As many of you know, federal contracting programs aimed at leveling the playing field for diverse and women-owned businesses have been under legal attack. An incredible number of small businesses rely heavily on these certifications, such as the Disadvantaged Business Enterprise (“DBE”), Airport Concessions Disadvantaged Business Enterprise (“ACDBE”), and the 8(a) Business Development Programs ,to obtain contracts for their business. According to the SBA, the federal government spent $178.6 billion in 2023 with small businesses, including many through programs such as DBE and 8(a).
In this blog, I will provide updates on two of the leading cases seeking to challenge these programs.
Ultima Services Corp. v. U.S. Department of Agriculture has been pending in the Eastern District of Tennessee since 2020. In July of 2023, this case made headlines when the court enjoined the SBA from using the race-based rebuttable presumption of social disadvantage in the 8(a) program. A few months later, Ultima filed for a permanent injunction against the entire program. Briefing has been closed since October of 2023, and the court has yet to issue its decision.
The Tunica-Biloxi Tribe of Louisiana and the National Center for American Indian Enterprise Development filed an amicus curiae (a/k/a friend of the court) brief. They argue that tribes and Alaskan Native Corporations do not need to demonstrate disadvantage to qualify for the 8(a) program, so there are no race-based presumptions at issue, and thus, should not be included in the permanent injunction.
In September of 2024, a Black business owner sought to intervene in the matter on behalf of herself and another Black business owner. They objected that Alaskan Native Corporations, Community Development Corporations, and Native Hawaiian Organizations are not entitled to the rebuttable presumption under the 8(a) program. The court denied their Motion to Intervene because the parties seeking to intervene must be represented by an attorney. Despite that order, the potential intervenors continue to file documents with the court without an attorney, to which neither the parties nor the court have responded.
There is no indication of when the court will issue a decision on Ultima’s request for a permanent injunction against the 8(a) Business Development Program.
Mid-America Milling Co., LLC v. U.S. Dep’t of Transportation was filed in the Eastern District of Kentucky in 2023 and has moved at a faster pace than Ultima. As I have blogged previously, in fall of 2024, the court issued a preliminary injunction blocking a portion of the DBE program (limited to contracts where the plaintiffs in the case are bidding).
The Mid-America court recently issued a case management order, setting the deadlines for the case, including setting a jury trial for January 26, 2026. Between now and then, the parties will engage in discovery and brief various legal issues.
On January 1, 2025, two companies (Central Seal Company and Charbon Contracting, LLC) moved to intervene. These companies requested that the court extend the order to also include bids in which their companies participate. As of the date of this blog, no parties have responded to the motion, nor has the court issued any orders regarding the motion.
The world of diversity certifications is rapidly changing-please continue to follow my blog for the latest updates.
If you have any questions about DBE/ACDBE certification or the SBA’s 8(a) Business Development Program, please contact Danielle Dietrich, Esq. at ddietrich@potomaclaw.com or 412-449-9141.
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