Revenue Edge in A Down Market? Understanding the Federal 8(a) Program.

Trying to get business from the US government is extremely difficult, but lots of businesses do it every day.  Your company is competing with the largest companies in the world, many of them with more people in a single department than you have in your whole business.  You also have to find your way through the red tape, regulations and strange sounding acronyms.  You may have heard about certain programs that are created to help small businesses work with the government, but no one seems to know all the details.  Is it worth all the energy?

Lisa Dolan, SBW's contributing editor says that there is one acronym that might make all your time and energy bear fruit - the Federal 8(a) business development certification, 8(a) for short.   Lisa is an 8(a) certification consultant and has helped many companies through the certification process.  She says, "If you qualify for an 8(a), you really can have an edge when it comes to getting contracts, but it is the most difficult of all the Federal certifications."

So what is the 8(a) program and how do you qualify for this certification?  And what kind of contract dollars are at stake?

8 (a) Basics

The 8(a) Program is the first and best known of the Small Business Administration's contracting-related certification programs, passed into law in 1988 as part of the Business Opportunity Development reform Act.  The 8(a) certification is issued by the Small Business Administration to qualifying applicants, small business applicants who are US citizens and who are both socially and economically disadvantaged. The 8(a) certification is a nine-year program that provides business development assistance to all its participants. Companies that have been certified can participate in 8(a)-set asides.  (NOTE:  There are Congressional mandates for 23% of all contracts must be set aside for certain classifications.  Within that 23%, certain percentages are carved out specifically for 8(a) companies.)

What Are "Restricted" Contracts?

The government has mandates that it must meet for contracting with small businesses, 8(a) businesses, SDB businesses, Hub-Zone businesses and woman-owned businesses.  Within those mandates they set aside a certain percentage for each one. These contracts are termed "restricted".  This means that if a contract goes out and it specifies it is an 8(a) competitive contract or Hub-Zone competitive contract then only those firms holding those certifications may bid on them.  In that respect, it is a restricted contract.

Each year there are billions of dollars in 8(a) contracts awarded to program participants.  In the 2001 SBA annual report to Congress, it was noted that about 6,950 8(a)-certified companies participated in over $4.4 billion in new contracts - 6,950 out of the nation's approximately 20+ million small businesses!  This is the competitive edge that has been carved out for the 8(a) certified participants - AND the stakes are plenty high!!  (NOTE:  If you cannot locate the Annual Report on the SBA web site, contact me at ahamor@smallbizworthy.com and I will help.  It makes for fascinating reading and has detail at both the geographic and by type of business.)

Main Qualifying Criteria For The 8(a) Program

As with any special program, there are guidelines and qualifications for the 8(a) program which govern its underlying intent.  First, businesses must be "small" business, as defined by the Small Business Administration's size standards and categories.  Also, the applicant or applicants must be the principal owner (more than 51%) of the business and those principal owner-applicants must be U.S. citizens.  Other key qualifying criteria are the test of social and economic disadvantage.  A number of minority ethnic groups are listed in the 8(a) regulations as groups presumed to be socially disadvantaged.  An applicant who is not a member of one of these designated groups must provide information in his or her application that leads the government reviewers to conclude that the applicant has suffered chronic and substantial discrimination because the applicant is in a certain category (i.e. woman or disabled).  Applicants who fall within the socially disadvantaged guidelines have to then meet economic disadvantaged requirements.

Another key guideline that impacts on qualifying for an 8(a) certification is that the business must demonstrate a propensity for success.  In general terms, this normally means that the business has been in operation for at least two years and is economically sound.  Applicants who have been in business less than two years must be able to show that they are generating revenue.

Applying to the 8(a) Program

As you would expect, there are special forms and applications to be completed when filing for an 8(a) certification.  In order to obtain those forms, you can contact your nearest SBA district office and request an application.  The SBA's position is that anyone can fill out the forms.  But if you don't have the time and would prefer experienced help, most of the SBA district offices have a list of private certifiers who are well versed in the certification process and can help you through that process on a paid basis.  SBW's contributing editor, Lisa Dolan, is on that list.  If you are interested in learning more about the 8(a) program, she can be reached at ldolan@smallbizworthy.com. 

The 8(a) business development program is quite possibly the competitive edge your company needs to grow when everyone else is trying only to survive.  And with numbers like these, it might be worthy the few thousand dollars to have a consultant walk you through the process.