Panic among beneficiaries of racial preferences as implications of Harvard decision become apparent
The Washington Post runs a frontpage story about a district court decision striking down a large federal racial set-aside programs that allowed federal agencies to reserve government contracts for the exclusive use of “socially and economically disadvantaged” small businesses, and presumed that small business owners of certain races and ethnicities are socially disadvantaged. The Post also reports on the inevitable effort of the Small Business Administration to work around that decision.
The district court case is Ultima Services Corp. v. U.S. Department of Agriculture. The victorious plaintiff was represented by the Center for Individual Rights, on whose board of directors I serve.
It was the rebuttable presumption of social disadvantage that proved problematic. In practice, it meant that contracts were set-aside largely on the basis of race.
The court found that use of the presumption is unconstitutional by virtue of the Fifth Amendment’s due process clause. Applying strict scrutiny, the court held that the rebuttable presumption was not shown to serve a compelling interest and is not narrowly tailored to achieve the interest the government relied on.
The Post reports that the decision in Ultima Services Corp. produced “a full-blown panic” from owners of minority businesses. The Small Business Administration dutifully responded by gearing up to review essays in which minority contractors can explain "how race has hindered their success."
Sound familiar? It should. In light of the Supreme Court’s decision in the Harvard case, colleges and universities hope that essays by black and Hispanic applicants about their alleged disadvantages will enable these institutions to keep preferring such applicants based on their race and ethnicity. As we discussed here, the Supreme Court majority opinion, which the Ultima Services decision cites, left open this possibility.
So now, in addition to a cottage industry of college essay writers of sob stories for blacks and Hispanics, we’ll have one for minority-owned small businesses. Indeed, the Post quotes a lawyer who represents small businesses who says she’s seen “a massive influx” of businesses seeking help with crafting their essays.
No doubt.
The Small Business Administration says it will hire and train additional staff to read the hardship essays. It already gets such essays from some non-minority contractors who, lacking a presumption of being disadvantaged, seek to show they fit that description.
But the requirements are tough. As I understand it, the essay must demonstrate that the applicant’s particular difficulties are the result of discrimination rather than other factors. And applications must clear four levels of review.
Will the SBA maintain these requirements for minority applicants and apply them using the same standard it has used for non-minority applicants? I assume they will pretend to. But I’m told the SBA has said it will act on essays in a matter of four to five days, far less time than it takes now. It doesn’t seem possible to have four levels of good faith review in such a short period of time.
Meanwhile, the Ultima Services case is still pending in district court. The court has ordered each side to file briefs about the need for any additional equitable relief. This enables the plaintiff to argue, should it wish to, that the new essay requirement as formulated by the SBA does not fully do away with unlawful presumption in favor of members of particular groups. Perhaps the court will want to maintain jurisdiction to see whether the SBA is truly complying.
The Ultima Services case seems like the tip of the iceberg when it comes to post-Harvard case litigation over racial preferences for blacks. That’s why a district court decision became the lead story in Friday’s Washington Post.
Stay tuned.