Race Preference Challenge Survives Motion to Dismiss

On March 31, U.S. District Judge Clifton L. Corker ruled that Ultima Services Corporation has standing to sue the USDA and SBA for racial discrimination for setting aside government contracts through the Section 8(a) Program — which reserves certain federal contracts for minority-owned small businesses.  Ultima filed suit against the agencies for setting aside administrative and technical support contracts, which for nearly two decades, it had bid on, won, adeptly performed, and regularly renewed.

Last July, the agencies filed a motion to dismiss arguing that Ultima could not challenge the program’s racial restrictions because it would not qualify as a Section 8(a) contractor even if the racial restrictions were lifted.  Judge Corker rejected their argument explaining that Ultima is not trying to be included as a Section 8(a) contractor; rather, Ultima argues that the Section 8(a) Program as a whole violates the Fifth Amendment’s prohibition on racial discrimination in federal law.  He concluded that Ultima does have standing to challenge the Section 8(a) Program as a whole.

With the court’s ruling, the case will now move forward into discovery.