The 8(a) Business Development Program is a business assistance program for small, distressed businesses. This program provides a wide range of assistance to firms; this owns and controlled by at least 51% of socially and economically disadvantaged individuals.
It’s also a key instrument to help socially, and economically disadvantaged entrepreneurs; this further help in gaining access to the economic mainstream of American society. The programs help thousands of aspiring entrepreneurs to gain a foothold in government procurement.
The goal of the initiative is to provide resources for business development, including:
- Mentoring
- Procurement assistance
- Business advice
- Learning
- Financial assistance
- Safety bonding
- Other management and technical assistance
The enrollment in the program is split into two stages over nine years: a four-year growth process and a five-year transition phase.
Benefits of the Program.
The following is a list of the benefits of participating in the 8(a) Business Development Programme.
Participants can obtain sole-source contracts, up to a maximum of $4 million for goods and services, and $6.5 million for manufacturing. While we help 8(a) companies build their competitive and institutional know-how, we also encourage you to participate in competitive acquisitions.
8(a) Firms are also able to form joint ventures and contract bid teams. This enhances the ability of 8(a) firms to perform larger prime contracts and overcome the effects of contract bundling, combining two or more contracts into one large contract. See also the Mentor-Protégé program for more information on enabling start-up 8(a) companies to learn ropes from other experienced 8(a) businesses.
Specifications and goals of the 8(a) Business Development Plan
The overall objective of the program is to graduate 8(a) companies that will continue to thrive in a competitive business climate. There are some criteria in place to help accomplish this purpose. System goals allow 8(a) companies to: maintain a balance between their commercial and government business.
Reduce the overall dollar value of the sole-source contracts that each applicant can obtain while in the program: $100 million or five times the value of its primary NAICS code.
To ensure that 8(a) companies are on track to meet their goals and satisfy the following requirements, SBA District Offices evaluate and assess the success of participants through:
- Performance Reviews
- Business Planning
- Systematic Evaluations
How participants can benefit from business training:
In addition, 8(a) participants can benefit from advanced business training, coaching, marketing assistance, and high-level executive growth. You may also be eligible for assistance in obtaining access to surplus government assets and supplies, SBA-guaranteed loans, and bonding assistance for participation in the program.
Graduates of the Small Business Program frequently fail to recognize incentives associated with the size of the company, but also most of the rules, the Federal Acquisition Regulations (FAR) and back-office infrastructure standards that are similarly related to the size of the enterprise. Competition has changed, and thus the conditions for competition have changed. Executives may be stunned for the first time to learn that they have been “knocked out” of business due to the failure to meet minimum regulatory compliance requirements— even if their past performance, customer relationship, and customer solution are good.
Common areas or criteria not expected for small business graduates include:
- Increased price competitiveness
- Accounting requirements
- Adequate accounting system
- Small business subcontracting scheme
- Cost accounting principles and report document
- Auditable cost or sales details
- Code of conduct and accounting policy
- Affirmative action plan
- Lack of automation
Needs must be defined well before demand for a proposal (RFP), or “option” occurs, so planning is essential. Organizations need not only to schedule the time needed to implement the standards but also to assess the impact of the requirements on the company and its procedures, as well as the financial and talent resources required. Remember that your price competition increases significantly when you enter a full and open competition; therefore, you should plan for these costs on an incremental basis and for a period when your indirect rates can absorb the costs. The transition conditions for the same year that the General and Administrative Expenditures (G&A) cost needs to be reduced in order to compete in the full and open economy is a loss/loss situation.
Items that you need to remember upon graduation include;
Narrow your Focus.
This rule of thumb applies to all companies, but it is especially true in the government contract sector. You can’t take control of the entire country. Identify specific divisions, sub-agencies, and departments. If you have already done business with a certain agency, look for ways to repeat that success (proof of performance is a huge advantage).
Get your foot in the door: form a teaming relationship before you graduate.
8(a) Companies are very appealing to larger companies because of their ability to win sole-source contracts. Luckily, you’ve used this power to build relationships and alliances with other, bigger contractors. Not only will you benefit from their experience and add value to government customers, but you will also obtain past performance, which is all-important in the contracting sector.
Take Advantage from Mentor-Protégé Relationships.
In addition to forming joint ventures and contract bidding teams, you can also compete in the 8(a) BD Mentor-Protégé network, which allows companies to learn ropes from other more established firms.
Hire the best and right talent.
Invest now in workers who have the network and expertise needed to help you develop relationships, sell to the government (what works in the private sector doesn’t work with the government), and appreciate the sales / contracting cycle. To support “talk-the-talk” consider hiring former government employees. We can provide invaluable advice on tailoring the plans to the needs and selection procedures of a specific agency.
Please be sure to speak to your 8(a) SBA Business Development Manager about your recruiting plans. They may advise on any specific rules and regulations affecting the employment of former federal employees and the formation of certain positions to ensure that they do not deviate from the 8(a) regulations (particularly financial positions).
Maintain a balance between the private sector and government business.
One of the conditions of the 8(a) system is that the company ensures a balance between business and government. There is also a $100 million cap (or five times the value of your primary NAICS code) on the overall dollar value of the sole-source contracts that you can obtain while in the system. To guarantee your financial future and your preparation to leave the 8(a) system, it is a good idea to start dreaming about other ways in which you can diversify your business and enter new commercial markets.
Keep an eye on your financial statements.
Most 8(a) businesses are seeing a drop in profits within a few years of leaving the program. It’s time to prepare for this. Many of the actions mentioned above can help you prepare and manage your cash flow.
This blog was written by Linda Rawson, who is the founder of DynaGrace Enterprises (dynagrace.com) and the inventor of WeatherEgg (weatheregg.com). She, along with her daughter, Jennifer Remund make up the mother-daughter duo of 2BizChicks (2Bizchicks.com). For further information, please connect with Linda on LinkedIn, or contact her at (800) 676-0058 ext 101.
Please reach out to us at GovCon-Biz should you have any questions.
