It was only a matter of time before corporate affirmative action would be challenged successfully.
The U.S. Court of Appeals for the Federal Circuit has struck down a 1986 law that has set aside 5 percent of U.S. defense contracts for “socially and economically disadvantaged” business owners. The companies are often referred to as “8(a)” because they fall under Section 8(a) of the Small Business Act. Or they did.
According to the court, Section 1207 of Title 10 of the U.S. Code section 2323 “incorporates the [1953] Small Business Act’s presumption that Black Americans, Asian Americans, Hispanic Americans, and Native Americans are socially disadvantaged individuals.”
And that would have been OK, except in the court’s opinion Congress lacked sufficient evidence showing DoD actually was discriminating against minority-owned small businesses to justify the set-aside. Since there is no justification, the law as written is unconstitutional violating the right to equal protection, guaranteed within the right to due process under the Fifth Amendment. (Whoa.)
The court ruled on a 1998 suit filed by San Antonio-based Rothe Development (a patient and tenacious bunch) challenging a contract awarded by the Air Force to a business owned by a Korean-American couple despite a lower bid submitted by Rothe, owned by a Caucasian female.
The decision, which orders DoD to not “employ the statute or race-based contracting preferences” is a victory for thin and fat cats alike. It does not affect small business set-asides or the laws governing them, though it’s anyone’s guess if small business awards or even veteran-owned set-asides will meet legal challenges.
“What has been overlooked and conveniently ignored in the process is that there is only one group that has EARNED the right to preferential treatment and that is Veteran and Service Disabled Veteran Owned Businesses,” commented one interested party.
But what effect will this decision have on the Navy’s penchant for race-based awards?