SBA’s 8(a) Business Development Program: Legislative and Program History (R44844, Updated September 16, 2024)
Summary
This Congressional Research Service report, R44844, "SBA's 8(a) Business Development Program: Legislative and Program History," was updated September 16, 2024. It describes the 8(a) program as helping small "socially and economically disadvantaged" business owners compete for federal contracts through set-asides and sole-source contracts, with mentorship, training and counseling. Contracting preferences and business development support are available for a nine-year period, and the SBA notes that 8(a) certification does not guarantee contract awards. The report states the SBA accepts procurements from other agencies and awards them to participants, and that 1978 amendments gave the SBA explicit statutory authority for the program.
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“SBA’s 8(a) Business Development Program: Legislative and Program History (R44844, Updated September 16, 2024).”
Original at www.congress.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/r44844-36-aa148682f1/
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SBA’s 8(a) Business Development Program:
Legislative and Program History
Updated September 16, 2024
Congressional Research Service
https://crsreports.congress.gov
R44844
SBA’s 8(a) Business Development Program: Legislative and Program History
Introduction
Congress has sought to help small “socially and economically disadvantaged” business owners
overcome barriers to participating in federal contracting and compete in the national economy
through the Small Business Administration’s (SBA’s) 8(a) Business Development Program,
commonly known as the “8(a) program.”
For eligible businesses, program participation offers federal contracting preferences such as
federal contract set-asides and sole-source contracts.1 Program participants also receive dedicated
business development support, including mentorship, training, and counseling designed to
enhance the competitiveness of participant businesses and their long-term viability. Contracting
preferences and business development support services are both available for a nine-year period.
However, the SBA notes that “8(a) certification does not guarantee contract awards.”2
Agency purchasing officials choose to award contracts through the program in order to reach
annual goals for contracting with small disadvantaged businesses.3 Under its program authority,
SBA accepts procurements from other federal agencies and awards contracts to 8(a) program
participants on behalf of the procuring agency. Through this agency-to-agency contracting
process, the SBA essentially subcontracts an agency’s requirement to an 8(a) program participant.
Amendments to Section 8(a) of the Small Business Act in 1978 gave the SBA explicit statutory
authority for program activities previously implemented through regulations.4 Since its
authorization, the 8(a) program has become an essential part of federal small business
procurement policy. The Small Business Act indicates “that the opportunity for full participation
in our free enterprise system by socially and economically disadvantaged persons is essential if
we are to obtain social and economic equality for such persons and improve the functioning of
our national economy.”5 To help achieve these goals, the 8(a) program’s stated statutory purposes
are to
(A) promote the business development of small business concerns owned and controlled
by socially and economically disadvantaged individuals so that such concerns can compete
on an equal basis in the American economy;
(B) promote the competitive viability of such concerns in the marketplace by providing
such available contract, financial, technical, and management assistance as may be
necessary; and
(C) clarify and expand the program for the procurement by the United States of articles,
supplies, services, materials, and construction work from small business concerns owned
by socially and economically disadvantaged individuals.6
Program eligibility is generally limited to small businesses that are “unconditionally owned and
controlled by one or more socially and economically disadvantaged individuals who are of good
character and citizens of and residing in the United States” and demonstrate “potential for
1 Set-asides limit contract competition to businesses in the 8(a) program. Sole-source awards are made to selected 8(a)
program participants without competition.
2 https://www.sba.gov/federal-contracting/contracting-assistance-programs/8a-business-development-program
3 For more information on the government’s annual contracting goals, see CRS Insight IN12018, Federal Small
Business Contracting Goals, by R. Corinne Blackford.
4 Statutory authority for the program is contained in Sections 7(j), 8(a), and 8(d) of the Small Business Act.
5 P.L. 85-536, §2(f)(1)(a), 72 Stat. 384 (July 18, 1958) (codified at 15 U.S.C. §631(f)(1)(a)).
6 P.L. 85-536, §2(f)(2)(A-C), 72 Stat. 384 (July 18, 1958) (codified at 15 U.S.C. §631(f)(2)(A-C)).
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SBA’s 8(a) Business Development Program: Legislative and Program History
success.”7 Small businesses owned by certain groups, including Alaska Native Corporations
(ANCs), Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian
Organizations (NHOs) are also eligible for the program under different terms.
This report reviews the origins and evolution of the 8(a) program, including its creation,
eligibility requirements,8 and administration. It explores changes in program eligibility over time,
including the presumption of social disadvantage for business owners who were members of
minority racial and ethnic groups.
Program Origins
The 8(a) program for “disadvantaged” small business contractors is the result of the merger of
federal contracting policies with distinct objectives: those promoting small business contractors in
federal procurement and those focused on preventing discrimination against racial and ethnic
minorities in federal contracting markets. Executive orders in the 1940s sought to end
employment discrimination against African American workers by federal contractors.9 Decades
later, antidiscrimination efforts that were focused on contractors’ employees evolved into
antidiscrimination efforts focused on business owners. Following civic unrest in the late 1960s,
SBA programming sought to support business ownership by African Americans and other
minorities. In 1967, executive action directed federal procurement to contractors willing to hire
workers in areas with high rates of African American unemployment and underemployment.10
That initiative was a precursor to executive branch efforts to promote minority business
ownership during the Nixon Administration and to explicit Congressional authorization of the
8(a) program in 1978.11
Early Programs Promoting Small Business Contractors
In 1942, Congress first authorized a federal agency, the Smaller War Plants Corporation (SWPC),
to enter into prime contracts with other federal agencies in order to subcontract with small
businesses for the performance of these contracts. This arrangement was similar to how SBA
would later enter into prime contracts with other federal agencies for the 8(a) program. The
SWPC was partly created for a contracting purpose, in order to ameliorate small businesses’
financial difficulties. The SWPC was also used as a means of “mobiliz[ing] the productive
facilities of small business in the interest of successful prosecution of the war.”12
The SWPC was abolished at the end of World War II.13 In 1951, at the start of the Korean War,
Congress created the Small Defense Plants Administration (SDPA), with authorities similar to
7 Requirements for program admission are contained in regulations at 13 C.F.R. §124.101.
8 For a summary of program participant requirements, see the Appendix.
9 See Table 1 for summaries of these executive orders.
10
President Lyndon B. Johnson created the President’s Test Cities Program (PTCP) in 1967, wherein the SBA first
used the Small Business Act’s Section 8(a) authority to award direct contracts to firms “agreeing to locate in or near
ghetto areas and to provide jobs for the unemployed and underemployed.” U.S. Government Accountability Office,
Questionable Effectiveness of the 8(a) Procurement Program, GGD-75-57, April 16, 1975, pp. 1-2, at
https://www.gao.gov/products/ggd-75-57.
11 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, 92 Stat. 1757
(October 24, 1978).
12 P.L. 77-603, Small Business Mobilization Act, §4(f), 56 Stat. 351 (June 11, 1942).
13 Executive Order 9665, in 1945, abolished SWPC. Some functions were transferred to successor agencies, including
the now obsolete Reconstruction Finance Corporation. Executive Order 9665, “Transfer of the Functions of the Smaller
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SBA’s 8(a) Business Development Program: Legislative and Program History
those provided to the SWPC.14 Two years later, in 1953, Congress transferred the SDPA’s
authorities, among others, to the newly created SBA15 in order for the SBA to exercise these
powers in times of peace as well as in future times of war.16 When the Small Business Act of
1958 transformed the SBA into a permanent agency, agency-to-agency contracting authority was
included in Section 8(a) of the act.17 At this time, the SBA’s subcontracting authority was not
limited to certain types of small businesses; under the original Section 8(a), the SBA could
contract with any “small-business concerns or others,”18 but it reportedly did not employ this
subcontracting authority, focusing instead upon loan and other programs.19
Policy Addressing Racial and Ethnic Minority Contractors
Executive Orders Related to Employment Discrimination in Federal Contracting
Federal policy addressing racial and ethnic minorities in contracting first focused on employment
discrimination by federal contractors, around the same time that the SWPC was created.
Executive orders created the earliest of these policies, beginning with an order issued by
President Franklin Roosevelt in June 1941, which required defense-related contracts to contain a
provision prohibiting contractors from “discriminat[ing] against any worker because of race,
creed, color, or national origin.”20 In 1943, similar requirements were imposed on non-defense
contractors as well as their subcontractors.21 Subsequent Presidents, from Truman to Nixon,
War Plants Corporation to the Reconstruction Finance Corporation and the Department of Commerce,” 10 Federal
Register 15365, December 28, 1945.
14 P.L. 82-96, An Act to amend and extend the Defense Production Act of 1950 and the Housing and Rent Act of 1947,
as amended, §110, 65 Stat. 131 (July 31, 1951).
15 P.L. 83-163, Reconstruction Finance Corporation Liquidation Act, §207(c)-(d), 67 Stat. 230 (July 30, 1953).
16 See U.S. Congress, House Committee on Banking and Currency, Small Business Act of 1953, report to accompany
H.R. 5141, 83rd Cong., 1st sess., May 28, 1953, H.Rept. 83-494 (Washington: GPO, 1953), p. 2 (stating that the SBA
would “continue many of the functions of the [SDPA] in the present mobilization period and in addition would be
given powers and duties to encourage and assist small-business enterprises in peacetime as well as in any future war or
mobilization period”); and U.S. Congress, Senate Committee on Banking and Currency, Small Business Act, report to
accompany H.R. 7963, 85th Cong., 2nd sess., June 16, 1958, pp. 9, 10 (stating that the act would “put the procurement
assistance program on a peacetime basis”).
17 P.L. 85-536, as amended, §8(a)(1)-(2), 72 Stat. 384 (July 18, 1958).
18 P.L. 85-536, as amended, §8(a)(1)-(2), 72 Stat. 384 (July 18, 1958).
19 Thomas Jefferson Hasty, III, “Minority Business Enterprise Development and the Small Business Administration’s
8(a) Program: Past, Present, and (Is There a) Future?” 145 Military Law Review pp. 1, 8 (Summer 1994). (“[B]ecause
the SBA believed that the efforts to start and operate an 8(a) program would not be worthwhile in terms of developing
small business, the SBA’s power to contract with other government agencies essentially went unused. The program
actually lay dormant for about fifteen years until the racial atmosphere of the 1960s provided the impetus to wrestle the
SBA’s 8(a) authority from its dormant state.”)
20 This order also created a Committee on Fair Employment Practice, to investigate complaints of discrimination in
violation of the order’s provisions. Executive Order No. 8802, “Reaffirming Policy of Full Participation in the Defense
Program by All Persons, Regardless of Race, Creed, Color, or National Origin, and Directing Certain Action in
Furtherance of Said Policy,” 6 Federal Register 3109, June 25, 1941.
The order was a response to grievances, including job discrimination in the defense industry, expressed by A. Philip
Randolph, president of the Brotherhood of Sleeping Car Porters, and other Black leaders, who met with members of the
President’s cabinet; Randolph raised the prospect of protestors marching on Washington DC if executive action was not
taken. “Executive Order 8802: Prohibition of Discrimination in the Defense Industry (1941),” U.S. National Archives
and Records Administration, June 25, 1941, https://www.archives.gov/milestone-documents/executive-order-
8802#transcript.
21 The order required, “All contracting agencies of the Government of the United States shall include in all contracts
hereafter negotiated or renegotiated by them a provision obligating the contractor not to discriminate against any
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SBA’s 8(a) Business Development Program: Legislative and Program History
issued executive orders seeking to improve access to federal contracting opportunities for
minority racial and ethnic groups, albeit through fair employment with federal contractors rather
than through opportunities to win federal contracts. See Table 1 summarizing these orders.
Table 1. Executive Actions to Improve Access to Federal Procurement
Opportunities for Racial and Ethnic Minorities
Executive
Year President Order Order Requirements
1941 Franklin Roosevelt No. 8802 Prohibited racial discrimination against workers by
defense industry contractors (and their subcontractors).
1943 Franklin Roosevelt No. 9346 Prohibited racial discrimination against workers by
contractors in any industry (and their subcontractors).
1951 Truman No. 10308 Addressed compliance with nondiscrimination
requirements for contractors and established the
Committee on Government Contract Compliance.
1954 Eisenhower No. 10557 Revised the nondiscrimination provision required in
federal contracts based on Committee on Government
Contract recommendations.
1961 Kennedy No. 10925 Established the President’s Committee on Equal
Employment Opportunity, required contractors to take
“affirmative action” to ensure employment and equal
treatment of employees regardless of race, and required
contractors (and their subcontractors) to file compliance
reports with contracting agencies.
1965 Lyndon Johnson No. 11246 Required non-discrimination and “equal opportunity”
policies, including by federal contractors and
subcontractors.
1969 Nixon No. 11458 Called on the Department of Commerce, with other
agencies, to promote the establishment and successful
operation of minority business enterprises.
Sources: Executive Order No. 10308, “Improving the Means for Obtaining Compliance with the
Nondiscrimination Provisions of Federal Contracts,” 16 Federal Register 12303, December 3, 1951 (Truman);
Executive Order No. 10557, “Approving the Revised Provision in Government Contracts Relating to
Nondiscrimination in Employment,” 19 Federal Register 5655, September 3, 1954 (Eisenhower); Executive Order
No. 10925, “Establishing the President’s Committee on Equal Employment Opportunity,” 26 Federal Register
1977, March 6, 1961 (Kennedy); Executive Order No. 11246, “Equal Employment Opportunity,” 30 Federal
Register 12319, September 28, 1965 (Johnson); and Executive Order No. 11458, “Prescribing Arrangements for
Developing and Coordinating a National Program for Minority Business Enterprise,” 34 Federal Register 4937,
March 7, 1969 (Nixon).
Use of Section 8(a) Authority to Aid Minority-Owned Contractors
SBA activities under the Johnson and Nixon Administrations laid the foundations for the present-
day 8(a) program. According to some histories of the program, Section 8(a) of the Small Business
Act was “pressed into service as one policy attempt to alter the opportunity structure available to
employee or applicant for employment because of race, creed, color, or national origin and requiring him to include a
similar provision in all subcontracts.” Executive Order No. 9346, “Further Amending Executive Order No. 8802 by
Establishing a New Committee on Fair Employment Practice and Defining Its Powers and Duties,” 8 Federal Register
7183, May 29, 1943 (Roosevelt).
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SBA’s 8(a) Business Development Program: Legislative and Program History
minority group members” because of the “racial unrest and social upheaval” during the mid-
1960s.22
President’s Test Cities Program
In FY1968, the SBA first used its 8(a) authority23 implementing the President’s Test Cities
Program (PTCP), created by President Lyndon Johnson in 1967. PTCP was designed to create
workforce training and job opportunities under the direction of the Departments of Commerce
and Labor, but included use of Section 8(a) authority to award contracts to firms “agreeing to
locate in or near ghetto areas and to provide jobs for the unemployed and underemployed.”24
PTCP program contracts were offered “on a noncompetitive basis” in certain metropolitan areas,
but were not restricted to minority-owned firms.25 The PTCP “did not result in the desired plant
relocations, hiring, and training,” and was phased out in 1968 before Johnson left office.26
Minority Business Enterprise Policies
President Nixon initiated the policy of directing federal contracts to minority-owned firms. In
March 1969, he issued an executive order (No. 11458) that directed a new federal effort to grow
“minority business enterprises.”27 Later that year in a December memorandum to the heads of
federal agencies and departments, Nixon requested certain support for the development of “a
program which will increase the involvement of minority group contractors in the multibillion
dollar Federal procurement program.”28 Nixon also created a Federal Task Force on Procurement,
whose chair helped lead efforts to increase minority business contracting.29
22 Charles E. White, “An Assessment of Public Law 95-507,” (M.S. thesis, Naval Postgraduate School, 1980), p. 21.
23 U.S. Government Accountability Office, Questionable Effectiveness of the 8(a) Procurement Program, GGD-75-57,
April 16, 1975, pp. 1-2, https://www.gao.gov/products/ggd-75-57.
24 U.S. Government Accountability Office (GAO), Questionable Effectiveness of the 8(a) Procurement Program,
GGD-75-57, April 16, 1975, pp. 1-2, https://www.gao.gov/products/ggd-75-57.
25 Thomas Jefferson Hasty, III, “Minority Business Enterprise Development and the Small Business Administration’s
8(a) Program: Past, Present, and (Is There a) Future?” 145 Military Law Review, pp. 11-12. The program was initiated
after civil disturbances in various cities in the summer of 1967 as well as Johnson’s creation of the National Advisory
Commission on Civil Disorders in 1967 (known informally as the “Kerner Commission,” after the Commission’s chair,
Otto Kerner). The Commission produced a report documenting its investigation into the “disorders,” finding that
“segregation and poverty” had created “a destructive environment totally unknown to most White Americans.” Report
of the National Advisory Commission on Civil Disorders (March 1968), p. 1.
26 Thomas Jefferson Hasty, III, “Minority Business Enterprise Development and the Small Business Administration’s
8(a) Program: Past, Present, and (Is There a) Future?,” 145 Military Law Review, p. 12-13.
27 Executive Order No. 11458, “Prescribing Arrangements for Developing and Coordinating a National Program for
Minority Business Enterprise,” 34 Federal Register 4937, March 7, 1969 (Nixon). This order also established the
Office of Minority Business Enterprise, which later became the Minority Business Development Agency. In 1971,
Nixon issued another executive order to coordinate a government-wide effort in support of minority-owned small
businesses (Executive Order No. 11625, “Prescribing Additional Arrangements for Developing and Coordinating a
National Program for Minority Business Enterprise,” 36 Federal Register 19967, October 13, 1971). The order broadly
sought “[t]he opportunity for full participation in our free enterprise system by socially and economically
disadvantaged persons,” and directed the Secretary of Commerce to “implement Federal policy in support of the
minority business enterprise program” and “coordinate the participation of all Federal departments and agencies in an
increased minority enterprise effort.”
28 U.S. President (Nixon), “Memorandum Requesting Support for the Minority Business Enterprise Program,” Public
Papers of the Presidents of the United States (Washington: GPO, 1969), p. 994.
29 The Task Force was chaired by the Administrator of the General Services Administration, Robert L. Kunzig. In June
1970, Mr. Kunzig reported that 90 contracts, without bidding, were “preferentially” awarded to minority businesses,
totaling more than $14 million in fiscal year 1970. Robert A. Wright, “U.S. Tries to Spur Aid to Businesses Run by
Minorities,” New York Times, June 16, 1970.
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SBA’s 8(a) Business Development Program: Legislative and Program History
SBA regulations in 1970 articulated a policy of using Section 8(a) to “assist small concerns
owned by disadvantaged persons to become self-sufficient, viable businesses capable of
competing effectively in the market place.”30 The regulations at that time also used SBA’s
authority under Section 7(j) of the Small Business Act to provide management and technical
assistance to specify that “the SBA may provide technical and management assistance to assist in
the performance of the subcontracts.”31
During the 1970s, agencies began implementing “minority business enterprise” policy. A 1971
Federal Register notice by the Veterans Administration indicated that agencies were channeling
procurement requirements to SBA for subcontracting via Section 8(a) authority.32 That notice
defined a “minority” individual as “(1) Negro or Black, (2) American Indian, (3) Oriental, (4)
Aleut, (5) Eskimo, (6) Mexican American, (7) Puerto Rican, (8) Cuban, or (9) of Central or South
American origin.”33
Later, in 1973, SBA regulations, defined disadvantaged persons as including, but not limited to,
“Black Americans, Spanish Americans, Oriental Americans, Eskimos, and Aleuts.”34 However,
the SBA lacked explicit statutory authority for focusing its 8(a) program on minority-owned
businesses until the Small Business Act was amended in 1978.35
1978 Amendments to the Small Business Act
In 1978, Congress amended the Small Business Act to give the SBA express statutory authority
for its 8(a)-based program, which was referred to the “Minority Small Business and Capital
Ownership Development” program.36 The 1978 amendments permitted the SBA to subcontract
under Section 8(a) authority with “socially and economically disadvantaged small business
concerns,”37 or small businesses that are least 51% owned by one or more socially and
economically disadvantaged individuals and whose management and daily operations are
controlled by such individual(s).38 The amendments also provided the SBA explicit statutory
authority to extend financial, management, technical, and other services to socially and
economically disadvantaged small businesses.39
30 13 C.F.R. §124.8-1(b) (1970).
31 13 C.F.R. §124.8-1(d) (1970).
32 Veterans Administration, “Public Contracts and Property Management,” 36 Federal Register 25099-25100,
December 29, 1971.
33 Veterans Administration, “Public Contracts and Property Management,” 36 Federal Register 25099, December 29,
1971.
34 13 C.F.R. §124.8(c) (1973).
35 U.S. Congress, House Committee on Small Business, Amending the Small Business Act and the Small Business
Investment Act of 1958, report to accompany H.R. 11318, 95th Cong., 2nd sess., March 13, 1978, H.Rept. 95-949
(Washington: GPO, 1978), p. 4 (“Congress has never extended legislative control over the activities of the 8(a)
program, save through indirect appropriations, thereby permitting program operations.… [The] program is not as
successful as it could be.”).
36 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, 92 Stat. 1757
(October 24, 1978).
37 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, §202.
38 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, §202 (codified at 15
U.S.C. §637(a)(4)(A)-(B)). Firms that are owned and controlled by groups such as Indian tribes were later included
within the definition of a “socially and economically disadvantaged small business concern.”
39 P.L. 95-507.
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SBA’s 8(a) Business Development Program: Legislative and Program History
The 1978 amendments were also a key legislative development because they set eligibility
criteria that continues to be scrutinized and contested—namely, which business owners may be
considered “socially and economically disadvantaged.”
Program Eligibility Provisions
Statutory Definition of Social Disadvantage
The definition of socially disadvantaged individuals in the 1978 amendments included 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.”40 The 1978 amendments also
included congressional findings that “Black Americans, Hispanic Americans, Native Americans,
and other minorities” are socially disadvantaged.41 Thus, if an individual was a member of one of
these groups, SBA presumed he or she was socially disadvantaged. Still, Congress indicated that
the amendments were intended to grant the SBA discretion to recognize additional groups or
individuals as socially disadvantaged.42 SBA regulations established a three-part test for
40 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, §202 (codified at 15
U.S.C. §637(a)(5)).
41 P.L. 95-507, To amend the Small Business Act and the Small Business Investment Act of 1958, §202 (codified, as
amended, at 15 U.S.C. §631(f)(1)(C)).
The meaning of socially disadvantaged individuals was the subject of much debate at that time. Some Members of
Congress viewed the 8(a) program as a program for African Americans and would have defined social disadvantage
accordingly. (See Parren J. Mitchell, “Federal Affirmative Action for MBE’s: An Historical Analysis,” National Bar
Association Magazine 46 (1983). Mitchell was a Member of the U.S. House of Representatives and leader of the
Congressional Black Caucus at that time.) Others favored including both African Americans and Native Americans,
arguing that only those who did not come to the United States seeking the “American dream” should be deemed
socially disadvantaged. See U.S. Congress, House Committee on Small Business, Minority Enterprise and General
Oversight, General Review of Major SBA Programs and Activities, 95th Cong., 2nd sess., June 20, 1978, H721-H741
(Washington: GPO, 1978), p. 21. Yet others suggested that groups that are not racial or ethnic minorities, such as
women, should be able to qualify as “socially disadvantaged,” or that individuals ought to be able to prove they are
personally socially disadvantaged even if they are not racial or ethnic minorities. See U.S. Congress, House Committee
on Small Business, Amending the Small Business Act and the Small Business Investment Act of 1958, report to
accompany H.R. 11318, 95th Cong., 2nd sess., March 13, 1978, H.Rept. 95-949 (Washington: GPO, 1978), p. 9.
The House-passed version of the bill defined socially disadvantaged individuals, in part, by establishing a rebuttable
presumption that African Americans and Hispanic Americans are socially disadvantaged, but the Senate-passed bill did
not reference any racial or ethnic groups in defining social disadvantage. See U.S. Congress, House Committee of
Conference, Amending the Small Business Act and the Small Business Investment Act of 1958, report to accompany
H.R. 11318, 95th Cong., 2nd sess., October 4, 1978, H. Rept. 95-1714 (Washington: GPO, 1978), p. 20; and U.S.
Congress, Senate Select Committee on Small Business, Amending the Small Business Act and the Small Business
Investment Act of 1958, 95th Cong., 2nd sess., August 8, 1978, S.Rept. 95-1070 (Washington: GPO, 1978), pp. 13-16.
The conference committee reconciling the House and Senate versions ultimately arrived at a definition of socially
disadvantaged individuals that included “those who have been subjected to racial or ethnic prejudice or cultural bias
because of their identity as a member of a group.” See P.L. 95-507, at §202. The conference committee also included
congressional findings that “Black Americans, Hispanic Americans, Native Americans, and other minorities” are
socially disadvantaged. See P.L. 95-507, at §201.
Congress later added “Asian Pacific Americans” (P.L. 96-302, An original bill to provide authorizations for the Small
Business Administration, and for other purposes), “Indian tribes” (P.L. 99-272, the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Title XVIII—Small Business Programs)), and “Native Hawaiian Organizations” (P.L. 100-
656, the Business Opportunity Development Reform Act of 1988) to the groups whom it finds to be socially
disadvantaged. See 15 U.S.C. §631(f)(1)(C)).
42 P.L. 95-507, at §201 (stating that the groups Congress finds to be socially disadvantaged include, but are not limited
to, those specified here); P.L. 95-507, at §202 (authorizing the award of contracts to socially disadvantaged
individuals); and U.S. Congress, House Committee on Small Business, Amending the Small Business Act and the Small
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SBA’s 8(a) Business Development Program: Legislative and Program History
determining whether groups were disadvantaged.43 These standards were designed for the SBA to
evaluate petitions from representatives of groups seeking inclusion on the list of presumptively
disadvantaged individuals.44
The SBA eventually recognized five racial or ethnic categories as socially disadvantaged for 8(a)
program purposes, including the three identified in the 1978 amendments and two that were
added later and reference countries of origin.45 Table 2 lists these broad categories, along with the
means by which they were added.
Table 2. Groups Presumed to Be Socially Disadvantaged
Countries of Origin Included Within
Group Group Means of Inclusion
Black Americans N/A 1973 SBA regulations;
1978 Small Business Act
amendments (P.L. 95-507).
Hispanic Americans N/A 1973 SBA regulations;
1978 Small Business Act
amendments (P.L. 95-507).
Native Americans N/A 1973 SBA regulations;
(including American 1978 Small Business Act
Indians, Eskimos, amendments (P.L. 95-507).
Aleuts, Native
Hawaiians)
Asian Pacific Burma, Thailand, Malaysia, Indonesia, 1973 SBA regulations;
Americans Singapore, Brunei, Japan, China (including Hong 1979 SBA regulations;
Kong), Taiwan, Laos, Cambodia, Vietnam,
Korea, the Philippines, U.S. Trust Territory of P.L. 96-302;
the Pacific Islands (Republic of Palau), Republic 1989 SBA regulations;
of the Marshall Islands, Federated States of 1989 petition decision.
Micronesia, Commonwealth of the Northern
Mariana Islands, Guam, Samoa, Macao, Fiji,
Tonga, Kiribati, Tuvalu, and Nauru
Subcontinent Asian India, Pakistan, Bangladesh, Sri Lanka, Bhutan, 1982 petition decision;
Americans the Maldives Islands, and Nepal 1982 SBA regulations;
1988 petition decision;
1989 SBA regulations.
Source: CRS, based on 13 C.F.R. §124.103(b); George R. La Noue and John C. Sullivan, “Presumptions for
Preferences: The Small Business Administration’s Decisions on Groups Entitled to Affirmative Action,” Journal of
Policy History, vol. 6, no. 4 (1994), pp. 439-467.
Business Investment Act of 1958, report to accompany H.R. 11318, 95th Cong., 2nd sess., March 13, 1978, H.Rept. 95-
949 (Washington: GPO, 1978), p. 9 (expressing the view that §201 and §202 of the bill provide “sufficient discretion
… to allow SBA to designate any other additional minority group or persons it believes should be afforded the
presumption of social … disadvantage”).
43 13 C.F.R. §124.103(d)(2)(i)-(iii).
44 13 C.F.R. §124.103(d)(2).
45 13 C.F.R. §124.103(b). Per 13 C.F.R. §124.103(b)(1), “[t]here is a rebuttable presumption” of social disadvantage for
the groups in Table 2, but “[b]eing born in a country does not, by itself, suffice to make the birth country an
individual’s country of origin for purposes of being included within a designated group.”
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SBA’s 8(a) Business Development Program: Legislative and Program History
Evolution of the Definition of Social Disadvantage
As described below, socially disadvantaged racial and ethnic groups came to be recognized
between 1973 and 1989. Some groups were included in the 1973 regulations as well as the 1978
statutory authorization of the 8(a) program. Others were added by the 1978 amendments or by
legislation in 1980, and still others were added through petitions to the SBA and SBA regulations.
Asian Americans, although included in the 1973 regulations under the description “Oriental
Americans,” were omitted from 1978 amendments. Following this exclusion and lobbying by
Asian American interest groups, the SBA recognized “Asian Pacific Americans” as socially
disadvantaged. Asian Pacific Americans consisted of individuals from Japan, China, the
Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Trust Territory of the Pacific, the Northern
Marianas, Laos, Cambodia, and Taiwan.46 Legislation in 1980 added Asian Pacific Americans to
the Small Business Act’s list of socially disadvantaged persons.47
In the 1980s, the SBA rejected petitions from some groups, including those from Hasidic Jews,
women, disabled veterans, and Iranian-Americans, and accepted petitions from those representing
Asian Indians,48 Sri Lankans,49 and Indonesians.50 SBA also rejected a petition from Tongan
business leaders in 1986, although Tongans were later added to the category of Asian Pacific
Americans, along with some other Asian Pacific groups, in 1989.51
SBA regulations further established standards of evidence to be met by individuals demonstrating
personal social disadvantage, as well as procedures for rebutting the presumption of social
disadvantage accorded to members of recognized minority groups.52
Today, personal circumstances causing social disadvantage, documented through a personal
narrative to SBA, are the foundation for an individual’s 8(a) program eligibility, as SBA is no
longer permitted to presumed a program applicant’s social disadvantage based on membership in
a disadvantaged social group (see “Response to Federal District Court Ruling in 2023” for further
information).
Definition of Economic Disadvantage
The 1978 amendments also defined economically disadvantaged individuals as “those socially
disadvantaged individuals whose ability to compete in the free enterprise system has been
impaired due to diminished capital and credit opportunities as compared to others in the same
business area who are not socially disadvantaged.”53
In determining the degree of diminished credit and capital opportunities, Section 8(a)(6)(A) of the
Small Business Act authorizes the SBA to “consider, but not be limited to, the assets and net
worth of such socially disadvantaged individual.”
46 George R. La Noue and John C. Sullivan, “Presumptions for Preferences: The Small Business Administration’s
Decisions on Groups Entitled to Affirmative Action,” Journal of Policy History, vol. 6, no. 4 (1994), p. 444.
47 Sec. 118 of P.L. 96-302.
48 The first petition on behalf of Asian Indians was rejected in 1981, while the second was accepted in 1982. La Noue
and Sullivan, pp. 451-452.
49 La Noue and Sullivan, pp. 455-456.
50 La Noue and Sullivan, p. 459.
51 La Noue and Sullivan, pp. 453-454.
52 13 C.F.R. §124.103(c)(2) (standards of evidence for showing personal disadvantage); and 13 C.F.R. §124.103(b)(3)
(mechanisms for overcoming the presumption of social disadvantage).
53 P.L. 95-507, at §202.
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SBA’s 8(a) Business Development Program: Legislative and Program History
Initially, the SBA determined economic disadvantage by examining:
• the applicant’s personal financial condition (including their personal net worth,
personal income for at least the past two years, and the total fair market value of
their assets);
• the applicant’s access to credit and capital;
• the business’s financial condition; and
• the business’s access to credit, capital, and markets.54
In 1989, the SBA announced in the Federal Register that 8(a) program applicants needed a
personal net worth of less than $250,000 (excluding ownership in the 8(a) firm and equity in his
or her primary residence) at the time of entry into the program, and less than $750,000 for
continuing eligibility to remain in the program.55 Objective monetary thresholds for personal
income and total assets appeared in regulations more than 20 years later. See “Additional Select
Program Changes” for further discussion of economic disadvantage criteria.
Small businesses owned by certain 8(a)-eligible organizations are subject to slightly different
standards for economic disadvantage. See “Program Expansion to Include Group-Owned Firms”
for information on the program participation of firms owned by Community Development
Corporations (CDCs), Indian tribes, Alaska Native Corporations (ANCs), and Native Hawaiian
Organizations (NHOs).
Program Expansion to Include Group-Owned Firms
Although the 8(a) program was originally established for the benefit of small businesses owned
by disadvantaged individuals, in the 1980s, Congress expanded the program to include entity-
owned small businesses, owned by disadvantaged groups.
The first type of entity made eligible was a Community Development Corporation (CDC). A
CDC is
a nonprofit organization responsible to residents of the area it serves which is receiving
financial assistance under part A of this subchapter [42 U.S.C. §§9805 et seq.] and any
organization more than 50 percent of which is owned by such an organization, or otherwise
controlled by such an organization, or designated by such an organization for the purpose
of this subchapter [42 U.S.C. §§9801 et seq.].56
Congress created CDCs through the Community Economic Development Act of 1981 and
instructed the SBA to issue regulations ensuring that CDCs could participate in the 8(a)
program.57
54 SBA, “Minority Small Business and Capital Ownership Development Program: Final Rule,” 54 Federal Register
34719, August 21, 1989.
55 SBA, “Minority Small Business and Capital Ownership Development Program: Final Rule,” 54 Federal Register
34696, August 21, 1989 (codified, as amended, at 13 C.F.R. §124.104(c)). Some commentators have estimated that
80% to 90% of Americans are economically disadvantaged under the SBA’s net-worth requirements. See La Noue and
Sullivan, “Gross Presumptions: Determining Group Eligibility for Federal Procurement Preferences,” 41 Santa Clara
Law Review, p. 108.
56 42 U.S.C. §9802.
57 P.L. 97-35, Omnibus Budget Reconciliation Act of 1981, Ch. 8, Subchapter A, 95 Stat. 489 (August 13, 1981)
(codified at 42 U.S.C. §§9801 et seq.); and P.L. 97-35, Omnibus Budget Reconciliation Act of 1981, at §626, 95 Stat.
496 (codified at 42 U.S.C. §9815(a)(2)). (“Not later than 90 days after August 13, 1981, the Administrator of the Small
(continued...)
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In 1986, two additional owner-groups, Indian tribes and Alaska Native Corporations (ANCs),
became eligible for the 8(a) program when Congress passed legislation providing that they were
socially disadvantaged for 8(a) program purposes.58 In 1992, Congress passed legislation that
deemed ANCs “economically disadvantaged.”59
The final owner-group, Native Hawaiian Organizations (NHOs), was made eligible for the
program by legislation enacted in 1988.60 An NHO is defined as
any community service organization serving Native Hawaiians in the State of Hawaii
which (A) is a nonprofit corporation that has filed articles of incorporation with the director
(or the designee thereof) of the Hawaii Department of Commerce and Consumer Affairs,
or any successor agency, (B) is controlled by Native Hawaiians, and (C) whose business
activities will principally benefit such Native Hawaiians.61
Small businesses owned by these four entities participate in the 8(a) program under somewhat
different terms than small businesses owned by individuals. For example, these group-owned
entities may receive sole-source contract awards beyond the sole-source award limit imposed on
individually-owned 8(a) program participants ($4.5 million and $7 million for manufacturing
contracts). The Appendix also provides a table summarizing program requirements for different
types of 8(a) firms.
Additional Select Program Changes
Additional developments impacting the 8(a) program in the 1980s and beyond included the
program’s name change, the introduction of objective monetary thresholds to assess economic
disadvantage, and a consolidation of SBA business mentoring programs. Each of these
developments is discussed below.
Also of note is a Reagan Administration proposal to abolish the SBA and transfer some of its
programming, including “minority business support activities” involving “set-aside contracts for
minority and disadvantaged small businesses,” into the Department of Commerce.62 Although the
proposal was reported to be moving forward in 1985, a lack of congressional support for it led to
the end of the White House’s “campaign” to eliminate SBA as an agency.63
Program Name Change
The Clinton Administration changed the program’s name from the Minority Small Business and
Capital Ownership Development Program to the 8(a) Business Development Program in 1998 “to
Business Administration, after consultation with the Secretary, shall promulgate regulations to ensure the availability to
community development corporations of such programs as shall further the purposes of this subchapter, including
programs under §637(a) of title 15.”)
58 P.L. 99-272, Consolidated Omnibus Budget Reconciliation Act of 1985, §18015, 100 Stat. 370 (April 7, 1986)
(codified at 15 U.S.C. §637(a)(13) and 15 U.S.C. §637(a)(4)).
59 P.L. 102-415, Alaska Land Status Technical Corrections Act of 1992, §10, 106 Stat. 2115 (October 14, 1992)
(codified at 43 U.S.C. §1626(e)). ANCs do not have to prove their economic disadvantage (13 C.F.R. §124.109(a)(4)).
60 P.L. 100-656, Business Opportunity Development Reform Act of 1988, at §207, 102 Stat. 3861 (November 15, 1988)
(codified at 15 U.S.C. §637(a)(4)).
61 P.L. 100-656, Business Opportunity Development Reform Act of 1988, at §207 (codified at 15 U.S.C. §637(a)(15)).
A Native Hawaiian is “any individual whose ancestors were natives, prior to 1778, of the area which now comprises
the State of Hawaii” (codified at 13 C.F.R. §124.3).
62 Myron Struck, “Inside: the SBA,” Washington Post, January 9, 1985, p. A19.
63 Nathaniel C. Nash, “Campaign to Kill S.B.A. Is Scrapped” New York Times, August 28, 1986, p. D1.
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SBA’s 8(a) Business Development Program: Legislative and Program History
emphasize that individuals need not be members of minority groups and to stress the importance
of assisting participating firms in their overall business development.”64
Financial Thresholds for Economically Disadvantaged Status
The SBA has a three-part test for determining economic disadvantage, related to the applicant’s
net worth, personal income, and total assets. The agency began transitioning to the use of
objective monetary thresholds to assess these three personal financial characteristics in 1989. At
that time, SBA regulations required that the applicant’s personal net worth had to be less than
$250,000 at the time of entry into the program and less than $750,000 for continuing eligibility.65
Objective monetary thresholds for personal income and total assets were not added until 2011.66
SBA then adjusted the thresholds again in 2020 and 2022.67 Table 3 summarizes the threshold
changes over time.
Table 3. Thresholds for Qualifying as Economically Disadvantaged
Financial Characteristics of Economic Disadvantage over Time
Financial 1989 2011 2020 2022
Characteristic Threshold Threshold Threshold Threshold
Personal Net Worth $250,000 at No change $750,000 at $850,000 at
time of program time of program time of program
application; application and application and
$750,000 for for continuing for continuing
continuing eligibility eligibility
eligibility
Average Personal N/A $250,000 at $350,000 at $400,000 at
Income (over a time of program time of program time of program
three-year period) application; application and application and
$350,000 for for continuing for continuing
continuing eligibility eligibility
eligibility
Value of Total Assets N/A $4 million at $6 million at $6.5 million at
time of program time of program time of program
application; $6 application and application and
million for for continuing for continuing
continuing eligibility eligibility
eligibility
Source: SBA, “Minority Small Business and Capital Ownership Development Program: Final Rule,” 54 Federal
Register 34692, August 21, 1989; SBA, “Small Business Size Regulations; 8(a) Business Development/Small
Disadvantaged Business Status Determinations,” 76 Federal Register 8229-8231, February 11, 2011; SBA,
64 SBA, “Small Business Size Regulations: 8(a) Business Development/Small Disadvantaged Business Status
Determinations; Rules of Procedure Governing Cases Before the Office of Hearings and Appeals,” 63 Federal
Register 35727, June 30, 1998.
65 SBA, “Minority Small Business and Capital Ownership Development Program: Final Rule,” 54 Federal Register
34692, August 21, 1989.
66 SBA announced “objective standards by which an individual can qualify as economically disadvantaged based on his
or her income and total assets.” See SBA, “Small Business Size Regulations; 8(a) Business Development/Small
Disadvantaged Business Status Determinations,” 76 Federal Register 8229-8231, February 11, 2011.
67 SBA, “Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business
Certification,” 85 Federal Register 27650-27665, May 11, 2020; and SBA “Small Business Size Standards:
Adjustment of Monetary-Based Size Standards, Disadvantage Thresholds, and 8(a) Eligibility Thresholds for
Inflation,” 87 Federal Register 69118-69154, November 17, 2022.
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“Women-Owned Small Business and Economically Disadvantaged Women-Owned Small Business Certification,”
85 Federal Register 27650-27665, May 11, 2020.
Notes: In 2011, SBA issued regulations that specified that the net worth and the fair market value of a program
applicant’s assets may exclude funds invested in an official retirement account that are unavailable to the
applicant without a significant penalty. In 2020, SBA issued regulations that specified that total assets included an
applicant’s primary residence and the value of the applicant/program participant firm.
Mentor-Protégé Program
In 1998, the SBA established the 8(a) Mentor-Protégé Program to “enhance the capabilities” of
8(a) firms and “improve [their] ability to successfully compete for contracts.”68 The program,
which merged with the SBA’s All Small Mentor-Protégé Program in 2020, provided various
forms of assistance, including technical or management training, subcontracts, financial
assistance in the form of equity investments or loans, and assistance in performing prime
contracts with the federal government through joint venture agreements.69 The All Small Mentor-
Protégé Program’s requirements and benefits were essentially identical to those that were in place
for the 8(a) Mentor-Protégé Program. The major difference was that the All Small Mentor-
Protégé Program was available to all small businesses, whereas the 8(a) Mentor-Protégé Program
was limited to firms participating in the 8(a) program. The SBA merged the programs in an effort
to streamline program processes and functions.70
SBA regulations govern various aspects of the Mentor-Protégé Program, including who may
qualify as a mentor or protégé, the content of written agreements between mentors and protégés,
and the SBA’s evaluation of the mentor-protégé relationship. For example, a protégé must have
industry experience and propose a mentor prior to applying for the program, while a mentor must
demonstrate its capabilities for assisting the protégé and have no more than three protégés at a
time.71
The SBA must determine that the mentor-provided assistance will promote real developmental
gains for the protégé and not be merely a vehicle to receive federal small business set-asides and
sole-source contracts.72 However, mentors may benefit from the program in that they may form
joint ventures with their protégés that qualify for small business set-aside contracts for which a
protégé small business is eligible, including contracts set aside for 8(a) program participants.73
Response to Federal District Court Ruling in 2023
In a July 2023 district court case, Ultima Servs. Corp. v. U.S. Department of Agriculture, the U.S.
District Court for the Eastern District of Tennessee enjoined SBA from presuming the social
68 SBA, “Small Business Size Regulations; 8(a) Business Development/Small Disadvantaged Business Status
Determinations; Rules of Procedure Governing Cases Before the Office of Hearings and Appeals: Final Rule,” 63
Federal Register 35739, June 30, 1998.
69 13 C.F.R. §124.520(a). See also GAO, Small Business: SBA Could Better Focus Its 8(a) Program to Help Firms
Obtain Contracts, GAO/RCED-00-196, July 20, 2000, p. 14, at http://www.gao.gov/new.items/rc00196.pdf; and SBA,
“Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments,” 85 Federal Register
66146-66199, October 16, 2020.
70 SBA, “Consolidation of Mentor-Protégé Programs and Other Government Contracting Amendments,” 84 Federal
Register 60846, November 8, 2019; and SBA, “Consolidation of Mentor-Protégé Programs and Other Government
Contracting Amendments,” 85 Federal Register 66146-66199, October 16, 2020.
71 13 C.F.R. §125.9.
72 SBA, “SBA Mentor-Protégé Program,” https://www.sba.gov/federal-contracting/contracting-assistance-programs/
sba-mentor-protege-program.
73 13 C.F.R. §125.9; and SBA, “SBA Mentor-Protégé Program.”
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disadvantage of program applicants.74 The district court found the SBA 8(a) program’s
presumption of social disadvantage for certain program applicants to be unconstitutional. Prior to
the ruling, the SBA applied a “presumption of social disadvantage” to individuals applying for its
8(a) program from the following groups, per legislation and agency regulations: Asian Pacific
Americans, Black Americans, Hispanic Americans, Subcontinent Asian Americans, and Native
Americans.75 Applicants had been required to attest to membership in one of these groups or
provide a personal narrative to the SBA if they did not belong to one of the groups.76 All
individuals were required to submit evidence documenting their economic disadvantage to the
SBA.77 Unchanged since the ruling is that although program participants recertify their economic
disadvantage annually, they establish their social disadvantage once.78
In response to the ruling, the SBA temporarily suspended new 8(a) program applications, issued
guidance for program participants, and reopened the program to applicants on September 29,
2023.79 In addition, program participants who previously relied on the presumption of social
disadvantage for program eligibility were required to submit a personal narrative about their
social disadvantage to SBA.80 Before the ruling, this procedure was required for individuals who
were not members of one of the racial groups identified in SBA regulations as socially
disadvantaged.81 Program participants were also advised to continue to submit their annual review
and continuing eligibility materials to SBA.
To assist program participants and applicants, the SBA provided resources, including a webinar
and a writing guide on how to prepare a “social disadvantage narrative” for submission to the
SBA.82 According to SBA guidelines, the “key elements” of a narrative include (1) a description
of a program participant’s identity or characteristics and “how [they] have been subject to
discrimination,” and (2) descriptions of two “incidents of bias” that demonstrate “chronic and
substantial social disadvantage.” SBA notes that these incidents “should be related to education,
employment, and business history.”83
Concluding Remarks
While earlier federal efforts addressing discrimination against minorities in federal contracting
can be found in executive orders focused on the employment policies of federal contractors, it
74 Ultima Servs. Corp. v. U.S. Dept of Agric., et al. (United States District Court, E.D. Tennessee, Greeneville Division
2023).
75 13 C.F.R. §124.103(b). See “Statutory Definition of Social Disadvantage” and “Evolution of the Definition of Social
Disadvantage” for discussion of the origins of this presumption.
76 13 C.F.R. §124.103(b)-(c).
77 13 C.F.R. §124.104.
78 13 C.F.R. §124.112(b).
79 SBA, “Updates on the 8(a) Business Development Program,” September 18, 2023, https://www.sba.gov/federal-
contracting/contracting-assistance-programs/8a-business-development-program/updates-8a-business-development-
program#id-guidance-and-faqs-for-current-a-participants.
80 These participants received a direct communication from SBA in August 2023 that detailed the process for
establishing social disadvantage through a social disadvantage narrative. Program participants who did not submit a
social disadvantage narrative to reestablish eligibility were to be suspended from the 8(a) program on November 15,
2023. Ibid. CRS did not assess such SBA action, post-November 15, 2023.
81 Ibid.
82 Ibid. The writing guide remains available, at https://sbaone.atlassian.net/wiki/spaces/CKB/pages/2768076819/
Guide+for+Demonstrating+Social+Disadvantage.
83 SBA, Guide for Demonstrating Social Disadvantage, at https://sbaone.atlassian.net/wiki/spaces/CKB/pages/
2768076819/Guide+for+Demonstrating+Social+Disadvantage.
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was not until the end of the Lyndon Johnson Administration in 1968 that Section 8(a) of the Small
Business Act was used and it was not until the Nixon Administration in the 1970s that it was used
to support minority-owned federal contractors. The policy of encouraging contracts with
minority-owned small businesses initiated through executive programming was congressionally
authorized in 1978, after which SBA regulatory actions created detailed criteria for determining
when individuals may be considered socially and economically disadvantaged.
The 2023 federal district court decision that enjoined SBA from presuming an individual’s social
disadvantage based on membership in a disadvantaged social group upended almost 30 years of
agency practices. Nevertheless, the SBA adapted its program application procedures and has
continued to administer 8(a) functions, including recertifying existing program participants to
comply with the district court ruling.
The SBA’s “408 Report” provides Congress with an annual update on the 8(a) program’s impacts
on disadvantaged business owners and the national economy.84 The report includes data on
program participants as well as an estimate of the costs and benefits of the program for the
government and economy.85 The most recent report, for FY2023, indicates that “5,273 firms
participated in the 8(a) BD Program and provided employment for more than 171,600 people.” It
further notes that 8(a) contracts may have added approximately $35-$40 billion to the national
gross domestic product (GDP).86
Academic literature provides additional assessments of the effectiveness of the 8(a) program. One
investigation of “preferential procurement programs,” including federal initiatives, concluded that
they “have been highly successful” with respect to removing barriers to Black entrepreneurship.87
Still, the author argued that federal efforts such as the Department of Transportation’s
Disadvantaged Business Enterprise Program88 have been “[m]ore important than 8(a).”89 Also of
significance in the literature are the numerous state and local government procurement programs,
to some extent spurred by and modeled after federal policies, and which find both supporters and
detractors among researchers.90
84 The report was required by the Business Opportunity Development Reform Act of 1988 (P.L. 100-656), codified at
15 U.S.C. §636(j)(16). It was first required for FY1990. The aim of the report is to “determine and quantify” program
impacts.
85 SBA, “Report to the U.S. Congress on Minority Small Business and Capital Ownership Development,”
https://www.sba.gov/document/report-408-report-us-congress-minority-small-business-capital-ownership-
development; and SBA Office of Government Contracting and Business Development, 8(a) Business Development
Program FY2023 408 Report to the Congress.
86 SBA Office of Government Contracting and Business Development, 8(a) Business Development Program FY2023
408 Report to the Congress, pp. 16-20. The estimate used “a fiscal multiplier approach ... to determine how much total
spending occurs as a result of each additional dollar of Federal spending,” and relies on multipliers specific to 8(a) set-
aside contracting dollars, developed with FY2021 data.
87
Timothy Bates, “Contested Terrain: The Role of Preferential Policies in Opening Government and Corporate
Procurement Markets to Black-Owned Businesses,” Du Bois Review, vol. 12, no. 1 (2015), p. 137.
88 The Department of Transportation Disadvantaged Business Enterprise (DBE) program is designed to prevent
discrimination against DBEs by providing them equal opportunity to compete for federally funded transportation
contracts. For more information on the program, see CRS In Focus IF12055, The U.S. DOT Disadvantaged Business
Enterprise Program, by R. Corinne Blackford.
89 Bates, p. 139.
90 For further discussion, see Timothy Bates, “Contested Terrain: The Role of Preferential Policies in Opening
Government and Corporate Procurement Markets to Black-Owned Businesses,” Du Bois Review, vol. 12, no. 1 (2015);
and George R. La Noue and John Sullivan, “But for Discrimination: How Many Minority Owned-Businesses Would
There Be?” Columbia Human Rights Law Review, vol. 24, no. 1 (Winter 1992-1993).
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SBA’s 8(a) Business Development Program: Legislative and Program History
Congress has directly heard viewpoints on program benefits and challenges from the testimony of
hearing witnesses. In a March 2022 hearing before the House Committee on Small Business
Subcommittee on Contracting and Infrastructure, witnesses included business owners who had
participated in the 8(a) program.91 These owners remarked on the importance of the program for
the growth of their firms and offered suggestions for program improvements, including those
related to program technical assistance and the oversight of joint-venture arrangements.92
91 U.S. Congress, House Small Business, Subcommittee on Contracting and Infrastructure, The 8(a) Program:
Overview and Next Steps to Promote Small Business Success, 117th Cong., 2nd sess., March 2, 2022.
92 Testimony of Arshdeep Khurana, President & CEO of AVOSYS Technology, in U.S. Congress, House Small
Business, Subcommittee on Contracting and Infrastructure, The 8(a) Program: Overview and Next Steps to Promote
Small Business Success, 117th Cong., 2nd sess., March 2, 2022; Testimony of Qin Li, President of Soliel LLC, in U.S.
Congress, House Small Business, Subcommittee on Contracting and Infrastructure, The 8(a) Program: Overview and
Next Steps to Promote Small Business Success, 117th Cong., 2nd sess., March 2, 2022.
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SBA’s 8(a) Business Development Program: Legislative and Program History
Appendix. Summary of Program Participant
Requirements
Table A-1. Requirements for Different Types of 8(a) Firms
8(a) Firms
Category Generally Tribally Owned ANC-Owned NHO-Owned CDC-Owned
“Small” Independently Independently Independently Independently Independently
owned and owned and owned and owned and owned and
operated; not operated; not operated; not operated; not operated; not
dominant in field dominant in field dominant in field dominant in field dominant in field
of operation; of operation; of operation; of operation; of operation;
meets size meets size meets size meets size meets size
standards (15 standards (15 standards (15 standards (15 standards (15
U.S.C. §631(a)). U.S.C. §631(a)). U.S.C. §631(a)). U.S.C. §631(a)). U.S.C. §631(a)).
All affiliations Affiliations based Affiliations based Affiliations based Affiliations based
count (13 C.F.R. on the tribe or on the ANC or on the NHO or on the CDC or
§121.103). tribal ownership, ownership by the ownership by the ownership by the
among others, do ANC, among NHO, among CDC, among
not count (15 others, do not others, do not others, do not
U.S.C. count (15 U.S.C. count (15 U.S.C. count (15 U.S.C.
§636(j)(10)(J)(ii); §636(j)(10)(J)(ii); §636(j)(10)(J)(ii); §636(j)(10)(J)(ii);
13 C.F.R. 13 C.F.R. 13 C.F.R. 13 C.F.R.
§124.109(c)(2)). §124.109(c)(2)). §124.110(c)). §124.111(c)).
“Business” For-profit entity For-profit entity For-profit entity For-profit entity For-profit entity
with its place of with its place of with its place of with its place of with its place of
business in the business in the business in the business in the business in the
United States; United States; United States; United States; United States;
operates operates operates operates operates
primarily within primarily within primarily within primarily within primarily within
the United States the United States the United States the United States the United States
or makes a or makes a or makes a or makes a or makes a
significant significant significant significant significant
contribution to contribution to contribution to contribution to contribution to
the U.S. economy the U.S. economy the U.S. economy the U.S. economy the U.S. economy
(13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R.
§121.105(a) §121.105(a)(1)). §121.105(a)(1)). §121.105(a)(1)). §121.105(a)(1)).
(1)). Although an
ANC may be
nonprofit, ANC-
owned firms
must be for-
profit to be
eligible for 8(a)
Program (13
C.F.R.
§124.109(a)(3)).
“Unconditionally At least 51% At least 51% At least 51% At least 51% At least 51%
owned and unconditionally tribally owned ANC-owned (13 NHO-owned (13 CDC-owned (13
controlled” and directly (13 C.F.R. C.F.R. C.F.R. C.F.R.
owned by one or §124.109(b)). §124.109(a)(3)). §124.110(a)). §124.111(a)).
more Management may Management may NHO must Management and
disadvantaged be conducted by be conducted by control the board daily business
individuals who individuals who individuals who of directors, but operations to be
are U.S. citizens are not members are not Alaska individuals who conducted by
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SBA’s 8(a) Business Development Program: Legislative and Program History
8(a) Firms
Category Generally Tribally Owned ANC-Owned NHO-Owned CDC-Owned
(13 C.F.R. of the tribe, Natives, provided are responsible individuals having
§124.105). provided that the that the SBA for day-to-day managerial
Management and SBA determines determines that management experience of an
daily business that such such management need not extent and
operations must management is is necessary to establish personal complexity
be conducted by necessary to assist the social and needed to run
one or more assist the business’s economic the firm (13
disadvantaged business’s development, disadvantage (13 C.F.R.
individuals (13 development, among other C.F.R. §124.111(b)).
C.F.R. §124.106). among other things (13 C.F.R. §124.110(d)).
things (13 C.F.R. §124.109(c)(4)(B)
§124.109(c)(4)(B) ).
).
“Socially Individuals may Indian tribes ANCs presumed NHOs presumed CDCs presumed
disadvantaged prove personal presumed to be to be socially to be socially to be socially
individual” social socially disadvantaged (43 disadvantaged (43 disadvantaged (42
disadvantage by a disadvantaged (43 U.S.C. §1626(e); U.S.C. §1626(e); U.S.C.
preponderance of U.S.C. §1626(e); 15 U.S.C. 15 U.S.C. §9815(a)(2)).
the evidence (13 15 U.S.C. §637(a)(4)(A)-(B); §637(a)(4)(A)-(B);
C.F.R. §124.103). §637(a)(4)(A)-(B); 13 C.F.R. 13 C.F.R.
13 C.F.R. §124.109(b)(1)). §124.109(b)
§124.109(b)(1)). (1)).
“Economically Financial Tribe must prove Deemed to be NHO must prove CDCs presumed
disadvantaged information (e.g., economic economically economic to be
individual” personal income, disadvantage the disadvantaged (43 disadvantage the economically
personal net first time a U.S.C. §1626(e); first time an disadvantaged (42
worth, fair tribally owned 13 C.F.R. NHO-owned U.S.C.
market value of firm applies to §124.109(a)(2)). firm applies to §9815(a)(2)).
assets) must the 8(a) Program; the 8(a) Program;
show diminished thereafter, a tribe thereafter, an
financial capital need only prove NHO need only
and credit economic prove economic
opportunities (13 disadvantage at disadvantage at
C.F.R. §124.104). the request of the request of
the SBA (13 the SBA
C.F.R. (13 C.F.R.
§124.109(b)(2)). §124.110(c).
Congressional Research Service 18
SBA’s 8(a) Business Development Program: Legislative and Program History
8(a) Firms
Category Generally Tribally Owned ANC-Owned NHO-Owned CDC-Owned
“Good Criminal conduct Criminal conduct Criminal conduct Criminal conduct Criminal conduct
character” or violations of or violations of or violations of or violations of or violations of
SBA regulations SBA regulations SBA regulations SBA regulations SBA regulations
may result in may result in may result in may result in may result in
denial of denial of denial of denial of denial of
participation; participation; participation; participation; participation;
cannot be cannot be cannot be cannot be cannot be
debarred or debarred or debarred or debarred or debarred or
suspended from suspended from suspended from suspended from suspended from
government government government government government
contracting (13 contracting (13 contracting (13 contracting (13 contracting (13
C.F.R. C.F.R. C.F.R. C.F.R. C.F.R.
§124.108(a)). §124.108(a)). §124.108(a)). §124.108(a)). §124.108(a)).
Requirement Requirement Regulations do Requirements
applies only to applies only to not address to apply to the firm
officers, officers, whom and “all its
directors, and directors, and requirements principals” (13
shareholders shareholders apply (13 C.F.R. C.F.R.
owning more owning more §124.110).a §124.111(g)).
than a 20% than a 20%
interest in the interest in the
business, not to business, not to
all members of all ANC
the tribe (13 shareholders (13
C.F.R. C.F.R.
§124.109(c)(7)(B) §124.109(c)(7)(B)
(ii)). (ii)).
“Demonstrated Firm must Firm must have Firm must have Firm must have Firm must have
potential for generally have been in business been in business been in business been in business
success” been in business in primary in primary in primary in primary
in primary industry for at industry for at industry for at industry for at
industry for at least two full least two full least two full least two full
least two full years prior to years prior to years prior to years prior to
years prior to date of date of date of date of
date of application to application to application to application to
application to 8(a) Program; 8(a) Program; 8(a) Program; 8(a) Program;
8(a) Program individuals who individuals who individuals who individuals who
unless SBA grants will manage the will manage the will manage the will manage the
a waiver; waiver firm must have firm must have firm must have firm must have
is based on five substantial substantial substantial substantial
conditionsb (13 experience, and experience, and experience, and experience, and
C.F.R. §124.107). firm must have firm must have firm must have firm must have
had successful had successful had successful had successful
performance and performance and performance and performance and
adequate capital; adequate capital; adequate capital; adequate capital;
or tribe must or ANC must or NHO must or CDC must
have made have made have made have made
written written written written
commitment to commitment to commitment to commitment to
support the firm support the firm support the firm support the firm
and have the and have the and have the and have the
financial ability to financial ability to financial ability to financial ability to
do so do so do so do so
(13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R.
§124.109(c)(6)(i)- §124.109(c)(6)(i)- §124.110 (g)(1)- §124.111 (f)(1)-
(iii). (iii). (3). (3).
Congressional Research Service 19
SBA’s 8(a) Business Development Program: Legislative and Program History
8(a) Firms
Category Generally Tribally Owned ANC-Owned NHO-Owned CDC-Owned
Sole-source With contracts Can be made Can be made Can be made With contracts
awards valued at over with contracts with contracts with Department valued at over
$4.5 million ($7 valued at over valued at over of Defense $4.5 million ($7
million for $4.5 million ($7 $4.5 million ($7 contracts valued million for
manufacturing million for million for at over $4.5 manufacturing
contracts), sole- manufacturing manufacturing million ($7 contracts), sole-
source awards contracts), even contracts), even million for source awards
permissible only if there is a if there is a manufacturing permissible only
if there is not a reasonable reasonable contracts), even if there is not a
reasonable expectation that expectation that if there is a reasonable
expectation that at least two at least two reasonable expectation that
at least two eligible 8(a) firms eligible 8(a) firms expectation that at least two
eligible 8(a) firms will submit offers will submit offers at least two eligible 8(a) firms
will submit offers and the award and the award eligible 8(a) firms will submit offers
and the award can be made at a can be made at a will submit offers and the award
can be made at a fair market price fair market price and the award can be made at a
fair market price (15 U.S.C. (15 U.S.C. can be made at a fair market price
(48 C.F.R. §637(a)(1)(D)(i)- §637(a)(1)(D)(i)- fair market price (48 C.F.R.
§19.805-1(b)(1)- (ii); 48 C.F.R. (ii); 48 C.F.R. (48 C.F.R. §19.805-1(b)(1)-
(2)). §19.805-1(b)(1)- §19.805-1(b)(1)- §219.805- (2)).
(2)). (2)). 1(b)(2)(A)-(B)).
Otherwise,
cannot be made
unless there is
not a reasonable
expectation that
at least two
eligible 8(a) firms
will submit offers
and the award
can be made at a
fair market price
(48 C.F.R.
§19.805-1(b)(1)-
(2)).
Inability to Firm’s eligibility Firm’s eligibility Firm’s eligibility Firm’s eligibility Firm’s eligibility
protest eligibility for award cannot for award cannot for award cannot for award cannot for award cannot
for award be challenged or be challenged or be challenged or be challenged or be challenged or
protested as part protested as part protested as part protested as part protested as part
of the solicitation of the solicitation of the solicitation of the solicitation of the solicitation
or proposed or proposed or proposed or proposed or proposed
contract award contract award contract award contract award contract award
(48 C.F.R. (48 C.F.R. (48 C.F.R. (48 C.F.R. (48 C.F.R.
§19.805-2(d)). §19.805-2(d)). §19.805-2(d)). §19.805-2(d)). §19.805-2(d)).
Maximum of nine Firm receives “a Firm receives “a Firm receives “a Firm receives “a Firm receives “a
years in the 8(a) program term of program term of program term of program term of program term of
Program nine years” but nine years” but nine years” but nine years” but nine years” but
could be could be could be could be could be
terminated or terminated or terminated or terminated or terminated or
graduated early graduated early graduated early graduated early graduated early
(13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R.
§124.2). §124.2). §124.2). §124.2). §124.2).
One year One year One year One year One year
extension extension extension extension extension
available for firms available for firms available for firms available for firms available for firms
participating in participating in participating in participating in participating in
Congressional Research Service 20
SBA’s 8(a) Business Development Program: Legislative and Program History
8(a) Firms
Category Generally Tribally Owned ANC-Owned NHO-Owned CDC-Owned
the program the program the program the program the program
from March 13, from March 13, from March 13, from March 13, from March 13,
2020, through 2020, through 2020, through 2020, through 2020, through
September 9, September 9, September 9, September 9, September 9,
2020. 2020. 2020. 2020. 2020.
One-time Applies to both Applies only to Applies only to Applies only to Applies only to
eligibility for 8(a) disadvantaged tribally owned ANC-owned NHO-owned CDC-owned
Program owners and firms firms, not tribes firms, not ANCs firms, not NHOs firms, not CDCs
(13 C.F.R. (15 U.S.C. (15 U.S.C. (15 U.S.C. (15 U.S.C.
§124.108(b)). §636(j)(11)(B)- §636(j)(11)(B)- §636(j)(11)(B)- §636(j)(11)(B)-
(C)). (C)). (C)). (C)).
Limits on the No sole-source Can make sole- Can make sole- Can make sole- Combined total
amount of 8(a) awards possible source awards source awards source awards of competitive
contracts that a once the firm has even when a firm even when a firm even when a firm and sole-source
firm may receive received a has received a has combined a has received a 8(a) contracts in
combined total of combined total of total of combined total of excess of the
competitive and competitive and competitive and competitive and dollar amount set
sole-source 8(a) sole-source 8(a) sole-source 8(a) sole-source 8(a) forth in 13 C.F.R.
contracts in contracts in contracts in contracts in §124.519 not
excess of the excess of the excess of the excess of the explicitly
dollar amount set dollar amount set dollar amount set dollar amount set addressed in
forth in 13 C.F.R. forth in 13 C.F.R. forth in 13 C.F.R. forth in 13 C.F.R. regulations.
§124.519 (13 §124.519 (13 §124.519 (13 §124.519 (13 Firms must
C.F.R. C.F.R. C.F.R. C.F.R. receive an
§124.519(a)). §124.519(a)). §124.519(a)). §124.519(a)). increasing
Firms must Firms must Firms must Firms must percentage of
receive an receive an receive an receive an revenue from
increasing increasing increasing increasing non-8(a) sources
percentage of percentage of percentage of percentage of throughout their
revenue from revenue from revenue from revenue from participation in
non-8(a) sources non-8(a) sources non-8(a) sources non-8(a) sources the 8(a) Program
throughout their throughout their throughout their throughout their (13 C.F.R.
participation in participation in participation in participation in §124.509(b)).
the 8(a) Program the 8(a) Program the 8(a) Program the 8(a) Program
(13 C.F.R. (13 C.F.R. (13 C.F.R. (13 C.F.R.
§124.509(b)). §124.509(b)). §124.509(b)). §124.509(b)).
Source: CRS, based on 8(a) Program statutory and regulatory requirements.
Notes: ANC: Alaska Native Corporations; NHO: Native Hawaiian Organizations; CDC: Community
Development Corporations.
a. The rules governing NHO-owned firms do not address this issue, and although the general rules apply
where no “special rules” exist, it seems unlikely that NHO-owned firms are treated differently than tribally
or ANC-owned firms in this regard.
b. These criteria include (1) the management experience of the disadvantaged individual(s) upon whom
eligibility is based; (2) the business’s technical experience; (3) the firm’s capital; (4) the firm’s performance
record on prior federal or other contracts in its primary field of operations; and (5) whether the firm
presently has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and other
resources necessary to perform contracts under Section 8(a).
Congressional Research Service 21
SBA’s 8(a) Business Development Program: Legislative and Program History
Author Information
R. Corinne Blackford
Analyst in Small Business and Economic
Development Policy
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