Ultima Fallout: Many Current 8(a)s Must Submit Narratives of Social Disadvantage to Earn new 8(a) Work.

SBA’s Associate General Counsel for Procurement Law John Klein said Thursday that many, perhaps most, 8(a) companies must submit narratives of social disadvantage before than can receive new 8(a) work.

Firms owned by individuals who did not have to show social disadvantage when they originally applied must now demonstrate their disadvantage to the SBA thanks to a recent court ruling. Because the presumption made eligibility so much easier, this may impact the majority of 8(a) companies.

The Ultima Impact

A few weeks ago, a ruling by a federal judge in the Eastern District of Tennessee rocked the SBA’s 8(a) Business Development program by enjoining the SBA from using its presumption of social disadvantage for people with certain racial and ethnic backgrounds. Now, just how far reaching the decision in Ultima Servs. Corp. v. U.S. Dep’t of Agric. goes is becoming clear.

If your company got into the 8(a) program by virtue of a presumption of social disadvantage due to your personal racial or ethnic background, you now have to submit a narrative of social disadvantage. That narrative must detail specific instances of disadvantage in order to demonstrate your eligibility to remain in the program. The same is true for joint ventures where the 8(a) managing venturer got in thanks to the presumption.

The Pressure is on

SBA had already suspended new 8(a) applications. With this news, it’s clear that the 8(a) program is under serious pressure.

Klein said that all pending and future 8(a) awards, including sole-source awards, will be subject to the SBA finding that the qualifying owners are socially disadvantaged. The good news is that current contracts are not impacted.

If you’re an 8(a) who gained entry to the program after demonstrating social disadvantage through a narrative, then you don’t have to do anything. In fact, this puts you in an enviable position for the near future as one of a minority of 8(a)s eligible for new work. Chances are most 8(a) companies gained access by virtue of the presumption.

What is a Social Disadvantage Narrative?

You might think a narrative of social disadvantage sounds simple enough, but you would be wrong. These are complicated documents that have historically been held up to intense scrutiny. They require applicants to relive and retell some of the most unfortunate events they have experienced in their entire lives only to then have a government agent potentially tell them that it is not actually an example of social disadvantage. They can be tremendously difficult. Schoonover & Moriarty attorneys have experience and are available to help.

These narratives take a long time to be reviewed and approved too. However, Klein said that when a contract award is in issue, the SBA is prepared to process eligibility determinations within the five-day period required.

Lastly, when the SBA will begin accepting these narratives is currently unknown. The SBA said it will provide an update soon.

If you have any questions about how this will impact your business please call us.