SBA’s 2023 Update: Demonstrating 8(a) Social Disadvantage

SBA recently issued new guidance on how to demonstrate social disadvantage–one of the elements an individual must meet to be eligible for SBA’s illustrious 8(a) Business Development Program. The guidance implements a streamlined social disadvantage narrative format–limiting the number of social disadvantage instances to two and asking only for direct answers to six questions for each instance. The “new” format really just hones in on the elements SBA has always asked for 8(a) social disadvantage narratives to demonstrate, substantively, not changing a thing. Nevertheless, SBA has been quite firm in requiring this new, short and sweet, structured format–so let’s dig into it a bit.

Since the federal court’s decision in Ultima (you can read all about here), the 8(a) Program has been swept up in a whirlwind of change. The whole application process was paused and un-paused. Awards were postponed. The vast majority of active, individual 8(a) participants had to submit social disadvantage narratives (some, in just a few days). And naturally, there was a massive influx in social disadvantage narratives requiring SBA’s review: some needing immediate review for 8(a) awards; and all hoping for prompt review to avoid any 8(a) Program term pause or termination.

Here at SmallGovCon, this inspired our 8(a) landing page, the 8(a) Contractors’ Toolkit (for all the recent 8(a) happenings and updates you might’ve missed). Over at SBA, it inspired steps to maximize the 8(a) Program’s review capacity and efficiency. For one, SBA rallied the troops–dramatically increasing its fleet of 8(a) eligibility reviewers. It also issued this new guidance simplifying the narrative format–hoping to streamline reviews.

The guidance changes the narrative format in two primary ways: (1) it directs drafters to focus on just two instances of social disadvantage; and (2) it asks them to directly and succinctly (and to only) answer six specific questions for each instance. In regard to the first change it, it says:

An individual should typically provide two incidents of bias to establish chronic and substantial social disadvantage. One incident may be enough to establish social disadvantage if it is pervasive or recurring. SBA recommends limiting yourself to two examples to avoid unnecessary delays during the review process.

It was previously pretty standard for narratives to include as many instances as possible to support a finding of social disadvantage. This was largely because SBA’s rules say narratives must demonstrative that the “social disadvantage [was] chronic and substantial, not fleeting or insignificant[.]” But now, since SBA has expressly limited these narratives to two instances, it allows drafters to focus on detailing and analyzing just two of the strongest instances.

As for the second big change, SBA now wants drafters to format their analysis as an essential Q&A. The guidance states:

For each incident, please describe who, what, where, why, when, and how discrimination or bias occurred. Incidents are more readable if they provide information in the following order within a narrative:

When – Explain when the discriminatory conduct occurred. Exact dates, where available, are preferred but are not necessary so long as the incident provides a specific time period. This discrimination can be from any period of your life; you do not need to be experiencing current discrimination to qualify.

Where – Explain where the discriminatory conduct occurred. The incident must have occurred in American society.

Who – Explain who committed the discriminatory action. This could include an individual, a group of individuals, or an institution. Individual names, where available, are preferred but not necessary so long as the incident provides a specific figure or organization.

What – Explain the discriminatory conduct.

Why – Explain the reason(s) that the conduct was more likely motivated by bias or discrimination than other non-discriminatory reasons. Without additional facts, a mere assertion that the action was the result of bias or discrimination is will not be enough to support a claim of social disadvantage.

How – Explain how each instance of discriminatory conduct impacted your entry into or advancement in the business world. Offensive comments or conduct, while reprehensible, will not support a claim of social disadvantage if there is no negative impact associated with the incident.

SBA’s guidance also provides helpful examples of acceptable and unacceptable responses to each of these questions. This new Q&A format, in effect, discourages inclusion of generalized, statistical, or political information in these narratives–information SBA does not deem relevant to the specific social disadvantage instances experienced. This is actually something SBA has always urged drafters to avoid in their narratives (even asking for shorter narratives for this reason a few years back–but never enforcing the suggested page limit). And this isn’t the only SBA policy or rule that appears to underlie and motivate SBA’s recent guidance and new format.

In fact, it is very important to keep in mind that (outside of those covering the now-prohibited rebuttable presumption of social disadvantage) the underlying social disadvantage regulations remain intact, in full force and effect. One must demonstrate the same substantive elements, the same facts and level of detail, and the same analyses (which you can learn all about in my prior blog–a still relevant and highly beneficial read for anyone drafting a narrative now or at any point in the future).

The guidance states, “[e]xperiences should be related to education, employment, and business history[,]” the same three categories SBA has always allowed individuals to pull social disadvantage experiences from. And as you can see from SBA’s descriptions for its “who,” “where,” “when,” and “what” questions, SBA is still looking for a specific and detailed account of all the relevant facts for each incident. SBA’s “why” question goes directly to its regulatory requirement to demonstrate why each instance was due to bias/discrimination or or at least more likely due to bias/discrimination than some “alternative ground.” And SBA’s “how” question hits on the always-vital regulatory requirement to demonstrate long-term impact for each instance. Specifically, the rules state:

An individual claiming social disadvantage must present facts and evidence that by themselves establish that the individual has suffered social disadvantage that has negatively impacted his or her entry into or advancement in the business world.

Each instance of alleged discriminatory conduct must be accompanied by a negative impact on the individual’s entry into or advancement in the business world in order for it to constitute an instance of social disadvantage.

So, again, what SBA is really looking for in a social disadvantage narrative hasn’t changed. SBA only changed the way you present the experiences in the narratives–and put a limit on how many. Outside of that, the guidance did introduce one thing that’s brand new–the latest, alternative option for new 8(a) applicants to demonstrate social disadvantage via a fillable questionnaire on SBA’s Certify platform. Unless you’ve completed that questionnaire yourself, or know someone who has, I will say, it is still quite the mystery. The guidance simply says the following:

New applicant owner or owner(s) who are claiming social and economic disadvantage can demonstrate their individual social disadvantage through one of two options: by writing a narrative or by completing the fillable questionnaire in SBA Certify . . . Existing Program participants should prepare their narrative and upload it to Certify according to the instruction posted here.

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Here at SmallGovCon, we’ve been studying the art and science of 8(a) narrative-drafting since long before the newly-lit spotlight on 8(a) social disadvantage. So, like many, we were a bit uneasy when recent judicial challenges began to effect these narratives–who has to submit them, when and where to submit them, and even, their contents. And the lack of any official new rule on the subject naturally causes us lawyerly types a bit of unease. But now that at least some of the dust has settled, we can comfortably say (from extensive recent experience) that the tried-and-true art and science of narrative drafting is holding strong. At this point, there are just some new formatting rules–and a very helpful limitation–that seems to make the process more concise and efficient for drafters and reviewers alike. And while I would love to leave you on a positive note, I will at least mention that there have been some recent challenges and requests from the plaintiff in Ultima in regard to this “less rigorous” narrative review, which you can read about here. Stay tuned for any updates, as we will, of course, keep you posted.

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