C ommonly known as the "8(a) Program," the Minority Small Business and Capital Ownership Development Program is one of several federal contracting programs for small businesses. The 8(a) Program provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-asides and sole-source awards. A "set-aside" is an acquisition in which only certain contractors may compete, while a sole-source award is a contract awarded, or proposed for award, without competition. However, small businesses owned by Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Organizations (NHOs) are eligible for the 8(a) Program under somewhat different terms. In FY2014, the federal government spent over $16 billion on contracts and subcontracts with 8(a) firms. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone). Later, the SBA established by regulation that personal net worth of less than $250,000 at the time of entry into the 8(a) Program ($750,000 for continuing eligibility) constitutes economic disadvantage. Requirements In General

			Eligibility for the 8(a) Program

Eligibility for the 8(a) Program is limited to "small business[es] which [are] unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States, and which demonstrate[] potential for success." Each of these terms is further defined by the Small Business Act; regulations that the SBA has promulgated to implement Section 8(a); and judicial and administrative decisions. "Business"

Except for small agricultural cooperatives, a "business" is a for-profit entity that has a place of business located in the United States and operates primarily within the United States or makes a significant contribution to the U.S. economy by paying taxes or using American products, materials, or labor. "Small"

A business is "small" if it is independently owned and operated; is not dominant in its field of operations; and meets any definitions or standards established by the Administrator of the SBA. Ownership is "unconditional" when it is not subject to any conditions precedent or subsequent, executory agreements, voting trusts, restrictions on or assignments of voting rights, or other arrangements that could cause the benefits of ownership to go to another entity. "Control is not the same as ownership" and includes both strategic policy setting and day-to-day management and administration of business operations. "Demonstrated potential for success"

For a firm to have demonstrated potential for success, it generally must have been in business in the field of its primary industry classification for at least two full years immediately prior to the date of its application to the 8(a) Program. Constitutionality of the 8(a) Program

The 8(a) Program has periodically been challenged on the grounds that the presumption that members of certain racial and ethnic groups are disadvantaged violates the constitutional guarantee of equal protection. The outcomes in early challenges to the program varied, with some courts finding that the plaintiffs lacked standing to bring such challenges because they were not economically disadvantaged, or were otherwise ineligible for the program; and other courts finding that the program was unconstitutional as applied in specific cases. More recently, in its 2012 decision in DynaLantic Corporation v. U.S. Department of Defense , the U.S. District Court for the District of Columbia found that the 8(a) Program was not unconstitutional on its face because (1) "breaking down barriers to minority business development created by discrimination and its lingering effects" constitutes a compelling government interest; (2) the government had a strong basis in evidence for concluding that race-based action was necessary to further this interest; and (3) the 8(a) Program is narrowly tailored to "minimize the burden on non-minority firms." In particular, in its brief discussion, the court noted the following six factors: 
1. alternative, race-neutral remedies had proved unsuccessful in addressing the discrimination targeted here; 2. the 8(a) Program is "appropriately flexible" because it imposes no quotas and prescribes no consequences for failure to meet the aspirational goals as to the percentage of federal contract dollars awarded to small disadvantaged businesses; 3. the program is neither under- nor over-inclusive, since it "does not provide that every member of a minority group is disadvantaged"; 4. the program imposes temporal limits on individuals' participation in the program, and SBA continuously monitors participants' eligibility; 5. the aspirational goals for contracting with small disadvantaged businesses are "numerically proportionate" to the evidence regarding the availability of minority firms that are ready, able, and willing to perform government contracts; and 6. various aspects of the 8(a) Program minimize the program's burden on non-minority firms (e.g., SBA cannot accept a contract for award through the 8(a) Program if it determines that doing so would have an "adverse impact" on other small businesses).
Commonly known as the "8(a) Program," the Minority Small Business and Capital Ownership Development Program is one of several federal contracting programs for small businesses. The 8(a) Program provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-asides and sole-source awards. A "set-aside" is an acquisition in which only certain contractors may compete, while a sole-source award is a contract awarded, or proposed for award, without competition. In FY2014, the federal government spent over $16 billion on contracts and subcontracts with 8(a) firms. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone).
Eligibility for the 8(a) Program is generally limited to small businesses "unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States" that demonstrate "potential for success." Each of these terms is further defined by the Small Business Act, regulations promulgated by the Small Business Administration (SBA), and judicial and administrative decisions.
A "business" is generally a for-profit entity that has a place of business located in the United States and operates primarily within the United States or makes a significant contribution to the U.S. economy by paying taxes or using American products, materials, or labor. A business is "small" if it is independently owned and operated; is not dominant in its field of operations; and meets any definitions or standards established by the Administrator of Small Business. Ownership is "unconditional" when it is not subject to any conditions precedent or subsequent, executory agreements, or similar limitations. "Control" is not the same as ownership and includes both strategic policy setting and day-to-day administration of business operations.
Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged. To be economically disadvantaged, an individual must have a net worth of less than $250,000 (excluding ownership in the 8(a) firm and equity in one's primary residence) at the time of entry into the program. This amount increases to $750,000 for continuing eligibility. In determining whether an applicant has good character, SBA looks for criminal conduct, violations of SBA regulations, or debarment or suspension from federal contracting. For a firm to have "potential for success," it generally must have been in business in the field of its primary industry classification for two years immediately prior to applying to the program. However, small businesses owned by Alaska Native Corporations, Community Development Corporations, Indian tribes, and Native Hawaiian Organizations are eligible for the 8(a) Program under somewhat different terms.
The 8(a) Program has periodically been challenged on the grounds that the presumption that members of certain racial and ethnic groups are disadvantaged violates the constitutional guarantee of equal protection. The outcomes in early challenges to the program varied, with some courts finding that the plaintiffs lacked standing because they were not economically disadvantaged. Most recently, two federal district court decisions found that the program is not unconstitutional on its face because (1) "breaking down barriers to minority business development created by discrimination and its lingering effects" constitutes a compelling government interest; (2) the government had a strong basis in evidence for concluding that race-based action was necessary to further this interest; and (3) the 8(a) Program is narrowly tailored to "minimize the burden on non-minority firms." However, in one of these cases, the court did find that the program was unconstitutional as applied in the military simulation and training industry because the government conceded it had no evidence of discrimination in this industry. The decision in one case was appealed. The litigation in the other has reportedly been settled.