The U.S. Small Business Administration proposed Thursday to drastically change a contracting program that benefits disadvantaged individuals and groups. But the agency said the change won’t affect tribes and Alaska Native corporations, which benefit heavily from the program.
The 8(a) Business Development Program under the U.S. Small Business Administration allows socially disadvantaged individuals, tribes and Alaska Native corporations to compete for federal contracts. Under the proposed change, individuals wouldn't be considered socially disadvantaged – and therefore eligible for the program – because they are a member of a racial minority.
“This proposed rule will dismantle the race-based admissions framework of the past and replace it with one standard for all applicants, rooted in verifiable, fact-based evidence of social disadvantage,” the head of the Small Business Administration, Kelly Loeffler, said in a statement.
The proposed change would apply only to individuals and not to “entity-owned participants” such as Alaska Native corporations, tribes and Native Hawaiian Organizations, the administration said.
“Based on the language included in the proposed rule, it would have no direct impact on Alaska Native corporations or their participation in the 8(a) program,” said Christopher Slottee, an attorney who works with Alaska tribes and corporations.
However, Slottee said it could still influence Native contracting in general. In addition to barring people from being considered socially disadvantaged based on their race, the new rule also allows people from all racial groups to prove their socially disadvantaged status and apply for the program.
“There could be an economic impact if there is an increase in the number of 8(a) companies and therefore an increase in competition for 8(a) contracts,” Slottee said.
The government is accepting comments on the proposed change until July 13.
“Native contracting is not DEI”
Alaska Native corporations rely on contracts awarded through the 8(a) program – especially from the Department of Defense – for a significant portion of their revenue.
In January, Defense Secretary Pete Hegseth called the program the oldest Diversity, Equity and Inclusion program in the federal government. And over the past year, the federal government has been reviewing the program, awarding fewer contracts and not accepting new applications.
“While it has definitely not been a complete shutdown, it is a slower process obtaining contracts,” said Haven Harris, a board co-chair of Native American Contractors Association. “It is a slower process getting these awards.”
That slowdown prompted advocacy efforts by the Alaska legislators and Native leaders in support of the program – and some response from the government.
Michael Duffey, the U.S. Under Secretary of Defense for Acquisition and Sustainment, wrote a letter to Alaska’s senators in May supporting the program and Native contractors. He said the government is auditing the 8(a) program because it wants to increase competition amid contractors and restore “the lethality for the warfighter.”
“Participation by federally recognized tribes and Alaska Native corporation in federal programs is grounded in their political status as Native Americans, not DEI initiatives,” Duffey wrote.
Harris said he was thankful for Duffey’s letter because DEI is “something that this administration strongly believes is detrimental to the United States.”
“He obviously acknowledged what many other agencies have said – that tribal Native contracting is not DEI,” Harris said. “It explicitly says that in this letter, and every time that that is reaffirmed, I'm grateful for that.”
Harris said that Native contractors still have concerns about the slowdown of the program, as well as the government’s push to streamline contract awards instead of working with each contractor individually.
He said that on a positive note, Native contractors have had more conversations with Small Business Administration leadership this month.
“I'm more optimistic today than I was, say, a month ago that our relationship with the current administration of SBA is on a positive footing,” Harris said. “We do believe that lines of communication are improving.”
The Alaska Native Claims Settlement Act Regional Association, which represents local Native corporations, has also been working to improve relationships between Native contractors and the federal government, said its president, Nicole Borromeo.
“It's incredibly encouraging to see administration officials recognize that the 8(a) program has been an indispensable tool for the federal government,” Borromeo said, “making sure that the federal agencies have the specialized goods and services that our ANCs have come to provide and be known for over the past several decades.”
