A federal government program provided a financial incentive for any prime contractors who hired subcontractors controlled by “socially and economically disadvantaged individuals” in the performance of federal government contracts. Individuals qualifying as “socially and economically disadvantaged” were presumed to include racial minorities. In 1989, the Central Federal Lands Highway Division (CFLHD) awarded a prime contract for a construction project to Mountain Gravel & Construction Company (Mountain Gravel). Mountain Gravel then accepted bids from subcontractors for the guardrail portion of the project. Adarand Constructors, Inc. (“Adarand”) (plaintiff) submitted the lowest bid. However, Mountain Gravel awarded the subcontract to Gonzales Construction Company (“Gonzales”), a business controlled by “socially and economically disadvantaged individuals.” Mountain Gravel stated that it would not have awarded the subcontract to Gonzales were it not for the financial incentive it received under the federal government program. Adarand brought suit against Peña (defendant), the Secretary of Transportation, in federal district court. The district court and the court of appeals ruled in favor of Pena, and the United States Supreme Court granted certiorari.