In Washington, when a authorities program comes beneath scrutiny, the dialog usually jumps too rapidly from “this wants oversight” to “this ought to be eradicated.” That intuition is now on show within the debate over the federal authorities’s 8(a) Enterprise Growth Program, a long-standing initiative designed to assist small companies owned by socially and economically deprived people compete in federal contracting.
For a lot of Black-owned companies, 8(a) is commonly the first pathway into federal contracting, offering entry to capital, expertise, and credibility that might in any other case stay out of attain in a system formed by longstanding racial inequities. But even with this program, equal entry to alternative stays elusive. The U.S. Division of Labor reported in 2021 that, regardless of representing 24% of eligible companies, minority-owned companies accounted for less than 3% of all contract awards.
Oversight or Pretext? The Politics Round “DEI”
Critics argue this system is outdated, weak to abuse, and legally fragile. Some have gone additional, calling for its dismantling. However this debate is unfolding amid a broader political effort to roll again range, fairness, and inclusion initiatives, notably people who acknowledge race as a consider unequal financial outcomes. In that context, enforcement dangers getting used to not strengthen this system, however to shrink it.
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That contraction is already seen. The Small Enterprise Administration has admitted solely 65 firms to the 8(a) program in 2025, in contrast with greater than 2,000 admissions over the earlier 4 years. It additionally suspended greater than 1,000 of roughly 4,300 lively companies in January for noncompliance.
The actual query shouldn’t be whether or not 8(a) is flawless. It’s whether or not policymakers will do the more durable work of governing it successfully or use enforcement as a pretext for eliminating one of many few federal instruments designed to increase alternative for deprived entrepreneurs.
How 8(a) Works and What it Really Presents
The 8(a) program shouldn’t be a everlasting choice or a assured pipeline of contracts. It’s a time-limited enterprise improvement initiative, sometimes lasting as much as 9 years, meant to assist small companies owned by socially and economically deprived people construct the capability to compete within the federal market. Members obtain contracting alternatives alongside enterprise counseling, technical help, and mentoring. The purpose is commencement, not dependency.
This system exists as a result of Congress acknowledged that socially and economically deprived companies, together with many Black-owned companies, face documented boundaries to capital, bonding, and business networks. Federal contracting requires previous efficiency, upfront financing, and institutional relationships that many entrepreneurs have traditionally been denied. 8(a) makes an attempt to slim that hole.
The “Preferential Therapy” Declare Doesn’t Match the Numbers
But labeling 8(a) as “DEI” distorts each its function and its outcomes. Black-owned companies nonetheless obtain solely about 1.5 p.c of whole federal contract {dollars}, a fraction of their share of the small enterprise neighborhood and the inhabitants. Even with 8(a), the positive factors have been modest. If that is what critics name preferential remedy, it’s a remarkably restricted one.
The hazard is that within the identify of eliminating “DEI,” policymakers are dismantling one of many few structured entry factors into federal contracting for deprived small companies with out changing it with something stronger. That doesn’t punish elites. It harms small companies that depend on federal contracts to construct previous efficiency, stabilize money circulation, and create jobs.
What Occurs if 8(a) Shrinks Additional
Shrinking this system won’t produce a extra aggressive market. It would focus federal contracting additional amongst established incumbents, scale back provider range, and weaken the resilience of federal provide chains. The consequence shouldn’t be neutrality. It’s consolidation, greater boundaries to entry, and probably greater prices for taxpayers.
Reform Is More durable Than Scrapping it
There is no such thing as a critical dispute that this system faces dangers. Issues can come up when a small enterprise features primarily as a pass-through, when massive contracts are awarded with out competitors, or when businesses fail to watch efficiency. These points deserve consideration. However acknowledging danger shouldn’t be the identical as proving a program is past restore. Oversight our bodies have persistently proven that focused enforcement, higher knowledge, and risk-based supervision work.
The Division of Protection awarded greater than $18 billion in contracts to eight(a) companies in 2024. A January memo signifies that the DoD is conducting an 8(a) assessment meant to remove what it describes as unconstitutional and non-merit-based DEI. Eliminating this system would require important provide chain restructuring and would contradict Commerce Division findings emphasizing the significance of minority-owned companies for provide chain resilience.
The selection dealing with policymakers shouldn’t be between oversight and abandonment. It’s between dismantling a flawed however vital software or reforming it to ship higher outcomes. A reformed and well-enforced 8(a) program shouldn’t be a particular favor. It’s a sensible mechanism to increase competitors and strengthen the small-business ecosystem. Scrapping it could be politically handy. Fixing it and demanding that it do extra is much extra precious.
Cantrell Dumas is a senior researcher on the Joint Heart for Political and Financial Research.
