Billions in Set-Asides

The excerpts from an article quoted below indicate that billions of dollars each year are "set aside" for minority contractors on the basis of their race:

"Keep in mind, bidding preferences are only a variant of longer-standing disadvantaged business breaks. The main program, called 8(a), has resulted in 95,000 contracts valued at $48 billion since its inception. These are typically "solesourced"-meaning no bids. The list of 8(a) eligible firms totals 5,400, and includes 32 of the top 100 black businesses in the U.S. A single company has piled up $440 million in 8(a) business."

Under the 8a program, a total of $48 billion of contracts have been let to minority business with no competitive bidding at all.

The excerpts that follow are included to demonstrate what may be expected from Clinton's "review" of affirmative action. He and his favored minority constituencies are looking for methods to conceal the racial preferences or to otherwise make them look as if they could benefit poor European-Americans as well.

While the "disadvantaged business" bidding preference scheme purports to grant a preference to Appalachians or rural whites, the article notes that less than 1% of "disadvantaged businesses" certified by the Small Business Administration are non-minority, even though these groups comprise more than 50% of the economically disadvantged.

The excerpts also make clear that one need not be poor to qualify.

Once again, the real purpose is to create a wealthy class of minorities with the resources and the leisure time to participate in the political process. Liberal politicians expect concrete practical benefits from these programs.

Thus, there is a sharp contrast between the highly paid wage slaves of the information elite at the consulting firms and investment banks who must work 60 hour weeks and have no time whatever for political organizing, and the caste of middle class blacks with contracting businesses and plenty of time for such organizing.

That is the intended result of these programs.

In any event, look for the cruder forms of preference in the "sole source" contracts to be repackaged into something more neutral sounding, like the "disadvantaged business" preferences described below.

But the truth is that these programs have more to do with the distribution of political power in our country than with economic fairness. That is why the liberals can say with a straight face that they do not intend to damage European-Americans by operating them. Their intent is merely to provide political resources to their minority allies to maintain the political machine that enforces the relatively benign form of "fractional slavery" enforced against the great herds of freeway commuting, middle class European-Americans.

After all, that is where the real money is!

Yggdrasil-

-------------------

Mar. 14, 1995 Wall Street Journal A19

Race (etc.) Preferences on the Line

Business World

By Tim W. Ferguson

You'd think from some press accounts that the affirmative- action fight was over before it began. The California Civil Rights Initiative hasn't even gotten its first signature, yet quotas and preferences seem to be halfway out the window.

Afraid not. Formal favoritism is well bunkered. In Washington, President Clinton may be trying one of his straddles, but an executive-branch "review" that leads only to policy pablum about helping the needy of all colors won't root out programs that are deeply insinuated in admissions, hiring and contracting processes. Federal efforts in this area--discreetly numbering 160, according to Sen. Robert Dole--mostly have origins in the Nixon administration and have gone unchallenged by major politicians (including Mr. Clinton) until lately.

To get an inkling of how intractable these preferences have become, and how they aid some companies at the expense of others, consider a controversy involving "disadvantaged businesses." Electra Telecommunications, of Bethesda, Md., is five years old with annual revenues of just over $4 million. Electra is one of many outfits reselling long distance capacity tailored to meet specific federal needs such as giving two military bases a direct phone tie.

There's room for the Electras, even after their markup, when a major carrier doesn't want to bother with such a small contract. But the Defense Federal Acquisition Regulations punish Electra if an opposing small bidder is ostensibly owned by "someone with a social and economic disadvantage." In that case, Electra suffers a 10% penalty. If it bids $1,000, it loses to the other firm's $1,099.

Who has a social disadvantage? The Small Business Administration defines it for other U.S. agencies. Right off, partiality goes to all nonwhite citizens, including those of East and South Asian heritage. Then come other openings: "long-term residence in an environment isolated from the mainstream of American society," "social patterns or pressures which have discouraged the individual from pursuing a professional or business education," "acquisition of credit or capital under unfavorable circumstances" and so on.

This is interesting territory, because it suggests what might survive a ban on race-restrictiveness. Even a white person can be a victim, although the burden of proof is higher and less than 1% of disadvantaged businesses certified by SBA are nonminority. Not surprisingly, however, moves are afoot to expand preferences for women, the disabled and presumably other categories to be named. One thing you don't have to be is poor. In most situations, an owner can have a net worth of $750,000, not including equity in a home and the business itself.

* * *

Electra's particular market niche is tiny. Contracts are less than $100,000, sometimes way smaller. But overall, big money is involved here--federal agencies are supposed to award 5% of their contracts to disadvantaged businesses.

* * *

Brokering also could take place in other types of defense purchases: electricity, gas, even basic computers. Overall, DoD applied the 10% break in $515 million worth of contracting in fiscal 1993. Its model for preference-bidding was extended to the rest of the federal government by legislation passed last year, though the Supreme Court is deciding a case that could put the brakes on.

Keep in mind, bidding preferences are only a variant of longer- standing disadvantaged business breaks. The main program, called 8(a), has resulted in 95,000 contracts valued at $48 billion since its inception. These are typically "solesourced"-meaning no bids. The list of 8(a) eligible firms totals 5,400, and includes 32 of the top 100 black businesses in the U.S. A single company has piled up $440 million in 8(a) business.

* * *

Other factors are at work as well, but the laws are slow to respond to the new wind. The frustrations of Electra and similar companies are likely to continue. Indeed, government manuals at every level are so inlaid with mind-numbing preference procedures that it is hard to see how anybody but ferocious litigators, acting under a broad court ruling or statute such as the California initiative, will ever rid the books of them.


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