A federal court has given a mixed ruling on a challenge to the constitutionality of the Small Business Administration’s 8(a) set-aside program for small, disadvantaged businesses.

The U.S. District Court for the District of Columbia decided the 8(a) program was constitutionally sound in general, but not when applied to contracts for military simulation and training, because the SBA had no evidence of discrimination in that specific industry.( DynaLantic Corp. v. U.S. Department of Defense, Civil Action No. 95-2301 (Aug. 15, 2012))

The decision suggests the SBA may need to show evidence industry-by-industry to justify 8(a) set-asides.

“Because DynaLantic squarely addresses the constitutionality of parts of the Small Business Act, it could open the door to lawsuits challenging the use of the 8(a) program in other industries,” Joseph Hornyak and Keith Wiener, partners at Holland & Knight LLP wrote in a blog entry.

DynaLantic filed suit in 1995 against a Navy award of a flight simulator contract to an 8(a) firm. The lawsuit morphed into a constitutional challenge to 8(a).

The court held that the 8(a) program is not unconstitutional because Congress had evidence of discrimination against minorities in government contracting. Most of the evidence was in “disparity studies” in certain industries

However, the government did not show evidence for the military simulation and training industry.

“According to the court, the government must have industry-specific evidence for the use of the 8(a) program in a particular type of procurement,” Hornyak and Wiener wrote.

The court issued an injunction preventing SBA and DOD from awarding contracts for military simulators under 8(a), unless they first offer evidence that 8(a) is applicable in that industry.