When the Supreme Court struck down affirmative action as practiced by Harvard University, it set off a tsunami. One of those giant waves is already washing over federal contracting. For more on this and other matters, Federal Drive with Tom Temin checked-in with federal sales and marketing consultant Larry Allen.

Interview Transcript: 

Tom Temin When the Supreme Court struck down affirmative action as practiced by Harvard University, it set off waves. And one of those waves is already washing over federal contracting. With this and a few other matters, we check in with federal sales and marketing consultant Larry Allen. And I think a lot of people wondered about affirmative action as practiced in federal contracting. And now there’s the first case, and it’s not going well for the traditional programs.

Larry Allen What we’re talking about here is an article that recently appeared in The Wall Street Journal, written by Judge Glock from the Manhattan Institute. And in that article, Glock argues that the Supreme Court’s recent decisions in the affirmative action cases considering higher education could also have an impact on the government’s contract set aside programs. He goes on to cite his arguments where he believes that these programs generally have added cost to government acquisition. I’m not here to debate that. We haven’t run the numbers. But what he does say is that if you have found a place where you can’t use race in college admissions, then you shouldn’t really be using race or other socioeconomic factors in awarding government contractors. That could really turn this industry on its ear. And yet we’ve already seen litigation in this area. A couple of cases that went up maybe 20 years ago to the Supreme Court that dealt with this issue. So there is some precedent here, Tom, where the court has said previously that you can use race and other socioeconomic factors in the award of government contracts if it’s tailored to meet specific past incidents of impropriety.

Tom Temin Right. And the same article cites a case that happened just a week or two ago in which Judge Clifton Corker struck down minority contracting preferences at the Small Business Administration and the Agriculture Department, citing the same thing the Supreme Court said in its case that there’s no logical endpoint to what they were doing. It just was kind of on its own autopilot. So whether that will spread or not. Hard to say, but it definitely could change 8(a) programs, set aside programs, the whole basic 23 – 24% rule that’s been in place in which the contracting community has kind of wrapped itself around now for for a couple of generations.

Larry Allen Right. And we can see where these two divergent policies, Tom, could be on a collision course with each other. On the one hand, we have the established set aside programs for small businesses, really kind of turbocharged by this administration’s push to increase the amount of government contracts that go to small minority businesses. On the other hand, we have the judge’s decision that you just referenced, as well as previous case law that says you can’t do minority contracting everywhere all the time just because you want to do it. It has to be tailored to making up for past wrongdoing. That kind of gets in with what the judge said in the most recent case, which is like at some point this has to have an end to it. If you remedy past wrongs for a certain period of time, the judge suggests that it’s time to maybe do away with these programs. Tom, I think that this is another area where we’re going to end up with a case that goes before the Supreme Court, that talks about the legality of being able to set aside government contracts by race or other socioeconomic factors. It gets to that whole equal protection under the law type laws. I think it’ll be a really fascinating discussion to get into with the contract bar and people who follow these things in the legal profession. But from my view as a professional consultant, somebody who’s been in this business for 33 years, I think that’s where we’re going.

Tom Temin Larry Allen is president of Allen Federal Business Partners. And we’ll have to wait and see if there is a case brought. But it sounds like in some of the recent decisions, the court has almost asked for cases in other domains on the same principle on which it just ruled. So we could see a qui tam challenge to the constitutionality of that, which would also turn a lot of long term tradition on it’s head. But in the meantime, we’ve got a more short term worry and that is, you know, government shutdown, so to speak, looks kind of likely. Definitely more likely is a full year continuing resolution given the division in Congress. So what’s your best advice right now for contractors as golly, I mean, it’s August already.

Larry Allen Tom, it is August and it. My best advice for government contractors is to do as much positive business in the current fiscal year as you possibly can and understand that the next fiscal year, the one that nominally starts on October 1st, is going to be a little bit bumpy. You know, we’ve talked a little bit about the possibility of a government shutdown. And just last week, before Congress left town for its August recess, we had a member of Congress saying publicly we should not fear a government shutdown. And then he went on to say, Tom, one of the great things about Congress, there are so many divergent viewpoints. This congressman said most of what we do here is bad anyway. So there you have it.

Tom Temin Yeah, great. That was Bob Good who said things. A lot of things are bad.

Larry Allen Bob Good from Virginia.

Tom Temin Right? Yeah the good and the bad and I guess the ugly, you might say. And in point of fact, as a practical matter, probably 80% of the government functions continue even when there is a lapse in funding. It’s the people that rewrite the FAR that decide policies that do this kind of thing are the ones that don’t go to work. But so many large sections of the government keep going that the shutdown is less and less fearsome, I think over the decades.

Larry Allen Less the less fearsome. But, you know, to be clear, it’s also really expensive. It’s not just turning the government off. It’s not as simple as turning off a light in your office. If you think about lights, just to continue the analogy of a sports stadium, you have to be very careful about how you turn them off. And then when you turn them back on, it’s not like they just go back on instantly. It takes a while for them to get back up to the necessary brightness. Thats the same thing with government. And if you’re really a fan of reduced costs in government, the best thing you can do is work to not have a government shutdown because it’s expensive to have one that’s very disruptive to people’s spending. Very disruptive to people’s ability to plan. And while you can say, hey, we shut everything down in order to save a few cents, I’m not sure how many spends you really end up saving if you end up having to restart the entire juggernaut or a substantial part of the juggernaut that is the government market.

Tom Temin Right. And just as the government leadership is trying to get people used to the idea of coming back to the office three days a week, they would be.

Larry Allen Right.

Tom Temin Home again. And one other thing I wanted to ask you about is something that our colleague Jason Miller, also noted and reported on, and that is when GSA sent out a request for information on a solicitation for Alliant 3-draft RFP, 4500 questions came in. How are they going to answer all those questions? And these were not auto generated. I mean, these were individual questions.

Larry Allen Right? I think these are more than double the amount of questions that GSA was anticipating when it sent out its second Alliant 3-draft RFP. It indicates that there’s a substantial amount of interest in this solicitation Tom, which isn’t at all surprising. Alliant 2 currently underway, has been phenomenally popular. I think one of the real questions that GSA is going to have to address and address very quickly is how they’re going to deal with small businesses that would like to get either on Alliant 3 or on another set of small business I.T., indefinite delivery, indefinite quantity contracts. You know, we’ve got Polaris. The GSA tried to get out the door and the court or federal claims kind of sent a torpedo through the hull there. Polaris is back in drydock being repaired. So either they’re going to have to get Polaris out and resuscitated pretty quickly, or they’re going to have a or I’m advocating that the GSA strongly consider adding small business subcontracts or small business alternatives companion contracts to the Alliant 3 Unified Solicitation. What I think myself and a lot of other people are fearing is that if there is no small business I.T. vehicle and Alliant 3 is the only game in town right now that’s going to get bids for businesses of all sizes. We’ve seen what happened in those cases. Those programs get bound up in web after web of protests with substantial delays. We can’t have that happen with Alliant. It’s too much of a foundational program. So either GSA has to figure out it’s going to add some small business capabilities to that one, just like they did with Oasis Plus, or they’re going to have to get busy and get Polaris out of drydock and back and sea trials. But it all maneuvers.