The SBA’s 8(a) Program: A Potential Boon for Businesses
Over the past year and a half, New Jersey and Pennsylvania-area construction contractors, manufacturers, and distributors have faced various operational and financial challenges. This included unexpected contract changes, supply chain disruptions, and higher material and supply costs. The resulting economic impact has left many relying on federal COVID-19 relief programs such as the Employee Retention Credit (ERC) to manage the financial implications. However, given these programs continue to sunset, many are looking for other programs to help stay competitive and benefit during the recovery.
The U.S. Small Business Administration’s (SBA), 8(a) Business Development Program, offers disadvantaged small businesses access to sole source and other government contracts. Program participants enjoy several benefits that make it easier to win work with the federal government, the details of which we have summarized below.
8(a) Program Benefits
As mentioned above, the federal government limits competition for certain contracts to eligible businesses that participate in the program. Participants enjoy several benefits, including:
- Contract Competition– Opportunity to compete for competitive set-aside and sole-source contracts. A competitive set-aside contract is a contract that is reserved for multiple small businesses to bid on. A sole-source contract does not include a competitive bidding process because a single business can fulfill contract requirements.
- Opportunity Management – Program participants can receive the assistance of a Business Opportunity Specialist to help navigate the federal contracting system and
various requirements. - Joint Ventures – To expand the ability to fulfill more federal contracts, participants can form joint ventures with established businesses through the SBA’s Mentor-Protégé Program.
- Business Support – There is also the opportunity to receive management and technical assistance, including needed business training, marketing assistance, and executive coaching and development.
- Additional Benefits – This includes assistance in obtaining surplus government property and supplies, SBA guaranteed loans, and bonding assistance.
Eligibility Requirements
Unfortunately, not all small businesses will be able to participate in the program. Access is limited to small businesses that meet the following criteria:
- Have not previously participated in the 8(a) program.
- Be at least 51% owned and controlled by U.S. citizens who are socially or economically disadvantaged. A socially disadvantaged individual is one that has faced limitations (racial or ethnic prejudice) resulting in the inability to obtain needed credit and capital as compared to others in the same line of business.
- Maintain a personal net worth of $750,000 or less, an adjusted gross income of $350,000 or less, and have no more than $6M in total assets.
- Demonstrate good character and potential to perform on contracts.
Next Steps
To participate in the program, a business must be registered with the SBA. In addition, qualifying businesses will need to register on the SBA Certify Portal and provide the required documentation to demonstrate compliance with eligibility requirements. There is a preparation checklist available for review to make the registration process easier for applicants.
Once submitted, applicants will receive a notification of acceptance/rejection within a few weeks. If accepted, the certification will last for nine years. However, participating businesses will be required to complete an annual review to maintain a good program standing.
The opportunities available through the SBA’s 8(a) Business Development Program represents a unique opportunity not to be missed. The set aside contract bidding opportunities can open the door to significant growth opportunities.
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©2021 Klatzkin & Company LLP. The above represents our best understanding and interpretation of the material covered as of this post’s date. The content is provided for informational purposes only and does not constitute accounting, tax, or financial advice. Please consult your advisor concerning your specific situation.