On November 4, 2008, the U.S. Court of Appeals for the Federal Circuit issued its decision in Rothe Development Corporation v. Department of Defense , a case involving a challenge to the constitutionality of a "small disadvantaged business" (SDB) program of the Department of Defense (DOD). As part of the SDB program, DOD could apply a 10% price evaluation adjustment to the offers of small businesses owned and controlled by socially and economically disadvantaged individuals in pursuit of its goal of awarding 5% of its contract dollars to such businesses, among others. In determining which small businesses were socially and economically disadvantaged, the SDB program relied upon Section 8(d) of the Small Business Act, which presumes that minorities are socially and economically disadvantaged, while also allowing non-minorities to demonstrate disadvantage. Rothe Development Corporation (RDC) challenged the constitutionality of the SDB program after losing a contract to a Korean-American-owned firm. RDC's offer would have been lower had DOD not applied a 10% price evaluation preference to the Korean-American firm's offer. RDC claimed that the SDB program was unconstitutional, both on its face and as applied, because the program denied it equal protection by treating minority and nonminority businesses differently. Prior litigation had resolved the as-applied challenge in RDC's favor, and, in its decision, the Federal Circuit resolved the facial challenge in RDC's favor as well. The Federal Circuit found that DOD's SDB program was unconstitutional because, when re-enacting the program in 2006, Congress lacked a "strong basis in evidence" for concluding that race-conscious contracting was necessary to remedy discrimination in the defense industry. The Federal Circuit's decision in Rothe was followed on February 27, 2009, by a decision of the U.S. District Court for the Western District of Texas, San Antonio Division, to which the case had been remanded for entry of judgment. This decision enjoined defense agencies from implementing other programs authorized by Section 1207 because these programs were "contingent" on the subsections containing the price preference and must "also fall" when those subsections did. These programs included technical and infrastructure assistance for certain minority-serving institutions (MSIs) of higher education, including historically black colleges and universities (HBCUs), Hispanic-serving institutions (HSIs), Alaska Native- and Native Hawaiian-serving institutions (ANNHIs), and majority-minority institutions (MMIs). However, the 111 th Congress responded to the District Court's decision by enacting legislation authorizing defense agencies to provide assistance similar to that authorized under Section 1207 to MSIs. On September 9, 2011, the Obama Administration proposed amending the Federal Acquisition Regulation (FAR) in light of the decisions by the Federal Circuit and the district court in Rothe . Among other things, the proposed changes would delete those provisions of the FAR which govern price evaluation adjustments to bids or offers submitted by small disadvantaged businesses for defense contracts, as well as relocate and amend those provisions of the FAR regarding monetary incentives and evaluation factors for subcontracting with small disadvantaged businesses. The report examines the Rothe decision in detail; describes existing contracting programs for minority-owned and women-owned small businesses; and analyzes Rothe 's potential effect on these programs, including the Business Development Program under Section 8(a) of the Small Business Act. These programs were not at issue in Rothe and would not be substantively changed by the Obama Administration's proposed amendments to the FAR. However, as numerous commentators and the Small Business Administration (SBA) have recognized, the Rothe decision could have significant implications for other federal contracting programs for small businesses. In particular, commentators wonder whether the government could demonstrate a "strong basis in evidence" for these programs, which include the subcontracting programs under Sections 8(a) and (d) of the Small Business Act, if they were challenged. The Rothe case involved a constitutional challenge to one specific federal program for minority-owned small businesses: DOD's SDB program. This program was created by Section 1207 of the Department of Defense Authorization Act of 1987, which was captioned "Contract Goal for Minorities." Section 1207 established, as a goal for DOD, that 5% of DOD's contract dollars for procurement, research and development, testing and evaluation, military construction, and operations and maintenance be awarded to "small business concerns ... owned and controlled by socially and economically disadvantaged individuals." Section 1207 further required or allowed DOD to take certain steps in meeting this 5% goal. Among the steps DOD was required to take were (1) making advance payments and (2) providing "technical assistance," such as advice regarding DOD procurement procedures and instruction in preparing proposals. DOD was also given discretion to "enter into contracts using less than full and open competitive procedures," which included applying price evaluation adjustments of up to 10% to offers submitted by small disadvantaged businesses. For purposes of the SDB program, "socially and economically disadvantaged" had the same meaning it has under Section 8(d) of the Small Business Act, which presumes that minorities are socially and economically disadvantaged but allows non-minorities to demonstrate disadvantage. Although Section 1207 originally applied only to DOD and only for FY1987 to FY1989, its re-enactments encompassed the National Aeronautics and Space Administration (NASA) and the Coast Guard, as well as all fiscal years between 1989 and 2009. These periodic re-enactments of Section 1207 to extend DOD's "contracting goal for minorities," illustrated by Table 1 , ultimately determined the outcome in Rothe because, according to the Federal Circuit, Congress did not have sufficient evidence of racial discrimination in defense contracting when it re-enacted Section 1207 in 2006. The Federal Acquisition Streamlining Act (FASA) temporarily granted other federal agencies the same authority that DOD, NASA, and the Coast Guard had under Section 1207. However, these provisions of FASA were not reauthorized when they expired at the end of FY2003. The 5% goal for contracting with small disadvantaged businesses under Section 1207 is not the only government-wide or DOD goal for contracting with such businesses. Sections 644(g)(1) and (2) of the Small Business Act require (1) that the federal government award at least 5% of all contract dollars to small disadvantaged businesses and (2) that DOD establish, in conjunction with the SBA, similar goals that "realistically reflect the potential of ... small business concerns owned and controlled by socially and economically disadvantaged individuals ... to perform such contracts and to perform subcontracts under such contracts." However, while 15 U.S.C. §644(g) establishes or requires goals for contracting with small disadvantaged businesses, such goals are purely aspirational. Section 644(g) does not authorize agencies to use price evaluation adjustments—or any other mechanism—to attain contracting goals. The constitutionality of § 644(g) was not challenged in Rothe , nor was that of any other federal contracting program benefiting minority-owned small businesses. The constitutionality of Section 1207 was at issue in the Rothe case because DOD used its price evaluation adjustment authority under Section 1207 in awarding a contract to a competitor of the Rothe Development Corporation (RDC). Beginning in the late 1980s, RDC had a contract with the Department of the Air Force to maintain, operate, and repair computer systems at Columbus Air Force Base in Mississippi. In the late 1990s, the Air Force decided to consolidate the contract that RDC had with a contract for communications services. When doing so, it also decided to let the contract pursuant to Section 1207 and issued a solicitation for competitive bids. RDC bid $5.57 million. However, RDC was not a small disadvantaged business, and International Computer and Telecommunications, Inc. (ICT), a minority-owned small business eligible for the price evaluation adjustment under Section 1207, bid $5.75 million. When 10% (or $575,000) was subtracted from ICT's bid, its bid was lowest, and the Air Force awarded the contract to it. RDC filed suit in U.S. District Court for the Western District of Texas, San Antonio Division, alleging that Section 1207 deprived it of equal protection under the U.S. Constitution both as applied and on its face. RDC's as-applied challenge focused upon Section 1207 in its 1992 re-enactment, which governed DOD's award of the contract to ICT, while RDC's facial challenge ultimately focused upon the 2006 re-enactment of Section 1207, which was in effect at the time when the Federal Circuit heard the appeal. DOD countered that Section 1207 "satisfies the strict scrutiny standard established by the United States Supreme Court in Adarand v. Peña ." DOD did not contest whether Section 1207's presumption regarding race and disadvantage constituted a racial classification subjecting its SDB program to strict scrutiny. The claims and defenses of the parties to the Rothe litigation rested on the U.S. Constitution and case law interpreting it. The Fifth Amendment to the Constitution guarantees due process of law to individuals in their dealings with the federal government. Due process under the Fifth Amendment includes equal protection, or the constitutional assurance that the government will apply the law equally to all people and not improperly prefer one class of people over another. For this reason, consideration of race by the federal government, even when intended to remedy past discrimination, is constitutional only if it meets the so-called strict scrutiny test, which requires that a race-conscious government program be narrowly tailored to further a compelling government interest.