8(a) Small Business

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What is a Small Business Administration’s 8(a) small business?  The Federal Acquisition Regulation (FAR) Subpart 19.8—Contracting with the Small Business Administration (The 8(a) Program) Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and let subcontracts for performing those contracts to firms eligible for program participation. The SBA’s subcontractors are referred to as “8(a) contractors.”

In order for the SBA to help small, disadvantaged businesses compete in the marketplace, the SBA created the 8(a) Business Development Program. 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 at least 51% by socially and economically disadvantaged individuals.  The 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting.

The U.S. government defines “socially and economically disadvantaged” individuals under the Small Business Act (15 USC 637):

  • Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
  • Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged. In determining the degree of diminished credit and capital opportunities the Administration shall consider, but not be limited to, the assets and net worth of such socially disadvantaged individual.

This coverage extends only to socially and economically disadvantaged U.S. citizens, or those who have been lawfully admitted permanent U.S. residency. Individuals not mentioned in the act may be considered on a case-by-case basis.  Individuals specifically mentioned include:

  • Black Americans
  • Hispanic Americans regardless of race, culture, or origin
  • Asian-Pacific Americans and Subcontinent Asian Americans
  • Native Americans including Native Hawaiians, Eskimos, Aleuts, and American Indians
  • Women are presumed to be included under the act because of social, and therefore, economic, disadvantages women encounter.

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

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 can help 8(a) firms build their competitive and institutional know-how, the SBA will also encourage the 8(a) firms to participate in competitive acquisitions.

The 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. Also, the SBA will encourage the 8(a) firm to join the Mentor-Protégé Program for more information on allowing starting 8(a) companies to learn the ropes from other more experienced businesses.

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. Program goals require 8(a) firms to:

Maintain a balance between their commercial and government business.

Limit on 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

In addition, 8(a) participants may take advantage of specialized business training, counseling, marketing assistance, and high-level executive development provided by the SBA and the SBA resource partners. The 8(a) business 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.

For more information contact the Small Business Administration at www.sba.gov.

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