8(a) Business Development Program Creates Opportunities in the Federal Marketplace
What is the 8(a) Business Development Program?
The Small Business Administration’s (SBA) 8(a) Business Development Program was created to help small, disadvantaged businesses, particularly minority-owned businesses, compete and work with the federal government.
During the nine-year 8(a) program, participants can be awarded sole-source contracts up to $4.5 million for goods and services, and $7 million for manufacturing, as well as compete in larger 8(a) set-aside contracts. 8(a) companies can also participate in the SBA All-Small Mentor-Protégé program and form Joint Ventures with larger contractors to compete for 8(a) competitive contracts and other small business contracts to gain the ability to expand their business and compete for contracts that may normally be out of reach.
The 8(a) program offers small, disadvantaged businesses tremendous opportunities for sole source and limited competition contracts. However, 8(a) certification has stringent program requirements for participation approval, as well as annual compliance and reporting requirements.
What Are the 8(a) Program Qualifications and Certification Requirements?
To qualify for the 8(a) program, a company must be owned and controlled at least 51% by U.S. citizens who are socially and economically disadvantaged and have a personal net worth of $850K or less, excluding certain assets, average adjusted gross income of $400K or less and $6.5 million or less in total assets.
8(a) contractors must demonstrate progress during the nine-year program, the first four of which are spent in the development stage. Advancement must also be displayed during the transitional stage, which takes place in years five through nine, including progressing from sole-source awards to 8(a) competitive contracts, and transitioning to non-8a revenue. 8(a) contractors are also required to adhere to small business size standards to maintain eligibility for contract awards.
The SBA monitors and measures progress through annual reviews, business planning and regular evaluations.
What Are the SBA Annual Reporting and Compliance Requirements?
Each year, 8(a) participants must submit the Form 1450-8(a) Annual Update Review. Based on the 8(a)’s annual program year, businesses must disclose certain company data to remain in the program, including:
- Progress on meeting goals
- Annual personal financial statements, including net worth, for the individuals upon whom the 8(a) eligibility is based
- Fair market value of all assets
- Personal income
- Excessive withdrawal limitations
These should be monitored to ensure no issues with the SBA.
In addition, company financial statements are required. 8(a) participants with greater than $10 million in revenue must submit annual audited financial statements within 120 days of the company’s fiscal year. 8(a) participants with revenue between $2M and $10M must submit annual reviewed financial statements within 90 days of the company’s fiscal year. Finally, 8(a) participants with less than $2M in revenue must provide an annual in-house or compiled financial statement within 90 days after the close of the company’s fiscal year.
Are You Prepared to Apply for the 8(a) Program?
Planning and preparing your SBA 8(a) application is critical to gaining approval. 8(a) applicants should strictly follow 8(a) certification checklists to ensure the documents provided meet program requirements in both fact and appearance. In addition to answering many questions in the online application, numerous documents are required, including:
- Prior tax returns
- Financial statements
- Company history
- Personal financial statements
How to Apply for SBA Certification?
The actual application on the SBA website can be completed by the owner directly, but many companies benefit by having a financial advisor, who is knowledgeable on all aspects of the 8(a) program requirements, review the documents prior to submission.
