News about racial quotas and preferences at the SBA.

SBA Redoubles Government Contracting Quota Efforts
(News Analysis 07/31/00)

Earlier this spring, the quota lobby trotted out some less than impressive statistics to convince Congress that -- gasp -- federal agencies were issuing contracts that were too large and complex for many SBA quota-firms to perform. Even with generous quota points and greatly relaxed qualification requirements for minorities, it seemed that SBA's disadvantaged minority and women-owned quota-firms just couldn't measure up on these larger "bundled" government contracts.

The actual facts indicate that historically disadvantaged (minority) firms are doing just as well at SBA's quota-trough as they ever have:

Type of Set-Aside:	FY 1998 Contracts:	FY 1999 Contracts:
SBA Section 8(a) Minority-owned firms:	$6.5 billion	$6.3 billion
SBA Women-owned firms:	$4 billion	$4.59 billion

Minority firms bagged a whopping $6.5 billion in set-aside contracts in 1998 vs. $6.3 billion in 1999. Women-owned firms received set-asides of $4 billion in 1998 vs. $4.59 billion in 1999.

The SBA also admits that in 1994 there were 98,694 minority contracts awarded at an average of $78,018 per set-aside. The SBA claims to be alarmed that, by compar4ison, in 1999 81,399 minority contracts were awarded at an average of $77,397 per set-aside contract.

Countless tiny contractors owned by white males would give just about anything to be guaranteed an average of $77,397 in federal contracts per year! But such firms are considered privileged, and therefore were not entitled to compete for any of these contracts.

The solution to this non-existent dilemma? SBA's Aida Alvarez this month proposed new quota rules that would make it more difficult for federal agencies to issue large "bundled" contracts for which inexperienced minorities and women-owned firms could not possibly compete.

Under SBA's new more quota friendly rules, the agency proposes to force federal contracting agencies (a) to prove that their "bundled" mega-contracts do not have a "disparate" impact on minority contractors; and (b) to prove that their "bundled" contracts cannot be broken down into smaller, more quota-friendly contracts.

The U.S. Government Accounting Office (GAO) weighed in to this Kafka-esque debate with a report that of the 5,400 minority and women-owned firms feeding at SBA's quota trough last year, only 3.9% (209 firms) received 50% of these set-aside contract dollars!

Stated another way, the GAO report says that 209 disadvantaged firms received a total of $3.15 billion in set-aside contracts, for an average of $15 million per firm in 1999.

How could anyone consider any race-preferred or gender-preferred recipient of $15 million in annual federal contracts to be disadvantaged in any sense of the term?

SBA and Director Aida Alvarez are absolutely correct on one point only: the SBA set-aside program is in trouble. SBA's racial- and gender set-aside program is even more indefensible today than it was at the inception of this discriminatory program.

-- Editor

Racial Spoils in Fed Contracting (10/20/00)

Clinton Orders More Racial Balkanization.

Excerpts from Opinion by Roger Clegg, general counsel of the Center for Equal Opportunity & John Sullivan, associate director of the Project on Civil Rights and Public Contracts

"On October 6, President Clinton signed an executive order which, the White House declared, "directs Federal departments and agencies with procurement authority to take aggressive and specific actions" to make sure that certain racial and ethnic groups get an increased share of federal contracts. The order specifically "direct[s] each agency to establish goals" and to make clear "that these are minimum goals and are not considered a ceiling for such contracting."

"The odor of election-year politics is strong in the order. Vice President Gore joins President Clinton in the press release's headline and throughout its body; the order was pushed by Democratic congressmen seeking reelection; and agencies are given 90 days — that is, just enough time to make sure the next president is stuck with their product — to submit a "a long-term comprehensive strategic plan." This is serious election-year pork. One federal program alone awards more than $5 billion in contracts annually.

"The federal government is encouraging public and private actors to divide up contracting and jobs along racial and ethnic lines. The White House, moreover, says the order "directs federal departments and agencies to ensure that all creation, placement, and transmission of federal advertising are fully reflective of the nation's diversity." It trumpets as well a recent report by Vice President Gore's "National Partnership for Reinventing Government" and the Department of Commerce that encourages "holding managers responsible for building diverse staffs."

"Three days after President Clinton signed his executive order, the NAACP issued its annual report card on the "lodging industry." Different hotel chains were graded on, for instance, their "willingness to explore incentives and to establish programs to increase the number of African-American franchisees" and "to utilize African-American owned agencies and media in advertising campaigns." Other people of color are not mentioned.

"... the SBA defines economic disadvantage generously: $250,000 in assets, not counting house and business. Indeed, more than 90 percent of all American families would qualify — only their skin color and ancestry remain as a stumbling block.

"... immigrants from countries with people of color will be deemed disadvantaged; those from countries populated by lighter-skinned people will not. As was true for economic disadvantage, social disadvantage is ultimately irrelevant: Every group in this country can point to some history of discrimination, so that issue becomes bureaucratic cover for a decision really driven by racial politics.

"But, with so much money at stake, expect other groups to petition for minority status. It is ironic that as courts are ending preference programs in public contracting around the country, there is simultaneously a more aggressive effort to enlarge federal preferences, as the president demonstrated in his recent executive order. It is even more ironic that, as race and ancestry matter less and less to most Americans in their private lives, the government insists on playing the race card politically."

(National Review 10/20/00 by Roger Clegg, general counsel of the Center for Equal Opportunity & John Sullivan, associate director of the Project on Civil Rights and Public Contracts)

[link http://www.nationalreview.com/
comment/comment102000b.shtml ]

See Especially: Clinton Orders MORE Federal Quotas! (10/06/00) (Below)

Clinton's Executive Order for More Racial Discrimination

THE WHITE HOUSE Office of the Press Secretary
For Immediate Release October 6, 2000

STATEMENT BY PRESIDENT BILL CLINTON

"I am pleased today to sign an Executive Order strengthening our efforts to increase contracting opportunities between the federal government and disadvantaged businesses -- in particular, Small Disadvantaged Businesses, 8(a) Businesses, and Minority Business Enterprises. These businesses play a vital role in our nation's economy, but historically have been underutilized and at times shut out of Federal procurement opportunities.

"Accordingly, this Executive Order directs Federal departments and agencies with procurement authority to take aggressive and specific affirmative actions to ensure inclusion of disadvantaged businesses in federal contracting.

"I want to thank Representatives Kilpatrick, Menendez, Velazquez and Wynn, and the many others who have worked with us to ensure that the private sector recognizes the importance and utility of contracting with disadvantaged businesses. I particularly commend those members of the advertising community who are working to increase the representation of minorities within advertising -- both on the creative end and in transmission to the public. It is critical that the private sector help lead this effort and take advantage of the diverse and creative views that underrepresented groups will bring to the advertising process. I want to commend the American Advertising Federation (AAF) for responding to the Vice President's challenge and working with interested parties to develop the Principles for Effective Advertising in the American Multicultural Marketplace, a strategic plan for boosting minority representation in the advertising industry. Certainly, the federal government must play a leading role as well. Advertising and the broader information technology industries play an increasingly expansive role in our society.

"Therefore, in this Executive Order, I am directing each federal department and agency to ensure that all creation, placement, and transmission of federal advertising is fully reflective of the nation's diversity.

"Further, this Executive Order directs each federal department and agency to take clearly defined and aggressive steps to ensure small and disadvantaged business participation in procurement of information technology and telecommunications contracts.

"This Executive Order will ensure that Federal departments and agencies are held accountable on these issues. It does so by clearly listing the responsibilities and obligations of each agency to expand opportunities for disadvantaged businesses and requires the agencies to report to me within 90 days of the issuance of this order the steps they plan to take to increase contracting with disadvantaged businesses. Subsequently, the agencies will be required to submit annual reports on their ongoing efforts in this area to the Director of the Office of Management and Budget to ensure at the highest levels the Executive Branch will sustain on unflagging and aggressive efforts to achieve this important goal."

[The above is the entire, unedited text of the official White House Press Release 10/06/00]

SBA Acts to Promote Bite-Sized Contracts (07/27/00)

Aida Alvarez, director of the SBA, has proudly announced new regulations which make it even more difficult for government agencies to issue large contracts without regard to skin color or gender.

That's right. SBA's Alvarez and her quota industry lobbyists have unilaterally ruled that large "bundled" government contracts have a "disparate impact" on preferred racial and gender groups.

Therefore federal agencies who need to hire contractors must now submit extraordinary new paperwork justifying the necessity of large "bundled" contract awards lest such awards "adversely impact" those racial and gender groups who have previously enjoyed SBA's protection from odious and burdensome competitive bidding requirements.

The SBA's language is as conflicted as it is transparent: half the time they refer to the adverse impact on "small businesses" and the other half of the time they refer to the adverse impact on "minority and women-owned businesses". To which category do you think SBA is really referring?

As you read the news coverage (below) of this newest, pro-quota initiative by the SBA, note that virtually all of the voices raised in protest against so-called "bundled" government contracts are the voices of the pro-quota, pro-minority advocacy groups.

          [Washington Post 07/26/00] "The Small Business Administration yesterday issued a long-awaited regulation designed to restrain a trend toward the bundling of federal contracts into huge packages that are too large or complex for many [racially-preferred] small businesses to seek.

          "Before smaller contracts can be combined into a large procurement bid, the bundling must be shown to be "necessary and justified" because it creates substantial cost savings, quality improvement or other benefits, the regulation provides.

          The Washington Post quotes SBA administrator Aida Alvarez as saying: "The change 'forces a lot of scrutiny' of agency contracting. We think it will really provide the oversight [and gifts to minority firms] that is needed."

          In this article, the Washington Post soft-pedals the new, stricter SBA quota requirements. Reporter Peter Behr writes: "But the SBA initiative drew a mixed reaction from [minority-owned] small business advocates. "We in the community are skeptical that this will work," said Fernando V. Galaviz, president and chief executive of Centech Group Inc., an Arlington-based information technology and engineering contractor. Galaviz heads the National Federation of 8(a) Companies, minority-owned firms that compete for federal contracts reserved for them by agencies. "Every time an agency can show a cost benefit, they can bundle," Galaviz said. "It's difficult to argue against that."

          "Other 8(a) program participants said they are concerned about an exemption in the regulation that permits agencies to bundle contracts without meeting other requirements if high-level officials say the large contract offering is "critical" to the agency's performance."

          Set-aside advocate Representative Nydia M. Velazquez is quoted by the Post as follows: "It doesn't take a military genius to realize that is a loophole you can drive a tank through." Ms. Valazquez is New York's ranking minority advocate Democrat on the House Small Business Committee. The House Small Business Committee today is scheduled to take up a Velazquez amendment that would direct the SBA to block a bundling decision whenever an agency has failed to meet its goals for awarding contracts to small businesses, including minority and women-owned firms."

          "[SBA director] Alvarez said that last year, the [SBA] persuaded agencies to "unbundle" about $1 billion in proposed contracts, breaking them into smaller pieces [in order to favor preferred minorities]. So far this year, the figure is $1.8 billion, Alvarez said."

          The Post continues: "Contract bundling has been a growing obstacle for small [minority] businesses over the past five years, critics of the practice say. SBA officials identified at least $6 billion in bundled [large] purchases last year; so far this year the total stands at $17.5 billion, although [minority] small business advocates say the figure is considerably larger."

          Ironically, "bundling" (issuing larger, more efficient government contracts) is a product of the Clinton administration's campaign to streamline government purchases. An unintended consequence has been that weak, inexperienced, racially-preferred firms have been unable to meet the technical requirements of these larger contracts.

          The Washington Post story continues: "These changes are blamed for reducing contracting opportunities for all small businesses and, particularly, minority-owned and women-owned firms. Last year, minority-owned firms participating in the SBA's 8(a) contracting preference program received 81,399 contracts totaling of $6.2 billion. Five years before, the totals were 98,694 contracts for $7.7 billion."

Analysis: In 1999 $6.2 billion ($6,200 million) spread over 81,399 contracts equals $76,168 per set-aside contract. In 1994, $7.7 billion ($7,700 million) spread over 98,694 contracts equals $78,018 per set-aside contract.

That hardly seems like gloom-and-doom, especially when one considers the greatly reduced requirements such firms must meet. Most such SBA set-aside contracts are outright "gifts" without any competition whatsoever.

(Based on the Washington Post July 27, 2000, page A21, by Peter Behr)
[link http://www.washingtonpost.com/wp-dyn/politics/fedpage/A51915-2000Jul26.html ]

New Minority Partnership Agreements (08/19/99) --

Sorry, this story has moved to Older SBA News
[link http://www.adversity.net/fed_stats/fednews_SBA_1.htm#alvarez081999]

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