SBA Contracting Assistance Programs

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SBA Contracting Assistance Programs

• 8(a) Business Development Program
• HUBZone Program
• Small Disadvantaged Business Program

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SBAs 8(a)BusinessDevelopmentProgram
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8(a) BD Program Objectives

• (Sec. 204 of Public Law 100-656)
• to promote the business development of small
  business concerns owned and controlled by
  socially and economically disadvantaged
  individuals

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Term of ParticipationStart Date is Date of
Approval

• Year 1
• 2 developmental
• 3 stage
• 4
• Year 5
• 6 transitional
• 7 stage
• 8
• 9
• Continuation in the program is dependent on
  the firms continuing eligibility as a socially
  and economically disadvantaged owned/operated
  firm and continued compliance with the 8(a)BD
  participation agreement.

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Personal Eligibility Criteria

• Social Disadvantage
• Economic Disadvantage

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Social Disadvantage

• Subjected to racial or ethnic prejudice or
  culture bias because of their identities as
  member of groups, without regard to individual
  qualities.

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Socially Disadvantaged Determinants

• Individuals are presumed to be socially
  disadvantaged if they are a U.S. Citizen and a
  member of one of the following groups
• Black American
• Asian Pacific American
• Hispanic American (includes individuals of
  Spanish Portuguese descent).
• Native American
• Subcontinent Asian American

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Requirements for Persons Not Members of
Designated Group

• Establish their case by a preponderance of the
  evidence
• The disadvantage may stem from race, ethnic
  origin, gender, physical handicap, long term
  environmental isolation, or other similar causes
• The applicant must have personally suffered
  disadvantage in the United States
• The disadvantage must be substantial chronic
• The discrimination must have negatively impacted
  on business advancement .

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Non-Members of Designated Groups

• Substantial chronic
• Discrimination must have negatively impacted on
  business advancement .

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Types of Evidence for Preponderance

• Documentary evidence which corroborates or
  supports assertions made by an applicant such as

• Personnel Records Payroll Records
• Rejection letters on job applications. Financial
  statements.
• Denials of credit applications.
• Documents relating to rejected contract offers,
  i.e., bid abstracts, solicitations.
• Contemporaneous records memorializing meetings,
  conversations, negotiations, telephone
  calls, etc.
• Documents setting forth company policy(ies)
  which are alleged to be discriminatory.

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Net Worth CriterionAfter excluding the
individuals equity in the firm and equity in the
primary residence, net worth may not exceed
250,000.00

• Net Worth
• less equity in primary residence
• less equity in business
• adjusted net worth (which
  cannot exceed 250,000)

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Economically Disadvantaged

• Individuals are socially disadvantaged persons
  whose ability to compete in the free enterprise
  system has been impaired due to diminished
  capital and credit.

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Business Eligibility Criteria

• Ownership
• Control and Management
• Size
• Potential for Success
• Good Character

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What Determines Ownership?

• At least 51 unconditional ownership by the
  disadvantaged person(s).
• Partnerships Agreements must reflect
  unconditional ownership.
• Limited Liability Company Disadvantaged
  individuals must own at least 51 of each class
  of member interest.

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Corporate Ownership Determination

• Corporations
• Disadvantaged persons must own at least 51 of
  each class of voting stock and at least 51 of
  all outstanding stock.
• Stock option plans for nondisadvantaged
  individuals will be viewed as if they have been
  exercised .

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Control and Management Determination

• Partnerships Agreements must reflect
  unconditional management by disadvantaged
  partner(s)
• Limited Liability Company One or more
  disadvantaged individuals must serve as
  management members with unconditional control.

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Corporate Control and Management Determinants

• Corporations
• Disadvantaged directors of the board must control
  the board by actual number of votes and must be
  able to establish a quorum without the presence
  of non-disadvantaged directors.

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Disadvantaged Individual must

• Hold the position of President or Chief Executive
  Officer, Managing Partner or LLC Managing Member
• Be the highest compensated individual
• Have the ability to Hire and Fire
• Set Policies
• Have the ability to commit firm to contracts
• Have the ability to the control Budget and
  Financial Disbursement

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Size Determinants

• Firms Must be Small Based on Their Primary SIC
  Code, Including Affiliates
• Size is determined either by
• average 3 years revenues
• of employees (manufacturers, dealers,
  wholesalers)
• See 13 CFR 121 Size Regulations or visit our
  website www.sba.gov/size

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Factors Considered for Potential Success

• Factors considered
• Proof of two years operation in the firms
  primary industry as verified by revenues reported
  in business tax returns.
• Financial capability sufficient capitalization,
  financial performance, bonding capacity,
  manageable debts.
• Managerial and Technical capability performance
  on previous contracts, firm has the necessary
  personnel, licenses, certifications, facilities,
  prior experience.

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Other Factors Consideredfor Potential Success

• Management capability Education, experience and
  training of CEO and other managers, magnitude and
  complexity of past/current jobs, management
  systems.
• Qualifications for ability to perform on Federal
  contracts relevant contracting experience and
  the ability to meet Federal procurement
  policies.

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Conditions for Waivingthe Two-Year Rule

• The individual or individuals upon whom
  eligibility is to be based have substantial and
  demonstrated business management experience
• The applicant has demonstrated technical
  expertise to carry out its business plan with a
  substantial likelihood for success if admitted to
  the 8(a) BD Program
• The applicant has adequate capital to carry out
  its business plan as a Participant

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Other Conditions for Waiving the Two-Year Rule

• The applicant has a record of successful
  performance on contracts from governmental and
  nongovernmental sources in the primary industry
  category
• The applicant has, or can demonstrate its ability
  to timely obtain the personnel, facilities,
  equipment, and any other requirements needed to
  perform such contracts as a Participant.

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Ineligible Business Factors

• Ineligible businesses brokers debarred or
  suspended persons or concerns nonprofit
  organizations. Franchises may be allowed
  contingent upon SBA review of the franchise
  agreement.
• A business may participate only once. Even if
  ownership and control has completely changed,
  firm may not re-apply.
• Any person who has used his/her disadvantaged
  status to qualify another firm shall be regarded
  as non disadvantaged.

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Benefits of Participation

• Sole Source Contracts
• Up to 3 million for services and construction
  and 5 million for manufacturing.
• Competitive threshold
• When the estimated value (including options)
  exceeds 3 million for services and construction
  and 5 million for manufacturing, requirement
  will be competed among 8(a)BD firms.
• Federal Acquisition Regulations (FAR)
• Apply to and govern 8(a)BD contracts.

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Filing Applications

• Applications for the 8(a)BD program are filed
  with the Division of Program Certification
  Eligibility (DPCE) Unit that services the Federal
  Region containing your state.For assistance in
  determining your Federal Region, contact the SBA
  District Office servicing your locality or state.

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Philadelphia DPCE - Regions 1 3900 Market
Street, 5th FloorPhiladelphia, PA 19107(215)
580-2779 Dallas DPCE - Regions 5, 6 7 4300
Amon Carter Blvd, Suite 116Ft. Worth , TX
76155(817) 684-5315 San Francisco DPCE -
Regions 2, 4, 8, 9 10455 Market Street, 6th
FloorSan Francisco, CA 94105(415) 744-0328
Processing Centers
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Expectations of Program Participants

• Self marketing to federal procurement agencies.
• Submission and annual update of business plan.
• Access to company records by SBA.
• Informing SBA of any changes affecting 8(a)BD
  eligibility, i.e. changes in business structure,
  ownership, etc.

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Additional Expectationsof Program Participants

• Submission of year end financial statements and
  annual tax returns.
• Participation in business development training
  opportunities and networking offered by SBA.
• Staying current in financial obligations to the
  Federal Government.

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Small Disadvantaged Business (SDB)Program

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Purpose for SDB Certification

• Reform the SDB certification process
• Ensure that only eligible firms receive SDB
  program benefits
• Establish a formal process at the front end to
  determine SDB eligibility
• No longer rely on firms self-certification

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SDB Program Benefits

• When competing for government contracts, SDBs in
  industries that show the ongoing effects of
  discrimination will be able to
• participate in Federal SDB price evaluation
  adjustments (up to 10)
• other evaluation factors or sub-factors
• Set-aside programs

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Other SDB Program Benefits

• Subcontracting opportunities as authorized under
  SBAs section 8(d) subcontracting program.
• Remain on the SBA maintained list of certified
  SDBs for a period of three years from the date of
  certification.

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When Price Evaluation Applies

• In competitive acquisitions
• Shall not be used in acquisitions that-
• - Are not greater than the acquisition threshold
• - Are awarded pursuant to the 8(a) program
• - Are set aside for small business concerns.

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SBAs Role

• Certify all qualified concerns requesting SDB
  certification
• Decide protests and appeals
• Maintain a national public on-line registry of
  certified SDBs for access by contracting officers
  and the general public

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SBA Field Offices

• Provide information and required application
  forms to any firm interested in SDB certification

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SDB Certification Process

• Applications must be submitted to SBA
• Applicants notified in 15 days whether the
  application is complete and suitable for
  evaluation
• Ownership and control decision within 30 days of
  receipt of a complete application package

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SDB Application

• SBA Form 1010
• SBA Form 413
• IRS Form 4506

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Reapplying for SDB Certification

• Firms may reapply 12 months after final decision
  of SBA to decline its application
• If it is determined that the firm is not owned
  and controlled by individual(s) claiming
  disadvantaged status and no appeal is filed with
  SBAs Office of Hearings and Appeals, a firm may
  apply for a new ownership and control
  determination at any time

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HUBZones (Historically Underutilized Business
Zone Program)

• Develops historically underutilized urban and
  rural areas
• Establishes federal award preferences for small
  businesses
• Lists qualified businesses on PRO-Net
• Information is available at www.sba.gov/hubzone

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The HUBZone Empowerment Contracting Program

• Community Based
• Empowerment
• Employment
• Enterprise

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Purpose of the HUBZone Program

• Provide federal contracting assistance for
  qualified small business concerns located in
  historically underutilized business zones to
• Increase employment opportunities
• Stimulate capital investment in those areas
• Empower communities through economic leveraging
  and the multiplier effect

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Qualified Areas

• Qualified Census Tracts (HUD) - 7,000
• Qualified Non-metropolitan Counties - 900
• Median household income is less than 80 of the
  non-metropolitan state median household income
  (Census)
• Unemployment rate that is not less than 140 of
  the state-wide average unemployment rate (BLS)
• Indian reservations (external boundary)

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Goaling

• Based upon a percentage of the total value of
  federal prime contract awards
• 1999 - 1
• 2000 - 1.5
• 2001 - 2
• 2002 - 2.5
• 2003 - 3 and each year thereafter

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Requirements to be a Qualified HUBZone SBC

• Four Requirements
• Must be a small business
• Concern must be owned and controlled only by U.S.
  citizens
• The principal office of the concern must be
  located in a HUBZone and
• At least 35 of the concerns employees
• must reside in a HUBZone

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The Certification Process

• Fully electronic, Internet-based
• Integrated with Pro-Net
• SBA will not process incomplete packages
• Processing time - 30 days
• SBA may request additional information or
  clarification any time after submission
• SBAs decision will be in writing

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Program Examinations

• Eligibility verification
• Scope of review
• Verification eligibility requirements at time of
  application and examination
• location, ownership employment percentage
  requirements
• Time frame - when notified of a possible
• material change in status or random,
• at the discretion of SBA

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Contractual AssistanceProcurement Methods

• Set-aside awards
• Sole source awards
• Awards through full and open competition after
  application of a price preference in favor of the
  HUBZone SBC

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Requirements Not Available for HUBZone Set-aside

• Federal Prison Industries (FPI)
• Javits-Wagner-ODay Act (JWOD)
• Current 8(a) requirements
• Micro Purchase requirements - for 2,500 or less

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Website and Mapping Capability

• www.sba.gov/hubzone
• Identification of qualified areas
• Non-metropolitan counties
• Census tracts
• Indian reservations
• EZ/EC s etc.

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The HUBZone Empowerment Contracting Program

• For further information contact
• Michael P. McHale, Asst.Admin. Office of
  Procurement Policy and Liaison ,
• SBA Office of Government Contracting
• e-mail michael.mchale_at_sba.gov
• (tel) [phone]
• (fax) [phone]

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