Connecticut’s Set Aside Program: What Can—and Cannot—Be Dictated by Construction Managers On Municipal Projects

By Paul R. Fitzgerald and Steven B. Kaplan

By law, Connecticut state agencies, municipalities and quasi-public state agencies must require contractors to utilize small business enterprises (SBE) and minority-owned business enterprises (MBE) when bidding and performing public work.  The law specifically requires that contractors on such projects must “set aside” at least 25% of all state-funded assistance to SBE subcontractors, and of that 25% SBE set aside, a net of 6.25% must be awarded to MBE subcontractors.  

But at least on municipal projects, the law does not explicitly allow the general contractor or construction manager to determine how to allocate those percentages among the various trade  packages.  Nevertheless, contractors on a number of recent municipal projects have mandated that only MBE’s can bid on certain trade packages- to the exclusion of other SBE’s. 

This article discusses Connecticut’s set aside law, whether the practice of restricting trade packages to MBE’s only is permitted by the law, and what to do if you encounter an “MBE-only” requirement in a municipal bid package.

Connecticut’s set aside law for public projects is located at Conn. Gen. Stat. §4a-60g.  Section (b)(3)of the  statute requires municipalities to act as follows:

Notwithstanding any provision of the general statutes, and except as provided in this section, on and after October 1, 2015, each municipality when awarding a municipal public works contract shall state in its notice of solicitation for competitive bids or request for proposals or qualifications for such contract that the general or trade contractor shall be required to comply with the provisions of this section and the requirements concerning nondiscrimination and affirmative action under sections 4a-60 and 4a-60a. Any such contractor awarded a municipal public works contract shall, on the basis of competitive bidding procedures, (A) set aside at least twenty-five per cent of the total value of the state’s financial assistance for such contract for award to subcontractors who are small contractors, and (B) of that portion to be set aside in accordance with subparagraph (A) of this subdivision, reserve a portion equivalent to twenty-five per cent of the total value of the contract or portion thereof to be set aside for awards to subcontractors who are minority business enterprises. The provisions of this section shall not apply to any municipality that has established a set-aside program pursuant to section 7-148u where the percentage of contracts set aside for minority business enterprises is equivalent to or exceeds the percentage set forth in this subsection.

In recent months, a number of large municipal building projects that have been put out to bid by construction managers have broken out numerous trade packages for separate bids.  In their attempts to comply with Conn. Gen. Stat. §4a-60g(b)(3), the prequalification/trade package information tables for these bid packages have listed certain trade packages as “MBE Only” or “100% MBE.” 

The authors of this article, on behalf of the contractors and subcontractors they routinely represent, contacted the Connecticut Commission on Human Rights and Opportunities (“CHRO”) to express concern about this practice of designating certain trade packages as “MBE only” on municipal projects.  The practice eliminates numerous prequalified SBE subcontractors from bidding on these packages and restricts the construction manager’s ability to comply with the statutory SBE/MBE requirements for the overall project.

The CHRO responded in writing on January 3, 2023  clarifying that “the Commission cannot require contractors to break up packages in any particular way or put in place and requirements [at bid phase]; our only role is solely to provide advice and insight on inclusionary practices.  The Commission will not require MBE-only contracts that exclude others from submitting bids.  To the extent that may have been done in the past, we have advised our staff that it is not our policy.”   

[Note that a separate provision, Conn. Gen. Stat. §4a-60g(b)(2), pertains to State agency contracts and arguably may provide more discretion to the agency in dictating “MBE only” trade packages. Hopefully, CHRO and the State will now follow the same, more flexible approach as with municipal contracts.]   

The CHRO deserves credit for  addressing  this issue in forthright terms.  Hopefully, the improper practice of designating certain trade packages for municipal building projects as “MBE-only” is at an end.  SBE subcontractors who encounter such a restriction, or anyone who has questions regarding Connecticut’s set aside program, should call MKR&B at 860-522-1243.

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