Some small business groups require formal certifications in order to receive the benefits of their specific small business program for purpose of federal procurement. Some groups merely self-represent their business status when completing the solicitation representations and certifications clauses.
SBA's 8(a) Business Development Program
Section 8(a) of the Small Business Act, as amended, authorizes SBA to contract for goods and services with federal agencies. SBA then subcontracts actual performance of the work to socially and economically disadvantaged small businesses, which have been certified by SBA as eligible to receive these contracts. The major advantage of this program is that it allows the government to contract, on a noncompetitive basis, with socially and economically disadvantaged small businesses. SBA also offers managerial, technical, and financial support to participating firms.
DOT gives special emphasis to identifying procurement requirements for matching with the capabilities and potential of approved 8(a) firms. DOT has obtained special authority to negotiate directly with 8(a) firms on the behalf of SBA.
Program participation is divided into two stages.
- The developmental stage is designed to help 8(a) certified firms overcome their economic disadvantage by providing personalized business assistance in expanding their business and fostering meaningful business relationships.
- The transitional stage is designed to help program participants become more effective in both the large business and government sector market in dealing with complex business deals and to prepare them for post 8(a) program expansion and development. Formal certification is required by the SBA.
You can learn more about the 8(a) program on the SBA web site at: http://www.sba.gov/8abd/
SBA's HUBZone Certification
FAR - Part 19.13
The HubZone Empowerment Contracting program provides federal-contracting opportunities for qualified small businesses located in distressed areas. This program was enacted into law as part of the Small Business Reauthorization Act of 1997 and is administered by the SBA. The program encourages economic development in historically underutilized business zones (HUBZones) and through the establishment of preferences. SBA certified firms for eligibility to receive HUBZone contracts and maintains a listing of qualified HUBZone small businesses that federal agencies can use to locate prospective vendors.
You can learn more about the HUBZone program and apply electronically on the SBA web site at:http://www.sba.gov/category/navigation-structure/contracting/working-with-government/small-business-certifications-audiences/hubzone-certification
Veteran and Service Disabled Veteran Certification
To qualify as a Veteran-Owned Small Business (VOSB), a business concern must be at least 51% owned by one or more eligible veterans; or, in the case of any publicly-owned business, at least 51% of the stock is owned by one or more veterans, and whose management and daily business operations are controlled by such veterans. There is no certification program for VOSBs.
In 2003, Congress created a procurement program for small business concerns owned and controlled by service-disabled veterans (commonly referred to as the "Service-Disabled Veteran-Owned Small Business (SDVOSB) Procurement Program"). The purpose of the program is to provide federal contracting assistance to SDVOSBs.
The SDVOSB program requires that federal contracting agencies establish and achieve a participation goal of 3% of the total value of all prime contract and sub-contract awards for each fiscal year for small businesses owned and controlled by veterans with service-connected disabilities.
There is no federal SDVOSB certification program. The service disabled veteran business owner self represents his or her service-disabled status and small business status in the contract representations and certifications.
To be eligible for the SDVOSB program, a veteran must be able to produce one of the following stating that s/he has a service-connected disability in the event of a protest:
- Adjudication letter from the Veterans Administration; or
- Department of Defense Form 214, Certificate of Release or Discharge from Active Duty.
According to the Center for Veteran’s Enterprise, Defense Form 214 is needed to prove that the individual is honorably discharged and it also documents the type of service disability. The letter from VA is needed for confirmation that individual is eligible under the program and that there is a disability.
To be seen as a SDVOSB, a small business concern must meet the following two conditions through a self-certification process:
- At least 51% owned by one or more Service-Disabled Veterans or, in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more Service-Disabled Veterans; and
- Management and daily business operations are controlled by one or more Service-Disabled Veterans or, in the case of a veteran with a permanent and severe disability, the spouse or permanent caregiver of such a veteran.
More information on the SDVOSB Program can be found on the Veterans Affairs website at: http://www.vetbiz.gov/. Also, FAR 19.14 provides details of the program at http://www.arnet.gov/far/current/html/Subpart%2019_14.html.
Woman-Owned Small Business Status
To qualify as a woman-owned business (WOB), a small business concern must meet the following two conditions:
- At least 51% owned by one or more women, or, in the case of any publicly owned business, at least 51% of the stock of which is owned by one or more women; and
- Management and daily business operations are controlled by one or more women.
In 1994, Congress established a government-wide goal that WOBs be awarded at least 5% of the total value of all prime contract and subcontract awards for each fiscal year; however, there are no set-aside procurement programs or incentives for awarding a contract to a WOB.
The federal government does not require any formal certification for women-owned small businesses that are proposing as prime contractors on federal procurements. If a business meets the two conditions stated above, that business can “self-certify.” Should a WOB status be challenged upon procurement award, the procuring agency may request proof of the firms WOB status.
More information about WOB programs can be found on the SBA website athttp://www.sba.gov/aboutsba/sbaprograms/onlinewbc/index.html.
Why Be Certified?
The SBA Certification in the SDB, the 8(a) DBE, or the HUBZone Program provides benefits by:
- Bringing more dollars to an eligible company through SDB procurement mechanisms;
- Targeting competition to specific industries where there are disparities; and
- Increasing economic activity in distressed communities.
SDB certified companies may benefit in one of two ways. First, an SDB can qualify for a price evaluation adjustment when bidding as a prime contractor. Second, all prime contractors are encouraged to use certified SDB's as subcontractors through mandated evaluation factors and optional monetary incentives.
Small businesses are considered SDB's upon successful certification into the SBA 8(a) DBE Program. In addition to the benefits available through the SDB Program, 8(a) firms enter into a nine-year partnering relationship with the SBA.
HUBZone certified businesses can qualify for specific procurement benefits. Businesses that use these benefits are also helping to improve the economy of the distressed area.
SBA Size Standards
SBA has a Size Standard for all private sector industries in the U.S. economy. SBA uses the North American Industry Classification System (NAICS) to identify the industries.
Size Standards (usually stated in number of employees or average annual receipts) represent the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a Small Business for SBA's programs and for federal contracting programs.
If the size of a business exceeds the Size Standard for its overall industry group, it may still be a Small Business for the specific NAICS industry in that group. Some industries have higher size standards than the general one for the industry group. A table of Size Standards by NAICS industry is on SBA's Size Standards webpage athttp://www.sba.gov/sites/default/files/Size_Standards_Table.pdf.
For federal contracting, a Small Business must meet the Size Standard stated in the solicitation. The contracting officer designates the Size Standard of the procurement by selecting the Size Standard established for the NAICS industry that best describes the principle purpose of the procurement.
More information on the SBA size standards can be found on the SBA website at http://www.sba.gov/content/small-business-size-standards.