Adarand Constructors bid lower than a competitor for a highway guardrail subcontract but lost the job because the competitor was certified as a disadvantaged business and the prime contractor received a financial bonus for hiring them. Adarand sued, claiming the federal government's race-based preference program violated equal protection rights. The Supreme Court ruled that all federal race-based classifications—even those intended to help minorities—must meet the highest legal standard (strict scrutiny) and sent the case back to lower courts to apply this stricter test.
Federal disadvantaged business programs using race-based presumptions now face strict legal scrutiny; the government must prove these programs serve a compelling interest and are narrowly tailored