After the University of Alabama denied admission to Black students for decades, and after Governor George Wallace swore to keep the doors closed to them with his pledge of “segregation now, segregation tomorrow, segregation forever,” President John F. Kennedy federalized the Alabama National Guard to enroll Vivian Malone and James Hood. Immediately after that, should the federal government have trusted Governor Wallace and his administration to admit other Black students on an equal basis without verifying that that the process was fair and closely monitoring the results?
Today, when the U.S. Justice Department proves that a municipal police force has engaged in a “pattern and practice” of racial discrimination that permeated the entire force, the feds don’t just trust the incumbent local officials to institute appropriate changes without extensive monitoring and statistical records to verify that the pattern and practice of discrimination has truly ended.
And yet the federal government now sings a very different tune after a federal court ruled that it has engaged in decades of unconstitutional discrimination in the Small Business Administration’s section 8(a) contracting program. It is rich to hear the Agriculture Department and the SBA insist that they must be trusted to modify the program, largely as they see fit, when they struggled so hard, and for so many years, to retain the unconstitutional preference for minority-owned contractors.
The government tenaciously fought Ultima Services Corp. and its owner Celeste Bennett in court for years, swearing in its filings that the racial presumption was necessary to make the program function (since race-neutral procedures would be inadequate). Perhaps the racial preference was necessary for the program to work the way the government wanted since 93% of the section 8(a) contractors originally qualified as socially disadvantaged through the automatic racial presumption.
So it’s quite odd for the government to seemingly concede defeat without an appeal when a single federal district court ruled in Ultima’s favor and enjoined the program nationwide. Readers’ Spidey senses should be tingling that the Biden administration would give up so easily. Sure, the racial preference is unlikely to survive appellate review in the U.S. Sixth Circuit or in the Supreme Court, but why not roll the dice—unless it’s easier to circumvent a district court ruling?
Federal district Judge Clifton Corker’s ruling is based on an extensive record, including that SBA officials hadn’t reconsidered the racial categories that receive the presumption of social disadvantage in decades, and that the supposed “presumption” of social disadvantage was not (as defendants had argued) “rebuttable”—since it has never been rebutted during the history of the program. Indeed, there is no process by which that can conceivably happen. Every single contractor from certain designated races and ethnicities was automatically and conclusively designated to be socially disadvantaged in business, even if they were second-generation descendants of Spanish royalty.
Judge Corker ruled last July that the conclusive racial presumption in the 8(a) program serves no legitimate government purpose, let alone not a compelling one—as the strict scrutiny test for racial classifications requires. He also ruled that the program was not narrowly tailored to achieve the government’s questionable purpose—for six different reasons.
Among them, Judge Corker found that the government had no lawful goal; it had never considered any race-neutral alternatives; and the list of races that received the presumption was both over- and underinclusive (all Hispanics are presumed socially disadvantaged, but no Arabs are).
Judge Corker’s nationwide injunction barring the SBA from using the presumption initially brought the program to a halt—and seemingly overruled President Biden’s executive order that socially disadvantaged business contracting be increased by 50% to help achieve the administration’s diversity goals. Instead of appealing the decision last summer, however, the government filed a “Notice of Compliance” with the court explaining just how much energy it would expend to “comply.”
Lawyers’ Spidey senses should be tingling further at this point, since a “notice of compliance” is a novel filing, unknown to the rules of civil procedure. What it amounts to in Ultima is a thinly veiled plan to circumvent the judge’s order.
SBA’s goal seems to be to paper over its discrimination and retain the effect of the presumption by other means. Instead of conclusively assuming that all minority-owned small businesses are socially disadvantaged, the SBA asked thousands of existing 8(a) minority business owners to write narratives explaining how their minority status disadvantaged them.
In an email, the SBA informed at least some 8(a) contractors that the narrative should be no more than two paragraphs long and recite one or two instances of discrimination, with key points confined to one or two sentences. The email gives the impression that the court ruling simply requires this abbreviated narrative to be “on file” with the SBA for the contractor to continue in the program. That would be a blatant violation of the injunction, and it would be a marked change from the standards previously applied to non-minority contractors who had to prove their social disadvantage in a four-step process.
What’s worse, the SBA admits it assigned new staff to read the narratives and that it trained them to complete the regulatory review in a few days, skipping or seriously truncating the four-step, multiple-officer process. These new agents also don’t report through the congressionally established Office of Compliance but to officials at SBA headquarters. Suffice it to say, there is plenty of room for abuse in that system.
We filed motions asking Judge Corker to stop this effort to circumvent his injunction, grant other prophylactic relief to our client, and appoint a court monitor to oversee SBA compliance. The DOJ responded that SBA’s valiant efforts to re-certify the minority contractors were “necessary” (again) to keep the government functioning, claimed that privacy concerns prevented anyone else from reading even redacted narratives, and withheld statistics on how many minority contractors have been approved under the abbreviated process. All this despite statutory mandates that it produce similar statistics annually, which it has not sent Congress since 2017.
We filed our reply brief seeking additional relief on Oct. 6, and we are awaiting a ruling. “Trust but verify” was President Reagan’s posture in treaty negotiations with the former Soviet Union. And yet, the law doesn’t require mutual trust when a plaintiff proves discrimination. It requires justice. Isn’t it time to end racial set-asides in government contracting once and for all?
Todd Gaziano is a former commissioner on the U.S. Commission on Civil Rights and the president of the Center for Individual Rights which represents Ultima Services Corp.
