Recently a client asked about socio-economic programs – which program is ‘better’ to be in? (SDVOSB, WOSB, 8(a), minority, HUBZone, etc.)
Actually, you don’t have to choose! For example, a woman who served in the military and was disabled during her military service and who establishes her business in a qualified HUBZone area can literally qualify for all of the small business programs currently offered by the SBA (Small business (SB), 8(a), Small Disadvantaged Business (SDB), HUBZone, Economically Disadvantaged Woman-owned SB, Service Disabled Veteran Owned Small Business (SDVOSB), and Veteran Owned Small Business (VOSB). The fundamental requirement for most of these programs (the exception is the HUBZone program) is that at least 51% of the company is owned AND OPERATED by one or more qualifying people individuals. There are unique qualification processes for each specialized small business program, some much more challenging than others, and getting “certified” is required in order to claim to be part of that program. Some programs have additional requirements that must be met as well. HUBZone, for example, requires you to hire and train individuals located in a HUBZone. The only program that requires merely “self-certification” is the small business program itself. And you need to be ready to back it up in the event that your company’s size is challenged.
As to which one is “best,” it depends on your definition. All of the programs allow the government to “set aside” procurements for competition only among small businesses certified in a particular program. (e.g., only SDVOSB, only HUBZone, or Woman-owned). The Service Disabled Veteran Owned Small Business (SDVOSB) program is one of the newest, so many agencies are still scrambling to meet their established goals for this program so there are a number of SDVOSB set-aside procurements right now. Also, large prime contractors are searching for certified SDVOSBs to subcontract with to meet their goals as well.
The 8(a) program is still probably the most powerful program – and the most difficult certification to obtain. The certification process takes about six months to complete and that’s after you’ve submitted your complete application which is the most detailed of all of the small business programs. But the 8(a) program allows for a procurement to be set aside for just one 8(a) certified company, without advertising it on FBO and without competing it, even among other 8(a) companies (under certain thresholds). The 8(a) program does have limits: It is good for only 9 years and the owner(s) who achieve the certification can never apply for an 8(a) certification again, even with a different business.
One last thing: I have helped small businesses get certified in all of these programs over the past 15 years, and have seen any number of ways that company owners try to get around the eligibility requirements for these small business program. The FAR requires that the Contracting Officer to give everyone a chance to challenge the “apparent winner’s” small business status before making an award. (See FAR 15.503, Notifications to Unsuccessful Offerors). In other words, if you are lying about your wife running the company and your competitor finds out (it’s not like it’s hard to see…and competition can be fierce), they are given a chance to challenge your status prior to you receiving an award on a small business set-aside. I saw a Small Business lose an $80M contract by messing this up. Their competitor spent about two hours Googling them and came up with a case to the agency that they were not the “Woman Owned Small Business” they claimed. The result? No award of the contract, and a warning from SBA that if they competed in that fashion again, the government would take legal action against them.
All of us at Skyway have many experiences with companies trying to skirt the rules. Like the guy who walked into my office and said “I put the business in the wife’s name. Want to know how I get her certified.” I wanted so badly to say (but never did) “Well, you can’t. She’s not a cow!” And, it’s not her business! (“Oh, she takes care of the books.” Seriously?)
Or the time a couple of non-minority guys came in to ask about the 8a program and it was really apparent that they had made some deal with a minority guy (or were thinking about it) to make him the “primary owner” (but not really, wink, wink) so they could get into the 8a program.
Or another time a company came in wanting help because a competitor had challenged their HUBZone status. Turned out he had rented an empty office in a HUBZone and didn’t have any “employees” per se only “independent contractors” so he thought he was good.
There was a company I dealt with regularly at WPAFB that was “woman-owned.” Supposedly the guy’s wife owned it. Never saw the woman in 20 years of dealing with them.
The small business programs have been set up to help bona fide small businesses get a fair opportunity to obtain federal contracts. The certification processes are designed to ensure that only businesses owned and operated by these designated socioeconomic groups get to participate in these programs. Do not try to get around this or “game the system.” The SBA takes this very seriously, and you will get caught (at the least), and prosecuted by the GAO and SBA, at the worst. People go to jail for this. I’ve seen it happen.