Small
Business
A
business that is independently owned and operated and which is not
dominant in its field of operation and in conformity with specific
industry criteria defined by the Small Business Administration (SBA).
Depending on the industry, size standard eligibility is based on
the average number of employees for the preceding twelve months
or on sales volume averaged over a three-year period. The SBA has
established a table
of size standards matched to North American Industry Classification
System (NAICS) industries.
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Small
Business Set Aside Program
The
Federal Government is required to reserve a fair proportion of its
total purchases and contracts for property and services for small
business concerns. The Government does this by reserving or "setting
aside," entire procurements or parts of procurements for small businesses.
This does not guarantee that any particular small business will
receive a contract. It means that only small businesses may compete
for the contract ("total small business set-aside") or the reserved
portion ("partial small business set-aside").
The
Government is also required to buy goods and services at competitive,
fair market prices. Therefore, contracts are set aside only
when at least two qualified small businesses are expected to submit
offers that are competitive in terms of market prices, quality and
delivery. In this context, "market price" means a price based on
reasonable costs under normal competitive conditions, and not lowest
possible cost.
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Small
Disadvantaged Business (SDB) Certification Program
The
Small Disadvantaged Business (SDB) Certification Program is one
of two SBA programs targeted towards providing business assistance
to small disadvantaged businesses. SDB certification pertains specifically
to federal procurement. SDB firms are eligible for special bidding
benefits. Also, SDBs increase their subcontracting opportunities
with prime contractors who accumulate evaluation credits by subcontracting
to qualified SDBs. The SBA must certify small businesses that want
to claim SDB status.
An
SDB is a small business that is at least 51% owned and controlled
by a socially and economically disadvantaged individual or individuals.
Socially
disadvantaged individuals are those who have been subject to
racial or ethnic prejudice or cultural bias within American society
because of their identification as members of certain groups. African
Americans, Hispanic Americans, Asian Pacific Americans, Subcontinent
Asian Americans, and Native Americans are presumed to quality. Other
individuals can qualify if they show by a "preponderance
of the evidence" that they are disadvantaged. All individuals
must have a net worth of less than $750,000, excluding the equity
of the business and primary residence. Successful applicants must
also meet applicable size standards for small businesses in their
industry.
Economically
disadvantaged individuals are socially disadvantaged individuals
whose ability to compete in the free enterprise system has been
impaired due to diminished capital and credit opportunities as compared
to others in the same or similar line of business who are not socially
disadvantaged. Economically disadvantaged must be established for
all applicants. The SBA determines eligibility on a case-by-case
basis.
More
information on the Small
Disadvantaged Businesses Certification Program.
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8(a)
Business Development Program
SBA's
8(a) Business Development Program offers a broad scope of assistance
to socially and economically disadvantaged firms; it was created
to help eligible small disadvantaged businesses become independently
competitive in the federal procurement market. A firm must be 51%
owned and controlled by a socially and economically disadvantaged
individual or individuals to be eligible for the 8(a) Program; 8(a)
firms automatically qualify for SDB certification. Unlike the SDB
Program, 8(a) applicants must generally be in business for at least
two years before applying. The SBA must certify small businesses
that want to claim 8(a) status.
Program
participation is divided into two stages: the developmental stage
and the transitional stage. The developmental stage is four years
and the transitional stage is five years. The developmental stage
is designed to help 8(a) certified firms overcome their economic
disadvantage by providing business development assistance. The transitional
stage is designed to help participants overcome the remaining elements
of economic disadvantage and to prepare participants for leaving
the 8(a) Program.
The
requirements to enroll in the SBA's 8(a) Program are similar to
those for SDBs with the exception that an applicant's personal net
worth must be less than $250,000 (excluding the applicant's ownership
interest of the business and primary residence) for initial eligibility.
For continued 8(a) eligibility after admission to the program, net
worth must be less than $750,000. The SBA will also consider the
individual's average two-year income, fair market value of all assets,
access to credit and capital, and the financial condition of the
applicant firm in evaluating economic disadvantage.
Firms
participating in the 8(a) Program may take advantage of specialized
business training, counseling, marketing assistance, and high-level
executive development provided by the SBA and its resource partners.
They may also be eligible for SBA-guaranteed loans and bonding assistance.
In addition, 8(a) Program participants are eligible to participate
in the SBA's Mentor-Protégé Program.
More
information on the 8(a)
Business Development Program
SBA's
Mentor-Protégé Program
The
Mentor-Protégé Program is designed to enhance the capabilities of
eligible 8(a) firms and to improve their ability to successfully
compete for and receive federal government contracts. Mentors provide
technical and management assistance, financial aid in the form of
equity investments and/or loans, subcontracting support and assistance
in performing prime contracts through joint venture arrangements
with 8(a) firms for which 8(a) firms would otherwise not qualify.
Mentor
and protégé firms must enter into an SBA-approved written agreement
outlining the protégé's needs and describing the assistance the
mentor has committed to providing. The Agreement must also specify
that the Mentor will provide such assistance to the Protégé firm
for at least one year.
More
information on the SBA's
Mentor-Protégé Program
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HUBZone
Empowerment Contracting Program
The
Historically Underutilized Business Zone (HUBZone) Program provides
federal contracting opportunities for small business concerns located
in economically distressed communities in order to increase employment
opportunities, stimulate capital investments in those areas, and
empower communities through economic leveraging. HUBZone areas are
determined by various census data. To qualify as a HUBZone, a business
must meet the following criteria:
- It
must be a small business by SBA size standards;
- Its
principal office must be located within a HUBZone, which includes
lands on federally recognized Indian reservations;
- It
must be owned and controlled by one or more U.S. citizens. Approved
ownership can also be by a Community Development Corporation or
Indian tribe; and
- At
least 35% of its employees must reside in a HUBZone.
The
SBA must certify small businesses that want to claim HUBZone status.
HUBZone businesses are eligible to receive sole-source or set-aside
contracts, or receive a price preference up to 10% when competing
for full and open competition procurements.
More
information on the HUBZone
Empowerment Contracting Program
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Service-Disabled
Veteran-Owned Small Business (SDVOSB)
A
service-disabled veteran-owned small business concern is a small
business that is at least 51% owned by one or more service-disabled
veterans. In the case of publicly owned businesses, at least 51%
of the stock is owned by one or more service-disabled veterans and
the management and daily business operations are controlled by one
or more service-disabled veterans or in the case of a veteran with
permanent and severe disability, the spouse or permanent caregiver
of such veteran.
Service-disabled
veteran means a veteran with a disability that is service-connected;
the disability was incurred in the line of duty while serving in
the U.S. active military, naval or air service.
SDVOSBs
are eligible for sole source contracts and restricted competitions.
All contracts valued at $100,000 or more include a clause, which
requires the prime contractor to provide the maximum practicable
opportunity to SDVOSBs to compete for subcontracts.
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Veteran-Owned
Small Business (VOSB)
A
veteran-owned small business concern is a small business that is
at least 51% owned by one or more veterans. In the case of publicly
owned businesses, at least 51% of the stock is owned by one or more
veterans and the management and daily business operations are controlled
by one or more veterans. VOSBs are not eligible for sole source
contracts and procurement set-asides however the FAR requires federal
agencies to actively encourage their prime contractors to use VOSBs
as subcontractors. All contracts valued at $100,000 or more include
a clause, which requires the prime contractor to provide the maximum
practicable opportunity to VOSBs to compete for subcontracts.
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Women-Owned
Small Business (WOSB)
A
women-owned small business concern is a small business that is at
least 51% owned by one or more women. In the case of publicly owned
businesses, at least 51% of the stock is owned by one or more women
and the management and daily operations of the business are controlled
by one or more women.
WOSBs
are not eligible for sole source contracts and procurement set-asides
however the FAR requires federal agencies to actively encourage
their prime contractors to use WOSBs as subcontractors. All contracts
valued at $100,000 or more include a clause, which requires the
prime contractor to provide the maximum practicable opportunity
to WOSBs to compete for subcontracts.
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Small
Business Subcontracting Program
The
successful offeror or bidder on contracts valued at $500,000 or
more ($1 million for construction) must submit an acceptable subcontracting
plan that sets percentage (based on the contract's total value)
and dollar goals for the award of subcontracts to small business,
veteran-owned small business, service-disabled veteran-owned small
business, HUBZone, small disadvantaged business and women-owned
small business concerns. (Note: Small business concerns receiving
prime contracts are exempt from this requirement.)
OSDBU
staff and contracting officers review all subcontracting plans by
prime contractors to ensure compliance with subcontracting requirements.
The subcontracting plan must be submitted and accepted before the
contract may be awarded. Also, according to the FAR, any contractor
receiving a contract for more than $100,000 (simplified acquisition
threshold) must agree in the contract that small business, veteran-owned
small business, service-disabled veteran-owned small business, HUBZone,
small disadvantaged business and women-owned small business concerns
will have the maximum practicable opportunity to participate in
contract performance consistent with its efficient performance.
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