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What is the difference between an MBE and an SDB?
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Posted On: Wednesday December 31st, 2003 at 12:00am EST
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The Minority Business Development Agency is the only Federal organization that is authorized to advocate for and to provide assistance to minority-owned business enterprises that are other than small. Although the SBA’s authoring legislation refers to the 8(a) program office as the “Office of Minority Small Business and Capital Ownership Development,” the SBA has changed the name in recent years to the “Office of Business Development.” MBDA provides numerous forms of assistance, including assisting MBEs in their efforts to secure Federal, state and local government contracts as well as contracts with universities, institutions and commercial corporations. The types of assistance provided are listed and described throughout this website. However, when marketing Federal agencies, you must be aware of the distinction between MBEs and SDBs, or small disadvantaged businesses.
There are two principle reasons why this distinction must be clearly understood. The first is that, other than through MBDA, the Federal Government provides no assistance or preferences to firms that are other than small, except for some preferences provided to large businesses who utilize small businesses as subcontractors or serve as their approved mentors. Participation in all of the programs administered by the Small Business Administration is governed by size standards used to determine whether or not a business qualifies as small. If your business exceeds these size standards, you are not eligible for participation or for SBA’s financial, counseling or procurement assistance. Likewise, the Federal offices of Small and Disadvantaged Business Utilization (OSDBUs) are statutorily authorized to ensure that small businesses participate in their agencies’ acquisitions as prime and subcontractors. The only assistance they provide to large businesses involves advocating for small businesses as subcontractors and team members.
Therefore, in order to participate or benefit from the many forms of assistance provided by SBA and the OSDBUs, an MBE must also be small, unless the MBE is a large business with a requirement for a subcontracting plan. If you are an MBE and also fall within the SBA’s size standards for your industry, you may want to consider whether you meet the additional requirements for being certified as an SDB, 8(a), HUBZone, Woman-owned, or veteran owned small business The Office of Federal Procurement Policy and the Federal Procurement Data Service collect, compile and report Federal procurement statistics broken out by these categories.
The second reason that the distinction between MBE and SDB must be understood by MBEs seeking government contracts is that the term “minority” technically is rarely included in the language of Federal legislation, regulations, procurement policy documents, standard operating procedures or internal and external communications. For decades, the term of reference in Federal procurement has been “disadvantaged.” According to statutory language governing the program, a business owner is considered disadvantaged if he can be certified as socially and economically disadvantaged.
A business owner(s) is presumed to be socially disadvantaged if he is a member of a minority group. He must then prove economic disadvantage by providing evidence to show that his personal net worth does not exceed the applicable thresholds. If social and economic disadvantage can be shown, the company may be able to qualify for the SDB and/or section 8(a) programs by meeting additional requirements for the business. |
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