Let’s Start at the Beginning | What is the SBA 8(a) Program, and What does it do?
The U.S. Small Business Administration (SBA) has a program called the 8(a) Business Development program, established under Sections 7(j)(10) and 8(a) of the Small Business Act. This program is aimed at helping businesses owned and controlled by socially and economically disadvantaged individuals. It’s a nine-year program that provides training and assistance to these businesses to help them compete effectively in the American economy.
Businesses that participate in the program receive training and technical assistance designed to strengthen their ability to compete effectively in the American economy. Also eligible to participate in the 8(a) program are small businesses owned by Alaska Native corporations, Community Development Corporations, Indian tribes, and Native Hawaiian organizations. Small business development is accomplished by providing various forms of management, technical, financial, and procurement assistance.
Benefits of Participation in the 8(a) Program
Participating in the 8(a) Business Development program offers a range of benefits for socially and economically disadvantaged small business owners:
- Competitive Opportunities: Certified firms can efficiently compete for set-aside and sole-source contracts in the federal marketplace, increasing their chances of securing government business.
- Personalized Assistance: Throughout their nine-year term, businesses receive one-on-one business development assistance from dedicated Business Opportunity Specialists who help them achieve their growth and business objectives.
- Mentorship Potential: The program opens up the possibility for mentorship from experienced and technically capable firms through the SBA Mentor-Protégé program, providing valuable guidance and support.
- Expert Resources: Participants can connect with procurement and compliance experts who understand regulations in the context of business growth, finance, and government contracting, helping them navigate complex requirements.
- Capacity Expansion: The program allows businesses to pursue joint ventures with established firms, increasing their capacity and ability to take on larger contracts.
- Priority Access: Certified firms qualify to receive federal surplus property on a priority basis, providing access to valuable resources for their operations.
- Training Opportunities: They can benefit from free training through SBA’s 7(j) Management and Technical Assistance program, enhancing their skills and knowledge.
- Sole-Source Contracting: The 8(a) certification makes businesses eligible to compete for sole-source and competitive set-aside contracts. The government authorizes sole-source contracts for various amounts, depending on the type of acquisition. However, approvals may be required for certain high-value contracts, ensuring that 8(a) program participants have the opportunity to secure significant government contracts.
- Access to Other Programs: In addition to 8(a) program-specific benefits, participants are also eligible to compete for contract awards under other socio-economic programs or small business set-asides they qualify for, expanding their range of opportunities in the federal marketplace.
So What Has Changed?
In a recent development on July 19, 2023, the U.S. District Court for the Eastern District of Tennessee issued a significant ruling in Ultima Servs. Corp. V. Dep’t of Ag., which has had implications for the 8(a) Business Development program. Prior to this ruling, individuals from specific ethnic backgrounds, including Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans, applying for the program could establish their social disadvantage by simply identifying as a member of one of these designated groups. This practice was referred to as the “rebuttable presumption of social disadvantage” or the “presumption of social disadvantage.”
Traditionally, most 8(a) firms qualified for the program using this presumption of social disadvantage. However, some firms gained admission to the 8(a) program by having the qualifying individual owner demonstrate their social disadvantage through a preponderance of evidence, typically by submitting a narrative as part of their application.
The recent court ruling has now prohibited the Small Business Administration (SBA) from utilizing the presumption of social disadvantage to administer the 8(a) Program. As a result, businesses that initially relied on this presumption for their eligibility will be required to re-establish their 8(a) Program eligibility by completing a social disadvantage narrative, as outlined in guidance provided by the Department of Justice (DOJ) following the court’s order. This change signifies a shift in the process for certain applicants seeking participation in the 8(a) program, as they will now need to provide more detailed evidence of their social disadvantage to qualify.
What Now? What is this narrative?
To participate in the 8(a) Business Development program under the new regulations, you’ll need to establish social disadvantage based on chronic, substantial discrimination or bias experienced within American society due to your identity as a member of specific groups. You only need to establish this disadvantage once for the program term. To do this, provide key elements, including a clear indication of the identity or characteristics that form the basis of your social disadvantage (e.g., race, gender), and describe at least two incidents of bias related to education, employment, or business history. Include specific details such as when, where, who, what, why, and how discrimination or bias occurred, and explain how these incidents negatively impacted your entry into or advancement in the business world. This information will help the Small Business Administration (SBA) assess your eligibility for the program. Additional documentation or information may be requested by the SBA if needed.
What this means for me and why I should remain aware
The recent change in the 8(a) Business Development program holds significant importance for small business owners of color, and here’s why we should care about it. This change impacts the way individuals establish their eligibility based on social disadvantage, and it means that as minority business owners, we now have a more nuanced and detailed process to prove the challenges we’ve faced due to racial, ethnic, or cultural bias. The requirement to provide specific incidents and details about discrimination or bias may seem more demanding, but it also offers an opportunity for a more robust and accurate assessment of our struggles. By sharing our experiences, we can highlight the chronic and substantial nature of the discrimination we’ve encountered, whether in education, employment, or business history. This change signifies a more focused effort to support and uplift minority-owned businesses, ensuring that they truly benefit from the program’s intent. It also underscores the importance of acknowledging and addressing systemic biases that have historically hindered opportunities for people of color in the business world. In essence, this change in the 8(a) program is not just about meeting new requirements; it’s about making our voices heard, advocating for equal opportunities, and ensuring that our businesses have a fair chance to thrive and succeed in the federal marketplace. It’s a vital step toward a more inclusive and equitable business landscape.