Minority-Owned Businesses Get a Boost from the Federal Government
The federal government sponsors a number of programs designed to help minority-owned enterprises succeed in their business, and one of the most extensive is the Small Business Administration’s 8(a) Business Development Program. The program offers a broad scope of assistance to firms that are owned and controlled at least 51 percent by socially and economically disadvantaged individuals, and its stated goal is to provide such businesses with “access to the economic mainstream of American society” by helping them gain a foothold in government contracting. It is a nine-year program, with participation divided into a four-year developmental stage and a five-year transition stage.
The main benefit of the program is that 8(a) certified businesses gain exclusive access to sole-source contracts of up to $4 million for goods and $6.5 million for manufacturing per contract, says Jean Kristensen, president and CEO of Jean Kristensen Associates, LLC, a New York-based consulting firm that provides tools and resources to small, minority, and women-owned firms seeking to increase revenues through government contracting, certification, and innovative business strategies. “As an 8(a) graduate, I can attest to the fact that certain sole-source contracts provided my firm with the ability to gain experience with government contracting, human capital management, and regulatory compliance that increased our ability to bid for competitive contracts in my industry,” she says. “Many government agencies do require that firms have strong past performance and experience in working with government agencies as a precondition to winning government contracts, and the 8(a) program allowed us to get that experience.”
Exclusive access to those sole-source contracts is surely one of the most important advantages of 8(a) certification, but there are others as well, says Rick Otero, president and CEO of Tampa, Florida-based Cloveer, Inc., which has helped more than 1,500 businesses navigate the 8(a) application process. Among them are:
- Limiting your potential competition. Larger firms that might otherwise compete for the same contracts do not have access to them, and there are fewer than 10,000 8(a)-certified business concerns in the entire country.
- Making you more attractive to larger federal government prime contractors. Since businesses not considered “small” by the SBA definition for this program do not have access to 8(a) contracts, certification makes your company more attractive for teaming, joint ventures, or mentor/protégé relationships.
- Making it easier for federal agencies to purchase your products or services because 8(a) set-aside contracts require less time, paperwork, and bureaucracy than other types of federal contracts.
- Faster start times, because 8(a) contracts take less time to be awarded than most other procurement methods.
Applicants to the 8(a) Business Development program undergo a rigorous screening process designed to ensure that only the most qualified firms receive certification, Kristensen says. The general eligibility requirements are:
- The business must be majority owned by an individual or individuals, and they must be American citizens by birth or naturalization.
- The business must be majority owned and controlled/managed by socially and economically disadvantaged individual(s), and they must meet the SBA requirements for both social and economic disadvantage. Social disadvantage eligibility is presumed for members of certain groups, including African Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. Applicants are presumed to be economically disadvantaged if they can provide documentation proving their assets, income, and net worth fall below these threshold levels: $4 million, $250,000 averaged over three years, and less than $250,000, respectively.
- The business must be a “small” business by SBA 8(a) standards, a designation that is subject to a range of variables.
- The business must demonstrate potential for success.
- The principals must show good character.
Obtaining 8(a) certification requires a high level of involvement on the part of the applicant and the willingness to commit to a nine-year process, during which time all eligibility requirements have to be maintained. The SBA recommends that potential applicants start by taking an online training and self-evaluation course. If you do not meet the key eligibility criteria in the self-assessment test, you will be directed to other SBA resources deemed most appropriate for your business at its present stage of development.
