In what is quickly becoming an epic saga centered around the repercussions from the Ultima Servs. case, 8(a) program participants should have received a direct communication from the Small Business Administration (SBA) on Monday (August 21), providing direction on next steps regarding social disadvantage eligibility determinations. As that communication stated, if your firm’s 8(a) eligibility was based on an individual or individual(s) who relied upon the rebuttable presumption of social disadvantage, the firm will now be required to submit a social disadvantage narrative. (Entity-owned firms, such as firms owned by Indian tribes, Alaska Native Corporations, or Native Hawaiian Organizations, will not need to submit narratives; nor will 8(a) participants who previously established their social disadvantage through submission of a social disadvantage narrative.) Each owner claiming disadvantaged status must submit a narrative. This is all consistent with our previous coverage on this topic. What is new, however, is that there is now some more specific guidance on timing and how this process is going to play out.
Key language from Monday’s SBA communication explains: “Please be advised that your firm should complete and submit the required narrative as soon as possible if you have a pending contract offer or award … When your District Office Servicing Business Opportunity Specialist receives the 8(a) offer letter from the Federal contracting agency, they will reach out to you to obtain your social disadvantage narrative and provide further guidance on how to submit it to SBA. An individual-owned 8(a) Participant that previously relied on the presumption of social disadvantage to support its eligibility will be ineligible for new 8(a) contracts until SBA affirmatively determines that the individual(s) upon whom eligibility is based has established personal social disadvantage.” In other words, if there is a pending offer or award, act fast to ensure continued 8(a) eligibility.
On the other hand, the SBA advised that “[i]f your firm does not have a pending contract offer or award … please continue to review the resource guide and stand by to receive notification regarding the process to submit your narrative through Certify.SBA.gov in the near future. Please wait for this notification and the instructions for submission.”
As for next steps, the SBA communicated that “[o]nce an 8(a) participant has submitted a narrative to SBA, and if SBA determines that the firm’s owner(s) has demonstrated personal social disadvantage, the Participant will receive an approval letter indicating it has established social disadvantage and may continue to receive 8(a) contracts and otherwise participate in the 8(a) BD Program. Consistent with existing regulations, 8(a) Participants will only need to establish social disadvantage once for their program term, unless there are ownership/control or other changes which affect eligibility.”
There is still no word on when the temporary suspension on new applications will be lifted, but our guess is that new applications will remain on hold until the SBA can review existing 8(a) program participants’ social disadvantage narratives and update existing participants’ eligibility status accordingly. Companies with questions about how to prepare a social disadvantage narrative should review the guidance provided by SBA. However, because it is critically important that these companies understand the regulatory requirements regarding these narratives, and conform to what SBA is hoping to see, additional review and legal assistance may be advisable.