On the campaign trail, President Donald Trump promised to end federal spending on diversity, equity, and inclusion (DEI) programs. Yet the government has continued to award contracts based on race and sex. Despite rampant fraud and multiple court rulings against the practice, the Small Business Administration (SBA) has used “disadvantage” essays from business owners to skirt the rules and continue discriminatory programs that dole out billions in government contracts.
For decades, the federal government has awarded certain special contracts exclusively to so-called disadvantaged businesses and women-owned small businesses. Until 2023, SBA presumed that racial minorities were “disadvantaged.” The resulting discrimination was absolute: according to an analysis conducted between 2020 and 2023, these programs made not a single award to white men.
Though the second Trump administration has taken steps to limit these contracts, the largest disadvantaged-business initiative—the SBA’s 8(a) program—is thriving. The program “is still one of the most lucrative and sought after” SBA certificates, one contracting lawyer said in November. In fact, fiscal year 2025 saw the largest 8(a) spending on record, totaling $26 billion.
President Trump signed an executive order forbidding federal DEI discrimination, and a federal district court struck down the SBA’s presumption that minorities are disadvantaged. How, then, has 8(a) survived?
Much as colleges have used personal essays to evade affirmative-action bans, the Small Business Administration has asked companies to submit “social disadvantage narratives” to qualify for the 8(a) program. These allow business owners to establish minority status through descriptions of racial taunts or alleged discrimination. Applicants might not check a racial box, but the implication is clear: no white men need apply.
The SBA’s “Guide for Demonstrating Social Disadvantage” reveals how the shell game works. The guide teaches applicants how to play the system, featuring examples of potential “disadvantage.” It gives minorities and women the magic words: “I believe my application [for a bank loan] was denied due to bias toward my race” and “I believe my request [to declare a business major] was denied based on sex bias.” Once the agency approves the application, the contracts can start flowing—no real evidence required.
Are these applicants always disadvantaged? No. Consider Earl Stafford Jr., a black contractor who wrote an essay to apply for the 8(a) program. The Washington Business Journal reported on Stafford’s “painstaking” ordeal of writing the essay, in which he described unspecified acts of discrimination that made him think that he did not have “what it took to be in business.” Yet his father, Earl Stafford Sr., founded a successful defense firm and started his own private foundation—hardly the background of a disadvantaged person.
As with any racialized initiative, the 8(a) program is ripe for fraud. White business owners can find a minority front man or a woman to head a nominally disadvantaged or woman-owned firm, which the white man continues to run behind the scenes. Another option is for minority-owned firms to receive the government contract but act as “pass through,” taking a cut off the top and paying another firm to do the contracted work. The Supreme Court ruled last year against a “disadvantaged” company that provided none of the required paint for a Philadelphia bridge and train station and passed the work to other firms.
Out-and-out dishonesty is also common. In 2023, Margarita Howard and her companies HX5 and HX5 Sierra were forced to pay the government almost $8 millionfor lying about Howard’s assets in order to participate in 8(a). At the time she claimed to be disadvantaged, Howard was living in a 14,000-square-foot waterside Florida mansion featured on HGTV’s Extreme Homes, the complaint against her alleges. Howard is still the CEO of HX5 (a “woman-owned small business”) and applies for federal money. The Trump administration awarded her company millions last year.
Hellbound and Down 