The SBA's 8(a) Business Development Program (Congressional Research Service, Updated August 18, 2026)

Summary

This Congressional Research Service report, updated August 18, 2026, gives an overview of the SBA’s 8(a) Business Development Program, which helps socially and economically disadvantaged small business owners take part in federal contracting through set-asides and sole-source contracts. The program was established under Section 8(a) of the Small Business Act in 1978 and also provides mentorship, training and counseling. After a federal district court ruling in July 2023, the SBA stopped presuming social disadvantage based on racial or ethnic group membership and required applicants to submit a personal narrative. The SBA released a proposed rule on June 11, 2026 and a final rule on August 11, 2026 creating a new test for establishing social disadvantage.

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“The SBA's 8(a) Business Development Program (Congressional Research Service, Updated August 18, 2026).” Original at www.congress.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/congressional-research-service-if12458-6-the-sba-s-8-a-business-develo-430339df8f/, SHA-256 6d9c27b42ae14bc097788c6dc0d62dab137ea4cf0e531fb8009d0ba87cc42a9a.

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Updated August 18, 2026
The SBA’s 8(a) Business Development Program
Background Definition of Socially Disadvantaged
Through the 8(a) Business Development Program, Socially disadvantaged individuals have been “subjected to
Congress aims to help small “socially and economically racial or ethnic prejudice or cultural bias because of their
disadvantaged” business owners overcome barriers to identity as a member of a group without regard to their
participating in federal contracting. The program, individual qualities” (15 U.S.C. §637(a)(5)). Prior to a July 2023
established under Section 8(a) of the Small Business Act in ruling in a federal district court case (Ultima Servs. Corp. v. U.S.
1978, gives explicit statutory authority for program Department of Agriculture), the SBA applied a “presumption of
activities previously implemented through regulations. For social disadvantage” to individuals applying for its 8(a) program
eligible businesses, the 8(a) program creates federal from the following groups: Asian Pacific Americans, Black
contracting preferences such as contract set-asides and sole- Americans, Hispanic Americans, Subcontinent Asian
source contracts. Set-asides limit contract competition to Americans, and Native Americans. Due to the district court
businesses in the 8(a) program. Sole-source awards are ruling that the SBA cannot presume social disadvantage based
made to 8(a) firms without competition. This InFocus on ethnic or racial group membership, the SBA stopped
provides an overview of program features and presuming social disadvantage and required program
congressional issues. For a more detailed discussion, see applicants to submit a personal narrative to the SBA that
CRS Report R48190, SBA’s 8(a) Business Development demonstrates their social disadvantage. SBA released
Program: Structure and Current Issues. a proposed rule on June 11, 2026, that would revise the
criteria for individuals (but not entities) to establish social
Agency purchasing officials may choose to award contracts disadvantage, and it released a final rule on August 11, 2026.
under this program in order to reach annual goals for The rule created a new “test by which any individual American
contracting with small, disadvantaged businesses (SDBs), citizen can establish social disadvantage,” by showing that
inclusive of 8(a) firms (see CRS Insight IN12018, Federal
Small Business Contracting Goals). Under the authority of during the citizem’s lifetime, a governmental or
the Small Business Act, the Small Business Administration private entity in the United States ... through any
(SBA) subcontracts to 8(a) program participants on behalf action, policy, rule, regulation, or other practice of
of other federal agencies and may award these contracts any of its agencies, subsidiaries, or authorized agents,
through either a set-aside or a sole-source award, typically discriminated or was biased against a clearly definable
racial, ethnic, or cultural group of which the citizen is
depending on the value of the contract.
a member, or favored in any way a racial, ethnic, or
cultural group of which the citizen is not a member.
In addition to contracting preferences, the program provides
participants with business development support, including The applicant would also need to show that the
mentorship, training, and counseling. These services are “discrimination, bias, or favoritism conferred material harm on
intended to enhance participants’ competitiveness and their the citizen,” by self-certifying “group membership and
long-term viability as businesses. Statutory authority for the individual harm” and providing “evidence of government or
program is contained in Sections 7(j), 8(a), and 8(d) of the private entity discrimination or bias.” As one example, SBA
Small Business Act. cites a business owner’s prior ineligibility for the 8(a)
program's race-based rebuttable presumption (deemed
Definition of Economically Disadvantaged unconstitutional in Ultima Services) as a circumstance an
Economically disadvantaged individuals are defined in statute applicant could use to show discrimination.
as those whose ability to compete in the free enterprise For more information on the SBA’s response to the legal
system has been impaired due to diminished capital and credit challenge, see CRS Insight IN12245, SBA’s 8(a) Business
opportunities (15 U.S.C. §637(a)(6)). SBA considers individuals Development Program Responds to District Court Ruling and CRS
with a net worth of less than $850,000, an adjusted gross Insight IN12698, Proposed SBA Rule Would Establish New Test
income averaged over the three preceding years of $400,000 for Social Disadvantage Under 8(a) Program.
or less, and total assets of $6.5 million or less as economically
disadvantaged. Funds invested in an Individual Retirement Program Details
Account or other official retirement account, ownership
interest in the applicant firm, and the equity in the individual’s Eligibility Requirements
primary personal residence are excluded from net worth Businesses that meet eligibility criteria and obtain 8(a)
calculations. Total assets are the fair market value of all his or program certification may participate in the program for
her assets, including his or her primary residence and the nine years, at which point they are no longer eligible for
value of the applicant firm but excluding qualified retirement contracting preferences. Eligible firms must meet all of the
accounts. following criteria, described at 13 C.F.R. §124:

https://crsreports.congress.gov
The SBA’s 8(a) Business Development Program

1. Are small, according to SBA size contracts to the SBA “in [their] discretion,” and the SBA
standards; may accept them “whenever it determines such action is
2. Have owners and principals of good necessary or appropriate” (15 U.S.C. §637(a)(1)(A)).
character, and no history of violations of
SBA regulations, suspension or When an 8(a) contract’s anticipated value, including
debarment, or submission of false options, is less than $5.5 million (or $8.5 million for
information to the SBA; manufacturing contracts), the contract is typically awarded
on a sole-source basis without competition. When the
3. Demonstrate potential for success, which anticipated value exceeds these thresholds, it generally must
a firm can generally do by operating and be awarded via a set-aside.
receiving contracts in the private or
public sectors, in its primary industry, for
Sole-source awards in excess of the above thresholds may
at least two full years immediately prior
be made only when (1) there is not a reasonable expectation
to applying for the program (although the that at least two eligible and responsible 8(a) firms will
SBA may waive this two-year
submit offers at a fair market price, or (2) the SBA accepts
requirement under certain conditions);
the contract on behalf of certain group-owned firms.
4. Are at least 51% unconditionally and Participant firms owned by ANCs and Indian tribes may
directly owned by socially and receive sole-source awards in excess of the thresholds from
economically disadvantaged individuals any agency, and NHO-owned firms may receive such sole-
who are citizens of the United States (or source awards from the Department of Defense.
owned by an Alaska Native Corporation
[ANC], Native Hawaiian Organization Once they have been awarded more than $168,500,000 in
[NHO], Community Development 8(a) contract awards, participant firms owned by
Corporation [CDC], or Indian tribe). individuals may not receive any additional 8(a) sole-source
awards, though they can still receive set-asides. This
Selected Program Features amount is set forth at 13 C.F.R. §124.519. The SBA will
The SBA also provides various forms of business assistance not count awards less than $350,000 toward this limit.
to program participants. To enhance their ability to manage Firms owned by ANCs, CDCs, NHOs, and Indian tribes are
federal contracts, firms may receive training, individual not subject to this maximum total award amount and may
counseling, and management assistance and executive continue to receive sole-source awards beyond it.
development—all provided through SBA District Office
staff and SBA partners. The Small Business Act also Issues for Congress
authorizes the SBA to provide direct or guaranteed loans to Following recent program eligibility and application
program participants, on its own or with lenders. changes, Congress may be interested in program oversight
and whether agency contracting with SDBs has been
Participants complete a developmental stage in the first four affected by 8(a) program application changes. Program
years and a transitional stage over the last five years. In the participants include more than 3,000 individually-owned
transitional stage, program participants must reach required firms and according to SBA, it received roughly 4,000
annual targets for non-8(a) contract revenue. These targets applications for the program in FY2025.
increase over time, as described at 13 C.F.R. §124.509(b):
15% of their revenue from non-8(a) sources in the fifth Congress may reassess the purpose of the 8(a) program and
year, 25% in the sixth year, 30% in the seventh year, 40% the meaning of “social disadvantage” as it relates to racial
in the eighth year, and 50% in the ninth year. The goal is discrimination. Some Members of Congress have asserted
for firms to successfully compete for federal contracts that the 8(a) program plays a role in remedying racial
without program assistance after completing the program discrimination in the federal contracting. Meanwhile, others
by the ninth year. If the SBA determines that a participant have introduced legislation (H.R. 8511 and S. 4390) that
did not make good faith efforts to meet these targets, the would end contracting preferences for disadvantaged
participant becomes ineligible for sole-source awards. business owners.

A participating business may “graduate” from the program Another issue of recent congressional debate is the status of
by reaching its business development goals; it may exit the group-owned firms within the 8(a) program, although
program after nine or fewer years. Once a participant has unaffected by the recent final rule. Some Members have
left the program, neither the firm nor the owner of that firm raised questions about the policies permitting firms owned
is eligible to participate in the program again. However, if by ANCs, NHOs, and tribes to receive sole-source
ANCs, CDCs, NHOs, and Indian tribes own multiple contracts. Joint venture agreements and mentor-protégé
businesses, these groups may participate more than once via agreements that extend sole-source contract eligibility to
a firm that has not previously participated in the program. non-8(a) participants may also be of interest.

8(a) Contract Award Limitations R. Corinne Blackford, Analyst in Small Business and
The SBA is barred from awarding an 8(a) contract, either
Economic Development Policy
via a set-aside or on a sole-source basis, if the cost to the
contracting agency exceeds “a fair market price” (15 U.S.C. IF12458
§637(a)(1)(A)). Additional prohibitions on the SBA
accepting 8(a) contracts exist, although agencies can offer
https://crsreports.congress.gov
The SBA’s 8(a) Business Development Program

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