An Analysis of How Eligibility Criteria Are Applied to Participation in the 8(a) Program

The Administrator of the Small Business Administration (SBA) is authorized under Section 8(a) of the Small Business Act to help small businesses owned and controlled by socially or economically disadvantaged persons to achieve a competitive position in the marketplace. Under section 8(a), SBA enters into procurement contracts with other federal agencies and departments and subcontracts the work to disadvantaged small businesses.

Criteria for admission to the 8(a) program are subjective and are not applied in a uniform and consistent manner. An applicant's social or economic disadvantage must be established for admission, but this standard has never been defined effectively. Points of view differ; some officials emphasize social background while others emphasize economic aspects. As a result, different offices can reach different decisions on eligibility. In at least one case, a given applicant was recommended for acceptance by one office while rejected by another. Contrary to the required procedures, there is often no indication of how approved applicants have met the eligibility criteria. A review of the records of SBA 8(a) applicants considered eligible for entry into the program at the San Francisco regional office and at the San Francisco, Los Angeles, San Diego, and Phoenix district offices showed that Region IX is not complying with program procedures because its files do not identify the specific criteria used to approve eligibility, nor does it document the connection between an applicant's social or economic disadvantage and its inability to successfully compete in the economic mainstream.