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Becoming an 8(a) Contractor Just Got Personal

August 24, 2023

Don Walsh

The Federal Government sponsors a program for emerging contractors called the 8(a) program which allows owners who have suffered “social disadvantages” to obtain unique contract opportunities not available to other contractors.  This includes sole source contracts and procurements with limited competitors. With the recent seismic shift by the Supreme Court away from presumptions of disadvantage based on race or national origin, the SBA’s 8(a) program is going through its own shift and abandoning a presumption of disadvantage if owners were part of certain races or nationalities.

The SBA halted reviews of applications to the program and is seeking statements from each approved 8(a) contractor which demonstrate that its owners are the victims of social disadvantage.  Now each 8(a) contractor’s owner must demonstrate with examples why they believe they were the victim of social disadvantage.  

Writing a narrative to demonstrate social disadvantage is a soul searching effort for many owners who have to recount specific instances where they have been disadvantaged in the past because of their personal characteristics.  The owner is required to provide detailed recounting of where they suffered social disadvantage, corroborate them if possible and will need to demonstrate that this disadvantage was more likely than not the result of their personal characteristics.  

Evidence of individual social disadvantage must include the following elements:

  1. At least one objective distinguishing feature that has contributed to social disadvantage (such as race, ethnic origin, gender, physical handicap, etc.);
  2. Personal experiences of “substantial and chronic disadvantage in American society”; and
  3. Negative impact on entry into or advancement in the business world because of the disadvantage.  

Because the individual needs to have been the victim of “substantial and chronic disadvantage,” it generally means there must be more than one or two specific, significant incidents unless a single incident is so substantial and far-reaching that there can be no doubt.  The incidents identified must be presented in sufficient detail and should include: (1) when and where the incident occurred; (2) who discriminated against the business owner; (3) how the discrimination took place; and (4) how the applicant was adversely affected by the incident.

The regulations provide that SBA will consider “any relevant evidence” in assessing negative impact or entry into the business world, but in every case SBA will consider education, employment and business history, where applicable, to see if the “totality of the circumstances” shows such disadvantage. For example,

  • With respect to education, SBA considers such factors as denial of equal access to institutions of higher education, exclusion from social and professional association with students or teachers, denial of educational honors rightfully earned, and social patterns or pressures which discouraged the individuals from pursuing a professional or business education.  
  • In terms of employment, SBA is to consider unequal treatment in hiring, promotions and other aspects of professional advancement, pay and fringe benefits, and other terms and conditions of employment; retaliatory or discriminatory behavior by an employer; and social patterns or pressures that channeled the individual into non-professional or non-business fields.
  • With respect to business history, SBA considers unequal access to credit or capital, acquisition of credit or capital under commercially unfavorable circumstances, unequal treatment in opportunities for government contracts or other work, unequal treatment by potential customers and business associates, and exclusion from business or professional organizations.

This is no easy task for any business owner.  However, in order to maintain or achieve 8(a) status, it must be undertaken with full view of the interests which are at stake.  The SBA’s limited guidance is provided here. In addition, the SBA’s Office of Hearing Appeals has decisions evaluating social disadvantage which provide examples of past efforts to pursue 8(a) status. Those efforts included specific detailed accounts of discriminatory behavior at school and in the industry as well as letters from allies in the industry who have witnessed the discrimination against the individual or in the industry in general.

The SBA has prioritized that contractors with pending awards or contracts will go first.  As those decisions occur, additional guidance will come forth. If you need assistance in crafting your statement or in reviewing it prior to submission, you can contact RKW at any time.

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