The Magazine

The Quotas That Won't Die

Neither party has the nerve to take on the scandal of preferential set-asides in government contracts.

Jul 21, 2008, Vol. 13, No. 42 • By JENNIFER RUBIN
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

If the person in a group "presumed to be disadvantaged" has a net worth of less than $750,000 (excluding the value of the person's principal residence and the business) and a construction business with revenues below a set threshold (in the case of the Department of Transportation, $20.41 million in 2007), he or she can gain certification as a DBE. Under this definition 95 percent of Americans might be "disadvantaged" if they started a construction business.

Examining airport contracting, LaNoue found that women, not minorities, were the prime beneficiaries of DBE programs, noting:

A person may have gone to elite schools, have had very prestigious employment, be selected to prominent positions, and be a member of the best clubs; nevertheless, because of their race or gender they will be presumed by the DBE program to be "socially disadvantaged" as long as they live. Every DBE must be certified by a government agency and must provide considerable data to get certified, but that data do not deal in any detail with whether the owners or the business have ever suffered discrimination.

LaNoue found African-American businesses (the originally intended beneficiaries of DBE programs) received 23.5 percent of the airport contracts (31 percent of the dollars) awarded to DBEs while white women received 48.3 percent (36.5 percent of the dollars).

Ward Connerly, a longtime opponent of preferences and the driving force behind the overturning of affirmative action in California in 1996, points out that the DBEs' original goal of creating self-sufficient "minority entrepreneurs" has never been met. These DBE businesses who are supposedly being helped, Connerly says, "don't graduate from preferences. They remain beholden to the primes." (DBE contracting programs can either meet their goals through direct bids from prime contracts, or, more frequently, indirectly from prime non-DBE contractors which subcontract out the work to DBEs.) He observes ruefully that we have created a system where "Mexican Americans are given preference over people of Chinese descent on the rationale that 100 years ago white people enslaved black people."

And despite the best efforts of government auditors, no one really knows if these programs work: how much they cost, how successful they are in assisting owners to operate without preferences, or any other meaningful indication of success. In 2001, the GAO reported to Congress that not only could none of these questions be answered, but that the 14 disparity studies which it examined were all analytically flawed.

In 1989, the U.S. Supreme Court intervened to put limits on race-based contracting. The Court in Richmond v. Croson held that to use preferences state and local governments must pass a "strict scrutiny" test demonstrating a "compelling state interest" in remedying discrimination and must narrowly tailor their programs to reach that goal. Then in Adarand Constructors, Inc. v. Peña in 1995, the Court held that all racial classifications used by the federal government must also be subject to "strict scrutiny," with the burden of proof on the government to demonstrate that the classification is the least restrictive way of serving a "compelling governmental interest." The Court insisted that race-neutral alternatives be considered.

It would be understandable, if perhaps naïve, to assume that after Croson and Adarand government entities abolished preference programs that did not meet the strict scrutiny test. Jonathan Bean, a professor of history at Southern Illinois University, has studied the effects of affirmative action programs. He explains that there was "massive resistance across the board" to implementing the Court's edicts. "The proponents of affirmative action have played rope-a-dope for decades." The Croson and Adarand decisions did not actually abolish race-based contracting. "The Court left the door open," notes Roger Clegg, the president and general counsel of the Center for Equal Opportunity, "and the government proceeded to drive a truck through it." An entire industry of consultants sprang up to provide studies of racial disparity to justify preferential contracting programs. By the end of 2005, LaNoue found there were almost 200 such disparity studies, which had cost taxpayers an estimated $75 million.