Federal District Judge Emmett Sullivan signed and approved a settlement between CIR client DynaLantic Corp. and the defendants, the Department of Defense, the Navy, and the Small Business Administration (SBA), ending a 19-year battle. Under the terms of the settlement, defendants agreed to not to award any prime contracts in DynaLantic’s industry under the SBA’s Section 8(a) program for two years. After two years, defendants must give notice to the Court if it intends to begin again using the Section 8(a) program in DynaLantic’s industry and convince the Court that it has a strong basis in evidence for reinstating the program.
The Section 8(a) program provides for contracts that can be awarded exclusively to small businesses owned by “socially and economically disadvantaged” individuals – a term whose definition and presumptions gave substantial advantages to members of racial and ethnic minorities. DynaLantic’s lawsuit claimed that the program violated the Constitution and federal law, and Judge Sullivan previously had ruled that the program did violate the Constitution as it applied to DynaLantic’s industry. The settlement agreement also requires defendants to pay DynaLantic $1 million for attorney’s fees, costs, and other litigation expenses.