Understanding,Obtaining & Leveraging the SBA s 8(a) Certification Pedro J. Acevedo 787-758-4747 x. 3177 pedro.acevedo@pridco.pr.gov
Federal Contracting Center (FeCC) a Procurement Technical Assistance Center PRIDCO DLA A division of the Puerto Rico Industrial Development Company (PRIDCO) Cooperative agreement with DoD Part of a nationwide network of 97 PTACs 30 years of experience
Goal Mission Puerto Rico Federal Contracting Center To proactively position businesses in the federal government market while actively assisting and matchmaking companies with federal contracts available. To generate employment and improve the general economy of Puerto Rico by assisting business firms to obtain and perform under federal state, and municipal government contracts.
Federal Contracting Center Services Technical Support Marketing Training Advocacy DUNS Number SAM SBA and VA Certifications One-on-one counseling Bid preparation GSA Schedules Market intelligence Identify & match bids Forecasting Capturing plan Help you decide if this is the right market for your firm Federal Contracting education Matchmaking events E-training Small Business Administration Federal Procurement Policy Trade Missions
Course Objectives By the end of the presentation you will: Understand how the 8(a) program works; Be able to determine if this program is right for your business; Understand the certification requirements and application process according to your business legal structure; Review key questions; Start the application process if applicable, and Recognize Best and Worst Practices for Certified 8(a) Firms
8(a) Program Purpose Help small disadvantaged businesses compete in the marketplace Prepare small disadvantaged firms for procurement and other business opportunities Promote the business development of small business concerns owned and controlled by socially and economically disadvantaged individuals Promote the competitive viability of such concerns
Regulatory Perspective The 8(a) Business Development Program was established by: Section 8(a) of the Small Business Act of 1953 (Section 204 of Public Law 100-656) Governed by: 13 CFR 124.100 124.704 (Subpart A) and FAR Part 19.800 19.812
What the Program is Not Not a contracting program 8(a) program participants are not in any way guaranteed or entitled to receive federal contracts Program does support small disadvantaged firms with management and technical assistance to help them compete for contracts and other business opportunities
Program Benefits Sole source contracts up to $7 million (manufacturing NAICS codes) or $4 million (other NAICS codes) Unlike other socioeconomic programs, no requirement that agency determine that it is unlikely to receive multiple competitive offers Access to 8(a) set-aside contracts Competition limited to active 8(a) participants Joint ventures, teaming and Mentor-Protégé Program Eligibility as SDB subcontractor to meet large primes subcontracting goals
Term of Participation Maximum 9 year participation in the program, beginning from the date of SBA approval One time eligibility for disadvantaged individuals and businesses Program term can be shortened by voluntary withdrawal, early graduation, or termination Continuation in the program is dependent on: Remaining eligible as a socially and economically disadvantaged firm Staying in compliance with the 8(a) BD participation agreement
Role of Participating 8(a) Firms 8(a) client firms must be competitive and market themselves competitively Successful 8(a)firms capitalize on available business development resources, educate themselves on government buying needs, and market themselves based on skills and ability to meet such needs
Basic Eligibility Requirements Small business in primary NAICS code At least 51% unconditionally owned and controlled by one or more individuals who are: Socially disadvantaged Economically disadvantaged U.S. citizens residing in U.S. Good character Has potential for success
Socially Disadvantaged People presumed to be socially disadvantaged are individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identification as a member of certain groups without regard to their individual qualities Black American Asian Pacific American Hispanic American (includes individuals of Spanish & Portuguese decent) Native American Subcontinent Asian American Contrary to common misconception, 8(a) Program is not limited to minorities
Economically Disadvantaged To meet economic eligibility requirements for the program, a firm s net worth must be less than $250,000 --after excluding the individual s equity in the firm, unavailable pension funds and equity in the primary residence Individuals with an average three-year income over $250,000 are not considered economically disadvantaged. If applicant exceeds $250,000, may be able to rebut presumption of ineligibility by showing that income was unusual and not likely to occur in the future, such as with an inheritance. Individuals with total personal assets over $4.0 million are not considered economically disadvantaged
Economically Disadvantaged After 8(a) Program admission, net worth threshold rises to $750,000 and income threshold rises to $350,000 SBA may early graduate an 8(a) firm if the owner exceeds these thresholds
Ownership and Control Persons or principals used to determine, socially and economically disadvantaged status, must be the direct and unconditional majority owners (at least 51%) of the applicant business Individuals used as the basis to determine program eligibility must also be engaged full time in the daily management and operation of the business Hold the highest position of President or Chief Executive Officer, Managing Partner, or LLC Managing Member
Ownership and Control Be the highest compensated individual Have the ability to hire and fire employees Set policies Have the ability to commit the firm to contracts Have the ability to control the budget and financial disbursements
Immediate family members Individual generally cannot use disadvantaged status to qualify a company for 8(a) certification if the individual has an immediate family member who is using, or has used, his or her status to qualify another company. General rule is one 8(a) company per family SBA may waive prohibition if the two concerns have no connections, either in the form of ownership, control or contractual relationships, and provided the individual seeking to qualify the second concern has management and technical experience in the industry.
Citizenship, Size, Management & Time 8(a) applicants must be citizens of the United States Meet small business size standards based on its primary NAICS code https://www.sba.gov/contracting/getting-startedcontractor/make-sure-you-meet-sba-size-standards/table-smallbusiness-size-standards Demonstrate sound management and technical experience In business for two years
Sound Management Applicant business has been in operation for two years (two year rule) in the firm s primary industry as verified by revenues reported in the two most recent years of federal business tax returns Evidence of financial capability Managerial and technical experience of the firm s managers Performance on previous contracts (government or commercial) Firm has the necessary personnel, licenses, certifications, facilities, equipment, etc. to perform on contracts
Waiver for the Two Years Rule 1. Individual or individuals upon whom eligibility is to be based have substantial and demonstrated business management experience 2. Applicant has demonstrated technical expertise to carry out its business plan with a substantial likelihood for success if admitted to the 8(a) program 3. Applicant has adequate capital to carry out its business plan 4. Applicant has a record of successful performance on contracts from governmental and non governmental sources in the primary industry category 5. Applicant has, or can demonstrate its ability to timely obtain the personnel, facilities, equipment, and any other requirements needed to perform on contracts
Deciding Factors Good Character Adverse information regarding possible criminal conduct by the applicant or its principals 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
Applying to the 8(a) BD Program 1. Verify eligibility compliance 2. Gather what you need (refer to checklist) 3. Review user guide & sample 8(a) application 4. Ask questions 5. Ensure that your SAM and DSBS records are up-dated 6. Register in SBA s General Login System (GLS) 7. Complete and submit the online 8(a) program application and supporting documents
How long does it take to get certified? The periods for the certification process for the 8 (a) BD programs are set in regulation. For the 8(a) BD program, there is a 15 days screening period and a 90 day overall processing time.
What happens if you are not certified If your initial application is declined, you can request that SBA reconsider its decision. You have 45 days from the date you receive SBA s initial decision to request it be reconsidered. SBA has 45 days from the date of receipt of your request to issue a final decision. If you are declined on reconsideration, you must wait one year to reapply.
Supplemental Checklist Please make sure that you have downloaded the checklist
https://eweb.sba.gov/gls
Best and Worst Practices according to Steven J. Koprince Managing Partner Koprince Law LLC
Best Practice Forge good, strong relationship with local SBA office The SBA office has a significant role in whether you get sole source contracts, the speed at which various filings (e.g., JV agreements) are reviewed, and the seriousness with which any minor infractions are treated
Worst Practice Assume that your SBA representative is your best friend The 8(a) representative is responsible for two (sometimes inconsistent) functions: 1. Helping your business grow and develop 2. Enforcing the 8(a) Program rules Don t forget the cop part of the SBA s role
Best Practice Know exactly what you intend to do with your 8(a) certification before you get it If possible, line up potential sole source awards, prime contract awards, and mentor Plan, plan, plan An 8(a) certification is a nine-year hunting license, but you have to hunt. 8(a) contracts don t rain down from heaven
Worst Practice Assume that you can do stuff without SBA prior approval Many seemingly ordinary corporate actions may require SBA s prior approval New minority owner Joint venture agreement Change of business structure (i.e., corporation to LLC) When in doubt, ask the SBA first
Best Practice Understand, and timely satisfy, all reporting requirements SBA takes Annual Report very seriously, Don t be late! Recognize and comply with additional reporting obligations, such as JV certifications or reports regarding business development consultants When in doubt
Summary & Actions Decide if this program is right for you, if it is: Set-up an appointment with a FeCC counselor Gather the required documentation Submit the application Conduct thorough research specific to 8(a) opportunities Develop and execute a sound marketing strategy
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Remember that you are not alone; we have 31 years of experience in helping companies doing business with the Federal Government. Pedro J. Acevedo Program Manager pedro.acevedo@pridco.pr.gov 787-758-4747 x. 3177