Are you familiar with the pending court case Ultima Services Corporation vs U.S. Department of Agriculture, et al.?   If you are not, and your firm is 8(a) certified then you need to bring yourself up to speed on this matter as it can greatly impact your future 8(a) contracts.  According to the SBA’s 8(a) certification website…

On July 19, 2023, the United States District Court for the Eastern District of Tennessee enjoined SBA from applying a rebuttable presumption of social disadvantage to individuals of certain racial groups applying to the 8(a) Business Development program. SBA has suspended new 8(a) application submissions to comply with the Court’s decision.

On August 18th this year, the U.S. Small Business Administration issued interim guidance affecting the program’s determination of social disadvantage in response to a ruling by a U.S. District Court in the matter of Ultima Servs. Corp. v Dep’t of Agric., et al. In accordance with the court’s directive, the SBA now mandates that all participants, whose program eligibility was predicated on one or more individuals utilizing the presumption of social disadvantage, submit a comprehensive social disadvantage narrative.  The SBA’s approval of this narrative is a prerequisite for participants to be eligible to receive future 8(a) contract awards. 

 The updated interim guidance for 8(a) Program participants and applicants can be found on the SBA’s website here.

Context of the legal action- Ultima Servs. Corp. v. U.S. Dep’t of Agric, et al.

The U.S. District Court for the Eastern District of Tennessee on July 19, 2023, issued a ruling in Ultima Servs. Corp. v. U.S. Dep’t of Agric., No. 2:20-CV-00041-DCLC-CRW, 2023 WL 463348 (E.D. Tenn. July 19, 2023), that found the SBA’s use of a “rebuttable presumption” of social disadvantage for certain minority groups to qualify for inclusion in the 8(a) Program violates the Fifth Amendment’s Due Process Clause. The court ordered SBA to immediately stop using the presumption of social disadvantage to administer the 8(a) Program.

In summary, in adherence to the court’s mandate, the SBA necessitates that all 8(a) program participants, whose eligibility was contingent upon one or more individuals relying on the presumption of social disadvantage, substantiate their individual social disadvantage by completing a social disadvantage narrative.   The SBA must then approve the narrative before the 8(a) participant can receive future 8(a) contracts.

In its Opinion and Order, the district court enjoined the SBA from using the rebuttable presumption of social disadvantage in the administration of the 8(a) program. However, the District Court reserved the right to rule on any further remedy and has scheduled a hearing on this matter for August 31, 2023.

On September 1, 2023, the U.S. District Court for the Eastern District of Tennessee issued an order in Ultima Services Corp. v. U.S. Dept. of Agriculture, et. al., Case No. 2:20-cv-00041, following the status hearing held on August 31, 2023.

According to the District Court’s order of September 1st, it states that only two issues remain in the case:

  • Ultima Services Corporation’s request for an injunction precluding the federal government from reserving administrative and technical support contracts with the Natural Resources Conservation Service U.S .Dept of Agriculture the SBA’s 8(a) program; and
  • The SBA’s compliance with the District Court’s prior injunction.

The below briefing schedule was set by the District Court to address the above issues.

  • September 15, 2023-  Ultima’s brief was due
  • September 29, 2023-  Government’s brief was due
  • October 5, 2023-         Ultima’s reply brief is due

A Brief History on the Case- The Ultima case arose from the Government’s decision to initiate a follow-on procurement for a contract (in which Ultima was the incumbent), within the SBA’s 8(a) program.  Consequently, Ultima was precluded from competing for the new contract.  The complaint filed by Ultima sought an order restraining the federal government from restricting competition for administrative and technical support contracts with the Natural Resources Conservation Service (a subdivision of the USDA) to participants in the program.

Impact on 8(a) firms

If you are in the program and your Social Disadvantage narrative was waived, you are now required to submit a Social Disadvantage narrative prior to being awarded any new contracts and/or any follow-on contracts.  It DOES NOT affect contracts that you are currently performing on.

Requirements and Actions

If you have not heard anything from the SBA or your BOS on submitting your Social Disadvantage narrative you should reach out to your district office as based on the Court’s directive, the SBA now mandates this of all participants in the 8(a) program whose statement was previously waived based on the rebuttable presumption.

For further information regarding what is necessary to compile an effective social disadvantage statement, or if you need assistance writing your narrative, watch this video, post to the FedMap Community, or book time with Lisa Dolan, FedMap coach.

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