Fullilove v. Klutznick

In May of 1977, Congress passed the Public Works Employment Act, which allocated an additional $4 billion for federal grants to be made by the Secretary of Commerce through the Economic Development Administration, to state and local governments for public works programs.

The Public Works Employment Act in a section designated "minority business enterprises" or "MBE" stipulated that no money would be granted to state and local governments, unless at least 10 percent of the projects were awarded to minority businesses. Under the act, minority groups were defined as "Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts."

To qualify as a minority business enterprise, at least 50 percent of the business had to be minority owned, and for publicly held businesses, at least 51percent of the stock had to be minority owned.

Under the act, MBE's could be awarded contracts even if they were not the lowest bidders, if their bids resulted from attempts to overcome a prior disadvantage or discrimination.