As you likely know if you have been anywhere around federal government contracting lately, the SBA’s 8(a) Program is in a little bit of an upheaval. Due to a court case we have blogged on, SBA is subject to a court order with how it administers certain aspects of the 8(a) Program and has temporarily suspended new 8(a) Program applications. However, there are many contractors already in the 8(a) Program that SBA is now asking to complete social disadvantage narratives to allow for continued eligibility. SBA held a webinar on August 24, 2023 to discuss what they expect from social disadvantage narratives submitted by these current 8(a) Program participants. What SBA expressed represents a change to how SBA has reviewed social disadvantage in the past. But we are here to walk you through some of these changes.
Prior to the current events shaking up the 8(a) Program, social disadvantage narratives (SDNs) were only needed for those applicants who did not meet one of the categories of presumed social disadvantage. The way SBA reviewed SDNs was pretty strict. SBA rules state that individuals who are not presumed socially disadvantaged must submit a social disadvantage narrative that shows “individual social disadvantage by a preponderance of the evidence”. The narrative had to include the following four elements:
- You need at least one objective distinguishing feature;
- Your social disadvantage must be rooted in treatment experienced in American society;
- Your social disadvantage must be chronic and substantial, not fleeting or insignificant; and
- Your social disadvantage must have negatively impacted your entry or advancement in the business world.
These occurrences would come from your experience in education, employment, and/or business history. Traditionally, SBA would look for a large amount of detail and expect multiple occurrences of discrimination to be listed in the narrative. SBA did have some guidance stating that narratives should be three pages or less, but often the experience of contractors applying to the 8(a) Program did not reflect SBA holding applicants to that limit. In our extensive experience, regardless of whether or not a contractor reached out to a third party (such as attorneys or consultants), this did not change the fact that SBA would routinely come back to the applicant with requests for clarification or more information. As such, we always recommended that 8(a) Program applications involving social disadvantage narratives include a large amount of detail and occurrences addressing SBA’s listed elements.
Recently, SBA’s 8(a) Program was challenged in court, leading to SBA being placed under a court order and the 8(a) Program no longer accepting applications. The crux of the court challenge was SBA’s presumptions of social disadvantage. Because the court ruling found the presumption of social disadvantage to be unconstitutional, SBA suspended new applications to the 8(a) Program, and contractors currently in the 8(a) Program who were admitted under presumed social disadvantage were informed that they would need to submit social disadvantage narratives.
On August 24, 2023, SBA held a webinar to explain what specifically they were looking for in these social disadvantage narratives form current 8(a) Program participants. SBA stated that it would post this webinar at some point, but we will review some of the larger points here for you.
For one thing, current 8(a) Program contractors who are going to be affected by their guidance and requests for new social disadvantage narrative are those who relied on the social disadvantage presumption to obtain participation in the 8(a) Program. Contractors who did not do this should have received notices from the SBA that they do not need to do anything. That would include 8(a) Program contractors who already demonstrated their social disadvantage through an approved narrative, or that were owned by a Native American, Alaska Native Corporation, or Native Hawaiian entity.
For those who do need to submit social disadvantage narratives, SBA is still looking for the “who, what, when, where, and why” of all the occurrences listed in a social disadvantage narrative. These occurrences need to still be felt in American society, be chronic and substantial, be tied to a visible characteristic, and must negatively impact the eligible individual’s entry or advancement in the business world. None of this is new, and fits SBA’s previous guidance and rules. However, SBA in the webinar provided new guidance, which if taken literally, could lead to quite a few changes in social disadvantage narratives.
SBA stated that they are looking for two cases or occurrences, and these could theoretically even be a paragraph long. SBA then went on to state that even one occurrence could work, if it shows multiple, chronic and ongoing instances of discrimination. Despite the SBA saying things such as “just need to get two examples” or “if you have a bunch, just give your best two”, SBA seemed to backpedal their new brief requirements by stating there should be “at least” two. SBA assured contractors on the webinar that they would work with 8(a) Program participants if their new social disadvantage narratives weren’t adequate, allowing revisions and feedback. However, SBA did not mention what happens if the social disadvantage narrative is eventually rejected or if at a later date SBA wants more detail in their narratives.
Unchanged is the need for narratives to be individually specific, tied to one objective distinguishing feature, based in American society, and chronic and substantial. SBA presented three elements of review of social disadvantage narratives:
- Whether each supporting claim establishes an incident of bias that could lead to a finding of social disadvantage;
- Whether each incident of bias negatively impacted the individuals entry into or advancement in the business world; and
- Whether in the totality, these qualifying incidents establish chronic and substantial social disadvantage.
SBA went on to explain that the shortened narrative should address these three elements with occurrences from education, employment or business history, and that they will continue to apply a “preponderance of the evidence” standard when evaluating. The presentation from SBA did not mention any changes to the exiting regulations or rules, and did not discuss whether there will be continued legal challenges on the court’s decision that spurred all this on.
Unfortunately, despite SBA’s efforts, their explanations may raise even more questions from contractors. While previously, SBA seemed to want as many instances of discrimination as possible, SBA has indicated that right now, especially for those pending awards, it may prefer that participants focus on meeting all their requirements only in regard to a few of the most egregious incidents of social disadvantage. If SBA truly wants just two examples and minimal paragraphs, that would be quite the shift from previous guidance, especially given the fact that the regulations themselves have not changed at all, only this internal guidance. Given SBA’s own reluctance to firmly declare if it is only accepting two examples, or more, as well as the lack of changes in the rules themselves, it may be best to err on the side of caution, providing more details and occurrences in case the two examples do not work.
Need legal assistance with your social disadvantage narrative or other 8(a) or federal contracting matters? call at 785-200-8919 Questions about this post? Email us .