8(a) Program Faces Overhaul: How the Latest Court Ruling Impacts You
Aug 25, 2023The Small Business Administration (SBA) has temporarily halted the acceptance of new applications for the 8(a) small business program. This pause comes in the wake of a significant court ruling that found the "rebuttable presumption" process, which the SBA relied on to certify many firms as socially disadvantaged, to be unconstitutional.
The "rebuttable presumption" approach allowed companies to gain entry into the 8(a) program without having to substantiate their claims of social disadvantage. However, a non-8(a) company named Ultima Services challenged this process, citing a violation of their Fifth Amendment rights. Ultima Services was prevented from competing for a contract, which was subsequently awarded to an 8(a) firm. A U.S. District Court in Tennessee sided with Ultima Services, leading the SBA to discontinue the use of rebuttable presumption.
In response, the SBA has rolled out updated guidelines for 8(a) companies. Businesses previously certified through the "rebuttable presumption" method are now required to submit a "Social Disadvantaged Narrative." This narrative must outline incidents of bias or discrimination in education, employment, or business history. Specific details such as dates, locations, individuals involved, and explanations of bias's impact on business advancement need to be included.
Submitting this narrative is crucial for maintaining eligibility in the 8(a) program. While ongoing applicants can continue working with the SBA, additional information may be requested during the process.
To align with the court's ruling, the certify.sba.gov platform is temporarily not accepting new applications. This suspension is a temporary measure as the SBA collaborates with the Justice Department to chart the next steps.
Here are some key takeaways:
- A hearing is scheduled for August 31 to review potential remedies, indicating that the situation could evolve further.
- The SBA is actively developing guidance to ensure seamless contract awards to 8(a) firms by various agencies.
- Importantly, the court's decision does not impact 8(a) firms owned by Alaska Native Corporations or tribally-owned entities. These entities continue business operations without disruption.
Note: Winning government contracts isn't about flashing the 8(a) badge and magically getting showered with contracts. It takes a lot of work and the most important thing is not your certification, it's your product or service!
Check out the DoD Contract Academy Podcast to hear the latest strategies on winning contracts and have a great week!
Ricky Howard, Lt Col (Ret)
DoD Contract Academy
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