Did you hear that the SBA has halted 8(a) applications? In case you haven’t, they did so to comply with a Tennessee Supreme Court decision. Influenced by the recent opinions from the Supreme Court around affirmative action in college admissions, the Tennessee Supreme Court found that race cannot be used as an indicator of disadvantage in government contracting.
As a small business owner, I’m nervous. As an advocate for underutilized businesses, I’m pissed. And as a social scientist, I am baffled.
While the details are vague and the long-term consequences are not yet known, this doesn’t bode well for programs designed to help the most vulnerable businesses in government contracting.
Despite the incredible implications, there hasn’t been much coverage or discussion about the impact of this decision. So let’s talk about it.
What is 8(a)?
8(a), otherwise known as the 8(a) Business Development Program, is a federal initiative designed to help small businesses owned by socially and economically disadvantaged individuals secure government contracts. The program dates back to 1969, when Section 8(a) was added to The Small Business Act of 1953. This section was added to specifically address the inequities experienced by small businesses owned by people part of historically discriminated groups.
Since then, the program has been researched, redesigned, and expanded in an effort to ensure that it is working as intended. But one thing has held constant over time– the 8(a) program exists to help vulnerable businesses, including and especially those owned by racial and ethnic
minorities.
Is 8(a) effective?
Does 8(a) actually help minority-owned businesses? Like most initiatives, the research is mixed. While some studies indicate that the program has paved economic opportunities for minorities in public procurement, others have questioned whether the program truly benefits the most disadvantaged.
Like most race-conscious initiatives, the 8(a) program has also been fraught with debates about its fairness, effectiveness, and sustainability. These critiques have been recently amplified due to the U.S. Supreme Court’s affirmative action decisions, Students for Fair Admission v. Harvard and Students for Fair Admission v. University of North Carolina. The decisions removed race as a consideration for college admissions through affirmative action. If race cannot be used as a proxy for disadvantage in college admissions, the logic follows, it cannot be used as a proxy for disadvantage in government contracting.
But it can be. And it should be.
Why use race as a proxy for disadvantage?
The simple fact is that race IS a predictor of success, or lack thereof, in government contracting, and a significant one at that. Disparity studies have proven this for over forty years. On average, businesses owned by racial “minorities” continue to struggle in their pursuit of government contracts– across industries, across all levels of contracting.
But there is one group that has benefited greatly from concentrated efforts like 8(a) and that is white women, like myself.
Just because these programs have not been successful in the intended ways, it doesn’t mean that we should abandon race-conscious efforts. In fact, it says the very opposite. We need these programs to provide the same success for businesses owned by racial minorities as they have for white women–as the science shows.
The Tennessee ruling is centered on the use of a “rebuttable presumption” that race is an appropriate measure of disadvantage. The argument is that there is no evidence that race is indicative of inequity in government contracting. But there is. Let’s change the language. Let’s remove “rebuttal presumption” and replace it with “the fact” that minorities get fewer government contracts, raise less capital, and grow at a slower rate.
It is more important now than ever for small businesses to band together to overcome the barriers that the Tennessee Supreme Court seemingly denies exist despite extensive evidence. This is why I created The Amalgamation, a community for and by historically underutilized organizations like DBEs. In solidarity.