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SBA: Large Government Contracts Have 'Disparate Impact' on Minorities? (07/20/00)

          (Washington Post, Thu., Jul. 20, 2000, page A23) Today's Washington Post reported that "Small, minority-owned firms are losing ground to large companies in the competition for $200 billion in annual federal contracts, two new studies of Small Business Administration programs conclude." 

          Actually, a thorough reading of the Post article reveals that small, minority-owned firms are losing ground to gigantic, mega-million dollar minority-owned firms.  How can the SBA continue to maintain -- with a straight face -- that these mega firms are in any way "disadvantaged" and deserving of preferential treatment?

          The Post story continues: "The government's escalating needs for technology also have encouraged the use of larger, more complex contracts with mainstream technology providers, reducing opportunities for small minority- or women-owned firms. ... In congressional testimony this spring, SBA Administrator Aida Alvarez agreed that bundling [into larger contract awards] was an obstacle to meeting her agency's goals for minority contracting."

          The truth is, also according to the same Post article, that the minority and women-owned firms have not done badly at all!   Here are the actual statistics published by the Post which allegedly show that minority-owned firms are doing badly in the face of the trend toward larger government procurements:

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

          Historically, the two reasons federal agencies use SBA-certified minority firms in the first place have been:

  • (A) Congress has mandated that all agencies must reserve 10% to 20% of their contract awards exclusively for minority-owned firms; and
  • (B) The paperwork and turnaround time for minority-setaside contracts is much shorter than for competitive contract awards without regard to skin color or gender. 

          However, according to the Post, the SBA's answer to the current non-crisis in minority contracting is to make it even easier for federal agencies to award set-aside contracts to minority firms!  The SBA, abetted by the White House, has shortened the turn around time for awarding a minority contract and has cut the paperwork and contract oversight rules even further to ensure that firms of the correct skin color or gender continue to receive non-competed contracts at the expense of legitimate, white-male-owned businesses.

          Stated another way, SBA's strategy is to make issuing competitive contract awards without regard to skin color so difficult and time-consuming for federal agencies that they are compelled to use a preferred minority firm.

          The Post story cites a GAO report that of the 5,400 "race and gender correct" firms participating in SBA's minority give away program, only 3.9% (209 firms) have received 50% of the set-aside contract dollars!  So much for helping the "disadvantaged little guy".

          Significantly absent from the Post's coverage of this story, and especially from the Congressional testimony of SBA head Aida Alvarez, is the fact that for the past 20 years the SBA racial and gender quota program has virtually eliminated white-owned businesses from competing on smaller government contracts. 

          This policy has constituted nothing less than structural discrimination against small, non-minority-owned contractors, and it has wiped out thousands of such firms over the course of the past two decades.  This SBA policy routinely disregards the competence, qualifications, and proven track records of the small, arguably privileged, white-male-owned firms in favor of government-preferred minorities. 

         The applicable clause of the Section 8(a) statute actually states that a minority-owned firm shall qualify for a race/gender "contract gift" (without competition, except perhaps against 1 or 2 other 'qualified' minority firms, if they can be found) IF the designated minority firm can prove that they could not competitively win the bid on the contract in question on a level field of all qualified firms regardless of race or gender.

(Based in part upon the Washington Post story, 07/20/00, page A23, by Peter Behr)
[Washington Post Link: http://www.washingtonpost.com/wp-dyn/articles/A10920-2000Jul19.html ]


New Partnership Agreements Will Help SBA Reach Minority Small Businesses (08/19/99 - dead link)

          WASHINGTON, Aug. 19 /PRNewswire/ -- "U.S. Small Business Administration (SBA) Administrator Aida Alvarez today signed historic partnership agreements with three leading national African-American organizations that will help the agency deliver its small business financing, technical assistance, contracting and other programs to minority entrepreneurs.

          "The agreements were signed today at the Washington, D.C., headquarters of the National Council of Negro Women (NCNW), whose leaders signed the agreement with Administrator Alvarez. Also signing agreements with Alvarez today were representatives of the National Association of Black Accountants and the Phelps Stokes Fund.  "These agreements will help ensure more Americans a seat at the nation's economic table," Administrator Alvarez said. "Combining the resources of the SBA with the networks of these influential and vigorous organizations sends a powerful message that we're serious about all Americans sharing in our economic prosperity.

          "Today's partnership agreements state that the SBA, NCNW, NABA and the Phelps Stokes Fund will combine their efforts to reach out to African-Americans [a.k.a blacks] who may benefit from SBA services and to help more small firms succeed.

          "The SBA's African-American outreach effort is part of a broader initiative by the SBA to reach New Markets -- those markets that have not fully participated in our economic prosperity -- such as women and minorities, as well as businesses located in distressed rural and urban areas. Similar agreements have been signed with a number of national organizations, including the Urban League, the National Association for the Advancement of Colored People, the National Association of Women Business Owners and the U.S. Hispanic Chamber of Commerce.

          [No mention is made by SBA's Alvarez of any efforts to improve the economic circumstances for non-minority males. Obviously, Alvarez and her racially-biased SBA think that males of European American ancestry do not deserve to prosper.  Alvarez is regrettably strongly supported by the Clinton administration in this discrimination against European Americans.]   (Associated Press via the Boston Globe 08/19/99)
[former link **http://www.boston.com/dailynews/231/wash/New_Partnership_Agreements_Wil:.shtml]


SBA Set-Asides to Minority Business Totaled $6.4 Billion in 1996 (01/11/99)

          The U.S. Small Business Administration is tightening it rules for minority firms to qualify for the lucrative racial set-aside program.  Reportedly, the agency has begun checking much more closely into the actual racial or ethnic identity of minorities who apply.  SBA defines a disadvantaged business as one which has a net worth less than $750,000 and whose owners are black, Asian, or Native American.  SBA maintains a web site which lists qualified minority businesses so that white businesses whose government contracts force them to hire minority subcontractors know where to look for "officially approved" minorities. (Philadelphia Inquirer, posted Jan. 11, 1999)
[ link
http://www.phillynews.com/inquirer/99/Jan/11/business/SBA11.htm ]


SBA to Allow a Few "Disadvantaged Whites" into the 8(a) Program! (09/07/98)

          Recent changes in the SBA's minority give-away program might mean some minority businesses in the program will have to go out of business! 

          Do you think a "white" firm who has been denied work because it's owned by a "white" will automatically be considered for SBA's kinder, gentler give-away program?  (Sacramento Business Journal 9/7/98)
[link
http://www.amcity.com/sacramento/stories/090798/smallb2.html ]


NAACP to Refer Black Loan Applicants to SBA (07/16/98)

          You didn't know the NAACP was an agency of the Federal Gov't, did you?  V.P. Al Gore announces new "grab for black votes" with new minority loan program.  The administration hopes this vote pandering will result in strengthening the black middle class.  At least it will strengthen Clinton and Gore's vote appeal among blacks.  (Chicago Tribune 7/16/98)
[link
http://chicagotribune.com/version1/article/0,1575,SAV-9807160175,00.html ]


Minority "Set-Asides" in Government Contracting (02/10/97)

           (National Center for Policy Analysis) The "Section 8(a)" federal contract set-aside program awarded $5.8 billion in fiscal 1995 to minority- and female-owned firms. One-quarter of that went to just fifty companies -- at an average contract price of over $29 million apiece. (Source: David A Price, "Affirmative Action Shenanigans," Investor's Business Daily, February 10, 1997.)
[link http://www.ncpa.org/pd/affirm/pdaa/pdaa2.html ]


Small, White Male Contractor Charges SBA with Reverse Discrimination; Feds Take  $395,000!  (Ongoing, 1987 - 2000)

          Adversity.Net (Horror Stories, Case 1, this site):  Fay Communications, Inc. is a highly qualified, competent federal contractor.  They've been in business for 20 years and have won many accolades from government agencies.  Yet this tiny firm can no longer obtain government work because of the owner's skin color!  The Feds (and the SBA) black-listed this firm for complaining about "reverse racism".
[link http://www.adversity.net/c1_fay.htm]


Opinion:  SBA Systematically Eliminates
Small Business Owned by White Males

          Ask any truly small government contractor who is white and male the question "What do the letters S.B.A. stand for?"  To a person (actually, to a man) they will tell you, in one way or another, that "S.B.A. stands for the Minority Quota Business Administration. 

          The SBA does NOT promote small businesses.  It does, however, promote preferred minorities and females.

          For the past 20 years, SBA's politically-correct mission has been to systematically excluded small, white-male-owned businesses from government contracting opportunities, and especially from smaller government contracting opportunities.  The SBA has reserved virtually all small government contracts for persons of the correct skin color or gender.   White males need not apply.

          During the past two decades, most businesses owned by white males which competed for government contracts in the "tiny" category -- $5,000 to $3 million -- have been crushed, eliminated, and driven from government work by SBA quota rules favoring minorities and women. 

          Today you will find virtually NO white-male-owned federal contractors who specialize in federal contracts in the "bite-sized" range of $5,000 to $3 million.  They've all been eliminated.  Gone. 

          Oh, the SBA will argue that point, and will trot out biased statistics allegedly showing that truly small ($5,000 to $3 million contract size) white, male-owned contractors do continue to win these "bite-sized" government contracts. 

          FALSE!  Surviving white, male-owned firms in this "micro" category are largely "pass-through" companies who win these small contracts ONLY because they agreed to subcontract 15%, 30% or even more of their contracts to government-defined preferred minorities.  These white, male-owned "survivors" are pass-through scams feeding the SBA's preferred minorities.

          This surviving group of alleged "small white-male-owned" contractors are "white and male" in name only; they survive only by agreeing to reserve up to 50% of their contract for "pass-through" to SBA's preferred minority and women-owned contractors.   The SBA doesn't call these deals "pass-throughs", but that's exactly what they are. 

          The hammer SBA holds over federal agencies is this:  Paperwork requirements, turnaround time, and oversight (such as accounting requirements) are almost totally eliminated if the contracting agency agrees to "give" the small contract to an SBA-preferred minority.  Essentially, an agency can have the contractor on-board tomorrow (if they're a minority), or the agency can go through many months -- even years -- of tedious competitive bidding.

          Which option would you choose if you were a federal agency with an urgent need for contract services?


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Copyright 2002 Adversity.Net, Inc., an IRS 501(c)(3) tax-exempt educational organization.  For problems or questions regarding this web contact editor@adversity.net    Last updated: October 23, 2000.

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*  We use the term reverse discrimination reluctantly and only because it is so widely understood.  In our opinion there really is only one kind of discrimination.