#GovConThoughts: SBA Publishes New 8(a) Guidance, Suspends Over 1,000 8(a) Firms

[My #govconthoughts series provides a quick take on recent developments in the government contracting space.]

Today, the U.S. Small Business Administration ("SBA") published a news release announcing its new 8(a) Program guidance (and clarifications). As SBA notes, the guidance reiterates its view that "race-based discrimination within the 8(a) Business Development Program is unconstitutional and unlawful." The news release further states that SBA suspended over 1,000 8(a) contractors for failing to provide documents relating to its December data request.

Below is a quick take on SBA's guidance letter and its regulations that cover the effect of an 8(a) participant's suspension.

SBA's Clarifications

Under SBA's new guidance, the agency maintains that the presumption of social disadvantage based on specific races is unconstitutional and that it "does not deny any small business owner admission to the 8(a) Program simply because they are white." SBA also said that is "finalizing regulations to eliminate the unconstitutional presumption and related program guides."

SBA's guidance also clarifies its current practices regarding the 8(a) program requirements:

1. No applicant to the 8(a) Program shall be denied, nor given any presumptive preference, based solely on his or her race. The 8(a) Program should be administered race neutrally.

2. SBA will not approve admissions to the program based on the Biden-era "social disadvantage narratives", nor will SBA utilize in any way or refer applicants to the related "Guide for Demonstrating Social Disadvantage". Consistent with the SBA's practice since January 2025, employees in the Office of Government Contracting and Business Development and the Office of Field Operations should not request or consider such "social disadvantage narratives," nor utilize or encourage applicants to utilize the "Guide for Demonstrating Social Disadvantage."

3. All employees in the office of Government Contracting and Business Development and the Office of Field Operations shall treat all Americans fairly and equally in compliance with President Trump's Executive Orders 14151 and 14173.

4. When considering whether an individual has suffered social disadvantage, the Office of Government Contracting and Business Development and the Office of Field Operations shall consider, for example, such factors as whether such individual has been the victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides, or hiring targets, in each case, whether by governmental or non-governmental actors. The Office of Government Contracting and Business Development and the Office of Field Operations shall further consider, for example, whether an individual was formally, or in practice, excluded from SBA's 8(a) Program while these unconstitutional laws, practices, and policies were in effect.

SBA's Regulations On Suspension

Given that SBA stated that it already suspended over 1,000 8(a) firms, suspended firms will face an immediate impact. Notably, while 8(a) firms are required to complete any previously awarded 8(a) contract, suspended firms are not permitted to receive any new 8(a) sole source or 8(a) competitive contracts.

• 13 C.F.R. § 124.305 (h)(7) –– Effect of suspension. Once a suspension is issued pursuant to this section, a Participant cannot receive any additional 8(a) BD program assistance, including new 8(a) contract awards, for as long as the Participant is suspended. This includes any procurement requirements that the firm has self-marketed and those that have been accepted into the 8(a) BD program on behalf of the suspended concern. However, the suspended Participant must complete any previously awarded 8(a) contracts.

Regarding appeal rights, 13 C.F.R. § 124.305(c) provides that suspended firms have 45 days from the date of the Notice of Suspension to file an appeal with SBA's Office of Hearings and Appeals. Where a firm appeals its suspension, SBA's regulations also state that the "suspension remains in effect pending the result of its appeal."

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#govcon