Landmark Ruling Ends Race-Based SBA Contracting 

Ultima Services Corporation v. U.S. Department of Agriculture, et al.

Ultima Services Corporation is a small business that successfully challenged the federal government’s decades’ long use of race-based preferences in contracting. In doing so, Ultima also defended a basic constitutional principle: the government may not allocate economic benefits based on racial presumptions rather than individual merit. What began as a dispute over federal contracting eligibility has become a landmark constitutional case that struck down one of the federal government’s largest racial set-aside mechanisms. 

In July 2023, a federal district court ruled that the Small Business Administration’s use of a race-based “rebuttable presumption” of social disadvantage in the Section 8(a) program is unconstitutional. The court permanently enjoined the government from continuing to use that presumption. The ruling represents a decisive victory on the merits—but the litigation continues as Ultima seeks full and effective relief, which the federal government has not yet provided. 

For more than fifteen years, Ultima provided administrative and technical support services to the U.S. Department of Agriculture’s Natural Resources Conservation Service (NRCS). Under the leadership of its owner, Celeste Bennett, Ultima built a nationwide operation supporting conservation programs critical to farmers and ranchers across the country. The company repeatedly won contracts through competitive bidding and earned a reputation for reliability, efficiency, and institutional expertise. 

That successful partnership didn’t end because of Ultima’s performance as a contractor. It ended because Celeste was the wrong race. 

Excluded From Competition by a Federal Racial Preference 

The federal Section 8(a) program allows agencies to reserve contracts exclusively for businesses owned by individuals deemed “socially and economically disadvantaged.” A central feature of the program was a racial presumption: individuals from certain racial and ethnic groups were automatically deemed “socially disadvantaged” while everyone else was required to prove disadvantage through a demanding evidentiary process. 

Because Celeste is white, Ultima was categorically barred from competing for contracts the USDA reserved for the 8(a) program. Contracts Ultima had serviced for years were removed from competitive bidding and reassigned to 8(a) firms solely because of the race of their owners. 

Ultima’s exclusion had nothing to do with the company’s capacity, cost, or performance. It was the direct result of a government policy based on race. 

The Constitutional Challenge 

CIR filed suit on Ultima’s behalf, arguing that the SBA’s racial presumption violates the Constitution’s guarantee of equal protection. Under Supreme Court precedent, racial classifications imposed by the federal government must satisfy a demanding standard of constitutional review called strict scrutiny. 

The government claimed the presumption was justified as a remedy for past discrimination in federal contracting. But the court found that the government failed at every step of the analysis. 

In a comprehensive opinion issued on July 19, 2023, the court held that: 

• The government failed to identify specific, identified instances of past discrimination it was attempting to remedy 
• The SBA lacked concrete goals or metrics tying the racial presumption to any remedial objective 
• The presumption was not meaningfully “rebuttable” in practice 
• Automatically deeming individuals disadvantaged based on race was not narrowly tailored to any compelling interest 

The court concluded that the racial presumption was unconstitutional and prevented the federal government from using it in administering the 8(a) program.

 A Victory on the Merits and the Ongoing Fight for Real Relief 

Although the court struck down the unconstitutional presumption, the Biden administration attempted to limit the practical effect of the ruling. Following the decision, federal agencies asserted that they could continue awarding and extending existing 8(a) contracts with personal narrative statements and that only minimal procedural changes were required to comply with the injunction. 

Ultima has returned to court to ensure that the landmark constitutional ruling is not reduced to a hollow victory. The continued litigation centers on whether the government’s asserted “compliance” remedies the exclusion and competitive harm caused by the unconstitutional program or preserves those harms through slight-of-hand administrative maneuvering. 

The central legal question has shifted. The constitutionality of racial presumptions has already been decided. What remains is how the government is required to fully unwind the consequences of an unconstitutional contracting regime. 

Background: Equal Protection and Federal Contracting 

The Constitution prohibits the federal government from treating individuals differently based on race unless such treatment is narrowly tailored to serve a compelling governmental interest. Generalized claims of societal discrimination or statistical disparities are not enough. 

As the Supreme Court has repeatedly held, remedial race-based programs must be grounded in concrete evidence of past discrimination by the government itself—and must operate through individualized assessments, not racial shortcuts. 

 The Section 8(a) program’s racial presumption failed these constitutional requirements. 

Why This Case Matters 

This case isn’t just about Ultima. It addresses whether the federal government may: 

• Presume disadvantage based on race rather than individual experience 
• Exclude qualified businesses from competition solely because of the owner’s racial identity 
• Preserve race-based contracting systems after a court has declared them unconstitutional 

If allowed to persist in practice, such policies would entrench racial classifications in federal economic life and undermine the constitutional promise of equal treatment under law. 

Ultima Services Corporation v. U.S. Department of Agriculture seeks to enforce a foundational principle: the government must compete contracts based on merit, not racial presumptions. The Constitution requires nothing less.