If you’re a small business owner interested in government contracts, you’ve probably heard about the SBA’s 8(a) Business Development Program. The 8(a) Program itself is complex, and its eligibility rules are some of stricter rules out there; but its potential benefits are tremendous. In this Back to Basics post, I’ll break down some of the very basics about the 8(a) Program. But don’t worry, not only will I follow this post up with another to unpack more of the complexities, I have also included links throughout this post to other posts doing the same.
What is the 8(a) Program?
Like SBA’s other contracting programs, the 8(a) Program is a business development program—its purpose is to assist eligible disadvantaged small businesses compete in the American economy through business development.
What are the benefits to participating?
Participating in the 8(a) Program opens several doors to success. Each year, the federal government’s goal is to award at least 5% of all prime contracts to small disadvantaged businesses, which include 8(a) Program participants. To meet this goal, the government issues billions of dollars of awards annually to 8(a) Program participants through sole-source awards and set-asides. Participants are also allowed to join in mentor/protégé and joint venture relationships to further increase their ability to participate in the American economy. Additionally, the SBA provides targeted business development counseling to 8(a) participants.
Is your business eligible to participate?
Given these incentives, the desire to participate in the 8(a) Program is obvious. But can your business participate? That is the real question.
SBA has laid out detailed eligibility requirements, and has recently updated some of those rules too. A future post will discuss them in greater detail but, in general, a business typically must be small under its primary NAICS code, and be unconditionally owned and controlled by one or more socially– and economically-disadvantaged individuals who are of good character. (There are some separate requirements for businesses owned by Indian Tribes, Alaska Native Corporations, Native Hawaiian Organizations, and Community Development Corporations.) The business, moreover, must maintain its eligibility throughout the course of its participation.
One more thing: 8(a) Program participation is a one-time thing. So if your business has previously participated in the 8(a) Program, or if you’re a disadvantaged individual that has already participated, the SBA won’t allow you to participate again—although Tribes, ANCs, NHOs and CDCs have some different rules.
How long can your business participate in the 8(a) Program?
The presumptive term is 9 years. But this term can be shortened by the participant or the SBA—if, for example, the concern is successful enough to graduate from the Program or fails to maintain its eligibility. The term cannot be lengthened, although it can be temporarily suspended in rare instances. In early 2021, SBA also issued a rule providing a limited one-year 8(a) term extension for certain 8(a) Program participants affected by the COVID-19 pandemic.
How can your business apply?
Applications must be submitted electronically to the SBA and must include any supporting information requested by the SBA (like corporate organization documents and personal and business tax returns). Your local SBA office should be able to provide a list of all required documents.
Participating in the 8(a) Program can be a great way to grow your small business. Look for additional Back to Basics posts discussing its requirements and benefits in greater detail.
Questions about this post? Email us or give us a call at 785-200-8919.