On July 19, 2023, the U.S. District Court for the Eastern District of Tennessee issued a ruling in Ultima Servs. Corp. V. Department of Agriculture, impacting the 8(a) Business Development program. Before this ruling, individuals from specific ethnic backgrounds applying for the program could establish their social disadvantage by identifying as a member of those designated groups. This process was known as the “rebuttable presumption of social disadvantage” or “presumption of social disadvantage.”

Previously, many 8(a) firms qualified for the program by relying on this presumption. However, some firms were admitted based on individual owners demonstrating social disadvantage through evidence submitted as part of the application.

The court ruling prohibited the Small Business Administration (SBA) from using the presumption of social disadvantage to administer the 8(a) Program. As a result, SBA now requires all 8(a) participants who originally relied on this presumption to re-establish their program eligibility by submitting a social disadvantage narrative.

The Court’s decision does not impact entity-owned firms, such as firms owned by Indian tribes, Alaska Native Corporations, Native Hawaiian Organizations or Community Development Corporations. These firms will not need to submit narratives to apply for the 8(a) program.

Despite this change, the 8(a) program remains operational. SBA encourages its continued use as federal agencies seek small businesses to fulfill critical mission needs, especially towards the end of the fiscal year when program usage typically increases. Agencies can still send offer letters to SBA for consideration.

Contact SDB Growth at https://sdbgrowth.com/ for more information.