Do I qualify for small business contracting programs?
As the owner of a small business, you may qualify for specific U.S. Small Business Administration (SBA) programs based on a variety of factors. Qualified businesses are eligible to compete in procurements set aside for program participants. Qualifying and/or receiving certifications may place your business in a more competitive position in selling to the federal government and federal prime contractors.
Federal SBA Small Business Program Goals
Each year, the SBA sets small business and socio-economic prime contracting and subcontracting goals with every federal government agency. The minimum goals include:
23% of prime contracts for Small Businesses
5% of prime contracts for Women-Owned Small Businesses
5% of prime contracts for Small Disadvantaged Businesses including the 8(a) Program
3% of prime contracts for Service-Disabled Veteran-Owned Small Businesses
3% of prime contracts for HUBZone Small Businesses
Federal government programs that small businesses should consider include:
There is no formal certification for small businesses. Small businesses can self-represent their status in the System for Award Management (SAM).
To be eligible for government contracts reserved for small businesses, your business must meet size requirements set by the SBA. These size standards define the maximum size that a business—and its affiliates—can be to qualify as a small business for a particular contract. The SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.
In addition to meeting the numerical standards for small, your business must:
- Be a for-profit business of any legal structure,
- Be independently owned and operated,
- Not be nationally dominant in its field, and
- Be physically located and operate in the U.S. or its territories
This program encourages economic development in Historically Underutilized Business Zones– “HUBZones”–by providing access to more federal contracting opportunities. SBA certifies HUBZone businesses.
The HUBZone program is designed to help small businesses in defined areas–urban, rural, BRAC, Indian reservation, qualified disaster areas, and difficult development areas outside the U.S. mainland–to gain access to federal procurement opportunities. HUBZone areas are typically areas of low median household incomes, high unemployment, or both.
To qualify for the HUBZone program, your business must:
- Be a small business,
- Be at least 51 percent owned and controlled by U.S. citizens, a Community Development Corporation, an agricultural cooperative, a Native Hawaiian organization, or an Indian tribe,
- Have its principal office located in a HUBZone, and
- Have at least 35 percent of its employees live in a HUBZone
SBA has an interactive HUBZone map to determine if a business is located in a HUBZone. HUBZone maps are frozen through 2021 and will be updated every five years.
- The government limits competition for certain contracts to businesses in historically underutilized business zones. It also gives preferential consideration to those businesses in full and open competition.
- Joining the HUBZone program makes your business eligible to compete for the program’s set-aside contracts.
- HUBZone-certified businesses also get a 10 percent price evaluation preference in full and open contract competitions.
The 8(a) Business Development Program helps small, disadvantaged businesses compete in the federal government marketplace. SBA oversees the 8(a) Program.
The 8(a) Business Development Program is a business assistance program for small disadvantaged businesses that helps them compete in the federal government marketplace. SBA certifies 8(a) Businesses and this certification can last for a maximum of nine years.
- Be a small business,
- Be at least 51 percent owned and controlled by U.S. citizens who are economically and socially disadvantaged,
- Not have participated previously in the 8(a) program,
- Be owned by someone whose personal net worth is $750,000 or less, average adjusted gross income for three years is $350,000 or less, and have $6 million or less in assets,
- Have the owner manage day-to-day operations and also make long term decisions,
- Have all its principals demonstrate good character, and
- Show potential for success and be able to perform successfully on contracts
- Compete for set-aside and sole source contracts in the program,
- Have a Business Opportunity Specialist to help navigate federal contracting,
- Form joint ventures with established businesses through the SBA’s mentor-protégé program,
- Receive management and technical assistance, including business training, counseling, marketing assistance, and high-level executive development
There is no formal certification for Small Disadvantaged Businesses. Small businesses can self-represent their status as a Small Disadvantaged Business (SDB) in the System for Award Management (SAM).
- Be a small business,
- Be at least 51 percent owned and controlled by one or more socially and economically disadvantaged U.S. citizens,
- Be owned by someone whose personal net worth is $750,000 or less, and
- Have the owner manage day-to-day operations and also make long term decisions
The SBA defines small disadvantaged business as socially disadvantaged individuals as people that have been subjected to “racial or ethnic prejudice or cultural bias.” National origins that are presumed to be socially disadvantaged are: African Americans, Asian Pacific Americans, Hispanic Americans, Native American and Subcontinent Asian Americans. Members of other groups may qualify if they can satisfactorily demonstrate that they meet established criteria. Economically disadvantaged individuals must be able to show they have impaired access to financial opportunities that has hampered the ability to compete in the free enterprise system, in contrast to people in similar businesses who are not identified as socially disadvantaged.
For every agency except the Department of Veterans Affairs (VA) and Federal Aviation Administration (FAA), Service-Disabled Veteran-Owned Small Business (SDVOSB) status is self-represented in the System for Award Management (SAM). The Department of Veterans Affairs (VA) has a verification process for Service-Disabled Veteran-Owned Small Businesses (SDVOSB) and Veteran-Owned Small Businesses (VOSB).
The VA Vets First Verification Program affords VA-verified firms owned and controlled by Veterans and Service-Disabled Veterans the opportunity to compete for VA set-asides. The Center for Verification and Evaluation (CVE) verifies SDVOSBs and VOSBs. VA searches for SDVOBs and VOSBs prior to using any other set-asides in their procurements. VA Small Business Program Goals for Fiscal Year 2019 included 17.0 percent for Veteran-Owned Small Business (VOSB) and 15 percent for Service-Disabled Veteran-Owned Small Business. VA requires their VOSB and SDVOSB subcontractors to also be verified.
- Be a small business,
- Be a Veteran – A person who served on active duty with the Army, Air Force, Navy, Marine Corps or Coast Guard and who was discharged or released under conditions other than dishonorable. Reservists or National Guard may qualify.
- Service-Disabled Veteran – A Veteran possessing a VA disability rating between 0 and 100 percent or a Department of Defense disability determination.
- At least 51 percent of the business must be owned by one or more Veterans, and
- Veteran owner(s) must have full control over the day-to-day management of the business
- Verified business may use the VA SDVOSB or VOSB logos on their marketing materials,
- Inclusion in the Vendor Information Pages (VIP) database that is used by all VA contracting officers, and
- Participate in procurements set-aside for VOSB or SDVOSB
As of October 15, 2020, the Women-Owned Small Business Certification regulations are effective. These regulations terminate the ability of WOSB/EDWOSBs to obtain self-certification in the Certify system (https://certify.sba.gov) for the purposes of competing on awards within the WOSB Program applicable NAICS codes. Firms now must complete the new certification process in the beta.Certify system on (http://beta.certify.sba.gov) to compete for WOSB Program awards.
- Be a small business,
- Be at least 51 percent owned and controlled by women who are U.S. citizens, and
- Have women manage day-to-day operations and also make long term decisions.
To qualify as an economically disadvantaged business within the women’s contracting program, a business must also
- Be owned and controlled by one or more women, each with a personal net worth less than $750,000,
- Be owned and controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years, and
- Be owned and controlled by one or more women, each $6 million or less in personal assets.
- Participate in procurements set-aside for WOSB or EDWOSB in industries where WOSB and EDWOSB are underrepresented. The SBA maintains a list of eligible industries and the corresponding NAICS codes.