes that Reed recommended to Secretary Hannig that

IDOT rebid Contract No. 60I57 because the low bidder was

16% over the project estimate and was left off the For Bid-

ders List, and that the Secretary always followed her rec-

ommendations to rebid contracts for financial concerns. Ac-

cordingly, IDOT did not award the contract to anyone under

the first letting and re-let the contract. Dunnet Bay suffered

no injury because of the DBE program in the first letting. Cf.

Texas v. Lesage, 528 U.S. 18, 21 (1999) (“[W]here a plaintiff

challenges a discrete governmental decision as being based

on an impermissible criterion and it is undisputed that the

government would have made the same decision regardless,

there is no cognizable injury.”).

Even assuming that Dunnet Bay could establish that the

DBE program caused it an injury in the first letting, it cannot

establish redressability: IDOT’s decision to re-let the contract

redressed any injury. As for the second letting, the evidence

does not establish that the DBE program caused Dunnet Bay

any injury. In the second letting, Dunnet Bay satisfied the

DBE goals, but its bid was not the lowest; other contractors

submitted lower bids and met the DBE participation goals.

Therefore, Dunnet Bay was not awarded the contract.

Moreover, prudential limitations preclude Dunnet Bay

from bringing its claim. A litigant “generally must assert his

own legal rights and interests, and cannot rest his claim to

relief on the legal rights or interests of third parties.” Warth,

No. 14-1493 35

422 U.S. at 499.4 Dunnet Bay acknowledges that before a liti-

gant may be permitted to assert another’s rights to establish

a claim, he must satisfy Article III standing requirements. See

Craig v. Boren, 429 U.S. 190, 194 (1976) (“[W]e conclude that

appellant … has established independently her claim to as-

sert jus tertii standing. The operation of [the challenged stat-

utes] plainly has inflicted ‘injury in fact’ upon appellant suf-

ficient … to satisfy the constitutionally based standing re-

quirements imposed by Art. III.”); Barrows v. Jackson, 346

U.S. 249, 255–56 (1953) (stating that “a person cannot chal-

lenge the constitutionality of a statute unless he shows that

he himself is injured by its operation” but “this principle has

no application to the instant case in which respondent has

been sued for damages … and … a judgment against re-

spondent would constitute a direct … injury to her”); Luther-

an Church-Mo. Synod, 141 F.3d at 349–50 (allowing the plain-

tiff to raise an equal protection challenge although it had not

suffered an equal protection injury where it was harmed by

the FCC’s order finding it in violation of equal employment

opportunity regulations); Apter v. Richardson, 510 F.2d 351,

354 (7th Cir. 1975) (stating “[t]he fact that the alleged wrong

may also have injured third parties does not deprive plaintiff

of standing so long as she as well is injured in fact.”); see also

Warth, 422 U.S. at 501 (stating that as long as constitutional

standing is satisfied, a party “may have standing to seek re-

lief on the basis of the legal rights and interests of others”).

In challenging the DBE program, Dunnet Bay is attempting

4 Although IDOT has a good argument that Dunnet Bay forfeited its

prudential standing arguments for failing to raise them in the district

court in response to its summary judgment motion, we address pruden-

tial limitations on standing.

36 No. 14-1493

to assert the equal protection rights of a non-minority-

owned small business.

City of Chicago v. Morales, 527 U.S. 41 (1999), also cited by

Dunnet Bay, is inapposite. In that case, the Supreme Court

was asked to review the Illinois Supreme Court’s determina-

tion that a Chicago gang ordinance was unconstitutionally

vague. As the Court explained, “[w]hen a state court has

reached the merits of a constitutional claim, invoking pru-

dential limitations on the respondent’s assertion of jus tertii

would serve no functional purpose” and “state courts need

not apply prudential notions of standing created by this

Court.” Id. at 55 n.22. Dunnet Bay does not ask us to review

a state court’s decision as to the constitutionality of the DBE

program.

A party is exempt from the prudential limitation on as-

serting a third party’s rights, Dunnet Bay argues, “where the

limitation’s purpose is outweighed by the need to protect

fundamental rights.” But Barrows, which was cited for this

proposition, does not help Dunnet Bay. Barrows was a state

court action to enforce a racially restrictive covenant, and the

defendant was permitted to assert the equal protection

rights of others in her defense against enforcement. Dunnet

Bay is not defending against a state enforcement proceeding,

seeking to raise the rights of others in its own defense. And

as noted, the Barrows defendant had been sued for damages

and thus could establish her own injury. Moreover, the

Court concluded that the prudential limitation on standing

was outweighed and the defendant should be allowed to as-

sert the rights of others given the “unique situation” and

“peculiar circumstances” presented where “the action of the

state court … might result in a denial of constitutional rights

No. 14-1493 37

and … it would be difficult if not impossible for the persons

whose rights are asserted to present their grievance before

any court.” Barrows, 346 U.S. at 257.

But here there is no allegation, let alone evidence, that a

non-minority-owned small business could not challenge

IDOT’s DBE program on equal protection grounds. Because

Dunnet Bay has failed to identify an injury in fact that is fair-

ly traceable to the challenged DBE program, it lacks Article

III standing. And because Dunnet Bay has not established

Article III standing, it cannot raise an equal protection chal-

lenge to the DBE program based on the rights of a non-

minority small business.

B. Whether Dunnet Bay Has Sufficient Evidence that

IDOT’s Implementation of the DBE Program Con-

stitutes Unlawful Race Discrimination

In the alternative, even if Dunnet Bay has standing to

raise an equal protection claim, IDOT is entitled to summary

judgment. The Equal Protection Clause of the Fourteenth

Amendment prohibits intentional and arbitrary discrimina-

tion. Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000).

Thus, to establish an equal protection claim under the Four-

teenth Amendment, Dunnet Bay must show that IDOT “act-

ed with discriminatory intent.” Franklin v. City of Evanston,

384 F.3d 838, 846 (7th Cir. 2004).

Racial discrimination by a recipient of federal funds that

violates the Equal Protection Clause also violates Title VI

and § 1981. Gratz, 539 U.S. at 275–76 & n.23. These statutes

require proof that the plaintiff was treated differently be-

cause of race. 42 U.S.C. § 1981 (providing all persons the

same rights to contract and benefit of laws “as is enjoyed by

38 No. 14-1493

white citizens”); id. § 2000d (prohibiting discrimination “on

the ground of race” in programs receiving federal assis-

tance). Title VI prohibits only intentional discrimination. See

Alexander v. Sandoval, 532 U.S. 275, 281 (2001). To establish

liability for an equal protection violation, a plaintiff must es-

tablish that the defendant acted with a discriminatory pur-

pose and discriminated against him because of his member-

ship in an identifiable group. Nabozny v. Podlesny, 92 F.3d

446, 453 (7th Cir. 2002). Section 5 of the Illinois Civil Rights

Act of 2003 was not intended to create new rights but merely

created a new venue—state court—for discrimination claims

under federal law. Ill. Native Am. Bar Ass’n v. Univ. of Ill., 856

N.E.2d 460, 467 (Ill. App. Ct. 2006).

Because IDOT’s DBE program employs racial classifica-

tions, we apply strict scrutiny in addressing Dunnet Bay’s

constitutional challenge. Adarand Constructors, 515 U.S. at

235 (“Federal racial classifications, like those of a State, must

serve a compelling governmental interest, and must be nar-

rowly tailored to further that interest.”); N. Contracting, 473

F.3d at 720. Under strict scrutiny, “a government program

that uses racial classifications must be narrowly tailored to

serve a compelling governmental interest.” N. Contracting,

473 F.3d at 720. In implementing its DBE program, IDOT

may properly rely on “the federal government’s compelling

interest in remedying the effects of past discrimination in the

national construction market.” Id. at 720. “[A] state is insu-

lated from [a constitutional challenge as to whether its pro-

gram is narrowly tailored to achieve this compelling inter-

est], absent a showing that the state exceeded its federal au-

thority.” Id. at 721; see also Milwaukee Cnty. Pavers Ass'n v.

Fielder, 922 F.2d 419, 423 (7th Cir. 1991) (“Insofar as the state

is merely complying with federal law it is acting as the agent

No. 14-1493 39

of the federal government and is no more subject to being

enjoined on equal protection grounds than the federal civil

servants who drafted the regulations … . If the state does ex-

actly what the statute expects it to do … we do not see how

the state can be thought to have violated the Constitution.”).

Thus, the issue is whether IDOT exceeded its authority un-

der federal law.

Dunnet Bay contends that IDOT exceeded its federal au-

thority by effectively creating racial quotas by designing the

Eisenhower project to meet a pre-determined DBE goal and

eliminating waivers. If the DBE program were effectively a

quota, it would be unconstitutional and violate the regula-

tions. See City of Richmond v. J.A. Croson Co., 488 U.S. 469, 507

(1989) (“[T]he 30% quota cannot be said to be narrowly tai-

lored to any goal, except perhaps outright racial balanc-

ing.”); 49 C.F.R. § 26.43(a) (prohibiting quotas for DBEs).

More specifically, Dunnet Bay asserts that IDOT exceeded its

authority by: (1) setting the Contract’s DBE participation

goal at 22% without the required analysis, (2) implementing

a “no-waiver” policy, (3) preliminarily denying its goal mod-

ification request without assessing its good faith efforts, (4)

denying it a meaningful reconsideration hearing, (5) deter-

mining that its good faith efforts were inadequate, and (6)

providing no written or other explanation of the basis for its

good-faith-efforts determination.

In challenging the DBE contract goal, Dunnet Bay asserts

that the issue “is not whether a 20% goal could have been

legitimately derived” but instead argues that the DBE con-

tract goal was “arbitrary” and that IDOT “manipulated the

process to justify” a preordained goal. Dunnet Bay’s real

complaint about the contract goal setting is that there were

40 No. 14-1493

political motivations in resetting the DBE participation goal.

But Dunnet Bay has not identified any regulation or other

authority that suggests that the political motivations matter,

provided IDOT did not exceed its federal authority in setting

the contract goal. More to the point, Dunnet Bay does not

actually challenge how IDOT went about setting its DBE

goal for the contract. In its reply, Dunnet Bay argues that the

factors set forth in the regulation to be used to determine

contract goals were not used but were applied to justify a

pre-ordained goal. Yet Dunnet Bay points to no evidence to

show that IDOT failed to comply with the applicable regula-

tion providing only general guidance on contract goal set-

ting, 49 C.F.R. § 26.51(e)(2) (stating that a contract goal “de-

pend[s] on such factors as the type of work involved, the lo-

cation of the work, and the availability of DBEs for the work

of the particular contract”).

FHWA approved IDOT’s methodology to establish its

statewide DBE goal of 22.77% and approved the individual

contract goals for the Eisenhower project for the January 15,

2010 bid letting. Dunnet Bay has not identified any part of

the regulations that IDOT allegedly violated by re-

evaluating and then increasing its DBE contract goal, by ex-

panding the geographic area used to determine DBE availa-

bility, by adding pavement patching and landscaping work

into the contract goal, by including items that had been set

aside for small business enterprises, or by any other means

by which it increased the DBE contract goal. Indeed, as the

district court concluded, “because the federal regulations do

not specify a procedure for arriving at contract goals, it is not

apparent how IDOT could have exceeded its federal authori-

ty,” Dunnet Bay Constr. Co., 2014 WL 552213, at *26; and this

challenge is unavailing.

No. 14-1493 41

Next, Dunnet Bay asserts that IDOT had a “no-waiver”

policy. Despite statements regarding a no-waiver policy and

pressure from the Governor’s office, including from Harris,

Dunnet Bay did not present sufficient evidence to raise a

reasonable inference that IDOT had actually implemented a

no-waiver policy. There is evidence that IDOT’s District 8

EEO Officer Coleman advised contractors at a pre-letting

meeting that Secretary Hannig said that no DBE waivers

would be granted for the January 15, 2010 letting. However,

IDOT did not have a no-waiver policy; instead, the undis-

puted evidence shows that it was IDOT’s and Secretary

Hannig’s policy that requests for waivers would be subject-

ed to high-level review and would not be granted unless

shown to be appropriate. IDOT’s Director of Highways Reed

told Secretary Hannig that a no-waiver policy was not pos-

sible because it violated the law. The Secretary told Harris

that IDOT would follow the law. So, too, IDOT’s Regional

Engineer for the Metra East area Lamie testified that alt-

hough Secretary Hannig said that there would be no DBE

waivers, in context he was not “saying no waivers under any

circumstances will ever be issued” but that waiver requests

would be reviewed at a high level and had to be supported

by appropriate documentation. Significantly, even since Sec-

retary Hannig took over, IDOT granted waivers. In 2009, it

granted 32 of 58 requested waivers, and the other 26 contrac-

tors ultimately met contract goals; in 2010, IDOT granted 21

of 35 requested waivers, that is, 60% of the waiver requests.

IDOT even granted a waiver in connection with the January

15 letting—the one at issue here—albeit after this lawsuit

was filed. IDOT’s unbroken record of granting waivers re-

futes any suggestion of a no-waiver policy. Dunnet Bay has

42 No. 14-1493

failed to raise a reasonable inference that IDOT implemented

a no-waiver policy.

Dunnet Bay also challenges IDOT’s rejection of its bid

without determining whether it had made good faith efforts

to meet the DBE goal and contests whether IDOT’s reconsid-

eration of its bid was meaningful in violation of 49 C.F.R.

§ 26.53. As an initial matter, the regulation provides that “[i]f

the bidder/offeror does document adequate good faith ef-

forts, you must not deny award of the contract on the basis

that the bidder/offeror failed to meet the goal.” Id. §

26.53(a)(2). IDOT ultimately determined that Dunnet Bay

failed to document adequate good faith efforts; thus this

provision was inapplicable and did not prevent IDOT from

rejecting Dunnet Bay’s bid.

Dunnet Bay asserts that reconsideration hearing officer

Grunloh “was not an independent official with no role in the

original determination,” but it has offered no evidence to es-

tablish that Grunloh took any part in the initial determina-

tion that Dunnet Bay failed to make the DBE goal or make

adequate good faith efforts. See id. § 26.53(d)(2). Nor has

Dunnet Bay not shown that Grunloh, even if part of the “po-

litical leadership” and involved in pre-letting discourage-

ment of waivers, was ineligible to serve as the reconsidera-

tion official.

Furthermore, Dunnet Bay argues that it made good faith

efforts to meet the DBE goal and that the reasons given for

IDOT’s decision that it did not make adequate good faith ef-

forts “do not hold up.” Dunnet Bay focuses on its efforts in

attending a pre-bid meeting, advertising with DBE network-

ing organizations, soliciting DBEs by fax, telephoning DBEs,

and posting subcontracting opportunities on its own web-

No. 14-1493 43

site. In total, Dunnet Bay solicited 796 companies for subcon-

tracting work, 453 of which were DBEs.

A bidder “must show that it took all necessary and rea-

sonable steps to achieve a DBE goal … which … could rea-

sonably be expected to obtain sufficient DBE participation,

even if they were not fully successful.” 49 C.F.R. Pt. 26, Ap-

pendix A, § I. The regulations provide guidance for state re-

cipients in deciding whether a bidder that did not meet a

contract goal has demonstrated good faith efforts to meet the

goal, instructing recipients to consider “the quality, quantity,

and intensity of the different kinds of efforts that the bidder

has made.” Id., § II. State recipients are provided a non-

mandatory, non-exclusive, and non-exhaustive list of actions

to be considered in determining whether a bidder made

good faith efforts, including the following: (1) “Soliciting

through all reasonable and available means (e.g. attendance

at pre-bid meetings, advertising and/or written notices) the

interest of all certified DBEs who have the capability to per-

form the work of the contract … [and] taking appropriate

steps to follow up initial solicitations”; (2) “Selecting por-

tions of the work to be performed by DBEs in order to in-

crease the likelihood that the DBE goals will be achieved”;

(3) “Providing interested DBEs with adequate information

about the plans, specifications, and requirements of the con-

tract”; (4) “Making efforts to assist interested DBEs in ob-

taining bonding, lines of credit, or insurance as required by

the recipient or contractor”; (5) “Making efforts to assist in-

terested DBEs in obtaining necessary equipment, supplies,

materials, or related assistance or services”; and (6) “Effec-

tively using the services of available minority/women com-

munity organizations; minority/women contractors’ groups;

local, state, and Federal minority/women business assistance

44 No. 14-1493

offices; and other organizations as allowed on a case-by-case

basis to provide assistance in the recruitment and placement

of DBEs.” Id., § IV, A–C and F–H. Further, the regulations

instruct that “[i]n determining whether a bidder has made

good faith efforts, you may take into account the perfor-

mance of other bidders in meeting the contract.” Id. § V. The

regulation gives an example: “[W]hen the apparent success-

ful bidder fails to meet the contract goal, but others meet it,

you may reasonably raise the question of whether, with ad-

ditional efforts, the apparent successful bidder could have

met the goal.” Id.

Reconsideration officer Grunloh’s determination that

Dunnet Bay failed to show good faith efforts is well-

supported in the record. Grunloh testified that the reasons

he determined Dunnet Bay failed to make good faith efforts

were because it did not utilize IDOT’s supportive services,

and because the 2nd, 3rd, and 4th bidders all met the goal,

whereas Dunnet Bay did not even come close. Grunloh also

explained that Dunnet Bay’s efforts were lacking with re-

spect to the following areas included in the Appendix’s list:

conducting market research and soliciting through all rea-

sonable and available means the interest of all certified

DBEs; providing interested DBEs with adequate information

about the contract; making efforts to assist interested DBEs

in obtaining bonding, lines of credit, etc.; making efforts to

assist interested DBEs in obtaining necessary equipment,

supplies, etc.; and effectively using services of various mi-

nority organizations to provide assistance in recruitment

and placement of DBEs.

The performance of other bidders in meeting the contract

goal is listed in the regulation as a consideration when de-

No. 14-1493 45

ciding whether a bidder has made good faith efforts to ob-

tain DBE participation goals, see 49 C.F.R. Pt. 26, App. A, § V,

and was a proper consideration. Dunnet Bay argues that this

factor should not be considered because IDOT left it off the

For Bid List. While it is true that Dunnet Bay was left off the

For Bid List, the fact that other bidders met the goal shows

that the goal was attainable. Dunnet Bay also argues that

IDOT had not previously considered contacting supportive

services as necessary to establishing good faith, and that in

Dunnet Bay’s experience, supportive services were not help-

ful. However, utilization of supportive services is nonethe-

less a proper consideration under the regulation.

Dunnet Bay asserts that it employed the same efforts for

the Eisenhower project that it successfully employed on oth-

er projects. Dunnet Bay is not among those contractors who

often seek goal modification. The fact that its efforts failed to

secure the DBE participation goal may suggest that it was

hindered by its omission from the For Bid List. But the re-

bidding of the contract remedied that oversight.

Dunnet Bay also points out that Lyle thought it had

demonstrated good faith efforts. Given the discretion in de-

termining whether a contractor made good faith efforts, the

fact that Lyle disagreed with Grunloh and initially thought

Dunnet Bay showed good faith efforts does not raise a genu-

ine issue of fact as to Grunloh’s decision. In any event, Lyle

subsequently expressed the view that Dunnet Bay could

have done more to demonstrate good faith efforts, namely,

by contacting supportive services as well as IDOT’s Bureau

of Small Business Enterprises and the district EEO officer.

Finally, it is true that IDOT failed to provide Dunnet Bay

with “a written decision on reconsideration” explaining why

46 No. 14-1493

it found that Dunnet Bay did not make adequate good faith

efforts to meet the DBE contract goal. 49 C.F.R. § 26.53(d)(4).

However, this did not harm Dunnet Bay because IDOT did

not award the contract based upon the January 15, 2010 bid

letting. IDOT decided to re-let the contract instead; and

Dunnet Bay’s second bid met the DBE goal, but it was not

the lowest bid.

III. CONCLUSION

We AFFIRM the district court’s judgment.