Overview:

The SDB procurement mechanisms are a price evaluation adjustment for SDB concerns, an evaluation factor or sub-factor for participation of SDB concerns, and monetary subcontracting incentive clauses for SDB concerns. The Department of Commerce will determine on an annual basis the authorized SDB procurement mechanisms and applicable price evaluation adjustment percentage.

The SBA is responsible for certifying a concern as a SDB.

The certification process will categorize a small business as “disadvantaged” only if an SBA review finds the firm is owned and controlled by someone who is socially and economically disadvantaged. This revised rule will make it easier for business owners who are not members of minority groups to become Small Disadvantaged Businesses (SDB) by demonstrating their disadvantage.

In the past, the Government relied on each company to “self-certify” or to truthfully identify itself as disadvantaged. Today, SBA’s Office of Small Disadvantaged Business Certification and Eligibility will:

Certify the ownership and control of all small companies that apply;Decide protests and appeals; Establish and oversee a nationwide network of private certifiers who will help SBA process applications; and Maintain a public on-line registry of certified SDBs for access by contracting officers and the general public.

In order to qualify, a small business must be owned and controlled by a socially and economically disadvantaged individual. African Americans, Hispanic Americans, Asian Pacific Americans and Subcontinent Asian Americans are presumed to qualify. 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 value of the business and personal residence. Successful applicants must also meet applicable size standards for small businesses in their industry and display good character as well.

Once an SDB is certified and added to the on-line public registry of SDB-certified firms maintained in CCR/Dynamic Small Business Search, it will be eligible for preferences under federal procurement regulations. Certified firms remain on the list for three years.

The certification process is consistent with 13 CFR part 124, Subpart B which was mandated to “mend, not end” affirmative action programs. The SBA’s new certification service will help Small Disadvantaged Business (SDB) grow and develop by participating in a marketplace worth about $200 billion. This reform complies with the U. S. Supreme Court in Adarand Constructors, Inc. v Pena, which said affirmative action programs must be narrowly targeted to remedy only the lingering effects of discrimination.

Under the Government’s reformed affirmative action rules, SDBs are eligible for price evaluation adjustments of up to 10 percent when bidding on federal contracts in certain industries. The program provides evaluation credits for contractors who achieve SDB subcontracting targets. This program is intended to help federal agencies achieve the Government-wide goal of 5 percent SDB participation in prime contracting.

Preferential Evaluation Program, continued Price evaluation credits are authorized in those two-digit industry categories, or NAICS Codes, where the U. S. Department of Commerce has determined that SDBs are underrepresented. In addition, negotiated procurements where SDB participation is an evaluation factor may provide monetary incentives for prime contractors that meet specified targets for SDB subcontracting in the NAICS major groups.

Price Evaluation Adjustment:

The small disadvantaged business price evaluation adjustment (PEA) is a price-related factor that may be applied in contract award decisions where a small disadvantaged business (SDB) concern is competing with one or more concerns that are not SDB. Joint ventures that include an SDB may also qualify for a price adjustment if they meet requirements identified in the FAR.

The Department of Commerce will determine on an annual basis, by North American Industry Classification System (NAICS) Industry Subsector, and region, if any, the applicable PEA factor(s).

• The effective date of the determination must be no less than 60 days after its publication date.

All competitive solicitations must provide for consideration of the applicable PEA set by the Department of Commerce (DoC) unless one of the following exemptions applies:

The acquisition is:

• Less than or equal to the simplified acquisition threshold;

  warded pursuant to the 8(a) program;

  Set aside for small business concerns; or

  Set aside for HUBZone small business concerns;

  Set-aside for service-disabled veteran-owned small business concerns;

  Where price is not a selection factor so that a price evaluation adjustment would not be considered (e.g., architect/engineer acquisitions); or

  Where all fair and reasonable offers are accepted (e.g., the award of multiple award schedule contracts).

The price credit is not available for industry categories where benchmarks are not required. In addition, the price credit does not apply to:

• Procurements that are below the simplified acquisition threshold;

  Procurements that are set aside for small business;

  Procurements under the SBA 8(a) program; and

  Procurements set-aside for HUBZone small business concerns.

The U. S. Department of Commerce “benchmarks” reflects the degree of SDB under-representation in each industry category. Determinations are summarized on the Internet at: http://www.arnet.gov/References/sdbadjustments.htm

The 8(a) Business Development Program received its name from section 8(a) of the Small Business Act. It allows contracting agencies to enter into a contract with SBA who will have the actual work performed by an eligible subcontractor. The SBA’s subcontractors are referred to as “8(a) contractors.”

A business meets the basic requirements for admission to the 8(a) program if it is a small business unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States and which demonstrates potential for success.

Once enrolled in the program, a contractor may stay in the program for 9 years from the date of SBA’s approval letter. Only termination, early graduation or voluntary graduation may shorten the nine-year program term.

Footnote: SDVOSB, WOSB or HUBZone firms may be qualified to participate as an 8(a) contractor.

Definitions useful in understanding the 8(a) program are as follows:

Alaska Native means a citizen of the United States who is a person one-fourth degree or more Alaskan Indian.

Alaskan Native Corporation (ANC) means any Regional Corporation, Village Corporation, Urban Corporation, or Group Corporation organized under the laws of the State of Alaska in accordance with the Alaska Native Claims Settlement Act, as amended.

The ANC is one of many small business concerns that fall under the 8(a) Business Development (BD) Program designed to assist eligible small disadvantaged business concerns compete in the American economy through business development. There is a ten page SBA Application Form that the Alaskan Native Corporation-Owned Concern must fill out and submit to SBA, once accepted into the program and the participant completes its nine year term under the 8(a) BD Program is deemed to graduate from the program.

Bona fide place of business for purposes of 8(a) construction procurements means a location where a participant regularly maintains an office that employs at least one full-time individual within the appropriate geographical boundary. The term does not include construction trailers or other temporary construction sites

Community Development Corporation (CDC) means a nonprofit organization responsible to residents of the area it serves which has received financial assistance under 42 U.S.C. 9805, et seq.

Early graduation SBA may graduate a firm from the 8(a) program prior to the expiration of its Program Term where SBA determines that that the Participant has demonstrated the ability to compete in the marketplace without assistance under the 8(a) BD program; or one or more of the disadvantaged owners upon whom the Participant's eligibility is based are no longer economically disadvantaged.

Indian Tribe means any Indian tribe, band, nation, or other organized group or community of Indians, including any ANC, which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians, or is recognized as such by the State in which the tribe, band, nation, group, or community resides.

Native Hawaiian means any individual whose ancestors were natives, prior to 1778, of the area that now comprises the State of Hawaii.

Native Hawaiian Organization means any community service organization serving Native Hawaiians in the State of Hawaii, which is a not-for-profit organization, chartered by the State of Hawaii, is controlled by Native Hawaiians, and whose business activities will principally benefit such Native Hawaiians.

Program Year means a 12-month period of an 8(a) Business Development participant’s program participation. The first program year begins on the date that the concern is certified to participate in the 8(a) Business Development Program and ends one year later.

Self-marketing of a requirement occurs when a participant identifies a requirement that has not been committed to the 8(a) Business Development Program and, through its marketing efforts, causes the procuring activity to offer that specific requirement to the 8(a) Business Development Program on the participant’s behalf.

Tribally owned concern means any concern at least 51 percent owned by an Indian tribe.

Unconditional ownership means ownership that is not subject to conditions precedent, conditions subsequent, executor agreements, voting trusts, restrictions on or assignments of voting rights, or other arrangements causing or potentially causing ownership benefits to go to another (other than after death or incapacity).

Competitive 8(a) acquisitions - The contracting officer may request an eligibility determination on as many as three of the most highly rated offerors. If competitive procedures are used, SBA’s concurrence in the negotiated price is not required.

Sole Source (under $5M assigned manufacturing NAICS codes and $3M for all other acquisitions) – The contracting officer is responsible for initiating negotiations directly with the 8(a) contractor. The contractor is responsible for negotiating within the time established by the contracting officer. If the contractor does not negotiate within the given timeframe and additional time cannot be allowed, the contracting officer may proceed with the acquisition from other sources after notifying the SBA. Sole source dollar limitations do not apply to Native Hawaiian Organization, Alaskan Native Corporation, and tribally owned concerns.

Requirements of 8(a) contractors - During the transitional stage of the 8(a) Program, a participant must achieve certain targets of non-8 (a) contract revenue from other than sole source or competitive 8(a) contracts. These targets are called non-8 (a) business activity targets and are expressed as a percentage of total revenue.

Competition Waiver - A competition waiver may be obtained when the contracting officer determines that there is not a reasonable expectation that at least two responsible 8(a) firms will submit offers at a fair market price; or SBA accepts the requirement on behalf of a concern owned by an Indian tribe, Alaskan Native Corporation or a Native Hawaiian Organization.

Useful Small Business Internet Sites

DoD Mentor-Protégé

Small Business Administration

Veterans Business Development

Veterans in Business

Programs for Veterans

Veteran's Small Business Research - SBA Office of Advocacy

SBA Procurement Center Representative (PCR)

SBA Office of Native American Affairs

Native American Assistance (HUD)

Native American Resources

Small Business Development Center

Small Business Innovation Research Program

National Technology Transfer Center

Procurement Technical Assistance Center

Federal Access - Information about services, resources, and business development programs to assist your small business

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