Will 8(a) Program Survive?

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Published on Friday, 09 November 2012 20:11

Written by Jeff McKaughan, Senior Analyst

The 8(a) business development program was established to assist in the development of small busi­nesses owned and operated by individuals who are socially and economically disadvantaged, such as women and minorities. A court decision in August 2012 definitely affected how the program was applied to one sector of industry for a DoD contract.

In 1995 Dynalantic filed suit challenging the Navy's decision to issue a contract for the development of helicopter aircrew simulator to an 8(a) eligible company. Even though the Navy ultimately cancelled the contract solicitation, the court decided that the foundation of the case, the use of 8(a) in a potential award was a "live controversy," and kept the case open.

At the heart of the matter in this case was whether any of the 8(a) companies that were bidding on this Navy contract were disadvantaged in any way and therefore eligible for benefits provided by the 8(a) program. At the root is if these companies were woman or minority-owned, were they in any way disadvantaged over other companies. If not, then was it unconstitutional for them to be provided advantage over other companies.

On August 15, the court ruled that there had been no disparity studies showing any evidence of dis­advantage in the military simulation and training industry. Therefore, it issued an injunction pre­venting the DoD and Small Business Administration from awarding procurements for military simulators under the 8(a) program.

The decision in this case in narrowly defined, but by ruling that the government did not have suffi­cient evidence of "pervasive, nationwide racial discrimination" by DoD to justify the SDB program, the use of the 8(a) program in general by the DoD is drawn into question on constitutional grounds.

It I still early to tell what the ramifications will be, but it is almost assuredly not to be the last time this case will be heard from.