Deep Dive: SBA 8(a) Program
We’ve received a number of requests for information about the SBA’s (Small Business Administration) 8(a) program recently – so this month we’ll be discussing this business development/contracting program. And that is the first big distinction: 8(a) is NOT a certification. While it does have eligibility and supporting document requirements similar to the diverse certification process; the 8(a) is a designation, not a certification.
- To reiterate, the 8(a) is a business development program, aimed to help small diverse businesses grow through government contracting, particularly at the federal level. The program allows for set-aside and sole-source contracts and offers opportunities to form joint ventures through the SBA’s Mentor-Protégé Program. The SBA also offers other services to its 8(a) firms including executive development, business training, and marketing assistance to name a few.
- The 8(a) designator has an expiration date. A business holds the designation for 9 years, before graduating from the program.
- Upon graduation, neither the business nor its owner(s) can ever participate in the 8(a) program again. That means if you own more than one business, any other business you have ownership in, will be excluded from participating in the 8(a) program.
Have a Plan
Because of the time limit, and one-and-done nature of the 8(a) program, we always counsel businesses who are interested in 8(a) status to have a plan for utilizing it before applying. Some things to research for your plan: which agencies purchase the product and/or service you sell; who at those agencies is responsible for making that procurement; and, where they are in their procurement cycle. There are a couple of ways to gather this information.
- Review current requests on Beta.SAM (requests are located under Contract Opportunities).
- Review the history of previous awards, including who the successful bidder was and the contract award dollar value at USA Spending.
- Seek support, including bid matching services, from your local PTAC (Procurement Technical Assistance Center). PTACs provide government contracting (federal, state, and/or local) assistance, through training and one-on-one counseling. You can find your local PTAC HERE.
Once you know what agencies to target and who to speak to at them, you can start learning about them and their procurement processes while marketing your business to them.
Don’t go in expecting a quick sale. The government procurement cycle can be long, upwards of 2 years from a request for information to a final award on a request for proposal. It is better to have established relationships and a good understanding of an agency’s needs and procurement process before applying for your 8(a) status. You don’t want to waste of moment of your 9 years in the program.
8(a) Eligibility Requirements
- Be a small business, meeting the SBA standards for a small business (number of employees and/or gross sales) based on the business’s primary NAICS Code.
- Find your NAICS Code(s): https://www.census.gov/naics/
- Determine your size eligibility: https://www.sba.gov/size-standards/
- Owner(s) and the business have not already participated in the 8(a) program
- Be at least 51% percent owned and controlled by U.S. citizens who are economically and socially disadvantaged
- Economic disadvantaged is defined as having a personal net worth that is $750,000 or less, an adjusted gross income of $350K or less, and $6 million or less in assets
- Social disadvantaged is defined as a minority (African Americans, Hispanics, Native Americans, Asian-Pacific and Subcontinent Asian Americans), women, and potentially a person with disability
- All principals must demonstrate good character
- Business must show potential for success and be able to perform successfully on contracts
There are a few steps you’ll need to take before applying for the 8(a) program. In order to do business with the U.S. government, a company must be registered in the federal System for Award Management (SAM). To be registered in SAM a business needs a DUNS (Dun & Bradstreet) Number, which is FREE. If you do not already have a DUNS Number, you can apply for one using the DUNS Request Service.
Once you’ve received your DUNS Number you can proceed with registering in SAM. As part of the registration process, you’ll be assigned a CAGE code and be asked to select your PSC codes (Product Service Codes) [a way to classify your business (products and services sold) – these codes are broken down into three types: products, services, and research and development projects]. Find your PSC Codes.
If you’re interested in receiving our Information Guide on the 8(a) program, other SBA offerings (HUBZone, EDWOSB, or WOSB), or HUD’s Section 3 please email us [email protected].