Why does race still control who wins federal contracts?
The federal government spent roughly $759 billion on contracts in fiscal year 2025, yet a growing share of that money is steered by skin color rather than by the lowest responsible bidder. Race-conscious procurement survives because politicians treat minority set-asides as symbolic reparations paid with other people’s money.
The Small Business Administration runs the 8(a) Business Development Program, which sets aside contracts for firms owned by socially and economically disadvantaged individuals. The category is defined partly by race. A business owned by a Black, Hispanic, Native American, or Asian American applicant is presumed disadvantaged. A white applicant must prove disadvantage with a mountain of evidence.
The Supreme Court made clear in 2023 that race-based classifications are presumptively invalid in Students for Fair Admissions v. Harvard. That case dealt with university admissions, but its reasoning applies wherever the government sorts citizens by ancestry. Federal contracting is not a constitutional safe harbor. It is a constitutional target.
Defenders claim the set-asides correct past discrimination. The evidence for that claim is thin. Most contracts are awarded in markets where discrimination is already illegal under Title VII of the Civil Rights Act of 1964 and Section 1981 of the Civil Rights Act of 1866. If specific discrimination exists, the remedy is a specific lawsuit, not a blanket racial preference.
The cost is not abstract. A 2022 Department of Commerce study found that contracts awarded through race-conscious programs often came with higher prices and longer completion times than open competitions. Taxpayers pay more for roads, software, and maintenance so politicians can hand out racial trophies.
What does the data say about set-aside programs?
Federal procurement data shows that race-conscious set-asides have grown faster than overall contracting, yet they have not produced a sustained rise in the number of independent minority-owned prime contractors. The money flows to a rotating cast of well-connected firms that master the preference game.
In fiscal year 2024, the federal government aimed to award 10 percent of contracting dollars to small disadvantaged businesses. That target rose to 15 percent by 2025 under executive direction. Reaching the goal requires federal agencies to prioritize race over price, which is exactly what the Constitution forbids when the government acts.
The Government Accountability Office has repeatedly warned that the 8(a) program lacks rigorous outcome measurement. A 2019 GAO report found that SBA did not consistently verify whether participants remained economically disadvantaged after entering the program. Some firms stayed in the program for the full nine-year term while growing into multi-million-dollar enterprises.
Competition matters. A 2020 Mercatus Center review of defense procurement found that contracts receiving only one bid cost taxpayers an average of 40 percent more than contracts with multiple bidders. Set-asides shrink the pool of bidders by definition. Fewer bidders mean higher prices and lower quality.
The racial categories themselves are incoherent. The SBA treats Indian Americans, Pakistani Americans, and Bangladeshi Americans as Asian for some purposes and separately for others. Arabs and North Africans are classified as white by the Office of Management and Budget unless they choose a different box. When government distributes billions based on categories it cannot define, corruption follows.
How did universities adopt the same costly habits?
Universities have mirrored federal procurement by creating race-conscious vendor directories, supplier diversity mandates, and DEI hiring quotas that treat skin color as a credential rather than evidence of skill. These programs cost money, lower standards, and invite lawsuits that taxpayers and tuition-payers ultimately fund.
The University of Michigan employed more than 140 full-time DEI staff before announcing cuts in 2025. The University of North Carolina system reported spending roughly $60 million on diversity programs across its campuses in 2023. Those resources buy administrators, consultants, and reporting systems instead of research, instruction, or maintenance.
Many campuses now require contractors to submit equity plans before bidding on dining, construction, or technology contracts. A contractor must show minority participation, sometimes through subcontracting arrangements that add layers of cost and delay. The University of Texas system, for example, maintains supplier diversity goals for construction projects funded by tuition and state appropriations.
The logic is identical to federal set-asides. Race is used as a proxy for disadvantage, and proxy discrimination is still discrimination. The Supreme Court’s 2023 decision should have put every institution on notice. Instead, many colleges relabeled their preferences as DEI and kept the same racial sorting under a new banner.
The result is a two-tier market. Firms without the right demographic profile hire diversity consultants to restructure ownership on paper. Minority-owned firms get courted for their race and then used as fronts. The whole exercise degrades the dignity of every participant.
What would a colorblind contracting system look like?
A colorblind system would evaluate every bidder on price, technical skill, past performance, and financial capacity while forbidding agencies from asking about race, ethnicity, or sex. The goal is the best value for taxpayers, not the most flattering press release for a politician.
Congress should amend Title 10, Title 41, and the Small Business Act to remove racial preferences in federal contracting. Existing programs for service-disabled veterans and women-owned small businesses should be reviewed for the same constitutional defects. Veteran status and sex are also suspect when they override merit.
Agencies should publish contracting data by race-neutral metrics such as firm size, geographic location, and years in business. Transparency would reveal whether contracts reach new entrants without sorting citizens by ancestry. The data already exists. It should be released in machine-readable form.
State legislatures can lead. Florida in 2024 barred public universities from spending state funds on DEI offices. Utah passed legislation requiring competitive bidding for diversity consulting contracts. Other states should extend that principle to all vendor selection. Race should never be a line item on a government scorecard.
The moral argument is simple. A government that treats citizens as individuals respects them. A government that sorts them by race breeds resentment, fraud, and dependency. The Constitution demands the first approach. The budget requires it. And the dignity of every American contractor depends on it.
