On July 19, 2023, a federal court ruling impacted the Small Business Administration’s 8(a) program eligibility requirements. Previously, the SBA allowed individual applicants who identified as Asian Pacific American, Black American, Hispanic American, Subcontinent Asian American, or Native American to demonstrate social disadvantage simply by indicating their racial/ethnic group membership. This practice, known as the “presumption of social disadvantage,” was eliminated by the court.
The court ordered the SBA to immediately stop presuming social disadvantage based solely on racial/ethnic group membership. To comply, the SBA now requires all current 8(a) participants who previously relied on the presumption to submit information establishing individual social disadvantage.
Specifically, 8(a) participants owned by individuals who used the presumption must provide a social disadvantage narrative to the SBA through Certify.sba.gov. This will allow the SBA to evaluate if the owner has faced personal social disadvantage. Participants originally admitted by demonstrating social disadvantage through evidence do not need to submit a new narrative.
Additionally, the court ruling does not impact entity-owned firms like those owned by tribes, Alaska Native Corporations, or Native Hawaiian Organizations. These firms are not required to submit social disadvantage narratives.
On Monday, August 21, 2023, the SBA directly communicated next steps to all current 8(a) participants. Some received instructions on submitting a narrative, while others received confirmation they have already met requirements and can continue federal contract awards.
Once approved, participants can resume 8(a) program participation. The SBA encourages continued 8(a) program use as agencies seek to meet critical needs. Offer letters can still be immediately sent to the SBA, and existing narratives will be processed until a new system is implemented.
8(a) participants should continue annual reviews. Social disadvantage certifications will be interpreted to mean no changes affecting eligibility versus the information previously submitted. Per regulations, social disadvantage only needs to be established once per program term unless ownership/control changes occur.
For assistance in complying with these new regulations please contact Jeffrey D. Katz or Niall McMillan at our office.