Legislative proposal would eliminate contracting preferences for minority, women-owned businesses
Sen. Mike Lee, R-Utah, has proposed legislation ending contracting preferences for minority-owned contractors.
By
Nick Wakeman
The bill would codify and expand on Trump’s executive order to eliminate diversity, equity and inclusion initiatives in federal contracting.
A bill introduced in the House and Senate in late April would effectively wipe out many of the contracting preferences for minority and women owned businesses.
The Ending Discrimination in Government Contracting Act was introduced by Sen. Mike Lee (R-Utah) and Rep. Glenn Grothman (R-Wisconsin). It would codify and expand on provisions in President Trump’s March 26 executive order on diversity, equity and inclusion provisions in federal contracts.
The EO requires agencies to insert a clause in contracts that bans DEI and mandates reporting requirements to assure compliance, as well as allowing agencies to cancel contracts for not complying with the no-DEI requirement.
Prime contractors would be required to report subcontractors who violate the contract clause. Primes also would be required to report subcontractors who file a lawsuit challenging the no-DEI requirement.
The executive order also set a July 24 deadline for agencies to modify existing contracts by inserting the no DEI clause.
In their bill, Lee and Grothman also aim to eliminate contracting goals and preference programs for small businesses owned by socially and economically disadvantaged individuals. These include the 8(a) program and small businesses owned by women.
Their bill leaves in place goals for businesses in the HUBZone small business, veteran-owned and service-disabled/veteran-owned categories.
The proposed legislation expands on the executive order by also banning agencies from considering sex, along with race and ethnicity when awarding contracts and grants. It also would bar agencies from telling prime contractors to require their subs to consider race, ethnicity or sex.
Lee and Grothman’s bills also end the requirement that agencies report on the number of contracts that go to women-owned businesses, and socially and economically disadvantaged small businesses.
The bills also seeks to repeal the Minority Business Development Act of 2021, which has steered billions of dollars in contracts to minority-owned businesses since its passage.
Part of the argument from Lee and Grothman is that DEI programs waste taxpayer money and are not fair.
Their proposed bills would be a significant restructuring of the small business contracting world and would impact thousands of businesses.
So far, there are no co-sponsors for Lee's bill (S. 4390) or Grothman’s bill (HR. 8511). Both bills have been referred to their respective committees.