Legislation Affecting Minority BUSINESS ENTERPRISES


1968 — The Small Business Administration 8(a) program was established to enhance federal purchases from socially or economically disadvantaged owners of small businesses.

1969 — Executive Order 11458 established the U.S. Office of Minority Business Enterprise within the Department of Commerce with the purpose of mobilizing federal resources to aid minorities in business. The Minority Business Enterprise Program came into being as a result of exclusion of individuals on the basis of their gender or race. This program was viewed as an effort to open the doors of education, employment and business development opportunities to qualified individuals who happen to be members of groups experiencing longstanding discrimination. President Richard Nixon signed Executive Order 11458 in 1969 (March 5) which prescribed arrangements for developing and coordinating a National Program for Minority Business Enterprise.

1971 — Title 41, Federal Procurement Regulations required all federal contracts exceeding $500,000 to contain a clause encouraging contractors to utilize minority businesses as sub-contractors on a best-effort basis.

1971 — Expanded upon Executive Order 11458 and Executive Order 11625 gave the Secretary of Commerce the authority to: (1) implement federal policy in support of minority business enterprise programs; (2) provide technical and management assistance to disadvantaged businesses; and (3) coordinate activities between all federal departments to aid in increasing minority business development.

1977 — The Public Works Employment Act as amended by Congressman Parren J. Mitchell required that ten percent of each Federal Construction Grant be awarded to minority businesses.

1977 — Public Law 95-89 increased loan authorizations and surety bond guarantee authority to minority businesses.

1977 — The Railroad Revitalization and Regulatory Reform Act required that recipients of financial grants and their subcontractors establish a goal of 15 percent of purchases to be awarded to minority businesses.

1978 — Public law 95-507 mandates that bidders for federal contracts in excess of $500,000 for goods and services and $1,000,000 for construction, submit prior to contract award, a plan which included percentage goals for the utilization of minority businesses. This law also contained several amendments to the Small Business and Small Business Investment Act of 1958.

1982 — Section 105(f) of the Surface Transportation Assistance Act is the ten percent set-aside amendment sponsored by Chairman Parren Mitchell of the House Small Business Committee. This set-aside provision mandates that not less than ten percent of all funds appropriated over the four-year period (1982-1986) shall be expended with small businesses that are owned and controlled by socially and economically disadvantaged individuals.

1983 — Executive Order 12432 signed by President Reagan, directs all agencies of the Federal Government to develop specific goal-oriented plans for expanding procurement opportunities to minority businesses.

1985 — H.R. 1961 —Criminal Penalties for Front Companies was introduced by Congressman Mitchell to address some of the concerns of those who allege that front companies are injuring minority business programs.

Under H.R. 1961, any false statement knowingly made to any party for the purpose of obtaining an 8(a) contract, a small business set-aside, a subcontract awarded under Section 8(d) subcontracting plan, or a contract awarded under the ten percent set-aside of the Surface Transportation Assistance Act of 1982, would be a crime punishable by a fine and/or a jail term of five years.

1986 — Public Law 99-661 is a precedent-setting bill requiring affirmative efforts by all government contractors towards a three-year goal of 5% minority (disadvantaged) business participation in Department of Defense procurement. It provides that:

  • To the extent practicable”, each contractor demonstrate full
    compliance with the intent of the legislation.
  • Contractors may pay no more than fair market price (FMP), which may exceed 10% of the market price.
  • Contractors may be criminally prosecuted for acts of misrepresentation.
  • Contractors must report utilization for all separate groups that make up the protected class of minorities.

1989 — California General Order 156 reaches farther than any state or local MBE initiative ever conceived. The General Order calls for the setting of goals, establishment of viable program initiatives, verification or racial or gender ownership status of suppliers and the adoption of a formal complaint procedure. This results in the California Public Utilities Commission having the potential for withholding action on utility rate cases brought before it, where the affected utilities have not complied with the General Order.

1994 — Executive Order 12928, signed by President Clinton.  Promotes procurement with small businesses owned and controlled by socially and economically disadvantaged individuals, Historically Black Colleges and Universities (HBCU) and minority institutions.   The EO established a contracting goal of 5% for those entities.

1999 — Public Law 106-50 - expand existing small business programs and establish new assistance programs for veterans who own and operate small business firms.  The act also defines service-disabled veterans and veteran owned firms - small businesses owned by service-disabled veterans are small businesses that are at least 51% owned and controlled by one or more service-disabled veterans.  PL106-50 established a 3% goal for government contracting with businesses owned by service-disabled veterans.