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Affirmative Action


This report examines most of the federal programs that would be considered to be affirmative action. It may be useful, therefore, to consider one or more taxonomies of those efforts. Figures 1 and 2 offer two possible matrices. In Figure 1, the horizontal dimension arrays various policy devices from the most flexible to the most pointed, while the vertical dimension arrays different spheres of activity--from those most closely to those less closely related to the federal government. (46) In this array, examples of the eight categories of policies include:

Outreach & Hortatory Efforts:

  • Various statutes encourage recipients of Federal funds to use minority-owned and women-owned banks.

  • DOL's Office of Federal Contract Compliance Programs (OFCCP), for example, offers a periodic award for contractors with superior affirmative-action practices, such as innovative recruitment or training strategies.

Disclosure of Data:

  • The Small Business Act (§502) requires SBA to monitor and report on agency contracting with small disadvantaged businesses (SDBs). This reporting serves hortatory purposes and creates a competitive dynamic among agencies.

  • Last year, the Administration announced plans to publish the rates at which financial institutions made federally guaranteed loans to women- and minority-owned firms. This reporting can leverage public and intra-industry pressures to expand such lending.

Affirmative Action Plan Requirements:

  • E.O. 11246 requires Federal contractors to maintain affirmative action plans; since the Nixon Administration, such plans must in certain circumstances contain flexible goals and timetables.

  • The Community Reinvestment Act (CRA) requires certain chartered financial institutions to conduct and record efforts to reach out to undeserved communities.

Targeted Training & Investment Efforts:

  • The Foreign Service maintains a minority internship program designed to increase minority participation in the Foreign Service.

  • EPA maintains a Mentor/Protegé program to encourage prime contractors to develop relationships with small and disadvantaged businesses (SDBs).


  • The Small Business Act requires each agency to set goals for contracting with small businesses and SDBs; the SBA coordinates the effort. Additionally, Congress has, in several instances, legislated specific goals for certain agencies. (As described in section 9 of this Report, these goals are all flexible -- they are not quotas or numerical straight jackets.)

  • In response to dramatic imbalances in the numbers of women and minority entrepreneurs participating in its programs, SBA now sets management goals to increase diverse participation in its core §7(a) loan guarantee program.

Market Advantages:

  • In upcoming FCC auctions of certain licenses for personal communication services and interactive video, the Commission had planned to offer a 25 percent discount for women- and minority-owned businesses; this effort was temporarily suspended by the Commission in light of Adarand.

  • Under its "§1207" authority, the Defense Department is permitted to provide a 10 percent bid price preference, and to employ reduced-competition systems as a means of meeting its SDB contracting goals. Last year's procurement reform legislation extended this authority to non-DOD agencies as well.

  • The Surface Transportation Assistance Act, and now the Intermodal Surface Transportation Efficiency Act (ISTEA), authorizes use of "subcontractor compensation" bonuses to prime contractors who use SDBs; The payment is intended as rough compensation for the prime contractor's expense in mentoring and technical assistance.

"Soft" Set-Asides:

  • ISTEA requires that 10 percent of contracts be allocated to disadvantaged business enterprises (DBEs), except to the extent that the Secretary determines otherwise.

  • The Airport & Airway Improvement Act requires the same.

"Hard" Set-Asides:

  • The Omnibus Diplomatic Security & Antiterrorism Act requires that a minimum of 10 percent of funds appropriated for diplomatic security projects be allocated to minority business enterprises.

  • Certain small education grant programs target minorities in graduate education. (47)

Obviously, there is no single best way to think about these efforts. For example, in Figure 2, one could categorize efforts based on their programmatic objectives, perhaps distinguishing programs focused on education and training (as more "investment-oriented"), from programs focused on employment and contracting (as more "income-oriented"),from programs focused on the assignment of scarce assets, such as bank charters and spectrum licenses (as more "result" or "reward-oriented"). There are obviously elements of "opportunity" and "result" present across the board, but the scale has some heuristic appeal.

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Affirmative Action Review


2. History and Rationale

3. Empirical Research on Affirmative Action

4. Justifications

5. Review of the Programs

6. Office of Federal Contract Compliance

7. AA and EEO in the Military

8. Federal Civilians

9. Federal Procurement Policies and Practices

10. Education and HHS Policies

11. Selected Other Federal Policies


Appendix A

Appendix B

Appendix B Footnotes