Minority Contracting Decision
In a story related to our last post about DoD small business contracting preferences, a Federal District Court in Texas enjoined 10 U.S.C. 2323 which called for DoD to acheive 5 percent of contract awards to small businesses owned by socially and economically disadvantaged individuals. This is the final decision in the long argued case of Rothke Development Corp. v. U.S. Department of Defense.
Rothke argued that 10 U.S.C. 2323 was unconstitutional on iys face because it made race based classifications and had to meet a strict scrutiny test that such a classification was proper. This same court held that the section was constitutional in 2006 but that decision was overturned by the Court of Claims for the Federal Circuit on November 4, 2008. The court of appeals sent the case back to the district court with instructions to enter a judgment that the section was unconstitutional and stop enforcement of the current section of the statute.
Because there are concerns covered by section 2323 that are not race based, including the HUBZone program, the government argued that the portions of the statute applicable to these concerns should not be enjoined. The court rejected this position because allowing the section to apply to HUBZone concerns would make the entire 5 percent goal applicable to such businesses and that there was no evidence Congress intended such a result. The court also noted that "the Federal Circuit's Judgment and Mandate, and the Federal Circuit made to exclusions for Historically Black colleges and universites , minority Institutions, Hispanic-serving institutions or 'qualified HUBZone small business concerns.'"
The memo from the Undersecretary of Defense and the entire decision is available here.. The impact of this decision is limited to the DoD small disadvantaged program at this time.
