Minority Vendors Say Awards Program at Risk on U.S. Court Ruling

September 13, 2012

Minority vendors and contracting attorneys say a federal court ruling may damage a government program designed to boost disadvantaged businesses.

A U.S. judge in Washington ruled on Aug. 15 that the Defense Department can’t favor such companies for work on military simulators, which replicate what it’s like to fly a fighter jet or sail a ship.

The potential significance of the narrow decision at first escaped the notice of some contractors in the government’s so- called 8(a) program for disadvantaged firms, said David Stephens, chief executive officer of Katmai Government Services LLC, a minority vendor that has a contract at risk. Participants now say the ruling may have a broader effect on federal awards to minority-owned small businesses, already bracing for looming budget cuts designed to reduce the U.S. deficit.

“It is potentially the death knell of the 8(a) program,” Stephens said in an e-mail. His Anchorage, Alaska-based company, which makes technology used in simulators, received a notice from the Army 12 days after the decision declaring the “immediate cessation” of new minority-preference contracts related to the products, he said.

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