SBA 8(a) Certification for Veteran & Minority Owned

Businesses

Maria Asuelimen | AMA Consulting | Managing Partner

Becoming a Federal ContractorSmall Business Administration (SBA) manages certification for the US

Government Establish your firm’s corporate qualifications in private sector or as

a subcontractor Research agencies to ensure that government buys what you sell Obtain a DUNS number www.dnd.com Register your business with SAM www.sam.gov Create marketing materials: Website, Capability Statements and

Briefings, Business Cards, Brochures Get certified Win Work and Perform Excellently!!!

SBA Has 3 Core Certification Programs

• 8(a) Business Development• Woman Owned Small Business (WOSB).

Economically Disadvantaged Woman Owned Small Business (EDWOSB)

• HUB Zone Empowerment Contracting Program

The 8(a) Business Development Program Benefits

• Technical Assistance and Trainings• Networking opportunities • Sole-source contracts $4mil/$6.5mil• Mentor/ Protégés & JVs

– Financial– Technical– Contracting

U.S. Small Business Administration’s8(a) Certification

• An applicant or Participant must be at least 51 percent unconditionally and directly owned by one or more socially and economically disadvantaged individuals who are citizens of the United States, except for concerns owned by Indian tribes, Alaska Native Corporations, Native Hawaiian Organizations, or Community Development Corporations (CDCs). See §124.3 for definition of unconditional ownership; and §§124.109, 124.110, and 124.111, respectively, for special ownership requirements for concerns owned by Indian tribes, ANCs, Native Hawaiian Organizations, and CDCs.

8(a) Requirements• United States Citizen• Business Must be small per SBA’s Size Standard• Social & Economically Disadvantaged• The applicant individual must

– Own unconditionally at least 51% of concern – Control & Manage concern on fulltime basis– Good character: not eligible if debarred, suspended, arrested, on

parole, or probation, – Have proven skills and experience – Have two (2) years full-time business history in primary industry

classification with tax returns– Must meet SBA’s critical & broadly defined “Factors for Success”

Newly Enforced Criteria

U.S. CITIZENSHIP

Applicants not born in the U.S. must provide documentation to show that they are U.S. citizens.

-Certificate of NaturalizationOr

- U. S. Passport

Firms, including affiliates, must be small based on the applicant firm’s primary NAICS Code.

• Size is determined either by:

average 3 years revenues, or# of employees (manufacturers, dealers, wholesalers)

• See 13 CFR 121 Size Regulations or visit our website: www.sba.gov/size.

Size

Socially Disadvantaged

Individuals are persons who have been subjected to racial or ethnic prejudice or cultural bias because of their identities as members of groups without regard to individual qualities.

Members of these groups are presumed by SBA to be socially disadvantaged• African American• Asian Pacific American • Hispanic American (includes Spanish and Portuguese descent)• Native American• Subcontinent Asian American

Persons not members of designated groups must:

• Establish their case by preponderance of the evidence;• The disadvantage may stem from color, ethnic origin, gender,

physical handicap, long term environmental isolation, or other similar causes.

• The applicant must have personally suffered disadvantage in the United States;

• The disadvantage must be substantial or chronic;• The discrimination must have negatively impacted on

business advancement.

Essay on Economic Disadvantage

1. Family History2. Education History3. Employment History4. Company Ownership5. Company History6. Conclusion

Economically Disadvantaged

Individuals are economically disadvantaged persons whose ability to compete in the

free enterprise system has been impaired due to diminished

capital and credit.

Economic Disadvantage• Personal Net Worth: After excluding the individual’s equity in the firm and

equity in the primary residence, net worth may not exceed $250,000• Salary: average salary for the last 3 years may not exceed $250,000• Total Assets: all assets may not exceed $4million

NET WORTHLess equity in primary residenceLess equity in businessEquals adjusted net worth

(which must not exceed $250,000)

*When married, each spouse to show each individual’s joint or community property shares and separate property assets, liabilities & income

Potential for Success Factors

Proof of two years operation in the firm’s primary industry as verified by revenues reported in business tax returns for the two previous tax years, NOT the applicant’s anniversary date.

Financial capability: sufficient capitalization, financial performance, bonding capacity, manageable debts.

Managerial and Technical capability: performance on previous contracts, firm has the necessary personnel, licenses, certifications, facilities, prior experience.

Management capability: Education, experience and training of CEO and other managers, magnitude and complexity of past/current jobs, management systems.

Qualifications for ability to perform on Federal contracts: relevant contracting experience, ability to meet Federal procurement policies.

• Past Performance w/o “Affiliation” (Ref 13 CFR 124.106 (g) (4)

• Prior Government Contracting Experience• Profitability of Operations• Positive Working Capital (CA minus CL)• Positive Net Worth (TA minus TL)• Strong Cash Flow or Financing Sources• Reference 13 CFR 124.101-108

The 8(a) BD Application Requirements

Forms include:

•1010- Individual and Business.•1623- Certification regarding debarment, suspension and other responsibility matters•1790- Report on compensation paid for services in connection with getting federal contracts•912 – Statement of personal history•413 –Personal financial statement (Must be completed by all owners with over 10% ownership and spouses of married owners)•4506T _ Request for tax transcript

Visit us at www.sba.gov 16

Required Supporting DocumentsThe processing center will, at the minimum, request the following regarding each alleged affiliate:a. 3 years of financials and interim financial statements no older than 90 days;b. 3 years of business and personal tax returns, including all schedules, attachments, and proof of tax paid;c. If the firm is a corp:

- two years shareholder meeting minutes showing the election of the board of directors;

- two years board of director meeting minutes showing the election of the officers;

- stock certs and ledger; articles of incorporation, bylawsd.  If the firm is a LLC:

- articles of organization, operating agreement, membership ledgere.  If the firm is a sole prop, provide:

- assumed/fictitious name registration.f.  If the firm is a partnership:

- partnership agreement;

Corporations:

– Disadvantaged individuals must own at least 51% of each class of voting stock and at least 51% of the aggregate of all outstanding stock. (13 CFR § 124.105(d))

– Stock option plans for non-disadvantaged individuals will be viewed as if they have been exercised. (13 CFR §124.105(e))

All Businesses Certificate of good standing Copies of contracts, recommendation letter Narratives Documentation of all items listed on PFS

Good Character RequirementApplicant Business must not have:

Adverse information regarding possible criminal conduct by the applicant or its principals.

Violations of any SBA regulations.

Debarred or suspended individuals or firms.

Applicant firms and principals that lack business integrity as shown by an indictment, guilty plea, or civil judgment.

Any principal who is incarcerated or on parole or probation.

Evidence that the firm knowingly submitted false information during the application process.

Any firm or any of its principals that fail to pay financial obligations to the Federal Government.

Term of ParticipationSTART = date of approval

Year 12 developmental3 stage4

Year 56 transitional7 stage89

Continuation in the program is dependent on the firm’s continuing eligibility as a socially and economically disadvantaged owned/operated firm and continued compliance with the 8(a)BD participation agreement.

* Exception: military reservists who are called to active duty may suspend their participation in the program under certain circumstances.

Ineligible businesses: brokers *; debarred or suspended persons or concerns; nonprofit organizations. Franchises may be allowed contingent upon SBA’s review of the franchise agreement.

A business may participate only once. Even if ownership and control has completely changed, firm may not re-apply.

Any person who has used his/her disadvantaged status to qualify another firm shall be regarded as non disadvantaged.

* A broker is a concern that adds no material value to an item being supplied to procuring activity or which does not take ownership or possession of or handle the item being procured with its own equipment or facilities.

Ineligible Businesses

SBA’s “Waiver” Criteria for the Two (2) Year Requirement:

1. Management experience2. Technical expertise3. Adequate Capital 4. Successful performance5. Ability to perform on timely basis

Process of Application

Create account in SBA GLS and complete all required forms in BDMIS

Compile supporting documents and print forms and sign

Mail Hard copy forms to processing centerSubmit electronic forms in BDMIS Respond to SBA Inquiry Processing time is 90 days after receipt of

complete application

After Certification

Complete form 1010c Business Plan Annual Review Regulatory Compliance: Excessive

withdrawals, financial statement, reporting Contract Compliance: 8(a) contract work share Relationship with District Office

• “MDOT” CertificationThe Maryland DBE/MBE Programs

Maryland Department of Transportation

Ensure only bona fide disadvantaged and minority-owned firms receive the MBE/DBE/ACDBE certification.

Prevent “front” or “pass-through” companies from competing as MBE/DBE/ACDBE firms.

Maintain the integrity of the Program by deterring fraud and abuse. Meet constitutional requirements associated with race and gender-based

affirmative action programs.

Check out the MBE/DBE Program Manual: www. mdot.state.md.us/MBE_Program/Documents/2000_MBE_Manual.pdf

a Why Maryland Agencies Certify b

• Receive greater exposure to work opportunities on State, federal and local government contracts.

• Market your firm as an MBE/DBE vendor to prime contractors.

• Actively participate in meeting public and private sector diversity contracting goals.

• Assistance with Questions regarding the Certifications at mbe@mdot.state.md.us

a Benefits of Certification b

• The Disadvantaged Business Enterprise Program (DBE)

• The Minority Business Enterprise Program (MBE)

These Certifications are Similar but have Different Requirements

MD Has 2 Core Certification Program

• Businesses that are Non-Profit Organized to Promote the needs of the physical and mentally handicapped population, For-Profit, Disabled Individuals or Socially and Economically Disadvantaged Individuals

• United States Citizen or Lawfully Admitted Permanent Residence• Own unconditionally at least 51% of concern and is Disabled, Socially, or Economically Disadvantaged• Owner Control and Manage concern on fulltime basis• Business Must be Small per SBA’s Size Standard• Individuals are presumed to be eligible is they African American,

Female, Hispanic American, Asian American, Native American, Alaskan Native, a Non-Profit Organization, or Disabled.

Maryland DBE/MBE Requirements

DBEYou must be a For-Profit Business and have a Personal Net Worth of Less than $1,320,000

MBEYou can be a For-Profit or Non-Profit and have

a Personal Net Worth of Less than $1,674,928

Major Difference in DBE vs MBE

M i n o r i t y S t a t u sa Eligibility Standards b

Certain groups are presumed to be socially and economically disadvantaged:

WomenAfrican AmericansHispanic AmericansNative AmericansAsian Pacific AmericansSubcontinent Asian Pacific Americans

a Eligibility Standards bOwnership

• An MBE/DBE/ACDBE is a small business that is at least 51% independently owned and controlled by one or more socially and economically disadvantaged individuals.

• Owner must be a U.S. citizen or permanent resident.

• Firm must be in good standing with the Maryland Department of Assessments and Taxation.

Control• Ownership must be real and substantial.

Minority owner(s) must have managerial and operational control.

• Minority owner(s) must have technical expertise and experience relating to specific NAICS Codes.

• Firms are certified in specific areas of work as defined by the North American Industry Classification System (NAICS Codes).

Visit www.census.gov/naics to learnmore about NAICS Codes.

a Eligibility Standards b

P e r s o n a l N e t W o r t h

PNW is the net value of the assets held by an individual, and includes, if married, those assetsheld jointly or as community property with spouse.

a Eligibility Standards b

• MBE Cap:$1,674,928(adjusted annually)

• DBE Cap:• $1,320,000

S i z e

All applicant firms must be “small.”

• Size standards are set by the U.S. Small Business Administration (SBA) under Regulation 13 CFR Part 121.

• Size standards are determined by industry based on NAICS Codes.

Visit SBA’s website for more information regarding size standards:http://www.sba.gov/contractingopportunities/officials/size/index.html

a Eligibility Standards b

The certification process consistsof four steps:

(1) Application – Applicants must submit an application along

with all applicable supporting documentation. OMBE recommends completing the Uniform Certification Application for consideration as both an MBE and DBE.

http://www.mdot.maryland.gov/MBE_Program/Application

a Certification Process b

(2) Investigation – An MBE Officer reviews the entireapplication package then conducts an on-site interview with the applicant(s), performs a job-site visit (if applicable) and documents her/his findings in a written report.

(3) Determination – MBE Advisory Committeereviews the investigative report to evaluatewhether the applicant firm meets all programrequirements.

a Certification Process b

(4) Certification – The MBEAC Chairman issues a certification letter and the firm is listed in MDOT’s online directory of certified firms.

Once a complete application package has been received, it takes an average of 3-6 months to

complete the certification process.

a Certification Process b

• Certified firms are listed in MDOT’s online directory of MBE, DBE and/or ACDBE Firms. Visit www.mdot.maryland.gov Select the Minority/Disadvantaged Business Enterprise tab.

• Firms are recertified annually and may remain in the program as long as they continue to meet the program requirements.

• Certified firms are encouraged to request an Expansion of Services with OMBE as theirproducts and services grow.

a Upon Receiving Certification b

Register on eMaryland Marketplace – the State’s Internet-based procurementsystem. – Visit www.eMarylandMarketplace.com

Register with the Small Business Reserve Program – the State’s online, self-certification program for small businesses. – Visit www.dgs.maryland.gov

Know your competition – search MDOT’s online directory of certified firms– Visit http://mbe.mdot.state.md.us/directory/search_select.asp

a Marketing & Business Development b

Contact MDOT’sOffice of Minority Business Enterprise

at any point during the certification process.410-865-1269

mbe@mdot.state.md.us

OMBE staff members are available to conduct a preliminary review of yourapplication packet at MDOT Headquarters during regular business hours.

No appointment is necessary.

As you go through the certification process…talk with the experts!

• Get Certified

• Start Small

• Don’t forget about sub-contracting opportunities

• Find a mentor with experience in this area

• Leverage available training

• Build relationships

Doing Business with the Government

• Try, try, try again…then try again…then try again…

• Do your homework.

• Don’t expect it to happen overnight.

• Be willing to start small.

• If you don’t get the work, ask why.

• When you get the work…SHINE!

a Tips from Prime Contractors b

• www.sbdchelp.org

• 301-934-7583

Certification Presenter

Maria AsuelimenManaging Partner

AMA Consulting LLC 10104 Senate Drive. Suite 208

Lanham MD 20706P. (301) 577-9300F. (301) 577-9301C. (240) 601-4205

www.amaconsultonline.com