Race Preferences for Federal Contracts Coming to an End?

gty_courtroom_gavel_judge_mw_110908_wblogOne case coming up to D.C.’s District Court could strike a serious blow to the government’s controversial use of racial preferences in federal contracting. Through several agencies and covering many industries, the federal government since the late seventies has administered a host of programs which set aside contracts specifically for minority-owned businesses. In 2008, after a 10-year long fight in the courts, Rothe Development Inc., a federal contractor from Texas, scored a big victory in D.C.’s Federal Circuit court forcing a key set-aside program to be declared wholly unconstitutional. Now, thanks to a new complaint from the company, the days of the government allocating federal contracts on the basis of race may be numbered.

The program at issue in Rothe’s 2008 victory was the “Small Disadvantaged Business program” (SDB), which had allowed the Department of Defense (DoD) and other agencies to take 10 percent off the price of bids submitted by so-called “small disadvantaged businesses” giving them an artificial boost in the bidding process. Although more competitive, Rothe, a white-owned business, was denied a contract to build a switchboard system for an army base in Mississippi. A “competing” bid from a Korean-owned business was given a “10 percent price evaluation adjustment” and as a result, Rothe was denied the bid.

Like most racial preference programs, the SDB program ran on the presumption that any non-white contractor was “socially and economically disadvantaged.” In response to Rothe’s 2008 complaint, the court overturned this presumption and decided that a “strong basis in evidence” was required to show that broad discrimination had existed in the industry in question. In other words, for a program of racial preferences to pass constitutional muster, it had to be shown that a minority-owned business was actually disadvantaged. In Rothe’s case, because zero evidence of discrimination was offered by the government, the statute enacting the SDB program was declared “facially unconstitutional” or unable to pass constitutional scrutiny under any circumstance. The court’s decision sent ripples throughout federal agencies and the contracting industry.

Thanks to Rothe, racially discriminatory programs now must be supported with a “strong historical record” of broad discrimination or be subject to constitutional challenge. Non-whiteness alone can no longer be enough to substantiate such programs. This made some commentators fret that now a “strong basis of evidence” would have to be made in order to justify other racial preference programs. Rothe’s latest lawsuit is confirming those fears.

In its new challenge, Rothe is seeking to have declared “facially unconstitutional” another major race-preferences program used by DoD and others, the so-called “8(a) Business Development Program.” Like the SDB program, the 8(a) program defines participants as disadvantaged merely if they’re non-white; no conclusive evidence of discrimination is needed. Instead of artificially boosting minority contractor-bids, the 8(a) program offers these companies technical assistance and outreach and allows them to bid for ”set-aside contracts” or contracts that are off-limits to white-owned businesses. 8(a) is far larger than the SDB program and allocates around 10 billion in taxpayer dollars every year.

For the government to save a broad program of racial preferences, according previous court decisions, it need only show that some statistical, non-conclusive, evidence of discrimination, such as a ”disparity study,” was shown to Congress before they enacted the statute. Disparity studies attempt to measure the difference between the number contracts awarded to minority-owned companies and the number contracts that could’ve been awarded. Although disparity studies are widely criticized as results-driven ”junk studies”, because such a study did accompany the 2006 re-enactment of the 8(a) program, a court may be satisfied that this constituted a “strong basis in evidence” and deny a facial challenge.

According to the Competition in Contracting Act, federal contracts outside set-aside programs like 8(a) must be awarded to the lowest-bidder on the basis of merit; a process that’s made transparent at every step and which should make it relatively easy to uncover and correct any discrimination. What’s hoped for in Rothe’s new challenge is for the court to agree that, in the area of federal contracting, there’s always easier and better ways to remedy discrimination other than by the use of racial preferences.

Notably, such a broad holding would thwart what’s plagued this area of law since then-Justice Sandra Day O’Connor’s opinion in City of Richmond v. J.A. Croson. In an otherwise positive decision for proponents of equal opportunity in contracting, Justice O’Connor in just one line managed to keep open the racial preferences-system by saying state and local governments would be allowed to infer discrimination and thereby justify race-based programs if they could point to a “significant statistical disparity” between minority and non-minority contractor-award rates. Since that 1989 decision, many state and local governments have strained themselves to locate such disparities by paying consultants to construct results-driven disparity studies. But if a court simply found that discrimination in contracting should always be remedied without the use of racial preferences then set-aside programs could never be justified, with or without a “disparity study”, validly constructed or otherwise.

Rothe is trying to expand its own 2008 precedent to other programs that restrict competition on the basis of race. Although no doubt a positive step, it’s important to remember that should Rothe win we’d still be far from achieving a ”post-racial” society. Any policy of minority favoritism in contracting still tells your typical white contractor that because prejudice took place in the industry he happens to be in, government programs that discriminate against him are fair and reasonable. Such a policy punishes an individual not for his own shameful activities but for those activities of his entire race.

Supporters of the Constitution should wish Rothe Development Inc. all the best in their continuing fight. Let us hope that it’s fairly awarded.

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    • The March Hare


  • The March Hare

    “Such a policy punishes an individual not for his own shameful activities but for those activities of his entire race.”
    Should have said “for those activities of some of his race.”
    Not all whites were like that. Many whites in the north and even a few in the south fought hard to end it. John Brown wasn’t all by himself. He was an Important figure in a movement.

    • MrUniteUs1

      Note this is a case or white women owned company claiming a a Korean owned company was given and advantage.

      • CaptJack

        What matters is that the program allows the government to give preferences based on race, and discriminate based on race. The government does this even in industries and geographic locations where there is no evidence of discrimination by the government or prime contractors.

        • MrUniteUs1

          Did you read the post I was responding to . There were no Koreans in the United States during the American Civil War.

          The reality is most of the preferences goes to white women. Gender preferences are allowed to continue.
          How do you feel about that? Do you support gender based preferences.

          I remember reading an article years ago about the city of Dallas boasting that 50 contracts went to women and minorities. Turns out 49 went to white woman, and 1 went to a Black man. You guest it. He got a janitorial contract.

          • CaptJack

            For purposes of the 8(a) Business Development program, the following individuals are presumed socially disadvantaged (called “presumed groups”):
            Black Americans
            Hispanic Americans
            Native Americans
            Asian Pacific Americans
            Subcontinent Asian American.
            That is what Rothe is challenging. The program does not give preferences to women. Other state and federal programs do grant preferences (and therefore discriminate) based on race and sex. I do not support those, but those are not at issue here. I don’t believe in preferences, period – by race or sex. I do believe in efforts to help and grow small businesses without regard to race or sex.
            You raise an excellent point for why there should be no preferences. If I were a prime contractor and hated people of a certain race, I could comply with an affirmative action preference program by contracting with members of other preferred groups and continue to discriminate against those I hate. To eliminate discrimination, just make all contracting transparent so the public can see when a low bidder is denied an offer.

          • The March Hare

            “Did you read the post I was responding to . There were no Koreans in the United States during the American Civil War.”

            I wasn’t inferring there were Koreans here during the American Civil War. It was just an example showing that not every white person was part of the activities and in later years, that bigoted attitude didn’t include everyone. The article said he was punished “not for his own shameful activities but for those activities of his entire race.” His entire race wasn’t in on it, only part of them, and that was all I was inferring.

          • MrUniteUs1

            The author is incorrect.

            “Such a policy punishes an individual not for his own shameful activities but for those activities of his entire race.”

            He falsely assumes the entire race is guilty. No entire is race is guilty of anything. However racist policies can be implemented by a small group. For instance Woodrow Wilson banned Black Americans from federal work.

            After the Revolutionary War most Americans thought slavery should end. Thousands of Back Americans fought to free this country England. Most whites lived in the north and opposed slavery. However, the 3/5ths compromise allowed Southnerners to have great representation in congress and they voted to keep people enslaved.

          • The March Hare

            The author wasn’t falsely assuming the entire race is guilty. It is obvious he just misstated the premise regarding the results of the improper action on the part of the government.

          • Judahlevi

            If you want to continue to live in the past and discuss everything as “black this” and “white this” I don’t envy the quality of your life.

            The present and the future is for each individual to be judged, not by their skin color or gender, but by their “character.” This is where the rest of us are going.

            Time to move on instead of playing the victim card.

          • MrUniteUs1

            So no more talk about from you about Moses and the Exodus.

          • MrUniteUs1

            lol. What is this article about? The white victim card.
            92% of government contracts is not enough.

          • CaptJack

            The program being challenged here does not give preferences to women, so that is not the issue. Other programs do, and I oppose those as well.
            You raise an excellent point for why preferences of any kind should be prohibited. If I were a prime contractor and I was prejudiced against people of a certain racial group, I could satisfy the requirements of an affirmative action preference program simply by contracting with someone of a race I didn’t hate. In other words, preferences don’t work; they merely divide us further.
            If you want to stop discrimination in contracting, make all contracting transparent. That way, the public can see when the low bidder doesn’t get an offer.

          • Judahlevi

            Preferences are pure discrimination. Period.

            They should be completely eliminated from all federal and state contracts. Any kind of discrimination does not cure discrimination – it perpetuates it.

          • MrUniteUs1

            Pure discrimination = exclusion. i.e no Jews allowed,
            or in the Iraqi govt. no Sunnis allowed.

            President Woodrow had no Blacks allowed policy.


          • Judahlevi

            You mean Democrat Woodrow Wilson?

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          • MrUniteUs1

            Yep Woodrow Wilson was the first Southern Democrat elected after the civil war. Most Southern Democrats became Southern Republicans in oppostion to the Civil Rights act 1964 and the 1965 voting rights act.

          • CaptJack

            That policy is obviously wrong, immoral and unconstitutional. It would not exist today.

  • MrUniteUs1

    Although more competitive, Rothe, a white-owned business, was denied a
    contract to build a switchboard system for an army base in Mississippi. A
    “competing” bid from a Korean-owned business was given a “10 percent
    price evaluation adjustment” and as a result, Rothe was denied the bid.

    • MrUniteUs1

      Not mentioned is that Rothe gets preferential treatment because it’s a woman on business. Should preferential treatment for women owned businesses continue

      “The Rothe Companies consist of two small businesses
      which provide a diversity of services and support to
      the Federal Government and the commercial sector.

      Rothe Development, Inc. (RDI),
      the founding company, began operation in 1967 in the
      state of Texas. The founding brothers, Wilhelm E. Rothe
      and Heinrich C. Rothe, former members of Dr. Werner
      von Braun’s team of missile scientists stationed in
      Huntsville, Alabama, intended that the corporation
      serve the high technology sector of the space age with
      research, development and services.

      RDI has since become a woman-owned small business and
      has expanded its services to include support services
      to NASA, precision calibration services and Government
      Information Technology services.

      Rothe Enterprises, Inc. (REI)
      is a certified woman-owned HUBZone small business,
      headquartered in San Antonio, TX and has been in business
      since January 2000. REI was certified as a HUBZone
      business in June 2000. Products and services provided
      include: 1) NASA support services (including commercialization
      of NASA excess capacity at Johnson Space Center), 2)
      management of Network Communication Centers (Government
      IT services), 3) telecommunications, 4) precision calibration
      and metrology services, 5) Logistical support personnel,
      and 6) administrative personnel. “

  • Steve

    Minority owned businesses still get stiffed on federal contracts so this is just more rightwing whining. http://thinkprogress.org/economy/2013/08/08/2437671/minority-owned-small-businesses-get-stiffed-on-federal-contracts/

    • Judahlevi

      Your source is “think progress”?

      You must be joking…

      No business should get a federal contract only because of the color of their skin or their gender. Not one.

      • Steve

        But white businesses have been and still are getting contracts because of their skin. And can you dispute the facts and data presented in the article? If so, please do.

        • Judahlevi

          No, first you need to prove your statement that businesses are getting contracts ONLY because of their “white” skin color.

          That does not mean a regurgitation of a radical leftwing’s site statistics of ownership (which proves nothing), but proof that these businesses obtained their contracts on the basis of skin color alone.

          • Steve

            “For its part, the Small Business Association can’t select businesses based on race so are hampered in trying to remedy the problem. “Procurement officers cannot see the race/ethnicity of business owners when they select them for a contract award,” John Shoraka, an associate administrator of government contracting at the Small Business Administration, told Bloomberg News. Some of the minority-owned businesses qualify for a federal plan that sets aside work for “economically and socially disadvantaged” businesses but aren’t reserved specifically for race.”

          • Judahlevi

            This does not prove that contractors are being awarded contracts because of their skin color – just the opposite. It is saying it doesn’t even know their skin color. So how does this prove they are selected because of their “white” skin color?

            As for federal set asides, there should not be any, but if there are, they should be for economically disadvantaged, not based on skin color or gender.

            There are millions of individuals in this country of various skin colors, ethnicities and genders who are economically disadvantaged.

  • Cassandra

    I’m always amazed this doesn’t receive nearly as much attention as affirmative action in schools.

  • MrUniteUs1

    Rothe claims to be at least 51% woman. This entitles to them to gender based preferences. Should gender based preferences be eliminated. What about college. Note their are more women in college than men.

  • MrUniteUs1

    Over $500 billion in Federal Contracts are awarded each year.
    10 billion dollars is just 2% of $500 billion. That should be the outrage

    “8(a) is far larger than the SDB program and allocates around 10 billion in taxpayer dollars every year.”

    Far smaller than the $500 billion going to Caucasian owned businesses. Why? Discrimination? Nepotism?

    Do you think a total of 2 % for all of the groups you mentioned?.

  • cjkcjk

    Doesn’t matter, a couple more wise latinas, or another bull-dyke and everything good and just will be overturned anyway.