Assistant Attorney General William Bradford Reynolds said this week that "there is no real justification for tolerating" federal programs that set aside contracts for minority businesses.
To the extent that such programs award contracts on the basis of race or sex, Reynolds said, they are "offensive," discriminatory and possibly illegal.
In a speech Wednesday to the National Construction Industry Council, Reynolds said such programs can have a "devastating" impact on nonminority contractors by removing them from the competitive bidding process "for the most irrelevant and arbitrary of reasons . . . : race or sex."
Whether such set-aside programs are "at the federal, state or local levels," Reynolds said, "there is no real justification for tolerating, let alone perpetuating, their continued existence."
Reynolds' comments contrasted sharply with a June 1984 speech by President Reagan to the National Association of Minority Contractors. "This administration has strongly supported programs to provide special assistance to minority business," Reagan said then.
Reagan said he was "delighted to report" that federal agencies had increased minority procurements "by at least 10 percent" over fiscal 1982, and that a new 10 percent set-aside for highway construction contracts "has resulted in an additional $1 billion [a year] in new minority contracting opportunities."
Reynolds, head of the Justice Department's Civil Rights Division, said in an interview that he was not differing with Reagan. "We are all for increasing opportunities for minority businesses, but not by setting aside special enclaves for them," he said. "We are all for these programs so long as they are not tied to race, creed, color or sex."
Reynolds stopped short of saying race plays too large a role in how federal set-aside programs are run. But, he said, "There are allegations at the federal level that programs that should be used for the socially and economically disadvantaged are being used solely for race . . . .
"To the extent there are programs out there that are indistinguishable from a quota arrangement based on race and sex, that has a constitutional problem of monumental proportions."
Reynolds said he wanted to show that "there is a complete consistency" between his views on set-aside contracts and minority hiring goals.
Reynolds has previously criticized state and local set-aside programs as unconstitutional. The Justice Department filed suit unsuccessfully last year to overturn a Dade County, Fla., ordinance that reserves some construction contracts for black-owned businesses.
Wednesday's speech was the first time that Reynolds directly challenged set-aside programs created by Congress, however. He said in the speech that although the federal programs are legal because they are aimed at either victims of past discrimination or at "socially and economically disadvantaged" persons, they may be bad policy.
Reynolds said there is "overwhelming" evidence in the construction field that minorities and women "have realized few, if any, gains" from set-aside contracts. "The beneficiaries are largely contractors and subcontractors who have discreetly placed blacks within their corporate structure -- often temporarily -- in order to be in a position to bid on a job," he said.
James Freeman, president of the minority contractors' group, said, "Historically, Mr. Reynolds has taken a negative view of any program that promotes minority business or employment. President Reagan made it clear at our convention last year that he appreciates the value of set-asides as a means by which you can bring minorities into the mainstream of industry."
But Herbert Beatty, vice president of Associated General Contractors, called Reynolds' remarks "certainly encouraging to us.