Many individuals who have gone through SBA’s 8(a) Business Development Program (the 8(a) Program) will tell you that the application process is not for the faint of heart. One of the most time-consuming, and often frustrating hurdles of the application is the Social Disadvantage Narrative (or SDN).
Applicants are asked to revisit painful moments where they experienced discrimination. Sharing these deeply personal experiences is what makes it so upsetting for an applicant when SBA pushes back on their narrative – or worse, when SBA questions the bias, finding “legitimate alternative grounds” for the mistreatment.
Under the regulations, “SBA may disregard a claim of social disadvantage where a legitimate alternative ground for an adverse employment action or other perceived adverse action exists and the individual has not presented evidence that would render his/her claim any more likely than the alternative ground.” 13 C.F.R. § 124.103(c)(3)(ii).
For many applicants it can feel like their most personal moments are being put on trial.
In The CTS Grp. LLC, Petitioner, SBA No. BDPT-621, 2025 (Apr. 29, 2025), SBA’s Office of Hearings and Appeals (OHA) considered SBA’s termination of a former 8(a) Program participant after determining the company’s SDN did not demonstrate social disadvantage.
The CTS Group LLC (Petitioner) was an 8(a) Program participant whose eligibility had previously been based on the reliance of the presumption of social disadvantage. After the Ultima decision (read our blog about it here), SBA required all current 8(a) participants who had been admitted based on this presumption to submit an SDN establishing social disadvantage.
The Narrative
Petitioner’s owner, Calvin L. Scott Jr. (Mr. Scott), submitted an SDN on behalf of the company. The narrative described an experience Mr. Scott had in the federal contracting industry as a black man. Upon initial review, SBA sent the SDN back to Petitioner for additional revisions, stating the following,
[T]hat one incident presents no instance of chronic and substantial bias, prejudice, and discrimination catalyzing negative impact. You [Mr. Scott] mention that all of the individuals involved were Caucasian. However, you fail to mention any names and any speech/action that evidences bias. The mere fact that those you were dealing with are Caucasian is not sufficient in meeting the preponderance standard.
SBA gave Petitioner the following guidance for revisions to the narrative,
In order to successfully meet the preponderance of the evidence standard SBA need[s] to clearly see that you have suffered chronic and substantial bias, prejudice, and discrimination based upon one or more objective distinguishing features (i.e., what others see about you when you “walk into a room”) which has had a negative impact upon your entry into or advancement in the business world.
After several back-and-forth exchanges, Petitioner’s final revised SDN described two experiences where Mr. Scott had been subjected to discrimination:
The first incident detailed Petitioner’s experience serving as a subcontractor. Mr. Scott had reached out to the prime contractor about the ability to add employees to the Petitioner’s subcontract:
“Despite demonstrating exceptional expertise and contributing significantly, [Petitioner’s] efforts to expand our role on the contract and add more value were unjustly denied. [Three officials of the prime contractor] denied me the opportunity to add employees under the contract.”
The officials “specifically cited [Mr. Scott’s] age and [Petitioner’s] relative lack of past performance as reasons for denying the expansion” of the subcontract agreement.” “At the time I felt [the prime contractor] as a worldwide large contractor was bias[ed] against a young black owned business striving to grow within a competitive landscape dominated by established contractors.”
The second incident described a time when Petitioner was not the successful offeror on a contract. Petitioner had met the requirements of the solicitation, even being informed by the contracting officer that Petitioner “was more than likely to win the new contract.” However, despite checking all the boxes, the Petitioner was not the awardee. Mr. Scott later learned that two employees of the procuring agency had labeled Mr. Scott “the new guy” and based their decision on this factor. The SDN provided the following:
“This decision was influenced by discrimination, prejudice and bias against [Mr. Scott] as young, qualified, minority owned business striving to grow within the government contracting arena. The contract award was clearly racially bias[ed] by awarding a prime contract based on their personal relationships rather than merit.”
SBA Acting Associate Administrator for Business Development (AAA/BD) ultimately found that Petitioner’s final revised SDN insufficient, making the following findings:
- The first example is unpersuasive to show social disadvantage.
The AAA/BD noted that, “Petitioner did not demonstrate that the prime contractor’s decision not to enlarge Petitioner’s subcontract stemmed from any racial or ethnic prejudice or cultural bias.”
Legitimate Alternative Ground: The prime contractor may have perceived Mr. Scott’s actions as an attempt to circumvent the prime contractor by directly “soliciting [the] Prime’s customer for work.”
2. The second example is conclusory.
The AAA/BD noted that, “the mere fact that Petitioner did not win a particular contract does not establish that “racial bias played a part in the decision.”
Legitimate Alternative Ground: The agency could have been motivated to “award to a firm it was familiar with rather than a relative newcomer.”
Therefore, SBA terminated Petitioner’s participation in the 8(a) Program because Petitioner’s SDN did not demonstrate the company was owned and controlled by one or more disadvantaged individuals.
Holding
OHA denied the appeal, ultimately finding the SBA decision was reasonable. In accordance with SBA’s guidance for the SDN, Mr. Scott was required to present facts and evidence that alone established that Mr. Scott had suffered social disadvantage that negatively impacted his entry or advancement in the business world.
Under the regulations, SBA may find an SDN insufficient when a “legitimate alternative ground” for the negative outcome exists, and the individual fails to provide a preponderance of evidence that would render their social disadvantage claim more likely than the alternative ground.
Here, OHA concluded that the two examples in the SDN did not present evidence that the negative outcome described was attributable to bias rather than the legitimate, non-discriminatory reasons that were raised by the SBA reviewers. As such, OHA denied Petitioner’s appeal.
Key Takeaways
Submitting a compelling social disadvantage narrative can be a difficult process that requires applicants to relive painful experiences. It’s made even more difficult when an applicant’s personal narrative is met with SBA’s skepticism. Knowing in advance what SBA is looking for can help applicants avoid facing SBA’s suggestions of alternative grounds. Cases like this one, as well as other resources, can help applicants create a narrative that details their personal experiences while meeting SBA’s regulatory demands.
Check out these blogs for additional insight for drafting the SDN: Demonstrating 8(a) Social Disadvantage and What SBA is Looking For. Note that SBA may be transitioning to a new review process, so be sure to review all guidance from SBA as you work on the SDN.
Questions about this post? Email us or give us a call at 785-200-8919.
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