SBA's 8(a) Program Can Help Some Companies Compete

Q: A friend told me that as a woman of Nativeand subcontracts for small disadvantaged businesses;
American descent I might be eligible for a special SBA5 percent of prime and subcontracts for
program that will help me start a small business. Hewomen-owned small businesses; 3 percent of prime
said I could compete for government contractscontracts for HUBZone small businesses; and 3
through this program. Can you tell me what SBApercent of prime and subcontracts for service-disabled
program he's referring to?veteran-owned small businesses.
-- Clara P.A HUBZone (Historically Underutilized Business Zone) is
A: Your friend is probably referring to the Smalla designated area within urban and rural communities
Business Administration's (SBA) 8(a) Businessthat has been given preferential contract award
Development (BD) Program. The 8(a) Programconsideration in an effort to stimulate economic
(named after the section of the Small Business Actdevelopment. A company may qualify for HUBZone
from which it comes) is an SBA program created tostatus if it is owned or controlled by one or more U.S.
help small disadvantaged businesses better compete incitizens, has at least 35 percent of employees who
the U.S. marketplace and within the arena oflive within the designated zone, and has a principal
government procurement. The SBA provides businessoffice located there. HUBZones are a whole 'nother
development, technical assistance and other servicestopic that we can discuss at another time. Suffice it to
to the small businesses that are accepted into the 8(a)say that a company that obtains both 8(a) and
program.HUBZone status may be entitled to double dip in the
The 8(a) program is reserved for what the SBA callsgovernment procurement trough, that's why you often
"socially disadvantaged individuals." Sociallyfind a number of 8(a) companies specifically moving
disadvantaged individuals are defined as those whointo HUBZone areas to take advantage of the perks
have been subjected to racial or ethnic prejudice orboth programs offer.
cultural bias because of their membership in aThe U.S. government purchases billions of dollars in
disadvantaged group.goods and services every year, everything from
The SBA has designated the following groups asstaples to those wonderfully expensive toilet seats.
socially disadvantaged:Obtaining 8(a) status allows small businesses to
Black Americans Hispanic Americans Nativecompete for a portion of that business.
Americans (Native American Indians, Eskimos, Aleuts,The basic requirements for applying for 8(a) status are
and Native Hawaiians) Certain Asian Pacificyour company must be a small business as defined by
Americans Other individuals who can prove that theythe SBA, must be owned and controlled by one or
meet the SBA's criteria to be considered sociallymore socially and economically disadvantaged
disadvantagedindividuals who are U.S. citizens, and must show a
One point where your friend is incorrect is that the 8(a)potential for success. The SBA defines a small
program is for new companies. The 8(a) program isbusiness as "one that is independently owned and
primarily for companies that have been in business foroperated, is organized for profit, and is not dominant in
a minimum of two years, though that rule may beits field."
waived if your company is able to meet some prettyAs expected, the 8(a) program has its fans and its
strict management, financial, and performance criteria.detractors. It's fans are those companies that obtain
Obtaining 8(a) status is no guarantee that a company8(a) status and thereby get preferential treatment
will be successful in obtaining government or otherwhen competing for government procurement
contracts, but it certainly doesn't hurt. The Smallcontracts.
Business Act mandates that all small businesses haveThe program's detractors are typically those
the opportunity to provide goods and services to thecompanies that fail to obtain 8(a) status or that do not
U.S. government. To help ensure that mandate, themeet the definition of socially disadvantaged, i.e.
SBA negotiates annual procurement preference goalsbusinesses owned my white American males (that's a
with every Federal agency and reviews eachcan of worms we won't open this week).
agency's results to make sure the goals were met.You can learn more at the SBA's website (sba.gov) or
The statutory goals are: 23 percent of all primeby calling your local SBA office.
contracts go to small businesses; 5 percent of primeHere's to your success!