Tag Archives: small business setasides

Federal Government Contracting Small Business Set-Aside Designations

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Image: SBDC

SMALLTOFEDS” By Ken Larson

A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.

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“The following are the small business set-aside designations in federal government contracting:

1. Small Business – Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the “SBA Small Business Size Standards” at the “Box Net” Cubicle on the right margin of this web site for further information). Federal contract solicitations  have a NAICS Code assigned to them when they are registered at the below web site:

System for Award Managment (SAM)

2. Minority Business Enterprise (MBE) – A  good interim designation while an 8(a) application is in process for minority-owned companies:

National Minority Supplier Development Council MBE Information

3. Woman-Owned Business – Applicable to Women-Owned Businesses only:

SBA Woman-Owned Business Information and Application Site

4. Veteran-Owned Business – Applicable to Veteran-Owned Businesses only

SBA Veteran-Owned Business Program Information

5. Service Disabled Veteran-Owned Business – Applicable to Service Disabled Veteran-Owned Businesses only

SBA Service Disabled Veteran-Owned Business Information

6. Small/Disadvantaged Business SBA 8(a) Program – Requires 2 years in business and a lengthy application process with the SBA at the following web site:

SBA 8(a) Information and Application Site

7. Historically Under-Utilized Business (HUB) Zone Located – Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site:

Hub Zone Information and Application Site

QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS

To qualify as a small business for a given solicitation an enterprise must have registered at the System for Award Management Web Site under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.

A small business certifying under the above must have individuals qualifying for the designations with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name on the articles of incorporation with the state and by % of ownership in an operating agreement or similar document.

To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the applicable HUB Zone.

SUMMARY

Carefully select your small business designations when preparing your business and marketing plans for federal government contracting. Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.

A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.”

https://www.smalltofeds.com/2009/06/federal-government-contracting-small.html

Federal Government Contracting Small Business Set-Aside Designations

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Image: SBDC Florida

SMALLTOFEDS By Ken Larson

A small business set-aside designation can be a valuable tool if adequately documented, registered, certified and prudently used for bidding work that your enterprise is capable of performing successfully.

Carefully select your small business designations when preparing your business and marketing plans for federal government contracting.

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“Many questions have recently been received regarding federal government contracting small business set aside designations. This article will explain the designation types and suggest the best ways to establish and use them in your business planning.

There are 7 major small business set-aside designations in federal government contracting:

1. Small Business — Established by North American Industry Classification (NAICS) Code for all categories of government business (Please download the “SBA Small Business Size Standards” at the “Box Net” Cubicle on the right margin of this web site for further information). Every federal procurement has a NAICS Code assigned to it and is registered on the below web site if it exceeds $25k:
FEDBIZOPPS

2. Minority Business Enterprise (MBE) — A good interim designation while an 8(a) application is in process for minority-owned companies:
National Minority Supplier Development Council MBE Information

3. Woman-Owned Business — Applicable to Women-Owned Businesses only:
SBA Woman-Owned Business Information and Application Site

4. Veteran-Owned Business — Applicable to Veteran-Owned Businesses only
SBA Veteran-Owned Business Program Information

5. Service Disabled Veteran-Owned Business — Applicable to Service Disabled Veteran-Owned Businesses only
SBA Service Disabled Veteran-Owned Business Information

6. Small/Disadvantaged Business SBA 8(a) Program — Requires 2 years in business and a lengthy application process with the SBA at the following web site:
SBA 8(a) Information and Application Site

7. Historically Under-Utilized Business (HUB) Zone Located — Pertains to small businesses located in geographic areas with a historical record of low government contracting. This designation requires application at the following HUB Zone Site Web Site:
Hub Zone Information and Application Site

QUALIFICATIONS, REGISTRATION, CERTIFICATIONS AND REPRESENTATIONS

To qualify as a small business for a given solicitation an enterprise must have registered at the System for Award Management Web Site under the applicable NAICS code for the procurement and meet the SBA eligibility size standards for that code.

A small business also certifying under the above must have individuals qualifying for the designations with at least 51% ownership interest and an operating role in the company. 60% is recommended to avoid the appearance of a front. Silent partners and investors without qualifying status or an operating role in the firm do not count toward the designation. It is suggested that ownership interest be specified by name on the articles of incorporation with the state and by % of ownership in an operating agreement or similar document.

To qualify as a HUB Zone Enterprise the business must be located in a HUB Zone and a qualifying percentage of the members (owners or employees) of the business must also live in the applicable HUB Zone.

Keep in mind that self-certifications are verified through records checks and site visits by contracting officers, DCMAO and Source Selection Boards for federal procurements before contract awards are made.”

https://www.smalltofeds.com/2009/06/federal-government-contracting-small.html

ABOUT THE AUTHOR:

https://www.smalltofeds.com/2019/07/a-look-back-over-12-years-at-small-to.html

SBA Planning Tightening Oversight On Small Business Government Contracting Certifications

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FEDERAL NEWS NETWORK

For the sixth year in a row, agencies exceeded SBA’s governmentwide small business contracting goal and spent more than $120 billion on small-business contracts, exceeding last year’s record by nearly $15 billion. 

With one in four dollars spent in federal contracts now going to small businesses, the Small Business Administration is looking to give more teeth to the verification process for companies that claim to meet the criteria for this lucrative market.

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“Agencies awarded 25 percent of their contract spending to small businesses in fiscal 2018 and earned an overall ‘A’ rating on SBA’s annual small business scorecard.

But next year, SBA expects to have finalized a rule that would close a loophole that allowed for participants in SBA’s Women-Owned Small Business (WOSB) program to self-certify they’re eligible for the program, despite a provision in the 2015 National Defense Authorization Act mandating SBA to put an end to the self-certifications, as well as considerable scrutiny from watchdog offices.

The Government Accountability Office reported in March that about 40% of the WOSB-certified businesses in its audit sample were ineligible for the program. GAO had also expressed concerns about the performance of several third-party WOSB certifiers.

“As a result, SBA cannot provide reasonable assurance that WOSB program requirements are being met and that the program is meeting its goals,” GAO auditors wrote.

GAO’s numbers pale in comparison to what SBA’s Office of Inspector General found in its review of the WOSB program. During its June 2018 audit, the IG office found 50 of 56 sole-source contracts —or 89% — did not meet all of the criteria for the program.

“As a result, there was no assurance that these contracts were eligible to receive sole-source awards under the programs,” SBA OIG wrote.

Other small business set-aside programs have been vulnerable to improper payments as well. In 2013, eight contracting officials pleaded guilty in a scheme to apply for 8(a) contracts, set aside for small, disadvantaged business, valued at more than $153 million.

Robb Wong, SBA’s associate administrator of the Office of Government Contracting and Business Development, said moving to formal certification process will instill greater confidence and integrity into a program that had an “honor system” built in.

“Simply put, the wrong companies were receiving our contracts,” Wong said in an interview Tuesday to announce the scorecard results. “We want to make sure that, if a company receives a contract through these programs, they’re actually eligible to receive it.”

SBA published a proposed rule in the Federal Register on May 14 that would eliminate the self-certification and would provide a free online certification application to women-owned small businesses. The agency is accepting comments until July 15.

With the proposed rule underway, Wong said it would also be the “perfect time” to streamline the vetting processes for other set-aside programs, which each have different sets of eligibility criteria.

“The programs, when I came in, were being operated in a silo. You had that 8(a) program running in its silo and you had the [Historically Underutilized Business Zones] program operating in its silo. You have self-certifications in women-owned, which we’re doing differently than the self-certification for the service-disabled veteran. Now that we’re going to go to three formal certifications, it made sense, to me, to effectively unify all of the formal processes so that they run as similarly and as alike as possible,” Wong said.

GAO said SBA expects to have the change in place by January 2020, but with SBA going back-and-forth with Congress on what the set-aside screening will look like going forward, Wong said it would take about a year for changes in the rule to go into effect.

“We’re still working with them to find a version that they find acceptable,” he said about Congress.

Wong said the new certification process should help agencies meet SBA’s goal of having 5% of small business prime contracting come from women-owned small businesses. Agencies fell just short of that goal, just like last year,  having spent only 4.75% on small-business contracts through women-owned companies.

“We’re very, very close in this regard to hitting that goal, so I think just some minor changes will at least allow us to hit the goal,” Wong said, pointing out a continued rise in the contract spending on women-owned small businesses. SBA reported $22.92 billion in contract spending on women-owned small businesses in 2018, $3 billion more than two years ago. “That shows continued steady growth in the program.”

Agencies also missed their prime contracting goals for HUBZone businesses, meeting only 2.05% of its 3% contract spending goal. Agencies did exceed their contracting goals for service-disabled, veteran-owned businesses and small disadvantaged business.

“The mantra that we’ve asked all of our staff to take a look at is we want to make these programs easier and more effective for not only the business owner, but for the government to use. If I had a magic wand, I want to make SBA-certified programs the first option for the contracting officer,” Wong said.

Acting SBA Administrator Chris Pilkerton said the scorecard helps demonstrates SBA’s role in supporting more than a million jobs across the country.

“Every contract that gets in the hands of a small business is a win-win for our nation, the entrepreneurs, their employees and the communities they support all across the country,” Pilkerton said in a statement.”

Marketing to Achieve a Small Business Set-aside Government Contract

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Self marketing - storedge dot com

Image: Storedge.com

INTRODUCTION

Marketing is one of the greatest challenges for the small business federal government contractor. We have previously discussed the federal government marketing process at the following articles:

Insights to Succeed

Small Business Government Contract Marketing

Customer Relations

Techniques for Product Development

This posting will address sculpting a government contracting business opportunity to the point where it becomes a sole source or small business group-designated set aside procurement.

GENERAL CONSIDERATIONS

Small business group-designated procurements are far more frequent than sole source contract awards.  Agencies must prepare special justifications for sole sourcing and those most frequently approved are for Hub Zone and Small, Disadvantaged [8(a)] firms (see table below).

Small business group designations are beneficial to firms who hold them by enhancing the probability of an award through agency restrictions on prime contractor bidding to only those who hold the group designation. Others may bid as subcontractors to the prime but the prime small business contractor must be capable of performing at least 51% of the total effort in terms of work scope, hours and dollars.

In either sole source or group-designated marketing, an agency making the buy must be convinced that sufficient capability exists in a single company or in the small business designated group community to set a contract aside. The agency must be convinced early – before a formal procurement announcement is published on FEDBIZOPPS.

Marketing to achieve a limited competition under a small business group designation or eliminate competition under a sole source contract assumes the marketing enterprise has one or more of the following federal government set-aside designations:

DESIGNATION                                                         TARGET

Small Business                                           (Group Set Aside Potential)

Small Woman-Owned Business                 (Group Set Aside Potential)

Small Veteran-Owned Business                 (Group Set Aside Potential)

Small Disabled Veteran-Owned Business  (Group Designation Set Aside Potential)

Small Hub Zone Business                          (Sole Source and Group Set Aside Potential)

Small Disadvantaged Business 8(a)          (Sole Source and Group Set Aside Potential)

Federal government procurements are further classified under the SBA Small Business Size Standards in terms of North American Industrial Classification System (NAICS) Code, number of personnel and/or annual sales. To determine whether a firm qualifies for a given bid, note the NAICS for a given solicitation and download the SBA Small Business Size Standards the Box Net “References” Cube in the right margin of this site:

Small Business Federal Government Contracting

Part of the sole source or designated group set aside marketing task is to suggest to the agency the NAICS Code (hence the size standard) for a prospective procurement.

Registering to bid government contacts and establish sole source and group designations may be achieved using guidance in the below articles:
Small Business Set-aside Designations

Registering Your Business For Government Contracting

Hub Zone and Small Disadvantaged Business 8(a) designations are lengthy certification processes. The remaining designations in the above table are self-certifying at the above government contract registration web site, and are verified by site surveys and bid vetting for each solicitation prior to contract award.

EARLY REQUIREMENT TARGETING IS THE KEY TO SUCCESS IN SET ASIDE MARKETING
Effective set aside marketing reaches the agency decision makers with technical, budget and schedule authority before a synopsis of the requirement is posted on FEDBIZOPPS.

The objective of this form of targeted marketing is to get concurrence from the government to set the program aside sole source if the company has an 8(a), or Hub Zone Certification or reserve it by one of the above group designation classes to eliminate the prospect of full and open competition involving large business.

  • Become known to targeted agency personnel by visiting their program offices and meeting the decision makers.  Bring a capability statement:

Your Capability Statement for Government Contracting

  • Present your qualifications openly, objectively and specific to their needs.  You must determine what those needs are through market research, trade magazines, research on what they are buying on FEDBIZOPPS, as well as postings on their web site that are future-program oriented.
  • Subscribe to periodicals like “Washington Technology” and other trade magazines.  Observe agency trends and analysis that impact your market segment.  There have been set aside programs marketed by small companies through acquainting agency management and technical personnel with capabilities they were not aware existed in the small business community or fulfillment of needs they in fact did not know they had.
  • Pay particular attention to FEDBIZOPPS “Sources Sought” or “Requests for draft RFP Comment”  on programs that have yet to be formally solicited. Obtain an appointment to present your capabilities to the decision makers (not the gate keepers).  Be courteous to contracting officers but understand they are not the individuals who make source selections. Understand that once the requirement is formally published on FEDBIZOPPS the gate closes on informal visits to the customer and the competition begins in the form of proposals by competitors.  It is too late at that point to set the program aside for a sole source or a small business designation if it has not occurred by the publication stage.
  • Cultivate teaming relationships with other firms in your industry and look for early opportunities in agencies, not only to prime a program but to bring a team of qualified contractors in lesser roles to fulfill them with you or join a team being led by a more experienced firm:

Small Business Government Contract Teaming

  • Understand the small business start up past performance challenge and work to meet it:

Understanding the Past Performance Challenge

  • Attend small business outreach events by agencies and prime contractors.  Stay attuned to who is attending and research their needs and requirements.
  • Make a point to be present at bidders’ conferences for existing solicitations that you may not choose to bid but which may lend insight into the agency needs and prime contractor relationships in the future.

SUMMARY

As a small business becomes known in the federal government contracting community, successful marketing of sole source or group-designated business becomes easier, but it is always a challenge due to the need for taking early action in windows of opportunity.  Find those windows and communicate capabilities to the decision makers and industry team members who can help you.

If you are eligible for any of the designations discussed in this article, make small business set asides or sole source procurements key elements in your marketing plan.