Should 8(a) Set-Aside Program Be Terminated or Refined?

KOiFish said:

Do you think the program should be terminated completely or should it be kept but revised/refined?

The program should not be terminated. While refinement and revision are always looming the biggest change should be the refunding of SBA 8(a) offices to provide oversight. What has happened in my opinion was defunding which is now coming back to bite the Program in the backside. Hopla long timing coming that could have been prevented.

My opinion is based on the following experience, admittedly dated, but all the same experience that I suspect many do not understand.

First, there are creditable and well meaning entities in the Program which support that the Program is a success and has success stories. As it goes there will be many naysayers so I will leave to all to do their own research on success versus crooks in the Program.

And I can say crooks because in my 15 years as a SBA CO for the program I encountered one glaring one along with a few others. For the glaring one it was a case where the entity defrauded Federal and state govenment out of hundreds of thousands of dollars in funds due in workmans comp premiums and the US Attorney would not even sniff the case as they felt they had bigger fish to fry. I will note the owner fled to Mexico but in my detailed research extradition was viable and on the table.

Successes! Interestingly the other day I was driving around my little corner of the world and on the side of a dump truck was the logo of a firm that was in the Program when I was with SBA ( think like 30 plus years ago). I called a very good friend here that was also participating in the construction project (State contract for new curbing on State highways) and asked about the firm. Yep not a rogue truck being used by someone else but still a company in business. Undoubtedly probably not the same as I knew them but a name that has lasted all the same. AI and internet searches will provide many more successes.

To funding and oversight. First two references are important that folks need to read and understand. 13 CFR 124 and sections like .112 and .203 and agency Partnership Agreements found at the link I have provided below.

My 15 years of experience was in the Portland District Office of SB. There were 4 employess in the 8(a) Program office. Myself as CO and 3 "Business Development Specialists" overseeing 40 to 50 contractors in Oregon and Southwest Washington. This was before the full change over to the current Partnership world previously mentioned where much of the 8(a) contract stuff was completely turned over to an agency that goes to 8(a) eligibility issues such as lower tier subcontracting. I was fully immersed in efforts of pricing, contract award and modification and had oversight of agency administration of the contracts to ensure matters of elibility, along with with the full gaunlet of Federal contracting requirements, insuring all was being done in accord with the FAR, the Small Business Act as implemented especially by 13 CFR 124. The Business Develpment Specialists were fully immersed with the firms business activities, doing onsite visits that included review of their accounting records on a rotational basis, working with the firms to find opportunities Program specific and otherwise along with daily efforts in counseling firms business managment principles and techniques such as GAAP and a lot lot more.

So yes keep the Program along with an increase in funding of SBA to oversee. This would include elimination of the Partnership Agreements which I believe are not even remotely being adhered to anyway by either the SBA or the Agency with regard to their responsibility of meeting statutory and regulatory intent. The "tool in the tool box" for a unique way to contract is as important to promoting small business development of those that are socially and economically disadvantaged.

https://www.sba.gov/document/support--sba-and-agencies-partnership-agreements

FYI, the Congressional Research Service published a history and discussion of the 8(a) program 15 years ago. Attached. Also available online at:

https://www.congress.gov/crs_external_products/R/PDF/R44844/R44844.16.pdf

CRS Hiistory of the 8(a) Program.pdf

Good question. I would start with asking "what problem is the 8(a) Program supposed to solve?" and "to what extent has the 8(a) Program solved that problem?" I would like to see an objective study that answers those questions.

Don Mansfield said:

I would like to see an objective study that answers those questions.

Mr. Hairston's 35 year history with the SBA I am sure helped compile this testimony. It does not directly answer your questions but you might find it interesting all the same.

https://docs.house.gov/meetings/SM/SM23/20220302/114449/HHRG-117-SM23-Wstate-KHairstonD-20220302.pdf

Don Mansfield said:

I would like to see an objective study that answers those questions.

@Don Mansfield I have attached SBA's 2023 report to Congress, which is he lastest I could find. I don't know if it is objective.

Final FY 23 408 Report to Congress_508.pdf

See this:

https://www.sba.gov/article/2025/12/05/sba-orders-all-8a-participants-provide-financial-records

and this:

SBA Announces Full-Scale Audit of 8(a) Program to Uncover...

and this:

U.S. Department of the Treasury

Treasury Orders Department-Wide Investigation into Potent...

WASHINGTON – The U.S. Department of the Treasury today announced a comprehensive audit of all contracts and task orders awarded under preference-based contracting, totaling approximately $9 billion in

and this:

https://ktslaw.com/en/insights/alert/2025/12/small%20business%20administration%20investigating%20all%208a%20businesses%20in%20effort%20to%20expose%20fraud%20waste%20and%20abuse%20what%20this%20means%20for%20your%208a%20organization

All government "programs" get scammed. It's become a national pastime.

Aspen Institute

United We Stand: A National Strategy to Prevent Scams

The U.S. needs a whole-of-ecosystem approach to stop fraud and scams. Read our proposed national strategy.

From a link Vern posted above:

“There is mounting evidence that the 8(a) Program designed for ‘socially and economically disadvantaged’ businesses went from being a targeted program to a pass-through vehicle for rampant abuse and fraud – especially during the Biden Administration, which aggressively prioritized DEI over merit in federal contracting,” said SBA Administrator Kelly Loeffler. “

Everyone knew some problems existed in the past. The issues now are how extensive the abuses are and how much is this is politically motivated.

A very important part of fact finding will be in the responses SBA is seeking on ownership and financial data. Plus it will be interesting to see how many companies balk at submitting the information.

Chiming in with my takes:

1. As a matter of principle and default orientation, I think equality of opportunities is always good, and equality of outcome is always bad. Yes, I firmly do believe that equality of outcome is AWLAYS bad. In that sense, I suppose I am in agreement with this administration's initiative in doing away with DEI.

2. @C Culham mentioned cases of success stories from his own experience as well. I do agree that success stories exist and I am happy for those companies that were awarded government contracts and were able to grow and expand their companies. However, I am also thinking about the other side of the coin, the failure stories of other companies that may have had better/more capabilities and competitive pricing, but lost out on contracts because they are not of certain "disadvantaged" categories. I think that is an injustice to those affected companies as well as the government and taxpayers who have to pay for more expensive and/or less capable contracts.

3. How do you stop an 8a company from just winning the contract and subcontracting out their work to the work to another company? Why add a middle man to bloat prices?

4. Kind of answering my own question from #3, 8a programs has been used as a method for government to skip a lot of paperwork and competition process to be able to quickly award contracts. Does the benefit of this administrative convenience outweigh the alternatives?

5. Like @Vern Edwards said, all government programs get scammed one way or another by people exploiting the rules and loopholes. If elimination of waste, fraud, and abuse is impossible, then I think we can all agree that minimizing the probability of waste, fraud, and abuse to the extent possible should be the objective. If so, shouldn't we do away with the system of 8a which makes the waste, fraud, and abuse quicker and easier?

@KOiFish It's not clear to me that the 8(a) Program is wasteful. If the contractors are performing acceptably, then there may not be much if any waste.

Fraud is another thing entirely. I suspect that almost every government benefit program experiences fraud, waste, and abuse. Social Security probably experiences more fraud than any, and today's headlines say that Affordable Care experiences quite a bit. Government contracting has experienced an enormous amount of fraud not related to 8(a). Huge!

So, I wouldn't take the position that the 8(a) Program should be cancelled just because it experiences fraud.

I think Don alluded to an argument: Do we still need it?

KOiFish said:

How do you stop an 8a company from just winning the contract and subcontracting out their work to the work to another company?

Oversight! Todays atmosphere does not provide it adequately. Again read the Partnership Agreement for your specific agency and evaluate for yourself it the agency is doing what it is called to do.

KOiFish said:

Does the benefit of this administrative convenience outweigh the alternatives?

One could argue back and forth. Here is an example of my argument "for" that I have alluded to before in Forum. The company no longer exists so the Program hope of a successful long standing company not accomplished. Yet, as a procurement toolbox alternative imagine 3000 gallons of military jet fuel spilled on a tarmac. A company engaged through 8(a) to remove, the tarmac and 30,000 cubic yards of subsurface material, incinerate the fuel away and replace and repave. All the while meeting state environmental requirements. Letter contract, work done to 100% quality while definitization occurs. Took one week with no adminstrative blah, blah, blah to use some other exception to full and open.

KOiFish said:

If so, shouldn't we do away with the system of 8a which makes the waste, fraud, and abuse quicker and easier?

No apologies for repeating myself. Oversight! It is only way. folks only look at the contractual side not the statutory intent repeated in the regulation - "The purpose of the 8(a) BD program is to assist eligible small disadvantaged business concerns compete in the American economy through business development." 13 CFR 124.1 It is akin to Ability One, folks only want to argue the one side not the good it does and there is lots of it whether in real time contracts or a company that I know that has lasted 30 years in one form or another.

Vern Edwards said:

I think Don alluded to an argument: Do we still need it?

Yes, as one part of building and keeping our industrial base. A quote from the document I provided a link to above - "The origin of the 8(a) program can be found in Public Law 77-603, June 11, 1942, which created the Smaller War Plants Corporation..."

Anecdotal example - Genova Technologies started in 1993 and still around.

Sorry but not sorry - Like I did back when, during and after the experience of working for the Program for 15 years, and will to the end of my time make the argument that the Program when viewed fully is worthwhile.

formerfed said:

A very important part of fact finding will be in the responses SBA is seeking on ownership and financial data

Something one should remember that they have had access to all along to ensure entry into and eligibility to stay in the Program. 13 CFR 124.112 and 13 CFR 124.203.

here is the real life example of the just the application process - https://oes.gsa.gov/results/increasing-8a-applications/#:~:text=The%208(a)%20program%20application,of%20submitted%20applications%20are%20incomplete.

Here’s a bill Sen John Ernest introduced today to put a hold on sole source 8(a) contracts until SBA completes their study.

https://www.congress.gov/bill/119th-congress/senate-bill/3173/text

He also sent a letter to 22 agency heads asking for their voluntary compliance.

Edit: Wouldn’t a requirement to compete all 8(a) actions above the SAT eliminate much of the price criticism?

formerfed said:

Wouldn’t a requirement to compete all 8(a) actions above the SAT eliminate much of the price criticism?

Why? The price criticism runs rampant regarding GSA FSS. So why not pick on them too? Those that do criticize are in my belief are arm chair quarterbacks. The tale of the specific procurement tells the story.

During my 15 years in the 8(a) Program the fair market price standard was upheld and practiced. Any complaint about an award at other than fair market price today that is verifiable lands squarely on the back of the agency CO!

formerfed said:

Edit: Wouldn’t a requirement to compete all 8(a) actions

I meant to say compete all actions and not ones just above the SAT

formerfed said:

The issues now are how extensive the abuses are and how much is this is politically motivated.

Right. Even if systemic abuse is not found, there's a real possibility that--as occurred with many of DOGE's actions--the administration already knows what it will do and will find the pretext to do it. Apparently, the SBA has a lot of discretion here:

The Small Business Act grants SBA’s Administrator wide discretion to implement the 8(a) Program. “It shall be the duty of the [SBA] and it is hereby empowered,” the statute says, “whenever it determines such action is necessary or appropriate” to enter contracts with 8(a) entities. 15 U.S.C. 637(a)(1) (emphasis added). In other words, if SBA doesn’t think it necessary or appropriate to enter into 8(a) contracts, it’s not compelled to do so.

My fear is that there’s a significant risk that SBA—at least under this Administration—decides that contracting with 8(a) companies is no longer necessary or appropriate. Doing so, SBA could point to the success of agencies at awarding 8(a) contracts. Or maybe it would point to the changing constitutional interpretation of these type of programs. It might also refer to some of the (perceived) fraud within the Program to justify axing it.

The point is that—statutory basis notwithstanding—the 8(a) Program might not be on firm footing.

https://www.schoonoverlawfirm.com/the-long-term-viability-of-sbas-8a-program-is-uncertain/

For me, it's difficult to imagine a world in which this administration allows the program to continue in anything resembling its current form.

formerfed said:

The 8(a) just does a pass through and adds some time of their own which may be nothing more than administrative support.

What I do not get, and never will, is it occurs because an agency CO allows it which is contrary to Partnership agreement(s) and regulation that implements the limitation on subcontracting. Head hunting the program rather than the agencies that abuse it.

And I would add that competing would not solve the limitation issue as it is widely abused on the competitive side as well.

FrankJon said:

For me, it's difficult to imagine a world in which this administration allows the program to continue in anything resembling its current form.

Yep, it is a political witch hunt in my view. Damage to the industrial base will be minimal but all the same it will be damage. And the politicans will gain favor with those that provide support.

Anecotally - Nobody in this day and age understands that it is not a DEI program in the context of the discussion today. By experience there was a firm in the Portland District during my years that was owned by a white that grew up on a tribal reservation and provided proof he was "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." 13 CFR 124.103

Yet there is this https://www.sba.gov/sites/default/files/2023-09/Ultima%20Guidance%20to%20Agencies%20-%208.18%20Final%20-%20508.pdf

Bottomline the Program has been poorly administered within the context of statute and regulation due to the lack of funding of SBA to adequately do so. Congress has done the perfect job of setting the Program up for failure!

formerfed said:

Here’s a bill Sen John Ernest

By the way it is "Joni" not John.

I don't think the government should tolerate fraud (Blacks's Law Dictionary: "A knowing misrepresentation or knowing concealment of a material fact made to induce another to act to his or her detriment.") in its programs.

But when I consider the history of major system acquisition programs, which I have deeply studied, it strikes me that any fraud associated with the 8(a) program is laughably small in comparison. Think of the small business programs at large.

If anyone knows of a government activity hat is or was entirely free of fraud, please tell us about it. Even some organized religion involves fraud. Fraud is, and probably always has been, a signal feature of human society. We are angels and demons.

I think, like Don, that the fair questions to ask when considering the cancellation of any government program are:

1. For what legitimate purpose(s) was the program created??

2. Is it still needed to serve that (those) purposes?

3. Does it do so effectively and at a reasonable cost to the public?

An article detailing how intense this is. It also lists all the information SBA is requesting from the 8(a) firms which is much more comprehensive than I assumed. I think FrankJon is absolutely correct in that he can’t imagine the program remaining unchanged.

Federal News Network - Helping feds meet their mission.

SBA audit, lawsuit puts 8(a) program deeper in cross-hairs

From Capitol Hill to the courts to now the executive branch, the 47-year old contracting program is facing new questions about its legitimacy.

"The Department of Defense has ineffective policies, procedures, and Citi electronic access system (Citi EAS) reports to identify Government travel charge card (GTCC) misuse, abuse, and potential fraud, the DOD inspector general recently reported."

See the attached, below.

And see this:

Longtime VA Contracting Officer Sentenced to Over Five Ye...

Audit of the DoD Government Travel Charge Card Program_ Citi Electronic Access System (Report No. DODIG-2026-015).pdf

As I inferred in a previous post 8(a) is not a huge part of the Federal acquisition landscape. What is laughable is that in the current climate questions as posed by Don and Vern are not what is being asked. It is my view 8(a) is a target for two reasons. Misplaced relationship to DEI and the matter of fraud.

To the former it would seem that the Equal Opportunity Executive Order and the Civil Rights Act which both have a relationship to the history of the current use of Section 8(a) of the Small Business Act have not bit the dust so why 8(a)? Suggests strongly that my previous reference to a political witch hunt is right on.

To the latter regarding fraud as opined in this thread it is an issue that is not just limited to the 8(a) Program. From my view any reference as to why 8(a) needs the fraud microscope is a red herring. So to is the spin as to how comprehensive the "audit" is going to be because in truth the information is already available to SBA. How do I know? Because when I was with the Program we could at any time ask an 8(a) participant for the information on the basis of an eligibility review We would even do so when there was question to that eligibility. And as noted when there was adequate funding and staffing of 8(a) Program offices on site visits on an annual basis were also done where such information was reviewed. Regulation, policy and Program participant agreement made it so and other than reduced funding and oversight the same regulation, policy and participant agreement apply today.

In truth I am more pessimistic than FrankJon. Reasonable questions as posed by Don and Vern and reasonable thinking that created and has had 8(a) as a viable program that answered those questions long ago have nothing to do with what is going on. Politics, spin and grandstanding does. Change Ha! Sadly and wrongly the beginnings of the effort to do away with the Program all together.

One interesting observation is the difference between the "super" 8(a) firms (ANCs, Tribals, & NHOs), and the standard 8(a) firms. Senator Ernst seems to be targeting the entire program, yet the current administration seems to be meeting its mission/goals much faster with 8(a) contracting, than without. Perhaps that is one of the reasons why the super 8(a)s were left nearly unscathed by the FAR "overhaul" with regard to the competition requirements? I'd like to see how these differences play out in the media, as well is in the various planned audits. I know that the ANC lobby is very powerful in DC, so it's not going down without a major fight. Plus, Ernst is leaving the Senate soon, so I find it strange that she is picking this battle, and frankly, this hill.

That being said, my assumption is that more guardrails will be implemented with stricter reporting and subcontracting rules. I can't see the program going away, but it will look slightly different. I can say that my agency has been able to accomplish a lot of great things via 8(a) contracts. That is certainly not an endorsement but more a statement of fact.

In regard to Don's questions posed above, here is what the Small Business Act has to say about the problem the 8(a) program is supposed to address and the solution adopted by Congress:

(f)(1) with3 respect to the Administration’s business development programs the Congress finds—

(A) that the opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons is essential if we are to obtain social and economic equality for such persons and improve the functioning of our national economy;

(B) that many such persons are socially disadvantaged because of their identification as members of certain groups that have suffered the effects of discriminatory practices or similar invidious circumstances over which they have no control;

(C) that such groups include, but are not limited to, Black Americans, Hispanic Americans, Native Americans, Indian tribes, Asian Pacific Americans, Native Hawaiian Organizations, and other minorities;

(D) that it is in the national interest to expeditiously ameliorate the conditions of socially and economically disadvantaged groups;

(E) that such conditions can be improved by providing the maximum practicable opportunity for the development of small business concerns owned by members of socially economically disadvantaged groups;

(F) that such development can be materially advantaged through the procurement by the United States of articles, equipment, supplies, services, materials, and construction work from such concerns; and

(G) that such procurements also benefit the United States by encouraging the expansion of suppliers for such procurements, thereby encouraging competition among such suppliers and promoting economy in such procurements.

(2) It is therefore the purpose of section 8(a) to—

(A) promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals so that such concerns can compete on an equal basis in the American economy;

(B) promote the competitive viability of such concerns in the marketplace by providing such available contract, financial, technical, and mangement5 assistance as may be necessary; and

(C) clarify and expand the program for the procurement by the United States of articles, supplies, services, materials, and construction work from small business concerns owned by socially and economically disadvantaged individuals.

Given the stated purpose of the 8(a) program, it seems to me that the question to be answered is how effective is the program in developing participants to be successful in the market place after they leave the program. Carl has provided some anecdotal evidence of some success stories but has there been an in-depth analysis of how program graduates do after they leave the program?

Motorcity said:

I can say that my agency has been able to accomplish a lot of great things via 8(a) contracts. That is certainly not an endorsement but more a statement of fact.

This comment reminded me of a great thing we did a long time ago. This was when no dollar ceiling limit existed for 8(a) sole source. This was also when agencies needed to require a delegation of procurement authority from GSA to purchase IT hardware.

My agency, CBP, needed to buy a mainframe computer system, acquire space for a data center, and recruit a large number of employees to operate everything. We were faced with at least a three year timeframe to do it all. We got the idea to have an 8(a) accomplish it all through a contract for facility management operations. The contractor would conduct a competitive procurement for the mainframe, acquire space, and operate everything for us using their own employees. We simply paid for it all as a service contract.

It turned out everything was up and running in one year and below budget.

Motorcity said:

how these differences play out in the media

I am already done with this view. Watched a report from a national outlet who proclaimed the audit was with regard to the "8(a) loan program" of SBA. Others get it I realize but all the same I think general interest and knowledge equals the small impact of the program on Federal acquisition.

Retreadfed said:

but has there been an in-depth analysis of how program graduates do after they leave the program?

A link follows of an example of sort. It is from 2018. And I would offer without further research that such an analysis has undoubtedly been performed since the inception of the Program yet the Program still survives. https://dair.nps.edu/bitstream/123456789/1602/1/SYM-AM-18-087.pdf

So maybe as a business development program questionable in creating firms that are sustainable. But then again I have the experience of knowing a person whose business was a part of the program and whose business no longer exists but the individual was successful otherwise. Maybe the measure is one akin to a college degree. A business development program that gives support in developing knowledge, skills and abilities and all, after a businesses demise, is applied otherwise. Like a person that got a degree in accounting and wanted to be a CPA and is now a successful cattle rancher. With the next question being - Is the 8(a) Program investment good anyways?

As I already noted rhetorical questions when it comes to the current chaos.