SBA 8(a) and SDB Certification Programs

The U.S. Small Business Administration (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-Protégé 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 their personal 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 obtain assistance on how to apply to the 8(a) Program by contacting any local SBA district office. For more information or questions, call the Division of Program Certification & Eligibility at (202) 205-6417.

Please read this section before you proceed to the 8(a)/SDB registration site.

If you are a new registrant to CCR and/or updating your profile in CCR, there may be a 24 to 72 hour waiting period before you will be allowed access to the 8(a)/SBD Electronic application. Therefore, if you have recently registered in CCR and/or updated your profile in CCR, please allow a day or so to pass before you try to gain access to the 8(a)/SDB Electronic application to allow the databases to communicate with each other. We apologize for any inconvenience that this may cause you.

1. To do business with the Federal government and to be certified under the 8(a) Program or as an SDB, you must register in the Central Contractor Registration (CCR) database, and complete the Small Business Supplemental Page within CCR. As a government-wide single point of vendor registration, CCR is a key aspect of streamlining and integrating electronic commerce into the Federal procurement process. Effective October 1, 2003, Federal Acquisition Regulation require contractors to register in CCR prior to award of any contract, basic agreement, basic ordering agreement, or blanket purchase agreement. It’s easy to register in CCR. Just go to www.ccr.gov and select the “Start a New Registration” button.

2. You must register for an account in the SBA’s General Log-in System (GLS). SBA supports a single log-in point for all services of the U.S. SBA, that point is the General Log-in System. This assists us in improving our service delivery to our clients. It’s simple to register for an account.

3. You must download, sign and submit your notarized Authorization form. Also referred to as your “signature” authorization. This authorization is sent separately to the SBA. Please note that the receipt of your signature via the “Certification for the Receipt of Electronic 8(a)/SDB Information from Individual Applicants,” is an important part of the electronic application process for it is upon the receipt of this document by SBA that will initiate the time frame to begin and trigger the screening and review process of the Electronic Application.

4. Log-in to the 8(a)/SDB Application via SBA General Log-in System (GLS). Complete and Submit a completed application form. Please note that question specific “Help” screens are available throughout the electronic application. We recommend that you make use of these screens as you complete the application process. The screens provide detailed guidance and user-friendly explanations to assist in your responses. Use of the screens will improve the accuracy of your submission and significantly reduce the time required to complete the application.

5. With respect to time frames, as always the length of time to review the application and get you a response will depend on the complexity of your application. That is, the more complex your application, the longer it will take, (for example, a 100% owned sole-proprietorship owned by a designated group member will not take as long as a multi-owned corporation located in a community property state). The regulatory time frames are 90 days for a response from an 8(a) application and 75 days for a response from an SDB application. There are two parts to reviewing any application. The first is the screening process where we make certain we have all the information required to process the application and the next is the review process where the information you have provided is reviewed and analyzed. We will of course do our best get back with you as soon as possible.

6. The information submitted as part of your electronic application is protected by a username/password based authentication system for all system interactions that require authorization. All authentication related system interaction will be protected using secure, encrypted communications (SSLv3 with 128-bit encryption) to ensure that system passwords cannot be detected by network intruders. SSL is the industry standard for secure network communications. For further information regarding SBA’s Internet Privacy Policy please click: http://www.sba.gov/privacy.html. Please make sure that your answers are truthful and accurate and submitted by you as there are serious legal consequences for falsifying information in an 8(a)/SDB application that may include fines, imprisonment or both. Should you have further questions please E-mail us at [email protected] or call (415) 744-6784. 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 PRO-Net, 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.

SBA/DOT Certification Reciprocity for Disadvantaged Businesses The U.S. Small Business Administration (SBA) and the U.S. Department of Transportation (DOT) signed a memorandum of understanding that "reciprocally" streamlines the certification process for current and future 8(a) Business Development, Small Disadvantaged Business (SDB), and Disadvantaged Business Enterprise (DBE) program participants. In effect, this process will allow each agency to recognize the program certification of the other without duplicating paperwork. By streamlining certain procedures and requirements, it will reduce the burden on applicants. The agreement creates the start of a uniform application process for small disadvantaged business certification, reinventing the way the government does business with SDBs. The SBA- DOT partnership will work to establish one centralized vendor database system with PRO-Net, the SBA’s electronic gateway to procurement information. Currently, there are nearly 8,000 certified SDBs and nearly 50,000 certified DBEs. SBA’s 8(a) BD and SDB programs and DOT’s DBE program share many common certification requirements. The purpose of the MOU is to identify reciprocal certification principles and streamline procedures for expediting the certification requirements of SBA regulations (13 C.F.R. part 124) and DOT regulations (49 C.F.R. parts 23 and 26).

The MOU does the following:  Establishes a certification process that facilitates the participation of firms certified under DOT rules in SBA programs and the participation of firms certified under SBA rules in DOT programs.  Establishes procedures for the efficient transfer of information among SBA and DOT program recipients for the consideration of certification appeals and for the determination of business size issues.  Establishes one common 8(a) BD, SDB, and DBE application form allowing the form to contain one common part and additional parts for 8(a) BD, SDB, and DBE certification.

Benefits for SDBs, 8(a)s, and DBEs  Streamline the 8(a)/SDB application and certification process.  Streamline and centralize the DBE application and certification process and database.  Increase the current number of certified SDBs.  Increase the number of DBE contractors.  Increase contracting opportunities for 8(a)s and SDBs outside of the federal sector.  Increase contracting opportunities for DBEs outside of state and local sectors.  Increase opportunities for women-owned businesses in the federal contracting arena.  Reduce administrative and paperwork burdens.

Will SBA and DOT reciprocal certification become automatic? No, but the agreement will make the reciprocal process much easier for DBEs, SDBs, and 8(a) applicants since both the SBA and DOT will share the basic application information. Applicants will have to submit only the additional information necessary to each certification program. In most cases, the agreement will expedite the review process.

How do current DBEs obtain 8(a) certification? The 8(a) program is a business development program intended to assist individuals that are both socially and economically disadvantaged and have a net worth of less than $250,000. If a currently certified DBE wishes to become 8(a) certified, it must meet the following criteria: Show U.S. citizen ownership.  Show a net worth of less than $250,000, excluding the primary residence.  Show potential for success and good character.  Show 51 percent ownership by socially and economically disadvantaged individuals.

What are the benefits of 8(a) or SDB certification? 8(a)-certified DBEs qualify for the following:  Specialized business development assistance from the SBA.  Sole-source and competitive 8(a) contracts.  SDB contracting opportunities.  8(a)-certified firms are automatically SDBs.

SDB-certified DBEs qualify for the following:  Ten percent price credits in open and unrestricted federal prime contracts.  Increased subcontracting opportunities via evaluation credits for SDB subcontracting plans. This is important because prime contractors must utilize SBA-certified SDBs before they can receive SDB goaling and evaluation credits.

How do SDBs and 8(a) businesses obtain DBE certification? Current SDBs will have to confirm that they are not above the three-year average revenue of $16.6 million. An Alaskan Native Corporation (ANC) or Native American tribe must be controlled by a disadvantaged individual. All SDBs must confirm ownership of specific license requirements and be subject to on-site reviews.

Will non-minority women DBEs automatically become certified 8(a)s or SDBs? No. DOT women business owners are "presumed" disadvantaged under the DOT statute, but not under the Small Business Act. Women are invited to apply for participation in both the 8(a) and SDB programs. In addition to proof of U.S. citizenship and the net worth requirement, non-minority women DBEs seeking SDB or 8(a) certification must submit a narrative explaining social disadvantage and the effects of discrimination. The SBA will evaluate the narrative based on the "preponderance of the evidence" standard. SBA will assist in expediting the certification review by supplying a short form that outlines the process. Currently, the SBA is certifying close to 60 percent of all non-minority women applicants.

For further information on SBA programs visit the SBA website at www.sba.gov. For free personal and confidential counseling on how to start and grow your business and low-cost business development workshops contact your local Small Business Development Center or your local SCORE chapter.