The Small Business Administration’s (SBA) 8(a) Business Development Program (8(a) program) faced new constitutionality challenges in a case filed at the U.S. Court of Federal Claims (COFC) by Advanced Simulation Technology Inc. (ASTi). ASTi protested a contract awarded to an Alaska Native Corporation (ANC) alleging, among other things, that the entire tribal 8(a) program is unconstitutional. While this case will likely be dismissed for reasons wholly unrelated to the constitutionality challenge, these allegations are sure to be raised again by other firms looking to challenge awards to tribally owned, ANC, or Native Hawaiian Organization (NHO)-owned entities. This is merely a continuation of the current challenges to the constitutionality of the 8(a) program starting with the Ultima case PilieroMazza reported on last year (linked here and here). .[1] As noted, this new challenge to the 8(a) Program could potentially affect contract awards to entity-owned 8(a) participants, such as tribally owned firms and ANCs.
In Ultima, the U.S. District Court for the Eastern District of Tennessee found that the SBA’s use of a rebuttable presumption to determine social disadvantage for admittance to the 8(a) program violated a government contractor’s Fifth Amendment right to Equal Protection.. Soon after, the SBA announced it would require pending and future individual-owned 8(a) participants to affirmatively establish eligibility with a social disadvantage narrative. (See our coverage linked here.)
Now, in Advanced Simulation Technology Inc. v. U.S., No. 1:23-cv-02201-MRS (Fed. Cl. 2024), ASTi challenges the SBA’s rebuttable presumption that tribally owned firms and ANCs are both socially and economically disadvantaged for purposes of participation in the 8(a) program. Entity-owned 8(a) contractors should be aware of these developments as the attacks are likely to continue beyond the ASTi case. Below, PilieroMazza discusses the case and its potential impact on entity-owned 8(a) contractors.
ASTi’s Allegations
ASTi’s bid protest challenges a follow-on 8(a) Indefinite Delivery, Indefinite Quantity(IDIQ) Naval Air Warfare Center Training Systems Division, Digital Radio Management System (DRMS) contract awarded to Bowhead Professional and Technical Solutions, LLC (Bowhead). ASTi, who is not an 8(a) participant but is a small business, maintains that its commercially available products meet the procurement requirements for the DRMS contract.
ASTi makes two main allegations. First, ASTi alleges the government failed to (i) appropriately favor commercial and nondevelopment products to the maximum extent practicable as required by a statute applicable to the Department of Defense and (ii) consider ASTi’s commercially available product prior to issuing an award to Bowhead. In this regard, ASTi asserts that the government did not conduct the appropriate market research and, if it had, the government would have determined that ASTi’s product “Voisus” satisfied the requirements and specifications of the DRMS system.
Second, and more importantly here, ASTi alleges that the Navy violated the Fifth Amendment’s guarantee of Equal Protection by awarding Bowhead a contract on account of its race or tribal status. Core to ASTi’s argument is the proposition that laws that facially discriminate on the basis of race or tribal status, even if they are beneficial to the group identified, are unconstitutional. While ASTi acknowledges that the D.C Circuit upheld the constitutionality of the 8(a) program in Rothe Development, Inc. v. United States Dep’t of Def., 836 F.3d 57 (D.C. Cir. 2016), ASTi argues the court’s ruling hinged on one aspect of the program’s eligibility criteria, “individualized assessments of social and economic disadvantage, which look for actual effects of prejudice” for individually owned 8(a) participants. Thus, according to ASTi, the facts in the instant case can be distinguished because tribally owned firms and ANCs enjoy two main exceptions to the general rules of the 8(a) program:
- competition is not required for awards that are issued to 8(a) participants owned and controlled by Native American tribes or ANCs, and
- no individualized assessment of social or economic disadvantage is necessary for participation in the 8(a) program for businesses owned and controlled by an ANC.[2]
ASTi argues that the Rothe Development Inc. decision cannot be used to justify the “categorical and indiscriminating carveout from competition for Indian Tribes and ANCs” or the “presumption of social and economic disadvantage that is afforded to ANC entities” for participation in the 8(a) program.[3] ASTi points to Supreme Court precedent for the proposition that the “only permissible Indian preferences are those that are tied to Indian lands, to uniquely sovereign interests, or to the special relationship between the federal government and the Indian tribes”.[4] According to ASTi, the federal government’s special treatment of ANC’s in the 8(a) program, a nationwide business development program, or for Navy contracts are not constitutional permissible preferences. Instead, these benefits are “completely untethered to issues of tribal sovereignty or remedying the effects of past discrimination.”[5]
More Challenges To Come
In the wake of the Supreme Court striking down affirmative action programs in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, 600 U.S. 181 (2023), this case is one of many challenges to federal programs that provide preferences for groups that have been historically socially and economically disadvantaged in the United States. However, unlike other challenges to affirmative action programs, it is more difficult to predict how the Court and lower federal courts will rule on challenges to the constitutionality of government contracting programs that assist tribally owned, ANC, or Native Hawaiian Organization (NHO) owned entities.
In its arguments, ASTi recognizes that the Supreme Court has a long history of recognizing the special relationship tribal communities have with the federal government and such a relationship has allowed for special treatment in certain cases.[6] While we expect to see more challenges to federal programs premised on Equal Protection arguments, whether these arguments will be successful when attacking preferences for tribally owned, ANC, or NHO entities is still unclear. Recently, in Haaland v. Brackeen, 599 U.S. 255(2023), the Supreme Court rejected a constitutional challenge to the Indian Child Welfare Act, a program that gives preference to Native American families in tribal adoptions. However, in that decision, the Court found that no party in the case, including the State of Texas, had standing to bring an Equal Protection claim, and thus, the Court did not decide that case on Equal Protection grounds.
Takeaways
Though entity-owned 8(a) participants may not receive a decision on the constitutionality of tribal 8(a) preferences from this case, participants should be prepared to see competitors making similar arguments in future bid protests or other federal court cases.
[1] Ultima Servs. Corp. v. U.S. Dep’t of Agric., No. 2:20-CV-0041-DCLC-CRW (E.D. Tenn. July 19, 2023).
[2] ASTi Amended Complaint, at 21.
[3] Id. at 23.
[4] Id. at 24 (citing United States v. Antelope, 430 U.S. 641, 646 (1977), Moe v. Confederated Salish and
Kootenai Tribes, 425 U.S. 463, 481 (1976), Fisher v. District Court, 424 U.S. 382, 389 (1976), and United States v. Garrett, 122.)
Fed. App’x 628, 631 (4th Cir. 2005)
[5] Id. at 33.
[6] “As long as the special treatment can be tied rationally to fulfillment of Congress’ unique obligation toward the Indians, such legislative judgements will not be disturbed.” Morton v. Mancari, 417 U.S. 535, 555 (1974).
