SBA's Proposed 8(a) Overhaul Draws Criticism
Commenters opposed the change to social disadvantage by a margin of 2-to-1
SBA’s plan to change eligibility for business owners applying for 8(a) certification received mostly negative feedback from business owners and trade groups, according to a GovCon Intelligence analysis of public comments filed this week. Commenters opposed SBA’s new social-disadvantage standard by a margin of over 2-to-1. Only 25% of the more than 110 commenters supported SBA’s changes, and 60% opposed, with the rest neutral.
Those opposed cited various reasons, including the proposal’s withdrawal of support for Black-owned small businesses and the burden on small businesses that would need to gather documents for an application. Commenters who opposed SBA’s proposals included three sitting members of Congress, all Democrats: Senators Edward Markey and Mazie Hirono, and Representative Nydia Velázquez, the ranking member of the House Small Business Committee.
Groups writing in favor of the proposal included the Conservative Political Action Conference (CPAC), the Center for Individual Rights, and the SBA Office of Advocacy. When the proposal was first published in June, SBA Administrator Kelly Loeffler said it would “restore equal treatment under clear, objective criteria and help ensure the program serves legitimate job creators instead of political friends, shell companies, or bad actors.”
The proposal comes after SBA lost a Federal court case in 2023 that forced it to halt a race-based preference policy. Several civil rights-focused legal organizations expressed strong opposition to SBA’s new proposal, thus raising the possibility that the latest policy could itself be challenged in court. The NAACP Legal Defense and Educational Fund, Asian Americans Advancing Justice, and the Minority Business Enterprise Legal Defense and Education Fund filed separate letters criticizing SBA’s Constitutional analysis and its rulemaking process.
SBA’s new proposal is “substantively unsupported, procedurally defective, and standardless,” wrote MBELDEF, adding that SBA’s analysis was based on “a record assembled toward a predetermined result.”
Shifting 8(a)’s purpose
Many commenters—some of them Black-owned businesses—found SBA’s proposal to be contrary to the original purpose of the 8(a) program. SBA wrote in the proposal that it would “remedy the federal government’s unconstitutional discrimination against members of groups”—and specifically cited the experience of “white Americans.” The proposed rule allows white business owners to cite harm from affirmative-action programs.
One Black business owner from Colorado, a lifelong Republican and former 8(a) participant, wrote, “In practical terms, white America still picks winners and losers through legal financial institutions, bond markets, prime-contractor networks, and established business relationships.” The “rule weakens the statutory purpose of the 8(a) program,” the business owner concluded.
Similarly, Jackie Robinson-Burnette—a former SBA Associate Administrator—observed that the 8(a) program was established 60 years ago to “address systemic barriers faced by small businesses owned by … particularly people of color and women.” She noted that only 1.5% of Federal contract dollars are awarded to individually owned 8(a) firms.
Others looked back at the law creating the program. Representative Velázquez noted that the original Congressional establishment of the 8(a) program was to “foster business ownership and development by individuals in groups that own and control little productive capital.” Consequently, she argued, SBA should not have removed criteria related to access to capital and credit.
One supportive commenter applauded SBA’s use in the proposed rule of “objective, evidence-based standards that any U.S. citizen can meet.” But others found the new criteria to be too permissive, potentially inviting fraud and diluting the program.
Many unanswered questions
Several businesses wrote in to seek more details on SBA’s proposal, which spanned only four full pages of the Federal Register. They wanted to know what rises to the level of “material harm” needed to establish discrimination. They also asked if women-owned businesses could still qualify based on gender discrimination. Still more firms requested that SBA state whether existing 8(a) participants would need to meet the new standard.
Gov Contract Pros, a consulting group, requested that SBA “avoid the unintended consequence that all 8(a) BD Program Participants must attest at their annual review that they comply with the vague standards” in the proposed policy.
The owner of a Black-woman-owned business was troubled by the proposed requirement to provide documentary evidence of discrimination. “Sourcing and substantiating that evidence is a meaningful undertaking for a small business owner without legal or research support,” she wrote.
Under its current process, SBA requires applicants to write narratives describing their personal experiences of discrimination. Some businesses prefer that process.
“The narrative process, while burdensome, provides a rigorous, individualized, evidence-based pathway,” argued JoAnn Braxton, another former SBA official. “Removing it removes accountability.”
Even supportive commenters wanted changes. The Center for Individual Rights, while it agreed with eliminating explicit racial preferences, urged SBA to remove 8(a) eligibility for Native Hawaiian Organizations.
Native 8(a) participation debated
The comments were filed shortly after SBA disclosed, with the publication of the 2025 Small Business Scorecard, that Native entity firms won nearly 70% of 8(a) dollars. Those firms, owned by Alaska Native Corporations, Native Hawaiian Organizations, or Indian Tribes, comprise only 16% of the businesses in the 8(a) program.
The Native participation in the 8(a) program was a common theme of the comments. Katmai Government Services, a company owned by an Alaska Native Corporation, praised the rule for “help[ing] safeguard the distinct statutory authorities that Congress has provided to Tribes” and other Native groups.
Other Native representatives were not so supportive. Three tribal groups—including the Wyandotte Nation and the Fort Belknap Indian Community—criticized the rule for removing the preference for individual tribal members. SBA should consult with Tribal governments before finalizing the policy, they said.
One non-Native business wrote that direct 8(a) awards to Native entities can harm competition. The “qualified contractors with proven performance are eliminated before the Government has an opportunity to compare technical approaches,” the contractor wrote.
Finally, several commenters called on SBA to resume processing of 8(a) applications, even if only for Native entity firms. SBA has not approved an application since August 15, 2025, according to 8aFacts.org.
The same site suggests that the freeze on applications might be ending soon. Meanwhile, SBA is faced with finalizing a policy that not only received bad reviews but also could get tied up in court.
With 20 years of Federal legal experience, Sam Le counsels small businesses through government contracting matters, including bid protests, contract compliance, small business certifications, and procurement disputes. His website is www.samlelaw.com. This article is for informational purposes only and does not constitute legal advice.