8(a) Faces More Trials

Industry executives are keeping their fingers crossed that Congress and the courts won't decide against the 8(a) program

P> The much-threatened 8(a) program looks set to survive its most recent legal trial, but may soon face new congressional trials, say industry executives and congressional staff members.

Rep. Charles Canady, R-Fla., has won tentative approval from Republican leader Newt Gingrich, R-Ga., for a debate on his measure that would largely bar government affirmative action programs. The measure has been kept off the House floor by Gingrich for several months.

Also, Rep. Jan Meyers, R-Kan., chairwoman of the House Committee on Small Business, said she will try to kill the 8(a) controversial program, which awarded an estimated $5.2 billion in 1995 to 5,500 minority-owned companies.

But Meyers has only a few months before she retires from Congress in November. Getting an anti-8(a) measure through Congress' packed calendar will be difficult, partly because of strong opposition expected from Democrats and President Clinton.

However, Meyers' anti-8(a) measure could be added to any bill being debated by the House, said Meyers' spokesman, Craig Orfield. "It is going to shake out within a month [or] six weeks," he said.

Congressional staff members said they couldn't predict whether the Canady bill would be allowed to come up for a vote, or whether it would accelerate consideration of Meyers' proposal, or of other community-development schemes that 8(a) proponents say will drain funds from the 8(a) program. Some Republicans are leery of the Canady bill partly because they fear Democrats will tag them during the November election as extremists, said a congressional staff member.

Also, the Canady bill is unlikely to pass the Senate, where it faces weaker support from Republicans - despite being sponsored by Republican leader Bob Dole, R-Kan. - and a veto from President Clinton.

Outside Congress, 8(a) industry executives are hopeful the set-aside program will survive, especially following a hearing held April 18 before U.S. District Court Judge Emmet Sullivan. Lawyers for Dynalantic Corp., Deer Park, N.Y., asked the judge to delay a Navy 8(a) contract pending a full hearing on whether the 8(a) program violated Dynalantic's constitutional rights.

During the hearing, Sullivan questioned whether Dynalantic had the standing, or legal right, to sue the government over the 8(a) program, and said he would try to balance Dynalantic's rights with those of the incumbent 8(a) companies. "Standing is a very significant issue in this case," he said.

Department of Justice lawyers, backed by attorneys from the 8(a) industry, defended the program.

Sullivan will rule on Dynalantic's request for a contract delay before he sets the date for the trial to determine whether the 8(a) program meets the constitutional tests demanded by the Supreme Court's June 1995 Adarand v. Pena decision.

"I thought it went well.... [But] you just can't tell," said Pamela Mazza, a lawyer representing the Minority Business Summit Volunteer Committee.

Justice Department spokesman Myron Marlin said, "We are pleased anytime a judge determines there is a likelihood that we will succeed on the merits [of the case]."

The government has defeated two anti-8(a) lawsuits in Virginia and New Mexico.

But even if the program survives these ordeals, factors other than hostility to affirmative action may shrink 8(a) contracts. Sen. Christopher Bond, R-Mo., who chairs the Senate Committee on Small Business, wants to divert $6 billion per year in government contracts to companies based in poor areas, rather than minority-owned companies. A similar economic-development plan is being pushed by Rep. J.C. Watts, R-Okla., and Rep. James Talent, R-Mo.

Deregulatory procurement reforms have made it easier for agencies to use non-8(a) procurement methods, such as purchase from retail stores or from the General Services Administration's shopping lists. Also, agencies are bundling many smaller infotech contracts into a few large contracts, allowing government offices and agencies to easily order up services such as software development and computer maintenance.

With these easy-to-use methods, contract officers may choose to avoid the controversial 8(a) program, say 8(a) industry officials.

Concern among the industry executives is growing and was underscored at an April 3 meeting in Washington, where industry executives said funding for the 8(a) program appeared to be roughly 25 percent less than in 1995.

However, the Small Business Administration, which oversees the program, said 8(a) companies won $1.51 billion in contracts during the first six months of the 1996 fiscal year. That represents a 9 percent decline from the $1.66 billion awarded during the same period in fiscal 1995. But "the 9 percent drop is not that significant" because agencies' spending has been disrupted by the battle between the White House and Congress over long-term spending plans, said SBA spokesman D.J. Caulfield.

Also, some major 8(a) contracts have not been awarded yet, said Paul Murphy, president of Eagle Eye Publishers Inc., which tracks government spending patterns. For example, the Air Force has not awarded the 8(a) portion of the $1.4 billion Desktop V program.

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