ALERT: SBA to Require All Individually-Owned 8(a)s to Affirmatively Establish Social Disadvantage

We recently wrote about a federal court decision in Ultima Servs. Corp. v. U.S. Dep't of Agric., which held that the "rebuttable presumption" of social disadvantage under Small Business Administration's ("SBA") 8(a) Program ("8(a) Program") was unconstitutional. Following the court's decision, SBA paused all applications for its 8(a) Program and provided a short update on

Today, the SBA, in conjunction with the National 8(a) Association, held a webinar to provide another update on how SBA plans on moving forward in light of the court's decision in Ultima. This post provides a quick overview of today's webinar.

Per John Klein (Deputy General Counsel, SBA):

  • The court enjoined SBA from "using the rebuttable presumption of social disadvantage in administering" the 8(a) Program, which SBA says is broad because of the word "administering."
  • The court's injunction therefore covers not only prospective 8(a) applicants (seeking entry into the program) but also current 8(a) participants that relied on the rebuttable presumption.
  • The SBA will require all individually-owned 8(a)s to establish social disadvantage prior to contract awards. So, prior to the award of an 8(a) contract, SBA's position is that it must affirm that the 8(a) company established social disadvantage by the narrative/evidence process.
  • For existing contracts, SBA said that the injunction does not apply and that options and modifications may be exercised.
  • Entity-owned 8(a)s are not impacted by the court's injunction (ANC, Tribal, NHO).

So what does this mean?

  • If you were accepted into the 8(a) Program and established social disadvantage by the narrative/evidence process, SBA said that the decision does not impact your company.
  • If you were accepted into the 8(a) Program using the rebuttable presumption of social disadvantage, you must begin to work on your social disadvantage narratives under SBA's regulations.

SBA stated that there is still some uncertainty and that they may ultimately appeal the court's decision. SBA also indicated that they will be publishing guidance sometime this week that provides more details on today's webinar. If you are a prospective or current 8(a) company, be on the lookout for SBA's upcoming guidance.

For more details on the court's decision, including an overview of the narrative process for establishing social disadvantage, please check out our article.


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