SBA Proposes to Eliminate the Rebuttable Presumption of Social Disadvantage for Individually Owned 8(a) Firms: What Contractors Need to Know

Elizabeth N. Jochum, Dominique L. Casimir, and Samarth Barot●

Summary

The U.S. Small Business Administration (“SBA”) published a proposed rule on June 11, 2026, that would reshape how individually owned small businesses establish social disadvantage for purposes of the 8(a) Business Development program. The proposed rule would eliminate the longstanding rebuttable presumption that members of certain designated racial and ethnic groups are socially disadvantaged. In its place, SBA proposes a single, race-neutral test requiring all applicants to show that a governmental or private entity discriminated against their clearly definable group and that the discrimination caused them “material harm.”

Critically, the proposed rule applies only to individually owned firms. Entity-owned 8(a) participants, including firms owned by Indian tribes, Alaska Native Corporations (“ANCs”), Native Hawaiian Organizations (“NHOs”), and Community Development Corporations (“CDCs”), are unaffected.

Comments on the proposed rule are due by July 13, 2026. Stakeholders may submit comments through regulations.gov under Docket No. SBA-2026-0133.

Key Takeaways

The rebuttable presumption of social disadvantage for designated racial and ethnic groups would be eliminated for individually owned applicants.
A new, uniform test would require all individual applicants to show that a governmental or private entity discriminated against or was biased against their clearly definable group and that this caused them “material harm” (defined as loss of access to or diminished opportunities for economic advancement).

To read the full alert, please visit our website.

Blank Rome and Our Attorneys Highly Ranked in Chambers USA 2026

We are proud to announce that Blank Rome’s attorneys and practices were highly ranked across several categories in the 2026 Chambers USA rankings, which reflect our high level of integrated services for government contractors and companies in the Aerospace, Defense and Government Services sector.

Our Government Contracts practice was ranked in Band 2 in Government Contracts: The Elite, USA, again placing our team among the top 10 law firms in the nationwide rankings.

Chambers quoted a government contracts reference as saying, “They provide creative and pragmatic solutions to complex legal issues.”

Chambers included five of our partners in the 2026 Government Contracts rankings: Dominique L. Casimir, Justin A. Chiarodo, Elizabeth N. Jochum, Stephanie M. Harden, and Luke Meier.

Elizabeth was again ranked in Government Contracts: Bid Protests, and Justin was ranked in Government Contracts: M&A, showcasing the depth of our practice in these specialty areas.

Our False Claims Act practice and partner Jennifer A. Short were ranked in False Claims Act, USA – Nationwide. An FCA reference told Chambers, “The attorneys really understand the factual issues and really bat for us.”

Partners Anthony Rapa and Kenneth Nunnenkamp, who serve clients impacted by tectonic changes in the international business environment, were both ranked in International Trade: Export Controls & Economic Sanctions.

To view all of Blank Rome’s Chambers USA 2026 rankings, please visit Chambers USA 2026 Recognizes Blank Rome Attorneys and Practices.

DoD Seeks “Unprecedented Level of Visibility” into the Supply Chain Under Newly Proposed Regulations

Michael Joseph Montalbano ●

The Department of Defense (“DoD”) released a proposed rule on May 7, 2026, that would significantly expand Foreign Ownership, Control, and Influence (“FOCI”) and beneficial ownership disclosure requirements beyond cleared contractors to a much broader segment of the Defense Industrial Base. Soon, any contractor or subcontractor with a DoD contract exceeding five million dollars will need to report its FOCI status in the National Industrial Security System (“NISS”).

Who Is Covered Under the Proposed Rule

The proposed rule would apply to any existing or prospective contractor or subcontractor, at any tier, holding a DoD contract valued in excess of five million dollars—regardless of whether classified information is involved. The reporting and review framework will be established under a new DFARS Part 240, “Information Security and Supply Chain Security.” The DoD does not mince words. The rule is designed to provide an “unprecedented level of visibility” into the ownership structures of its partners and to prevent foreign adversaries from accessing sensitive unclassified information and critical technologies.

60-Second Sustains: Effective Communication Strategies, LLC

Elizabeth N. Jochum and David L. Bodner ●

Protest of: Effective Communication Strategies, LLC
Government Accountability Office (“GAO”)
B-423993; B-423993.2

The challenged procurement was a commercial item, simplified acquisition for microwaves and dehumidfiers.
The Army Corps of Engineers issued numerous solicitation amendments, including several issued after initial proposals were submitted, requiring offerors to revise and resubmit their proposals.
Effective Communication Strategies (“ECS”) challenged one of these amendments, which added a requirement for a refrigerator that met outlined technical specifications and complied with the Trade Agreements Act.
The relevant amendment was issued in the morning, with revised quotations due the same day at 5:00 p.m.
The Agency and ECS then engaged in several rounds of communications and further solicitation amendments regarding the refrigerator requirements, with the Agency imposing extremely short response deadlines—always less than a day and sometimes less than an hour.
GAO found that the Agency had failed to afford offerors a reasonable opportunity to respond to the Agency’s evolving requirements, both in response to the amendment and during communications.
GAO recommended the Agency amend the solicitation and allow for a reasonable response time.

Decoupling from Chinese Chips: Unpacking the Proposed Section 5949 Supply Chain Ban

Robyn N. Burrows and Samarth Barot ●

In December 2022, we discussed the passage of Section 5949 of the Fiscal Year 2023 National Defense Authorization Act (“NDAA”), which introduced prohibitions on certain semiconductor products and services from designated Chinese manufacturers. At the time, the statute’s scope remained unclear, particularly regarding whether the restrictions would apply only to federal sales or extend to contractor “use” of covered technologies, similar to Section 889’s Part B prohibition. On February 17, 2026, the Federal Acquisition Regulatory (“FAR”) Council released a proposed rule that provides important clarity on these questions and establishes a compliance framework for government contractors.

Blank Rome Welcomes Nicole Islinger as Partner in Washington, D.C., Strengthening Corporate Practice and Aerospace, Defense & Government Services Industry Team

Blank Rome LLP is pleased to announce that Nicole Islinger has joined the firm’s Washington, D.C., office as a partner in the Corporate, M&A, and Securities group and as a member of the Aerospace, Defense & Government Services (“ADG”) and Technology industry teams. She brings deep transactional experience centered on mergers and acquisitions (“M&A”), with substantial experience in government contracting, technology, and private equity. Nicole, who began her career as an associate at Blank Rome, rejoins the firm from Pillsbury Winthrop Shaw Pittman LLP.

“We are excited to welcome Nicole to our Washington, D.C., office and our national corporate practice,” said Grant S. Palmer, Blank Rome’s Chair and Managing Partner. “Her deep experience in government contracts M&A and her practical insight into the federal marketplace and procurement landscape will bring meaningful advantages to clients pursuing growth in the aerospace, defense, and government services sector. Nicole’s ability to help companies navigate the unique demands of federal acquisitions makes her a valuable addition to our national corporate team.”

Nicole is an experienced M&A attorney with a strong track record guiding companies through complex transactions in the government contracting and technology sectors. She has deep experience advising small business government contractors on founder-led, sell-side M&A, as well as buyers and sellers navigating the unique regulatory and commercial considerations of the federal marketplace. Her practice also extends to helping international companies enter and operate in the U.S. government contracting space, where she regularly advises on market entry strategies and related international trade considerations.

Read the full press release on our website.

DOJ Announces Record-Breaking False Claims Act Recoveries in FY 2025: What the Stats Portend for 2026

Jennifer A. Shortand Oliver E. Jury ●

Fiscal Year (“FY”) 2025 yielded a historic high of over $6.8 billion in False Claims Act (“FCA”) settlements and judgments, underscoring the Department of Justice’s (“DOJ”) aggressive enforcement. DOJ’s annual report, released January 16, 2026, showed that healthcare fraud matters again dominated the lion’s share of the moneys recovered, accounting for more than $5.7 billion, and reaffirming the sector’s centrality to FCA priorities. Qui tam lawsuits also retained an outsized influence, representing approximately $5.3 billion in recoveries for both intervened ($3.0 billion) and declined ($2.3 billion) cases. On the flip side, that means the government recovered some $1.5 billion without the aid of an underlying whistleblower complaint. The pipeline of new cases looks robust moving forward: whistleblowers filed a record 1,297 new qui tam suits, and DOJ opened 401 new investigations.

Prioritizing the Warfighter in Defense Contracting—What Does the New EO Mean for Contractors?

Scott Arnold ●

President Trump issued an Executive Order (“EO”) on January 7, 2025, that seeks improved performance of defense contracts and enhanced contractor investments in production capacity through measures that would impose limits on executive compensation when contractor performance or investment levels are deemed inadequate. The EO, Prioritizing the Warfighter in Defense Contracting, appears predicated on the belief that “after years of misplaced priorities, traditional defense contractors have been incentivized to prioritize investor returns over the Nations’s warfighters.” To address this, the EO states that “[m]ajor defense contractors will no longer conduct stock buy-backs or issue dividends at the expense of accelerated procurement and increased production capacity.” While the desire to improve defense contract performance is understandable, the attempt to do so through regulation of executive compensation is unprecedented.

What Does the EO Require?

The EO sets forth two key mechanisms through which the new priorities will be implemented.

Preliminary Takeaways as DoD Seeks to Redesign the Defense Acquisition System for Wartime Speed

Oliver E. Jury ●

During a speech before key players in the defense industrial base on Friday, November 7, Secretary Hegseth announced plans for a sweeping transformation of the Defense Acquisition System, redesignating it as the Warfighting Acquisition System (“WAS”) and elevating speed-to-field as the organizing principle. The reforms would concentrate authority, expand competition and modularity, adopt commercial-first pathways, modernize contracting and training, and streamline oversight—all aimed at accelerating capability delivery and scaling industrial capacity for surge. While much will depend on how these announced changes are implemented, in this post we highlight key aspects of the changes and identify potential impacts to monitor. Secretary Hegseth’s full recorded remarks are available on C-SPAN’s website.

Redesignation and Organizing Principle

Acquisition is to be treated as a warfighting function, with every process required to justify its value to timely capability delivery. The WAS will reframe success around time-to-capability rather than exhaustive specification compliance.

Potential impact: Companies should expect solicitations and evaluations to prioritize schedule credibility and operational outcomes, reshaping win strategies toward demonstrable speed and adaptability.

E‑Verify, FAR 52.222‑54, and Renewed FCA Risk: What Contractors Need to Know

Jennifer A. Short, and Oliver E. Jury ●

The current administration’s focus on immigration played out in a recent False Claims Act (“FCA”) matter in which a federal contractor was alleged to have billed for unauthorized workers in violation of FAR 52.222‑54 (Employment Eligibility Verification, “E-Verify”).

On September 18, 2025, the Department of Justice (“DOJ”) announced that Bayonne Drydock and Repair Corporation (“Bayonne”) agreed to pay $4,043,810.56 to resolve allegations that unauthorized workers worked on Bayonne’s Navy contracts over multiple years.

According to DOJ’s press release, in 2016, the Department of Homeland Security (“DHS”) sent a “Notice of Suspect Documents” to a subcontractor controlled by Bayonne’s Risk Manager, questioning the work authorization of certain subcontractor employees. While the Risk Manager terminated the unauthorized employees, she re-hired some of them through another subcontractor that she controlled. Bayonne’s settlement agreement with DOJ asserts that between 2016 and 2020, Bayonne billed the government for the work of approximately 52 unauthorized employees working for entities owned or controlled by Bayonne’s Risk Manager. The settlement agreement also confirmed that the Risk Manager pled guilty to criminal charges stemming from her role with Bayonne and its subcontractors.

Summary

Key Takeaways

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Who Is Covered Under the Proposed Rule

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Redesignation and Organizing Principle

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