New Affirmative Action Rules Are Aired

The Justice Department has drafted new affirmative action guidelines that may make it harder for some minority-owned businesses to obtain federal contracts but will open the competition to more white business people.

Under the proposed new rules, firms owned by African Americans, Asians, Latinos and other racial minorities no longer will be able to participate in any government program designed to give them preference over other applicants unless they obtain certification by the Small Business Administration.

Such certification requires that applicants claiming preferred status demonstrate that they actually own and control their company, as defined by SBA regulations. In the past, some minority applicants have “fronted” for non-eligible companies to help them obtain contracts.

Justice Department officials said Wednesday that the new rules, to be published today in the Federal Register, are intended to carry out a policy announced by President Clinton last year after a Supreme Court decision banning federal agencies from using “racial classifications” in awarding most contracts.

Associate Atty. Gen. John Schmidt said the new rules, as expected, would allow nonminority applicants to bid on such contracts if they can establish that they are “socially and economically disadvantaged.”

The goal, Schmidt said, is to help anyone who has suffered bias that “has led to decreased economic opportunities compared to others.” He did not elaborate on how social and economic disadvantage would be defined.

On the other hand, as race-conscious affirmative action measures are scaled back, federal agencies will be required to use more “technical assistance, outreach and other race-neutral means to increase minority opportunity and participation,” Schmidt said.

Deval Patrick, who heads the Justice Department’s civil rights division, said the Clinton administration is developing new procedures “to ensure that qualified minority businesses get a chance to participate in government work.”

The Supreme Court said last June that racial preferences, when used by government agencies, are “inherently suspect and presumptively invalid.” Racial classifications can only be constitutional if they serve a compelling government interest and are narrowly tailored to further that interest, the justices said.

In ordering the Justice Department to determine if federal agencies are in compliance with the decision, Clinton said the administration’s policy on affirmative action would be “mend it, don’t end it.”

The president is seeking to accommodate the spirit of affirmative action in a politically hostile climate. Republicans in Congress have started drafting legislation to eliminate it altogether.

The voluminous new regulations will not take effect until after a 60-day period to solicit public comment.

Schmidt said that slightly more than 6% of government contracts, totaling about $10 billion a year, currently go to minority businesses. He said he could not estimate if the new rules would substantially alter that figure.