SBA’s Continuing Review of Socio-Economic Contracting Programs

On June 7, 2026, the Small Business Administration (SBA) sent an email to Economically Disadvantaged Women-Owned Small Business (EDWOSB) program participants. SBA was giving these firms until June 30, 2026, to respond to a 38-question survey and submit personal and business tax returns for the last three years to verify the 51% economically disadvantaged ownership requirement for continued program eligibility as set forth in 13 CFR 127.203.  This appears to be an expansion of the SBA’s scrutiny of socio-economic contracting programs, building on its audit of the 8(a) Business Development Program begun in December 2025, which BDO wrote about here. That audit led to the suspension of more than 1,100 8(a) firms and the eventual termination of 154 8(a) companies. Both the EDWOSB review and the 8(a) audit are aimed at ensuring contractors are not taking advantage of or being unfairly left out of federal contracting programs.

EDWOSB Program Requirements

To qualify as an EDWOSB, a firm must be at least 51% unconditionally and directly owned by women who are U.S. citizens. Those women must also meet specific thresholds for economic disadvantage, including personal net worth under $850,000, adjusted gross income under $400,000, and personal assets under $6 million. In addition to questions related to those specific regulatory requirements, the survey also includes probing queries such as:

• Has the Qualifying Owner transferred any assets to any immediate family member for less than fair market value in the last two years?
• Do you have any retirement accounts? And if so, provide a list and how much money is in each account.
• Do you have any stocks, bonds, or mutual funds? And if so, provide a list, a corresponding number of shares you own and total dollar value for each.
• Do you have a life insurance policy that has a cash surrender value?
• Do you own your primary residence? If so, what is the mortgage of your residence and what is the current value of your residence?

Potential Outcomes

There are two potential outcomes of the SBA review for firms participating in the EDWOSB program:

• Continued Certification: If the SBA determines that the firm substantiates all ownership, control, and economic disadvantage criteria, it would issue a formal notice of continued certification. The firm’s status would be maintained in the Dynamic Small Business Search (DSBS) and System for Award Management (SAM) platforms.
• Proposed Decertification: If the owner fails to respond to the survey, if documentation gaps exist, or if the owner’s net worth exceeds program thresholds, the SBA would propose the firm for decertification.

Continued SBA Scrutiny

As the SBA continues to review socio-economic programs with its stated objectives to root out fraud, eliminate pass-through schemes (where shell companies act as intermediaries for larger firms), and ensure strict compliance with legal program requirements, it has released a proposed rule on June 11, 2026, that would change the basis for entry into the 8(a) program. The proposed rule says that “individuals will no longer be considered ‘socially disadvantaged,’ and therefore eligible for the 8(a) program, simply because they are a member of a racial minority group. Likewise, no individual may be barred from the 8(a) program simply because they are white. Instead, all applicants will be required to prove their social disadvantage status by submitting verifiable, fact-based evidence.”  Note that these changes would only apply to individually owned firms. The eligibility standards for entity-owned participants, including businesses owned by Indian tribes, Alaska Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), and Community Development Corporations (CDCs), would not change. The proposed rule would also not impact current individually owned participants in the 8(a) program. Comments on the proposed rule are due by July 13, 2026.  

This proposed rule, along with other actions taken by the current administration, such as the March 2026 Executive Order 14398 “Addressing DEI Discrimination by Federal Contractors”, could have wide-ranging impacts on set-aside contracting programs based on historical socio-economic disadvantage definitions as the "social disadvantage" test presumption for designated racial and ethnic groups would be replaced by the rule with a race-neutral standard. All individual applicants would be required to prove they suffered material harm from specific, discriminatory actions by government or private entities.