A wrench was thrown into the works at the U.S. Small Business Administration (SBA) after a federal judge in Tennessee ruled that it could no longer consider race in its 8(a) program — an initiative designed to help socially disadvantaged contractors obtain federal contracts.
Here’s a breakdown of what you need to know at this stage.
What is SBA 8(a)?
Section 8(a) of the Small Business Act authorizes the SBA to establish a business development program that help firms owned and controlled by socially and economically disadvantaged individuals.
Technically, 8(a) is not race-based, because economically disadvantaged individuals can be any race (including white) and economically disadvantaged white people can apply and make the case that they qualify.
Socially disadvantaged people, on the other hand, are defined by the Small Business Act as “individuals 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 and the social disadvantage must stem from circumstances beyond their control.”
Individuals who fall under that definition by the SBA are Black Americans, Native Americans, Hispanic Americans, Asian Pacific Americans and Subcontinent Asian Americans — basically anything but non-Hispanic white.
The Tennessee case
And this is where the United States District Court for the Eastern District of Tennessee took issue. Simply put, the judge ruled that it’s not enough to be a certain race or ethnicity to be considered socially disadvantaged. All applicants should have to make their case as to why they’re socially disadvantaged on an individual level, while removing systemic racism as an automatic factor.
The case followed the June Supreme Court reversal of affirmative action at colleges and universities, disallowing higher education institutions from considering race as a factor for admissions.
While new 8(a) applications have been suspended, current 8(a) participants have been asked to submit a narrative statement explaining why they are disadvantaged if they weren’t required to previously. Other than the temporary notices on its 8(a) portal, the SBA hasn’t disclosed more than that, but it has until Sept. 17 to file an appeal.
Knowledge is power!
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