On March 5, 2024, a federal judge ordered the Department of Commerce's Minority Business Development Administration (MBDA) to It ordered the company to immediately stop considering the race and ethnicity of business owners. This includes access to capital and assistance in pursuing government contracting opportunities.[1] Judge Mark T. Pittman, U.S. District Judge for the Northern District of Texas, ruled that the MBDA does not apply to certain people, including African Americans, Latinos, American Indians, Alaska Natives, Asians, Native Hawaiians, or other Pacific Islanders. The court ruled that the case was presumed to be an individual. “Socially or economically disadvantaged people” is unconstitutional. Government contractors should be aware of these trends, as this decision could impact current and future programs focused on increasing the participation of groups that have historically been underrepresented in the federal marketplace. must be kept. Below, PilieroMazza details the incident. Jeffrey Nuisier et al. v. Minority Business Development Agency et al.and the potential impact on minority-owned businesses.
Minority Business Development Agency
MBDA was first established by President Nixon in 1969 as the Minority Enterprise Administration. The Minority Business Development Act of 2021, included in the bipartisan Infrastructure and Investment and Jobs Act, made the MBDA permanent and authorized him to establish his MBDA office in the region. Rural business center. He also expanded the agency's existing program capacity with a $550 million budget over five years.[2]
MBDA has a national network of dozens of business centers, advanced manufacturing centers, export centers, and one federal procurement center. In 2023, MBDA's national network will help companies secure more than $1.2 billion in capital, more than $1.6 billion in contracts, and nearly $300 million in export transactions, according to Don Kravins Jr., the first MBDA deputy secretary. We supported you to do so.[3]
background
The three named plaintiffs in the case, all white men, have access to MBDA assistance for their small businesses, including a sexual and lifestyle health clinic, a project management company, and an architecture firm. He claimed that there was not. to their tribe.Relying on the Supreme Court's landmark decision Student for Fair Admissions, Inc. v. Harvard University President and Fellows, 600 US 181 (2023), the court held that race-based affirmative action programs are unconstitutional, but the plaintiffs argued that the MBDA's use of racial presumptions for program participation violates the Fifth Amendment. It was argued that this violates the equal protection guarantee of the Due Process Clause. Appellants also argued that the program was illegal under the Administrative Procedure Act, but the district court declined to grant summary judgment on that basis.
decision
In a lengthy 93-page opinion, Judge Pittman opined about the dangers of programs operating on racially based assumptions. Although he held that it was in the government's compelling interest to redress past discrimination in government contracts, the court ultimately held that race-based presumptions were not narrowly tailored to meet that remedial purpose. It was judged. Instead, the final design of this program is to penalize business owners who are not presumed entitled to MBDA assistance.
Judge Pittman was not persuaded by the fact that business owners could still apply for designation as socially or economically disadvantaged and be found eligible to participate in the MBDA Business Center Program. .[4] Rather, he found, the application process merely proves that people who are “not on the list” must “overcome additional hurdles” to receive business assistance from government agencies.[5]
Despite acknowledging that the agency's efforts “have the potential to alleviate the opportunity disparities faced by[minority entrepreneurs],” the court concluded that “two wrongs do not make a right.”[6] As such, Judge Pittman sided with the plaintiffs, arguing that the race presumption is a rigorous scrutiny test that is the gold standard review courts use to evaluate the constitutionality of race-based affirmative action programs. It found that the MBDA's actions violated the Equal Protection Guarantee of the Fifth Amendment. .
Finally, Judge Pittman declared:[t]It builds on MBDA's 55-year legacy of using unconstitutional race-based presumptions to determine program eligibility.[7] Now, institutions created to address the challenges facing minority-owned businesses must open their doors to business owners and entrepreneurs of all races.
Take-out
After the Supreme Court struck down affirmative action programs, Student for Fair Admissions, Inc., this decision marks the latest change in the law related to programs specifically designed to assist historically socially and economically disadvantaged individuals and groups in the United States. Last year, PilieroMazza reported: altima A case in which a federal judge in Tennessee issued an injunction against the Small Business Administration's 8(a) business development program from using rebuttable race-based presumptions to determine program eligibility. (Links here and here).
For businesses that already utilize MBDA Business Centers, this decision could impact the types of services and programs the centers can offer. Certain programs may be overhauled. Without eligibility requirements, the number of entrepreneurs seeking support from business centers could increase dramatically and impact the services and benefits that existing participants can access.
Individuals who previously did not meet the presumption of eligibility for MBDA Business Centers can now access programs offered by MBDA without first having to prove that they are “socially or economically disadvantaged.” Ta. It is unclear how the agency will change its customized business development and industry-specific services for U.S. minority businesses after this decision. The Department of Commerce and MBDA have not yet updated their websites or provided guidance on how to address the necessary program changes.
The ruling will likely be appealed to the U.S. Court of Appeals for the Fifth Circuit.
[1] Jeffrey Nuizard et al. v. Minority Business Development Authority et al.No. 4:23-CV-0041-00278-P (ND Texas, March 5, 2024).
[2] Infrastructure Investment and Employment Law, Publications. L. No. 117-58 (2021).
[3] Minority Business Development Agency 2023 Review, Message from Under Secretary Donald R. Cravins Jr., https://www.mbda.gov/2023yearinreview (last visited March 8, 2024).
[4] 13 CFR § 1400.3 Request for Determination. (“An entity wishing to apply for designation as a socially or economically disadvantaged person under Executive Order 11625 shall submit a written application to the Director of the Office of Minorities and Business Development, U.S. Department of Commerce, Washington, DC, 20230. ”)
[5] Jeffrey Nuizard et al. v. Minority Business Development Authority et al. At 38 years old.
[6] Same as above. At 92.
[7] Same as above. At 93.
