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Court Decision Voids Major Small Business Contracting Law

More news stories on Common Sense in High Places

Elizabeth Newell, Government Executive, November 6, 2008

A federal appeals court has thrown out a law establishing a 5 percent goal for awarding defense contracts to small businesses owned by socially and economically disadvantaged individuals.

The decision has the potential to invalidate the small disadvantaged and 8(a) contracting programs, which help socially and economically disadvantaged firms win billions of dollars in federal contracts every year.

The opinion, issued by the U.S. Court of Appeals for the Federal Circuit, strikes down a legislative provision, first enacted in 1986 and renewed numerous times since, which sets a goal that 5 percent of federal defense contracting dollars each fiscal year must be awarded to certain entities, including small disadvantaged companies.

The court noted that this provision incorporates the 1953 Small Business Act’s presumption that African-American, Asian-American, Hispanic-American and Native American business owners are socially disadvantaged.

The provision therefore violates the equal protection component of the Fifth Amendment right to due process, because it authorizes the Defense Department to afford preferential treatment on the basis of race and does not meet a “strict scrutiny” standard, the appeals court decided. Under this requirement, the government must prove that the preference is “narrowly tailored to serve a compelling government interest.”

{snip}

Defense’s practice of giving minority companies a 10 percent price credit meant that companies owned by certain socially and economically disadvantaged groups did not have to be the lowest bidder to win federal contracts, and helped the department achieve the congressionally mandated goal. Defense is required to waive price adjustments if it is meeting the small business goals, and has not employed adjustments since March 2007.

The initial suit was filed in 1998 by Rothe Development Corp., a Texas-based information technology company that lost a Defense contract to an Asian-American-owned business. Rothe, owned by a Caucasian woman, had been the lowest bidder.

David Barton, of the San Antonio-based Gardner Law Firm, who represented Rothe, said the decision will force minority-owned businesses to compete on an equal playing field.

{snip}

Original article

Email Elizabeth Newell at enewell@govexec.com.

(Posted on November 10, 2008)

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Comments

1 — Tom Iron wrote at 6:08 PM on November 10:

I’m happy for this ruling, but the fact of the matter is that contractors have long since circumvented this rule by either setting up their own dummy minority firms or partnering up with a minority outfit set up just for the purpose of obtaining contracts for White companies.

Tom Iron…

2 — Bobby wrote at 6:14 PM on November 10:

I love the line “economically disadvantaged groups”….

I would think that almost every small business owner is from an economically disadvantaged group, otherwise why would most people bother with a “small” business, generally speaking? Minority owned businesses have been getting away with murder for years. I know this from relatives of mine who have had to compete against them.

3 — Sleep wrote at 6:49 PM on November 10:

There are all sorts of weird laws on the books intended to help minority-owned businesses. Once, when I was being hired to a job that would involve doing tech support for cell phone customers, they told me I first had to fly 500 miles to a training site in Maryland because they had been required to outsource their training operations to a black-owned company.

I ended up taking a job in a totally opposite line of work, that paid less but avoided all the hassles of government regulation.

4 — Dave wrote at 6:58 PM on November 10:

Affirmative action in general is clearly violative of equal protection, but courts have concocted an elaborate legal “dance” over the past 40 years to allow themselves to uphold egregious anti-white discrimination — even when the state is the actor! — while striking down even minor infractions against “protected groups.”

How? By holding whites to the lowest standard, women and certain other groups to an intermediate standard, and blacks to the highest (while claiming to use the same standard for all). Yes — the Supreme Court actually applies the Equal Protection clause unequally, and even hierarchically. Read Justice O’Connor’s opinion in the Michigan Law School case (Grutter v. Bollinger) for an introduction to this technique. The court in this story applied the test fairly and honestly.

5 — Freyr wrote at 6:59 PM on November 10:

O Happy Day. O Jubilation. With Obama in, Blacks are free at
last, free at last, thank God Almighty, free at last-to fail.

6 — AvgDude wrote at 7:30 PM on November 10:

Bummer… I work at an 8a company that contracts with the Commerce dept. Although it’s complete bunk. The CFO’s wife is 1/4 Native American, and she doesn’t really run the company, he does, and he’s as white as the driven snow. She has the title of CEO, but she doesn’t do anything other than sit at home and be 1/4 indian; so her husband’s company can get the contract.

7 — nokangaroos wrote at 7:45 PM on November 10:

I have seen too many political decisions on this to find it funny. I mean, in DEFENSE? I have to be able to trust my superiors and my gear. Is REALLY everybody corrupt? OK, now I´m in academia, so I´m no more directly affected, but I remember how it was. Wasting money on PC is never a good idea. (it even gets you thinking who the enemy is)

8 — nokangaroos wrote at 8:59 PM on November 10:

Read “Harrison Bergeron” on the “equality of outcome” fallacy (g).

9 — AnalogMan wrote at 1:13 AM on November 11:

At last, some good news. It’s been mighty depressing so far.

I predicted that white people would find that electing a black president would not give them the absolution from their sin of racism that they sought. I still believe that blacks are not about to grant that absolution, but is it possible that whites themselves will now cast off that burden of unearned guilt? Please let it be so.

10 — Alan wrote at 5:38 AM on November 11:

This program was not just for blacks, hispanics, etc. It also covers Hasidic Jews - a religious, not racial designation. (Google: “Efraim Diveroli” for more info on that.)

And note the year it was implemented - 1986, when Reagan was in the White House and Repuglicans still controlled the US Senate. The Reagan Administration is also the one which added Hasidic Jews to the category of the so-called “disadvantaged.”

Annual legal immigration also doubled during the Reagan years to over half a million, and has doubled to over a million since then with lots of support from Repuglicans.

It’s time for conservatives to wake up and realize that on issues other than slashing taxes for the rich the Repuglican Party is scarcely more reliable than the Demicratic one. They won’t vote conservtaively on social issues until you force them to.

11 — Legal Eagle wrote at 11:23 AM on November 11:

I once represented a client who was attemptng to collect money owed from a black contractor that purportedly designed and installed computer networks for colleges and universities. This particular minority-owned “company” consisted of one black man and a cell phone - he had no employees, no office, no warehouse, no trucks. He would secure a contract from the governing board of the school and then “sub out” all of the procurement and labor, with a healthy markup for his troubles, of course. He was, essentially, a needless and wasteful middleman. And somehow, he still managed to go bankrupt.

12 — Brett Stevens wrote at 12:18 PM on November 11:

Now that equality has been visibly achieved, perhaps white people will have no problem tossing out all of those well-intentioned, infinitely costly programs designed to achieve it.

I’d like to start with:

* Affirmative action in all forms.
* Non-discrimination in housing.
* Replace welfare with job insurance.

At least, that’s what I’ve been advocating for a long time.

13 — MoMo wrote at 5:21 PM on November 11:

Political correctness, affirmative action, cultural relativism, racial sensitivity, minority preference, etc. etc. are luxuries that economically successful countries can afford and promote [because they have enough resources to compensate for the innate waste and inefficiency]; but, for struggling countries, such “Tom Foolery” is well “Tom Foolery!”

The United States is simply no longer in a position in which throwing unlimited money away on African - American businesses can be justified. In case you haven’t noticed the Dow Jones Average is heading in the wrong direction, i.e. South!

As one of this country’s greatest learned, biblical scholar and future Presidential advisor extant, is reportedly quoted as saying:”Da chickens, they be commin home to roost!”

And for once, he is Wright!

MoMo

14 — Anonymous wrote at 8:03 AM on November 12:

Any law that gives people special privileges based on race is invalid and illegal.


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