Minority business programs examined in lawsuit

By Gloria Larkin

Have you ever wondered about the depth of the data behind the programs offered by federal agencies that are designed to help the disadvantaged? If so, you are not alone.

Hence the recent legal challenge from White entrepreneurs who contend that the mission of several federal programs, particularly the Minority Business Development Agency, is misguided and unconstitutional. They are challenging the idea that certain racial and ethnic groups are inherently disadvantaged in American society and thus entitled to preferential treatment.

The MBDA, which was established to remedy past and ongoing discrimination in the business world, is one of several federal programs that is being subjected to a heightened examination concerning certain racial and ethnic groups being entitled to assistance to level the playing field in government contracting.

And it is now to the point that the agency, which was created 54 years ago by the Commerce Department under Richard Nixon’s presidency, is fighting for its existence.

This legal affair, which is part of a conservative backlash against affirmative action and diversity efforts in government contracting and the private sector, is also targeting programs run by the Transportation Department and the Small Business Administration. It intensified last June after the Supreme Court overturned a law concerning race-conscious college admissions.

Back in the day, the categories of disadvantaged minorities were created without much data to back them up; that has resulted in what some observers consider a mixed bag of programs designed to benefit minority groups that may (or may not) be disadvantaged, depending on one’s given perspective.

But of the targeted programs the MBDA, which was made permanent in 2021 under the Infrastructure Investment and Jobs Act and greatly increased its funding to $550 million, is in the greatest danger of dissolution. It runs more than three dozen centers across the country that assist minority-owned businesses in securing financing and navigating the federal contracting process.

However, that could change with the lawsuit, as the three White male business owners who filed it are looking for eligibility for the MBDA’s benefits, but don’t identify as members of any eligible minority group.


‘Rule of Two’ Expanded to Increase Small Business Contracts

With spending against government-wide acquisition contracts reaching an all-time high in fiscal 2023, the Office of Federal Procurement Policy is working to ensure that what it considers a fair amount of small businesses can participate in these opportunities.

In a new memo from OFPP, the Biden administration is telling agencies to take specific steps such as on-ramps, applying the rule of two and even not using “best-in-class” contracts ― should they be detrimental to small firms when managing or buying from a multiple award contract.

New data for 2023 from HigherGov, a market intelligence firm, revealed that the market is only rising with the use of multiple award contracts. The company said nearly 55.8% of all awards went through a contract vehicle with the General Services Administration’s OASIS and NASA’s SEWP V seeing record awards of $13.4 billion and $10.5 billion, respectively.

The GSA has also stated that its schedules contract saw a record $46 billion in sales last year, up $4.6 billion from 2022; in addition, OFPP’s push for agencies to use one of the “best-in-class” contracts like SEWP V or OASIS (all told, there are 38 BICs) resulted in more spending across these multiple-award contracts.

Need more data? Deltek, another market research firm, recently reported that agencies spent more than $54 billion, or 12.7%, of all procurement on BICs. That’s up from $37.6 billion in 2019.

Moving forward, the OFPP is encouraging freer-flowing communications with small businesses, the SBA’s procurement center representatives, and agency small business specialists in the development of multiple-award contracts.

Such progress is nothing new. The aforementioned memo came after a record fiscal 2022, during which the administration said small businesses received nearly $163 billion in federal contracts, of which a record of nearly $70 billion went to small, disadvantaged businesses.

“Agencies should include in the acquisition plan rationale, including the market research undertaken, when a multiple-award contract would not be fully or partially set aside for small businesses, or when a reserve would not be used,” said SBA Administrator Isabel Casillas Guzman in a blog posted by the Office of Management and Budget. “The explanation should be reviewed by the agency small business specialist.”

Gloria Larkin is President and CEO of TargetGov, and a national expert in business development in the government markets. Email glorialarkinTG@targetgov.com, visit www.targetgov.com, or call toll-free 1-866-579-1346 x 325 for more information.

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