What is the SBA's 8(a) Business Development Program?
Government Business Development | 6 Min Read
Small businesses might feel in over their heads while competing for government contracts through the GSA Multiple Award Schedule (MAS) program. However, to ensure that small businesses receive a portion of government contracting dollars, the Small Business Administration (SBA) has established several contracting assistance programs such as the 8(a) Business Development Program. The 8(a) Program aids small, disadvantaged businesses, and the SBA works with federal agencies to promote equitable access to contracting opportunities in the federal marketplace. In this article, we’ll define the SBA's (8a) Business Development Program, who is eligible to participate in the program, and the benefits for small, disadvantaged businesses.
What is the 8(a) Business Development Program?
Sections 8(a) and 7(j) of the Small Business Act authorize the SBA to establishes a business development program, which is officially called the 8(a) Business Development Program, or 8(a). The purpose of the 8(a) Business Development Program is to assist eligible small, disadvantaged business concerns owned and controlled by socially and economically disadvantaged individuals to compete in the U.S. economy. Through the 8(a) Program, businesses receive training and technical assistance which helps them strengthen their ability to compete effectively in the economy.
Who is Eligible for the 8(a) Program?
To be eligible for the 8(a) Program your business must first identify as a small, disadvantaged business. There are 4 categories of disadvantaged small businesses as defined by the SBA:
Minority-owned small businesses are entities that are owned or controlled by Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Subcontinent Asian Americans, and members of other groups designated by the SBA.
Representatives of an identifiable group whose members believe that they have suffered chronic racial or ethnic prejudice or cultural bias may petition to the SBA to be included as a presumptively socially disadvantaged group. Disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups, and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control.
If you think your firm qualifies as a small, disadvantaged business, your next step is to review the qualifications and the process to become a certified 8(a) business.
How Do You Qualify for the 8(a) Program?
To qualify for the program, a small business must be owned and controlled by a socially and economically disadvantaged individual by 51% or greater. A firm may self-represent as a small, disadvantaged business for any federal contracting program if it believes in good faith that it is owned and controlled by one or more socially and economically disadvantaged individuals.
The qualifying owner of the small business must have a personal net worth of $750,000 or less or an adjusted gross income of $350,000 or less. Additionally, the total assets of the qualifying owner cannot exceed $6 million. It’s important to note that non-disadvantaged individuals may be involved in the management of an applicant or participant, and may be stockholders, partners, limited liability members, officers, and/or directors of the applicant or participant.
Before you jump into an 8(a) application, visit certify.SBA.gov to utilize the “Am I Eligible” tool to help confirm your eligibility. There is also a great checklist available from the SBA to make sure you have the required material to complete the process as quickly and painlessly as possible.
How Does the 8(a) Program Work?
The 8(a) Business Development Program is designed to only be applicable for a maximum of 9 years. The 9-year timeline is broken down into a 4-year developmental stage and then a 5-year transitional stage. A small business is only eligible for one 9-year period and cannot apply for the 8(a) Program if previously enrolled. A full list of qualifications can be found in the code of federal regulations.
Participation in the 8(a) program is one-time-only for firms and individuals except for entity-owned firms. Alaska Native corporations, Tribal-owned Native Hawaiian organizations, and Community Development Corporations may have multiple 8(a) firms.
After initial certification, 8(a) Program participants are responsible for maintaining their eligibility in the program. This means that every year, each program participant must certify that their business meets all statutory and regulatory requirements. You can check out the 8(a) annual review checklist to see what information you may need to present to the SBA.
To remain eligible to participate in the 8(a) Program after certification, a firm must generally remain small for its primary industry classification. However, if your firm grows to exceed the small business size standard as determined by your primary North American Industry Classification System (NAICS) Code for 3 successive program years, the SBA may graduate you before the expiration of your program term.
What Are the Benefits of the 8(a) Program?
8(a) certification qualifies your business to compete for the program’s sole-source and competitive set-aside contracts. The government authorizes sole-source contracts to 8(a) participants for up to $7.5 million for acquisitions assigned manufacturing NAICS Codes, and $4.5 million for all other acquisitions. Entity-owned 8(a) Program participants are eligible for sole-source contracts above these thresholds.
Participants in the 8(a) Program receive a lot of additional benefits such as:
- Efficiently compete and receive set-aside and sole-source contracts.
- Receive one-on-one business development assistance for their 9-year term from dedicated Business Opportunity Specialists focused on helping firms grow and accomplish their business objectives.
- Pursue opportunity for mentorship from experienced and technically capable firms through the All Small SBA Mentor-Protégé Program.
- Connect with procurement and compliance experts who understand regulations in the context of business growth, finance, and government contracting.
- Pursue joint ventures with established businesses to increase capacity.
- Qualify to receive federal surplus property on a priority basis.
- Receive free training from SBA’s 7(j) Management and Technical Assistance program.
Competing in Small Business Set Aside Contracts
As we mentioned above, participants in the 8(a) Program are able to compete in small business set asides. What does this mean? The SBA has created set-asides with specific criteria that allow small businesses to have a fair share of contracting opportunities in the federal marketplace. So, when a government agency releases a government solicitation, they may partially set-aside awards for certain categories small businesses (like the 8(a) program), or make it a total small business set-aside. So, if you go after an opportunity that is an 8(a) small business set-aside, you are only competing against other 8(a) participants.
Each solicitation may have different requirements, but typically, the decision to dedicate an opportunity to a certain set-aside is made through market research, where agencies look to see who can complete the contract, and of that group, how many are qualified small businesses.
Take Advantage of Your Small Business Designation
The benefits of joining the 8(a) Business Development Program are undeniable. Applications are processed electronically, so you can visit the application website at certify.sba.gov to access a checklist, tools, training, and a full list of guides for applying.
Navigating the MAS program can be difficult, and you want to make sure you are taking advantage of the contracting opportunities available to small businesses. If you need help figuring out the 8(a) Program qualification process or you have any questions about your GSA Schedule, please reach out to us at Winvale or visit our resources center for the full catalog of our blogs, webinars, whitepapers, and ebooks.