On February 11, 2026, the U.S. Small Business Administration issued a press release announcing that it was initiating termination proceedings and suspending over 150 Washington, D.C.-based 8(a) firms for allegedly failing to meet “economic disadvantage” eligibility criteria for the 8(a) Program. This is a bold move as traditionally proposed terminations are not also coupled with suspensions. And while the press release asserts that these firms “exceeded statutory net worth limits, adjusted gross income caps, or total asset limits,” the notice these firms received suggests that these firms “may” no longer be eligible. Contractors are entitled to respond and explain why the proposed grounds do not justify termination. Understanding the regulations and calculations is critical. SBA’s move to propose termination while simultaneously suspending 8(a) firms based on the program’s economic disadvantage criteria shows SBA’s continued scrutiny of the 8(a) Program and the need for 8(a) firms to understand and maintain eligibility compliance.
The 8(a) Program imposes requirements on the qualifying owners of 8(a) firms, including specifically that the owner’s adjusted net worth (at a high level, assets less liabilities) not exceed $850,000 (excluding the value of the owner’s primary residence, equity in the 8(a) firm and funds invested in an official retirement account); the fair market value of the owner’s total assets (including their primary residence and their equity in the 8(a) firm and only excluding funds invested in an official retirement account) not exceed $6.5 Million; and the owner’s adjusted gross income averaged over the three preceding years should not exceed $400,000 (this includes income from all sources, including distributions; the only income that may be excluded is income reinvested into the firm or used to pay corporate taxes). Exceeding one or more thresholds triggers a review by SBA for continued participation; termination is not automatic nor always mandatory under the applicable regulations.
SBA’s press release follows the issuance of a December 5, 2025, Data Call to all 8(a) Program participants through which SBA sought substantial economic and contractual documentation in an effort to identify fraud, waste, and abuse in the program. In January, following receipt of Data Call responses, SBA announced it was suspending approximately 1,100 8(a) firms for failure to respond (or failure to completely respond) to the Data Call. Some 8(a) firms were reinstated days later after they demonstrated reasonable compliance with the Data Call requests. However, other firms remain suspended.
On one hand, SBA’s announcement clearly reinforces the agency’s intent to closely scrutinize the 8(a) Program and its participants, but on the other, it raises questions about SBA’s imposition of swift penalties. For instance, the press release states that “[t]he firms . . . exceeded statutory net worth limits, adjusted gross income caps, or total asset limits.” It then provides examples of a D.C.-based 8(a) firm that allegedly “reported total assets of more than $35 million” and another that reported “net worth of at least $24 million . . . .” Out of context, these statements paint 8(a) companies in a bad light. However, it is important to note that the regulations do not impose limits on the net worth, adjusted gross income, or total assets of the 8(a) firms themselves; those limits are imposed only on owners of 8(a) firms. The press release makes no mention of the total assets or net worth of the firms’ owners.
While the press release refers to Washington, D.C.-based firms, this is not limited to that geographical area. 8(a) firms in other parts of the country should expect similar treatment from SBA in the coming weeks. Firms close to the economic disadvantage thresholds should be prepared to demonstrate ongoing economic disadvantage and shore up regulatory compliance requirements.
Firms facing termination and/or suspension as a result of SBA’s review of economic disadvantage criteria are not without remedies. Targeted firms may respond to the proposed termination within 30 days and appeal adverse decisions to the Office of Hearings and Appeals. Firms that are suspended from the 8(a) Program may appeal within 45 days. And even firms terminated or suspended from the 8(a) Program may continue to perform existing 8(a) contracts unless otherwise terminated by the awarding agency.
If your firm has been suspended or proposed for termination from the 8(a) Program, or you have questions about 8(a) compliance or your appeal options, reach out to the authors of this blog, Matt Feinberg or Meghan Leemon, members of PilieroMazza’s 8(a) Audit Response Task Force.
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