SBA Proposes to End Race-Based Presumption in 8(a) Program, Vindicating CIR’s Ultima Victory 

The proposed rule complies with the 2023 court order in CIR’s lawsuit on behalf of Ultima Services Corp. CIR and the Wisconsin Institute for Law & Liberty are now in court to end the same racial presumption across the rest of the federal government.

In a vindication of CIR’s 2023 Supreme Court victory in Ultima Services Corp. v. USDA, the Small Business Administration has proposed a new rule that would eliminate the race-based “rebuttable presumption” of disadvantage from its Section 8(a) federal contracting program for individually owned firms—the presumption a federal court held unconstitutional in CIR’s case.

The 8(a) program sets aside government awards for small businesses owned by “disadvantaged” individuals, with certain racial groups presumed to be disadvantaged. CIR sued on behalf of Ultima,and a federal court ruled that this presumption violated the Fifth Amendment’s right to equal protection. The court stopped the SBA from using the regulation, and the Biden Administration’s SBA did not appeal. The SBA now “fully agrees that the Rebuttable Presumption is unconstitutional,” conceding that from 1986 until its “demise in 2023” the program “unconstitutionally categorized and favored certain individuals solely on the basis of race and ethnicity,” to the point that the regulations “rendered white Americans almost totally unable to participate in the program.”

CIR’s Executive Legal Officer Michael Rosman, said, “We brought Ultima on a simple premise: The government cannot decide what business wins a federal contract based on the owner’s race. A federal court agreed—and now the SBA is proposing to write that principle into its rules and to admit, in its own words, the discrimination it imposed for nearly four decades. That is a real victory for equal treatment under the law.”

Background: Ultima Services Corp. v. USDA

CIR represented Ultima Services Corporation, a small administrative and technical-support firm owned by Celeste Bennett. The lawsuit challenged the SBA’s practice of presuming that members of certain racial and ethnic groups were “socially disadvantaged,” and therefore eligible for 8(a) contracting preferences not available to other applicants.

On July 19, 2023, the U.S. District Court for the Eastern District of Tennessee ruled the presumption could not survive constitutional scrutiny and prohibited the SBA from using it in administering the 8(a) program. On November 25, 2025, the Department of Justice formally advised the Speaker of the House that it would no longer defend the presumption in court.

A proposed rule, however, can be revised or rescinded by a future administration, which is why CIR does not rest on regulatory fixes alone. The durable remedy must come from the courts, and the same racial presumption at issue in Ultima reaches far beyond the SBA.

The Fight Continues: Revier Technologies v. Loeffler

Ultima stopped the SBA from using the presumption. But that did not stop other federal agencies from using it. Congress directed other agencies to follow these regulations in their own programs—at NASA, the EPA, the Treasury Department, and the Department of Homeland Security. Cut at one agency, it survives in the rest.

That is why CIR continues to challenge these unconstitutional regulations. In November 2025, CIR and the Wisconsin Institute for Law & Liberty (WILL) filed Revier Technologies and Young America’s Foundation v. Loeffler, a direct challenge to the racial presumption at the heart of Section 8(a) and the federal programs built on its template. The suit aims at the source of the presumption rather than any single agency’s copy of it.

Matthew Schultheis, founder of the Louisiana startup Revier Technologies, developed artificial-intelligence tools for the construction industry and applied for investment capital through a federal small-business program—only to be turned away because he is not a member of a “disadvantaged” race. Students across Young America’s Foundation’s college chapters, qualified and studying in the relevant fields, have been blocked from competing on equal terms for a paid Department of Homeland Security cybersecurity fellowship for the same reason.

“The SBA’s proposed rule fixes one regulation at one agency, but the same racial presumption has spread across the federal government,” said CIR Litigation Director Caleb Kruckenberg. “In Revier, we and our partners at the Wisconsin Institute for Law & Liberty are asking the courts to end it everywhere—so that Americans like Matthew Schultheis are judged on their merits, not their skin color.”

The SBA’s action is a proposed rule, not a final one. The agency is accepting public comments through July 13, 2026 at regulations.gov. CIR intends to submit comments in support of the new rule.