Thousands of Black, Latino and other minority business owners are scrambling to prove that their race puts them at a “social disadvantage” after a federal judge declared a key provision of a popular Small Business Administration (SBA) program unconstitutional, extending the U.S. Supreme Court’s recent retreat from affirmative action.
The SBA changes come amid a broad legal assault on diversity, equity and inclusion (DEI) initiatives in the private sector, one that has only intensified in the wake of the Harvard and UNC decisions. Edward Blum, the conservative activist behind the two college admissions cases, has several pending lawsuits targeting private-sector DEI programs. And in July, more than a dozen Republican attorneys general fired off letters warning the nation’s largest companies that explicit racial quotas and preferences in hiring and promotions would invite legal action.
That a judge struck down the SBA’s use of the presumption of social disadvantage “wasn’t completely surprising to us because we’ve known that there’s been a number of cases that have been brought [and] funded by conservative legal foundations that have always questioned any affirmative action,” said Antonio Franco, managing partner at PilieroMazza, based in Washington, which works with government contractors to apply for the 8(a) program.
After the Harvard-UNC rulings, Franco said he remembered thinking it was “only a matter of time before that same kind of ruling comes out with regard to the 8(a) program.”
Other government business programs meant to benefit disadvantaged groups may also be vulnerable, Franco added. He cited the Transportation Department’s Disadvantaged Business Enterprise program, which dispenses transportation-related construction contracts to minority-owned businesses. Though different from the 8(a) program in some respects, it relies on the same social disadvantage presumption.
Excerpt taken from the article “SBA Program Upended in Wake of Supreme Court Affirmative Action Ruling” by Julian Mark for The Washington Post. Please visit this link for the full article and this link for PilieroMazza’s client alert on this topic.
About Tony Franco
In addition to serving as Managing Partner of PilieroMazza, Tony has an active practice in the Firm’s Government Contracts Group where he has over 30 years of experience representing government contractors and commercial businesses. His practice encompasses all aspects of federal government contracting. Tony also works closely with attorneys in the Firm’s Business & Transactions Group on corporate transactions and the Labor & Employment Group to address employer-employee challenges in the highly regulated market of government contracting.
Tony counsels clients on a wide range of complex legal and regulatory matters, including (i) protests and claims against the federal government; (ii) commercial and contractual disputes; (iii) investigations and compliance audits; (iv) suspension and debarment proceedings; and (v) entity formation, including joint ventures, operating agreements, and shareholder agreements.
Tony primarily represents government contractors—large and small—interested in pursuing set-aside opportunities under SBA’s small business programs. He advises firms on teaming, joint ventures, mentor protégé arrangements, and strategies to defend awards from size, status, and bid protests. Tony assists firms in complying with the FAR and rules applicable to all small business contracting programs. His practice also encompasses the representation of Tribes, Alaska Native Corporations, and their government contracting subsidiaries.
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