Honestly, it’s one of those cases that sounds dry until you realize it changed the rules for basically every city and state in America. If you’ve ever wondered why local governments can't just "fix" inequality by setting aside a chunk of their budget for minority-owned businesses, you're looking at the fallout from City of Richmond v. J.A. Croson Co.
This wasn't just some local squabble over plumbing or concrete. It was a 1989 Supreme Court showdown that essentially told local politicians: "Nice intentions, but if you’re going to use race as a factor, you better have some serious receipts."
The $30 Million Question in Richmond
Back in 1983, the City Council in Richmond, Virginia, looked at their books and saw something they didn't like. Even though the city's population was over 50% Black, only about 0.67% of the city’s prime construction contracts were going to minority-owned businesses. That's a staggering gap. You’ve got a city where half the residents are Black, but less than 1% of the big construction money is reaching them.
To fix this, the council passed the Minority Business Utilization Plan. It required any prime contractor winning a city job to subcontract at least 30% of the work to "Minority Business Enterprises" (MBEs). They defined "minority" pretty broadly—Blacks, Spanish-speaking people, Orientals, Indians, Eskimos, and Aleuts.
The problem? They didn't really have proof that the city itself had been discriminating. They just pointed to national trends and the low numbers in Richmond.
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Then came the J.A. Croson Company. They were the sole bidder on a project to install stainless steel urinals and toilets in the city jail. To meet the 30% quota, they tried to find a minority subcontractor. They found one, but the guy had trouble getting credit and couldn't provide a competitive price on the fixtures. When Croson asked for a waiver or a price adjustment, the city said no and eventually decided to re-bid the whole contract.
Croson sued. He wasn't happy. And his lawsuit went all the way to the top.
Why the Court Threw the Book at Richmond
Justice Sandra Day O’Connor wrote the majority opinion, and she didn't hold back. Basically, the Court ruled 6-3 that Richmond’s plan was unconstitutional. But the "why" is what really matters.
The Court applied what’s called strict scrutiny. This is the highest level of legal "skepticism" a court can use. For a law to pass strict scrutiny, the government has to prove two things:
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- They have a compelling interest (a really, really good reason).
- The law is narrowly tailored (it does only what it needs to do and nothing more).
The "Receipts" Problem
Richmond argued they were trying to remedy past discrimination. The Court said, "Which discrimination?" You can't just point to "societal discrimination" in general. That's too vague.
O’Connor noted that the 30% quota wasn't tied to any specific injury. It was just a number. Also, why were "Aleuts" or "Eskimos" included in a Richmond, Virginia, plan? There was zero evidence that Eskimo contractors had ever been discriminated against in Richmond construction. This suggested the plan wasn't a precision tool for justice; it was a "mosaic of shifting preferences."
The "Tailoring" Problem
The city also didn't try anything else first. They didn't try to help small businesses with bonding or credit—which were the actual hurdles Croson's sub-contractor faced. They went straight to a racial quota. In the eyes of the Court, that’s a big no-no.
Why Croson Still Matters Today (Especially in 2026)
If you follow the news, you’ve seen the ripples of this case lately. Just recently, in late 2025 and early 2026, we’ve seen federal agencies like the Department of Transportation (DOT) having to scramble. They’ve had to remove "presumptions" of social disadvantage for certain racial groups because courts are applying the same logic from Croson.
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The era of "assume they were discriminated against" is effectively over for government contracting. Now, everything has to be case-by-case.
Common Misconceptions
- "Affirmative action is illegal." Not exactly. It just can't be a rigid quota without specific proof of local, identifiable discrimination.
- "Diversity doesn't count." In contracting, "diversity" isn't a compelling enough interest on its own—unlike in education (though even that's been restricted recently). In business, it’s almost always about "remedying past wrongs," and you have to prove those wrongs happened in your backyard.
The Reality for Small Businesses
If you're a minority business owner today, you're living in a "Croson-compliant" world. This means:
- Disparity Studies: Cities now spend millions on these massive reports to prove that local discrimination exists before they can set up any preference programs.
- Individual Proof: You often have to prove your own "social and economic disadvantage" rather than just checking a box for your race.
- Race-Neutral Alternatives: Expect more programs focused on "small business" or "under-resourced ZIP codes" rather than just race.
Moving Forward: Actionable Insights
If you’re a contractor or a local policy leader, the Croson decision is your playbook. You can't wing it.
If you are a business owner looking for these contracts, don't just rely on your status. Ensure your "disadvantaged" certification is backed by a solid personal statement of how your business has faced hurdles. Documentation is your best friend.
If you are a public official, stop calling them "quotas." Call them "goals." And for heaven's sake, make sure you have a disparity study that is less than five years old. If you don't have the data to back up your program, a lawsuit is basically inevitable.
The dream of a "color-blind" society that Justice O'Connor talked about is still a massive debate, but legally, City of Richmond v. J.A. Croson Co. remains the wall that most race-based government programs eventually hit. To get over it, you need more than good intentions; you need data, narrow focus, and a clear paper trail of why the rules are there in the first place.