Challenges to the 8(a) Program Will Continue

September 30, 2016

D.C. Circuit Upholds Constitutionality of Small Business Administration’s 8(a) Program

Source: The National Law Review, Jennifer L. Plitsch and Terra White Fulham, September 28, 2016U.S. SBA

Earlier this month, in Rothe Development, Inc. v. Department of Defense, the D.C. Circuit upheld the constitutionality of the Small Business Administration (“SBA”) 8(a) program by rejecting arguments that the Small Business Act contains an unconstitutional classification based on race.  Although the decision will likely be seen as a positive development for small business government contractors and other 8(a) program supporters, the court’s opinion leaves the door open for further challenges to the 8(a) program based on the SBA’s implementing regulations.

The goal of the SBA’s 8(a) program is to expand government contracting opportunities to small business owners. Under the Small Business Act, the SBA enters into contracts with other federal agencies, which the SBA then subcontracts to eligible small businesses to compete for subcontracts in a sheltered market.  Businesses owned by “socially and economically disadvantaged” individuals are eligible to participate in the 8(a) program.  Per the statute, socially disadvantaged individuals are those “who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”

The appellant, Rothe Development, Inc., is a small business that bids on Department of Defense (“DoD”) contracts, including the types of subcontracts that SBA may award to socially and economically disadvantaged businesses through the 8(a) program. Rothe alleged that the 8(a) program’s implementing statute contained an unconstitutional racial classification that hindered Rothe’s ability to compete with minority-owned businesses for government contracts…. READ MORE….

Contact your nearest PTAC to learn more about the 8(a) Program and if your business qualifies.


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