A New Era in Federal Preferential Contracting?

By George R. La Noue
February 16, 2009
On Election Day, while the country’s attention was otherwise engaged, the Federal Circuit Court of Appeals unanimously stuck down the racial preferences in Section 1207 of the National Defense Authorization Act (1987), the federal defense contracting program. Although racial preferences in federal contracting began in the 1977 Public Works Employment Act (PWEA) and have subsequently spread to dozens of other programs and agencies, the Rothe v. Department of Defense and Department of the Air Force decision marks the first time a facial challenge to a federal preferential contracting program has ever been successful. Rothe’s victory came after ten years of litigation that involved losing three trial court decisions and then winning reversals and remands in two Circuit Court opinions in 2001 and 2005. In its third encounter with the case, precedents had so tightened the evidentiary requirements for contracting preferences that the Federal Circuit fi nally found the 1207 program unconstitutional on its face.” Because of the unique status of the Federal Circuit Court of Appeals which can have national jurisdiction over federal contracting, the Rothe decision has far more significance than a decision by another Circuit which would be enforceable only in that Circuit. The Bush Department of Justice opted not to seek en banc reconsideration and Obama’s new team decided not to petition for certiorari, so the Rothe rules will have to be seriously considered as the Obama administration crafts its stimulus programs with expanded federal procurement....