Monday, September 19, 2011

Federal Minority-Owned Small Business Programs in Jeopardy

Efforts by the federal government to ensure equity in contracting may be jeopardy.
As a formality, the Obama administration has proposed eliminating a federal contracting program benefiting ethnic minority-owned businesses after courts ruled that the program was unconstitutional.
Before 2008 and 2009 court rulings, the Defense Department and other agencies added 10 percent to low bids from non-minority firms and awarded contracts to the best minority-owned company bids that came in below the new bid amount. The practice was used to help the agencies meet their goal of giving 5 percent of contracts to companies owned by minorities.
The programs were originally designed under the Nixon Administration to help reversed years of systemic discrimination against minorities and women who sought to do business with the federal government, yet were often left out due to gender or race.
Around 35 percent of the U.S. population is made up of ethnic minorities, and 5.8 million businesses are minority-owned. The American Small Business League (ASBL) estimates that if the policy is implemented, minority-owned small businesses could lose close to $50 billion in federal contracts annually, which could lead to the loss of millions of jobs.

“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 ASBL President Lloyd Chapman. “It will no doubt destroy millions of jobs and minority businesses from coast to coast.”

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