New SBA 8(a) Guidance Signals Shift in Interpretation of Who Is ‘Socially and Economically Disadvantaged’

Quick Hits

• On January 22, 2026, the U.S. Small Business Administration (SBA) released guidance that eliminates race-based presumptions of social disadvantage and abandons prior narrative frameworks, replacing them with a fact-specific inquiry focused on whether an individual has experienced social disadvantage.
• SBA’s subsequent announcement that only sixty-five companies were admitted to the 8(a) Program in 2025 signals a materially narrower program going forward, with heightened scrutiny of applications and a significantly higher bar for demonstrating eligibility.
• Current participants should expect increased agency oversight, while prospective applicants should carefully evaluate whether participation remains viable under the new standards.

Together with SBA’s separate announcement on January 28, 2026, that only sixty-five companies were admitted to the 8(a) Program in 2025, the new guidance is another strong indication that the Trump administration aims to significantly change the way in which federal procurement policy may implement socioeconomic preference programs.

Overview of the 8(a) Program

Section 8(a) of the Small Business Act authorizes SBA to operate a development program for small businesses owned and controlled by individuals who are both socially and economically disadvantaged. A company’s participation in the program provides access to federal contracting opportunities that are otherwise unavailable to most small businesses, including:

• Sole-source contract awards up to applicable statutory thresholds
• Competitive 8(a) set-aside procurements
• Mentor-Protégé relationships and joint venture opportunities

Participation is limited to a maximum of nine years, and admission to the program has always been at the agency’s discretion. Historically, however, the program admitted hundreds and in some years thousands of new participants annually.

The Small Business Act defines “socially disadvantaged individuals” in race-neutral terms. Under the statute, such individuals “are 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.” The statute itself does not identify specific racial or ethnic groups, nor does it establish presumptions of disadvantage. Instead, it directs SBA to determine whether an individual has sufficiently experienced social disadvantage to warrant participation in the program.

SBA’s implementing regulations create a rebuttable presumption of social disadvantage for individuals who are members of certain enumerated racial or ethnic groups. Individuals outside those groups are required to affirmatively demonstrate social disadvantage through detailed narratives and supporting documentation. In 2023, a federal district court in Tennessee held that SBA’s race-based presumptions of social disadvantage were unconstitutional. Following that decision, the Trump administration’s U.S. Department of Justice advised the U.S. Congress that it would not defend the constitutionality of those provisions.

The SBA Guidance

SBA’s guidance formalizes how the agency has been administering the 8(a) Program since early 2025 and clarifies the standards that apply to current and future applicants. The guidance states that the 8(a) Program must be administered on a race-neutral basis and no applicant may be denied admission or given any presumptive preference based solely on race. SBA also disavows the use of “social disadvantage narratives” and related guidance documents that were previously used to assess eligibility. SBA personnel are instructed not to request, consider, or rely on those narratives in evaluating applications.

Rather, SBA will now conduct a fact-specific inquiry into whether an individual has actually experienced social disadvantage. The guidance directs SBA staff to consider whether an individual has been harmed by unlawful discrimination or excluded from opportunities as a result of unconstitutional or illegal diversity, equity, and inclusion (DEI) or affirmative action policies, whether imposed by governmental or non-governmental actors. This approach represents a fundamental shift away from eligibility based on group membership toward a narrowly tailored, individualized assessment.

The SBA noted in its January 28, 2026, announcement that the number of companies admitted into the program in 2025 is a significantly lower figure by historical standards. Although SBA has not formally linked that number to the guidance, the implications are clear: admissions are now significantly more selective and the burden on applicants to demonstrate social disadvantage has increased materially. SBA appears committed to operating a smaller, more tightly controlled program to align with what it views as constitutional constraints and current administration policy.

For companies considering whether to pursue 8(a) certification, the guidance materially changes the risk-benefit analysis. Applications premised on prior presumptions or legacy narrative templates appear unlikely to succeed. Prospective applicants may want to carefully assess whether they can support an individualized showing of social disadvantage consistent with the guidance and evolving review standards.Early strategic and legal evaluation is increasingly important to determine whether the program remains a viable growth strategy.

Looking Ahead

SBA has indicated that it is finalizing formal regulatory changes to align the 8(a) Program with its interpretation of current law. Until those regulations are issued, the guidance provides the clearest indication of how the current administration intends to operate the program. For companies that rely on the 8(a) Program or are considering whether participation makes sense in the current environment the takeaway is straightforward: the program remains available, but it is smaller, more selective, and more legally constrained than at any point in recent history.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group, Government Contracting and Reporting Practice Group, and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will post updates on the Diversity, Equity, and Inclusion Compliance, Government Contracting and Reporting, and Workforce Analytics and Compliance blogs as additional information becomes available.

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