U.S. urges judge to deny Ultima’s request for an industry-specific SBA 8(a) injunction
The government asked a federal judge to deny a request by a federal contractor to extend the court’s injunction of the Small Business Administration’s 8(a) program assisting disadvantaged businesses to a specific industry.
“There is no basis in the Court’s order or federal law for such relief,” the Justice Department, which represents SBA and the Department of Agriculture, said of the requested injunction for the administrative and technical support industry.
The DOJ also called other remedies requested by Ultima to appoint a monitor to SBA’s certification of 8(a) participants and enjoin SBA’s ongoing efforts to comply with the court’s order “drastic” and “extraordinary.”
The Friday memo filed in the U.S. District Court for the Eastern District of Tennessee is a response to Ultima Services Corp.’s request for relief beyond an injunction that prevents the SBA from using a “rebuttable presumption” of social disadvantage in the 8(a) program aimed at broadening the pool of federal government contractors.
The rebuttable presumption made it easier for businesses owned by people belonging to certain racial and ethnic groups to qualify for the social disadvantage requirement of the program. But in July, the court ruled that the presumption violated Ultima’s right to equal protection. The decision cited the Supreme Court’s decision striking down the use of race in college admissions, which came less than a month before.
Earlier this month, Ultima requested that the court go further. Among its requests, it asked the court to bar the use of the 8(a) program in the industry it’s a part of: The administrative and technical support industry. It defined that as spanning three North American Industry Classification System (NAICS) codes for industries.
“This would bar not just Defendants—but every federal agency— from using the 8(a) program in three of the largest industries used by the program,” the DOJ said in its Friday filing. “It also would prevent 8(a) participants who never even benefitted from the presumption—and those that did but have since established social disadvantage without it—from fully participating in a lawful federal contracting program.”
In addition to its requested industry-specific injunction, Ultima also asked the court to prevent SBA from exercising contract options or making similar modifications to contracts with 8(a) businesses that relied on the rebuttable presumption and “providing a shortened or less rigorous review of narratives of social disadvantage” than the agency did before the court’s order.
But the DOJ said Friday that “Defendants have fully complied with the Court’s order.”
Following the injunction, the SBA started requiring so-called “narratives” of social disadvantage for businesses that previously qualified under the presumption. Those narratives, which require business owners to detail bias and discrimination they’ve faced, must be approved for a business to receive new contract awards.
“Out of an abundance of caution, SBA has treated the Court’s order as requiring more than eliminating the presumption at the application stage,” DOJ said, noting the agency doesn’t typically review a business’s social disadvantage after they’ve applied for the program.
The SBA also temporarily halted new applications to the program while it was working to comply with the order. According to the new filing, it reopened that portal on Friday.
The DOJ further said that Ultima’s suggestion that businesses that previously relied on the presumption won’t be held to the same standard for social disadvantage as other applicants is “without merit.”
“Since the Court’s order, all social disadvantage determinations have been made using the standard previously used for applicants who were not members of the designated groups entitled to rely on the presumption,” the DOJ said.
An attorney for Ultima didn’t immediately respond to a request for comment.
