The 8(a) Business Development Program—commonly known as the “8(a) Program”—provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-aside and sole-source awards. A set-aside award is a contract in which only certain contractors may compete, whereas a sole-source award is a contract awarded, or proposed for award, without competition. In FY2019, 8(a) firms were awarded $30.4 billion in federal contracts, including $8.6 billion in 8(a) set-aside awards and $9.9 billion in 8(a) sole-source awards. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone, and service-disabled veteran-owned).
8(a) Program eligibility 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.”
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 $750,000 at the time of entry into the program and less than $750,000 for continuing eligibility. In determining whether an applicant has good character, the SBA takes into account any criminal conduct, violations of SBA regulations, or debarment or suspension from federal contracting. For a firm to demonstrate potential for success, it generally must have been in business in 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 to participate in the 8(a) Program under somewhat different terms. Each of these terms is further defined by the Small Business Act, Small Business Administration (SBA) regulations, and judicial and administrative decisions.
This report examines the 8(a) Program’s historical development, key requirements, administrative structures and operations, and the SBA’s oversight of 8(a) firms. It also discusses two SBA programs designed to support 8(a) firms, the 7(j) Management and Technical Assistance Program and the All Small Mentor-Protégé Program, and provides various program statistics. It concludes with an analysis of the following current 8(a) Program issues:
- The SBA’s decision to address recent declines in the number of program participants by revising and streamlining the program’s application process, an action which the SBA’s Office of Inspector General (SBA OIG) reports “may erode core safeguards that prevented questionable firms from entering the 8(a) Program.”
- Reported variation in 8(a) Program service delivery.
- Reported deficiencies in the oversight of 8(a) Program participant’s continuing eligibility.
- Disagreements concerning the financial thresholds used to determine economic disadvantage, including the SBA’s decision to exclude equity in a primary residence from the calculation of an individual’s net worth.
- The adequacy of the performance measures used to evaluate the program’s effectiveness in meeting its statutory goals.
Read the full report here: https://crsreports.congress.gov/product/pdf/R/R44844