After 8(a) Ends - Don't Worry, You Can Become an SDB!

For those of us who hold 8(a) certifications you may be unaware that there is another program available after you graduate from the 8(a) program. Following your graduation, if you qualify, you can apply for the Small Disadvantaged Business (SDB) designation.   The economic incentives for you to apply for the SDB program are significant. The federal government has statutory goals for SDB’s of 5% of all prime and subcontracted work.

Nine Years To Navigate
It seems a shame. Just when you think you have finally figured out how to do business with the government your time is up!  People may think nine years is a long time but in reality, it takes at least two of those years to figure out how to do business with the world’s largest purchaser of services and products.  So you may have closer to seven years to actually take advantage of the 8(a) program.

You can make the most of your 8(a) experience by applying for an SDB certification.  The benefit to obtaining your SDB certification is that even though it expires in three years, it is renewable every three years. So, in effect you can maintain that status indefinitely as long as you continue to meet the criteria.  It does not expire unless you no longer meet the criteria set forth for that certification.

SDB Qualifications
There are a number of points of difference in the qualification criteria.  Most significantly, the personal net worth criteria for the SDB designation is significantly higher than the 8(a) designation.  In the 8(a) program your personal net worth cannot exceed $250,000.00, excluding your primary residence and the equity in your business.  In the SDB program, your personal net worth cannot exceed $750,000.00 with the same exclusions. Because you were previously certified as an 8(a), and are familiar with the details of that certification process, obtaining an SDB designation is likely to be a less arduous journey.

(NOTE: An 8(a) certification is not a prerequisite to obtaining your SDB certification. For those readers without an 8(a) certification, you can apply directly to the SDB program provided you meet the criteria.)

What are SDB Program Benefits?
The program offers several important incentives which are not part of the 8(a) program.

• SDB price evaluation adjustment: qualified SDBs receive a price evaluation adjustment of up to 10 percent on procurements where mandated by regulation. The price evaluation adjustment for SDBs bidding as primes became effective October 1, 1998. Regulations mandate this approach in competitive acquisitions over the simplified acquisition threshold (usually $100,000) where the NAIC Code for the prime contract is authorized by U.S. Department of Commerce benchmarks. The price evaluation adjustment does not apply to 8(a) acquisitions and small business set-asides.
  
  
• SDB evaluation factor: qualified prime contractors can receive a credit when using SDBs as subcontractors. This evaluation factor for SDB participation became effective January 1, 1999. The incentive applies only to competitive negotiated acquisitions over $500,000, or $1,000,000 in construction. The evaluation factor does not apply to small business set asides, 8(a) acquisitions, or contracts performed entirely outside the United States. The evaluation factor for SDB participation allows credit for subcontractors only in the NAIC codes authorized by the US Department of Commerce benchmarks and requires that all SDBs be certified by the SBA. Once certified, firms remain on the SBA’s list of SDB-certified firms for a period of three years.
  
  
• SDB statutory goals:   The SBA is responsible for ensuring that the statutory government-wide goals are met. The statutory goals for SDB’s are 5% of all prime and subcontracted work.

Conclusion
There are clear advantages to the SDB Program that the 8(a) program does not offer.    So while the 8(a) certification is an excellent first program, the SBA has, through its incentives, made the SDB a second natural progression for your business. By offering the SDB certification the federal government allows you to make the most of  your 8(a)No question about it, an 8(a) certification is an excellent achievement.