Good afternoon to all of our participants
today. We greatly appreciate you joining us and the interest in SBA second 8(a) business
development program. As you can see from the screen that youíre looking at, weíre going
to talk about the 8(a) program and what the purpose of the program is, weíre briefly
going to cover some of the eligibility criteria. Weíre going to talk about some of the benefits
around the program and the opportunities associated with this program.
There is an extensive [flight deck 00:00:33] that associated with this webinar that will
be provided on YouTube along with the flow webinar, probably about four days following
this webinar. The YouTube address will be included in the deck so please be sure to
get that address when we cover that next. Weíre going to talk about, what is the 8(a)
business development program, next slide. As you can see on the screen, weíre basically
introducing you here to the originations of the 8(a) program talking about the public
law and the reason weíre showing you that is because that really tell us what is 8(a)
program is all about. When this program was legislated, it was legislated
probably to the surprise of everyone as a business development program. In doing so,
congress determined that the cause of unequal access to the number of resources required
to start and operate a business like financing, access to capital, access to human resources,
technical resources and other necessary factors to successfully operate a business and particularly
contracting opportunity. The individuals who were described as disadvantaged individuals
had an unequal access to the market place. This program was legislated to facilitate
the business development assistance necessary that help overcome those discrepancies or
those inequalities that they had experienced. Among those tools that were being provided
by this law with contracting, so letís start out with the notion that the 8(a) program
is a business development program, it is not a contracting program. It was actually legislated
under two sections for the small business action. One section, we refer to as section
7 [inaudible 00:02:36] and that is the section of the act which talks the types of business
development assistance that to be provided through the 8(a) program and the purpose of
the 8(a) program. The 8(a) section of the act is essentially
the section of the act that allows with a contracting activity that occurs in the 8(a)
program. The roles governing the 8(a) program are described in chapter 13 of code federal
regulations part one 24. I would encourage everyone to review those regulations, their
easy to access, you can access on website thatís noted on the slide and just to make
sure that whatever regulations you look at. Whatever you pull up on the internet, that
it has a date of March 2011 and additionally regulations governing the 8(a) program are
found in the [far 00:03:28] under part 19 which describes the small business program
and the Federal Acquisition Regulations governing contracting under the 8(a) program. Again
that accessible online under the website noted on the slide, next please.
What are the objectives of the 8(a) program business development program? These are pretty
much straight out of the statute to promote the business development or small business
concerns founded in [inaudible 00:03:57] by socio and economic and disadvantaged individuals
and to promote the competitive liability of these firms. To clarify and expand the program
for [inaudible 00:04:04] for the United States, what that last one really means is that we
are essentially expanding the number of companies that have the ability to produce and provide
for the services that are required for the operations of the government.
Moving to the next slide, so how does this program operate? This program is essentially
divided in the two stages. Itís a nine year program. The first four year of the program
as considered the developmental. During those nine years, doing those first four years,
the [inaudible 00:04:37] is to provide as much assistance and much contracting activity
as we possibly can, but keeping our mind that this is a business development program. During
those years, weíre trying to develop the company to the point where it has developed
a resources and infrastructure to prepare to exit a program.
The next five years of the program, we referred to as to transitional stage and thatís when
things start to change for firms in the 8(a) program. During those years weíre looking
to wean you off of the support provided about the 8(a) program. For more dependency on opportunities
that you are able to obtain competitively outside of the 8(a) program, those opportunities
can be both governmental or private sector. There is a requirement during that period
that we look at in respect to the level of activity you generate outside the 8(a) program.
Moving to the next slide, once you get in the program, as I mentioned, this is a nine
year program, you essentially leave the program before nine years or after nine years and
how do you that? Well a number of firms who find that the program doesnít really work
well for them so they will voluntary withdraw early or they will themselves decide that
weíve met the objective of the program. Weíve met the objectives of the program. Weíve
met the objectives that weíve set forth for our company when we came into the program.
They will voluntarily early graduate from the program.
Some firms will complete the program in nine years. That means that theyíve went through
the entire nine years and the nine year term is up and they are automatically removed from
the program and then thereís graduation from the program. The graduation could be after
nine years, which means that following nine years of the program, itís determined that,
you stayed in the program for nine years and you left the program meeting the objectives
that set out to achieve. You could be early graduate from the program,
thatís an action that initiated by SBA and when that occurred itís because SBA has determined
that you have met the goals and objectives that you set out to achieve and you should
leave the program early. Of course you can be terminated from the program and termination
is an adverse action which means that you need to leave [inaudible 00:06:58] because
you have violated a rule associated with the program.
Moving to the next slide, as I mentioned before, weíre going talk a little bit about our eligibility
criteria for the program. However, as many of you may be aware, we have another webinar
schedule for next week. That webinar next week is going to focus on the eligibility
criteria but more importantly itís going to focus on, what is considered a good application
and we are going to talk a little bit about why firms or for dominant reasons, why firms
are denied participation in the 8(a) program and how to submit a successful application.
Next slide, so the program as legislated with design to assist firms that are small businesses
that are owned by individuals and controlled by individuals who are socially and economically
disadvantaged and who are of good character. The socially disadvantaged individuals and
this language that you see in front of you is language right out of our statutes, is
individuals or persons who have been subjected to racial or ethnic prejudice or cultural
bias because of their identity, thereís number of group, without respect to their individual
equality. Next slide, please. In legislating this program,
congress decided that certain individuals were identified as members of certain groups
are presumptively socially disadvantaged. Of course that list of individuals on the
screen in front of you, black Americans, Asian specific Americans, Hispanic [inaudible 00:08:3]
native Americans, subcontinent Asian Americans. Those individuals if you are identified as
a member of one of those groups then you are presumptively disadvantaged.
Next slide, please. There are other groups that are eligible to participate in the program.
We refer to those [inaudible 00:08:49] organization and those are companies that are owned and
operated by [lots of 00:08:53] native corporations, tribes, native Hawaiian organizations and
community development corporations. Today weíre not going to focus on those weíre
going to focus on the individual eligibility. Next slide, please. Now, the question would
be, what if Iím not identified as a member of one of these groups, am I eligible to participate
in this program? Yes, the 8(a) program while it is a race conscious program, is a not a
race based program. Anyone is eligible to participate in a program if he or she believes
that they are socially and economically disadvantaged and has been subjected to bias treatment because
some identification of some identifying characteristic. Whatís an identifying characteristic? It
could be a disability. It could be gender. It could because of long term residence in
a particular area. In order to establish that you are socially disadvantaged that had been
subjected to bias treatment, the legal standard that we apply is preponderance of evidence.
In order to meet that requirement you need to describe to SBA based on preponderance
evidence. The experiences that youíve had in business, education, employment or whatever
it may be, how you were treated in a biased way and how it impacted your entry and advancement
in the business place. Next slide, please. What is preponderance?
Well, preponderance as I indicated is a legal standard. It essentially says, itís evidence
of a quality and quantity which leads the decision maker to objectively conclude that
the existence of truth or the fact concerned is more probable or not. In other words, itís
more likely or not that what you are representing to us is true.
Next slide, please. Now, I mentioned that individuals who are members of certain groups
were presumptively disadvantaged. No one is presumptively economically disadvantaged.
Economic disadvantaged individuals are socially disadvantaged individuals and thatís important
to note that you have to be socially disadvantaged before you can be considered to be economically
disadvantaged and if those individuals whose ability to compete in a free enterprises system
have been impaired due to diminished capital and credit.
Next slide, please. Now we apply a certain criteria to determine whether or not you are
economically disadvantaged and in this next few screen which Iím going to go through
very quickly describe the criteria that we apply to an application when you are, the
initial application for 8(a) eligibility. First thing we look at is your net worth and
what we look at as individual who have a net worth of less than less than 250, 000 dollars.
If you see on your screen, we excluded things. We excluded the equity and your primary residential.
We exclude the equity and the business thatís applying to participate in a program. We exclude
retirement accounts that are subjective to penalty for early access and if your adjusted
net worth after those exclusions is less than 250, 000 dollars, you pass the first test.
The next slide describes the next test and thatís your personal income. When we look
at personal income, weíre look at an average of personal income and thatís ñ We look
at a three year average and it may not exceed 250,000 dollars. It is important to note here
is that if you are operating a company that is [attest 00:12:23] to organization like
a partnership or LLC or a sub-chapter [inaudible 00:12:28] corporation, we also look at the
distributions that may be pass through to you out of those companies. Depending on how
you handle those distributions, they may impact your three year average income. In other words,
if you are getting pass through income and if that income exceeds the amount thatís
due on in terms of taxes on the earnings of the company or your share of the earnings
of the company then we will consider that as part of your personal income.
Now on the next slide, we will get total assets so we look at personal net worth, we look
at personal income or we look at total assets and if you can see including all the exclusions
less the retirement account. If your total asset donít exceed four million dollars then
assuming that you met all through test, more than likely we will consider you to be economically
disadvantaged. Next slide, please. Looking at those same
numbers after you entered the program then those numbers changed for continuing eligibility
in a program using the same approach that we use for program entry. Your net worth figures
that are allowable for continuation in a program, 750, 000 dollars. A total asset goes to six
million and your personal income goes to 350, 000.
Next slide, please. As I mentioned when I described the eligibility for the program,
good character, next slide, this is an important one to note for you and Iím not going to
read through all the requirements. I mean, you can see that but we look at things ñ
When we look a character, we look at any adverse information related to any criminal conduct
in you were you may have a prior relationship with SBA if there are violations of any SBA
regulations. Whether or not you were or company youíre
associated with or have been [inaudible 00:14:26] or suspended. Where thereís an indication
of a lack of business integrity, whether you were incarcerated, on parole or probation
and more important whether you have failed to pay a financial obligation to the federal
government that could be a student loan, that could be taxes or any other type of obligation
that you may have been [inaudible 00:14:54] federal government.
These are important things and the reason itís important is because part of the application
weíre going to ask you these. Itís very important to make sure that you are [inaudible
00:15:02] coming and answering, a positive answer to any of these questions doesnít
necessarily lead to ineligibility. A negative answer where there should have been a positive
answer will lead to ineligibility. Next slide, please. Now this is an area that
I want to focus on. This is a [inaudible 00:15:20] what we call potential for success in, one
of the requirements for the program ñ Itís a business development program. In coming
into the program, one of the things that you need to demonstrate is that you have the ability
to successfully perform in the program and while this program is not a contracting program
and major focus of program is the ability to assist in the development of your company
through the provision of federal contract. Next slide, please. For those purposes, when
you apply for the program, we evaluate your company for a potential for success and I
have to tell you this one of the highest factors or one of the area where we have the highest
decline rate ñ Is in the area of potential for success. What do we look at? First of
all, when you apply for the program you apply to participate in the program in a particular
industry. We refer to that as your primary next [coder 00:16:15], North American Industry
Classification Code System. Letís say you are a construction company
and your primary next goal is associated with one of the areas of construction so we look
at you when we determine ñ First and foremost, have you [inaudible 00:16:34] based on the
information you provide, tax returns. Have you been operating in that business, in that
industry for at least two years? Do you demonstrate sufficient financial capability to capitalize
the company, provide bonding, service your debt, pay your bills, and pay your employees?
Do you have the necessary management and technical capability that actually perform in this industry?
Now as an individual who is applying, whoís saying that he or she is disadvantaged. We
donít require that you have both managers on technical capability. We require that you
have one or the other but the business itself must have both.
Next slide, please. We look at management. We look at your education, your experience
in training and particularly relate it to the primary industry. We look at past performance
of the company, now why do we do that? When you entered into a contract under the 8(a)
program, in fact SBA is the prime contractor and as you probably know, if youíre familiar
federal contracting. To perform on a federal contract you must demonstrate responsibility.
That would be the ability to manage the contract, to provide the services to produce the products
and to meet the financial requirement to performing that contract. Those are issues of responsibility.
When SBA, as a prime contractor accepts the contract into the 8(a) program, it is asserting
its responsibility to perform based on your capability. Thatís what makes the potential
for a success requirement extremely important to firms coming into the 8(a) program.
Next slide, please. One of the things that I mentioned before is that there is a requirement
that you be in business for at least two years. Next slide, please. Letís assume your company
has not been a business for two years. We do have labor criteria and if you are applying
to participate in a program and youíve not been on a business for two years you have
to request a labor. In these slides described what we look at in respect to labor criteria.
As you can see weíre looking for the individual or individuals upon whom eligibility is based
have substantial and demonstrated a business management experience. Thatís a firm. When
we refer to the applicant, weíre referring to the firm has demonstrated technical expertise.
In other words, that youíve got the past performance and that you have wherewithal
within your organization to meet the technical requirement associated with the industry in
which you are operating, that you have adequate capital.
Next slide, please. As I mentioned, that you have a record of successful performance on
contract from government or non-governmental sources in your primary industry. If you have
the wherewithal I can demonstrate the wherewithal to obtain the necessary resources to perform
the contract as personnel, facility, equipment and any other things that you might need to
perform on a particular contract. Next slide, please. Weíve talked about ownership
and if company needing to be owned by individuals who are socially and economically disadvantaged.
Next slide, our requirement is that at least 51 % unconditional ownership by a disadvantaged
or disadvantaged individual. What do we mean by unconditional? That means that you must
have direct right to that ownership, it canít be condition on any other terms and conditions
and that you have the right to 51 % of the distribution profits and that 51 % is not
otherwise in convert. If you have a partnership agreement, the agreements must reflect that
you have 51 % unconditional ownership, same thing to Limited Liability Companies.
Next slide, please. We talked to you about the corporation and the ownership requirement
for corporation when we talked about the 51 % of each class or voting stock and then 51
% of outstanding stock. One thing important about stock options, if you have individuals
involved in your company who are not disadvantaged individuals and they have stock options. We
will consider those stock options that at the time of eligibility as though they have
been exercised. What that means is, is that if you apply and you say you own 51 % of all
the stocks and you have a non-disadvantaged individual who owns 49 % of the stock but
they have options to acquire additional stock that may not have been issued at the time
of application. We will consider that with options as being exercised and calculate your
ownership based on the impact to those options. On the other side of the coin, if you have
stock options, we will not consider those to be exercised.
Next slide, please. You can only use your eligibility to qualify one firm in the 8(a)
program. When you apply to participate the 8(a) program, if you say that you are disadvantaged
and you exercise your disadvantaged status for the purpose of qualifying a firm. You
can only use it one time, you could not use your eligibility status to qualify a second
firm or participate in the second firm as a disadvantaged individual or you could have
an individual who owns 49% of your company who is a member of one of the designated groups.
If that individual doesnít use his or her disadvantaged status to qualify that firm,
that individual is considered to be a non-disadvantaged individual for the purpose of participation
in the program. One and important point on this slide is that
if you have an immediate family member who currently owns or previously own an 8(a) company.
You may not be eligible to participate in a program if there is not a strict prohibition
against it. However, we look at that relationship between your family member and the existing
8(a) company or the former 8(a) company and where we find that there are relationships
contractual or otherwise were you may have been a former employee or an officer or director
in that company even though you didnít use you disadvantaged status. We may find that
there are relationships that exist that will preclude you from participating in the 8(a)
program. What we are basically saying is that if the
– What the regulation says in this regard is that there is a compelling consideration
that if you have a relationship with a former family member that you would not be eligible
to participate in the program. That can be waived by the Associate Administrator for
Business Development which happens to be me. In waving that, Iím looking at product connections
and relationships associated with that particular company and that particular Ö Next slide,
please. As I mentioned before, the individuals upon whom eligibility is based must demonstrate
that he or she controls the company and manages the company on a daily basis.
Next slide, please. Iím not going to go through all these slides in great degree because weíre
going to talk about this a little bit more next week in the webinar on eligibility. When
we look at control, we look at the agreement. If thereís a partnership, if itís a liability
– A limited liability company or if itís a corporation, we look at what the corporate
paper say about the management you control of the company. Nest slide, please. When we
look at corporations, we look at the board of directors. We look at who ñ your ability
to establish [inaudible 00:25:06]. Next slide, please. Again, Iím not going to get into
great detail about this but when we look at corporation in respect to voting and if youíre
voting stock or voting on the board of directors. Weíre looking for disadvantaged individuals
to have the ability to exercise control. Where you have provisions that would allow non-disadvantaged
individuals to have equal vote then we would find that to be negative control. One thing
I would encourage you to do here and youíre going to hear this next week, is to make sure
that when you apply for the program, that you read the provision and your corporate
governance or your partnership agreement is to ensure that if you are the disadvantaged
individual, hat you have the ability to [inaudible 00:26:03] control over the day the day operations
and the management. Next slide, please. Youíll have an opportunity
to read through these slides yourself. Then again, this is talking about how we look at
the voting requirement and what your corporate document ñ What your agreement say in respect
to those issues. Next slide, please. Whatís constitutes control? When we look at control,
we look at the positions that are held by disadvantaged individuals who [inaudible 00:26:46].
Who has the ability to hire and fire? Who sets policies? Who is actually committing
the firm in respect to contract and who find contract and who has control over the budget
and financial [inaudible 00:27:01] of the company?
Next slide, please. Some of the tests to determine, whether or not you control the operations
of the company. Did you devote fulltime to the business? Do you have an informant outside
of the company? Are you operating other businesses? We expect that the individuals who are applying
as the disadvantaged individuals who will be in control of this company will actually
devote fulltime to the development of this company. Did I mention that this is a business
development program? We expect that you will commit yourself to the developing ñ the necessary
resources and infrastructure to build a successful company. In order to do that, we feel that
you need to devote fulltime to operations of this business.
That doesnít mean that you donít have the ability to teach a class somewhere. You may
have some other outside activities that are going on. As long as they donítí detract
from ability to manage this company in a fulltime basis. Do you have the necessary managerial
experience to be able to control the operations? Do you have to rely on someone else for those
purposes? Then again, if you donít have the technical capability, do you have the managerial
[inaudible 00:28:21] to manage the individuals who do have the technical expertise or who
may be providing critical licenses to your company?
Next slide, please. [Inaudible 00:28:37] disadvantaged individuals having the ability to control
your firm. This is one the things that SBA pays a lot of attention to. Next slide, please.
Okay, weíre having a technical difficulty moving to the next slide but when we look
at, whether or not non-disadvantaged individuals have the ability to control the firm, we look
at things like contractual arrangements that exist that allow non-disadvantaged individuals
to control the firm. Is non-disadvantaged individual involved in your company, a previous
employer or supervisor, and though that individual hold licenses that are critical to the company
or have an equity interest in the company. Did they provide bonding? Are they leasing
facilities to you? Do they have unlimited access to bank accounts? Are they providing
critical findings? Do they control loan arrangements? We look at those things and not one of those
things alone will necessarily make you an eligible. We look at the totality, are there
circumstances when we look at that issue. We look at size and obviously to qualify,
to participate the 8(a) program you must be a small business and we follow our size regulations
in respect to determining your size. Your size is based on your primary next code, the
average revenues over a three year period and that information is available in chapter
13 of code federal regulations part one, 21. I would suggest that you take a look at that
and particularly if youíre planning on participating in next weekís webinar, you take the opportunity
to look at these things so that you would be prepared to have your questions answered
regarding these particular issues. Next slide, please. Little bit about application
processing. Next slide, please. This slide sort of layout the general rules around application
processing. When you originally submit your application, the first thing that happen is
that we screen it, we typically try to do that in about 15 days. If the application
is incomplete, weíll contact and request the additional information that we think to
be appropriate. Once we get a complete application, once we have an application that we didnít
complete, we try to process application within 90 days. To be honest with you that doesnít
happen all the time and it depends on the complexity of the application. Right now,
weíre probably averaging about 75 to 80 days on applications but to keep in mind, there
is one when we have accepted an application as being complete.
If you have declined on the original application, you have an opportunity to request reconsideration
and you have to do so within 45 days from the day that itís declined. If you are declined
on reconsideration then you have to wait 12 months before you can re-apply. If we decline
you either on initially or on reconsideration on issues related to social disadvantage,
ownership or control. You have the ability to request reconsideration or you have the
ability to submit and appeal to our office of Hearings and Appeals and weíll talk more
about that next week as well. Next slide, please. While weíre getting the
next slide up, just a couple of notes, there are certain businesses that are ineligible
to participate in the 8(a) program. Brokers are ineligible. In other words, if you are
not taking possession of good, if youíre not selling good in a normal course, you would
be consider a broker and that firm would be ineligible. If youíve been debarred or suspended,
you would be ineligible. Non-profit organizations are ineligible. Certain franchises that maybe
ineligible but those are things that we have to look at on a case by case basis.
As I mentioned about individuals only being able to [pay 00:33:04] once a business, may
only participate in one. Even if you were to purchase a business that has previously
participated in a program, that firm would also be ineligible. Again, any person whoís
used disadvantaged status to qualify another firm will no longer be regarded as a disadvantaged
individual and would be a no to participate. Next slide, please. This slide basically shows
you the check list that we require that for 8(a) applications and again this check list
it pretty much [inaudible 00:33:42] what weíre looking for in an 8(a) program. Weíre going
to cover that again next week but as you can see, thereís an opportunity for you to look
at this check list, itís online at that particular portal noted that to the top of the slide.
Next slide, please. These next couple of slides are actually are ñ identify the application
process again. Iím not going to go through these. You have an opportunity to review though.
Next slide, please. This next slide basically talks about where and how to file your application
again this will be cover in our webinar next week. Next slide, please. This slide basically
shows ñ We have two offices that actually handle the processing of applications. One
is in San Francisco. One is in Philadelphia. The addresses are noted on this slide and
this map pretty much shows the parts of the country that are covered by those offices.
Next slide, please. I want to go back for a minute real quick and talk about potential
for success around this program and the purposes of this program. I talked a little bit about
being what we look at in expecting your ability to successfully perform in the 8(a) program
and particularly in respect to the ability to take advantage of the contracting opportunity
associated with the program. The first thing that you want to do is when you go back and
look at the requirements that we have in place for a potential for success in the areas that
we assess and the ability for you to be successful in this program, keeping your mind that itís
a nine year program. The question that you should ask yourself
is, are you really ready to participate in the program? Itís a nine year program, nine
years go very quickly. One of the things that you want to do when you get in to the program
is to hit the ground running. The question that you should be asking yourself is, am
I really prepared to take full advantage of this program and if not, what are the things
that I need to do in respect with my company to be prepare to get in to the program. As
I mentioned before, thereís a concept out there that this is in a contracting program
and itís not, itís not a long program. Another question that pops up routinely is
do we have to pay somebody to apply to get in to the 8(a) program to get approved or
to get contract after approval. Next slide, please. The first answer is no, itís not
a contracting program. We talked about that, no, itís not a loan program. The program
is about business development and contracting is just one of the tools that we provide for
purposes of helping to develop your company. Next slide, please. Do you have to pay someone
to get approved? No and I will tell you from personal experience that probably one of the
best experiences that youíll have as a business person is actually seating and reviewing the
requirements of 8(a) application and actually preparing it. I can tell you from personal
experience that there have been number of occasion where we have denied applicant based
on issues associated with the documentation provided.
The response that we usually get is that, ìWell that was prepared by my accountant
or it was prepared by my consultant,î but ultimately when you submit an 8(a) application,
itís your signature on that application and you are indicating to the SBA that you are
providing the information that truly represents circumstances associated with your company.
With that in mind, I would suggest that if you decided to apply for the 8(a) program
and particularly following the webinar next week, make certain that you completely review
your application before you submit it. Regardless of whether you prepared it or not
but to really ñI think most of the individuals who have prepared their own application have
found out things about their business that they were not fully aware of simply because,
in setting up their company, they relied on consultants or accountants or attorneys who
prepared documents that they themselves did not read or pay much attention to what they
actually say. Thatís an important point, make sure that you fully review the information
that you submit to SBA. Whether or not you decide to use an outside business and pay
someone to help you prepare an application, thatís a personal decision and thatís something
that you have to decide yourself but again, no one knows your business better than you
and you should be involve in that process. Next slide, please. You get in the 8(a) program,
whatís the first thing thatís going to happen? Will someone is going to give a call and say
we have contract for you? No, thatís not going to happen. Did the federal government
agencies have to give you contracts because you are certified, no, they do not. Is it
possible that you might not get a contract and if so can SBA extend your term in the
program? No, we cannot and thatís an important thing to know at this point as well. It is
a nine year program. The nine years is set by the statutes governing the program and
SBA does not have the authority to extend the term. Going back again to being prepared
and ready to get into program. It is an opportunity to grow your business, to develop the necessary
infrastructure and performance capability to be a successful operation beyond the 8(a)
program and getting in the program at the time when you can take full advantage of it
is very important. Next slide, please. I think an important thing
on this slide is that if you look at the percentages of those firms that receive contracts in the
program, as I mentioned, we have a lot of applicants and we get a lot of firms approved
for the program. While they meet the basic eligibility criteria, they are truly not ready
to participate in a program. Based on the regulations, we donít have the authority
to preclude those firms whoíre participating in a program. The consequences to that are
basically depicted in these ratios, about 40 % of the firms who get in a program, received
contracts. About 60 % of the firms never received a contract over the nine year period.
Next slide, please. With that in mind, the 8(a) certification is really ñ My employee
described it as like a fishing life and says, ìIf it crossed your head, it doesnít mean
youíre going to catch a fish.î Next slide, please. What type of assistance do we provide
to the people who are approved to participate in the program? Next slide, please. Once you
are approved for the 8(a) program you are assign to a District Office that is responsible
for servicing companies in the area in which you are located. Under the program, you are
assigned to what we refer to as a Business Opportunity Specialist, that person is responsible
for facilitating your business development and assistance. The first thing that happens
when you get approve for a program is you have to develop a business plan.
My suggestion is that you prepare a business plan before you apply for the program, so
that you can understand what your needs are and what you expect to receive from the program.
What you should expect from SBA is that you are assigned to an individual who will help
you facilitate those needs. Now, how do we do that? We have program called 7(j) program
which allow us to provide you professional consulting assistance. The Business Opportunity
Specialist will work with you to facilitate meeting your financial need and we use our
resource partners to assist us in helping you with business planning, with marketing
planning, contracting assistance and in any other area of your business that needs assistance.
Our most common resource partners that help are the service [inaudible 00:42:40] executive
[inaudible 00:42:42] a score, the small business development centers, one of our very active
partners located all over the country. I went in business centers provide business development
assistance, and [inaudible 00:42:54] and technical assistance centers are excellent first partners
in helping you identify contracting opportunities and preparing to do successful in the federal
market place. Next slide, please. What are the responsibilities
of the Business Opportunity Specialist that Iím referring to you? Next slide, please.
Their primary responsibility is to help you to develop your business plan. To review your
business plan, to determine what your needs are in terms of development, make you understand
how to market your company. What resources you need to be competitive in the federal
marketplace. To help you identify opportunities to understand how to do research about identifying
opportunities in the federal market place. To keep you apprised of opportunities that
they become aware of and communicate with ñ To carry activities on a regular basis
to maximize the usually 8(a) program and not necessarily specifically just your firm but
all the firms that they are responsible for. Next slide, please. Weíve talked about your
business plan, when you get approved for the program, the first thing thatís going to
happen is theyíre going to contact you, theyíre going to give you an orientation and then
theyíre going to sit down with you. Theyíre going to try and help you identify your strengths
and weaknesses and theyíre going to help you try to develop a plan in overcoming those
strengths and weakness and that business plan is updated on an annual basis. Every year
you have to submit an annual update to your business plan and again they look at your
progress, they look at what they need to do to help you going forward.
One of the things that I would advise you to do is that, this is a program that you
have to take full advantage of. You canít wait for someone to reach out to help you.
You have to let this person, this Business Opportunity Specialist know what your needs
are and be proactive about seeking assistance with your need. Next slide please. Just a
little bit about 8(a) contracting. In the 8(a) program, contracts are made available
on two bases. One is sole source and one is competitive. Next slide please. Any contract,
including options for manufacturing, if itís $6.5 million or less, itís eligible for sole
source award. If itís for any other service or construction, if itís $4 million or less,
itís eligible for a sole source award. Next slide please. Contracts that are offered to
SBA by agencies that exceed those thresholds are awarded in the 8(a) program on a competitive
basis where only 8(a) firms are allowed to compete. In these instances where these contract
opportunities exceed those thresholds and there are at least two- In order for it to
be an 8(a) competition, there has to be at least two eligible 8(a) companies to bid and
the [conference must be fair and reasonable 00:46:00]. No difference in any other federal
contracting opportunity for small business. Next slide please.
That map demonstrates that SBA District Office network. You can access that online. By doing
so, you can contact our local offices and find out when they are going to have seminars
about the 8(a) program or any other type of service that the SBA may provide. I would
strongly encourage you to contact your local office about upcoming seminars regarding the
program to get some hands-on assistance. Next slide please. This slide basically talks about
our government contracting classroom. One of the things that we try to do is to help
people prepare for the federal contracting arena and we have a number of classes that
are associated with government contracting and government contracting opportunities.
I would strongly encourage you to take a look at this as well. Next slide please. This slide
talks about our upcoming webinar. With that, I would like to say I know I ran through a
number of things very quickly, but I want to just give you a brief overview of the program,
the opportunities and the benefits of the program and I do strongly encourage you to
participate in our webinar upcoming next week. With that, Iíll be happy to try to respond
to as many questions as I can within the time thatís allotted.
Okay, so Iíve got a list of questions here and Iím going to try to go through these
as quickly as I possibly can. Can you re-apply for the program after a voluntary withdrawal?
The answer to that unfortunately is no. Remember I indicated that you can only use your eligibility
as an individual once and your business can only participate in the program once. Next
question, while determining eligibility for the 8(a) program, are you separately examining
each person who has ownership in the company or just one? We are examining each individual
who has ownership in the company. That would be any individual claiming to be economically
disadvantaged, would have to meet the social and economic disadvantage criteria, depending
on that individualís particular position in the company, we would determine his or
her suitability in respect to their experience and capabilities.
When we look at non-disadvantaged individuals, we are looking at those individuals in respect
to the influence and their role in the company and whether or not they would have the ability
to actually exercise control over the company. Now keep in mind that our intent is to ensure
that the benefits of the program flow to the intended individuals and those would be individuals
who are considered disadvantaged for the purposes of that firmís participation in the program.
Would a disabled veteran fall into the disability entitlement of the 8(a) program? When we look
at an individual who is disabled, what we look at is a distinguishing feature, so you
have a disability that as a consequence to that disability, being recognized by American
society, you have been subjected to bias treatment. Letís say that as a consequence to your disability
you are sight challenged. Because you are sight challenged, you have suffered certain
types of biases. Whatever your disability is, the bias has to be associated directly
to that disability, not the fact that you are disabled and that disability has to be
something that is recognizable to American society. Next question, is it possible for
employees, not directors, to work for more than one company or another 8(a) company?
Thatís an interesting question. Itís possible; however, keep in mind that when you have employees
or shared employees in particular, we would be looking at the relationship between your
company and the company that you are sharing your employees with and thereís the potential
there for affiliation. When we look at affiliation, thereís a potential that you can run into
issues of control and you could also run into issues related to size. Depending on the size
of that company that you are sharing employees with, you could be deemed not to be a small
business. If a firm sees an email declining the application
but the hard copy comes much later, when does the 45 days start for reconsideration? That
question is in respect to requesting reconsideration and keep in mind the rule says that you must
request reconsideration within 45 days. Our regulation says that the 45 days start from
the date that you received your first notice so if in fact you received an email notification
then youíre 45 days starts from the day of the email notification. The next question,
does SBA pre-screen applications before they are formally submitted? There is no formal
process for pre-screening an application, but that doesnít preclude you from contacting
your local SBA representative and asking them to sit down and help you review your application.
All of our field offices in our BOS are more than happy to sit and talk to you about the
requirements for the 8(a) program and give you recommendations and suggestions in respect
to what youíre submitting. While there is no formal process for that, that is a service
that you would be able to obtain through your SBA District Office.
Question regarding economic disadvantage, does the $250,000 net worth for a husband
and wife where only one is the owner of a corporation should be considered with 50%
of the net worth or it includes both personís net worth? We only look at the net worth of
the individual thatís applying. In other words, when you apply you will submit a separate
financial statement for you and your spouse. If your spouse is not claiming disadvantage
or not otherwise involved in the business, we donít consider that individualís net
worth unless he or she has some type of equity interest in the company or is in some way
facilitating the financial needs of the company or otherwise providing some support for the
company. If we find that your spouse is somehow guaranteeing
loans for you or providing financial assistance, we will consider that personís financial
resources. When you prepare your financial statements and depending on how you manage
your home affairs, your mortgage for instance, you would simply divide it in half. You would
divide the mortgage balance in half and you would divide the value of the business in
half and you would provide that on separate financial statements. Is there an expedited
review process? We try to expedite every review process, but there is no special expedited
review process. Are there restrictions on location of 8(a) companies? Specifically are
there any restrictions on how close 8(a) companies can be in proximity to each other? For example,
if a tribe owns two companies, can those companies share an office space? First of all, there
is no restriction on proximity of 8(a) companies. If you are an entity-owned company, because
the way the law reads, the law basically says that if a tribe or an Alaska Native Corporation
owns more than one 8(a) company, they are not considered affiliated because of the common
ownership. There wouldnít necessarily be any prohibition against them being housed
in the same facility. Final question, I think Iím running out of
time here, are there contracting value limits in the 8(a) program? Yes, there are. Itís
basically associated with sole source contracts and the period of participation in the program
of $100 million. With that, again, let me thank you for taking time to participate today.
I know we covered a lot of material. Iím hoping that you will take the opportunity
to review these slides once they are posted on the internet. To the extent that there
were questions that were not answered over the phone, weíre going to get answers out
to those questions and weíll make sure that all participants receive a copy of those answers.
Again, thank you very much and I hope you have a great day. By the way, if in fact you
do have additional questions, feel free to submit those questions to 8(a)[email protected]
Again, thank you very much.