Effective February 20, 2026, the SBA has stripped district offices and Business Opportunity Specialists of authority to approve or deny continued 8(a) program participation through annual reviews. All final determinations now require authorization from the Associate Administrator for Government Contracting and Business Development (AA/GCBD) or designee. Entity-owned 8(a) participants, including 8(a) companies owned by Alaska Native Corporations, Tribes, and Native Hawaiian Organizations, should expect heightened scrutiny of annual review submissions, particularly regarding business activity targets (BAT) and good faith compliance efforts.

SBA policy notice can be found here.

Background

On February 20, 2026, the SBA issued Policy Notice No. 6000-876995, signed by Associate Administrator Ryan Lambert, which restructures the approval process for 8(a) annual reviews. The directive follows the SBA’s February 11, 2026, announcement of proposed terminations and suspensions of 154 Washington, D.C.-based 8(a) firms for alleged ineligibility – firms that SBA contends had been permitted to remain in the program despite failing to meet eligibility requirements at prior annual reviews. The Policy Notice frames this centralization of authority as a response to claimed “longstanding failures in the program’s oversight.”

What the Directive Does

The Policy Notice centralizes approval authority, effective immediately. Final determinations on continued 8(a) eligibility arising from annual reviews are now authorized only by the AA/GCBD or a designee expressly authorized by the AA/GCBD. District Directors, Regional Administrators, and Business Opportunity Specialists (BOS) no longer have the authority to approve or deny continued participation.  The Policy Notice states:

To that end, effective immediately, final determinations regarding continued 8(a) BD eligibility arising from annual reviews shall be authorized only by the Associate Administrator of the Office of Government Contracting and Business Development (AA/GCBD) or designee.

SBA personnel who review 8(a) annual review submissions may continue to examine current and future submissions for completeness, accuracy, and other standard review checks. However, these personnel are not permitted to make any final determination to approve or deny continued program participation.

Implications for Entity-Owned 8(a) Participants

This directive has several important practical consequences for Alaska Native Corporation subsidiaries and other entity-owned 8(a) firms:

Heightened Scrutiny of BAT Compliance

15 U.S.C. § 636(j)(10)(I) requires 8(a) entities to start receiving non-8(a) revenue starting in their fifth year, or be ineligible to receive additional 8(a) contracts. Implementing this statutory directive, the SBA requires 8(a) entities to achieve progressively higher levels of non-8(a) revenue each program year, starting with the fifth program year.

These required ratios are “business activity targets,” and each transitional year (years five through 9 of an entity’s participation in the 8(a) program), the 8(a) entity must meet the following amounts of non-8(a) revenue as a percentage of their annual total revenue:

The consequences for not meeting the applicable business activity targets can be severe, ranging from heightened reporting, a remedial action plan, or up to a complete prohibition on receipt of sole source 8(a) awards , if the 8(a) entity is found to have not made good faith efforts to meet their BAT.  In 2023, the SBA adopted rule changes that provided greater clarity as to what constitutes good faith efforts to meet BAT. 13 C.F.R. § 124.509 clarifies that good faith efforts include:

• Demonstrating that the 8(a) entity submitted offers for one or more non-8(a) procurements which, if awarded during its just completed program year, would have given the 8(a) entity sufficient revenues received during that year to achieve the applicable non-8(a) business activity target for its just completed program year, and/or
• Identifying extenuating circumstances that adversely impacted the 8(a) entity’s efforts to obtain non-8(a) revenues, such as (but not limited to) a reduction in government funding, continuing resolutions and budget uncertainties, increased competition driving prices down, or having one or more prime contractors award less work to the 8(a) entity than originally contemplated.

BAT has long been a focus of annual reviews, but compliance determinations have historically been made at the district level by BOS personnel familiar with the participant’s business and market conditions. Under the new framework, BAT compliance, including evaluating a participant’s good-faith efforts to meet BAT, will be evaluated and decided at the headquarters level by GCBD officials, who may apply a more rigid standard.

Entity-owned firms that have historically relied on contextual explanations and narrative good faith efforts to satisfy BAT requirements should anticipate that these submissions will receive closer review. GCBD reviewers may be less familiar with—and less receptive to—the unique market dynamics and operational constraints facing Native-owned subsidiaries.

Increased Risk of Adverse Action

The centralization of decision-making authority at AA/GCBD carries a meaningful risk that annual reviews will result in more frequent denials of continued eligibility or conditions on continued participation. The Policy Notice’s own framing, emphasizing that ineligible firms “continued to remain active Participants” due to inadequate oversight, signals that the current Administration views prior annual review approvals as having been too permissive.

For entity-owned participants, this creates a heightened risk of proposed early graduation, proposed termination, or suspension arising from annual review findings that would previously have been resolved at the district level. Firms should be prepared for the possibility that submissions previously deemed adequate may no longer pass muster under the new review regime.

Potential Implications for Sole Source Awards

While the Policy Notice is directed at annual review determinations, the centralization of eligibility authority at GCBD could have downstream effects on sole source 8(a) contract awards. If GCBD adopts a more restrictive posture on eligibility, particularly around BAT, participants may face challenges in maintaining the clean compliance record necessary to support sole source award recommendations. Procuring agencies may also become more cautious in offering sole source opportunities to firms perceived to be under heightened SBA scrutiny.

Delays in Annual Review Processing

As a practical matter, routing all final annual review determinations through the AA/GCBD or designees is likely to create significant processing delays. Participants should plan for longer review timelines and ensure that annual review submissions are complete, well-documented, and proactively address any potential compliance concerns to minimize the risk of requests for additional information or adverse findings.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.