8(a) Participants – and the 8(a) Program – Under the Microscope or on the Chopping Block

The Small Business Administration (SBA) has rolled out changes to its 8(a) Program even as it suspends 8(a) participants for failure to respond to the SBA’s December 5, 2025 8(a) audit letters.

SBA Suspends Contractors from the 8(a) Program

As Crowell previously reported, the SBA is conducting an audit of all active participants in the 8(a) Business Development Program.  Responses to the SBA’s December 5 audit letters were due January 19, 2026.  On January 22, 2026, SBA announced that it “suspended over 1,000 contractors from participation in the 8(a) Program after they failed to submit the documents SBA requested in December.” 

The SBA suspension notices, issued January 21, indicated a failure to “respon[d] to this data call after repeated attempts by SBA to obtain the information.”  The notices advised entities of their ability to appeal the 8(a) Program suspension and that certifications.sba.gov would remain open for “Data Call Submissions until February 19, 2026.” 

As the SBA’s Office of General Counsel (OGC) proceeds with its review of audit responses, we anticipate continued intense engagement between SBA and the contracting community, including:

• 8(a) participants receiving follow-up questions and requests for additional documents;
• SBA announcements of additional suspensions from the 8(a) Program; and
• the SBA Office of General Counsel referral of case files to the SBA Office of Inspector General for additional investigation, the SBA Suspension and Debarment Officer for suspension and debarment, and the Department of Justice for investigation and enforcement of statutes such as the False Claims Act.

Moreover, SBA is likely to contact government contractors that are not 8(a) participants (or even small businesses) that are identified in the audit materials, such as subcontractors and vendors, regarding topics such as compliance with the limitations on subcontracting on 8(a) contracts.  

GSA Is Auditing 8(a) Program Awards

SBA also gave the first indication that, in addition to the previously-announced audits by the Departments of War and Treasury, the General Services Administration (GSA) has started its own internal audits of the 8(a) Program.  SBA describes GSA as one of the core users of the 8(a) Program. 

SBA Announces Material Changes to 8(a) Program Rules

On January 22, 2026, the SBA also announced “changes to its 8(a) Program” as one of the steps it is taking in a “Year-Long Effort to Dismantle DEI Discrimination, Expose Fraud, and Restore Fairness in Federal Contracting.”

In brief, in the guidance effective January 22, 2026, SBA states “that the presumption of social disadvantage based on enumerated races” in the 8(a) Program regulations is unconstitutional.  Now, when SBA considers whether an individual “has suffered social disadvantage,” relevant SBA officers will consider “such factors as whether such individual has been the victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides, or hiring targets, in each case, whether by governmental or non-governmental actors.”  SBA further stated that it is in the process of finalizing revised regulations to address these changes.

SBA indicated that since January 2025, SBA has not used the Biden-era “Guide for Demonstrating Social Disadvantage” and has removed the guide from its website. 

This guidance, seemingly deemed the “8(a) Program Mandate,” aligns with policy changes implemented by SBA Administrator Kelly Loeffler last year.  As touted in the notice, the “Trump SBA accepted just 65 new 8(a) firms into the program last year – compared to over 2,100 who were accepted during the Biden Administration.”

SBA Plans Staff Augmentation

The SBA’s notice also states that in order “to address fraud, illegality, and Constitutional concerns in the 8(a) program,” SBA is seeking to hire “additional program officers who can help administer the 8(a) Program as a race-neutral vehicle for small business success in a fair and lawful manner.”  The SBA seemingly expects to continue scrutinizing the 8(a) Program.