SBA Overhauls Rules for 8(a) Set-Aside Program

The Small Business Administration has announced major changes to the rules for its primary set-aside contracting program. The changes to the 8(a) program were made in an effort to reduce fraud and make sure contracts go to deserving small businesses.

“The regulations, first and foremost, help ensure the benefits flow to the intended recipients,” SBA Administrator Karen Mills said in announcing the rules. “By tightening the regulations, along with unprecedented oversight over the past two years, SBA is demonstrating its commitment to preventing waste, fraud and abuse.”

SBA Overhauls Rules for 8(a) Set-Aside Program

The new changes will include:

  • Joint Ventures –the 8(a) firm is now required to perform at least 40 percent of the work of each joint venture contract awarded.
  • Economic Disadvantage – the new rules clarify how economic disadvantage is determined related to total assets, gross income, retirement accounts and other factors.
  • Mentor-Protégé Program – mentors must provide assistance to protégés or face consequences.

The Washington Post, reporting on the changes, noted that the 8(a) program has been abused by large companies and entrepreneurs who don’t meet the criteria as disadvantaged, but still take advantage of the rules. Enforcement could remain problematic, though, since agencies are short-staffed and many procurement officials are too unfamiliar with the rules to administer them properly.

In October, a Washington Post investigation led the SBA to temporarily suspended a large contractor, technology company GTSI, from doing business with the government after evidence came out that GTSI had used two small businesses to get contracting work to which it wasn’t legitimately entitled.

I think we can all agree that ensuring contracting opportunities go to the right companies is a worthwhile goal. These changes are the first comprehensive overhaul of the 8(a) program in over 10 years, and were made based partly on input from small business owners at public meetings held nationwide.

SBA announced the new rules on February 11; will become effective in 30 days on March 14, 2011. You can get full details on the revisions and a guide to the 8(a) program at the SBA website.


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

5 Reactions
  1. Unfortunately, government regulations, no matter how well intended, often don’t solve the problem and only add costs to the taxpayer.

  2. We have a black President now, and many “minorities” run contracting corporations in Washington DC. The 8A program is obsolete, and is simply “legalized discrimination”. It causes resentment against “minorities” so it is counter-productive. A competitor claimed that being from India qualified as a minority. Another made his wife the “owner” yet did all the work. Hey, I am white and a minority in DC, so how about a set aside for me? My company was providing computer training to Pentagon staff for over a year, and getting excellent evaluations from the students. Then the contract was awarded to an 8A company, that simply hired our instructors, and charged more money to the taxpayers. The 8A program is full of fraud, and contrary to a free market economy. It is time for this nonsense to stop.

    • It’s time to start thinking of a FAIR MARKET..not free market.

    • The race of the President should not matter. The 8(a) Program and its flaws existed way before Obama was elected. What about the big dollar value contracts awarded to big companies that keep on being extended instead of being competed?

      The intent of the Small Business Program isto make it a more fair playing field for the smaller businesses..In a free market economy, only large businesses would win the contracts.