If you are a small business considering or actively seeking to bid on federal contracts it is crucial that you look into what small business certifications are available to you.
This year federal spending is expected to reach its highest levels since World War II and account for nearly $1 out of every $4 in the US economy. If there was ever a time to be thinking about government as a customer it is now.
Under the Small Business Reauthorization Act of 1997, the federal government has a goal of awarding at least 23% of contracting dollars to small businesses each fiscal year. In addition, Federal Acquisition Regulation (FAR) 19.502-2(a) states that a purchase with “an anticipated dollar value exceeding $3,000, but not over $100,000, is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery.”
As a result the Federal government will award contracts with an aggregate value of over $85 billion this year to small businesses. There are very few other customers that are predisposed to small business in this way.
Within the 23% goal there are several smaller goals focused on different types of businesses as follows:
- Small Disadvantaged Businesses – 5%
- Women-Owned Businesses – 5%
- Disabled Veteran-Owned Businesses – 5%
- HUBZone Businesses – 3%
In order to be able to take advantage of contracts that are “set-aside” for these types of businesses you need to be qualified. It is up to the company itself to self-certify as to whether it qualifies as a small, small disadvantaged, women-owned, veteran or disabled-veteran owned business. I covered what the definition of a small business is here.
The Small Business Administration administers 2 programs which it provides formal certifications for:
- HUBZone
- 8(a) Business Development Program
The benefits of being qualified in these programs are considerable and warrant their own posts which I will do later this week.
As a footnote, until October 2008, the SBA formally certified Small Disadvantaged Businesses (or “SDB”) but this program was suspended as it was deemed too cumbersome and costly. Any business that has 8(a) status is also considered an SDB.
Finally, please note that this post only relates to federal contracting. At the local level there will be other qualifications and certifications for small businesses that I will separately cover another time.
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The new administration should absolutely include veterans programs and especially programs for veteran owned businesses into their economic recovery planning.
Right now there are many small veteran owned businesses that are having a tough time keeping afloat. Any programs that help our veterans maintain and grow their respective businesses is a good thing for our economy and, more importantly, for America.
Check out some of the current programs online that help veteran owned businesses including many that are not managed (probably a good thing) by any government agency. VeteranOwnedBusiness.com http://www.VeteranOwnedBusiness.com is a perfect example. It’s a great resource for agencies, consumers other businesses and fellow veterans to search for and conduct business directly with businesses owned by United States military veterans.
Rachel – I agree entirely. That’s a nice resource
Good article. Should help some of the entrepreneurs out there.
When I ran a startup business consulting division at my previous company, the 2nd most common question I used to get from clients was about how they could get Federal contracts and how they should bid on them. It is one hot topic, since we know that the Feds pay on time, though it does take them forever.
In case you wonder, #1 question was “how do I get to VCs” to which my answer to 99% of them used to be – go buy a lottery ticket, you have better chances there.