Witnesses tell House committee minority contracting set-asides raise costs, invite fraud

Witness testimony to a House Oversight subcommittee focused in detail on federal contracting programs that give procurement preferences based on the race or sex of business owners, with one witness saying the programs are "probably the most expensive by an order of magnitude" among DEI-related initiatives.

Judge Glock, described in the hearing as a director of research and senior fellow at the Manhattan Institute, said the federal government spent "over $750,000,000,000 on contracts" last year and called out two principal race-based contracting programs: the Small Business Administration's 8(a) program and the Department of Transportation's Disadvantaged Business Enterprise program. He told the committee that contracting officers are required in many federal and federally funded programs to allocate portions of work to firms chosen in part for the race or sex of their owners.

Glock and other witnesses told the committee that those set-asides raise taxpayer costs and create incentives for fraud. Glock cited a U.S. Department of Transportation inspector-general report finding that "over a third" of active DOT fraud cases in a recent five-year span involved DBE-program fraud and that DOT recovered "hundreds of millions of dollars" in penalties in those cases. He also cited a Small Business Administration review that found many large 8(a) contractors should not have been admitted.

He pointed to recent criminal enforcement: "Just this month, the Department of Justice secured 4 guilty pleas involving bribery by an 8(a) firm of a USAID official to secure over $550,000,000 in contracts," he said. He also said the Supreme Court has addressed pass-through fraud schemes and that federal contracting preferences have produced cost increases in state-level examples — citing research that found California highway costs fell about 5.5% when race-based preferences were banned.

Why this matters: Federal contracting moves hundreds of billions of dollars each year; if preferences shift award criteria from price and quality to owner characteristics, witnesses warned, costs and procurement delays can rise and inspector-general investigations increase.

Glock urged Congress to end race- and sex-based preferences in federal contracting and described the current system as "unconstitutional, expensive, and detrimental to the core functions of government." He told members that while some court- and agency-level changes have narrowed eligibility presumptions for programs such as 8(a), the programs largely persist unless Congress acts.

No formal votes or committee directives followed the testimony. Committee members from both parties asked witnesses for supporting reports, and members reserved time to submit documents for the hearing record.