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Congressional ____
& a Research Service
SBA's 8(a) Business Development Program
Responds to District Court Ruling
September 18, 2023
In a July 2023 district court case, Ultima Servs. Corp. v US. Department ofAgriculture, the U.S. District
Court for the Eastern District of Tennessee enjoined SBA from continuing to operate its 8(a) Business
Development Program as it had been doing. SBA's 8(a) program offers federal contracting preferences,
such as contract set-asides and sole-source contracts, to small socially and economically disadvantaged
business owners. The district court found SBA program's presumption of social disadvantage for certain
program applicants to be unconstitutional. While the SBA is making program changes to comply with the
court's ruling, the agency says it is encouraging [the program's] continued use. The SBA has, however,
temporarily suspended new 8(a) program applications and issued new guidance for current program
participants (which includes submitting documentation regarding one's social disadvantage to the SBA).
Prior to the ruling, the SBA applied a presumption of social disadvantage to individuals applying for its
8(a) program from the following groups: Asian Pacific Americans, Black Americans, Hispanic
Americans, Subcontinent Asian Americans, and Native Americans. Applicants were required to attest to
membership in one of these groups or provide a personal narrative to the SBA if they did not belong to
one of the groups. In addition, all applicants were and continue to be required to submit evidence
documenting their economic disadvantage to the SBA.
The SBA issued its earliest regulations for the 8(a) program during the Nixon Administration in 1970,
declaring an SBA policy of using Section 8(a) of the Small Business Act to assist small concerns owned
by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in
the market place. A 1973 regulation then defined disadvantaged persons as including, but not limited to,
black Americans, Spanish-Americans, oriental Americans, Eskimos, and Aleuts.
Because the district court has ruled that SBA cannot presume social disadvantage based on ethnic or racial
group membership, the SBA has stopped presuming social disadvantage. Any program participant who
previously relied on the presumption of social disadvantage for program eligibility must now submit a
narrative to SBA, a procedure that is already required of individuals who are not members of one of the
racial groups listed in the regulation.
SBA reports that it is currently developing a new personal narrative requirement for applicants to
demonstrate their social disadvantage. Until the new process is in place, SBA says it will assess social
Congressional Research Service
https://crsreports.congress.gov
IN12245
CRS INSIGHT
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/govemxc0001&div=1&collection=&method=preview&ext=.png&size=3)