These days, businesses under the SBA’s 8(a) Business Development program are experiencing several changes, leaving many 8(a) applicants and participants wondering what may be next for the popular small business initiative.

To recap, a court ruling under the Ultima Servs. Corp. v. United States Dep't of Agric. case found that the rebuttable presumption that the SBA used to quality businesses of certain ethnic and minority groups for the 8(a) program may no longer be used. Accordingly, the SBA moved to pause applications to the 8(a) program as well as require current 8(a) businesses that previously qualified with the rebuttable presumption to submit narratives to prove their social disadvantage status. The SBA is reviewing narratives of current 8(a) companies under a phased approach, handling 8(a) businesses with pending awards first, followed by those with pending solicitations, and the rest thereafter. According to an article by the Washington Post, those that must requalify for the 8(a) program make up over 80% of participants currently in the program.

Attorney Maria L. Panichelli, a Partner at McCarter & English, LLP, joined Deltek for a small business webinar last week and provided advice to those businesses impacted by the recent changes in the 8(a) program.

According to Panichelli, companies recertifying as an 8(a) business must provide the following in their narratives:

• List at least one distinguishing feature that contributed to the social disadvantage
• Show that the disadvantage took place in U.S. society
• Show the severity of the social disadvantage, including chronic and substantial effects
• Prove that the social disadvantage negatively impacted entry or advancement of the business
• Provide two incidents of bias that contributed to chronic or substantial social disadvantage
  • These must be actions (vs. verbal) that impacted advancement
  • The incidents must show significant development barriers
  • Narratives will not be made public, so okay to “name names”

Further, Panichelli encouraged those in the 8(a) program to begin writing narratives as soon as possible, even if an award or solicitation is not pending.

On the horizon may be even more changes to the 8(a) program. On Friday, the plaintiff in the case, Ultima Servs. Corp., filed a motion with the court for additional equitable relief. Namely, the motion displays plaintiff’s disagreement with the steps the SBA has taken since the court ruling. In the motion, Ultima makes several requests:

• Prevent defendants from exercising options or making contract modifications to 8(a) program contracts with contractors that previously received rebuttable presumption 
• Prevent the SBA from providing an abbreviated review process of narratives of social disadvantage submitted by those previously accepted under rebuttable presumption 
• Prevent defendants from using the 8(a) program in the administrative and technical support industry 
• Either appoint a monitor to review the SBA’s certification of narratives that previously received qualification with rebuttable presumption, to make public the narratives of said businesses 

Until there is a resolution to the motion, Ultima also requests that the court temporarily enjoin defendants from, “Awarding, completing, modifying, or exercising options on any contracts through the Section 8(a) Program to 8(a) participants who received the benefit of the rebuttable presumption (regardless of whether the SBA subsequently approved a “narrative social disadvantage”). A court response to the motion was not found as of date of this publication.

Regardless of the outcome of the motion, further changes to the 8(a) program are likely to occur. At this juncture, it would be of no surprise if all elements of the 8(a) qualification process were reviewed for potential revamp. It is also a wonder if Congress will step in and provide legislation and/or oversight on the issue of social disadvantage associated with any government program, given the recent attention on the matter. Earlier in June, a district court in Texas issued a ruling to three Minority Business Development Agency (MBDA) centers, preventing them from imposing racial and ethnic classifications, and allowing the plaintiffs use of MBDA-provided services.

For now, 8(a) program participants that previously qualified for a rebuttable presumption should continue to write their narratives. Moreover, those interested in applying to the 8(a) program under the social disadvantage status should also anticipate a narrative requirement. As for the fate of the 8(a) program at the SBA, we all must wait and see what may happen.