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.
What Qualifies As A Small Business?
In order to be considered a small business, a company has to meet the following requirements:
- A business must meet small business size standards.
- Part of a business must be within the U.S.
- A business must operate mainly within the U.S. or make a significant contribution to the U.S. economy through the payment of taxes or the use of American products, materials, or labor.
- A business must be independently owned and operated.
- A business cannot be dominant in its field on a national basis.
- The first thing a small business must do in order to qualify for government contracts is to register with the SAM Directory.
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
In addition, 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 reserved for minority-owned or disadvantaged businesses, one must be certified by the government. This means a business is giving up 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.
Does Your Company Qualify As A Veteran Owned Business?
To qualify for these set-asides, a business must have the following:
- Meet small business size standards for primary NAICS code and contract
- At least 51% unconditionally and directly owned by veterans who are U.S. citizens*
- The veterans must manage the day-to-day operations
- The veterans must make long-term decisions for the business
- A veteran must hold the highest officer position
- The veterans must work at the business full-time during normal working hours
How Do You Prove That You Are A Veteran?
You will need to have a Department of Defense Form 214 (DD 214), a document issued when a military service member retires, separates, or is discharged from the military.
You will need a letter from the United States Department of Veteran Affairs stating you are service-disabled if you also intend to apply for service disables status. The VA benefits office can help you if you need to replace a lost disability status letter.
Registering with the VA
You will want your company to get certified as a veteran-owned business. This means that you should register with the VA because it is the only government agency with a formal verification process.
The VA actually has a number of contracts in which priority is given to service-disabled veterans and then to veterans. This is particularly important for nondisabled veterans, who do not get set-asides with the federal government. In short, registering with the VA increases the chances of a non service disabled veteran winning a contract.
How Do You Register?
The first step of getting certified is registering with VetBiz Registry. This is a veteran’s business database. You can also go to the Center for Veterans Enterprise which provides the registry and also includes step-by-step instructions on applying for VA Certification. Remember to have your DD 214 form handy.
You should also have the following:
- Partnership Agreements
- Corporate Charters
- Organizational Charters
- Board of Directors
- Mission Statements
- Inventory
- Service Providers
- Bank Statements
- Tax Information
Some businesses can also be subject to onsite visits that can sometimes be unannounced.
What Is The SAM Directory?
SAM stands for System Award Management.
In order to do any business with the federal government, you must register your business in the System for Award Management. The government will not hire any type of business that has not registered in the SAM directory.
We have an article on our site, Everything You Need to Know About SAM for Small Businesses, that gives you important information about this process.
Luckily our site takes this headache off your hands. You can leave this important step to the experts at Sam Directory so you can concentrate on more important matters.
The best part is once you register, you will no longer have to keep reentering important information every time you apply for a new government opportunity.