SBA Reforms 8(a) Business Development Program to End Racial Discrimination in Federal Contracting

WASHINGTON - Today, the U.S. Small Business Administration (SBA) released a proposed rule to end racial discrimination in the 8(a) Business Development Program and dismantle the race-based admissions framework that previously barred Americans of certain races from accessing 8(a) set-aside and sole-source contracting opportunities. Under the new rule, individuals will no longer be considered "socially disadvantaged," and therefore eligible for the 8(a) program, simply because they are a member of a racial minority group. Likewise, no individual may be barred from the 8(a) program simply because they are white. Instead, all applicants will be required to prove their social disadvantage status by submitting verifiable, fact-based evidence.

"The Biden Administration weaponized the 8(a) program as a vehicle for partisan and DEI preferences in federal contracting, using race to steer exclusive opportunities to favored groups while shutting out other deserving Americans," said SBA Administrator Kelly Loeffler. "This proposed rule will dismantle the race-based admissions framework of the past and replace it with one standard for all applicants, rooted in verifiable, fact-based evidence of social disadvantage. It will restore equal treatment under clear, objective criteria and help ensure the program serves legitimate job creators instead of political friends, shell companies, or bad actors."

The 8(a) program was dramatically expanded during the Biden Administration as a vehicle for partisan and DEI preferences in federal contracting - crowding out legitimate job creators, especially white Americans. Even after a federal court ruled in 2023 that the rebuttable presumption providing de facto race-based 8(a) eligibility for certain minority groups was unconstitutional, the Biden SBA continued using race and ethnicity to steer exclusive contracting opportunities to favored groups. From 2021 through 2024, the Biden Administration approved roughly 2,100 new 8(a) firms, compared with just 65 approved to date under the Trump Administration.

The Trump SBA ended the practice of approving admissions to the 8(a) program based solely on unsubstantiated claims or Biden-era narratives of racial discrimination immediately upon taking office. Today's proposed rule will make the change permanent by replacing race-based eligibility with one standard for all applicants and requiring verifiable, fact-based evidence of social disadvantage. It will end a system of racial favoritism, restore equal treatment under clear and objective criteria, and keep the 8(a) program open to job creators of every race. Importantly, Americans discriminated against by unlawful DEI and race-based practices in the public and private sector can now qualify for 8(a) contracts.

The changes apply only to individually owned firms participating in the 8(a) Business Development Program. Eligibility standards for entity-owned participants, including businesses owned by Indian tribes, Alaska Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), and Community Development Corporations (CDCs), remain unchanged.

Ending race-based discrimination in 8(a) admissions is only one part of the Trump SBA's broader effort to clean up a program distorted by favoritism, abuse, and weak oversight. The agency is also pursuing an aggressive campaign to root out fraud, abuse, and misconduct in 8(a) contracting, protect taxpayer dollars, and ensure the program serves legitimate small businesses instead of favored groups, shell companies, and corrupt contractors. Since last year, the agency has taken the following actions:

• In February 2025, on the first day of Administrator Loeffler's term, the Trump SBA cut the Small Disadvantaged Business contracting goal back to its statutory 5% and ended the practice of approving firms based solely on unsubstantiated claims of racial discrimination.
• In June 2025, SBA launched the first-ever audit of the 8(a) Program in its nearly 50-year history - initiating an investigation into all high-dollar and limited-competition contracts going back over a period of fifteen years.
• In July 2025, the agency rescinded the independent 8(a) contracting authority of the U.S. Agency for International Development (USAID) after a DOJ investigation uncovered a $550 million bribery scheme involving several 8(a) contractors.
• That same month, SBA issued a letter of warning to all federal contracting officers, outlining the penalties for failing to report suspected fraud, waste, and abuse within the 8(a) Program.
• In October 2025, SBA debarred numerous 8(a) contractors following allegations of fraud involving more than $253 million in previously issued contract awards.
• In November 2025, SBA cleared the Biden-era backlog of 2,700 Veteran Small Business Certification (VetCert) applications, which accumulated after the prior Administration diverted all resources away from VetCert to increase certification approvals for the 8(a) Program.
• In December 2025, SBA ordered all 4,300 8(a) contractors to produce three years' worth of financial documents for review by the agency in the effort to root out pass-through abuse and fraud by shell companies.
• In January 2026, SBA suspended over 1,000 contractors from participation in the 8(a) Program after they failed to submit the documents SBA requested in December.
• In February 2026, SBA took action to terminate over 150 Washington, D.C.-based 8(a) firms that failed to meet "economic disadvantage" eligibility requirements.
• In March 2026, SBA initiated termination proceedings to remove another 620 firms that refused to submit the documents SBA requested in December.

# # #

About the 8(a) Business Development Program
The SBA certifies small businesses considered to be socially and economically disadvantaged under its nine-year 8(a) Business Development Program. The 8(a) program helps these firms develop and grow their businesses through one-to-one counseling, training workshops and management and technical guidance. It also provides access to government contracting opportunities, allowing them to become solid competitors in the federal marketplace.

About the U.S. Small Business AdministrationThe U.S. Small Business Administration helps power the American dream of entrepreneurship. As the leading voice for small businesses within the federal government, the SBA empowers job creators with the resources and support they need to start, grow, and expand their businesses or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit https://www.sba.gov.