As part of the Small Business Administration’s 70th-anniversary celebration, SBA Administrator Isabella Casillas Guzman recognized Legacy Businesses from 68 districts. These businesses started small and leveraged SBA resources to become household names.
As part of the celebrations, Administrator Guzman rang the closing bell at the New York Stock Exchange in August and honored the legacy of President Dwight E. Eisenhower, who created the SBA 70 years ago.
Administrator Guzman also attended an anniversary celebration at the Eisenhower Presidential Library and Museum in Kansas, where she highlighted the nation’s historic small business boom under President Biden.
The Investing in America agenda aims to modernize SBA programs and resources, expand networks, and increase access to capital and contracting. This will enable more small businesses to capitalize on national investments in our nation’s infrastructure and rebuild advanced manufacturing.
However, a groundbreaking ruling by Judge Clifton L. Corker of the U.S. District Court for the Eastern District of Tennessee has declared the Small Business Administration’s use of presumed racial and ethnic disadvantage as a qualification for its “8(a)” program unconstitutional.
The program is designed to expand the government contracting landscape but is now uncertain due to the ruling.
Ultima Services Corporation, a small business government contractor, filed a complaint alleging that the rebuttable presumption in the program was racially discriminatory.
Ultima is not eligible for the presumption, and in court documents, they claimed to have lost out on business opportunities in the program. The 8(a) program assists small businesses that are at least 51% owned and operated by socially and economically disadvantaged U.S. citizens.
The use of a “rebuttable presumption” in the 8(a) program, which violated the Fifth Amendment rights of Ultima Services Corporation to equal protection of the law, was deemed unconstitutional.
The groundbreaking decision partly relies on the recent Supreme Court decision, which struck down the use of race in college admissions through affirmative action.
The ruling’s full scope on the Small Business Administration’s program management across the U.S. government is unclear, but it is likely to be appealed.
Judge Corker stated that the agencies did not identify whether certain minorities are underrepresented in a particular industry or outline the program’s goals.
If the ruling stands, current participants in the 8(a) program may have to prove their disadvantage. The ruling is not likely to impact those currently in the program, but it could create obstacles for historically marginalized groups, including Black, Latino, and other minority-owned small businesses, in accessing billions of dollars in government contracting opportunities.
According to one report, thousands of minority business owners are now struggling to establish that their race puts them at a social disadvantage. However, they bear the burden of proof in demonstrating social disadvantage, which may become more challenging and lengthy.