Ending Racial Favoritism in Government Contracting

The federal government spends more than $600 billion each year on contracts to purchase everything from health-insurance software to tanks. The federal government also gives numerous grants to state and local governments, which use those funds to offer contracts to businesses. The government has a duty, both to taxpayers and to the public, to get the best possible value in these contracts.

Unfortunately, government contracting today contains a vast system of racial favoritism, which costs taxpayers billions of dollars and degrades services, all while doing nothing to help the least well-off. Contracts are awarded not on the basis of value but on the color of contractors’ skin. The following proposed model bill would end racial favoritism in contracting and ensure that public goods and services are provided by the lowest and best bidders.

Even without this type of legislation, racial favoritism in contracting will be challenged in court, due to the Supreme Court’s recent ruling in Students for Fair Admissions v. Harvard, which forbids the government from considering race in most of its decision-making. A recent federal district court ruling in Tennessee halted a Small Business Administration racial contracting program based on the standards set forth in Students for Fair Admissions.[1] Unless Congress acts, courts will strike down large sections of federal contracting law. Without Congressional clarification of requirements, such court action may further degrade contracting performance.

Approximately 1 in every 40 dollars in the American economy goes through a federal contract; thus, a bill restoring honest competition in contracting will help promote economic dynamism more broadly. It will ensure that infrastructure is built in a timely and efficient manner and that the weapons protecting our nation are of the highest quality. It will also ensure that the government adheres to its constitutional mandate to treat all Americans equally, regardless of their race.

A bill to abolish racial and ethnic preferences in government contracts and awards.

Section 1. Short title

• This act may be cited as the “End Racism in Contracting Act.”

Section 2. Ending preferences for disadvantaged individuals and businesses in government contracts

• (a) Section 637 of title 15, United States Code, is amended–
• (1) by striking (a)(1)(B–C).
• (2) by striking (a)(4–8).
• (3) by striking (a)(20)(B).
• (b) Section 644 of title 15, United States Code, is amended–
• (1) by striking (g)(1)(A)(iv).
• (2) by striking, in (g)(2)(A), (B), and (D), the words “small business concerns owned and controlled by socially and economically disadvantaged individuals”.
• (3) by striking (h)(2)(E)(iv).
• (4) by striking (y)(4)(D).
• (c) Title 15, United States Code, is further amended by striking all references to “socially and economically disadvantaged individuals”; “disadvantaged business”; “disadvantaged small business concern”; or “small business concerns owned and controlled by socially and economically disadvantaged individuals”.

Section 3. Ending racial and ethnic participation goals for Department of Transportation financial assistance programs

• (a) Section 47017 of title 49, United States Code, is amended–
• (2) in (e)(1), by striking “10” and inserting “5” and by striking “small business concerns (as defined by regulations of the Secretary) owned and controlled by a socially and economically disadvantaged individual (as defined in section 47113(a) of this title) or qualified HUBZone small business concerns (as defined in Section 31(b) of the Small Business Act)” and inserting “disadvantaged business concerns (as defined in Section 47113(a) of this title)”.
• (3) in (e)(4)(B) and (e)(6), by striking “small business concern owned and controlled by a socially and economically disadvantaged individual or a qualified HUBZone small business concern (as defined in Section 31(b) of the Small Business Act)” and inserting “disadvantaged business concern”.
• (b) Section 47113 of title 49, United States Code, is amended–
• (1) by striking (a)(2) and inserting “‘disadvantaged business concern’ and ‘disadvantaged business enterprise’ mean a concern owned and controlled by women or a qualified HUBZone small business concern’ ”.
• (2) in (b), by striking “10” and inserting “5” and striking “with small business concerns owned and controlled by socially and economically disadvantaged individuals or qualified HUBZone small business concerns.” and inserting “by disadvantaged business concerns”.
• (3) by striking (e).

Section 4. Ending racial and ethnic contracting goals in other government programs

• (a) Section 1713 of title 41, United States Code, is amended–
• (1) by striking (a)(2).
• (2) in (b), by inserting between “concerns” and “the number” the word “, and” and striking “and the number of small business concerns owned and controlled by socially and economically disadvantaged individuals, by gender, that are first-time recipients of contracts from the agency.”
• (b) Section 13566 of title 42, United States Code, is amended–
• (1) in (a) by striking “10” and inserting “5”.
• (2) in (a)(1) by striking “socially and economically disadvantaged individuals or”.
• (3) by striking (b) and (c).
• (4) by striking (b)(2).
• (c) Section 4370(d) of title 42, United States Code, is amended–
• (1) by striking “8” and inserting “2”.
• (2) by striking “socially and economically disadvantaged individuals (within the meaning of section 637(a)(5) and (6) of title 15), including historically black colleges and universities. For purposes of this section, economically and socially disadvantaged individuals shall be deemed to include”.

Section 5. Ending all racial and ethnic discrimination in government contracting and awards

Chapter 14A of title 15, United State Code, is amended by inserting after section 657u the following:

Section 658. Preventing racial and ethnic preferences in government contracts and awards

• (a) No department, agency of, or individual in the United States government may take into consideration the race or ethnicity of individuals owning, controlling, or managing businesses or other entities when granting contracts or awards.
• (b) No department, agency of, or individual in the United States government may place requirements on contractors or grantees that require or encourage them to take into consideration the race or ethnicity of individuals to whom they award contracts, subcontracts, or awards.
• (c) All agencies that currently have rules or regulations in the Code of Federal Regulations requiring or encouraging consideration of the racial or ethnic status of individuals to whom they grant contracts or awards shall submit a notice of proposed rulemaking within 60 days of the passage of this legislation, removing all such references, and a final rule within 180 days, removing all such references.
• (d) All agencies that currently have guidances, directives, or notices requiring or encouraging consideration of the racial or ethnic status of individuals to whom they grant contracts or awards shall submit new guidance, directives, or notices within 60 days of the passage of this legislation removing all such references.

Section 6. All laws otherwise in contradiction to this legislation are hereby repealed.

There are two major parts, as well as a handful of minor parts, of federal law that mandate racial favoritism in contracts, as well as associated regulations that have expanded such favoritism.

First, parts of title 15 of the U.S. Code require that small business concerns owned by “socially and economically disadvantaged individuals” should receive “not less than 5 percent” of all contracts and subcontracts. Disadvantaged individuals are defined as those who are discriminated against due to racial or ethnic prejudice, and regulations declare that the focus of the program is on Black Americans, Hispanic Americans, Native Americans, and Asian Americans.[2]

In recent years, the government has worked to surpass the congressionally set goals, and the Biden administration has a stated policy of 15% of all contracts going to “disadvantaged” businesses. In the last fiscal year, disadvantaged businesses secured $70 billion in contracts.[3] The first part of this model bill ends all favoritism to “socially and economically disadvantaged” businesses in government contracting but does not affect any contracting programs directed at small businesses generally, women, veterans, or disadvantaged areas.

Second, parts of title 49 of the U.S. Code require that race be considered in grants for transportation funding. Congress has set a goal that not less than 10% of all funds from certain Department of Transportation airport grants be spent on disadvantaged businesses or businesses in certain disadvantaged areas (known as HUBZones). Regulations further set a goal of 10% of all state, local, or other contracts funded by the federal government for highways, transit, or certain other airport funds be given to disadvantaged businesses, which, in this context, includes racial and ethnic minorities and women.[4]

The second part of this model bill ends requirements for contracts to disadvantaged businesses in airport grants and reduces the total grant goal to just 5% of contracts going to women-owned businesses and businesses in HUBZones, which is commensurate with the contracting goals for those businesses in the small business section of the U.S. Code. A third part of the model bill eliminates similar requirements and reduces similar goals in a few other programs scattered throughout the U.S. Code.

Finally, the model bill removes all demands for racial or ethnic favoritism in contracting or grant-making in the U.S. Code and requires all agencies that have regulations or guidance requiring or encouraging such favoritism to issue new regulations or guidance within set time periods. Such a statute is necessary to end any further racial contracting programs, including those that go beyond congressional mandates, and to ensure that no administration can use regulations or guidance to discriminate in contracting based on race.

Please see Endnotes in PDF

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