On September 15, 2023, Ultima Services (Ultima) filed a motion in the U.S. District Court for the Eastern District of Tennessee seeking additional equitable relief in its suit challenging the constitutionality of the Small Business Administration’s (SBA) 8(a) Business Development Program (8(a) program).[1] Ultima’s motion comes after the SBA’s recent suspension of new applications to its 8(a) program to comply with U.S. District Court Judge Corker’s July 19, 2023, decision. 8(a) contractors should be aware of these developments as the court’s decision could impact current and future 8(a) contract awards. Below, PilieroMazza breaks down new developments in the Ultima case and its potential impact on 8(a) contractors.
Background
As reported by PilieroMazza, the U.S. District Court for the Eastern District of Tennessee recently declared that the SBA’s rebuttable presumption of social disadvantage in its 8(a) program was in violation of the equal protection rights of government contractors.[2] In response to the court’s order, the SBA implemented its temporary suspension of new 8(a) applications in August 2023 and announced that it will only award pending and future 8(a) contracts to contractors who affirmatively qualify as socially disadvantaged.
Ultima’s Motion
In the most recent development in the Ultima case, Ultima filed a motion for additional equitable relief. In its September 15, 2023, motion, Ultima made four requests of the court:
- that the court ensure defendants, the U.S. Department of Agriculture and the SBA (i) are enjoined from exercising option contracts or making similar modifications to 8(a) contracts with contractors that received the rebuttable presumption and (ii) are precluded from providing a less rigorous review of social disadvantage narratives than what was imposed in the past on applicants who did not benefit from the presumption;
- that the court enjoin defendants from using the 8(a) program in the administrative and technical support industry;
- that the court (i) appoint a monitor to oversee the SBA’s certification of 8(a) participants who were admitted on the basis of a rebuttable presumption or (ii) make public the social disadvantage narrative essays submitted by applicants, as well as the SBA’s decisions; and
- that until a resolution of Ultima’s motion for additional relief, the court temporarily enjoin defendants from awarding, competing, modifying, or exercising options on any 8(a) contracts to 8(a) participants who were admitted on the basis of a rebuttable presumption, whether or not the SBA subsequently approved the contractor’s social disadvantage narrative.
Takeaways
For businesses seeking 8(a) status, all applications to the 8(a) program remain temporarily suspended, and it is unclear when any of those applications will be restarted or whether the SBA is looking to revamp the entire program before turning the application process back on.
For businesses that are already 8(a)-certified, Ultima’s recent motion may have an impact on their ability to secure new work or keep contracts that were already awarded. Further, this latest motion may even cause the 8(a) program to be entirely suspended until new regulations can be developed and finalized. Indeed, the latest motion from Ultima seeks a court order that would enjoin the award, competition, modification, or exercise of options on any 8(a) contract where the contractor once received the rebuttable presumption, regardless of the contractor’s submission of a qualifying social disadvantage narrative.
Further, Ultima seeks to stop the use of the 8(a) program in the administrative and technical support industries entirely. This same reasoning could be used by other companies seeking to stop the entire 8(a) program in all other industries. While such an injunction was traditionally seen as overly broad, this is a different judicial environment given the Supreme Court’s decisions on affirmative action programs in higher education and receptivity to overturning precedent.
Judge Corker has not issued a decision in response to Ultima’s motion. However, depending on the judge’s ruling, the 8(a) program could be significantly impacted with respect to these requests in the coming weeks.
Due to the significant impact of this case on the 8(a) community, PilieroMazza is monitoring and reporting on new developments in the case. If you have questions, please contact Tony Franco, Cy Alba, Peter Ford, Meghan Leemon, or another member of the Firm’s Government Contracts Group.
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[1] Ultima Servs. Corp. v. U.S. Dep’t of Agric., No. 2:20-CV-0041-DCLC-CRW (E.D. Tenn. July 19, 2023).
[2] Ultima Servs. Corp. (E.D. Tenn. July 19, 2023).
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