Want to know how American taxpayers were cheated out of more than half a billion dollars for more than a decade? Blame the inevitable corruption that flows from rewarding federal contracts, grants and funds based on skin color rather than competence, efficiency and optimum benefit to the public.

That’s the only conclusion one can draw from the guilty pleas of an official at the U.S. Agency for International Development—the agency liberals love—and three other corporate executives. In essence, the executives, who are Black, bribed a USAID contracting officer, Roderick Watson, who is also Black, to steer contracts their way through set-asides and sole-source contracts available to minority contractors (you know, “disadvantaged” contractors) without a competitive bidding process.

Mr. Watson received $1 million in cash, laptops, tickets to suites at NBA games, a country club wedding, a down payment on not one but two residential mortgages, cellphones, a vacation on Martha’s Vineyard and jobs for his relatives. The bribes were often concealed through electronic bank transfers listing the government official on the contractors’ payrolls, using shell companies, and false invoices.

Shell companies? Gosh, did they receive advice from Hunter Biden? And did Mr. Watson say hello to President Obama when he was on Martha’s Vineyard?

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The contractors who pleaded guilty include Walter Barnes of Potomac, Maryland, owner and president of PM Consulting Group LLC doing business as Vistant; Darryl Britt of Myakka City, Florida, owner and president of Apprio Inc.; and Paul Young of Columbia, Maryland, a subcontractor of Vistant and Apprio.

Messrs. Barnes and Britt got themselves certified as qualified small businesses under the U.S. Small Business Administration’s 8(a) contracting program. This program awards contracts to businesses owned at least 51% by “U.S. citizens who are socially and economically disadvantaged” and have personal net worth, gross income and assets below specified dollar amounts.

“Socially and economically disadvantaged” is usually code for the color of the skin or gender of the business owner, and Messrs. Barnes, Britt and Young took full advantage of that.

As the press release from the Maryland U.S. attorney’s office outlines, Mr. Watson sent contracts their way by “manipulating the procurement process at USAID” that took advantage of “non-competitive contract awards, disclosing sensitive procurement information … providing positive performance evaluations to a government agency, and approving decisions on the contracts, such as increased funding and a security clearance.”

The conspiracy among these fraudsters also demonstrates how easily minority contractors game the system. At first, Apprio was the prime contractor being awarded USAID contracts. After Apprio lost its qualification status under the 8(a) program, the conspirators made Vistant the prime contractor, and Apprio became the subcontractor so they could continue to steal federal funds based on their supposed “disadvantages.”

Of course, the only ones disadvantaged in the end were American taxpayers.

The contractors also used Mr. Watson to fraudulently obtain loans, credit agreements and private equity investments, listing the USAID official as a reference for their “outstanding” performance as government contractors. Naturally, Mr. Watson neglected to inform anyone that he had been bribed into awarding those contracts and giving such an outstanding performance review.

That included a $14 million loan to Vistant, out of which Mr. Barnes paid himself a $10 million dividend. No, really: $10 million!

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The bottom line is that this bribery and fraud scheme would not have happened if the federal government required all contracts to be awarded on a competitive basis and did not play favorites based on skin color, gender or any other factor that has absolutely nothing to do with doing work for the government.

The federal government owes it to Americans to make efficient use of their hard-earned taxpayer dollars. No contracts of any kind should be awarded based on any condition other than being the best-qualified contractor capable of delivering the highest-quality products or services for the best possible price.

Period, end of story.

None of these individuals has been sentenced, so we don’t know how long they will spend in prison. The Justice Department has entered into “deferred prosecution agreements” with the two companies, Apprio and Vistant, for “cooperating in the investigation.” Apparently, they do not have the financial wherewithal to pay back the huge amount they stole from all of us. According to the Justice Department, both companies met the “burden of establishing an inability to pay the criminal penalty sought.”

Accordingly, there is a civil settlement in which Apprio will pay back $500,000 and Vistant will pay $100,000. That’s $550 million in illegally obtained government contracts versus a $600,000 payback.

Nice work if you can get it.