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.

The Dynamic Small Business Search (DSBS) is a powerful online search tool that has 2 great uses:

1. A place to conduct market research on competitors, prospects or partners
2. An important marketing tool if you are a small business and want to win a government contract

Background

One of the Small Business Administration’s (SBA) responsibilities is to negotiate with federal agencies a percentage of their annual expenditure that they will set aside for small businesses.  They actually negotiate the goals with each federal agency on an individual basis but the overall small business goal today is 23%.  Within this there are also specific goals for women-owned small businesses, service-disabled veterans, small disadvantaged businesses and Hubzone companies.

Are you a small business?

That is not a simple question to answer unfortunately.  The Small Business Act defines a small business as one “that is independently owned and operated and which is not dominant in its field of operation.”  The practical definition varies from industry-to-industry but is usually based on a mixture of employee numbers and annual receipts.  The SBA has a table that will help you understand if you qualify based on your NAICS code.  Access the table here.

Research tool

As a research tool, the DSBS provides a truly rich resource.  When you access it you are presented with an advanced search tool that allows you to generate a list of companies based on multiple criteria including geography (down to county level), industry, revenue and number of employees.  You are then presented with a table of companies that match your chosen criteria.  So, for example a search for companies that made uniforms for police, firefighters or school bands in Ohio returned 19 companies that were qualified as small businesses.  For each company you are able to drill down further and receive information on contacts, organization, ownership, certifications, products and even details of reference companies for some businesses.

Marketing tool

The DSBS is a database you should consider being part of if you are seeking to win government contracts as it is used by agencies to find companies that are certified as small businesses by the SBA.

By having a profile, you have the ability to present your company’s capability to anyone using the tool. While it is of particular use to federal agencies because they have to purchase a certain amount from small businesses, purchasing agents in local government agencies also frequently use it.  This is where decision-makers will go when they need to find out whether small businesses can provide them with the good or service they need.  In addition, as it is free and accessible by any company, it is also used by prime and other contractors seeking small businesses to be subcontractors and/or partnership opportunities.

How to be included in the DSBS?

The DSBS is part of the Central Contractor Registration database.  When you register with the CCR you are given the option to indicate whether you are a small business during registration.  If so, you will be asked to enter certain additional information that will populate the SBA so it can be accessed through the DSBS.

Just a final comment.  The user interface and design has a lot to be desired and can be pretty off-putting but don’t let that deter you, as it really is a valuable tool worth exploring.

UPDATE: If you are looking to find out what your Dynamic Small Business Search number is, I have written a post on it here