Relevant Information About the SBA 8(a) Program

Federal Contracting

The Federal Government is the single largest customer in the world. They spend $12,684 every single second of every day (over $400,000,000,000.00 per year) on products and services from commercial vendors. The way the federal government buys goods and services is different from the way it is done in the commercial marketplace, so companies wishing to sell to the Federal Government need to become familiar with the way the Government does business.

When the Government needs to procure a product or service, and the projected dollar value of the contract is expected to exceed the small purchase threshold (currently $100,000), they must, in general, do so on a competitive basis. Most usually, the Government publishes a solicitation requesting proposals or bids and invites interested potential vendors to compete for the contract. Sometimes contracts are awarded to the lowest bidder, but more often to the bidder that offers the best value, taking price, quality, experience and past performance into account.

In some cases, the Government awards contracts to companies directly without holding a public competition. This mainly happens where the products and/or services being procured are only available from a single source of supply. These are referred to as sole-source contracts. An example might be if the Navy wanted to buy 5 more Trident submarines. The Trident was developed by General Dynamics as a result of a previous competition. It would be insanely costly to hold a new competition to buy 5 more Trident submarines when General Dynamics already has all the engineering done, has the production facilities in place, and has produced all the Trident submarines to date. Effectively, then, General Dynamics is the only source of supply for Trident submarines.

In order to make a sole source contract award, the Government must publish its intention to do so as well as a detailed justification of its reasons for doing so. In some cases, other companies with the same capabilities to supply the required products or services will appeal a sole source decision. If the appeal is successful, the Government may decide to hold a competition instead.

For the most part, however, the products and services offered by small businesses are not unique. The same or similar products and services are available from many vendors. Therefore, small businesses - and for that matter most medium to large businesses as well - are almost never awarded sole source contracts. There are some exceptions, however, that are discussed below.

Because the Government is interested in promoting the award of government contracts to certain categories of businesses, another means of procuring products and services that the Government employs is contract set-asides. What that means is that, while the Government holds a competition for the contract, only the designated category of business may bid on the contract. Examples include, Small Business set-asides, 8(a) set-asides, Veteran-Owned Business set-asides, HUB Zone set-asides, Economically Disadvantaged Women-Owned Small Business (EDWOSB) set-asides and a number of others. In this way, the Government is assured that, no matter who wins the competition, the contract will be awarded to a business within the targeted category.

Interestingly, contracts that the Government intends to award to certain categories of businesses can, in some cases, be awarded as sole-source contracts instead. Examples include contracts to be awarded to SBA 8(a) certified. firms, HUB Zone certified firms, ESWOSB certified firms and Certified Veteran-owned firms. Below, we will focus on SBA 8(a) sole source contracts.

As mentioned above, there are two main ways that contracts are awarded to 8(a) certified firms. One is where the award is set aside for competition only among 8(a) certified firms. The other is where the contract is awarded directly to the 8(a) firm without holding a competition (sole-source). The way the Government decides which way to award an 8(a) contract is determined by the size (dollar amount) of the contract. Contracts that are expected not to exceed $4.5 million in total (for services) or $6.5 million in total (for manufacturing) may be awarded to an 8(a) firm on a sole source basis. Contracts expected to exceed those limits must be competitively awarded as the result of an 8(a) set-aside competition. 

There is yet another way that the Government awards contracts. This is through the use of GWACS. A GWAC is an overarching contract under which the government pre-establishes the products and services on offer, and prices, terms and conditions for those products and services. GWACs are awarded to multiple firms as a result of a general competition in which the most competitive firms receive contracts while those that are not within the competitive range do not. An important distinction is that under a GWAC, the government is not immediately procuring any services or products. Instead they are establishing a competitive range of contractors, as well as pricing and terms, from whom they can order products and services at a future date. In most cases, a further competition limited to the GWAC contract holders - and sometimes set-aside for small or 8(a) businesses as well - may be held for the award of such orders.

The most widely known and used GWACs are the various GSA Schedule contracts, although there are a growing number of others. We mention GWACs here as part of this general overview of Government contracting, but we cover this subject in more depth in a separate article.

Obviously, the preceding article does not begin to cover everything there is to know about Federal contracting. It would take thousands of pages to comprehensively cover the subject. However, for those who are new to Federal contracting, the forgoing is intended to give a general overview and a place from which to start.

Overview of the SBA 8(a) Program SBA 8(a) Program - Quick Overview

SBA Form 1010C, 8(a) Business Plan - Overview and Online Completion

Congress mandates it: In order to increase the success rate of firms going through the 8(a) program, Congress has mandated that 8(a) firms develop the special 8(a) Business Plan and that they update it yearly. In this way, firms will have a definite plan of development and will increase the chances of being competitively viable by the time they graduate from the 8(a) program. Recently certified firms participating in SBA's 8(a) Program need to promptly file the SBA's special 8(a) business plan or face early termination from the program.

  • Yes - the SBA 8(a) Business Plan is totally different: Although some new 8(a) firms may already have a business plan - even a business plan used to obtain SBA loans - it will probably be of little use in preparing the SBA 8(a) Business Plan. Why is this?Establishing 8(a) business development objectives:  It is because most business plans are for a different purpose. Most are for strategic planning, or obtaining financing. By contrast, the SBA 8(a) Business Plan is for the specific purpose of establishing 8(a) business development objectives.
  • SBA Form 1010C: The 8(a) Business Plan is submitted on a special form, SBA Form 1010C. The form asks 52 detailed questions that are specific to the 8(a) program. The questions require thorough and detailed answers in well-written narrative form that address the firm's plan for developing itself through the 8(a) program. Specifically, firms must comprehensively address 8(a) program business development objectives, 8(a) and non-8(a) sales projections, management plans and 8(a) and non-8(a) marketing plans, tables, charts and financial projections.

Within 30 days: Upon 8(a) approval, or shortly thereafter, new 8(a) firms are directed to attend a mandatory orientation session at their local SBA office. The 8(a) Business Plan must be filed within 30 days after that session. Failure to do so can lead to termination from the programSmart 8(a) owners don't wait:  Since firms may not receive any 8(a) program benefits, including 8(a) contracts, until they have filed their 8(a) Business Plan -- and until SBA approves it -- smart 8(a) firm owners get this requirement done and out of the way as soon as possible.

  • Between one and several solid weeks of research and writing time:  SBA estimates it will take you 520 hours (10 hours per response). That estimate is probably too high, but it gives a good idea of the level of detail that SBA is expecting to see.
  • If an 8(a) company owner has a team of staff members he or she can assign to the task, it can probably be completed in about a week. If not, the owner will probably have to tackle it. That typically takes much longer. This is especially true because, unless someone is familiar with what SBA is looking for and how to address it, they will probably miss the mark on the first try. That, in turn, can lead to multiple revisions, and time spent going back and forth with SBA.

Not required:  SBA does not require that an 8(a) firm hire a consultant to assist in preparing the 8(a) business plan. It is typically an expensive alternative. Many firms do, however, primarily in order to avoid tying up the the time of the owner, and also in order to get it done promptly and correctly so that it can be approved by SBA on the first try. That way the firm can be cleared for the award of 8(a) contracts.

Templates: Several consulting firms sell templates for use in formulating the 8(a) Business Plan. These tend to be "one size fits all", and since they have been used multiple times, SBA can easily spot the plans prepared from a template.

Online Software: There is also and option to use online software that efficiently gathers company information which is then used to customize an 8(a) Business Plan based on how questions are answered. Many recently certified firms choose this option because it is faster than other alternatives, and yet they still get a professional business plan that doesn't look like it was generated from a template - but without requiring advanced writing skills. For more information on this alternative, click here: PREPARATION OF 8(A) BUSINESS PLAN USING ONLINE QUESTIONNAIRE

How the SBA District Office Processes an 8(a) Business Plan