NCPA - National Center for Policy Analysis

Contracting Preferences Not Ended, Not Mended, Just Relabeled

August 24, 1998

The Small Business Administration is again accepting applications from companies wanting to participate in the federal government's program for "small disadvantaged businesses." The Clinton administration had suspended the program in order to bring it into compliance with a Supreme Court decision that preferences are generally unconstitutional.

Critics say the refurbished program is still unconstitutional.

  • Under the new rules, the government will award a 10 percent bidding preference on federal contracts to any small business certified as "socially disadvantaged."
  • If an industry has a percentage of "available" minority-owned firms that is higher than the percentage of dollars awarded to the firms, those firms will be given a bidding preference -- which would mean that industries representing about 74 percent of federal contract dollars will remain subject to racial and ethnic preferences.

Critics say there are two basic flaws in the logic behind the new system

  • First, it assumes that any disparity is the result of discrimination.
  • Second, it assumes that the only way to fight discrimination is through discriminatory preferences.

Analysts point out that the federal government will still be classifying its citizens by the color of their skin and where their ancestors came from -- and rewarding or punishing them accordingly.

Source: John Sullivan (Project on Civil Rights and Public Contracts) and Roger Clegg (Center for Equal Opportunity), "More Preferences for Minority Businesses," Wall Street Journal, August 24, 1998.


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