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8(a) Business Development Program
Katherine RothBusiness Opportunity Specialist
SBA Minnesota District Office
U.S. Small Business Administration
• Financial Assistance• Business Counseling and Training• Disaster Assistance• Government Contracting: Prime Contracting
and Subcontracting• http://www.sba.gov (National Office)• http://www.sba.gov/mn (MN District Office)
Non-Federal Categories• CERT Program: St. Paul, Ramsey County, Hennepin County. (651) 266-8900.
Http://www.govcontracts.org• DBE Program: Federally Funded Transportation – MN/DoT, MET Council, MAC, City
of Minneapolis. Http://www.dot.state.mn.us/eeocm.index.html. (651) 366-3329 MN/DoT, (612) 349-7463 (MET Council), (612) 726-8100 (MAC) or (612) 673-3076 (City of Minneapolis)
• Targeted Vendor: State of Minnesota. Helpline (651) 296-2600. http://www.mmd.admin.state.mn.us
• North Central Minority Supplier Development Council (NCMSDC). Corporate Certificate of MBE-Minority Business Enterprise. (612) 465-8883
• Women’s Business Enterprise National Council (WBENC). Certification as women owned. (612) 259-6584. http://www.wbenc.org
Federal Small Business Categories
• Small Business (Self Certify)• Small Disadvantaged Business (Self Certify – includes
8(a) BD (SBA Certified)• HUBZone Small Business (SBA Certified)• Woman-Owned Small Business (Self Certify)
– Registration at WOSB Repository.
• Veteran-Owned and Service Disabled Veteran-Owned Small Business (VA Certified)– Registration at Vetbiz.gov required for VA.
Primary Resource for All of These Programs
• SADBOC website: http://www.minnesota.feb.gov/index.php/councils/sadboc
• 2014 SADBOC Government Procurement Fair, 4/30/14: Earle Brown Heritage Center, Brooklyn Center, MN, Exhibitors Hall, SBA Exhibit Booth
What We’ll be Talking About
• Overview of 8(a) BD Program• Eligibility Requirements• Benefits of the Program• What is Expected of Participants• Applying to the Program
What is the 8(a) Business Development Program?
• “to promote the business development of small businesses owned by socially and economically disadvantaged individuals…” access to procurement marketplace.
• “to promote the competitive viability of such concerns…”
• 8(a) Business Development Program regulations are located on www.sba.gov.
Social Disadvantage – Designated Groups
Individuals are presumed to be socially disadvantaged if they are a U.S. Citizen and a member of one of the following groups:
1) Black Americans2) Asian Pacific American3) Hispanic American (includes individuals of Spanish and
Portuguese descent)4) Native American5) Subcontinent Asian American
Social Disadvantage – Non-Designated Groups
Non-minority women, disabled, other individuals that believe they have encountered discrimination may claim to be socially disadvantaged.
1) Must demonstrate individual social disadvantage.
2) Education, employment, business history3) Preponderance of the evidence
Economic Disadvantage Eligibility – Applicants Must Demonstrate:
• Adjusted Net Worth may not exceed $250,000 for initial eligibility; $750,000 for continuing eligibility.
• Personal Income must not exceed $250,000 (3-yr. average); $350,000 for continuing eligibility.
• Total Assets must not exceed $4M for initial eligibility; $6M for continuing eligibility (allows for growth during the 9-year program participation).
Net WorthLess Equity in Primary ResidenceLess Equity in BusinessEquals Adjusted Net Worth
Applicant must also describe economic disadvantage in a narrative statement.
What are the 8(a) Participant Requirements?
• Must be a small business concern with a potential for success demonstrated by two years in business.– Independently owned and operated, organized for profit, and not
dominant in its field.– Must be unconditionally owned and controlled by one or more
socially and economically disadvantaged individuals who are of good character and an U.S. Citizen. • Social Disadvantage – Refers to individuals who (beyond their control)
have been subjected to racial or ethnic prejudice or cultural bias because of their group membership identity without regard to individual qualities.
• Economic Disadvantage – Refers to socially disadvantaged individuals with an impaired ability to compete in the free enterprise system, because of diminished capital and credit opportunities.
Eligibility Criteria – Size Standards
• Based on North American Industrial Classification system codes – NAICs
• Codes and corresponding size standards at www.sba.gov/size
• Manufacturing and wholesaling – One-year average number of employees
• Service Industries – Three-year average revenues
• Self-Certification
Eligibility Criteria - Ownership
• At least 51% unconditional ownership by the disadvantaged person(s)
• Partnerships – Agreements must reflect unconditional ownership
• Limited Liability Company – Disadvantaged individuals must own at least 51% of each class of member interest.
Eligibility Criteria - Ownership
• Corporations– Disadvantaged persons must own at least 51% of
each class of voting stock and at least 51% of all outstanding stock.
– Stock option plans for non-disadvantaged individuals will be viewed as if they have been exercised.
Eligibility Criteria – Good Character
What shows lack of good character?1) Adverse information regarding possible criminal conduct by the
applicant or its principals.2) Violations of any SBA regulations.3) Debarred or suspended individuals or firms.4) Applicant firms and principals that lack business integrity as
shown by an indictment, guilty plea or civil judgment.5) Any principal who is incarcerated or on parole or probation.6) Evidence that the firm knowingly submitted false information
during the application process.7) Any firm or any of its principals that fail to pay financial
obligations to the Federal Government.
Eligibility Criteria – Control and Management
• Partnerships: Agreements must reflect unconditional management by disadvantaged partner(s).
• Limited Liability Company: One or more disadvantaged individuals must serve as management members with unconditional control.
• Corporations: One or more disadvantaged directors must be able to control the board and establish a quorum without the presence of non-disadvantaged directors. – No super majority
Eligibility Criteria – What Constitutes Control?
• The Disadvantaged Individual must:– Hold the position of President or Chief Executive Officer,
Managing Partner or LLC Managing Member– Devote full-time to the business during normal business
hours– Be the highest compensated individual– Have the ability to hire and fire– Set Policies– Have the ability to commit firm to the contracts– Have the ability to control the budget and financial
disbursement
Eligibility Criteria – Potential for Success
• Factors Considered:– Must be in business in its primary NAICs code for at least
two full years immediately prior to the date of its 8(a) application
– Proof of two years operation in the firm’s primary industry as verified by revenues reported in business tax returns
– Financial capability: sufficient capital, financial performance, bonding capacity, and manageable debts
– Managerial and Technical capability: performance on previous contracts, firm has the necessary personnel, licenses, facilities, and prior experience
Eligibility Criteria – Waiver of the Two Year Rule
• SBA may waive the two-year rule if:– The individual or individuals upon whom eligibility is
to be based have substantial and demonstrated business management experience
– The applicant has demonstrated technical expertise and has adequate capital to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) Business Development Program
– The applicant has successfully performed on government or non-government contracts
Eligibility Criteria
• One Time Eligibility– Each person can only participate once in the 8(a)
BD Program– Each business can only participate once in the 8(a)
BD Program
Assistance Available to BD Participants
• 8 (a) BD Contracting• 8(a) BD Mentor Protégé Program• Training – 7(j) and other community events• Introductions to procuring agencies and prime
contractors• Surplus Property Program
8(a) BD Contracting
• 8(a) Sole Source– Requirement offered to SBA– Contract price, including options, is $6.5M or less
for manufacturing NAICs codes– Contract price, including options, $4M or less for all
other contracts– Contract is negotiated with one 8(a) Business
Development participant– Contractor must comply with Limitations on
Subcontracting Clause
8(a) BD Contracting
• 8(a) Competition– Requirement offered to SBA– Competition limited only to 8(a) participants– In construction, competition may be limited
geographically– SBA confirms eligibility determination of
successful 8(a) participant– Contractor must comply with Limitations on
Subcontracting Clause
8(a) Mentor Protégé Program
• Written Agreement: a) Sets forth participants needs and is tied to a business plan. b) Mentor promises specific assistance to meet needs
• Agreement approved in SBA HQ• 8(a) participant (Protégé) and approved Mentor can
Joint Venture (JV) on federal contract and JV entity can be considered small (even if mentor is large)
• Agreement is reviewed annually by SBA as part of 8(a) Annual Review reporting requirement.
What’s Expected of 8(a) BD Participants
• Participants Must:– Upon acceptance into the 8(a) BD Program
complete an 8(a) business plan– Prepare and submit an annual review package
every year– Provide annual financial statements to SBA– Report any change in ownership and control to
SBA prior to the change
What’s Expected of 8(a) BD Participants
• Participants are strongly encouraged to:– Market to Federal Agencies– Attend all SBA-sponsored training and networking
events– Become familiar with 8(a) Business Development
Program requirements found in 13 CFR 124
Applying to the 8(a) BD Program• Online application available at www.sba.gov/8abd• Application is accessed after going through the 8(a) BD suitability
tool• Must be registered in Systems Award Management – S.A.M.-
sam.gov– Central Contract Registry (CCR)/Dynamic Small Business Search (DSBS)– Online Representations & Certifications Application (ORCA) and,
Excluded Parties List System (EPLS).• Be sure to provide all of the requested information• Applications are processed by SBA’s Division of Program
Certification & Eligibility (DPCE) in San Francisco for Region V (Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin).
Application Processing
• DPCE reviews application for completeness and advises firm of deficiencies within 15 days.
• If incomplete, applicant submits corrections within 15 days and a determination of completeness is made by DPCE within 10 days of receipt of a firm’s response.
• Applicant advised of outcome by the Associate Administrator within 90 days from the date completed application was accepted.
• If declined, applicant advised of right to request reconsideration within 45 days of decline date.
• If declined after reconsideration, there is a mandatory 12-month waiting period before firm may reapply.
Local SBA Contact Information
• SBA Minnesota District OfficeRandall Czaia (612) [email protected]/mn
Katherine Roth (612) [email protected]/mn
Questions?
Thank you for your interest in SBA’s Programs and Services.
