The Department of Defense (“DoD”), Civilian Agency Acquisition Counsel, and the Government Services Administration (“GSA”) have issued class deviations addressing the Small Business Administration’s (“SBA”) response to the Ultima ruling that the SBA’s application of a rebuttable presumption of social disadvantage to certain groups is unconstitutional. The class deviations (CAAC 2023-04, GSA Class Deviation CD-2023-08, and DoD Class Deviation 2023-O0007) prohibit the award of any 8(a) contract to an 8(a) entity until such entity has been affirmatively determined to be eligible for 8(a) awards.

This is a change from the procurement process prior to Ultima, under which agencies could assume an 8(a) entity is eligible for the award and proceed with the contract if it submitted the award to SBA for review and the SBA did not respond within a specified time period. That is no longer an option; under these new class deviations, federal agencies will not be able to award an 8(a) contract until and unless the SBA has affirmatively determined that the 8(a) entity is eligible for the award of the contract.

The class deviations are a result of the Ultima decision. The SBA interprets the injunction issued in Ultima as prohibiting the SBA from approving an 8(a) award (competitive or sole source) to an 8(a) entity until the SBA has determined that 8(a) entity is socially-disadvantaged. This means that an 8(a) entity is not able to receive a new 8(a) award until and unless they prove their social disadvantage and receive a confirmation letter to that effect from the SBA.

An 8(a) entity that did not rely upon the SBA’s presumption of social disadvantage at 13 C.F.R. § 124.103(b) when applying for entry into the 8(a) program will not need to prove social disadvantage again and should automatically receive confirmation letters from the SBA. Similarly, Alaska Native Corporations, Tribes, and Native Hawaiian Organizations, which are effectively statutorily deemed to be socially disadvantaged, will also not need to prove social disadvantage again and should automatically receive confirmation letters from the SBA.

In light of this requirement for 8(a) entities to receive confirmation from the SBA regarding their social disadvantage prior to the award of an 8(a) contract, and with the upcoming fiscal year-end, the class deviations from the DoD, CAAC, and GSA prohibit award of an 8(a) contract until and unless the SBA has affirmatively determined that the 8(a) entity is eligible for an 8(a) award. These class deviations do not apply to existing contracts; contractors will be able to continue to perform on existing 8(a) contracts.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.