Clinton to Unveil New Approach to Job Preferences

The Clinton administration will announce today that it will give minority firms preferences for federal contracts when government surveys show that their share of federal business is smaller than their overall market share.

The White House hopes the approach will satisfy a Supreme Court edict that preferences are permissible only to remedy past discrimination. Three years ago, the justices threw out the government’s previous practice of reserving some federal contracts for minority firms.

Small minority firms in industries that fit the new profile--including printing, electronics, transportation equipment and building materials--will get a price break of up to 10% for purposes of calculating the low bidder for government contracts. The new rules, which are not subject to congressional approval, will be phased in between now and Jan. 1.

The White House announcement ends a lengthy behind-the-scenes struggle over how to treat fledgling minority-owned enterprises at a time when public sentiment against racial preferences is running strong. In keeping with President Clinton’s statement that the goal on affirmative action is to “mend it, don’t end it,” the White House is arguing that the new plan will survive legal challenges.

The Supreme Court decided in a 1995 case involving a Colorado firm called Adarand Constructors Inc. that programs setting aside fixed numbers of contracts for minorities could apply only when there was a proven record of discrimination--and then only if the programs were narrowly targeted to correct the problem. That prompted the administration to launch a study of the $190-billion federal marketplace, looking at 73 sectors for evidence of discrimination.

The results of the survey, obtained by The Times, show that in some industries--such as food processing, social services, management consulting and metal manufacturing--there was no measurable discrimination in the awarding of federal contracts.

But in other areas, the survey found a disparity. In the electronic equipment field, for instance, which in fiscal 1996 was awarded $9.1 billion in federal contracts, minority firms held 7.6% of the overall market but received just 1.2% of federal contracts. Similarly, in the $1.7-billion wholesale durable goods sector, minorities held 33.1% of the market share and got 26.6% of federal contracts.

Using data from the Census Bureau as well as records from federal agencies, Commerce Department statisticians also discovered regional differences. In the construction industry, for instance, the survey found that minority builders in certain parts of the Midwest and Middle Atlantic states were underrepresented in federal contracts, whereas builders in the West and New England were not. In the West, minority firms held 27.1% of the market and accounted for 29.4% of federal contracts.

The White House said the data on minority contracts will be reviewed periodically to insure that preferences are being awarded only in qualifying industries.

“The good news is that the data show that in some sectors there no longer seems to be a problem,” said Christopher Edley Jr., a Harvard University law professor who advises the White House on racial issues and has worked on the new approach. “The bad news is that in too many areas the problem persists.

“A principle was established up front,” Edley said. “Measure discrimination. Turn off the programs where they no longer are needed--and keep them in place where there remains a disparity.”

The new approach is expected to be highly influential directly and indirectly. It will directly cover minority procurement in a range of goods and services that last year totaled $4.2 billion.

More broadly, it could influence the course of the government’s $6-billion small-business program for disadvantaged entrepreneurs known as 8(a).

“This is really a good example of ‘mend it, don’t end it,’ ” said an administration official familiar with the new approach. “It’s probably not going to satisfy either extreme of the affirmative action debate.”

Sen. Mitch McConnell (R-Ky.), a critic of racial preferences, said he will not comment until he reviews the new policy. But in a statement last year he called government set-asides “unfair, unconstitutional and just plain un-American.”

Rep. Albert Russell Wynn (D-Md.) called the administration action “a step in the right direction” but predicted further legal challenges.

“On balance, I think it’s a very good effort,” he said. “I commend the administration for trying to respond affirmatively--no pun intended.”

One optimistic administration official, who asked that his name not be used, said of the plan: “If it works really well, it should put itself out of business.”

Times staff writer Erin Trodden contributed to this story.