The 8(a) Certification provides socially and economically disadvantaged businesses the opportunity to grow their business through federal contracts. Many of these firms become much larger players in the federal marketplace. Below are the five basic pathways to 8(a) firm growth.
Sole Source Contracts – These are direct-award contracts, where a federal procurement officer agrees to award a contract to an 8(a) firm, provided they feel the price is commensurate with what they would pay in the open market. These agreements can be quickly drawn up by the federal buyer and have a contract limit of $4MM for most industry types.
Set-aside Contracts – There are competitive contracts on which only 8(a) firms are permitted to bid. This limits the available competition to a field of firms with similar capabilities. On average, these contracts are larger than Sole Source Contracts, and as a result, more successful 8(a) firms in industries such as IT or Consulting generally migrate their focus during their 8(a) career from Sole Source to Set-aside contracts.
Joint Venture (JV) or Mentor Protégé Arrangements – 8(a) firms are permitted to join up with other small businesses or large concerns in order to form a Joint Venture Agreement. This gives the combined entity the ability to bid on contracts together as an 8(a) contractor. The advantage for the 8(a) is that it allows them to obtain much larger contracts at a much earlier stage in their 8(a) career. The disadvantage is that it counts towards the 8(a)’s $100MM in lifetime contracts awarded through the 8(a) BD Program.
GWACs/IDIQ Contracts – Government-wide Acquisition Contracts (for IT firms) and Indefinite Delivery Indefinite Quantity Contracts start with completing a proposal in answer to a posted solicitation to obtain a position on the contract. The contracting body will review the firms’ past experience, capabilities, and pricing to determine the award. In the case of GWAC contracts, a position on these contracts can boost awareness of the firm in the marketplace. In the case of IDIQ contracts, there is often a need for a few 8(a) firms on the contract, in order to meet government goals.
Subcontracting – Large Prime Federal Contractors are required to subcontract with small businesses as part of the performance rating on any contract over $750K. These firms need 8(a) subcontractors in order to meet these goals and are generally actively looking to engage 8(a) firms. The first step in seeking a subcontractor relationship with a large prime is to register online through their vendor web portal.
Firms that are thinking about becoming 8(a) certified should think through these five pathways prior to becoming 8(a) certified, as in some cases it can take several months to get all the pieces in place. Utilizing all of these growth pathways will help an 8(a) firm take full advantage of its nine years of program eligibility, and average annual sales volume of $6-8MM per year in federal sales.
If you would like to find out more about the 8(a) Certification, and how it might help your small business to obtain federal, state, & private sector contracts, I always recommend contacting an industry expert such as ez8a or Advance 8a. Neither charge for an initial consultation.