Inc. v. Pena Adarand Constructors

Although this decision did not prohibit the federal government from involving itself in affirmative action programs, it marked a retreat from the U.S. Supreme Court's earlier endorsement of minority set-aside programs as a remedy for past racial discrimination.

As an element of its affirmative action policy, in the 1960s the federal government adopted Title VII of the Civil Rights Act of 1964 and Executive Orders 10925 and 11246, regulating federal contractors. Such measures were meant to remedy past employment discrimination against minorities. As a result, most federal agency contracts contained a clause giving the primary private contractor a financial incentive to hire subcontractors which have been certified as small businesses controlled by socially and economically disadvantaged individuals. Adarand, a noncertified construction company managed by a white person, submitted the lowest bid on a federal highway project. When it lost out to a certified competitor who had submitted a higher bid, Adarand alleged that this happened only because the "subcontractor compensation clause" in federal agency contracts favored contractors who were members of racial minorities. Such preferences, Adarand alleged, violated the equal protection component of the Fifth Amendment's Due Process Clause.

Adarand lost its suit in the U.S. District Court for the District of Colorado, as well as a subsequent appeal to the U.S. Court of Appeals for the Tenth Circuit. Because the applicable law was unclear, Adarand asked that their case be reviewed by the U.S. Supreme Court. The Supreme Court reversed the lower court's ruling by a vote of 5-4. In the opinion of a majority of the justices, classifications based solely on race are constitutional only if they are narrowly tailored measures that further a compelling government interest. Those in the "subcontractor compensation clause" were not.