Small, Disadvantaged, and Woman-Owned Business Issues
Q. What is a “Small Business” in government contracting?
A. Small business size can be determined only by reference to the Standard Industrial Classification (SIC) Code applicable to a procurement or government program. SIC Codes, which can be found at 13 C.F.R. Subpart 121, define business size either in terms of the number of employees or on average annual revenue over a three-year period.
To determine whether a company is a small business, the company first must determine what SIC Code applies to a particular procurement or program. If the company meets the SIC Code requirements, it can then self-certify to the agency that it is a small business, and avail itself of the benefits afforded small business. The Small Business Administration (SBA) works closely with other federal agencies and federal contractors to ensure that small business obtain a fair share of government contracts and subcontracts.
Q. What is a “Woman-Owned Small Business”?
A. A woman-owned, small business is a small business that is a least 51 percent owned by a woman or a group of women. In addition, a woman-owned business must be operated by a woman. It is not enough if a woman simply owns the majority of the business, but has no real day-to-day involvement in the operation of the business. The management and daily business operations must be controlled by one or more women. If a company meets the definition of a woman-owned business, it can self-certify to the procuring agency. Procuring agencies often have mandates requiring them to award a certain amount of government contracts business to small, disadvantaged or woman-owned businesses.
Q. What is a “Small Disadvantaged Business”?
A. A small disadvantaged business is small and at least 51 percent owned and controlled by an economically and socially disadvantaged individual(s). SDBs can receive preferences in federal procurement once they are certified under SBA’s SDB certification program. While in the past a business could qualify for these advantages by self-certifying as an SDB in its offer, self-certification is no longer acceptable today. Under SBA’s current regulations, SBA itself must formally certify the business as an SDB Program. Certification is accomplished by obtaining and completing an application for the SDB Program, and having that application approved by SBA. Applications may be obtained on SBA’s Web site at www.sba.gov/sdb/section06h.htm. 8(a) firms automatically qualify for the SDB Program and do not have to apply for certification.
Q. What is the SBA 8(a) Program?
A. The SBA’s 8(a) Program, named for a section of the Small Business Act, is a business development program created to help small disadvantaged business compete in the American economy and access the federal government contracts market. To qualify as an 8(a) business, a company must (1) be a small business as determined by the applicable SIC Code; (2) be owned and operated by one or more socially and economically disadvantaged individuals or groups of individuals; and (3) be able to demonstrate the potential for success. 8(a) businesses can benefit from teaming arrangements and federal procurement set-aside programs intended to bolster the ability of small disadvantaged businesses to compete and succeed in the government contracts market.
