Small Businesses Get a Boost from SBA Contracting Programs
The Small Business Administration administers several programs that are designed to help small businesses market to both large business and government procurements. One of these, the Small Disadvantaged Business (SDB) Certification Program, is aimed at helping disadvantaged small businesses compete effectively.
The Small Disadvantaged Business Program (SDB Program) is administered by SBA and designed to help small disadvantaged businesses compete in the American economy by providing specific advantages and benefits in the federal procurement process. It is now a self-certifying check box within CCR.
(Note that companies that are certified as 8(a) firms automatically qualify for SDB certification. The 8(a) program is explained below.)
If you can qualify as a small disadvantaged business (SDB), then you are entitled to participate in special preference programs aimed at encouraging participation by SDBs in government business.
SDB certified companies may benefit in two main ways. First, SDBs are eligible for special bidding benefits. An SDB can qualify for a price evaluation adjustment of up to 10 percent when bidding on federal contracts in certain industries or services where the U.S. Department of Commerce has determined that SDBs are underrepresented because of the effects of ongoing discrimination.
As of October 1, 1998, SDBs are eligible to receive the price credit when competing in the following industry categories:
|Industries ||Services |
|Agriculture ||Electric |
|Fishing ||Gas |
|Forestry ||Sanitary services |
|Construction ||Wholesale trade |
|Mining ||Retail trade |
|Manufacturing ||Finance |
|Transportation ||Insurance |
Second, the program also provides evaluation credits to prime contractors who achieve SDB subcontracting targets, which in turn boosts subcontracting opportunities for SDBs. All prime contractors are encouraged to use certified SDBs as subcontractors through mandated evaluation factors and optional monetary incentives. The program is intended to help federal agencies achieve the government-wide goal of 5 percent SDB participation in prime contracting.
To receive this credit, a contractor must confirm that a joint venture partner, team member, or subcontractor representing itself as a small disadvantaged business concern is, in fact, identified as a certified small disadvantaged business. Confirmation may be made by checking the PRO-Net database maintained by the Small Business Administration or by contacting the SBA's Office of Small Disadvantaged Business Certification and Eligibility.
The extent of participation of SDB concerns is evaluated in competitive, negotiated acquisitions expected to exceed $500,000 ($1,000,000 for construction). The SDB preference program does not apply in small business set-asides, 8(a) acquisitions, negotiated acquisitions where the lowest price technically acceptable source selection process is used, or contract actions that will be performed entirely outside of the United States.
Note that this price credit does not apply to government procurements that are below the simplified acquisition threshold of $100,000, procurements that are set aside for small business (i.e., small business set asides, HUBZone set asides and procurements under the SBA 8(a) program).
We also want to mention a new benefit. Under recent federal procurement regulations, the SBA certifies SDBs for participation in federal procurements aimed at overcoming the effects of discrimination.
Eligibility Requirements for SDB Program
Any small business wanting to take advantage of the SDB Program must
meet specific social, economic, ownership, and control eligibility
criteria. To qualify as a Small Disadvantaged Business (SDB), the
business must be a small business concern that is at least 51 percent
owned and controlled by one or more individuals who are both socially
and economically disadvantaged.
Socially Disadvantaged Individual Criteria
Socially disadvantaged individuals are those who have been subjected
to racial or ethnic prejudice or cultural bias within American society
because of their identities as members of groups and without regard to
their individual qualities. The social disadvantage must stem from
circumstances beyond their control.
To receive the benefits of the SDB Program, a small business must be certified by the SBA that it meets all of the requirements.
The U.S. population is broken down into two groups: designated groups
and non-designated groups. For designated groups, the law allows for a
presumption of discrimination. However, keep in mind that the
presumption of discrimination may be rebutted.
Businesses whose owners are members of one of the following groups are presumed to qualify:
- African American
- Hispanic American
- Native American (American Indians, Eskimos, Aleuts, or Native Hawaiians)
- Asian-Pacific American (persons with origins from Burma,
Thailand, Malaysia, Indonesia, Singapore, Brunei, Japan, China, Taiwan,
Laos, Cambodia (Kampuchea), Vietnam, Korea, The Philippines, U.S. Trust
Territory of the Pacific Islands (Republic of Palau), Republic of the
Marshall Islands, Federated States of Micronesia, the Commonwealth of
the Northern Mariana Islands, Guam, Samoa, Macao, Hong Kong, Fiji,
Tonga, Kiribati, Tuvalu, or Nauru)
- Subcontinent Asian (Asian-Indian) (American persons with origins
from India, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Maldives
Islands, or Nepal)
Individuals in non-designated groups can qualify if they can
successfully make an argument for discrimination based on certain types
of evidence, which include all of the following:
- At least one objective distinguishing feature that has
contributed to social disadvantage such as gender disability, sexual
orientation, or living in an economically isolated community
- Personal experiences of substantial and chronic social disadvantage
- Negative impact on one's education, employment entry, and advancement in the business world.
Economically Disadvantaged Individual Criteria
Economically disadvantaged individuals are socially disadvantaged
individuals whose ability to compete in the free enterprise system has
been impaired due to diminished capital and credit opportunities as
compared to others in the same or similar line of business who are not
In assessing the personal financial condition of an individual
claiming economic disadvantage, his or her net worth may not exceed the
limit set by law. All individuals must have a net worth of less than
$750,000, excluding the equity of the business and primary residence.
Successful applicants must also meet applicable size standards for small businesses in their industry.
Once a firm has self certified, it is added to the online registry of SDB-Self Certified firms maintained in the CCR
and Dynamic Search Databases. Certified firms remain on the list for
three years. Contracting Officers and large business prime contractors
may search this online registry for potential suppliers.
Requiring certification for subcontracts is not required by law, and
may contradict the express language of the Small Business Act. In this
regard, section 8(d)(3)(F) of the Small Business Act (15 USC
673(d)(3)(F)) states: "Contractors acting in good faith may rely on
written representations by their subcontractors regarding their status
as a small business concern owned and controlled by socially and
economically disadvantaged individuals." This language clearly suggests
that Congress intended to allow large business prime contractors to rely
on the self representation of subcontractors claiming to be SDBs.
Application and Certification for Section 8(a) Status
Prior to applying for certification, the SBA highly recommends that you take their online training course
on SBA certification eligibility available. Look under the topic
"Government Contracting" and click on "Certification Programs." It would
be nice to be certain you meet the criteria before investing your time.
Recently, the SBA has automated the 8(a)/SDB process to speed it up
and eliminate bottlenecks. The SBA hopes this process will revolutionize
the way the Business Development Program Office oversees 8(a) and Small
Disadvantaged Business certification, resulting in a more streamlined,
user-friendly, and an easier method for the applicant to apply for
certification. The SBA has created an online user guide for program applicants.
- To do business with the Federal government and to be certified
under the 8(a) Program or as an SDB, you must register in the Central
Contractor Registration (CCR) database, and complete the Small Business
Supplemental Page within CCR. This Supplemental Page is identified at
the completion of your CCR registration and before you close out of the
site. As a government-wide single point of vendor registration, CCR is a
key aspect of streamlining and integrating electronic commerce into the
federal procurement process.
- You must register for an account in the SBA's General Log-in System (GLS), the single log-in point for all of its services. This assists SBA in improving its service delivery to their clients.
- You must download, sign and submit your notarized Authorization form,
also referred to as a "signature" authorization. This authorization is
sent separately to the SBA. Upon the receipt of this document, the SBA
will begin the time frame for screening and reviewing of the entire
- Log-in to the 8(a)/SDB Application via SBA General Log-in System.
- Complete and submit your application form. Make sure you use the
help screens designed to guide you along when you submit your
The length of time needed to review your application will depend on
its complexity. For example, a sole-proprietorship 100-percent-owned by a
designated group member will not take as long as a multi-owned
corporation located in a community property state. The regulatory time
frames are 90 days for a response from an 8(a) application and 75 days
for a response from an SDB application. There are two parts to reviewing
any application. First, the SBA makes certain they have all the
information required to process the application, and then the
information is reviewed and analyzed.
Your electronic application information is protected by a
username/password-based authentication system for all interactions. The
process uses secure, 128-bit encrypted communications to ensure that
system passwords cannot be detected by network intruders. For further
Please make sure that your submitted answers are truthful and
accurate, as there are serious legal consequences for falsifying
information in an 8(a)/SDB application that may include fines,
imprisonment or both.
Help Getting Certified
You can work directly with SBA in completing your application and
providing the required documentation, but if there is something wrong
with your paperwork, you will be denied certification and given 45 days
in which to respond to the rejection. If you don't satisfactorily
address the deficiencies within that time frame, you will have to wait a
year to reapply.
Don't forget the PTACs and Small Business Development Centers may be
of help with your application, so be sure check if your local office can
Keep in mind that, no matter how you choose to complete your paperwork and application, you
are the one ultimately responsible for making sure that all questions
are accurately addressed and all required information is provided.
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