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They do indeed. Given the political popularity of minority set-asides, however, few in Washington seem to have the heart to examine the actual operation of the programs too closely. The last serious attempt to question the effects of special treatment for minority contractors was a controversial 1986 draft report prepared for the U.S. Commission on Civil Rights that charged that "the growth of set-asides has primarily benefited wealthier minority-group members, arguably the ones least in need of Government assistance." The report, which also assailed corruption in the programs, attracted a gale of criticism, was disowned by the White House and was ultimately withdrawn by the commission. But Commission Chairman Clarence Pendleton remains adamant in his conviction that the "set-aside program is one of the biggest pork barrels in history."
Despite Wedtech, there are success stories. General Railroad Equipment and Services, Inc., a black-owned firm in East St. Louis, Ill., has doubled its sales and almost tripled its work force in four years in the SBA program. Dennis Yee, the son of Chinese immigrants who used federal funds to build Abacus Technology in Washington, hails the SBA for allowing him "to establish a top-quality, competitive consulting firm."
But critics note that minority firms have consistently had difficulties in weaning themselves from the set-aside programs and competing for traditional federal contracts. A recent survey of firms graduating from the SBA program, conducted by the Senate Committee on Small Business, found that nearly 30% had most likely gone out of business and an additional 22% said they were facing financial troubles. That suggests that fewer than half the firms had weathered the transition to a competitive environment.
The Wedtech scandal has prompted some congressional interest in reform legislation. Massachusetts Democrat Nicholas Mavroules, who chairs a House small-business subcommittee, is championing a bill that would bar any political appointee from helping select minority contractors or managing the program. A more controversial approach, favored by Massachusetts Republican Congressman Silvio Conte, would require minority contractors to participate in competitive bidding and eliminate the SBA's awkward role as the middleman between federal agencies and minority businesses.
But there are few apparent congressional qualms about the further expansion of minority set-asides. A Defense authorization act, which took effect this month, calls upon the Pentagon to strive toward awarding 5% of all contracts, as much as $7 billion a year, to minority-owned small businesses. A laudable goal but also, alas, another tempting target for corruption.