Chairman Issues Letter Regarding SBA’s Response to Ultima Court Ruling | Schwabe, Williamson & Wyatt PC

On December 1, 2023, Chairman of the U.S. House Committee on Small Business, Roger Williams, a Member of Congress from Texas, issued a letter to the Small Business Administration to request information regarding the SBA’s response to the Ultima court ruling that the presumption of social disadvantage in the SBA’s 8(a) program is unconstitutional. Representative Williams’s letter seeks copies of the SBA’s internal policies and processes for reviewing social disadvantage narratives, as well as statistical data about how many social disadvantage narratives have been reviewed and how they have been resolved.

Representative Williams requested:

    1. A copy of the SBA’s internal review policy and standards for narrative review, including any training(s) or documents provided to all narrative reviewers.
    2. A copy of the SBA’s internal policy, standards, and documents related to the narrative adjudication process.
    3. The total number of narratives reviewed since the District Court’s ruling. Please delineate between new entrants and existing 8(a) firms that did not previously need to submit a narrative.
    4. The number and percentage of reviewed narratives approved since the District Court’s ruling.
    5. The number and percentage of reviewed narratives that required adjudication since the District Court’s ruling.
    6. The number of firms removed from the 8(a) program due to an insufficient narrative since the District Court’s ruling.
    7. The total number and outcomes of narratives reviewed in the past two years prior to the District Court’s ruling. Please provide the total number for each year as well as the number of approvals and denials each year.
    8. The total number and percentage of firms that sent a narrative but were denied due to an insufficient narrative in the past two years prior to the District Court’s ruling.
    9. The number and percentage of reviewed narratives that required adjudication in the past two years prior to the District Court’s ruling. Please provide the number and percentage per year.

The subtext of Representative Williams’ letter and requests is that the House Committee on Small Business is interested in how stringent or lenient the SBA’s standards have been for determining whether an entity is owned by a socially disadvantaged individual. His letter also suggests that Congress, or at least some of its members, might be taking a more active role or interest in the Ultima case and the SBA’s small business programs.

This year has seen a variety of challenges to government contracting programs that serve small businesses. In addition to the Ultima decision, Bruckner, Nuziard, and the more recent Mid-America case all pose challenges to aspects of the federal government’s small disadvantaged business contracting programs. In addition, the holdings in the United States Supreme Court’s decision in Students for Fair Admission could result in a significant change, and challenge, to programs that provide benefits or advantages to individuals based on their race or ethnicity. All of these cases, and the effect of them on the SBA and its small business programs, have raised the profile of the federal government’s small disadvantaged business contracting programs, so it is not that surprising that Congress, or individual members, will take a greater interest in SBA’s small business programs and how they respond to the legal challenges.

In terms of the letter from Representative Williams, the SBA has not appealed the Ultima court’s order barring the SBA from applying a rebuttable presumption of social disadvantage to certain races and ethnicities. Instead, the agency is modifying its approach to the 8(a) Program in response to the Ultima ruling. It is within the oversight responsibilities of the Small Business Committee to review how the SBA is implementing the 8(a) program, including significant changes to it, and it is natural for a House committee charged with oversight of the SBA to seek information regarding such changes.

We will continue to monitor this, including any response from the SBA.

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