Race-Based Contracting Suspended Pentagon Halts Its Program To Help Minority Businesses
The Pentagon on Monday suspended an affirmative action program designed to give minority companies a bigger share of defense business.
The program was halted because administration lawyers deemed it unsupportable under a recent Supreme Court ruling which said the government must be certain it is not infringing on the right to equal protection when it awards race-based contracts.
The program had been in effect since 1987 as an administrative tool for reaching a goal - established by Congress - of giving at least 5 percent of the dollar volume of federal defense contracts to disadvantaged small businesses.
John White, the deputy defense secretary, said the department’s suspension of its “rule of two” affirmative action program will not lessen its commitment to increasing the share of business going to minority small businesses.
Under the “rule of two” program a Defense Department contract was reserved for minority-owned businesses whenever two or more such companies were available to bid. The winning bids could not be more than 10 percent above the “fair market price.”
Nigel Parkinson, president of the National Association of Minority Contractors, said his organization had feared the Supreme Court ruling would lead to actions such as that taken by the Defense Department.
“It’s unfortunate, but we can understand that they have to abide by the law,” Parkinson said, adding that he was encouraged by Defense Secretary William Perry’s comments on the subject in a television interview Sunday.
Perry told NBC’s “Meet the Press” that “we will do everything we can to continue” to make progress in assisting minority businesses, even without the “rule of two.”
The “rule of two” program resulted in $1 billion in business for minority firms last year and $516 million through the first three quarters of the current fiscal year, according to figures provided by the Pentagon.
Of the total $112 billion in Pentagon contract awards last fiscal year, $6.1 billion, or 5.5 percent of the total, went to what the Pentagon calls “small disadvantaged firms,” which are mainly minority-owned firms. That is the highest percentage share for that category of businesses in the past decade.
The Washington Post, which first reported the Pentagon’s intention to suspend the program, said the Labor Department and NASA have their “rule of two” programs but neither is using it and only the Pentagon is suspending the rule.
Paul G. Kaminski, the under secretary of defense, said in a statement Monday that he called defense industry leaders to tell them of the impact of the Supreme Court’s Adarand v. Pena ruling and to urge them to do more subcontracting with minority-owned firms.
Even so, the Pentagon statement said without elaboration that prime contract awards to small disadvantage firms will decline as a result of suspending the “rule of two.”