Academic journal article Public Administration Quarterly

Diversity Governance by Convenience? Federal Contracting for Minority-Owned Small Businesses

Academic journal article Public Administration Quarterly

Diversity Governance by Convenience? Federal Contracting for Minority-Owned Small Businesses

Article excerpt

ABSTRACT

Public procurement serves as the means by which public goods and services are acquired through contracts with private firms, as well as a means by which governments promote policies such as socioeconomic diversity. In the U.S., diversity goals are pursued through preferences for contract awards by public agencies to businesses owned by members of disadvantaged groups, such as Native Americans, women, and disabled veterans. In this paper we argue that the extent to which these policies are realized depends substantially on implementation-specifically, on agency contracting capacity. Given current deficiencies in federal agency contracting capacity, diversity governance is largely missing. Rather, agencies use minority-based preferences in order to reduce their workload, thereby awarding contracts for convenience rather than to redress disadvantage and discrimination. We demonstrate that, when agencies use these expedient measures to sidestep the intent of public policy, they risk diverting contracts from deserving to undeserving firms. Unless agencies increase their contacting capacity, diversity governance in this important area of public administration will remain impoverished.

INTRODUCTION

Fifteen years ago, the Supreme Court's decision in Adarand Constructors, Inc. v. Pena (1995) was interpreted as a "major setback" (Rice and Mongkuo 1998, 86) for affirmative action initiatives intended to address discrimination of minority-owned businesses in federal contracting. In Adarand, the Court set a high standard of "strict scrutiny" for justification of minority preferences in federal contracts-a ruling that, according to Rice and Mongkuo (1998), would weaken and in some cases eliminate these preferences (83).

Today, however, data indicate that these fears have not materialized; levels of federal contract awards to minority-owned businesses have continued to increase (Federal Procurement Data System-Next Generation [FPDS-NG] 2011). In this article, we explain that this outcome has little to do with the success of federal agencies in meeting Adarand's strict scrutiny standard for minority preferences. Rather, agencies have continued to take advantage of the expedited contract award authorities that accompany minority preference programs-authorities that help reduce agencies' workload. As a consequence, both the Court's standards and the intent of Congress to redress past discrimination take a back seat to transaction cost considerations when agencies make minority contract awards. The continued use of these expedited authorities is to be expected, especially when, as we will show, agencies suffer from a lack of organizational contracting capacity.

Governance of diversity in federal contracting has thus become more an exercise in expedience and convenience than in recognizing and redressing disadvantage and discrimination. When agencies focus inwardly on their own interests of efficiency rather than outwardly on the public they are supposed to serve, perceptions of government's commitment to enhancing minority opportunities via federal contracting are eroded. This failure of diversity governance reflects a failure to invest in the capacity to govern-more specifically, in the capacity to contract as constituted in people and organizational processes. Unless federal agencies increase their contracting capacities, they will likely continue to rely heavily on minority preference programs, mainly for the sake of convenience.

We begin with a brief review of public sector contracting as an important function of public administration and as a means for accomplishing public policy objectives. In the discussion, we also address organizational contracting capacity; specifically, how it has been lacking in federal agencies and how it may be increased. We then review the legislative-regulatory context of policies and policy objectives related to minority contracting, along with some difficulties in their implementation. …

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