THE GOVERNMENT'S minority set-aside program for small businesses has been around in roughly its present form for 20 years. Its champions say it has helped in both fostering minority-owned businesses and giving them a share of the federal pie. But the evidence for at least the first of these propositions is sketchy. Even defenders acknowledge that too few firms have gone on to self-sufficiency, that too many have been allowed to stay in the program too long, then have failed when forced off. The program -- contracts let without competitive bid to firms supposed to be minority-controlled -- has also produced a steady trickle of corruption. Some minority firms have been false fronts; some contracts have been politically guided.
The program survives because small business has a special place in national lore, to some extent deserved; because a thriving subculture has grown up to support small business programs (their own agency, own committees on the Hill, own interest groups); and because the idea of minority capitalism deftly splits the difference in our politics. Conservatives like the capitalism, liberals the minorities. Every president of either party over the past 20 years has supported the program. Congress, instead of losing patience with it, has periodically tried to reform it.
Now it is trying again. The House passed a bill in December, and similar legislation has been drawn up in the Senate. The Wedtech scandal has been part of the inspiration. An Army contract awarded under the set-aside program is at the heart of that sloppy affair, in which those indicted now include a member of Congress, former White House aide Lyn Nofziger, a California attorney who is a close friend of Attorney General Edwin Meese and Mr. Meese's former investment adviser. Mr. Meese is himself under investigation. But even before the balloon went up on Wedtech, the program was in trouble on what you might call substantive grounds.
The bills seek to wall the program off from the kind of political intercession that occurred in Wedtech. They would also set new limits on how long a company could stay in the program; require that during its time in the program a company steadily wean itself from set-asides (a rising share of its business would have to come from other sources); and require competitive bidding among the eligible minority firms for set-aside contracts above certain amounts. The Senate bill would go further and seek to increase the pool of such contracts available in the government.
It will be great if the cure takes hold -- as Lowell Weicker, one of the Senate sponsors, said, "the program cannot be allowed to continue to operate as it has" -- but we have to confess we're dubious. Mr. Weicker also recounted the program's history, "a record of major legislative interventions over the years, mostly driven by abuse or due to poor or inconsistent program management." Minority firms get only about 3 percent of government contracts, and the government should use its contracting programs in part for social purposes. But the thing ought to be done cleanly and efficiently, which it hasn't been. If it can't be fixed, and pretty quickly, we say junk it. As it stands, the program does a disservice to the cause it is meant to help.