The Bush SBA's Last Act: Relenting On Women's Procurement

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The sun hadn't set yesterday in D.C. before the official repudiation of the Bush Administration began. Late in the afternoon, new White House Chief of Staff Rahm Emanuel ordered agencies to halt rule-makings until the Obama Administration could review them.

As a practical matter, the executive order is unlikely to have much effect: the Bush White House was extremely disciplined when it came to stealthy, controversial, last-minute regulatory doings -- or undoings. Unlike the Clintons, the Bush Administration insisted that all so-called "midnight regulations" be completed before the president left for Texas. The SBA, however, in one of its last acts, did a surprising about-face on one of those contentious policies, putting off implementing the new women-owned small business procurement program.

Congress passed the law establishing the women's procurement program, in which certain government contracts would be set aside for competition just among women-owned businesses, in 2000, after the government consistently found itself unable to meet a very modest goal of awarding five percent of contract dollars to those firms. (As Senator John Kerry consistently pointed out, women-owned firms account for 30 percent of all small businesses.) But the Bush Administration, citing constitutional concerns, was slow to implement the program. It took seven years and a lawsuit before the Bush SBA drafted rules that would set aside contracts for women-owned firms -- in just four of 140 potential industries. The final regulation extended set-asides to 31 industries where the agency concluded women are underrepresented.

Last week, after much protest, the SBA re-opened the comment period for the rule until March 19th. "There is significant Congressional and public interest in extending the comment period," the agency explained in the Federal Register. Effectively, this puts the ball in Obama's court. Interestingly, the SBA did not put a press release to announce this reconsideration.

Ironically, though, the Bush Administration may have been right. Last November, a federal appeals court in New York ruled that a similar program at the Defense Department for "small disadvantaged businesses" was unconstitutional. Though the many small business set-aside programs remain intact for now, some experts view that decision as a precedent that will ultimately dismantle them.