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Small Businesses can do business with the federal government.

November 21, 2016

As I discussed in my last article, small businesses can do business with the federal government.  They purchase up to $500 billion of goods and services annually.  The Small Business Administration (SBA) created the 8(a) Business Development Program in order to help small, disadvantaged business compete in the marketplace.

The 8(a) Business Development Program is a business assistance program for small disadvantaged businesses.  The 8(a) Program offers a broad scope of assistance to firms that are owned and controlled by at least 51% by socially and economically disadvantaged individuals.

The program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society.  It assists thousands of aspiring small business owners to gain a foothold in government contracting.

Participation in the program is divided into two phases over nine years:  a four-year developmental stage and a five-year transitional stages.

Participants can receive sole-source contracts up to a ceiling of $4 million for goods and services and $6.5 million for manufacturing.  While the SBA helps 8(a) firms build their competitive and institutional know-how, they also encourage small businesses to participate in competitive acquisitions.

8(a) firms are also able to form joint ventures and teams to bid on contracts.  This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling, the combining of two or more contracts together into one large contract. 

The overall program goal is to graduate 8(a) firms that will go on to thrive in a competitive business environment.  There are some requirements in place to help achieve this goal.  Programs require 8(a) firms to:

  • Maintain a balance between their commercial and government business
  • Limit the total dollar value of sole-source contracts that an individual participant can receive while in the program:  $100 million or five times the value of its primary NAICS code.

To make sure 8(a) firms are on track to accomplish their goals and are following requirements, the SBA district offices monitor and measure the progress of participants through:

  • Annual reviews
  • Business planning
  • Systematic evaluations

Additionally, 8(a) participants may take advantage of specialized business training, counseling, marketing assistance, and high-level development provided by the SBA and the Angelo State University · Small Business Development Center.  Small businesses can also be eligible for assistance in obtaining access to surplus government property and supplies, SBA-guaranteed loans and bonding assistance for being involved in the program.

 

“Business Tips” was written by Paul Howard, Certified Senior Business Advisor of Angelo State University’s Small Business Development Center.  For more information on the topic of this article or the services of the ASU · SBDC, contact him at Paul.Howard@angelo.edu. 

 

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