C ommonly known as the "8(a) Program," the Minority Small Business and Capital Ownership Development Program is one of several federal contracting programs for small businesses. The 8(a) Program provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-asides and sole-source awards. A "set-aside" is an acquisition in which only certain contractors may compete, while a sole-source award is a contract awarded, or proposed for award, without competition. Eligibility for the 8(a) Program is generally limited to small businesses "unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States" that demonstrate "potential for success." However, small businesses owned by Alaska Native Corporations (ANCs), Community Development Corporations (CDCs), Indian tribes, and Native Hawaiian Organizations (NHOs) are eligible for the 8(a) Program under somewhat different terms. In FY2014, the federal government spent over $16 billion on contracts and subcontracts with 8(a) firms. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone). The 8(a) and other programs for small businesses are of perennial interest to Congress, given that It is the declared policy of the Congress that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise, to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government (including but not limited to contracts or subcontracts for maintenance, repair, and construction) be placed with small-business enterprises, to insure that a fair proportion of the total sales of Government property be made to such enterprises, and to maintain and strengthen the overall economy of the Nation. However, recent Congresses have had particular interest in the 8(a) Program because of the recession of 2007-2009, its effects on minority-owned small businesses, and small businesses' role in job creation. This report provides a brief history of the 8(a) Program, summarizes key requirements, and discusses legal challenges alleging that the program's presumption that members of certain racial and ethnic groups are socially disadvantaged violates the constitutional guarantee of equal protection. The current 8(a) Program resulted from the merger of two distinct types of federal programs: those seeking to assist small businesses in general and those seeking to assist racial and ethnic minorities. This merger first occurred, as a matter of executive branch practice, in 1967 and was given a statutory basis in 1978. Congress first authorized a federal agency to enter into prime contracts with other agencies and subcontract with small businesses for the performance of these contracts in 1942. The agency was the Smaller War Plants Corporation (SWPC), which was created partly for this purpose, and Congress gave it these powers in order to ameliorate small businesses' financial difficulties while also "mobiliz[ing] the productive facilities of small business in the interest of successful prosecution of the war." The SWPC's subcontracting authority expired along with the SWPC at the end of the World War II. However, in 1951, at the start of the Korean War, Congress created the Small Defense Plants Administration (SDPA), which was generally given the same powers that the SWPC had exercised. Two years later, in 1953, Congress transferred the SDPA's subcontracting authorities, among others, to the newly created Small Business Administration, with the intent that the SBA would exercise these powers in peacetime, as well as in wartime. When the Small Business Act of 1958 transformed the SBA into a permanent independent agency, this subcontracting authority was included in Section 8(a) of the act. At its inception, the SBA's subcontracting authority was not limited to small businesses owned and controlled by the socially and economically disadvantaged. Under the original Section 8(a), the SBA could contract with any "small-business concerns or others," but the SBA seldom, if ever, employed this subcontracting authority, focusing instead upon its loan and other programs. Federal programs for racial and ethnic minorities began developing at approximately the same time as those for small businesses, although there was initially no explicit overlap between them. The earliest programs were created by executive orders, beginning with President Franklin Roosevelt's order on June 25, 1941, requiring that all federal agencies include a clause in defense-related contracts prohibiting contractors from discriminating on the basis of "race, creed, color, or national origin." Subsequent Presidents followed Roosevelt's example, issuing a number of executive orders seeking to improve the employment opportunities of members of various racial and ethnic groups. These executive branch initiatives took on new importance after the Kerner Commission's report on the causes of the urban riots of 1966 concluded that African Americans would need "special encouragement" to enter the economic mainstream. Presidents Lyndon Johnson and Richard Nixon laid the foundations for the present 8(a) Program in the hope of providing such "encouragement." Johnson created the President's Test Cities Program (PTCP), which involved a small-scale use of the SBA's authority under Section 8(a) to award contracts to firms willing to locate in urban areas and hire unemployed individuals, largely African Americans, or sponsor minority-owned businesses by providing capital or management assistance. However, under the PTCP, small businesses did not have to be minority-owned to receive subcontracts under Section 8(a). Nixon's program was larger and focused more specifically on minority-owned small businesses. During the Nixon Administration, the SBA promulgated its earliest regulations for the 8(a) Program. In 1970, the first of these regulations articulated the SBA's policy of using Section 8(a) to "assist small concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the market place." A later regulation, promulgated in 1973, defined "disadvantaged persons" as including, but not limited to, "black Americans, Spanish-Americans, oriental Americans, Eskimos, and Aleuts." However, the SBA lacked explicit statutory authority for focusing its 8(a) Program on minority-owned businesses until 1978, although courts generally rejected challenges alleging that SBA's implementation of the program was unauthorized because it was "not specifically mentioned in statute." In 1978, Congress amended the Small Business Act to give the SBA statutory authority for its 8(a) Program for minority-owned businesses. Under the 1978 amendments, SBA can only subcontract under Section 8(a) with "socially and economically disadvantaged small business concerns," or businesses which are least 51% owned by one or more socially and economically disadvantaged individuals and whose management and daily operations are controlled by such individual(s). The 1978 amendments established a basic definition of "socially disadvantaged individuals," which included those who have been "subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities." They also included congressional findings that "Black Americans, Hispanic Americans, Native Americans, and other minorities" are socially disadvantaged. Thus, if an individual was a member of one of these groups, he or she was presumed to be socially disadvantaged. Otherwise, the amendments were generally seen to grant the SBA discretion to recognize additional groups or individuals as socially disadvantaged based upon criteria promulgated in regulations. Under these regulations, which include a three-part test for determining whether minority groups not mentioned in the amendment's findings are disadvantaged, the SBA recognized the racial or ethnic groups listed in Table 1 as socially disadvantaged for purposes of the 8(a) Program. The regulations also established standards of evidence to be met by individuals demonstrating personal disadvantage and procedures for rebutting the presumption of social disadvantage accorded to members of recognized minority groups. The 1978 amendments also defined "economically disadvantaged individuals," for purposes of the 8(a) Program, as "those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged." Later, the SBA established by regulation that personal net worth of less than $250,000 at the time of entry into the 8(a) Program ($750,000 for continuing eligibility) constitutes economic disadvantage. Although the 8(a) Program was originally established for the benefit of disadvantaged individuals , in the 1980s, Congress expanded the program to include small businesses owned by four "disadvantaged" groups . The first owner-group to be included was Community Development Corporations (CDCs). A CDC is a nonprofit organization responsible to residents of the area it serves which is receiving financial assistance under part A of this subchapter [42 U.S.C. §§9805 et seq .] and any organization more than 50 percent of which is owned by such an organization, or otherwise controlled by such an organization, or designated by such an organization for the purpose of this subchapter [42 U.S.C. §§9801 et seq . ]. Congress created CDCs with the Community Development Act of 1981 and instructed the SBA to issue regulations ensuring that CDCs could participate in the 8(a) Program. In 1986, two additional owner-groups—Indian tribes and Alaska Native Corporations (ANCs)—became eligible for the 8(a) Program when Congress passed legislation providing that firms owned by Indian tribes—which include ANCs —were to be deemed "socially disadvantaged" for purposes of the 8(a) Program. In 1992, ANCs were further deemed to be "economically disadvantaged." The final owner-group, that of Native Hawaiian Organizations (NHOs), was recognized in 1988.