Rothe Development v. DOD

Rothe filed suit alleging that the statutory basis of the Small Business Administration’s (SBA) 8(a) business development program, Amendments to the Small Business Act, 15 U.S.C. 637, violates its right to equal protection under the Due Process Clause of the Fifth Amendment. Rothe is a small business that bids on Defense Department contracts, including the types of subcontracts that the SBA awards to economically and socially disadvantaged businesses through the 8(a) program. The court rejected Rothe's claim that the statute contains an unconstitutional racial classification that prevents Rothe from competing for Department of Defense contracts on an equal footing with minority-owned businesses. The court concluded that the provisions of the Small Business Act that Rothe challenges do not on their face classify individuals by race. In contrast to the statute, the SBA’s regulation implementing the 8(a) program does contain a racial classification in the form of a presumption that an individual who is a member of one of five designated racial groups (and within them, 37 subgroups) is socially disadvantaged. Because the statute lacks a racial classification, and because Rothe has not alleged that the statute is otherwise subject to strict scrutiny, the court applied rational-basis review. Under rational-basis review, the court concluded that the statutory scheme is rationally related to the legitimate, and in some instances compelling, interest of counteracting discrimination. Finally, Rothe's evidentiary and nondelegation challenges failed. Accordingly, the court affirmed the district court's judgment granting summary judgment to the SBA and DOD. View "Rothe Development v. DOD" on Justia Law