Contracters left defenseless: minority contractors see set-asides program swept away.

Consider it the legacy of Clarence Thomas and his conservative High Court comrades. Many Capitol Hill pundits feared that the U.S. Supreme Court ruling in Adarand v. Penal which required affirmative-action programs to meet a stricter scrutiny standard, would signal open season on federal affirmative-action efforts. They were right. The first major effects are being felt with the recent scrapping of Department of Defense program that had been extremely lucrative for minority contractors for nearly a decade.

The "rule Of two" set-aside program had assisted small disadvantaged businesses in locking down nearly $5 billion in government contracts since its inception in 1987. Under the rule, federal contracts were reserved for minority-owned companies when there were two or more companies available and deemed qualified to do the work. The DOD set an annual goat of awarding 5% of their contracts and subcontracts to small disadvantaged businesses. That means, in 1994, those minority businesses had about $1 billion--out of a $112 billion pie--reserved for them. But the program was scrapped following a joint decision of the U.S. Justice Department and the DOD; the two believed that the rule of two was no longer constitutionally sound.

"We have a task force in place here that looked at the range of government programs that use race as an element of decision making, and looked to see if they applied to the strict scrutiny standard," says Associate Attorney General John Schmidt, who headed the task force for the Justice Department. "We came to the conclusion that the program didn't [meet the standard and had to be [eliminated]."

Although the decision took few by surprise, because of the Adarand ruling, many are still upset that the program was struck down without there being a similar program to take its place.

"We're very disturbed about it," says Rep. Kweisi Mfume (D-md.) , a member of the Congressional Black Caucus. "This leaves an immeasurable void in terms of minority business participation," says Mfume.

The Minority Business Enterprise Legal Defense Education Fund, the National Association of Minority Contractors, and the National Minority Supplier Development Counsel are all skeptical of efforts on the part of the government to truly look for a substitute program. Their recent joint statement reads in part: "Both the Department of Defense and the Department of Justice acknowledge the distinct risk of serious cutbacks in minority contracting and have promised to `redouble efforts' in implementing program revisions to allay the negative impact of the rule of two suspension; but the disturbing absence of detail so far regarding reasonable alternatives to the program has been disappointing to the extent of raising suspicions about the Clinton administration's political intentions."

Although one of the most lucrative, the now-defunct rule of two program wasn't the only way minority contractors got their feet in the federal door. Remaining DOD programs include the 10% price preference program; the subcontracting plan requirement on prime bids; and the Small Business Administration 8(a) Program.

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