8(a) Marketing Communications Contracts At Risk?

Historically, 8(a) firms secure hundreds of millions of dollars annually in marketing communications services provided to the federal government. Last week, we saw a ruling from a federal judge that may significantly change the SBA 8(a) program and federal procurement as we know it.

In short, the judge ordered an injunction that prevents the SBA from presuming social disadvantage based on race for program applicants. The immediate implementation of this injunction could be incredibly disruptive to the 8(a) program, although the full implications of the decision are still unclear.

The 8(a) program is designed to aid businesses owned by socially and economically disadvantaged individuals. The program's established rules presume social disadvantage for certain racial and ethnic groups based on historical discrimination, and this presumption has dramatically increased minority-owned businesses’ participation in federal government contracting. The 8(a) program itself will continue, with contracting officers still able to use 8(a) set-asides, and the SBA can continue to accept applications and admit new members. However, removing the presumption of social disadvantage based on race raises significant questions for both current and potential participants of the program.

The court's decision to prohibit this presumption may introduce a new challenge for businesses applying to the program and/or increase the aperture for firms that have not historically been eligible for the program. Although this is too early to say, current participants who have been benefiting from this presumption, could potentially need to provide additional proof of social disadvantage. The court has scheduled a hearing for August 31 to discuss potential additional remedies. It's likely that the SBA will appeal. However, if this goes to the Supreme Court, their recent ruling against affirmative action does not look promising. And for those that say that there is no chance of the Supreme Court striking this down, remember what happened with the VA and Kingdomware. A game changer for how procurement is done within the VA.