From 6,500 to 3,300: The 8(a) Program Is Being Rebuilt From the Ground Up

By WALLY ANGEL, ROSE FINANCIAL SOLUTIONS

In 2023, roughly 6,500 firms held active 8(a) certifications. In FY2024, the federal government awarded $71.9 billion in small business set-asides - 11.27% of total spending. The 8(a) program's share: $25.7 billion, or about a third of all small business set-aside dollars.

As of this week, that number may be below 3,300. Let that sink in.

The 8(a) Business Development Program is undergoing its most dramatic transformation since its creation in 1968. Over the past 30 months, a cascade of court rulings, regulatory changes, and executive actions has cut the program's participant base nearly in half - and the reshaping isn't over yet.

I've been writing about this shift since December. In "Don't Relinquish Your 8(a) Certification: Why Persistence Pays" (December 26, 2025), I urged firms not to panic and abandon the program. Two weeks later, in "DoW's 8(a) Sole-Source Review: Implications and Action Steps" (January 18, 2026), I laid out what the Department of War's contract review meant operationally. Everything I cautioned about has materialized - and then some.

If you're an 8(a) firm owner, a small business competing for set-asides, or a prime contractor managing your subcontracting plan, this affects you directly. Here's what happened, what it means, and what you should be doing right now.

The Timeline: How We Got Here



• June 29, 2023 - The Supreme Court issues Students for Fair Admissions v. Harvard, 600 U.S. 181. The ruling strikes down race-conscious admissions in higher education. Within days, legal analysts flag the obvious downstream question: what does this mean for federal programs that use racial presumptions?
• July 19, 2023 - We get the answer fast. In Ultima Services Corp v. USDA (E.D. Tenn.), a federal court enjoins the SBA's use of the racial presumption in 8(a) eligibility. The court rules that the rebuttable presumption of social disadvantage for certain racial and ethnic groups -the backbone of 8(a) certification for decades - likely violates the equal protection component of the Fifth Amendment.
• August 2023 - The SBA responds by implementing a narrative requirement under 13 CFR 124.103(b). Instead of checking a box based on race, all applicants must now provide individualized evidence of social disadvantage. Same standard, applied to everyone. On paper, it's race-neutral. In practice, it adds significant documentation burden. This framework would survive less than two and a half years.
• 2024 - New certifications drop to approximately 550 for the year. That's a noticeable decline from the 600+ pace in 2023, but the real collapse hasn't started yet.
• 2025 - Only 66 new firms are certified into the 8(a) program. That's an 88% drop from 2024. The narrative requirement, combined with processing backlogs and political uncertainty, effectively chokes the pipeline.
• December 2025 - The SBA issues a Data Call to all ~4,300 active 8(a) participants, requiring firms to resubmit or confirm their social disadvantage narratives and financial records under the new individualized standard. The deadline: January 19, 2026.
• January 16, 2026 - Secretary of War Hegseth orders a review of all sole-source contracts exceeding $20 million - the largest targeted review of 8(a) sole-source awards I've seen in my career.
• January 22, 2026 - The SBA formally eliminates the racial presumption from 8(a) eligibility and goes further: the agency announces it will not accept or utilize the Biden-era social disadvantage narratives that had been required since August 2023. The entire framework is being replaced. Going forward, SBA will administer the program on a race-neutral basis, and when evaluating social disadvantage, will consider new factors -including whether an applicant has been the victim of "illegal or radical DEI policies or affirmative action policies" or "discriminatory practices such as race-based quotas, set-asides, or hiring targets." The SBA also announced it is hiring new officers to address "fraud, illegality, and Constitutional concerns" within the program.
• January 26, 2026 -Mass suspensions begin. 1,091 firms - roughly 25% of the entire program - are suspended for failing to respond to the Data Call. These are suspensions, not terminations - a critical distinction. Suspended firms have a 45-day appeal window and retain existing contracts, but cannot receive new 8(a) awards during the suspension period.

And it's not just the SBA. The DoW, Treasury, and GSA are each running independent 8(a) audits. This isn't one agency asking questions - it's a coordinated, government-wide posture shift toward accountability in small business contracting.

Meanwhile, the FAR Overhaul - while not eliminating set-aside contracts outright - has removed many of the regulatory provisions that facilitated set-aside procurements across the board, including small business set-asides generally. The infrastructure that made set-aside contracting frictionless for agencies is being dismantled alongside the program changes.

In less than three years, the 8(a) program went from 6,500 participants to potentially fewer than 3,300.

What This Means for Current 8(a) Firms

If you're still certified and in good standing, read this carefully: The math has changed in your favor.

In FY2024, the federal government put $71.9 billion into small business set-asides (source: SBA). The 8(a) program alone accounted for $25.7 billion of that - roughly 36% of all small business set-aside dollars flowing through a single program. The government's 5% small disadvantaged business goal hasn't been reduced. Agencies still need to hit their numbers. But the pool of eligible firms to receive those dollars just got cut roughly in half.

Now peel back another layer: $16.1 billion of that $25.7 billion - roughly 63% - went to 8(a) entity set-asides (Alaska Native Corporations, Indian tribes, and Native Hawaiian Organizations). That means the remaining individual 8(a) firms were competing for approximately $9.6 billion. With roughly 3,300 firms left in the program, the math per firm just got dramatically better. Fewer firms. Same dollars. More opportunity per survivor.

That's not spin - it's arithmetic. If you maintained your certification through the narrative requirement and the Data Call, you are now in a significantly stronger competitive position than you were 18 months ago.

Those 1,091 suspended firms cannot compete for new 8(a) awards. Some will resolve their suspensions within the 45-day window. Many won't. And the firms that were already struggling with compliance aren't likely to suddenly get their houses in order under pressure.

But don't get comfortable. The scrutiny isn't going away. The era of loose oversight is over, and the firms that treat this moment as a wake-up call - not a death sentence - will be the ones still standing when the dust settles.

Seven Things Every 8(a) Firm Should Be Doing Right Now

Stop worrying about headlines. Start executing:

1. Audit Your Own Financial Records - Today.

If the SBA asked for your financials tomorrow, could you produce them within 48 hours? Complete, accurate, and reconciled? If the answer is anything other than an immediate yes, that's your first priority. Annual financial statements, tax returns, balance sheets, and profit-and-loss statements should be current, clean, and accessible. This is non-negotiable.

2. Understand the New Social Disadvantage Standard - and Prepare for It.

The Biden-era narrative requirement is gone. The SBA has explicitly stated it will not accept or utilize those narratives. In their place, the agency is evaluating social disadvantage under new criteria that include whether an individual has been the victim of illegal DEI policies, affirmative action programs, race-based quotas, or discriminatory practices by government or private actors. If you submitted a narrative under the old framework, do not assume it still supports your eligibility. Monitor your program status for official correspondence, and be prepared to reaffirm your eligibility under criteria that may look nothing like what you originally submitted.

3. Scrub Your Sole-Source Contract Files.

If you hold any sole-source 8(a) contracts- especially those approaching or exceeding the $20 million threshold - conduct a thorough internal review. Verify that every deliverable is documented, every modification is justified, and every invoice is supportable. The DoW review will be granular. Prepare accordingly.

4. Verify Your SAM.gov and SBA Profile Accuracy.

Outdated NAICS codes, stale capability statements, incorrect revenue figures - these are the kinds of discrepancies that trigger deeper scrutiny during audits. Ensure every data point in your SAM.gov registration and SBA dynamic small business profile is current and consistent with your actual operations.

5. Strengthen Your Accounting Infrastructure.

I've seen too many 8(a) firms operating with bookkeeping systems that can't withstand an audit. If you're still running your government contracting finances on QuickBooks with no cost accounting structure, no incurred cost submission preparation, and no DCAA-ready timekeeping - you're bringing a knife to a gunfight. Invest in the infrastructure now, before the auditors arrive.

6. Stop Relying on the Designation - Start Competing on Capability.

This is the uncomfortable truth: too many 8(a) firms have treated the certification as a business strategy instead of a business development tool. The designation gets you in the door. It doesn't keep you there. If your win rate depends entirely on 8(a) set-aside preferences rather than demonstrable past performance, technical capability, and delivery excellence - you are one policy change away from irrelevance. Build a company that wins work because it's the best option, not just the most convenient socioeconomic check-box. That's the only sustainable position.

7. Engage Expert Support Before You Need It.

Don't wait until you receive a suspension notice or audit request to bring in professionals. Proactive compliance review is orders of magnitude cheaper and less disruptive than reactive crisis management. Whether it's your CPA firm, your compliance counsel, or a specialized GovCon financial services partner - get them engaged now.

What This Means for Non-8(a) Small Businesses

If you've been competing in the open small business set-aside space, the 8(a) contraction creates a ripple effect you should be watching. Consider the full FY2024 set-aside landscape: $71.9 billion in total small business set-asides, with $25.7B in 8(a), $14.5B in SDVOSB, $2.8B in HUBZone, and $2.2B in WOSB. The 8(a) program commands the largest single slice of socioeconomic set-aside dollars. When a third of the firms in a $25.7 billion program get sidelined, those contract dollars don't just vanish - they have to go somewhere.

Some contracts that were set aside for 8(a) may shift to small business set-asides or full-and-open competition if agencies can't find enough qualified 8(a) firms. Contracting officers still have requirements to fill. If the 8(a) pool is too thin in your NAICS code, those dollars have to go somewhere.

Additionally, firms that lost their 8(a) status don't disappear - they become your competitors in the general small business pool. Expect more crowding at the small business set-aside level, particularly from experienced firms that had been operating in the 8(a) lane.

And watch the FAR Overhaul closely. The removal of provisions that facilitated set-aside contracting doesn't just affect 8(a) - it affects every socioeconomic category. The entire set-aside ecosystem is being restructured, not just one program.

Start tracking 8(a) set-asides in your NAICS codes. If you see awards getting canceled or reissued as unrestricted, that's your signal.

What This Means for Primes

If you're a large prime relying on 8(a) subcontractors to meet your subcontracting plan goals, you have a problem. Your pool of eligible 8(a) subs just shrank dramatically. The firms you've been teaming with may have been suspended. Your subcontracting plan percentages for SDB participation don't change just because the market did.

Audit your subcontractor roster now. Verify current 8(a) status for every firm on your team. If a key sub lost their certification, you need a replacement - and so does every other prime in your position. The compliant 8(a) firms that remain are about to get very popular and very busy.

Primes who build and maintain strong relationships with certified 8(a) firms now will have a significant advantage on upcoming recompetes and new pursuits. Consider mentor-protege arrangements that create structural partnerships, and diversify your socioeconomic subcontracting across multiple categories so you're not over-indexed on a single shrinking pool.

The Bottom Line

The 8(a) program isn't dying. It's being rebuilt from the ground up - on individual merit rather than group presumption. That's a seismic shift in policy, and the transition has been painful. Over a thousand firms have been sidelined. The certification pipeline has slowed to a trickle. Multi-agency audits are underway. The uncertainty is real.

But for the firms that remain - the ones with solid narratives, clean books, and real past performance - this is arguably the best competitive position the program has offered in decades. Fewer seats at the table. Same amount of food. The survivors win.

At Rose Financial Solutions, this is exactly the work we do - helping government contractors build the financial infrastructure, compliance readiness, and accounting systems that withstand scrutiny at every level. If you're an 8(a) firm that wants to be among the survivors, not the statistics.

Wallace Angel

VP, Finance and Accounting, Client CFO

Wallace “Wally” Angel is a strategic CPA with more than 20 years of experience in the government contracting and consulting environments with companies ranging from start-ups to $800M. His government contracting expertise includes FAR and DCAA compliance, indirect rate calculation, forward pricing, proposal writing, pricing, and cradle to grave contracts management and system design and implementation. In his position as Partner, Financial Operations, Wally serves as a trusted advisor to the C-suite in controllership and cash management, revenue recognition, system design and implementation, and full financial planning and analysis.