Monday, November 10, 2008

We Need a Fix To The Fix

ben's Pen
Tuesday, 11 November 2008 02:29
by Sen. Ben Pangelinan
Guam Variety News

Washington delegate: We need a fix to the fix

The military buildup has been held out as the salvation to the economic crises and financial challenges facing our community. The Department of Defense, as well as the Joint Guam Program Office, has touted the fact that the buildup will benefit local businesses both big and small. It appears that a recent decision in a federal appeals court may have placed a kink in the flow of contract dollars to Guam businesses.

Since 1986, the Congress in authorizing Department of Defense appropriations for contracts, set a goal of channeling 5 percent of contract money each year to firms owned and operated by minorities. This was directed in the appropriations because some lawmakers were not satisfied with the pace of the Pentagon in including smaller minority owned firms in defense contracts versus the awards to the Lockheed Martins and General Dynamics and others.

The appeals court ruling declared unconstitutional the 5 percent set aside of defense contract dollars for minority owned businesses based on the court's decision that there was not enough evidence the Pentagon discriminates against minority firms in awarding the contracts. The court ruled that Congress was deficient in its justification for the policy, lacking strong evidence and proof of discrimination by the Pentagon, and thus violated the equal protection clause. Using the strict scrutiny standard, the court opined that "Congress did not have a "strong basis in evidence" to find that DOD was a passive participant in the pervasive nationwide racial discrimination.

The program has benefited minority owned businesses to the tune of over $15 billion in contracts awarded to these businesses of the over $269 billion in contract awards that were issued last year. It is still in effect and is set to expire next year.

The case started in 1988 when a business owned by a white woman lost a contract to a Korean-American couple for computer services. The Air Force in this case gave the contract to the Korean-American couple even though their bid was higher at $5.75 million verses the white woman's Rothe Development Corporation's $5.57 price.

The initial ruling of a federal court in Texas sided with the Defense Department. Rothe Development appealed the decision. The lower court used six studies that ostensibly presented evidence of a discrimination pattern against minority owned businesses in public and private contracting.

Although this ruling I am sure will still be tied up in appeals for sometime, we need to develop a unified response to Washington and the Congress to press our case here on Guam. The Delegate must take the lead in crafting a legislative remedy based upon a studied analysis of the awards of defense contracts on Guam over the years. We need to solicit the assistance of the Small Business Administration, the Guam Contractors Association, the Chamber of Commerce and the University of Guam to attack the evidence as it relates to the practice here on Guam. The Governor must immediately request a grant from the Office of Economic Adjustment to fund the study necessary to present to the Congress showing the proof and evidence of the effect this will have on Guam-based businesses whether minority owned or not. The Guam story and its uniqueness must be documented and told to fix the fix and meet the strict scrutiny standard and constitutional test.

We must do so with all haste or again, Guam businesses will be left behind just like we were in the A76 process. If we do not, Guam firms and our people will be economically deep-sixed in this military buildup.

ben pangelinan is a Senator in the 29th Guam Legislature and a former Speaker now serving his seventh term in the Guam Legislature. E-mail comments or suggestions to

No comments: