The Small Business Administration (SBA) issued a proposed rule that would make remarkable and unprecedented changes to eligibility requirements for the Section 8(a) “socially disadvantaged” Business Development Program that provides eligible small businesses access to federal set-aside and sole-source contracting opportunities, as well as other business development and procurement benefits.
The proposal would eliminate the longstanding presumption that members of certain racial and ethnic groups are socially disadvantaged and automatically eligible for the 8(a) set-aside program. Under the proposal, all applicants would be required to demonstrate social disadvantage on an individual basis, and individuals could qualify by showing they were harmed by government, educational, or private-sector policies that favored other racial or ethnic groups, including certain diversity, equity, and inclusion, affirmative action, and race-conscious programs.
SBA’s press release states that the proposed rule “will dismantle the race-based admissions framework of the past” and end “partisan and DEI preferences in federal contracting” SBA says were “crowding out legitimate job creators, especially white Americans.” The press release stresses that under the proposal “Americans discriminated against by unlawful DEI and race-based practices in the public and private sector can now qualify for 8(a) contracts.” The proposed changes apply only to individually owned firms participating in the 8(a) Business Development Program. Eligibility standards for entity-owned 8(a) program participants, including businesses owned by Indian tribes, Alaska Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), and Community Development Corporations (CDCs), remain unchanged.
Comments on the proposal are due by July 13, 2026, and should be submitted through the federal eRulemaking portal using Docket ID SBA-2026-0133.