A Greenbrae woman has triumphed in a three-year battle with the Department of Defense with a court ruling that could lead to millions of dollars worth of contracts for minority-owned businesses.
"If the others fell they can stand up and that one person can make a difference, then it was worth it", said Belinda Guadarrama, owner of GC Micro Corp., a Novato computer supplies business that sells primarily to the defense and aerospace industries.
Guadarrama, who is of Mexican-American descent, said the fight has cost her $100,000, which she hopes will be reimbursed by the government.
At the core of her lawsuit is a 1998 Federal law that set an annual goal that at least 5 percent of government procurement contracts go to "small disadvantaged businesses" like hers.
To monitor compliance, the government requires contractors to file reports on the percentage of dollars they awarded to minority-owned businesses. The Defense Department routinely released these reports until Guadarrama began complaining to Congress that less than 2 percent of the business was going to minority-owned businesses.
If the department complied with the 5 percent goal, it would provide $10 billion in government contracts for minority firms and create thousands of jobs in minority communities across the nation, Guadarrama said.
The reports, which she used to market her business to contractors below the goal, were "solid proof" that the department was failing to enforce the goal, Guadarrama said.
Based largely on information she had obtained from the Freedom of Information act, a congressional inquiry was launched in 1991 that forced Lockheed and the Air Force to increase subcontractor dollars for small and minority-owned businesses by more than $500 million.
Soon after, the Defense Department stopped releasing the reports. It did so on the grounds that the Freedom of Information Act exempted the release of data that could cause government contractors substantial competitive harm. Loral Aerospace, McDonnell Douglas Corp. and Northrop Corp. said the reports would provide competitors with a roadmap of their subcontracting plans.
Guadarrama, arguing the reports were the only way to police compliance with the goal and charging the department with "flagrant abuse of power," sued the agency in U.S. District Court in San Francisco in 1991. Judge Jon Vukasin Jr. ruled against her next year but Guadarrama took her case to the 9th Circuit Court of Appeals.
The three-judge appellate panel ruled in San Francisco last Friday that Vukasin "clearly erred" and said the reports were not exempt from disclosure. The panel also returned her case to the District Court to consider reimbursement of her costs.
Attorneys representing the Department of Defense were not available for comment.
The unanimous ruling reversing Vukasin was by Judge Alred Goodwin, a Nixon appointee; Judge Harry Pregerson, a Carter appointee; and Pamela Rymer, a Bush appointee. Goodwin said data in the reports "would provide little if any help to competitors attempting to estimate and undercut the contractor's bids."
The Freedom of Information Act's "strong presumption in favor of disclosure trumped the contractor's rights to privacy," the ruling said.
Congress did not exempt information from the act "to protect large corporations from persistent computer salespeople," Goodwin wrote.
San Francisco attorney Nancy Krop, who represented Guadarrama, said a further appeal would be frivolous "because it's in the interest of the government to release the information." Ever since President Johnson ordered government contracts to go to minority-owned businesses in 1971, it's been the government policy to build up the economic base of minorities, she said.
"GC Micro should not have had to take the government on in this," Krop said. "This is the government's law, not GC Micro's."
Guadarrama said she took on the government because "some very good people said it's the right thing to do. Too often we just sit back and say, "Gee, it's just me; what can I do," Guadarrama said in the soft accent of her native Texas.
"It's a victory for the minority business community," she said. This is important information for the minority and small business community.
"Many people said, "Don't do it; you are going up against the government, which has been known to blacklist companies that push for this kind of information. It cannot do you any good.'"
"I was looking beyond what this can do for GC Micro," Guadarrama said. "The issue here is a congressionally mandated goal which the government was flagrantly ignoring.
"At a time when the minority community itself is growing, small business is growing and large corporations are downsizing, it seems the Department of Defense should be even more interested in working with small businesses, except they are conducting business as the did 30 and 40 years ago. Cultural diversity has not become a reality for them."
The Department of Defense willingness to allow contractors to fall below the 5 percent improperly sends a message to contractors that they can ignore the goal, Guadarrama said.
"Now that we have access to this information again, it is imperative that we use ti to show congress and president Clinton that the Department of Defense and its contractors have refused to allow competent and qualified minority firms to participate in government contracts," she said.