# The “8(a) Program” for Small Businesses Owned and Controlled by the Socially and Economically Disadvantaged: Legal Requirements and Issues

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/crs%3AR40744

## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** January 6, 2016
- **Citation:** R40744

## Text

The “8(a) Program” for Small Businesses
Owned and Controlled by the Socially and
Economically Disadvantaged:
Legal Requirements and Issues
(name redacted)
Legislative Attorney
January 6, 2016

Congressional Research Service
7-....
www.crs.gov
R40744

The “8(a) Program” for Small Businesses

Summary
Commonly known as the “8(a) Program,” the Minority Small Business and Capital Ownership
Development Program is one of several federal contracting programs for small businesses. The
8(a) Program provides participating small businesses with training, technical assistance, and
contracting opportunities in the form of set-asides and sole-source awards. A “set-aside” is an
acquisition in which only certain contractors may compete, while a sole-source award is a
contract awarded, or proposed for award, without competition. In FY2014, the federal
government spent over $16 billion on contracts and subcontracts with 8(a) firms. Other programs
provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone).
Eligibility for the 8(a) Program is generally limited to small businesses “unconditionally owned
and controlled by one or more socially and economically disadvantaged individuals who are of
good character and citizens of and residing in the United States” that demonstrate “potential for
success.” Each of these terms is further defined by the Small Business Act, regulations
promulgated by the Small Business Administration (SBA), and judicial and administrative
decisions.
A “business” is generally a for-profit entity that has a place of business located in the United
States and operates primarily within the United States or makes a significant contribution to the
U.S. economy by paying taxes or using American products, materials, or labor. A business is
“small” if it is independently owned and operated; is not dominant in its field of operations; and
meets any definitions or standards established by the Administrator of Small Business. Ownership
is “unconditional” when it is not subject to any conditions precedent or subsequent, executory
agreements, or similar limitations. “Control” is not the same as ownership and includes both
strategic policy setting and day-to-day administration of business operations.
Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although
individuals who do not belong to these groups may prove they are also socially disadvantaged. To
be economically disadvantaged, an individual must have a net worth of less than $250,000
(excluding ownership in the 8(a) firm and equity in one’s primary residence) at the time of entry
into the program. This amount increases to $750,000 for continuing eligibility. In determining
whether an applicant has good character, SBA looks for criminal conduct, violations of SBA
regulations, or debarment or suspension from federal contracting. For a firm to have “potential for
success,” it generally must have been in business in the field of its primary industry classification
for two years immediately prior to applying to the program. However, small businesses owned by
Alaska Native Corporations, Community Development Corporations, Indian tribes, and Native
Hawaiian Organizations are eligible for the 8(a) Program under somewhat different terms.
The 8(a) Program has periodically been challenged on the grounds that the presumption that
members of certain racial and ethnic groups are disadvantaged violates the constitutional
guarantee of equal protection. The outcomes in early challenges to the program varied, with some
courts finding that the plaintiffs lacked standing because they were not economically
disadvantaged. Most recently, two federal district court decisions found that the program is not
unconstitutional on its face because (1) “breaking down barriers to minority business
development created by discrimination and its lingering effects” constitutes a compelling
government interest; (2) the government had a strong basis in evidence for concluding that racebased action was necessary to further this interest; and (3) the 8(a) Program is narrowly tailored
to “minimize the burden on non-minority firms.” However, in one of these cases, the court did
find that the program was unconstitutional as applied in the military simulation and training
industry because the government conceded it had no evidence of discrimination in this industry.
The decision in one case was appealed. The litigation in the other has reportedly been settled.

Congressional Research Service

The “8(a) Program” for Small Businesses

Contents
Historical Development ................................................................................................................... 2
Origins of the 8(a) Program ...................................................................................................... 2
Federal Programs for Small Businesses .............................................................................. 2
Federal Programs for Racial and Ethnic Minorities............................................................ 3
1978 Amendments to the Small Business Act and Subsequent Regulations ...................... 4
Expansion of the 8(a) Program to Include “Disadvantaged” Groups........................................ 6
Current Requirements...................................................................................................................... 7
Requirements In General........................................................................................................... 7
Eligibility for the 8(a) Program........................................................................................... 7
Set-Asides and Sole-Source Awards Under Section 8(a) ................................................... 11
Other Requirements .......................................................................................................... 13
Requirements for Tribally, ANC-, NHO-, and CDC-Owned Firms ........................................ 15
Eligibility for the 8(a) Program......................................................................................... 15
Set-Asides and Sole-Source Awards ................................................................................. 19
Other Requirements .......................................................................................................... 19
Constitutionality of the 8(a) Program ............................................................................................ 20

Tables
Table 1. Groups Presumed to Be Socially Disadvantaged .............................................................. 5

Appendixes
Appendix. Comparison of the Requirements Pertaining to Different Types of 8(a) Firms ............. 1

Contacts
Author Contact Information ............................................................................................................ 6
Acknowledgments ........................................................................................................................... 6

Congressional Research Service

The “8(a) Program” for Small Businesses

ommonly known as the “8(a) Program,” the Minority Small Business and Capital
Ownership Development Program is one of several federal contracting programs for small
businesses.1 The 8(a) Program provides participating small businesses with training,
technical assistance, and contracting opportunities in the form of set-asides and sole-source
awards. A “set-aside” is an acquisition in which only certain contractors may compete, while a
sole-source award is a contract awarded, or proposed for award, without competition. Eligibility
for the 8(a) Program is generally limited to small businesses “unconditionally owned and
controlled by one or more socially and economically disadvantaged individuals who are of good
character and citizens of and residing in the United States” that demonstrate “potential for
success.”2 However, small businesses owned by Alaska Native Corporations (ANCs), Community
Development Corporations (CDCs), Indian tribes, and Native Hawaiian Organizations (NHOs)
are eligible for the 8(a) Program under somewhat different terms. In FY2014, the federal
government spent over $16 billion on contracts and subcontracts with 8(a) firms.3 Other programs
provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone).

C

The 8(a) and other programs for small businesses are of perennial interest to Congress, given that
It is the declared policy of the Congress that the Government should aid, counsel, assist,
and protect, insofar as is possible, the interests of small-business concerns in order to
preserve free competitive enterprise, to insure that a fair proportion of the total purchases
and contracts or subcontracts for property and services for the Government (including but
not limited to contracts or subcontracts for maintenance, repair, and construction) be
placed with small-business enterprises, to insure that a fair proportion of the total sales of
Government property be made to such enterprises, and to maintain and strengthen the
overall economy of the Nation.4

However, recent Congresses have had particular interest in the 8(a) Program because of the
recession of 2007-2009,5 its effects on minority-owned small businesses,6 and small businesses’
role in job creation.7
This report provides a brief history of the 8(a) Program, summarizes key requirements, and
discusses legal challenges alleging that the program’s presumption that members of certain racial

1

See generally CRS Report R41945, Small Business Set-Aside Programs: An Overview and Recent Developments in
the Law, by (name redacted) and (name redacted) (available upon request). The 8(a) Program takes its name from one
of the sections of the Small Business Act that authorizes it. The program is also governed by Section 7(j) of the act.
2
13 C.F.R. §124.101.
3
See Small Business Goaling Report: Fiscal Year 2014, available at https://www.fpds.gov/downloads/top_requests/
FPDSNG_SB_Goaling_FY_2014.pdf. The report on FY2015 has not yet been compiled.
4
Small Business Act of 1958, P.L. 85-536, §2(a), 72 Stat. 384 (July 18, 1958) (codified at 15 U.S.C. §631(a)).
5
See, e.g., Phil Izzo, Recession Over in June 2009, Wall Street J., September 20, 2010, available at
http://blogs.wsj.com/economics/2010/09/20/nber-recession-ended-in-june-2009/ (discussing the recession of 20072009).
6
See, e.g., Small Bus. Admin., The Small Business Economy: A Report to the President 3 (2009) (copy on file with the
author) (“The credit freeze in the short-term funding market had a devastating effect on the economy and small
firms.”); John Rosenthal, Tough Times Often Even Tougher on Minority Biz, Chicago Business, November 30, 2009,
available at http://www.chicagobusiness.com/article/20091128/ISSUE02/100032738/tough-times-often-even-tougheron-minority-biz.
7
See, e.g., Mark Trumbull, Why Obama Job Creation Plan Focuses on Small Business, The Christian Science Monitor,
December 8, 2009, available at http://features.csmonitor.com/politics/2009/12/08/why-obama-job-creation-planfocuses-on-small-business (noting that small businesses are reported to have created 65% of all new jobs in the United
States over the past 15 years).

Congressional Research Service

1

The “8(a) Program” for Small Businesses

and ethnic groups are socially disadvantaged violates the constitutional guarantee of equal
protection.

Historical Development
Origins of the 8(a) Program
The current 8(a) Program resulted from the merger of two distinct types of federal programs:
those seeking to assist small businesses in general and those seeking to assist racial and ethnic
minorities. This merger first occurred, as a matter of executive branch practice, in 1967 and was
given a statutory basis in 1978.

Federal Programs for Small Businesses
Congress first authorized a federal agency to enter into prime contracts with other agencies and
subcontract with small businesses for the performance of these contracts in 1942. The agency was
the Smaller War Plants Corporation (SWPC), which was created partly for this purpose, and
Congress gave it these powers in order to ameliorate small businesses’ financial difficulties while
also “mobiliz[ing] the productive facilities of small business in the interest of successful
prosecution of the war.”8 The SWPC’s subcontracting authority expired along with the SWPC at
the end of the World War II. However, in 1951, at the start of the Korean War, Congress created
the Small Defense Plants Administration (SDPA), which was generally given the same powers
that the SWPC had exercised.9 Two years later, in 1953, Congress transferred the SDPA’s
subcontracting authorities, among others, to the newly created Small Business Administration,10
with the intent that the SBA would exercise these powers in peacetime, as well as in wartime.11
When the Small Business Act of 1958 transformed the SBA into a permanent independent
agency, this subcontracting authority was included in Section 8(a) of the act.12 At its inception,
the SBA’s subcontracting authority was not limited to small businesses owned and controlled by
the socially and economically disadvantaged. Under the original Section 8(a), the SBA could
contract with any “small-business concerns or others,”13 but the SBA seldom, if ever, employed
this subcontracting authority, focusing instead upon its loan and other programs.14

8

Small Business Mobilization Act, P.L. 77-603, §4(f), 56 Stat. 351 (June 11, 1942).
Act of July 31, 1951, P.L. 82-96, §110, 65 Stat. 131.
10
P.L. 83-163, §207(c)-(d), 67 Stat. 230 (July 30, 1953).
11
See, e.g., H.Rept. 494, 83rd Cong., 1st sess., at 2 (1953) (stating that the SBA would “continue many of the functions
of the [SDPA] in the present mobilization period and in addition would be given powers and duties to encourage and
assist small-business enterprises in peacetime as well as in any future war or mobilization period”); S.Rept. 1714, 85th
Cong., 2nd sess., at 9-10 (1958) (stating that the act would “put[] the procurement assistance program on a peacetime
basis”).
12
P.L. 85-536, §8(a)(1)-(2), 72 Stat. 384 (July 18, 1958).
13
Id.
14
Thomas Jefferson Hasty, III, Minority Business Enterprise Development and the Small Business Administration’s
8(a) Program: Past, Present, and (Is There a) Future? 145 Mil. L. Rev. 1, 8 (1994) (“[B]ecause the SBA believed that
the efforts to start and operate an 8(a) program would not be worthwhile in terms of developing small business, the
SBA’s power to contract with other government agencies essentially went unused. The program actually lay dormant
for about fifteen years until the racial atmosphere of the 1960s provided the impetus to wrestle the SBA’s 8(a) authority
from its dormant state.”).
9

Congressional Research Service

2

The “8(a) Program” for Small Businesses

Federal Programs for Racial and Ethnic Minorities
Federal programs for racial and ethnic minorities began developing at approximately the same
time as those for small businesses, although there was initially no explicit overlap between them.
The earliest programs were created by executive orders, beginning with President Franklin
Roosevelt’s order on June 25, 1941, requiring that all federal agencies include a clause in
defense-related contracts prohibiting contractors from discriminating on the basis of “race, creed,
color, or national origin.”15 Subsequent Presidents followed Roosevelt’s example, issuing a
number of executive orders seeking to improve the employment opportunities of members of
various racial and ethnic groups.16 These executive branch initiatives took on new importance
after the Kerner Commission’s report on the causes of the urban riots of 1966 concluded that
African Americans would need “special encouragement” to enter the economic mainstream. 17
Presidents Lyndon Johnson and Richard Nixon laid the foundations for the present 8(a) Program
in the hope of providing such “encouragement.” Johnson created the President’s Test Cities
Program (PTCP), which involved a small-scale use of the SBA’s authority under Section 8(a) to
award contracts to firms willing to locate in urban areas and hire unemployed individuals, largely
African Americans, or sponsor minority-owned businesses by providing capital or management
assistance.18 However, under the PTCP, small businesses did not have to be minority-owned to
receive subcontracts under Section 8(a).19 Nixon’s program was larger and focused more
specifically on minority-owned small businesses.20 During the Nixon Administration, the SBA
promulgated its earliest regulations for the 8(a) Program. In 1970, the first of these regulations
articulated the SBA’s policy of using Section 8(a) to “assist small concerns owned by
disadvantaged persons to become self-sufficient, viable businesses capable of competing
effectively in the market place.”21 A later regulation, promulgated in 1973, defined
“disadvantaged persons” as including, but not limited to, “black Americans, Spanish-Americans,
oriental Americans, Eskimos, and Aleuts.”22 However, the SBA lacked explicit statutory authority
for focusing its 8(a) Program on minority-owned businesses until 1978,23 although courts
generally rejected challenges alleging that SBA’s implementation of the program was
unauthorized because it was “not specifically mentioned in statute.”24

15

Exec. Order No. 8802, 6 Federal Register 3,109 (June 25, 1941). Similar requirements were later imposed on nondefense contracts. See Exec. Order No. 9346, 8 Federal Register 7,182 (May 29, 1943).
16
See, e.g., Exec. Order No. 10308, 16 Federal Register 12,303 (December 3, 1951) (Truman); Exec. Order No. 10557,
19 Federal Register 5,655 (September 3, 1954) (Eisenhower); Exec. Order No. 10925, 26 Federal Register 1,977
(March 6, 1961) (Kennedy); Exec. Order No. 11458, 34 Federal Register 4,937 (March 7, 1969) (Nixon).
17
Report of the National Advisory Commission on Civil Disorders 21 (1968).
18
See, e.g., Hasty, supra note 14, at 11-12.
19
See, e.g., Jonathan J. Bean, BIG GOVERNMENT AND AFFIRMATIVE ACTION: THE SCANDALOUS HISTORY OF THE SMALL
BUSINESS ADMINISTRATION 66 (2001).
20
See Exec. Order No. 1625, 36 Federal Register 19,967 (October 13, 1971).
21
13 C.F.R. §124.8-1(b) (1970).
22
13 C.F.R. §124.8(c) (1973).
23
S. Rep. No. 95-1070, 95th Cong., 2nd sess., at 14 (1978) (“One of the underlying reasons for the failure of this effort is
that the program has no legislative basis.”); H.Rept. 95-949, 95th Cong., 2nd sess., at 4 (1978) (“Congress has never
extended legislative control over the activities of the 8(a) program, save through indirect appropriations, thereby
permitting program operations.… [The] program is not as successful as it could be.”).
24
See, e.g., Ray Billie Trash Hauling, Inc. v. Kleppe, 477 F.2d 696, 703-04 (5th Cir. 1973). In this case, the court
particularly noted that the SBA’s program was supported by congressional and presidential mandates issued after
enactment of the Small Business Act in 1958. Id. at 705.

Congressional Research Service

3

The “8(a) Program” for Small Businesses

1978 Amendments to the Small Business Act and Subsequent Regulations
In 1978, Congress amended the Small Business Act to give the SBA statutory authority for its
8(a) Program for minority-owned businesses.25 Under the 1978 amendments, SBA can only
subcontract under Section 8(a) with “socially and economically disadvantaged small business
concerns,”26 or businesses which are least 51% owned by one or more socially and economically
disadvantaged individuals and whose management and daily operations are controlled by such
individual(s).27
The 1978 amendments established a basic definition of “socially disadvantaged individuals,”
which included those who have been “subjected to racial or ethnic prejudice or cultural bias
because of their identity as a member of a group without regard to their individual qualities.”28
They also included congressional findings that “Black Americans, Hispanic Americans, Native
Americans, and other minorities” are socially disadvantaged.29 Thus, if an individual was a
member of one of these groups, he or she was presumed to be socially disadvantaged. Otherwise,
the amendments were generally seen to grant the SBA discretion to recognize additional groups
or individuals as socially disadvantaged based upon criteria promulgated in regulations.30 Under
25

P.L. 95-507, 92 Stat. 1757 (October 24, 1978).
Id. at §202.
27
Id. (codified at 15 U.S.C. §637(a)(4)(A)-(B)). Firms that are owned and controlled by Indian tribes, ANCs, or NHOs
were later included within the definition of a “socially and economically disadvantaged small business concern.” See
infra notes 36-43 and accompanying text.
28
Id. (codified at 15 U.S.C. §637(a)(5)).
29
Id. at §201 (codified, as amended, at 15 U.S.C. §631(f)(1)(C)). The meaning of “socially disadvantaged individuals”
was the subject of much debate at the time of the 1978 amendments. Some Members of Congress, perhaps focusing on
the SBA’s use of its authority under §8(a) in 1968-1970, viewed the 8(a) Program as a program for African Americans
and would have defined “social disadvantage” accordingly. See, e.g., Parren J. Mitchell, Federal Affirmative Action for
MBE’s: An Historical Analysis, 1 Nat’l Bar Ass’n Mag. 46 (1983). (Mitchell was a Member of the U.S. House of
Representatives and leader of the Congressional Black Caucus when the 1978 amendments were enacted.) Others
favored a somewhat broader view, including both African Americans and Native Americans on the grounds that only
those who did not come to the United States seeking the “American dream” should be deemed socially disadvantaged.
See, e.g., Testimony Before the House Comm. on Small Bus., Subcomm. on General Oversight & Minority Enter.,
Task Force on Minority Enter., 96th Cong., at 21 (1979). Yet others suggested that groups that are not racial or ethnic
minorities should be able to qualify as “socially disadvantaged,” or that individuals ought to be able to prove they are
personally socially disadvantaged even if they are not racial or ethnic minorities. See, e.g., H.Rept. 95-949, 95th Cong.,
2nd sess., at 9 (1978) (“[T]he committee intends that the SBA give most serious consideration to, among others, women
business owners” when determining which groups are socially disadvantaged.... [T]he bill does recognize that persons
falling outside of the racial and ethnic groups presumed to be disadvantaged, may nevertheless be disadvantaged.”).
The bill that passed the House defined “socially disadvantaged individuals,” in part, by establishing a rebuttable
presumption that African Americans and Hispanic Americans are socially disadvantaged, while the bill that passed the
Senate did not reference any racial or ethnic groups in defining “social disadvantage.” See, e.g., H.R. Conf. Rep. No.
95-1714, 95th Cong., 2nd sess., at 20 (1978); S.Rept. 95-1070, 95th Cong., 2nd sess., at 13-16 (1978). The conference
committee reconciling the House and Senate versions ultimately arrived at a definition of “socially disadvantaged
individuals” that was broader than the definition used in the SBA’s 1973 regulation and included “those who have been
subjected to racial or ethic prejudice or cultural bias because of their identity as a member of a group.” P.L. 95-507, at
§202. This definition did not incorporate the rebuttable presumption that members of certain groups are socially
disadvantaged included in the House bill. However, the conference bill included congressional findings that “Black
Americans, Hispanic Americans, Native Americans, and other minorities” are socially disadvantaged, thereby arguably
achieving similar effect. Id. at §201. Congress subsequently added “Asian Pacific Americans” and “Native Hawaiian
Organizations” to the groups whom it finds to be socially disadvantaged. See 15 U.S.C. §631(f)(1)(C)).
30
P.L. 95-507, at §201 (stating that the groups Congress finds to be socially disadvantaged “include,” but are “not
limited to,” those specified here); id. at §202 (authorizing the award of contracts to socially disadvantaged individuals);
H.Rept. 95-949, supra note 29, at 9 (expressing the view that Sections 201 and 202 of the bill provide “sufficient
discretion … to allow SBA to designate any other additional minority group or persons it believes should be afforded
(continued...)
26

Congressional Research Service

4

The “8(a) Program” for Small Businesses

these regulations, which include a three-part test for determining whether minority groups not
mentioned in the amendment’s findings are disadvantaged,31 the SBA recognized the racial or
ethnic groups listed in Table 1 as socially disadvantaged for purposes of the 8(a) Program.32 The
regulations also established standards of evidence to be met by individuals demonstrating
personal disadvantage and procedures for rebutting the presumption of social disadvantage
accorded to members of recognized minority groups.33
Table 1. Groups Presumed to Be Socially Disadvantaged
Group

Countries of Origin Included Within Group

Black Americans

n/a

Hispanic Americans

n/a

Native Americans
(including American
Indians, Eskimos,
Aleuts, Native
Hawaiians)

n/a

Asian Pacific
Americans

Burma, Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China
(including Hong Kong), Taiwan, Laos, Cambodia, Vietnam, Korea, The
Philippines, U.S. Trust Territory of the Pacific Islands (Republic of
Palau), Republic of the Marshall Islands, Federated States of
Micronesia, Commonwealth of the Northern Mariana Islands, Guam,
Samoa, Macao, Fiji, Tonga, Kiribati, Tuvalu, Nauru

Subcontinent Asian
Americans

India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives Islands,
Nepal

Source: Congressional Research Service, based on 13 C.F.R. §124.103(b).

The 1978 amendments also defined “economically disadvantaged individuals,” for purposes of
the 8(a) Program, as “those socially disadvantaged individuals whose ability to compete in the
free enterprise system has been impaired due to diminished capital and credit opportunities as
compared to others in the same business area who are not socially disadvantaged.”34 Later, the
SBA established by regulation that personal net worth of less than $250,000 at the time of entry
into the 8(a) Program ($750,000 for continuing eligibility) constitutes economic disadvantage.35
(...continued)
the presumption of social … disadvantage”).
31
See 13 C.F.R. §124.103(d)(2)(i)-(iii)(1980).
32
13 C.F.R. §124.103(b). Different groups are sometimes recognized as socially disadvantaged for purposes of other
programs, such as those of the Department of Commerce’s Minority Business Development Agency (MBDA). See 15
C.F.R. §1400.1(b). The SBA has rejected petitions from certain groups, including Hasidic Jews, women, disabled
veterans, and Iranian-Americans. See, e.g., George R. La Noue & John C. Sullivan, Gross Presumptions: Determining
Group Eligibility for Federal Procurement Preferences, 41 Santa Clara L. Rev. 103, 127-29 (2000). However, Hasidic
Jews are eligible to receive assistance from the MBDA, while women are deemed to be disadvantaged for purposes of
the Department of Transportation’s Disadvantaged Business Enterprise (DBE) program. See 49 U.S.C. §47113(a)(2)
(DBE program); 15 C.F.R. §1400.1(c) (MBDA program).
33
13 C.F.R. §124.103(c)(2) (standards of evidence for showing personal disadvantage); 13 C.F.R. §124.103(b)(3)
(mechanisms for overcoming the presumption of social disadvantage).
34
P.L. 95-507, §202.
35
See Small Bus. Admin., Minority Small Business and Capital Ownership Development Program: Final Rule, 54
Federal Register 34,692 (August 21, 1989) (codified, as amended, at 13 C.F.R. §124.104(c)). Some commentators have
estimated that 80 to 90% of Americans are economically disadvantaged under the SBA’s net-worth requirements. See,
(continued...)

Congressional Research Service

5

The “8(a) Program” for Small Businesses

Expansion of the 8(a) Program to Include “Disadvantaged” Groups
Although the 8(a) Program was originally established for the benefit of disadvantaged
individuals, in the 1980s, Congress expanded the program to include small businesses owned by
four “disadvantaged” groups.
The first owner-group to be included was Community Development Corporations (CDCs). A
CDC is
a nonprofit organization responsible to residents of the area it serves which is receiving
financial assistance under part A of this subchapter [42 U.S.C. §§9805 et seq.] and any
organization more than 50 percent of which is owned by such an organization, or
otherwise controlled by such an organization, or designated by such an organization for
the purpose of this subchapter [42 U.S.C. §§9801 et seq.].36

Congress created CDCs with the Community Development Act of 198137 and instructed the SBA
to issue regulations ensuring that CDCs could participate in the 8(a) Program.38
In 1986, two additional owner-groups—Indian tribes and Alaska Native Corporations (ANCs)—
became eligible for the 8(a) Program when Congress passed legislation providing that firms
owned by Indian tribes—which include ANCs39—were to be deemed “socially disadvantaged”
for purposes of the 8(a) Program.40 In 1992, ANCs were further deemed to be “economically
disadvantaged.”41
The final owner-group, that of Native Hawaiian Organizations (NHOs), was recognized in
1988.42 An NHO is defined as
any community service organization serving Native Hawaiians in the State of Hawaii
which (A) is a nonprofit corporation that has filed articles of incorporation with the
director (or the designee thereof) of the Hawaii Department of Commerce and Consumer

(...continued)
e.g., La Noue & Sullivan, supra note 32, at 108.
36
42 U.S.C. §9802.
37
P.L. 97-35, Ch. 8, Subch. A, 95 Stat. 489 (1981) (codified at 42 U.S.C. §§9801 et seq.).
38
Id. at §626, 95 Stat. 496 (codified at 42 U.S.C. §9815(a)(2)) (“Not later than 90 days after August 13, 1981, the
Administrator of the Small Business Administration, after consultation with the Secretary, shall promulgate regulations
to ensure the availability to community development corporations of such programs as shall further the purposes of this
subchapter, including programs under §637(a) of title 15.”).
39
P.L. 99-272, §18015, 100 Stat. 370 (1986) (codified at 15 U.S.C.§637(a)(13)) (defining “Indian tribe” to include
“any Indian tribe, band, nation, or other organized group or community of Indians, including any Alaska Native village
or regional or village corporation (within the meaning of the Alaska Native Claims Settlement Act (43 U.S.C.§1606))
which (A) is recognized as eligible for the special programs and services provided by the United States to Indians
because of their status as Indians, or (B) is recognized as such by the State in which such tribe, band, nation, group, or
community resides.”). An Alaska Native Corporation is “any Regional Corporation, Village Corporation, Urban
Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska
Native Claims Settlement Act.” 13 C.F.R. §124.3. An Alaska Native is any “citizen of the United States who is a
person of one-fourth degree or more Alaskan Indian …, Eskimo, or Aleut blood, or a combination of those bloodlines.
The term includes, in the absence of proof of a minimum blood quantum, any citizen whom a Native village or Native
group regards as an Alaska Native if their father or mother is regarded as an Alaska Native.” 13 C.F.R. §124.3.
40
P.L. 99-272, §18015, 100 Stat. 370 (codified at 15 U.S.C. §637(a)(4)).
41
P.L. 102-415, §10, 106 Stat. 2115 (1992) (codified at 43 U.S.C. §1626(e)).
42
P.L. 100-656, §207, 102 Stat. 3861 (1988) (codified at 15 U.S.C. §637(a)(4)).

Congressional Research Service

6

The “8(a) Program” for Small Businesses

Affairs, or any successor agency, (B) is controlled by Native Hawaiians, and (C) whose
business activities will principally benefit such Native Hawaiians.43

Current Requirements
Under the current 8(a) Program, participating firms are eligible for set-asides or sole-source
awards of federal contracts, as well as training and technical assistance from SBA. Detailed
statutory and regulatory requirements govern eligibility for the Program; set-asides and solesource awards to 8(a) firms; and related issues. These requirements are generally the same for all
participants in the 8(a) Program, although there are instances where there are “special rules” for
8(a) firms owned by groups.44 An Appendix to this report compares the requirements applicable
to individual owners of 8(a) firms to those applicable to groups owning 8(a) firms (i.e., ANCs,
CDCs, NHOs, and Indian tribes).45

Requirements In General
Eligibility for the 8(a) Program
Eligibility for the 8(a) Program is limited to “small business[es] which [are] unconditionally
owned and controlled by one or more socially and economically disadvantaged individuals who
are of good character and citizens of and residing in the United States, and which demonstrate[]
potential for success.”46 Each of these terms is further defined by the Small Business Act;
regulations that the SBA has promulgated to implement Section 8(a); and judicial and
administrative decisions.47 The eligibility requirements are the same at the time of entry into the
8(a) Program and throughout the Program unless otherwise noted.48

“Business”
Except for small agricultural cooperatives, a “business” is a for-profit entity that has a place of
business located in the United States and operates primarily within the United States or makes a
significant contribution to the U.S. economy by paying taxes or using American products,
materials, or labor.49 For purposes of the 8(a) Program, businesses may take the form of
43

Id. (codified at 15 U.S.C. §637(a)(15)). A “Native Hawaiian” is “any individual whose ancestors were natives, prior
to 1778, of the area which now comprises the State of Hawaii.” 13 C.F.R. §124.3.
44
See, e.g., 13 C.F.R. §124.109(a) (“Special rules for ANCs. Small business concerns owned and controlled by ANCs
are eligible for participation in the 8(a) program and must meet the eligibility criteria set forth in §124.112 to the extent
the criteria are not inconsistent with this section.”) (emphasis in original).
45
See also archived CRS Report R40855, Contracting Programs for Alaska Native Corporations: Historical
Development and Legal Authorities, by (name redacted) and (name redacted)(discussing contracting with ANC-owned
firms through the 8(a) Program and other programs).
46
13 C.F.R. §124.101. The Office of Legal Counsel at the Department of Justice has opined that SBA regulations
limiting eligibility for the 8(a) Program to citizens do not deprive resident aliens of due process in violation of the Fifth
Amendment to the U.S. Constitution. See U.S. Dep’t of Justice, Office of Legal Counsel, Constitutionality of 13 C.F.R.
§124.103 Establishing Citizenship Requirement for Participation in 8(a) Program, 20 Op. O.L.C. 85 (1996).
47
The SBA’s Office of Hearings and Appeals has, for example, developed a seven-part test for determining whether a
small business is “unusually reliant” on a contractor that is used in determining affiliation. See Valenzuela Eng’g, Inc.
& Curry Contracting Co., Inc., SBA-4151 (1996).
48
See 13 C.F.R. §124.112(a) (“In order for a concern ... to remain eligible for 8(a) ... program participation, it must
continue to meet all eligibility criteria contained in [Section] 124.101 through [Section] 124.108.”).
49
13 C.F.R. §121.105(a)(1). “Business” is separately defined for small agricultural cooperatives. See 13 C.F.R.
(continued...)

Congressional Research Service

7

The “8(a) Program” for Small Businesses

individual proprietorships, partnerships, limited liability companies, corporations, joint ventures,
associations, trusts, or cooperatives.50

“Small”
A business is “small” if it is independently owned and operated; is not dominant in its field of
operations; and meets any definitions or standards established by the Administrator of the SBA.51
These standards focus primarily upon the size of the business as measured by the number of
employees or its gross income, but they also take into account the size of other businesses within
the same industry.52 For example, businesses in the field of “scheduled passenger air
transportation” are “small” if they have fewer than 1,500 employees, while those in the data
processing field are “small” if they have a gross income of less than $32.5 million.53
Affiliations between businesses, or relationships allowing one party control or the power of
control over another,54 generally count in size determinations, with the SBA considering “the
receipts, employees, or other measure of size of the concern whose size is at issue and all of its
domestic and foreign affiliates, regardless of whether the affiliates are organized for profit.”55
Businesses can thus be determined to be other than small because of their involvement in joint
ventures,56 subcontracting arrangements,57 or franchise or license agreements,58 among other
things, provided that their income or personnel numbers, plus those of their affiliate(s), are over
the pertinent size threshold.

“Unconditionally owned and controlled”
Participants in the 8(a) Program must be “at least 51% unconditionally and directly owned by one
or more socially and economically disadvantaged individuals who are citizens of the United
States” unless they are owned by an ANC, CDC, NHO, or Indian tribe.59 Ownership is
“unconditional” when it is not subject to any conditions precedent or subsequent, executory
(...continued)
§121.105(a)(2).
50
13 C.F.R. §121.105(b).
51
15 U.S.C. §632(a)(1)-(2)(A).
52
13 C.F.R. §§121.101-121.109. The number of employees is the average number in each pay period for the preceding
12 calendar months. Where possible, gross income is based on the average for the last three completed fiscal years. It
includes all revenues, not just those from the firm’s primary industry. See IMDT, Inc., SBA-4121 (1995).
53
13 C.F.R. §121.201.
54
13 C.F.R. §121.103(a)(1). Control, or the power of control, need only exist. It need not be exercised for affiliation to
be found.
55
13 C.F.R. §121.103(a)(6).
56
13 C.F.R. §121.103(h) (“[A] specific joint venture entity generally may not be awarded more than three contracts
over a two year period, starting from the date of the award of the first contract, without the partners to the joint venture
being deemed affiliated for all purposes.”).
57
13 C.F.R. §121.103(h)(4) (“A contractor and its ostensible subcontractor are treated as joint venturers, and therefore
affiliates, for size determination purposes. An ostensible subcontractor is a subcontractor that performs primary and
vital requirements of a contract, or of an order under a multiple award schedule contract, or a subcontractor upon which
the prime contractor is unusually reliant.”).
58
13 C.F.R. §121.103(i) (“Affiliation may arise ... through ... common ownership, common management or excessive
restrictions on the sale of the franchise interest.”).
59
13 C.F.R. §124.105 (defining “unconditional ownership”). See also 15 U.S.C. §637(a)(4)(A)(i)-(ii) (requiring at least
51% unconditional ownership).

Congressional Research Service

8

The “8(a) Program” for Small Businesses

agreements, voting trusts, restrictions on or assignments of voting rights, or other arrangements
that could cause the benefits of ownership to go to another entity.60 Ownership is “direct” when
the disadvantaged individuals own the business in their own right and not through an
intermediary (e.g., ownership by another business entity or by a trust that is owned and controlled
by one or more disadvantaged individuals).61 Non-disadvantaged individuals and non-participant
businesses that own at least 10% of an 8(a) business may generally own no more than 10 to 20%
of any other 8(a) firm.62 Non-participant businesses that earn the majority of their revenue in the
same or similar line of business are likewise barred from owning more than 10% (increasing to
20%-30% in certain circumstances) of another 8(a) firm.63
Participants must also be controlled by one or more disadvantaged individuals.64 “Control is not
the same as ownership” and includes both strategic policy setting and day-to-day management
and administration of business operations.65 Management and daily business operations must also
be conducted by one or more disadvantaged individuals unless the 8(a) business is owned by an
ANC, CDC, NHO, or Indian tribe.66 These individuals must have managerial experience “of the
extent and complexity needed to run the concern” and generally must devote themselves full-time
to the business “during the normal working hours of firms in the same or similar line of
business.”67 A disadvantaged individual must hold the highest officer position within the
business.68 Non-disadvantaged individuals may otherwise be involved in the management of an
8(a) business, or may be stockholders, partners, limited liability members, officers, or directors of
an 8(a) business.69 However, they may not exercise actual control or have the power to control the
firm or its disadvantaged owner(s), or receive compensation greater than that of the highest-paid
officer (usually the CEO or President) without SBA approval.70

“Socially disadvantaged individual”
Socially disadvantaged individuals are “those who have been subjected to racial or ethnic
prejudice or cultural bias within American society because of their identities as members of
groups and without regard to their individual qualities.”71 Members of designated groups, listed in
Table 1, are entitled to a rebuttable presumption of social disadvantage for purposes of the 8(a)
Program,72 although this presumption can be overcome with “credible evidence to the contrary.”73
60

13 C.F.R. §124.3.
13 C.F.R. §124.105(a).
62
13 C.F.R. §124.105(h)(1). Ownership is limited to 10% when the 8(a) firm in is the “developmental stage” of the
8(a) Program and 20% when it is in the “transitional stage.” Id. For more on the developmental and transitional stages,
see infra notes 110-112 and accompanying text.
63
13 C.F.R. §124.105(h)(2).
64
15 U.S.C. §637(a)(4)(A)(i)-(ii) (requiring control of management and business operations); 13 C.F.R. §124.106.
65
13 C.F.R. §124.106.
66
Id.
67
13 C.F.R. §124.106 & §124.106(a)(3).
68
13 C.F.R. §124.106(a)(2).The individual must also be physically located in the United States. Id.
69
13 C.F.R. §124.106(e).
70
13 C.F.R. §124.106(e)(1) & (3).
71
13 C.F.R. §124.103(a). See also 15 U.S.C. §637(a)(5).
72
13 C.F.R. §124.103(b)(1). If required by the SBA, individuals claiming membership in these groups must
demonstrate that they held themselves out and are recognized by others as members of the designated group(s). 13
C.F.R. §124.103(b)(2).
73
13 C.F.R. §124.103(b)(3).
61

Congressional Research Service

9

The “8(a) Program” for Small Businesses

Individuals who are not members of designated groups must prove they are socially
disadvantaged by a preponderance of the evidence.74 Such individuals must show (1) at least one
objective distinguishing feature that has contributed to social disadvantage (e.g., race, ethnic
origin, gender, physical handicap, long-term residence in an environment isolated from
mainstream American society); (2) personal experiences of substantial and chronic social
disadvantage in American society; and (3) negative impact on entry into or advancement in the
business world.75 In assessing the third factor, the SBA will consider all relevant evidence
produced by the applicant, but must consider the applicant’s education, employment, and business
history to see if the totality of the circumstances shows disadvantage.76 Groups not included in
Table 1 may obtain listing by demonstrating disadvantage by a preponderance of the evidence.77

“Economically disadvantaged individual”
Economically disadvantaged individuals are “socially disadvantaged individuals whose ability to
compete in the free enterprise system has been impaired due to diminished capital and credit
opportunities as compared to others in the same or similar line of business who are not socially
disadvantaged.”78 Individuals claiming economic disadvantage must describe it in a personal
statement and submit financial documentation.79 The SBA will examine their personal income for
the past three years, their personal net worth, and the fair market value of the assets they own.80
However, principal ownership in a prospective or current 8(a) business is generally excluded
when calculating net worth, as is equity in individuals’ primary residence.81 For initial eligibility,
applicants to the 8(a) Program must have a net worth of less than $250,000.82 For continued
eligibility, net worth must be less than $750,000.83

“Good character”
In determining whether an applicant to, or participant in, the 8(a) Program possesses “good
character,” the SBA looks for criminal conduct; violations of SBA regulations; current debarment
or suspension from government contracting; managers or key employees who lack business
integrity; and the knowing submission of false information to the SBA.84

“Demonstrated potential for success”
For a firm to have demonstrated potential for success, it generally must have been in business in
the field of its primary industry classification for at least two full years immediately prior to the
74

13 C.F.R. §124.103(c)(1).
13 C.F.R. §124.103(c)(2)(i)-(iii).
76
13 C.F.R. §124.103(c)(2)(iii).
77
13 C.F.R. §124.103(d)(4). Groups petitioning for recognition as socially disadvantaged do not always obtain it. Over
the years, the SBA has rejected petitions from Hasidic Jews, women, disabled veterans, and Iranian-Americans. See
supra note 32.
78
13 C.F.R. §124.104(a). See also 15 U.S.C. §637(a)(6)(A).
79
13 C.F.R. §124.104(b)(1).
80
13 C.F.R. §124.104(c). See also 15 U.S.C. §637(a)(6)(E)(i)-(ii).
81
13 C.F.R. §124.104(c)(2).
82
Id.
83
Id.
84
13 C.F.R. §124.108(a)(1)-(5). For more on debarment and suspension, see CRS Report RL34753, Procurement
Debarment and Suspension of Government Contractors: Legal Overview, by (name redacted) .
75

Congressional Research Service

10

The “8(a) Program” for Small Businesses

date of its application to the 8(a) Program.85 However, the SBA may grant a waiver allowing
firms that have been in business for less than two years to enter the 8(a) Program when (1) the
disadvantaged individuals upon whom eligibility is based have substantial business management
experience; (2) the business has demonstrated the technical experience necessary to carry out its
business plan with a substantial likelihood of success; (3) the firm has adequate capital to sustain
its operations and carry out its business plan; (4) the firm has a record of successful performance
on contracts in its primary field of operations; and (5) the firm presently has, or can demonstrate
its ability to timely obtain, the personnel, facilities, equipment, and other resources necessary to
perform contracts under Section 8(a).86

Set-Asides and Sole-Source Awards Under Section 8(a)
Section 8(a) of the Small Business Act authorizes agencies to award contracts for goods or
services, or to perform construction work, to the SBA for subcontracting to small businesses
participating in the 8(a) Program.87 A “set-aside” is an acquisition in which only certain
contractors may compete, while a sole-source award is a contract awarded, or proposed for
award, without competition.88 Although the Competition in Contracting Act (CICA) generally
requires that agencies obtain “full and open competition through the use of competitive
procedures” when procuring goods or services, set-asides and sole-source awards are both
permissible under CICA. In fact, an 8(a) set-aside is a recognized competitive procedure.89
Agencies are effectively encouraged to subcontract through the 8(a) Program because there are
government-wide and agency-specific goals regarding the percentage of procurement dollars
awarded to “small disadvantaged businesses,” among others.90 Awards made via set-asides or on a
sole-source basis count toward these goals,91 and businesses participating in the 8(a) Program are
considered small disadvantaged businesses.92
85

13 C.F.R. §124.107. Specifically, “[i]ncome tax returns for each of the two previous tax years must show operating
revenues in the primary industry in which the applicant is seeking 8(a) ... certification.” 13 C.F.R. §124.107(a).
86
15 U.S.C. §637(a)(7)(A) (“reasonable prospects for success”); 13 C.F.R. §124.107(b)(1)(i)-(v).
87
SBA may delegate the function of executing contracts to the procuring agencies and often does so. See 13 C.F.R.
§124.501(a); Partnership Agreement Between the U.S. Small Business Administration and the U.S. Department of
Defense, January 7, 2013, available at http://www.sba.gov/sites/default/files/files/Department%20of%20Defense.pdf.
88
Set-asides may be total or partial. See 48 C.F.R. §19.501(a).
89
10 U.S.C. §2304(b)(2), 41 U.S.C. §3303(b) (CICA provisions authorizing set-asides for small businesses); 48 C.F.R.
§§6.203-6.207 (set-asides for small business generally, 8(a) small businesses, Historically Underutilized Business Zone
(HUBZone) small businesses, service-disabled veteran-owned small businesses, and women-owned small businesses).
CICA authorizes competitions excluding all sources other than small businesses when such competitions assure that a
“fair proportion of the total purchases and contracts for property and services for the Federal Government shall be
placed with small business concerns.” 41 U.S.C. §3104. CICA also permits sole-source awards when such awards are
made pursuant to a procedure expressly authorized by statute, or when special circumstances exist (e.g., urgent and
compelling circumstances). See 10 U.S.C. §2304(c)(1) (defense agency procurements) & 41 U.S.C. §§3301 & 3304(a)
(civilian agency procurements). For more on competition in federal contracting, see CRS Report R40516, Competition
in Federal Contracting: Legal Overview, by (name redacted) .
90
15 U.S.C. §644(g)(1)-(2). Currently, the government-wide goal is that 5% of all federal contract and subcontract
dollars be spent with small disadvantaged businesses, including 8(a) businesses. Most agencies also have a 5% goal.
See Small Business Goaling Report, supra note 3. The government-wide goal was met in FY2014, the most recent year
for which information is available, when 9.4% of all federal procurement dollars was spent with small disadvantaged
businesses. Id. Performance by the large procuring agencies varies, from 2.3% (Department of Energy) to 47.8%
(SBA). Id.
91
They also count toward a separate goal for the percentage of federal procurement dollars awarded to small businesses
generally. This latter goal is currently 23%.
92
See 13 C.F.R. §124.1002 (defining “small disadvantaged business”).

Congressional Research Service

11

The “8(a) Program” for Small Businesses

Discretion to Subcontract Through the 8(a) Program
There are few limits on agency discretion to subcontract through the 8(a) Program.93 However,
the SBA is prohibited by regulation from accepting procurements for award under Section 8(a)
when
1. the procuring agency issued a solicitation for or otherwise expressed publicly a
clear intent to reserve the procurement as a set-aside for small businesses not
participating in the 8(a) Program prior to offering the requirement to SBA for
award as an 8(a) contract;94
2. the procuring agency competed the requirement among 8(a) firms prior to
offering the requirement to SBA and receiving SBA’s acceptance of it;95 or
3. the SBA makes a written determination that “acceptance of the procurement for
8(a) award would have an adverse impact on an individual small business, a
group of small businesses located in a specific geographical location, or other
small business programs.”96
Additionally, SBA is barred from awarding an 8(a) contract, either via a set-aside or on a solesource basis, “if the price of the contract results in a cost to the contracting agency which exceeds
a fair market price.”97
Otherwise, agency officials may offer contracts to the SBA “in [their] discretion,” and the SBA
may accept requirements for the 8(a) Program “whenever it determines such action is necessary
or appropriate.”98 The courts and the Government Accountability Office (GAO) will generally not
93

See, e.g., AHNTECH, Inc., B-401092 (April 22, 2009) (“The [Small Business] Act affords the SBA and contracting
agencies broad discretion in selecting procurements for the 8(a) program.”).
94
Even in this situation, SBA may accept the requirement under “extraordinary circumstances.” 13 C.F.R. §124.504(a);
Madison Servs., Inc., B-400615 (December 11, 2008) (finding that extraordinary circumstances existed when the
agency’s initial small business set-aside was erroneous and did not reflect its intentions).
95
However, offers of requirements below the simplified acquisition threshold (generally $150,000) are assumed to
have been accepted if SBA does not reply within two days. 13 C.F.R. §124.503(a)(4)(i). See also Eagle Collaborative
Computing Servs., Inc., B-401043.3 (January 28, 2011) (finding that an agency properly awarded a sole-source
contract valued below the simplified acquisition threshold even though SBA never formally accepted the
requirements).
96
13 C.F.R. §124.504(a)-(c). The third provision applies only to preexisting requirements. It generally does not apply
to new contracts, follow-on or renewal contracts, or procurements conducted using simplified acquisition procedures.
Id. Also, under its regulations, SBA must presume an adverse impact when:
(A) The small business concern has performed the specific requirement for at least 24 months;
(B) The small business is performing the requirement at the time it is offered to the 8(a) ... program,
or its performance of the requirement ended within 30 days of the procuring activity’s offer of the
requirement to the 8(a) ... program; and
(C) The dollar value of the requirement that the small business is or was performing is 25 percent
or more of its most recent annual gross sales (including those of its affiliates).
13 C.F.R. §124.504(c)(1)(i)(A)-(C).
97
15 U.S.C. §637(a)(1)(A); 48 C.F.R. §19.806(b). Fair market price is estimated by looking at recent prices for similar
items or work, in the case of repeat purchases, or by considering commercial prices for similar products or services,
available in-house cost estimates, cost or pricing data submitted by the contractor, or data from other government
agencies, in the case of new purchases. 15 U.S.C. §637(a)(3)(B)(i)-(iii); 48 C.F.R. §19.807(b) & (c).
98
15 U.S.C. §637(a)(1)(A). See also Totolo v. United States, 87 Fed. Cl. 680, 695 (2009) (“The manner in which [an
agency] assesses its needs is a business judgment and lies within its own discretionary domain.”); JT Constr. Co., B254257 (December 6, 1993) (stating that it is a business judgment, within the contracting officer’s discretion, to decide
not to set aside a competition for small businesses). For a time in 2008-2010, the federal courts and the Government
(continued...)

Congressional Research Service

12

The “8(a) Program” for Small Businesses

hear protests of agencies’ determinations regarding whether to procure specific requirements
through the 8(a) Program unless it can be shown that government officials acted in bad faith or
contrary to federal law.99

Monetary Thresholds and Subcontracting Mechanism Under 8(a)
Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded either
through a set-aside or on a sole-source basis, with the amount of the contract generally
determining the acquisition method used. When the anticipated total value of the contract,
including any options, is less than $4 million ($7 million for manufacturing contracts), the
contract is normally awarded without competition.100 In contrast, when the anticipated value of
the contract exceeds $4 million ($7 million for manufacturing contracts), the contract generally
must be awarded via a set-aside with competition limited to 8(a) firms so long as there is a
reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and
the award can be made at fair market price.101 Sole-source awards of contracts valued at $4
million ($7 million or more for manufacturing contracts) may only be made when (1) there is not
a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers at
a fair market price, or (2) the SBA accepts the requirement on behalf of an 8(a) firm owned by an
Indian tribe, an ANC or, in the case of Department of Defense contracts, an NHO.102
Requirements valued at more than $4 million ($7 million for manufacturing contracts) cannot be
divided into several acquisitions at lesser amounts in order to make sole-source awards.103

Other Requirements
Other key requirements of the 8(a) Program include the following:


Inability to protest an 8(a) firm’s eligibility for an award: When the SBA makes
or proposes an award to an 8(a) firm, that firm’s eligibility for the award cannot

(...continued)
Accountability Office (GAO) found that set-asides for Historically Underutilized Business Zone (HUBZone) small
businesses had “precedence” over set-asides for 8(a) firms. See generally archived CRS Report R40591, Set-Asides for
Small Businesses: Recent Developments in the Law Regarding Precedence Among the Set-Aside Programs and SetAsides Under Indefinite-Delivery/Indefinite-Quantity Contracts, by (name redacted) . However, the Small Business Act
was amended on September 27, 2010, to remove the language that formed the basis for these decisions. Small Business
Jobs Act of 2010, P.L. 111-240, §1347,124 Stat. 2546-47 (September 27, 2010).
99
See, e.g., Rothe Computer Solutions, LLC, B-299452 (May 9, 2007).
100
15 U.S.C. §637(a)(16)(A). A noncompetitive award may be made under this authority so long as (1) the firm is
determined to be a responsible contractor for performance of the contract; (2) the award of the contract would be
consistent with the firm’s business plan; and (3) award of the contract would not result in the firm exceeding the
percentage of revenue from 8(a) sources forecast in its annual business plan. 15 U.S.C. §637(a)(16)(A)(i)-(iii).
101
15 U.S.C. §637(a)(1)(D)(ii); 48 C.F.R. §19.805-1(a). However, competitive awards for contracts whose anticipated
value is less than $4 million ($7 million for manufacturing contracts) can be made with the approval of the SBA’s
Associate Administrator for 8(a) Business Development. 15 U.S.C. §637(a)(1)(D)(i)(I)-(II); 48 C.F.R. §19.805-1(d).
102
48 C.F.R. §19.805-1(b)(1)-(2) (sole-source awards to tribally or ANC-owned firms); 48 C.F.R. §219.8051(b)(2)(A)-(B) (sole-source awards to NHO-owned firms). Prior to enactment of the National Defense Authorization
Act (NDAA) for FY2010, contracting officers making sole-source awards in reliance on the second exception did not
have to justify such awards or obtain approval of them from higher-level agency officials. The NDAA changed this by
requiring justifications, approvals, and notices for sole-source contracts in excess of $20 million awarded under the
authority of §8(a) analogous to those required for sole-source contracts awarded under the general contracting
authorities. Compare P.L. 111-84, §811, 123 Stat. 2405-06 (October 28, 2009) with 10 U.S.C. §2304(c) & (f)
(procurements of defense agencies); 41 U.S.C. §3304(a) & (e) (procurements of civilian agencies).
103
48 C.F.R. §19.805-1(c).

Congressional Research Service

13

The “8(a) Program” for Small Businesses









be challenged or protested as part of the solicitation or proposed contract award.
Instead, information concerning a firm’s eligibility for the 8(a) Program must be
submitted to SBA in accordance with separate requirements contained in Section
124.517 of Title 13 of the Code of Federal Regulations.104
Maximum of nine years in the 8(a) Program: Firms may participate in the 8(a)
Program for no more than nine years from the date of their admission into the
Program, although they may be terminated or graduate from the program before
nine years have passed.105
One-time eligibility for the 8(a) Program: Once a firm or a disadvantaged
individual upon whom a firm’s eligibility was based has exited the 8(a) Program
after participating in it for any length of time, neither the firm nor the individual
is generally eligible to participate in the 8(a) Program again.106 When at least
50% of the assets of one firm are the same as those of another firm, the firms are
considered identical for purposes of eligibility for the 8(a) Program.107
Limits on ownership of 8(a) firms by family members of current or former 8(a)
firm owners: Individuals generally may not use their disadvantaged status to
qualify a firm for the 8(a) Program if the individual has an immediate family
member who is using, or has used, his or her disadvantaged status to qualify a
firm for the 8(a) Program.108
Limits on the amount of 8(a) contracts that a firm may receive: 8(a) firms may
generally not receive additional sole-source awards once they have received a
combined total of competitive and sole-source awards in excess of $100 million,
in the case of firms whose size is based on their number of employees, or in
excess of an amount equivalent to the lesser of (1) $100 million or (2) five times
the size standard for the industry, in the case of firms whose size is based on their
revenues.109 Additionally, 8(a) firms in the “transitional stage,” or the last five
years of participation, must achieve annual targets for the amount of revenues
they receive from non-8(a) sources.110 These targets increase over time, with
firms required to attain 15% of their revenue from non-8(a) sources in the fifth
year; 25% in the sixth year; 35% in the seventh year; 45% in the eight year; and
55% in the ninth year.111 Firms that do not display the relevant percentages of

104

48 C.F.R. §19.805-2(d).
15 U.S.C. §636(j)(15) (nine-year term); 15 U.S.C. §637(a)(9) (termination and early graduation); 13 C.F.R.
§124.301 (exiting the program); 13 C.F.R. §124.302 (early graduation); 13 C.F.R. §124.303 (termination).
106
15 U.S.C. §636(j)(11)(B)-(C); 13 C.F.R. §124.108(b).
107
13 C.F.R. §124.108(b)(4).
108
13 C.F.R. §124.105(g)(1). SBA may waive this prohibition if the firms have no connections in terms of ownership,
control, or contractual relationships and certain other conditions are met. Id.
109
13 C.F.R. §124.519(a)(1)-(2). Contracts less than $100,000 are not counted in determining whether a firm has
reached the applicable limit. 13 C.F.R. §124.519(a)(3). The Administrator of the SBA may waive this requirement if
the head of the procuring agency determines that a sole-source award to a firm is necessary “to achieve significant
interests of the Government.” 13 C.F.R. §124.519(e). Even after they have received a combined total of competitive
and sole-source awards in excess of $100 million, or other applicable amount, firms may still receive competitive
contracts under the 8(a) Program. 13 C.F.R. §124.519(b).
110
15 U.S.C. §636(j)(10)(I)(i)-(iii); 13 C.F.R. §124.509(b)(1).
111
13 C.F.R. §124.509(b)(2).
105

Congressional Research Service

14

The “8(a) Program” for Small Businesses



revenue from non-8(a) sources are ineligible for sole-source 8(a) contracts
“unless and until” they correct the situation.112
Limitations on subcontracting: Although not only under the authority of Section
8(a) of the Small Business Act or applicable only to 8(a) businesses, limitations
on subcontracting require that small businesses receiving contracts under a setaside perform an amount of work that equals certain minimum percentages of the
amount paid under the contract.113 Specifically, small businesses must generally
perform at least 50% of the costs of the contract incurred for personnel with its
own employees, in the case of service contracts; and at least 50% of the cost of
manufacturing supplies or products (excluding the cost of materials), in the case
of manufacturing contracts.114

Requirements for Tribally, ANC-, NHO-, and CDC-Owned Firms
Tribes, ANCs, NHOs or CDCs themselves generally do not participate in the 8(a) Program.
Rather, businesses that are at least 51% owned by such entities participate in the 8(a) Program,115
although the rules governing their participation are somewhat different from those for the 8(a)
Program generally.116

Eligibility for the 8(a) Program
“Small”
Firms owned by Indian tribes, ANCs, NHOs, and CDCs must be “small” under the SBA’s size
standards.117 However, certain affiliations with the owning entity or other business enterprises of
that entity are excluded in size determinations unless the Administrator of Small Business
determines that a small business owned by an ANC, CDC, NHO, or Indian tribe “[has] obtained,
or [is] likely to obtain, a substantial unfair competitive advantage within an industry category”
because of such exclusions.118 Other affiliations of small businesses owned by ANCs, CDCs,
NHOs, and Indian tribes can count in size determinations, and ANC-owned firms, in particular,
have been subjected to early graduation from the 8(a) Program because they exceeded the size
standards.119
112

13 C.F.R. §124.509(d)(1). This prohibition may be waived when the Director of the Office of Business
Development finds that denial of a sole-source contract would cause severe economic hardship for the firm, potentially
jeopardizing its survival, or when extenuating circumstances beyond the firm’s control caused it to miss its target. 13
C.F.R. §125.509(e).
113
15 U.S.C. §637(a)(14)(A)-(B); 15 U.S.C. §644(o); 13 C.F.R. §125.6; 48 C.F.R. §52.219-14.
114
15 U.S.C. §657s(a)(1)&(2); 13 C.F.R. §125.6(a)(1)-(2). There are separate provisions regarding the percentage of
work to be performed under construction contracts. See generally 13 C.F.R. §125.6(a)(3)-(4).
115
13 C.F.R. §124.109(c)(3)(i) (tribally and ANC-owned firms); 13 C.F.R. §124.110 (b) (NHO-owned firms); 13
C.F.R. §124.111(c) (CDC-owned firms).
116
13 C.F.R. §§124.109-124.111.
117
13 C.F.R. §124.109(c)(2) (tribally and ANC-owned firms); 13 C.F.R. §124.110(b) (NHO-owned firms); 13 C.F.R.
§124.111(c) (CDC-owned firms).
118
13 C.F.R. §124.109(c)(2)(iii) (tribally and ANC-owned firms); 13 C.F.R. §124.110(b) (NHO-owned firms); 13
C.F.R. §124.111(c) (CDC-owned firms).
119
See, e.g., Valenzuela Eng’g, Inc. & Curry Contracting Co., Inc., SBA-4151 (1996) (rejecting a challenge to the size
of an ANC-owned firm because its subcontractor performed less than 25% of the work on the contract and was not its
affiliate); Gov’t Accountability Office, Increased Used of Alaska Native Corporations’ Special 8(a) Provisions Calls
(continued...)

Congressional Research Service

15

The “8(a) Program” for Small Businesses

“Business”
Firms owned by ANCs, CDCs, NHOs, and Indian tribes must be “businesses” under the SBA’s
definition.120 Although ANCs themselves may be for-profit or nonprofit, ANC-owned businesses
must be for-profit to participate in the 8(a) Program.121

“Unconditionally owned and controlled”
Firms owned by ANCs, CDCs, NHOs, or Indian tribes must be unconditionally owned and
substantially controlled by the ANC, CDC, NHO, or Indian tribe, respectively.122 However, under
SBA regulations, tribally or ANC-owned firms may be managed by individuals who are not
members of the tribe or Alaska Natives if the firm can demonstrate:
that the Tribe [or ANC] can hire and fire those individuals, that it will retain control of all
management decisions common to boards of directors, including strategic planning,
budget approval, and the employment and compensation of officers, and that a written
management development plan exists which shows how Tribal members will develop
managerial skills sufficient to manage the concern or similar Tribally-owned concerns in
the future.123

NHO-owned firms must demonstrate that the NHO controls the board of directors.124 However,
the individual who is responsible for the NHO-owned firm’s day-to-day management need not
establish personal social and economic disadvantage.125 CDCs are to be managed and have their
daily operations conducted by individuals with “managerial experience of an extent and
complexity needed to run the [firm].”126

“Socially disadvantaged”
As owners of prospective or current 8(a) firms, Indian tribes, ANCs, NHOs, and CDCs are all
presumed to be socially disadvantaged.127
(...continued)
for Tailored Oversight, GAO-06-399, at 29 (April 2006) (describing “early graduation” of ANC-owned 8(a) firms).
120
13 C.F.R. §124.109(a) & (b) (requiring tribally and ANC-owned firms to comply with the general eligibility
requirements where they are not contrary to or inconsistent with the special requirements for these entities); 13 C.F.R.
§124.110(a) (similar provision for NHO-owned firms); 13 C.F.R. §124.111(a) (similar provision for CDC-owned
firms).
121
13 C.F.R. §124.109(a)(3).
122
13 C.F.R. §124.109(a) & (b) (requiring tribally and ANC-owned firms to comply with the general eligibility
requirements where they are not contrary to or inconsistent with the special requirements for these entities); 13 C.F.R.
§124.110(a) (similar provision for NHO-owned firms); 13 C.F.R. §124.111(a) (similar provision for CDC-owned
firms).
123
13 C.F.R. §124.109(c)(4)(B).
124
13 C.F.R. §124.110(d).
125
Id.
126
13 C.F.R. §124.111(b).
127
13 C.F.R. §124.109(b)(1) (tribally and ANC-owned firms); 15 U.S.C. §637(a)(4)(A)(i)(II) (NHO-owned firms); 13
C.F.R. §124.110(a) (same); 13 C.F.R. §124.111(a) (CDC-owned firms); Small Disadvantaged Business Certification
Application: Community Development Corporation (CDC) Owned Concern, OMB Approval No. 3245-0317 (“A
Community Development Corporation (CDC) is considered to be a socially and economically disadvantaged entity if
the parent CDC is a nonprofit organization responsible to residents of the area it serves which has received financial
assistance under 42 U.S.C. 9805, et seq.”). SBA’s authority to designate CDCs as socially and economically
disadvantaged derives from Section 9815(a)(2) of Title 42 of the United States Code, which required SBA to
(continued...)

Congressional Research Service

16

The “8(a) Program” for Small Businesses

“Economically disadvantaged”
By statute, ANCs are deemed to be economically disadvantaged,128 and CDCs are similarly
treated as economically disadvantaged.129 Indian tribes and NHOs, in contrast, must establish
economic disadvantage at least once. Indian tribes must present data on, among other things, the
number of tribe members; the tribal unemployment rate; the per capita income of tribe members;
the percentage of the local Indian population above the poverty level; the tribe’s access to capital;
the tribe’s assets as disclosed in current financial statements; and all businesses wholly or
partially owned by tribal enterprises or affiliates, as well as their primary industry
classification.130 However, once a tribe has established that it is economically disadvantaged for
purposes of one 8(a) business, it need not reestablish economic disadvantage in order to have
other businesses certified for the 8(a) Program unless the Director of the Office of Business
Development requires it to do so.131
When determining whether an NHO is economically disadvantaged, SBA will consider “the
individual economic status of NHO’s members,” the majority of whom “must qualify as
economically disadvantaged” under the same standards as individual applicants to the 8(a)
Program.132 Specifically:
For the first 8(a) applicant owned by a particular NHO, individual NHO members must
meet the same initial eligibility economic disadvantage thresholds as individually-owned
8(a) applicants. For any additional 8(a) applicant owned by the NHO, individual NHO
members must meet the economic disadvantage thresholds for continued 8(a)
eligibility.133

“Good character”
When an organization owns an actual or prospective 8(a) firm, all members, officers, or
employees of that organization are generally not required to show good character. The regulations
governing tribally and ANC-owned firms explicitly address the issue, stating that the “good
character” requirement applies only to officers or directors of the firm, or shareholders owning
more than a 20% interest.134 NHO-owned firms may be subject to the same requirements in
practice.135 With CDC-owned firms, the firm itself and “all of its principals” must have good
character.136

(...continued)
“promulgate regulations to ensure the availability to community development corporations of such programs as shall
further the purposes of this subchapter, including programs under §637(a) of title 15.”
128
43 U.S.C. §1626(e)(1) (“For all purposes of Federal law, a Native Corporation shall be considered to be a
corporation owned and controlled by Natives and a minority and economically disadvantaged business enterprise if the
Settlement Common Stock of the corporation and other stock of the corporation held by holders of Settlement Common
Stock and by Natives and descendants of Natives, represents a majority of both the total equity of the corporation and
the total voting power of the corporation for the purposes of electing directors.”); 13 C.F.R. §124.109(a)(2) (similar).
129
See Small Disadvantaged Business Certification Application, supra note 129. See also 13 C.F.R. §124.111(a).
130
15 U.S.C. §637(a)(6)(A); 13 C.F.R. §124.109(b)(2)(i)-(vii).
131
13 C.F.R. §124.109(b).
132
13 C.F.R. §124.110(c)(1).
133
Id. If the NHO has no members, then a majority of the members of the board of directors must qualify as
economically disadvantaged.
134
13 C.F.R. §124.109(c)(7)(ii).
135
The regulations as to NHOs do not appear to address “good character.” However, in practice, when this has
(continued...)

Congressional Research Service

17

The “8(a) Program” for Small Businesses

“Demonstrated potential for success”
Firms owned by ANCs, CDCs, NHOs, and Indian tribes may provide evidence of “potential for
success” in several ways, including by demonstrating that
1. the firm has been in business for at least two years, as shown by individual or
consolidated income tax returns for each of the two previous tax years showing
operating revenues in the primary industry in which the firm seeks certification;
2. the individuals who will manage and control the daily operations of the firm have
substantial technical and management experience; the firm has a record of
successful performance on government or other contracts in its primary industry
category; and the firm has adequate capital to sustain its operations and carry out
its business plan; or
3. the owner-group has made a firm written commitment to support the operations
of the firm and has the financial ability to do so.137
The first of these ways for demonstrating potential for success is the same for individually owned
firms,138 and the second arguably corresponds to the circumstances in which SBA may waive the
requirement that individually owned firms have been in business for at least two years.139 There is
no equivalent to the third way for individually owned firms, and some commentators have
suggested that this provision could “benefit ANCs [and other owner groups] by allowing more
expeditious and effortless access to 8(a) contracts for new concerns without having to staff new
subsidiaries with experienced management.”140

Report of Benefits for Firms Owned By ANCs, Indian Tribes, NHOs, and CDCs
Although implementation of this requirement has been delayed,141 8(a) firms owned by ANCs,
CDCs, NHOs, and Indian tribes must submit information annually to the SBA showing
how the Tribe, ANC, NHO or CDC has provided benefits to the Tribal or native members
and/or the Tribal, native or other community due to the Tribe’s/ANC’s/NHO’s/CDC’s
participation in the 8(a) … program through one or more firms. This data includes

(...continued)
happened in the past, NHO-owned firms have often been treated the same as firms owned by Indian tribes.
136
13 C.F.R. §124.111(g).
137
13 C.F.R. §124.109(c)(6)(i)-(iii) (ANC- and tribally-owned firms); 13 C.F.R. §124.110(g)(1)-(3) (NHO-owned
firms); 13 C.F.R. §124.111(f)(1)-(3) (CDC-owned firms).
138
See supra note 85 and accompanying text.
139
See supra note 86 and accompanying text.
140
Daniel K. Oakes, Inching Toward Balance: Reaching Proper Reform of the Alaska Native Corporations’ 8(a)
Contracting Preferences, 40 Pub. Cont. L.J. 777 (2011).
141
Regulations promulgated by SBA in February 2011 provided that this reporting requirement would be effective “as
of September 9, 2011, unless SBA further delays implementation through a Notice in the Federal Register.” Small Bus.
Admin., Small Business Size Regulations; 8(a) Business Development/Small Disadvantaged Business Status
Determinations: Final Rule, 76 Federal Register 8,222 (February 11, 2011). SBA appears to have delayed reporting
through four such notices, two announcing tribal consultations about the reporting requirements, and two seeking
comments on the reporting requirements pursuant to the Paperwork Reduction Act of 1995. See Small Bus. Admin.,
Notice: Extension of Comment Period for New 8(a) Business Development Program Reporting Requirements, 78
Federal Register 9,447 (February 8, 2013); Small Bus. Admin., 60 Day Notice and Request for Comments, 76 Federal
Register 63,983 (October 14, 2011); Small Bus. Admin., Notice of Tribal Consultations, 76 Federal Register 27,859
(May 13, 2011); Small Bus. Admin., Notice of Tribal Consultations, 76 Federal Register 12,273 (March 7, 2011).

Congressional Research Service

18

The “8(a) Program” for Small Businesses

information relating to funding cultural programs, employment assistance, jobs,
scholarships, internships, subsistence activities, and other services provided by the Tribe,
ANC, NHO or CDC to the affected community. 142

Set-Asides and Sole-Source Awards
Like other participants in the 8(a) Program, firms owned by ANCs, CDCs, NHOs, and Indian
tribes are eligible for 8(a) set-asides and may receive sole-source awards valued at less than $4
million ($7 million for manufacturing contracts). However, firms owned by ANCs and Indian
tribes can also receive sole-source awards in excess of $4 million ($7 million for manufacturing
contracts) even when contracting officers reasonably expect that that at least two eligible and
responsible 8(a) firms will submit offers and the award can be made at fair market price.143 NHOowned firms may receive sole-source awards from the Department of Defense under the same
conditions.144

Other Requirements
Firms owned by ANCs, CDCs, NHOs, and Indian tribes are governed by the same regulations as
other 8(a) firms where certain of the “other requirements” are involved, including (1) inability to
protest an 8(a) firm’s eligibility for an award;145 (2) maximum of nine years in the 8(a) Program
(for individual firms);146 and (3) limits on subcontracting.147 However, the requirements for such
firms differ somewhat from those for other 8(a) firms where one-time eligibility for the 8(a)
Program; limits on majority ownership of 8(a) firms; and limits on the amount of 8(a) contracts
that a firm may receive are involved. Firms owned by ANCs, CDCs, NHOs, and Indian tribes
may participate in the 8(a) Program only one time.148 However, unlike the disadvantaged
individuals upon whom other firms’ eligibility for the 8(a) Program is based, ANCs, CDCs,
NHOs, and Indian tribes may confer eligibility for the 8(a) Program upon firms on multiple
occasions and for an indefinite period.149 Additionally, although ANCs, CDCs, NHOs, and Indian
tribes may not own 51% or more of a firm obtaining the majority of its revenues from the same
142

13 C.F.R. §124.604.
An Act To Amend the Small Business Act To Reform the Capital Ownership Development Program, and for Other
Purposes; P.L. 100-656, §602(a), 102 Stat. 3887-88 (November 15, 1988) (codified at 15 U.S.C. §637 note); 48 C.F.R.
§19.805-1(b)(2).
144
The authority for DOD to make sole-source awards to NHO-owned firms of contracts valued at more than $4
million ($7 million for manufacturing contracts) even if contracting officers reasonably expect that offers will be
received from at least two responsible small businesses existed on a temporary basis in 2004-2006 and became
permanent in 2006. See Department of Defense, Emergency Supplemental Appropriations to Address Hurricanes in the
Gulf of Mexico, and Pandemic Influenza Act of 2006, P.L. 109-148, §8020, 119 Stat. 2702-03 (December 30, 2005)
(“[Provided] [t]hat, during the current fiscal year and hereafter, businesses certified as 8(a) by the Small Business
Administration pursuant to section 8(a)(15) of Public Law 85-536, as amended, shall have the same status as other
program participants under section 602 of P.L. 100-656 ... for purposes of contracting with agencies of the Department
of Defense.”); 48 C.F.R. §219.805-1(b)(2)(A)-(B).
145
48 C.F.R. §19.805-2(d).
146
13 C.F.R. §124.109(a) & (b) (requiring tribally and ANC-owned firms to comply with the general eligibility
requirements where they are not contrary to or inconsistent with special requirements for these entities); 13 C.F.R.
§124.110(a) (similar provision for NHO-owned firms); 13 C.F.R. §124.111(a) (similar provision for CDC-owned
firms).
147
15 U.S.C. §644(o); 15 U.S.C. §657s; 13 C.F.R. §125.6; 48 C.F.R. §52.219-14.
148
13 C.F.R. §124.109(a) & (b) (ANC- and tribally-owned firms); 13 C.F.R. §124.110(a) (NHO-owned firms); 13
C.F.R. §124.111(a) (CDC-owned firms).
149
Id.; 15 U.S.C. §636(j)(11)(B)-(C).
143

Congressional Research Service

19

The “8(a) Program” for Small Businesses

“primary” industry in which another firm they own or owned currently operates or has operated
within the past two years, there are no limits on the number of firms they may own that operate in
other primary industries.150 Moreover, ANCs, CDCs, NHOs, and Indian tribes may own multiple
firms that earn less than 50% of their revenue in the same “secondary” industries.151 Finally, firms
owned by ANCs, CDCs, NHOs, and Indian tribes may continue to receive additional sole-source
awards even after they have received a combined total of competitive and sole-source 8(a)
contracts in excess of the dollar amount set forth in Section 124.519 of Title 13 of the Code of
Federal Regulations, while individually owned firms may not.152 However, firms owned by any
of these four types of entities are subject to the same requirements regarding the percentages of
revenue received from non-8(a) sources at various stages of their participation in the 8(a)
Program as other 8(a) firms.153

Constitutionality of the 8(a) Program
The 8(a) Program has periodically been challenged on the grounds that the presumption that
members of certain racial and ethnic groups are disadvantaged violates the constitutional
guarantee of equal protection. The outcomes in early challenges to the program varied, with some
courts finding that the plaintiffs lacked standing to bring such challenges because they were not
economically disadvantaged, or were otherwise ineligible for the program;154 and other courts
finding that the program was unconstitutional as applied in specific cases.155 More recently, in its
2012 decision in DynaLantic Corporation v. U.S. Department of Defense, the U.S. District Court
for the District of Columbia found that the 8(a) Program was not unconstitutional on its face
because (1) “breaking down barriers to minority business development created by discrimination
150

13 C.F.R. §124.109(c)(3)(ii) (tribally and ANC-owned firms); 13 C.F.R. §124.110(e) (NHO-owned firms); 13
C.F.R. §124.111(d) (CDC-owned firms). These regulations also provide that an 8(a) firm owned by an ANC, CDC,
NHO, or Indian tribe may not, within its first two years in the 8(a) Program, receive a sole-source contract that is a
follow-on to an 8(a) contract currently performed by an 8(a) firm owned by that entity, or previously performed by an
8(a) firm owned by that entity that left the program within the past two years. Id. In addition, there are restrictions on
the percentage of work that may be performed by any non-8(a) venturer(s) in joint ventures involving 8(a) firms. See
generally 13 C.F.R. §124.513.
151
13 C.F.R. §124.109(c)(3)(ii) (tribally and ANC-owned firms); 13 C.F.R. §124.110(e) (NHO-owned firms); 13
C.F.R. §124.111(d) (CDC-owned firms).
152
13 C.F.R. §124.519(a). See supra note 109.
153
13 C.F.R. §124.509.
154
See, e.g., Ray Baillie Trash Hauling, 477 F.3d at 710 (“The plaintiffs never applied for participation in the section
8(a) program. Furthermore, they do not even contend that they are socially or economically disadvantaged and
therefore eligible for participation in the program.”); SRS Techs., Inc. v. U.S. Dep’t of Defense, No. 96-1484, 1997
U.S. App. LEXIS 10143 (4th Cir., May 6, 1997) (“SBA’s requirement of economic disadvantage for entry into the 8(a)
Program is a race-neutral criterion. It was by virtue of this race-neutral criterion that plaintiff failed to qualify for a
contract award, and its standing to challenge the race-conscious criteria is therefore lacking.”). But see C.S. McCrossan
Constr. Co., Inc. v. Cook, No. 95-1345-HB, 1996 U.S. Dist. LEXIS 14721 (D.N.M., April 2, 1996) (“Although
Defendants attempt to characterize this set-aside program as one based on size and economic status of the owner, the
fact remains that ‘economic disadvantage’ requires a showing of ‘social disadvantage’ which then implicates the racebased challenge. … Plaintiff is not seeking admission into the 8(a) program. It is challenging the government’s
preferential treatment towards 8(a) program participants in the bidding of the job order contract.”).
155
See, e.g., Cortez III Service Corp. v. Nat’l Aeronautics & Space Admin., 950 F. Supp. 357, 361 (D.D.C. 1996)
(finding that the 8(a) Program is facially constitutional, but that “agencies have a responsibility to decide whether there
has been a history of discrimination in the particular industry at issue” prior to procuring requirements through the 8(a)
Program); Fordice Constr. Co. v. Marsh, 773 F. Supp. 867 (S.D. Miss. 1990) (“The court … finds that the United States
Army Corps of Engineers failed to give consideration to the impact of a 100% set-aside upon non-§8(a) eligible
contractors in the Vicksburg area.”).

Congressional Research Service

20

The “8(a) Program” for Small Businesses

and its lingering effects” constitutes a compelling government interest; (2) the government had a
strong basis in evidence for concluding that race-based action was necessary to further this
interest; and (3) the 8(a) Program is narrowly tailored to “minimize the burden on non-minority
firms.”156 However, the court found that the program was unconstitutional as applied in the
military simulation and training industry because the Department of Defense (DOD) conceded it
had “no evidence of discrimination, either in the public or private sector, in the simulation and
training industry.”157
Particularly in its rejection of the facial challenge to the 8(a) Program, the court emphasized
certain aspects of the program’s history and requirements when finding that the government had
articulated a compelling interest for the program and had a strong basis in evidence for its actions.
Specifically, the court rejected the plaintiff’s assertion that the 8(a) Program was “not truly
remedial,” but rather favored “virtually all minority groups … over the larger pool of citizens,”
because non-minority individuals may qualify for the program, and all 8(a) applicants must
demonstrate economic disadvantage.158 The court also noted that the history of the 8(a) program
prior to 1978 (when Congress expressly authorized set-asides for disadvantaged small businesses)
had evidenced that race-neutral methods were insufficient to promote contracting with minorityowned small businesses.159 The court further noted that the 8(a) Program was intended to be a
business development program, not a means to “channel contracts” to minority firms;160 that
Section 8(a) of the Small Business Act expressly provides that awards may be made through the
8(a) Program only when SBA determines that “such action is necessary and appropriate”;161 and
that the act requires the President and SBA to report annually to Congress on the program,
thereby ensuring that Congress has evidence as to whether there is a “continuing compelling need
for the program.”162 Similarly, in finding that the program was narrowly tailored to meet the
government’s interests, the court noted (1) that goals for contracting with small disadvantaged
businesses are purely aspirational, and there are no penalties for failing to meet them;163 (2) the
156

885 F. Supp. 2d 237, 251, 271 (D.D.C. 2012).
Id. at 265-66. However, the court did suggest that, with the requisite evidence, the government could use the 8(a)
Program to make awards in the military simulation and training industry. Id. at 292. The court further characterized this
industry as a “highly skilled” one, which arguably differentiates it from certain other industries in which DOD and
other federal agencies seek to award 8(a) contracts. Id. at 281. Questions about the availability of qualified minority
contractors may be less likely in industries that are not seen as highly skilled. See, e.g., Danielle Ivory, Minority
Vendors Say Awards Program at Risk on U.S. Court Ruling, Bloomberg Gov’t, September 13, 2012 (quoting Alan
Chvotkin, counsel and executive vice president of the Professional Services Council, as saying that the DynaLantic
ruling may “open the door to more lawsuits,” and “[t]he implications across the government could be significant”).
158
885 F. Supp. 2d at 252. The court also rejected DynaLantic’s argument that the government may only seek to
remedy discrimination by a government entity, or by private individuals directly using government funds to
discriminate. The court viewed these arguments as foreclosed by prior decisions holding that, under the Fourteenth
Amendment, the government may implement race-conscious programs “to prevent itself from acting as a ‘passive
participant’ in private discrimination in the relevant industries or markets.” Id. (quoting City of Richmond v. J.A.
Croson, 488 U.S. 469, 492 (1989)).
159
Id. at 255 (“Reports prepared by the GAO and investigations conducted by both the executive and legislative
branches prior to the 1978 codification showed that the Section 8(a) program had fallen far short of its goal to develop
businesses owned by disadvantaged individuals, and that one reason for this failure was that the program had no
legislative basis.”).
160
Id. at 256 (quoting H.Rept. 1714, 95th Cong., 2nd sess., at 22-23 (1978)).
161
Id. at 252-53.
162
Id. at 258. DynaLantic had asserted that post-enactment evidence of discrimination should not be considered.
However, the court concluded that it was proper to consider such evidence, particularly where the “statute is over thirty
years old and the evidence used to justify Section 8(a) [at the time of its enactment] is stale for purposes of determining
a compelling interest in the present.” Id.
157

Congressional Research Service

21

The “8(a) Program” for Small Businesses

nine-year limits on program participation for individual owners and firms;164 and (3) that SBA
may not accept a requirement for the 8(a) Program if it determines that doing so will have a
adverse effect on another small business or group of small businesses.165 The court emphasized
that the last two factors, in particular, helped ensure that race-conscious remedies do not “last
longer than the discriminatory effects [they are] designed to eliminate,”166 and “work the least
harm possible to other innocent persons competing for the benefit.”167
A 2015 decision by the U.S. District Court for the District of Columbia in Rothe Development,
Inc. v. Department of Defense subsequently adopted the reasoning of the DynaLantic court in
finding that the 8(a) Program is not unconstitutional on its face.168 In so doing, the court noted the
same attributes of the 8(a) Program that the DynaLantic court had emphasized. In particular, in its
brief discussion, the court noted the following six factors:
1. alternative, race-neutral remedies had proved unsuccessful in addressing the
discrimination targeted here;
2. the 8(a) Program is “appropriately flexible” because it imposes no quotas and
prescribes no consequences for failure to meet the aspirational goals as to the
percentage of federal contract dollars awarded to small disadvantaged businesses;
3. the program is neither under- nor over-inclusive, since it “does not provide that
every member of a minority group is disadvantaged”;
4. the program imposes temporal limits on individuals’ participation in the program,
and SBA continuously monitors participants’ eligibility;
5. the aspirational goals for contracting with small disadvantaged businesses are
“numerically proportionate” to the evidence regarding the availability of minority
firms that are ready, able, and willing to perform government contracts; and
6. various aspects of the 8(a) Program minimize the program’s burden on nonminority firms (e.g., SBA cannot accept a contract for award through the 8(a)
Program if it determines that doing so would have an “adverse impact” on other
small businesses).169
The decision in Rothe has been appealed to the U.S. Court of Appeals for the District of
Columbia Circuit.170 The litigation in DynaLantic, however, was reportedly settled by the parties
while their appeals to the D.C. Circuit were pending.171
(...continued)
163
Id. at 282-86.
164
Id. at 287-88.
165
Id. at 289-91.
166
Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 238 (1995).
167
Grutter v. Bollinger, 539 U.S. 306, 341 (2003).
168
No. 12-cv-0744 (KBJ), 2015 U.S. Dist. LEXIS 72925, at *60-*61 (D.D.C., June 5, 2015) (“[T]his Court concurs
with the DynaLantic court’s conclusion that the strict scrutiny standard has been met, and that the Section 8(a) program
is facially constitutional despite its reliance on race-conscious criteria. In so holding, this Court incorporates by
reference the reasoning in Parts III.A through III.D.1.(c) and Part III.E of the DynaLantic memorandum opinion, and
adopts it as its own.”) (internal citations omitted). The Rothe court also rejected the plaintiffs allegation that the 8(a)
Program violates the non-delegation doctrine because Congress did not articulate “any intelligible principle to limit the
Executive’s discretion in deciding whether racial, ethnic or cultural bias occurred or even what constitutes a racial,
ethnic, or cultural group.” See id. at *22, *65-*69.
169
Id. at *59-*60.
170
See, e.g., Jon M. DeVore and Melinda L. Meade Meyers, Rothe Development, Inc. v. Department of Defense: D.C.
(continued...)

Congressional Research Service

22

The “8(a) Program” for Small Businesses

(...continued)
District Court Upholds Constitutionality of 8(a) Program, Appeal Underway, available at http://birchhorton.com/
presentations/Victory_in_D_C_District_Court_in_Rothe_Case_re_Constitutionality_of_8(a)_Program.pdf.
171
See, e.g., Center for Individual Rights, DynaLantic Corp. v. Dep’t of Defense: Feds End 19-Year Battle with
DynaLantic, January 31, 2014, available at https://www.cir-usa.org/cases/dynalantic-corp-v-department-of-defense/
(reporting that the district court had approved an agreement between the parties that, among other things, bars the
federal government from awarding any contracts in DynaLantic’s industry for two years). After that time, the
government reportedly must notify the court if it plans to begin making awards through the 8(a) Program in
DynaLantic’s industry and demonstrate that it has a strong basis in evidence for reinstating the program. Id.

Congressional Research Service

23

The “8(a) Program” for Small Businesses

Appendix. Comparison of the Requirements
Pertaining to Different Types of 8(a) Firms
NHOOwned 8(a)
Firms

8(a) Firms
Generally

Tribally Owned
8(a) Firms

ANC-Owned
8(a) Firms

“Small”

Independently
owned and
operated; not
dominant in field
of operation;
meets size
standards (15
U.S.C. §631(a))
All affiliations
count (13 C.F.R.
§121.103)

Independently
owned and
operated; not
dominant in field
of operation;
meets size
standards (15
U.S.C. §631(a))
Affiliations based
on the tribe or
tribal ownership,
among others, do
not count (15
U.S.C.
§636(j)(10)(J)(ii);
13 C.F.R.
§124.109(c)(2))

Independently
owned and
operated; not
dominant in field
of operation;
meets size
standards (15
U.S.C. §631(a))
Affiliations
based on the
ANC or
ownership by
the ANC,
among others,
do not count
(15 U.S.C.
§636(j)(10)(J)(ii);
13 C.F.R.
§124.109(c)(2))

Independently
owned and
operated; not
dominant in
field of
operation;
meets size
standards (15
U.S.C. §631(a))
Affiliations
based on the
NHO or
ownership by
the NHO,
among others,
do not count
(15 U.S.C.
§636(j)(10)(J)(ii
); 13 C.F.R.
§124.110(c))

Independently
owned and
operated; not
dominant in field of
operation; meets
size standards (15
U.S.C. §631(a))
Affiliations based
on the CDC or
ownership by the
CDC, among
others, do not
count (15 U.S.C.
§636(j)(10)(J)(ii); 13
C.F.R. §124.111(c))

“Business”

For-profit entity
with its place of
business in the
United States;
operates
primarily within
the United States
or makes a
significant
contribution to
the U.S. economy
(13 C.F.R.
§121.105(a)(1))

For-profit entity
with its place of
business in the
United States;
operates primarily
within the United
States or makes a
significant
contribution to
the U.S. economy
(13 C.F.R.
§121.105(a)(1))

For-profit entity
with its place of
business in the
United States;
operates
primarily within
the United
States or makes
a significant
contribution to
the U.S.
economy (13
C.F.R.
§121.105(a)(1))
Although ANC
may be
nonprofit, ANCowned firms
must be forprofit to be
eligible for 8(a)
Program (13
C.F.R.
§124.109(a)(3))

For-profit
entity with its
place of
business in the
United States;
operates
primarily
within the
United States
or makes a
significant
contribution
to the U.S.
economy (13
C.F.R.
§121.105(a)(1)
)

For-profit entity
with its place of
business in the
United States;
operates primarily
within the United
States or makes a
significant
contribution to the
U.S. economy (13
C.F.R.
§121.105(a)(1))

“Uncondition
ally owned
and
controlled”

At least 51%
unconditionally
and directly
owned by one or
more

At least 51%
tribally owned (13
C.F.R.
§124.109(b))
Management may

At least 51%
ANC-owned
(13 C.F.R.
§124.109(a)(3))
Management

At least 51%
NHO-owned
(13 C.F.R.
§124.110(a))
NHO must

At least 51% CDCowned (13 C.F.R.
§124.111(a))
Management and
daily business

Category

Congressional Research Service

CDC-Owned
8(a) Firms

1

The “8(a) Program” for Small Businesses

NHOOwned 8(a)
Firms

8(a) Firms
Generally

Tribally Owned
8(a) Firms

ANC-Owned
8(a) Firms

disadvantaged
individuals who
are U.S. citizens
(13 C.F.R.
§124.105)
Management and
daily business
operations must
be conducted by
one or more
disadvantaged
individuals (13
C.F.R. §124.106)

be conducted by
individuals who
are not members
of the tribe
provided that the
SBA determines
that such
management is
necessary to
assist the
business’s
development,
among other
things (13 C.F.R.
§124.109(c)(4)(B))

may be
conducted by
individuals who
are not Alaska
Natives
provided that
the SBA
determines that
such
management is
necessary to
assist the
business’s
development,
among other
things (13 C.F.R.
§124.109(c)(4)(B
))

control the
board of
directors, but
individual who
is responsible
for day-to-day
management
need not
establish
personal social
and economic
disadvantage
(13 C.F.R.
§124.110(d))

operations to be
conducted by
individuals having
managerial
experience of an
extent and
complexity needed
to run the firm (13
C.F.R. §124.111(b))

“Socially
disadvantaged
individual”

Members of
designated
groups presumed
to be socially
disadvantaged;
other individuals
may prove
personal
disadvantage by a
preponderance
of the evidence
(13 C.F.R.
§124.103)

Indian tribes
presumed to be
socially
disadvantaged (43
U.S.C. §1626(e);
15 U.S.C.
§637(a)(4)(A)-(B);
13 C.F.R.
§124.109(b)(1))

ANCs
presumed to be
socially
disadvantaged
(43 U.S.C.
§1626(e); 15
U.S.C.
§637(a)(4)(A)(B); 13 C.F.R.
§124.109(b)(1))

NHOs
presumed to
be socially
disadvantaged
(43 U.S.C.
§1626(e); 15
U.S.C.
§637(a)(4)(A)(B); 13 C.F.R.
§124.109(b)(1)
)

CDCs presumed to
be socially
disadvantaged (42
U.S.C. §9815(a)(2))

“Economically
disadvantaged
individual”

Financial
information (e.g.,
personal income,
personal net
worth, fair
market value of
assets) must
show diminished
financial capital
and credit
opportunities (13
C.F.R. §124.104)

Tribe must prove
economic
disadvantage the
first time a tribally
owned firm
applies to the 8(a)
Program;
thereafter, a tribe
need only prove
economic
disadvantage at
the request of the
SBA (13 C.F.R.
§124.109(b)(2))

Deemed to be
economically
disadvantaged
(43 U.S.C.
§1626(e); 13
C.F.R.
§124.109(a)(2))

For first
applicant to
8(a) Program,
NHO
members must
meet the same
initial eligibility
economic
disadvantage
thresholds as
individuallyowned 8(a)
applicants; for
later
applicants,
NHO
members must
meet the
economic
disadvantage
thresholds for
continued 8(a)
eligibility (13
C.F.R.

CDCs presumed to
be economically
disadvantaged (42
U.S.C. §9815(a)(2))

Category

Congressional Research Service

CDC-Owned
8(a) Firms

2

The “8(a) Program” for Small Businesses

Category

8(a) Firms
Generally

Tribally Owned
8(a) Firms

ANC-Owned
8(a) Firms

NHOOwned 8(a)
Firms

CDC-Owned
8(a) Firms

§124.110(c)(1)
“Good
character”

No criminal
conduct or
violations of SBA
regulations;
cannot be
debarred or
suspended from
government
contracting (13
C.F.R.
§124.108(a))

No criminal
conduct or
violations of SBA
regulations;
cannot be
debarred or
suspended from
government
contracting (13
C.F.R.
§124.108(a))
Requirement
applies only to
officers, directors,
and shareholders
owning more than
a 20% interest in
the business, not
to all members of
the tribe (13
C.F.R.
§124.109(c)(7)(B)(
ii))

No criminal
conduct or
violations of
SBA regulations;
cannot be
debarred or
suspended from
government
contracting (13
C.F.R.
§124.108(a))
Requirement
applies only to
officers,
directors, and
shareholders
owning more
than a 20%
interest in the
business, not to
all ANC
shareholders
(13 C.F.R.
§124.109(c)(7)(B
)(ii))

No criminal
conduct or
violations of
SBA
regulations;
cannot be
debarred or
suspended
from
government
contracting
(13 C.F.R.
§124.108(a))
Regulations do
not address to
whom
requirements
applya

No criminal
conduct or
violations of SBA
regulations; cannot
be debarred or
suspended from
government
contracting (13
C.F.R. §124.108(a))
Requirements apply
to the firm and “all
its principals” (13
C.F.R. §124.111(g))

“Demonstrate
d potential for
success”

Firm must
generally have
been in business
in primary
industry for at
least two full
years prior to
date of
application to
8(a) Program
unless SBA grants
a waiver; waiver
based on 5
conditionsb (13
C.F.R. §124.107)

Firm must have
been in business
in primary
industry for at
least two full
years prior to
date of application
to 8(a) Program;
individuals who
will manage firm
must have
substantial
experience, and
firm must have
had successful
performance and
adequate capital;
or Tribe must
have made
written
commitment to
support the firm
and have the
financial ability to
do so
(13 C.F.R.
§124.109(c)(6)(i)(iii)

Firm must have
been in business
in primary
industry for at
least two full
years prior to
date of
application to
8(a) Program;
individuals who
will manage firm
must have
substantial
experience, and
firm must have
had successful
performance
and adequate
capital; or ANC
must have made
written
commitment to
support the firm
and have the
financial ability
to do so
(13 C.F.R.
§124.109(c)(6)(i)
-(iii)

Firm must
have been in
business in
primary
industry for at
least two full
years prior to
date of
application to
8(a) Program;
individuals
who will
manage firm
must have
substantial
experience,
and firm must
have had
successful
performance
and adequate
capital; or
NHO must
have made
written
commitment
to support the
firm and have
the financial

Firm must have
been in business in
primary industry
for at least two full
years prior to date
of application to
8(a) Program;
individuals who will
manage firm must
have substantial
experience, and
firm must have had
successful
performance and
adequate capital; or
CDC must have
made written
commitment to
support the firm
and have the
financial ability to
do so
(13 C.F.R. §124.111
(f)(1)-(3)

Congressional Research Service

3

The “8(a) Program” for Small Businesses

Category

8(a) Firms
Generally

Tribally Owned
8(a) Firms

ANC-Owned
8(a) Firms

NHOOwned 8(a)
Firms

CDC-Owned
8(a) Firms

ability to do so
(13 C.F.R.
§124.110
(g)(1)-(3)
Sole-source
awards

With contracts
valued at over $4
million ($7
million for
manufacturing
contracts), solesource awards
permissible only
if there is not a
reasonable
expectation that
at least two
eligible 8(a) firms
will submit offers
and the award
can be made at
fair market price
(48 C.F.R.
§19.805-1(b)(1)(2))

Can be made with
contracts valued
at over $4 million
($7 million for
manufacturing
contracts) even if
there is a
reasonable
expectation that
at least two
eligible 8(a) firms
will submit offers
and the award can
be made at fair
market price (15
U.S.C.
§637(a)(1)(D)(i)(ii); 48 C.F.R.
§19.805-1(b)(1)(2))

Can be made
with contracts
valued at over
$4 million ($7
million for
manufacturing
contracts) even
if there is a
reasonable
expectation that
at least two
eligible 8(a)
firms will submit
offers and the
award can be
made at fair
market price (15
U.S.C.
§637(a)(1)(D)(i)(ii); 48 C.F.R.
§19.805-1(b)(1)(2))

Can be made
with
Department of
Defense
contracts
valued at over
$4 million ($7
million for
manufacturing
contracts)
even if there is
a reasonable
expectation
that at least
two eligible
8(a) firms will
submit offers
and the award
can be made at
fair market
price (48
C.F.R.
§219.8051(b)(2)(A)(B)).
Otherwise
cannot be
made unless
there is not a
reasonable
expectation
that at least
two eligible
8(a) firms will
submit offers
and the award
can be made at
fair market
price (48
C.F.R.
§19.8051(b)(1)-(2))

With contracts
valued at over $4
million ($7 million
for manufacturing
contracts), solesource awards
permissible only if
there is not a
reasonable
expectation that at
least two eligible
8(a) firms will
submit offers and
the award can be
made at fair market
price (48 C.F.R.
§19.805-1(b)(1)-(2))

Inability to
protest
eligibility for
award

Firm’s eligibility
for award cannot
be challenged or
protested as part
of the solicitation
or proposed
contract award
(48 C.F.R.
§19.805-2(d))

Firm’s eligibility
for award cannot
be challenged or
protested as part
of the solicitation
or proposed
contract award
(48 C.F.R.
§19.805-2(d))

Firm’s eligibility
for award
cannot be
challenged or
protested as
part of the
solicitation or
proposed
contract award

Firm’s
eligibility for
award cannot
be challenged
or protested
as part of the
solicitation or
proposed
contract

Firm’s eligibility for
award cannot be
challenged or
protested as part
of the solicitation
or proposed
contract award (48
C.F.R. §19.8052(d))

Congressional Research Service

4

The “8(a) Program” for Small Businesses

Category

8(a) Firms
Generally

Tribally Owned
8(a) Firms

ANC-Owned
8(a) Firms

NHOOwned 8(a)
Firms

(48 C.F.R.
§19.805-2(d))

award (48
C.F.R.
§19.805-2(d))

CDC-Owned
8(a) Firms

Maximum of
nine years in
the 8(a)
Program

Firm receives “a
program term of
nine years” but
could be
terminated or
graduated early
(13 C.F.R.
§124.2)

Firm receives “a
program term of
nine years” but
could be
terminated or
graduated early
(13 C.F.R. §124.2)

Firm receives “a
program term of
nine years” but
could be
terminated or
graduated early
(13 C.F.R.
§124.2)

Firm receives
“a program
term of nine
years” but
could be
terminated or
graduated
early (13
C.F.R. §124.2)

Firm receives “a
program term of
nine years” but
could be
terminated or
graduated early (13
C.F.R. §124.2)

One-time
eligibility for
8(a) Program

Applies to both
disadvantaged
owners and firms
(13 C.F.R.
§124.108(b))

Applies only to
tribally owned
firms, not tribes
(15 U.S.C.
§636(j)(11)(B)(C))

Applies only to
ANC-owned
firms, not ANCs
(15 U.S.C.
§636(j)(11)(B)(C))

Applies only to
NHO-owned
firms, not
NHOs (15
U.S.C.
§636(j)(11)(B)(C))

Applies only to
CDC-owned firms,
not CDCs (15
U.S.C.
§636(j)(11)(B)-(C))

Limits on the
amount of
8(a) contracts
that a firm
may receive

No source
awards possible
once the firm has
received
combined total of
competitive and
sole-source 8(a)
contracts in
excess of the
dollar amount set
forth in 13 C.F.R.
§124.519 (13
C.F.R.
§124.519(a))
Firms must
receive an
increasing
percentage of
revenue from
non-8(a) sources
throughout their
participation in
the 8(a) Program
(13 C.F.R.
§124.509(b))

Can make solesource awards
even when a firm
has received
combined total of
competitive and
sole-source 8(a)
contracts in
excess of the
dollar amount set
forth in 13 C.F.R.
§124.519 (13
C.F.R.
§124.519(a))
Firms must
receive an
increasing
percentage of
revenue from
non-8(a) sources
throughout their
participation in
the 8(a) Program
(13 C.F.R.
§124.509(b))

Can make solesource awards
even when a
firm has
combined total
of competitive
and sole-source
8(a) contracts in
excess of the
dollar amount
set forth in 13
C.F.R. §124.519
(13 C.F.R.
§124.519(a))
Firms must
receive an
increasing
percentage of
revenue from
non-8(a)
sources
throughout their
participation in
the 8(a)
Program (13
C.F.R.
§124.509(b))

Can make
sole-source
awards even
when a firm
has combined
total of
competitive
and solesource 8(a)
contracts in
excess of the
dollar amount
set forth in 13
C.F.R.
§124.519 (13
C.F.R.
§124.519(a))
Firms must
receive an
increasing
percentage of
revenue from
non-8(a)
sources
throughout
their
participation in
the 8(a)
Program (13
C.F.R.
§124.509(b))

Combined total of
competitive and
sole-source 8(a)
contracts in excess
of the dollar
amount set forth in
13 C.F.R. §124.519
not explicitly
addressed in
regulation
Firms must receive
an increasing
percentage of
revenue from non8(a) sources
throughout their
participation in the
8(a) Program (13
C.F.R. §124.509(b))

Source: Congressional Research Service.

Congressional Research Service

5

The “8(a) Program” for Small Businesses

a.

b.

The rules governing NHO- and/or CDC-owned firms do not address this issue, and although the general
rules apply where no “special rules” exist, it seems unlikely that NHO- and/or CDC-owned firms are
treated differently than tribally or ANC-owned firms in this regard.
These criteria include (1) the management experience of the disadvantaged individual(s) upon whom
eligibility is based; (2) the business’s technical experience; (3) the firm’s capital; (4) the firm’s performance
record on prior federal or other contracts in its primary field of operations; and (5) whether the firm
presently has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and other
resources necessary to perform contracts under Section 8(a).

Author Contact Information
(name redacted)
Legislative Attorney
[redacted]@crs.loc.gov
, 7-....

Acknowledgments
Former CRS legislative attorney, (name redacted), coauthored this report.

Congressional Research Service

6

EveryCRSReport.com
The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the
Library of Congress, charged with providing the United States Congress non-partisan advice on
issues that may come before Congress.
EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The
reports are not classified, and Members of Congress routinely make individual reports available to
the public.
Prior to our republication, we redacted names, phone numbers and email addresses of analysts
who produced the reports. We also added this page to the report. We have not intentionally made
any other changes to any report published on EveryCRSReport.com.
CRS reports, as a work of the United States government, are not subject to copyright protection in
the United States. Any CRS report may be reproduced and distributed in its entirety without
permission from CRS. However, as a CRS report may include copyrighted images or material from a
third party, you may need to obtain permission of the copyright holder if you wish to copy or
otherwise use copyrighted material.
Information in a CRS report should not be relied upon for purposes other than public
understanding of information that has been provided by CRS to members of Congress in
connection with CRS' institutional role.
EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim
copyright on any CRS report we have republished.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR40744. Public record. Not legal advice.