WASHINGTON — Kavelle Bajaj, not surprisingly, speaks well of the federal government's oldest affirmative action program, which steers contracts worth $4.3 billion a year to "small disadvantaged minority enterprises."
A native of New Delhi, she came to this country in 1974 to marry a fellow Indian, a brilliant computer engineer who was rising in the ranks of Ross Perot's Electronic Data Systems Corp.
Not content with being a housewife, she started a business in her Bethesda, Md., home. Her first ventures, including a stint as an Avon lady, were none too successful, she says.
But in 1986, Kavelle's new computer services business was certified as a disadvantaged minority enterprise by the Small Business Administration, and that allowed her to win no-competition government contracts of up to $5 million.
With her husband and other top-flight computer engineers working as her employees--he made too much at EDS to be certified on his own--her business boomed. Last year, her firm, I-Net, captured $235 million in contracts for computer networking in half a dozen federal agencies.
"I think it's a great program," she said of the SBA's set-aside program for minority firms. "It gave me an opportunity, and I certainly used it well."
These days, the phenomenal success of "disadvantaged" entrepreneurs such as Bajaj--rather than testifying to the effectiveness of one brand of affirmative action--is fueling demands that the minority preference programs be reformed or repealed.
Begun in 1969 under President Richard Nixon with the intent of inspiring "black capitalism" in the nation's depressed inner cities, the program's big winners instead have been high-tech firms that occupy the glass office towers along Washington's Beltway, according to government auditors.
Enriched by no-competition contracts, several dozen highly successful firms have made millionaires of their owners, the auditors say. However, the minority enterprise program has done almost nothing to spur business development in the predominantly poor and black neighborhoods of the nation's largest cities, they add.
In other years, the controversy over the SBA's "8a" program would have been confined to the relatively small community of contractors who closely track federal procurement. But this year, it has come into the public spotlight as Washington begins to rethink the many programs that fall under the rubric of "affirmative action."
Last month, Senate Majority Leader Bob Dole (R-Kan.), once a supporter, took to the Senate floor to proclaim that the minority enterprise program "should be repealed outright."
"There are other, more equitable ways to expand opportunity, without resorting to policies that grant preferences to individuals simply because they happen to be members of certain groups," Dole said.
At Dole's urging, the Senate Small Business Committee will hold hearings on the program beginning Tuesday.
The Supreme Court also is reviewing the program to see whether it is constitutional. The Small Business Act says that at least 5% of all federal contracts should go to firms owned by "social and economically disadvantaged individuals." The agency defines disadvantaged persons as those who are "black Americans, Native Americans, Hispanic Americans, Asian Pacific Americans and subcontinent Asian Americans."
However, a white road builder from Colorado, who submitted the low bid but lost a contract to do guard-rail work along a federal highway, contends this racial and ethnic preference violates his rights to the equal protection of the laws.
President Clinton also has ordered a White House review of the government's programs that give funding preferences based on race or ethnicity.
The SBA's program is both the oldest and largest effort to steer business to minority firms. At Dole's request, the Congressional Research Service found 168 examples of "racial and ethnic preferences" written into federal laws and regulations, but only two of the efforts have a broad impact. The employment rules governing federal contractors have forced thousands of businesses to adopt "goals and timetables" for hiring minorities. The other is SBA's minority enterprise program.
Although it has operated in virtual obscurity, the SBA program has been sharply criticized by the General Accounting Office and the SBA's own inspector general.
The main criticisms include the following:
* Too much money is awarded without competition. The program says it seeks to develop minority firms and foster their "competitive viability," but 81.5% of the money awarded last year went to no-competition contracts, the GAO says.
* Too many wealthy people are labeled disadvantaged. Last year, SBA auditors checked 50 of the minority firms and found 35 people with "a net worth in excess of $1 million."