Our readers already know that SBA finally updated its 8(a) Program social disadvantage regulation to reflect SBA’s current policies and application review standards and procedures. And that new rule takes effect today! We previously blogged on this regulatory update here. We also blogged on the corresponding guidance issued by SBA here. In this article, we will take a more in-depth look at the new final rule, its potential implications, and some of the remaining questions it leaves unanswered.
As you can read all about in our prior blogs on the subject, SBA first proposed its new social disadvantage regulation (which we blogged on here) and soon thereafter, issued its final rule updating 13 C.F.R. § 124.103 (which we blogged on here). For the most part, the proposed rule and final rule were pretty similar. Both removed the presumption of social disadvantage for members of designated groups. And both proposed a new two-part “test” for social disadvantage to replace the social disadvantage narrative. The new test requires sufficient evidence that a government or private entity was biased or discriminated against a definable racial, ethnic, or cultural group and that such treatment materially harmed the citizen.
The Addition of “Congressional Findings” As Evidence of Bias or Discrimination.
One of the most significant changes between SBA’s original proposed revisions to 13 C.F.R. § 124.103 and its final rule, however, is the inclusion of “Congressional findings” as evidence of such bias. This simple addition, along with some of the examples provided in the final rule, came as a sigh of relief to many of the more traditional 8(a)-eligible individuals still seeking inclusion in the program.
Indeed, in its original proposed rule, SBA gave examples of such discrimination, noting:
Such actions, policies, rules, regulations, or other practices favoring or disfavoring groups may include, but are not limited to: unlawful diversity, equity, and inclusion programs or policies; unlawful affirmative action programs or policies; race-based quotas, set-asides, or hiring targets; or, any policies or programs that favored some groups over others on the basis of race.
So, SBA’s proposed rule objectively focused on the inclusion of individuals who faced bias and discrimination due to DEI, affirmative action, and even the prior 8(a) Program’s policies. In fact, SBA also noted in the proposed rule that its prior “individualized narrative of personal disadvantage” had opened “the program to abuses and unconstitutional discrimination.”
Now, in its proposed rule, SBA also expressly included: “Such actions, policies, rules, regulations, or other practices include prior iterations of 13 CFR 124.103 that excluded the Citizen’s racial or ethnic group as a group entitled to a rebuttable presumption of social disadvantage[.]” But many were reasonably confused as to how one would demonstrate this type of discrimination—given the SBA’s clear emphasis on official actions, policies, rules, regulations, and practices as sufficient evidence of bias or discrimination and SBA’s express focus on DEI, affirmative action, and quotas/targets.
Indeed, in today’s society, it would be much more difficult to find a written or otherwise-made-official policy, rule, or standard that was openly racist or discriminatory against someone based on their inclusion in a marginalized racial or ethnic group. Unfortunately, even where certain groups, entities, authorities, etc., in today’s society do practice such racism or discrimination, such is almost certainly not something an 8(a) applicant can just go pull of their websites or out of their mission statements.
Thus, the SBA’s addition to its final rule of “Congressional findings” as sufficient evidence of such discrimination or bias, again, was a welcomed surprise to individuals seeking 8(a) participation on more traditional 8(a)-eligibility bases. Indeed, this small addition to the proposed rule could have a big impact on the pool of eligible individuals. It could more objectively expand coverage to those have who suffered racism, sexism, ableism, etc.—since evidence could ideally now come from legislation like the Americans with Disabilities Act, the Equality Act, the Women’s and Civil Rights Acts, and many more. In fact, SBA’s final rule (which we again blogged on here) specifically called out the possibility that discrimination or bias on the basis of gender/sex and disability—in addition to ethnic and racial discrimination or bias.
Some Long-Awaited Movement in SBA’s Processing of 8(a) Applications.
Another noteworthy impact of SBA’s recent issuance of its final social disadvantage rule is the fact that applicants are finally seeing signs of life on the other end of their 8(a) applications after roughly a year of silence. As you can see from our blogs on the proposed and final rules, SBA has consistently and clearly assured us that the social disadvantage updates only apply to individually-owned 8(a) companies, not those owned by entities. Indeed SBA’s final rule stated: “It does not in any way amend or affect the eligibility of entity-owned small businesses (i.e., those owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations).”
But the issuance of this final rule, nonetheless, seemed to kick-start the SBA’s entity-owned 8(a) application review procedures back into gear after a long pause. Indeed, the Native American Contractors Association (NACA) even issued a press release praising the SBA for finally resuming “approvals for new participants in the 8(a) Business Development Program, marking an important step forward for Native-owned businesses and the Tribal communities they support.”
As for individual-owned 8(a) applicants, SBA’s recently released guidance on the new social disadvantage regulations (which we again blogged about here) explains that the final rule takes effect today, September 10, 2026. It also explains that SBA is updating its application portal and plans to “return” all applications today, September 10, 2026, apparently to request resubmission under the new social disadvantage test. But one of the most significant–and certainly frustrating–questions left unanswered with the new rule’s issuance seems to be, “what’s next?”
Here at SmallGovCon, we have already gotten wind of SBA notifying several of our individual-owned 8(a) applicant clients and blog-readers that their applications are being returned based on this new rule. But no one seems to have been given any concrete direction quite yet on exactly how they will need to update their 8(a) applications and/or demonstrate their social disadvantage under the new test. In fact, even SBA has told such applicants that it too is awaiting direction on how to apply the newest social disadvantage eligibility requirements to pending applications.
So, stay tuned to the blog for more information on this front to come. And if you have a pending 8(a) application at this time, keep your eyes open wide for any information from SBA on your next steps. Finally, just a quick reminder from our other blogs on the subject, SBA has also repeatedly confirmed that these updates will not impact current 8(a) Program participants (i.e., those who have already had their 8(a) applications approved).
Need help updating your 8(a) application under the new legal standards? Questions about the 8(a) Program, social disadvantage eligibility, or this post? Email us. Need legal assistance? Call us at 785-200-8919.
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