Activists decry court ruling striking down L.A. Minority business policy.

Leaders of the minority and women-owned business community are up in arms over a recent court decision that struck down the City of L.A.'s contract diversity outreach program.

In Domar Electric v. City of L.A., the state's 2nd District Court of Appeals ruled Oct. 26 the city's good faith outreach program is invalid because it was enacted by a mayoral directive that conflicts with the city charter. Amending the city charter requires voter approval.

Thus, the city can no longer deny a contract to the lowest bidder solely because that bidder failed to demonstrate a "good faith effort" toward subcontracting to minority and women-owned companies, said Assistant City Attorney Christopher Westhoff.

"I think the impact is going to be quite severe," said Constance Rice, western regional counsel for the NAACP legal defense and educational fund.

"If you don't have public policy forcing prime contractors to open up their doors and share some of the wealth of contracting with minority and women-owned businesses, it's not going to happen," she said.

The good faith effort outreach program was established by a directive from Mayor Tom Bradley in 1989. It mandated bidders for city contracts had to demonstrate they had made a "good faith effort" toward subcontracting to minority and women-owned businesses. This included placing advertisements to attract such companies and advising companies how to obtain the necessary bonds and credit.

During summer 1992, the City of L.A.'s Board of Public Works put out a request for proposals for a contract to design and install a computer-based control system for the Hyperion Treatment Plant, a sewage plant in Playa del Rey.

Lake Elsinore-based Domar Electric Inc. submitted the lowest bid but did not file a statement with the board indicating what it had had done to comply with the good faith outreach requirement.

The Board of Public Works awarded the contract to Cleveland, Ohio-based Bailey Controls Co., the second lowest bidder - but the lowest among those that had complied with the city's good faith outreach program, said Bailey's attorney Gerald Palmer.

Domar filed suit against the city, asking the Los Angeles County Superior Court to take the contract away from Bailey. The court declined, stating the Department of Public Works had the authority to award the contract to Bailey.