To help small, disadvantaged businesses successfully land government contracts, the U.S. Small Business Administration (SBA) created the 8(a) Business Development Program. The 8(a) Business Development Program is a business assistance program for small disadvantaged businesses; offers a broad scope of assistance to firms that are owned and controlled at least 51% by socially and economically disadvantaged individuals; and has helped thousands of small business owners secure government contracts.
Once you’ve been certified as eligible for the 8(a) Business Development Program, you can receive sole-source contracts, up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing. Entities certified as 8(a)s also can form joint ventures and teams to bid on contracts. Forming a team can help a small business prove an ability to handle a large prime contract. If you’re certified 8(a), then you also can work as a subcontractor.
The SBA also provides 8(a) participants with specialized business training, counseling, marketing assistance, and high-level executive development.
Generally, to be approved into the 8(a) Business Development program and become certified, the business must meet these eligibility requirements:
- The business must be majority-owned (51 percent or more) by an individual(s).
- The individual(s) must be an American citizen, by birth or naturalization.
- The business must be majority-owned (51 percent or more) and controlled/managed by socially and economically disadvantaged individual(s).
- The individual(s) controlling and managing the firm on a full-time basis must meet the SBA requirement for disadvantage, by proving both social disadvantage and economic disadvantage.
- The business must be a small business.
- The business must demonstrate potential for success.
- The principals must show good character.
- Separate eligibility requirements exist for a business that is owned by American Indians, Native Alaskans, Native Hawaiians or Certified Development Companies.
Before SBA can approve an 8(a) Business Develop program application, the disadvantaged individual(s) must show that he or she is socially disadvantaged.
Under federal law, socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identification as members of groups without regard to their individual qualities.
For purposes of the 8(a) Business Development program, the following individuals are presumed socially disadvantaged (called “presumed groups”):
- Black Americans
- Hispanic Americans
- Native Americans
- Asian Pacific Americans
- Subcontinent Asian American
In the absence of evidence to the contrary, an individual applicant is presumed socially disadvantaged if he or she:
- Holds him or herself out to be a member of a presumed group
- Is currently identified by others as a member of a presumed group
The presumed groups listed above are solely for purposes of SBA’s 8(a) Business Development program. Remember: An individual who is not a member of one of the “presumed groups” can be admitted into the 8(a) Business Development program.
Some businesses believe that if their firm is approved for Disadvantaged Business Enterprise certification by their state or other entity, the firm automatically is eligible for SBA’s certification. This is not so. Each federal agency’s definition and qualification requirements are different.
Other individuals may similarly be found socially disadvantaged and eligible for the program on a case-by-case basis.
An individual who is not a member of one of the presumed groups can be admitted into the 8(a) Business Development program. To do so, the business must prove to SBA that the individual(s) meeting SBA’s ownership and control requirements is socially disadvantaged. This process includes showing personal experiences where applicable in education, employment, and business history.
The individual must provide evidence to SBA proving one’s individual social disadvantage. Evidence of individual social disadvantage must include:
- At least one objective distinguishing feature such as race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society, or other similar causes not common to individuals who are not socially disadvantaged.
- Personal experiences of substantial and chronic social disadvantage in American society, not in other countries.
- Negative impact on the individual’s entrance into the business world or advancement in the business world because of the stated disadvantage(s).
To prove social disadvantage, the individual(s) owners must ultimately show that such personal experiences had a negative impact on entry into or advancement in the business world.
More importantly, all individuals that SBA finds socially disadvantaged – including all presumed group members must also meet these requirements:
- SBA’s economic disadvantage requirements – including presumed group members
- SBA’s ownership requirements
- SBA’s control and management requirements
- SBA’s character requirements. which extends to all principals, including:
- owner(s) of more than 10%
- key employees
- All principals will undergo a Federal Bureau of Investigation background check before SBA can admit the firm into the SBA 8(a) Business Development program.
In addition, to be approved, all firms must meet:
- SBA’s small business size requirements
- SBA’s potential for success requirement
To become certified as an 8(a) business, you must complete a lengthy application process. This process includes providing supporting documentation, responding to questions provided by the SBA, and completing an application. US Federal Contractor Registration can help you with the application process, including, for businesses just getting into government contracting, completing your System for Award Management (SAM) Registration. This Registration is not only needed to become certified as an 8(a), but also must be in place before you can bid on and receive government contracts.
To find out more about how US Federal Contractor Registration can help you become 8(a) certified and also a successful government contractor, call us at 877-252-2700 ext. 1.