| Nov. 21st, 2014

Feds Move to Stop Special Contracts for Minority-Owned Small Businesses

The Department of Defense, General Services Administration and NASA submitted a rule change on September 9 to eliminate a program which aimed to boost government contracts that were awarded to minority-owned small businesses.

“It is unbelievable that at a time when unemployment among minorities is at record levels, the President is going to eliminate the largest federal programs to help minority-owned businesses,” said American Small Business League President Lloyd Chapman. “It will no doubt destroy millions of jobs and minority businesses from coast to coast.”

Federal procurement officers have had a goal of purchasing five percent from disadvantaged businesses since the National Defense Authorization Act of 1987. They were also allowed to pay a 10 percent premium for products made by businesses that qualified. However, in 2008, the U.S. Court of Appeals found that favoring minority-owned businesses violated the Fifth Amendment and was therefore unconstitutional.

The original suit against the provision was brought by the Rothe Development Corporation, a consortium of federal contractors which curiously presents itself as a "Women Owned Small Business."

Image of President Obama and Jeff Immelt, the CEO of General Electric and an economic adviser to the President.

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