Special Consideration
In many markets, small businesses are often outcompeted by larger organizations that often have access to almost unlimited resources. This set aside actually might increase a small business’s chances of winning a lucrative bid. The following is set as statutory rules to give small businesses a fair chance in the marketplace:
- 23 percent of prime contracts are reserved for small businesses;
- 5 percent of prime and subcontracts are reserved for small disadvantaged businesses;
- 5 percent of prime and subcontracts are reserved for women-owned small businesses;
- 3 percent of prime contracts are reserved for HUBZone small businesses;
- 3 percent of prime and subcontracts are reserved for service-disabled veteran-owned small businesses.
Certain groups have experienced discrimination in the past that was not related to their qualifications. This discrimination kept them from participating in the free market because they did not have access to capital.
In response, the Federal government tries to award contracts to businesses that are at least fifty-one percent owned by those from disadvantaged groups.
Small Businesses Are Given Special Consideration When It Comes To Government Contracts
In many markets, small businesses are often outcompeted by larger organizations that often have access to almost unlimited resources. This set aside actually might increase a small business’s chances of winning a lucrative bid.
The federal government is required to set aside at least 23 percent of its total spending specifically for small businesses. Several small businesses have made a fortune just on federal government contract awards.
How Do I Know That Being A Government Contractor Is Right For My Company?
There is very little certainty in business. Having a powerful client that is known for paying its bills on time, like our Federal Government, is a great asset.
Also, many of your competitors might be dismissing the idea of being a government contractor as being too much trouble. This means that there could be surprisingly little competition in some spaces. Their shortsightedness can be your company’s advantage.
Minority-Owned Business Status
Five percent of the Federal government contracts are supposed to be awarded to members of an economically or socially disadvantaged group. This allows minority groups to remain competitive in the government market.
Under the Small Business Act, certain individuals are presumed socially disadvantaged:
- African-Americans
- Hispanic Americans,
- Asian Pacific Americans
- Native Americans (American Indians, Eskimos, Aleuts, or Native Hawaiians)
- Subcontinent Asian Americans.
An individual who is not a member of one of the groups listed can be admitted to the program if he/she shows – through a “preponderance of the evidence” – that he/she is socially disadvantaged. For instance, an individual may show social disadvantage due to race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from the mainstream of American society; or other similar causes.
Additional Requirements
Besides, the business must show economic disadvantage by submitting a narrative and personal financial documentation about the company’s income, assets, and net worth.
Generally, successful applicants must also meet the following additional requirements:
- The business must be small according to the Size standards for small business concerns;
- The business must demonstrate a potential for success (generally by being in business for, at least, two years);
- The business must be unconditionally owned and controlled by
- by one or more disadvantaged individuals who
- are US citizens and who are of good character.;
Registering For Minority Certification
To qualify for the five percent of the contracts that are reserved for minority-owned or disadvantaged businesses, one must be certified by the government. This means that a business is giving up on 24 billion dollars worth of revenue by not registering.
Registering also has other advantages. The SBA offers specialized training programs and mentoring to registered organizations, free of charge. You also get admitted to opportunity fairs and networking events through the National Minority Supplier Development Council.
Before applying for the 8(a) Program, each firm is urged to take an online training and self-evaluation course that can be found here at the 8(a) Business Development Suitability Tool.
The first section of the online course explains the 8(a) Program intimately. It culminates in an eligibility self-assessment test. The test consists of a series of straightforward yes/no questions that evaluate the degree to which your firm meets the essential qualifications for the 8(a) Program.
If key eligibility criteria are not met, you will be directed to the SBA resource deemed most appropriate to help you at this time.
How Do I Apply?
We recommend that you simply submit your application or the 8(a) Business Development Program electronically, but if you employ paper, see the subsequent guidelines.
If you’d not wish to submit electronically, you’ll contact your local SBA District Office to get a paper application to use for the 8(a) Program Business Development Program.
Think About Subcontracting
Subcontracting with a prime contractor rather than the government means that you do not have to worry about the strict rules and regulations that are part of working directly with the government. This is because the subcontractor is answerable to the prime contractor, not the government. Luckily, prime contractors are always on the lookout for companies that can help them complete these important government projects. Subcontracting has many advantages for less experienced businesses.
SAM Directory Can Help
SAM stands for System Award Management.
To do any business with the federal government, you must register your business in the System for Award Management directory. The government will not hire any type of business (large or small) that has not registered in the SAM directory.
Remember, registering for the SAM directory gives a business automatic entry into the extremely lucrative marketplace of the federal government. It is also a crucial step for applying for rewarding government grants that can help your business reach its full potential. Let us, the professionals at SAM Directory, make sure that you do all that is needed to not miss out on this important opportunity. We will make certain that your application is processed quickly and efficiently so you can start being a federal contractor as soon as possible. We remove this hassle so you can go about the important mission of running your company. Stay tuned for this next article in this series.