U.S. Small Business Administration (SBA): Programs to Assist Business
The SBA administers two particular business assistance programs for small disadvantaged businesses (SDBs). These programs are the 8(a) Business Development Program and the Small Disadvantaged Business Certification Program. While the 8(a) Program offers a broad scope of assistance to socially and economically disadvantaged firms, SDB certification strictly pertains to benefits in Federal procurement. Companies which are 8(a) firms automatically qualify for SDB certification.
Today’s 8(a) Business Development Program is strengthened and improved to be a truly effective business development vehicle. New regulations permit 8(a) companies to form beneficial teaming partnerships and allow Federal agencies to streamline the contracting process. New rules make it easier for non-minority firms to participate by proving their social disadvantage. We also have implemented the new Mentor-Prot?©g?© Program to allow starting 8(a) companies to learn the ropes from experienced businesses. Our task is to teach 8(a) and other small companies how to compete in the Federal contracting arena and how to take advantage of greater subcontracting opportunities available from large firms as the result of public-private partnerships.
The new and improved 8(a) Program has become an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. SBA has helped thousands of aspiring entrepreneurs over the years to gain a foothold in government contracting. Participation is divided into two phases over nine years: a four-year developmental stage and a five-year transition stage. In fiscal year 1998, more than 6,100 firms participated in the 8(a) Program and were awarded $6.4 billion in Federal contract awards.
Benefits of the Program
- Participants can receive sole-source contracts, up to a ceiling of $3 million for goods and services and $5 million for manufacturing. While SBA helps 8(a) firms build their competitive and institutional know-how, the agency also encourages them to participate in competitive acquisitions.
- Federal acquisition policies encourage Federal agencies to award a certain percentage of their contracts to SDBs. To speed up the award process, the SBA has signed Memorandums of Understanding (MOUs) with 25 Federal agencies allowing them to contract directly with certified 8(a) firms.
- Recent changes permit 8(a) firms to form joint ventures and teams to bid on contracts. This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling, the combining of two or more contracts together into one large contract.
Program goals require 8(a) firms to maintain a balance between their commercial and government business. There is also a limit on the total dollar value of sole-source contracts that an individual participant can receive while in the program: $100 million or five times the value of its primary SIC code. The overall program goal is to graduate firms that will go on to thrive in a competitive business environment.
To achieve this end, SBA district offices monitor and measure the progress of participants through annual reviews, business planning, and systematic evaluations. 8(a) participants may take advantage of specialized business training, counseling, marketing assistance, and high-level executive development provided by the SBA and its resource partners. They may also be eligible for assistance in obtaining access to surplus government property and supplies, SBA-guaranteed loans, and bonding assistance.
Eligibility Requirements
To qualify for the program, a small business must be owned and controlled by a socially and economically disadvantaged individual. Under the Small Business Act, certain presumed groups include African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans. Other individuals can be admitted to the program if they show through a “preponderance of the evidence” that they are disadvantaged because of race, ethnicity, gender, physical handicap, or residence in an environment isolated from the mainstream of American society. In order to meet the economic disadvantage test, all individuals must have a net worth of less than $250,000, excluding the value of the business and personnel residence.
Successful applicants must also meet applicable size standards for small business concerns; be in business for at least two years; display reasonable success potential; and display good character. Although the two-year requirement may be waived, firms must continue to comply with various requirements while in the program.
Applying to the 8(a) Program
You can apply to the 8(a) Program by contacting any SBA district office. For more information or questions, call the Division of Program Certification and Eligibility at (202) 205-6417.
Tips on Marketing to the Federal Government
Once certified by the SBA you will need to market your firm. Marketing to the government requires essentially the same skills and techniques that are necessary for effective marketing to the private sector. Some of the questions you will need to answer in developing your marketing strategy, include the following:
- Does the government use the product or service that I provide?
- If so, where is this product or service needed?
- Will my product or service provide a unique resource that the government would use if it became aware of what I can offer?
- How do I find the opportunities?
- How can I effectively compete with other businesses?
A wide range of resources are available to assist you answer these questions. To take advantage of the annual $200 billion government market for private sector goods and services, small businesses need to understand basic government programs that can benefit them-and know where to look for these opportunities.
The Commerce Business Daily and CBDNet. Proposed procurement actions expected to exceed the sole-source 8(a) award requirements threshold or designated as SDB-eligible are published in the U.S. Department of Commerce’s Commerce Business Daily (CBD). The CBD may be obtained from the Government Printing Office (GPO), SBA Small Business Development Centers (SBDC), or the CBD website.
Agency Websites. Many agencies publish their requirements on their own home pages. Agency websites can be useful to small businesses that supply regionally and locally.
Annual Procurement Forecasts. The Small Business Act requires that agencies annually publish a list of their requirements for upcoming fiscal year. These listings may be accessed through individual agency websites or the SBA website.
Finding Potential Customers
- Contact the Office of Small Disadvantaged Business Utilization (OSDBU) of the agency you wish to do business with. The staff can provide you with a directory of agency buying locations and advise you on the types of goods and services that the agency regularly purchases. Many agencies promote outreach programs and offer “how to” publications that provide assistance in understanding their procurement programs.
- Register in the Dynamic Small Business Source System, an SBA database of small business contractors and their areas of business. Agency contracting officers and prime contractors search the database to find small business sources and subcontractors. Firms can easily register from the SBA website.
- Register in the US Department of Defense’s Central Contractor Register (CCR) through the Internet.
- Agency purchasing offices maintain source lists for the goods and services that they buy. Firms can be included on the agency’s Solicitation Mailing List Application simply by completing a Standard Form 129 with the agency.
- Wherever possible, arrange marketing visits to agency project and program personnel.
- Provide catalogues and brochures to key personnel within the agencies.
- Participate in agency market research by attending pre-solicitation conferences.
- Many Federal agencies hold small business fairs that emphasize how to do business with the government and provide information regarding their program activities. Some have the added feature of making on-the-spot purchases from small business attendees.
Financing Your Business
At some point in your business career with SBA you may need a loan or other form of financing to help grow your business. SBA has been successfully providing small businesses with access to capital. We offer a wide variety of products aimed at meeting the needs of small businesses to increase exports, access to short-term and cyclical working capital, and specialized loans for small businesses engaged in energy conservation or pollution control. SBA loan guarantees can be used to cover loans starting from $25,000 – up to $750,000, or more.
Be Ready When the Call Comes
Understanding the buying techniques that your customer uses can provide you with a competitive advantage. If your market is in the simplified acquisition area, be ready to accept orders issued through the government-wide purchase card. If you provide commercial products or services, familiarize yourself with the expedited buying techniques for selling commercial products. Don’t wait until the solicitation arrives to begin your research. Finally-strive to provide excellent quality products and customer service. The concept of best value, including a contractor’s record of past performance, is the common standard government agencies use to make purchasing decisions.
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