SBA U.S. Small Business Administration

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The SBA 8(a) Business Development Program helps socially and economically disadvantaged individuals gain access to federal contracting opportunities.

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  1. SBA U.S. Small Business Administration

  2. 8(a) Business Development Program 2

  3. General Information The 8(a) BD Program is a business development program for small disadvantaged businesses that are owned and controlled at least 51% by socially and economically disadvantaged individuals, or entity owned businesses, by gaining access to the economic mainstream in the federal contracting arena. 3

  4. Eligibility Criteria Social Disadvantage Economic Disadvantage Ownership Criteria Control and Management Criteria Size Criteria Potential for Success Good Character 4

  5. Social Disadvantage Individuals are presumed to be socially disadvantaged if they are a U.S. Citizen and a member of one of the following groups: Black American Asian Pacific American Hispanic American Native American (as evidenced by a tribal membership card) Subcontinent Asian American Many other designated groups listed in 13 CFR 124.103 5

  6. What is Preponderance? Generally, preponderance is evidence of a quality and quantity which leads the decision maker to objectively conclude that the existence or truth of the facts asserted is more probable than not. 6

  7. Persons not members of presumed groups must establish- Chronic & substantial social disadvantage must include at least distinguishing factor such as face, gender, physical handicap, isolation from the mainstream economy by providing very specific examples of what was encountered such as names, dates, etc. The statements must then tie back to each example provided and what was encountered and how it directly impacted the ability to either enter or advance in the business world. Cannot be a one-time incident Should be several incidents occurring over a significant period of time such as several years Could be a hostile business environment 7

  8. Preponderance of Evidence Persons which have been negatively impacted in their business advancement. Documentary evidence which corroborates or supports assertions made by the applicant such as: EMPLOYMENT Denial of employment opportunity Denial of promotion, pay increases, training Dismissal for invalid reasons (gender, pregnancy, handicap) 8

  9. Preponderance (cont.) BUSINESS Limited/unequal access to credit or capital Denial of contracts and/or contract opportunities Discrimination leads to lessened economic activity and growth (sales, profits) Exclusions from business organizations EDUCATION Denial of scholarships or access to higher education Lack of educational mentoring Biased evaluation of work 9

  10. Economic Disadvantage Adjusted Net Worth: Must not exceed $850,000 Personal Income: Must not exceed $400,000 averaged over 3 years Total Assets: Must not exceed $6.5 million 10

  11. Ownership Criteria Applicant firm has to be owned at least 51% by disadvantaged person(s). Partnership Agreements must reflect that the qualified person(s) own at least 51% and must receive at least 51% of the benefits of ownership. LLC Disadvantaged individuals must own at least 51% of each class of member interest. Corporations Disadvantaged person(s) must own at least 51% of each class of voting stock and at least 51% of all outstanding stock. 11

  12. What constitutes Control? Disadvantaged individuals must Hold position of president or CEO, managing partner or LLC managing member Be highest paid compensated individual Have the ability to hire and fire Set policies Have the ability to commit firm to contracts Have the ability to control budget & financial disbursements 12

  13. Size Criteria Firms must be small based on their primary NAICS Code, including affiliates. Size is determined either by: average 5 years revenues for construction and services OR # of employees for manufacturers, dealers, wholesalers See 13 CFR 121 Size Regulations or visit 13

  14. Potential for Success Proof of two years operation in the firm s primary industry as verified by revenues reported in business tax returns. Financial capability: sufficient capitalization, financial performance, bonding capacity, manageable debts. Managerial & technical capability: performance on previous contracts, firm has necessary personnel, licenses, certifications, facilities, prior experience. Management capability: Education, experience and training, magnitude & complexity of past/current jobs. Qualifications for ability to perform on federal contracts: relevant contracting experience, ability to meet federal procurement policies. 14

  15. Good Character What shows lack of good character- Adverse information regarding possible criminal conduct by the applicant or its principals. Violations of any SBA regulations. Debarred or suspended individuals or firms. Applicant firms and principals that lack business integrity as shown by an indictment, guilty plea or civil judgment. Any principal who is incarcerated or on parole or probation. Evidence that the firm knowingly submitted false information during the application process. Any firm or any of its principals that fail to pay financial obligations to the Federal Government. 15

  16. Term of Participation Year 1 2 3 4 developmental stage Year 5 6 7 8 9 transitional stage Transitional stage firm is required to meet non 8(a) business activity target - required percentage of non 8a sales from year 5 thru year 9. Year 5 begins with 15%, year 6 is 25%, year 7 is 30%, year 8 is 40% until year 9 the firm is required to have at least 50% non 8a sales. Continuation in the program is dependent on the firm s continuing eligibility as a socially and economically disadvantaged owned/operated firm and continued compliance with the 8(a)BD participation agreement. Exception: military reservists who are called to active duty may suspend their participation in the program under certain circumstances. 16

  17. Two Year Waiver Individual(s) upon whom eligibility is to be based have substantial and demonstrated business management experience; and Applicant demonstrated technical expertise to carry out its business plan with a substantial likelihood for success if approved for the program; and Applicant has adequate capital to carry out its business plan as an applicant; and Applicant has good record of successful performance on contracts from governmental and nongovernmental sources in primary industry category; and Applicant has or can demonstrate its ability to timely obtain the personnel, facilities, equipment and any other requirements needed to perform such contracts as a participant. Please note SBA s contracting programs are not the best fit for start up businesses. 17

  18. Ineligible Businesses & Individual Disqualification Ineligible businesses: brokers *, debarred or suspended persons or concerns; nonprofit organizations. A business may participate only once. Even if ownership and control has completely changed, firm may not reapply. Any person who has used his/her disadvantaged status to qualify another firm shall be regarded as non disadvantaged. * A broker is a concern that adds no material value to an item being supplied to procuring activity or which does not take ownership or possession of or handle the item being procured with its own equipment or facilities. 18

  19. Federal Prime Contracting Small Business Goals FY 2023 Small Business -23% 8(a)BD / Small Disadvantaged Business (SDB) -12% This goal will increase 1% each year until 15% by 2025 HUBZone Small Business - 3% Service-Disabled Veteran Owned Small Business - 3% Woman Owned Small Business -5% 19

  20. Benefits of 8(a) Program Federal acquisition policies encourage Federal Agencies to award a certain percentage of their contracts to small disadvantaged businesses. Purchase excess government property Business development training Can be awarded sole source contracts Remember - the 8(a) program is but one tool that may help support business development growth. 20

  21. What is expected of 8(a) BD Program Participants? Self marketing to federal procurement agencies. Submission of annual update of business plan. Access to company records by SBA. Informing SBA of any changes or POTENTIAL CHANGES affecting 8(a) eligibility (changes in business structure, ownership, etc.). Submission of year end financial statements and tax returns and other documentation for annual reviews. Participation in training opportunities and networking offered by SBA. Staying current with financial obligations to the Federal Government. 21

  22. Subcontracting Subcontracting benefits to a prime contractor Money. Subcontractors cost less than employees and don t come with a long-term financial commitment. Time. Outsourcing work to subcontractors can free up time to focus on big-picture problems. Flexibility. Many businesses choose subcontractors for the flexibility they offer without the commitment to long-term employment and businesses can easily increase and decrease capacity. Expertise. Subcontractors add tools to your toolbox. Simplicity. When you subcontract, you only have a fraction of the paperwork that comes with hiring a fulltime employee. Gaining past performance . Working with partners (prime contractors) will allow you to gain past performance that you might not be able to gain elsewhere because they've already developed relationships. Building up your past performance is like a track record to use when you go after future work. You have a better chance at winning work when you have a credible record. Subcontracting opportunities are posted on the following: Subcontracting Network database (SBA s sub-net) General Services Administration s Subcontracting Directory for Small Businesses Department of Defense Subcontracting Opportunity Directory SBA s Directory of Federal Government Prime Contractors with a Subcontracting Plan 22

  23. Research Before applying, does the government use the product or service that I provide? Review the wish list or forecast of agencies forecasts?searchTerms=forecast Attend a procurement marketing/matchmaking event and visit with contracting officers 23

  24. Myths of the 8(a) Program Once I get certified, contracting officers will call and give me contracts. Federal Government agencies have to give me contracts once I m 8(a) certified. If I never get a contract, SBA can extend my 9-year term. 24

  25. When should you apply? Not too soon Are you ready? Remember 8(a) is a one-time nine-year certification program Do you have the CAPACITYto deliver on federal contracts? Do you have the sufficient CASH FLOW? Have you demonstrated CAPABILITY? Can you demonstrate successful PAST PERFORMANCE? Are you open to ADVICE on growing your business? 25

  26. Accessing Your Business and Basic Requirements Evaluate your small business to see if it has what it takes to win a government contract. your-business Your small business must meet some basic requirements before you can compete for government contracts. requirements 26

  27. Consultant Fees Firms ARE NOT REQUIRED to pay a consultant for assistance to apply for SBA s certification programs. Consider cost/benefit of hiring a consultant when an existing employee could assist with the application process. Contact local APEX Accelerator (formerly known as Procurement Technical Assistance Center PTAC) for assistance FREE OF CHARGE. 27

  28. Assistance Available APEX Accelerators provide local, in-person counseling and training services. APEX Accelerators provide no cost technical assistance to businesses that want to sell products and services to federal, state and/or local governments. SAM Assistance - System for Award Management (SAM) registration is FREE, and your APEX Accelerator can help you with this and everything else you need to sell to agencies at little or no charge. Local your local APEX Accelerator 28

  29. 8(a) Application upload documents 8(a) guidance on completing application Should be in business for at least 2 years before applying. Must have an active profile in www.sam.govand SBA s Dynamic Small Business Search (DSBS) before applying. One-time eligibility for business and qualified disadvantaged individual(s). 8(a) firms must complete an annual review to show they continue to meet program eligibility requirements. Additional information - program 29

  30. 8(a) regulations SBA s Standard Operating Procedure (SOP) 80 05 Code of Federal Regulations (CFR) Part 124 Federal Acquisition Regulation (FAR) Part 19 30

  31. MPA Program Qualifications To qualify as a prot g , your business must: Be a small business with industry experience using SBA's table of small business size standards. Be organized for profit or as an agricultural cooperative. Have a proposed mentor prior to applying for the program. To qualify as a mentor, your business must: Be organized for profit Be able to carry out its responsibilities to assist the prot g Possess good character Not appear on the federal list of debarred or suspended contractors Be able to impart value to a prot g firm due to lessons learned and practical experience gained or through its knowledge of general business operations and government contracting. For SBA to approve the Mentor-Prot g Agreement: SBA must determine that the mentor-provided assistance will promote real developmental gains for the prot g , not just act as a vehicle to receive federal small business set-asides. An applicant prot g and its prospective mentor may not be affiliated at the time of application. 31



  34. PROTEGES MUST: MENTORS MUST: Submit annual reports Demonstrate material or developmental benefits Provide meaningful assistance, as described in agreement Submit quarterly financial reports and Certificate of Compliance for JV s 34

  35. JOINT VENTURE BASICS Considered limited purpose entities MPA approval required prior to JV bid on award SBA only reviews and approves JVs when the JV has an 8(a) sole source offer. MPA JVs are granted exclusions from affiliation Note -MPAs are not required to have a JV in place (would be necessary only if the JV partner is large). MPA JV contracts awards are limited to 2 years Procuring activities must consider work done individually by each partner to the joint venture as well as any work done by the joint venture itself. Prot g firms must perform at least 40%, Mentor firms may perform up to 60% NEW 8(a)/WOSB/HubZone/SDVOSB cannot be JV partner for more than 1 JV per contract 35

  36. Slide title Small Business Mentor-Prot g Program 13 CFR 125.9 Service-Disabled Veteran 13 CFR 125.15(b) 8(a) and SDB Regulations 13 CFR 124.5 SBA Size Regulations 13 CFR 121 Small Disadvantaged Business 13 CFR 124.1002(f) HUBZone Program 13 CFR 126.6 WOSB Program 13 CFR 127 SBA Prime Contracting 13 CFR 125.2 SBA Subcontracting 13 CFR 125.3 Non-manufacturer rule 13 CFR 121.406(b) Limitations on subcontracting 13 CFR 125.6 36

  37. Additional Information Find local resources in your area QUESTIONS 37 Visit us at 37


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