SBA moves to terminate more than 150 firms from 8(a) Program after eligibility review

February 13, 2026

Alert

On February 11, 2026, the U.S. Small Business Administration (SBA) announced it has initiated termination proceedings against 154 current participants in the 8(a) Business Development Program, marking one of the most significant eligibility actions in recent years. This latest action follows sweeping oversight activity by SBA in recent months, including a December 2025 directive to all 8(a) participants to submit extensive financial documentation and the suspension of more than 1,000 firms for failure to comply with the data call.

Under an internal program integrity review conducted by SBA’s Office of Government Contracting and Business Development, the agency determined that these firms, all based in the Washington, D.C. area, failed to meet critical “economic disadvantage” eligibility criteria required for continued participation in the 9-year 8(a) Program. The agency said these companies reportedly exceeded statutory limits on owner net worth, adjusted gross income, or total assets — thresholds central to determining whether a business owner is economically disadvantaged.

Affected firms may receive a Letter of Intent to Terminate; this notice should include the specific facts and reasons for SBA's findings and should notify the concern that it has 30 days from the date it receives the letter to submit a written response to SBA explaining why the proposed grounds should not justify termination from the 8(a) Program. The termination notices require that the firms be suspended from the 8(a) Program for at least 30 days before final termination, so this minimum 30-day window provides an important opportunity to provide a written response to challenge the termination before the action becomes permanent.

What this means for affected firms

Participation in the 8(a) Program opens doors to significant federal contracting opportunities, including sole-source awards and set-aside work. The loss of program status, whether through suspension or termination, can materially impact a firm’s pipeline and strategic positioning in the government market. Suspension and impending termination are very serious, and firms should consider their options to challenge the termination actions.

Appeal rights and timelines

It is important to understand the options for response and appeal. Firms facing these actions should carefully preserve deadlines and consider engaging counsel experienced in Small Business Program compliance and OHA practice, as procedural missteps can result in loss of appeal rights.

Key appeal timelines and considerations:

Response to Notice of Intent to Terminate. If the 8(a) firm received a Notice of Intent to Terminate (usually coupled with a Notice of Suspension), then the firm has 30 calendar days to submit a written response to SBA to challenge the grounds for termination. SBA will consider any information submitted in response by the concern. If SBA determines that termination is not warranted, then they will notify the 8(a) firm in writing. If this challenge is unsuccessful, the firm may receive a Notice of Termination.
Appeal of Notice of Termination. The Notice of Termination will set forth the specific facts and reasons for the decision and will advise the concern that it may appeal the decision (in accordance with 13 CFR Part 134) through the SBA Office of Hearings and Appeals (OHA), a quasi-judicial body that hears challenges to SBA program decisions, including 8(a) eligibility. To challenge this decision, the firm can file a formal 8(a) appeal with OHA within 45 calendar days of receipt of the SBA’s Notice of Termination letter. Appeals typically involve submitting a written petition with supporting evidence and legal arguments demonstrating why SBA’s determination was in error. If a Participant does not appeal, then the termination decision is the final agency decision effective on the date the appeal right expired.

Effect of suspension and appeal

Even after filing an appeal, the suspension remains in effect pending the outcome of the appeal, meaning a firm cannot receive new 8(a) awards during this period. Once SBA issues a decision to terminate (Notice of Termination), the 8(a) Participant will be immediately ineligible to receive further program assistance. If, on appeal, OHA overrules the SBA's decision and finds in favor of the 8(a) firm, the length of time between the termination and OHA's decision on appeal will be added to the Participant's program term.

Looking ahead

This latest enforcement action underscores the increased scrutiny faced by current 8(a) participants in ensuring ongoing compliance with economic and regulatory eligibility requirements. Government contractors, especially those nearing statutory thresholds, should assess their eligibility status, maintain robust documentation, and be prepared to act swiftly in response to SBA inquiries or notices.

If you have any questions or would like assistance in challenging a termination decision, please contact Government Contracts Counsel Carissa Siebeneck Anderson.

McDonald Hopkins' Michelle Kantor will be leading the "USDOT's Interim Final Rule for the DBE/ACDBE Programs and 2024 Overhaul of the DBE Certification Rules" webinar presented by Great Lakes Women's Business Council.

USDOT issued an IFR updating certification standards for DBE/ACDBE programs, which includes definitions and procedures related to social and economic disadvantage and removes the presumption of disadvantaged based upon race or sex. These changes will affect eligibility determinations, certification renewals, recipient administration, goal counting and compliance planning for current and prospective DBEs/ACDBEs as well as prime contractors.

Published October 24, 2025, USDOT’s official FAQs interprets the Interim Final Rule that took effect on Oct. 3, 2025, which had made monumental changes to the Disadvantaged Business Enterprise and Airport Concession DBE programs. The FAQs clarify key questions regarding interpretation of the IFR.