Minority Challenges To Grow

Despite the president's ringing support for affirmative action, minority business leaders face daunting legal and political challenges

Despite President Bill Clinton's strong support for affirmative action, the minority business community must still protect its $10 billion annual contract awards with a long series of lawsuits, lobbying campaigns and regulatory battles.

Already, Pentagon officials have announced plans to scrap a 10 percent price break for companies in the Small Disadvantaged Business program. And the program has also been hit by a new lawsuit over a construction contract at White Sands Missile Range, N.M.

To protect the various affirmative action programs, including the minority contracts, the minority business community must present the courts with a barrage of studies, analyses and anecdotes about racial disparities in banking, bonding and licensing, said Deval Patrick, chief of the Justice Department's civil rights division. But Patrick warned some programs would not survive -- although he declined to specify.

The Supreme Court's Adarand decision directed the lower courts to strictly scrutinize federal affirmative action programs to ensure that they meet a compelling need and are tailored to counter specific discrimination. Following the decision, the Federal Communications Commission, fearing its program could not pass muster, quickly extended minority price breaks in spectrum auctions to all small businesses.

In the meantime, what is perhaps the first post-Adarand lawsuit was filed following a dispute at White Sands Missile Range over contracts worth up to $55 million for the repair of water works and roads, said Kelly Albers, a lawyer with Reeves, Chavez, Greenfield, Acosta and Walker, based in Las Cruces, N.M. Albers had been negotiating with U.S. Army officials on behalf of his client, Minnesota-based C.S. McCrossan Construction Inc., since last September, but once "Adarand came down... it put a higher burden of proof on the government to defend its programs," he said.

Other new lawsuits may also appear. For example, "the Small Business Administration is vulnerable to an action for permitting joint ventures between 8(a)s and non-8(a)s," said Jonathan Cain, a McLean, Va.-based attorney with Shaw, Pittman, Potts and Trowbridge.

Still, officials in the Small Business Administration do not know of any anti-affirmative action lawsuits filed against the agency, said SBA spokesman D.J. Caulfield. In 1994, the agency awarded $4.3 billion in contracts under its 8(a) set-aside program.

To withstand the "strict scrutiny" test, the defenders of minority business should rely on evidence gathered by Congress over the last few years, said Henry Wilfong, president of the National Association of Small Disadvantaged Businesses, Los Angeles.

Additional information, studies and reports will help defend the programs, said Patrick. "It is important not to be intimidated by Adarand.... The court did not impose an insurmountable legal burden," he told a July 18 meeting of minority business leaders.

Despite Clinton's support of affirmative action programs on July 19, he also directed officials to eliminate or reform programs that create quotas, preferences, or cause discrimination after they have achieved their aims.

So, for instance, this directive has already affected the Pentagon's Small Disadvantaged Business program, which grants a 10 percent price break to SDBs bidding against white-owned small and large companies. But because the program has boosted SDB contracts to more than the mandated goal of 5 percent, the 10 percent measure is being withdrawn, said Daniel Gill, director of the Pentagon's SDB utilization office. Now, SDBs will get a break of up to 10 percent when bidding against large contractors, but not small contractors, he said. The Pentagon awarded $6.1 billion to minority-owned companies in 1994. In comparison, it awarded $19 billion to non-minority firms and $87 billion to large firms.

Also, Clinton has directed the creation of a new set-aside program for companies in poor areas. How those areas will be designated as "poor" is unclear.

Still, the Senate or the House may yet wipe out affirmative action programs, despite the recent Senate defeat of a anti-affirmative action measure proposed by Sen. Phil Gramm, R-Texas. Senate Majority Leader Robert Dole, R-Kan., will likely fare better when his proposal comes up for a vote.

In contrast, the usually aggressive House Republican leaders have delayed a Republican legislative attack on affirmative action, pending the development of a "positive empowerment" policy that would aid poor people and small businesses. But "it can happen on the Hill quickly.... You could see a very fundamental change," said James Thorne, Washington counsel for the National Indian Business Association.

To fend off the Republican attacks, leaders of the minority business community are uniting behind officials such as the Department of Justice's Patrick and Rep. Kweisi Mfume, D-Md. They will rely on a combination of economic boycotts, grassroots protests, public rallies and personal lobbying of senators and representatives by minority business leaders from their constituencies, said Mfume. "It is a good cop/bad cop strategy," he said.


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