The federal government’s flagship 8(a) contracting program for small, disadvantaged businesses is shrinking.

The number of firms participating in the Small Business Administration’s 8(a) program has been steadily falling over the past six years —a decline that shows no signs of reversal, according to figures provided by the SBA to Set-Aside Alert.

From a high of 9,667 companies with 8(a) certifications in fiscal 2006, the number dropped to 9,423 in fiscal 2007, rose slightly to 9,462 in fiscal 2008, and then fell to 8,827 in fiscal 2009, 8,444 in fiscal 2010 and 7,814 in fiscal 2011, the SBA figures indicate.

Overall, the program experienced a net loss of 1,853 firms during the six-year period, a drop of 19%.

The pattern of slow decline appears to be continuing. An unofficial check of SBA databases on Feb. 12 showed only 7,696 8(a) certified firms.

The 8(a) program is the SBA’s premier business development program for small and disadvantaged firms. Originally established in 1958, and expanded and amended during the Civil Rights era, it offers unique benefits to eligible small vendors, including access to sole source federal contracts and set-asides.

Companies must show social or economic disadvantage to be eligible. The 8(A) certifications last for nine years.

The SBA’s Darryl Hairston, associate administrator for the 8(a) business development office, has acknowledged that the 8(a) program is losing more members than it is gaining, resulting in a net loss over time.

“There are several factors to be considered in the rate of increase or decrease in the number of 8(a) Business Development program participants,” Hairston told Set-Aside Alert in an emailed statement.

“Over the past three years, there have been a significant number of firms that have completed their nine-year terms and have voluntarily withdrawn from program participation,” Hairston said.

“While we continue to see strong interest in the 8(a) program from across the country (averaging approximately 45 new applications er week), the number of applicants eligible for program participation has not kept pace with the number of program exits,” Hairston added.

The SBA currently is engaging in “an aggressive outreach effort” to attract more applicants to the 8(a) program, he added.

The SBA currently is engaging in “an aggressive outreach effort” to attract more applicants to the 8(a) program...

While the number of 8(a) firms declined, the dollar amount and share of federal contracts going to small disadvantaged firms increased during the six-year period. That category includes 8(a) firms, among others.

Federal contracts with small disadvantaged firms rose from $23 billion, or 6.8% of the total, in fiscal 2006, to $32 billion, or 7.7% of the total, in fiscal 2011, according to the SBA.

Specialists familiar with the 8(a) program suggested several factors that may be contributing to the loss in participation, including changes in eligibility requirements and limited SBA support staff.

The SBA tightened up 8(a) eligibility requirements in 2011 to combat fraud. Specialists say it often costs about $3,500 to $10,000 in assistance to become 8(a) certified, and the process could take up to a year.

“They have really upped the scrutiny,” said Richard Hernandez, principal at E-MBE.net consulting firm in Chicago. “The applications hardly ever come back clean. You always have to resubmit.”

“The applications hardly ever come back clean. You always have to resubmit.”

“They have changed the rules and made it a lot harder,” Robert Ramos, president of The Gabriel Group consulting firm in Corpus Christi, TX, told Set-Aside Alert. “The SBA is being much more selective about who comes into the program.”

At the same time, less assistance is available. In fiscal 2012, the SBA enacted a $10 million cut in support staff to its business development centers.

“The SBA has cut the resources down quite a bit,” Ramos said. “They also have cut down on travel quite a bit.”

“Support is not what it used to be,” Hernandez agreed.

Overall, while there are still new companies eager to join 8(a), many get frustrated by the hurdles along the way, said Roger Laplante, senior partner with Government Certification Specialists in Leesburg, VA.

“In our experience, SBA is challenging 100% of the new applications,” Laplante told Set-Aside Alert.

“This administration has focused on integrity, but that translates to being more stringent,” Laplante said.