Pentagon’s 5% Rule|For Minorities Axed

(CN) - A 5 percent rule for minority participation in Defense Department contracts is unconstitutional, the Federal Circuit ruled. Rothe Development Corp., which is owned by a white woman, sued the Defense Department and the Air Force after it lost a contract to an Asian-American-owned company that submitted a higher bid.

Judge Michel ruled that Congress did not have strong evidence when it determined in 2006 that the Defense Department was "a passive participant in racial discrimination in relevant markets around the country."

Michel ruled that the district court relied on flawed data, because the disparity studies looked at the sizes of contracts awarded, but not the sizes of the businesses.

The trial court improperly ruled for the government because Rothe's right to equal participation was violated.

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